Kansas will continue doing business with a contractor that processes Medicaid applications despite years of troubled performance that prompted a top state official to acknowledge Tuesday “you get what you pay for.”
And to the frustration of lawmakers, the company will earn even more money.
The Kansas Department of Health and Environment plans to extend its contract with the company, Maximus, beyond the end of the year. But agency secretary Jeff Andersen said Tuesday that his department next July will take over processing the most difficult applications for KanCare, the state’s Medicaid program, that involve the elderly and individuals with disabilities.
Kansas won’t sue Maximus for failing to live up to the terms of its contract, but Andersen said the company will provide up to $10 million in “concessions.” Chronic understaffing by Maximus contributed to a backlog of unprocessed Medicaid applications that caused headaches for patients and medical providers.
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“This contract was underbid in an effort to get the contract, and in many cases, Maximus was not adequately staffed throughout this contract, which we’ve heard time and time again. In some cases, you get what you pay for,” Andersen said.
In a statement sent Tuesday evening, Andersen said that doing work “on the cheap” hasn’t been helpful to anyone. He stressed that KDHE is working to ensure Maximus’ performance is up to standards.
Kansas brought in Maximus in 2016 to run its KanCare Clearinghouse in Topeka, where the state sorts through Medicaid applications. But the operation has been plagued with backlogs and frustrations over poor service.
Officials told lawmakers in February that the company’s contract called for 98 percent accuracy on financial payments, but it was achieving only 40 percent. And it was falling behind on its handling of applications and cases.
At one point, Kansas had a backlog of thousands of unprocessed Medicaid applications, catching the attention of federal officials. Although the state no longer has large backlogs, advocates for people on Medicaid say problems still persist.
The state set a June 1 deadline for Maximus to improve that the company failed to fully meet.
In a statement, Maximus spokeswoman Lisa Miles said the company “competitively bid the contract based on the information provided in the State’s Request for Proposal. The scope of the contract has expanded dramatically over the last several years and that is fundamentally what has required the need for additional staff.”
Miles continued: “As a result, MAXIMUS has funded significant financial investments in additional resources including eligibility support staff and supplemental corporate resources. These efforts led to a substantial reduction in the backlog. They also allowed us to process applications more quickly.”
Miles said the company has made significant progress on its performance.
Andersen cautioned the Legislature’s KanCare Oversight Committee on Tuesday that having the state directly process some of the applications won’t necessarily save money and that “technically, we will pay Maximus more because we need to do the job right.”
Lawmakers immediately vented frustration with the arrangement.
“I have a real problem with that. It’s almost like we’re rewarding their underbidding to get the contract in the first place,” said Sen. Laura Kelly, who sits on the committee and is also the Democratic nominee for governor.
Rep. Dan Hawkins, a Wichita Republican who chairs the committee, said the situation “seems kind of weird” from a business standpoint and that he agreed with Kelly’s comments.
Sen. Richard Hilderbrand, R-Galena, called the arrangement with Maximus “troublesome.”
“That’s just a really foreign way to look at this,” Hawkins said of paying Maximus more.
Andersen indicated his agency will ask for $2 million in additional funding for the current fiscal year, which runs through June. He said much of the money will go toward ramping up KDHE’s operations as it prepares to take over processing some Medicaid applications.
The State Finance Council, made up of legislative leaders and the governor, may have to approve the additional funding at some point.
Andersen said he agreed with Hawkins’ comments. He said that since the beginning of 2018, the state has worked harder to hold Maximus accountable and that the company has added staff.
In explaining why Kansas is sticking with Maximus, Andersen said the state isn’t in a position to bring in new contractors to begin in January, when Maximus’ current contract expires. And the state isn’t immediately capable of processing all Medicaid applications itself.
In a Tuesday evening statement, Andersen said allowing Maximus to walk away without a solid transition plan be a disservice to customers. “Although it comes at a cost, we have a duty” to ensure Medicaid eligibility work is performed timely and accurately, Andersen said in the statement.
“There’s some short-term pain to get out of this hole,” Andersen told lawmakers earlier Tuesday.