New KanCare clearinghouse contract to be more enforceable but cost more, KDHE says

photo by: KanCare logo


Story updated at 6:55 p.m. Aug. 21, 2018:

TOPEKA – Officials with the Kansas Department of Health and Environment said Tuesday that they are prepared to sign a new contract with a company that processes applications for KanCare benefits that will be more enforceable than the previous contract and will help the agency clear up a backlog of applications.

The only problem, KDHE Secretary Jeff Andersen told lawmakers, is that it will cost about $2 million more than the agency has budgeted for the current fiscal year.

Speaking to the Legislature’s joint KanCare oversight committee, Andersen said the contract will enable the Virginia-based company Maximus Inc. to hire additional staff so it can process applications more quickly.

But he said it also includes additional costs to the state, which will bring some of the processing functions back in-house, including employee training and processing applications for low-income elderly and disabled individuals.

Andersen, who took over as KDHE secretary in January, long after the problems with application backlogs had been known to lawmakers, said Maximus had never been adequately staffed to do the job properly.

“This contract was underbid in order to get the contract, and in many cases, Maximus was not adequately staffed throughout this contract,” he told a legislative oversight committee. “We’ve heard time and time again, sometimes you get what you pay for.”

KDHE officials had previously told lawmakers that they would seek financial penalties, known as liquidated damages, against the company for failing to meet the terms of its contract.

Under federal regulations, Medicaid applications are supposed to be processed within 45 days of submission, unless there are extenuating circumstances, such as when an applicant doesn’t submit all the necessary information.

KanCare is the name of the state’s privatized, managed-care Medicaid program. It provides health coverage to some 400,000 low-income families, as well as elderly and disabled individuals.

But for more than a year, KanCare recipients, patient advocates and health care providers have told the committee that it sometimes takes months for an application to be approved and that applicants are frequently told to resubmit information they have already provided.

On Monday, though, KDHE told the committee that it would not pursue liquidated damages against the company and, instead, would pursue terms in a new contract that would make it more enforceable.

Andersen did not spell out details of the new contract, but he said it will be easier to enforce because it holds the company accountable to fewer and simpler standards than the previous contract, which he described as complex.

Sen. Laura Kelly, of Topeka, who is the Democratic nominee for governor, said she was not comfortable with the idea of paying Maximus more, especially when the contract calls on it to do less.

“It’s almost like we’re rewarding their underbidding to get the contract in the first place,” she said. “And now we’re saying OK, we’ll go ahead and pay you what you should have been getting paid, and we’ll pay you the same or more for doing less, and that just makes no sense.”

Andersen, however, said the state was able to negotiate about $10 million in concessions from the company in the new contract compared with what the company had originally sought. He said the agency believed it made more sense to renew a contract with Maximus than to start a search for a new contractor in the short amount of time available.

Andersen did not provide details about how much the new contract would cost. In fiscal year 2017, the most recent data available, Maximus was paid just under $18 million for its services in the medical assistance programs.

Rep. Dan Hawkins, R-Wichita, who chairs the joint committee, said he shared the same concerns Kelly expressed about paying more for the contract while at the same time having the state take on some of the responsibilities itself.

“I’m in agreement with those comments,” Andersen said. But he also noted that the company’s performance has been improving and that the backlog is being reduced.

Hawkins said the oversight committee does not have authority to recommend additional funding for the agency. He said that’s an issue KDHE would have to take up with the State Finance Council – a group made up of the governor and top legislative leaders from both chambers – or, in the alternative, wait until the full Legislature convenes in January.

Kansas has operated KanCare since 2013 under a federal waiver that is set to expire at the end of this year. Gov. Jeff Colyer’s administration is seeking a renewal of that waiver, and it has awarded contracts with three private, for-profit health insurance companies to administer the program during that time.

But Colyer, who took over as governor in January when former Gov. Sam Brownback stepped down, lost his bid for the Republican nomination to run for a full term of his own, which has raised concerns that the next governor could be locked into contracts for a program that he or she may not want.

Andersen, however, confirmed Tuesday that the new contracts will allow the next administration to cancel the agreements, if it provides 30 days’ notice, without the state having to pay any penalties.


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