KDHE working on improvement plan, new contract with company that processes KanCare applications

TOPEKA — The Kansas Department of Health and Environment says it will assess damages against a private company that has been running the state’s troubled KanCare application clearinghouse, but that may not happen until after the company submits an improvement plan and the agency negotiates a new contract.

Maximus Inc., based in Reston, Va., is paid $25 million a year to process applications for KanCare, the state’s privatized Medicaid program. It had been under fire in recent months from state lawmakers, the health care community, and from candidates in this year’s gubernatorial race because of a persistent backlog of applications from people applying for medical assistance.

“Maximus is in the process of developing its response, which will include the steps it will take to make needed improvements,” State Medicaid Director Jon Hamdorf said in a statement emailed to the Journal-World late Tuesday night. “After the state has an opportunity to review and respond to the improvement plan, the contract negotiation process will continue, with resolution anticipated in July.”

In a separate statement, KDHE Secretary Jeff Andersen said the subject of assessing “liquidated damages” — a way of pulling back a portion of the money paid to the company — for failing to meet specific terms of the contract was being negotiated separately.

“We are working through a process to establish agreement with Maximus regarding compliance and associated damages,” Andersen said. “We are also addressing our ongoing partnership. When those details have been settled, we will be able to speak to them in more detail.”

KDHE officials told a legislative KanCare oversight committee earlier this year that the agency fully intended to assess damages if Maximus failed to meet certain improvement benchmarks for both timeliness and accuracy of processing applications by June 1. KDHE has since confirmed that the company did not meet that deadline and a spokeswoman for the agency said Wednesday that the agency remains committed to assessing penalties for the period of noncompliance between Jan. 1 and June 30 of this year.

The statements from Andersen and Hamdorf came in response to criticism earlier Tuesday when Republican gubernatorial candidate Jim Barnett, a physician and former state senator who is challenging Gov. Jeff Colyer for this year’s GOP nomination, called on Colyer to cancel the state’s contract with Maximus.

He also urged the Colyer administration to levy the maximum amount of “liquidated damages” possible against the company for its failure to comply with terms of the contract and to put state employees back in charge of managing the clearinghouse instead of contracting with outside companies.

Colyer, who is also a physician, was the main architect of KanCare when he served as lieutenant governor under former Gov. Sam Brownback. He has defended the model, which involves private, for-profit insurance companies managing the benefits of Medicaid recipients, saying it has successfully slowed the rate of cost growth in the state’s Medicaid program.

As governor, Colyer has also proposed expanding the KanCare model — a project he has called “KanCare 2.0” — to include, among other things, imposing work requirements and a lifetime benefit cap on some KanCare recipients.

That, however, requires approval from the federal government, which pays for more than half the cost of the Kansas Medicaid program. And, thanks to language inserted in the final budget bill that state lawmakers passed this year, it now also requires approval from the full Legislature.

Lawmakers on both sides of the aisle have indicated they are reluctant to make any major changes in eligibility requirements until a multitude of issues are ironed out with the existing KanCare system, starting with the clearinghouse operation.

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