The legislative task force studying Arkansas’ Medicaid program should include a proposed $15 million contract between the state Department of Human Services and a Washington consulting firm in its inquiry, a legislative subcommittee decided Tuesday.
The Legislative Council’s Review Subcommittee voted unanimously to refer the department’s contract with McKinsey & Co. to the Health Reform Legislative Task Force after Sen. Missy Irvin, R-Mountain View, questioned whether the firm’s work on the state’s health care payment overhaul has been worth the more than $80 million that she said it has been paid over the past few years.
That money “would have bought a prison by now,” Irvin said.
“I’m not comfortable as a legislator to review and continue to review contracts that are seemingly a little out of control,” she said.
She also noted that former Medicaid Director Andy Allison now works for the firm.
John Selig, director of the Department of Human Services, said the state’s Health Care Payment Improvement Initiative has likely contributed to a slowdown in the growth of spending in the state’s Medicaid program, from 6 percent to 8 percent annually down to about 2 percent.
“I think we have definitely seen a return” on the state’s spending on the initiative, Selig said.
The contract with McKinsey for the state fiscal year that starts July 1 will cover continuing work on the payment overhaul, including an examination of “payment integrity” meant to reduce unnecessary spending.
Allison, who stepped down as Medicaid director effective June 1 of last year, does not work on any projects related to the Arkansas department, Selig said.
Work on the payment overhaul began in 2011. In 2013, Arkansas received a $42 million federal grant to help with the effort.
Under one component of the initiative, the Medicaid program and private insurance companies make upfront payments to doctors who agree to take steps to better coordinate patient care.
The initiative also rewards doctors who keep patients’ health care costs low and who meet cost targets for providing certain “episodes of care.”
Providers whose costs for episodes are considered excessive are penalized.
The task force was created earlier this year to study possible changes to the Medicaid program, including a replacement for the private option, which uses Medicaid funds to buy commercial insurance for low-income adults.
Irvin, whose husband is a physician, said the Human Services Department’s contracts with McKinsey and other firms amount to a “duplication of services.”
She noted that the task force last month hired the Manchester, N.H., Stephen Group to help develop recommendations under a $1 million contract.
“We’re paying money two and three times over for health care policy work,” Irvin said.
Earlier Tuesday, her objections prompted the Legislative Council’s Performance Evaluation and Expenditure Review Subcommittee to withhold its review of two contracts between the department and the University of Arkansas for Medical Sciences’ Arkansas Center for Health Improvement.
Those contracts will go to the full Legislative Council on Friday without a recommendation from the subcommittee.
In the meantime, Irvin said she will try to gather additional information.
“I don’t like spending money unnecessarily, and I feel like that’s what we’re doing here,” Irvin said.
Selig said the department contracts with firms that provide specialized services. For instance, under one contract, the Center for Health Improvement is performing an evaluation of the private option required under the federal wavier authorizing the program.
Under the other contract, the center is conducting an evaluation of the health care payment overhaul required under the terms of the $42 million federal grant.
“I’d love to have [only one] contract if the contractor was good, but it’s a continual challenge for us,” Selig said.