The Arkansas Department of Human Services should continue paying a Washington consulting firm for its work on the state's health care payment overhaul, but should also try to add more detail to its contract with the firm, a legislative task force recommended Thursday.
A legislative subcommittee on Tuesday referred the department's proposed $15.4 million contract with McKinsey & Co. to the Health Reform Legislative Task Force after Sen. Missy Irvin, R-Mountain View, questioned whether the firm's work has been worth the $85 million it has been paid by the department since 2011.
For the state fiscal year, which starts July 1, the federal government would pay 66 percent of the contract's cost; the state would pay the rest.
The contract will go to the Legislative Council for a final review today.
Human Services Department Director John Selig told the task force Thursday that McKinsey has played a key role in implementing the payment overhaul, which he credited with helping to slow the growth of spending in the Medicaid program.
Although the task force could recommend changes to the payment initiative, Selig said, the contract is needed to continue the payment initiative in the meantime.
For instance, the department plans to issue bonus payments this year to doctors in the initiative's patient-centered medical home program who met targets for keeping patients' health care costs low.
The department also is expanding a program that offers rewards to doctors who meet cost targets for providing certain "episodes of care" and penalizes those whose costs are considered excessive, he said.
If the work stops because the contract isn't approved, the state would be out of compliance with the terms of a $42 million federal grant that it received for the payment overhaul effort in 2013, he said.
"I think we're in a much stronger position if we keep the work going and adjust as necessary," Selig said.
Martha Tuthill, a senior consultant with The Stephen Group of Manchester, N.H., said McKinsey has "a good track record" of work for the agency, but that the contract for next fiscal year could be strengthened by adding more detailed performance measures.
The task force hired The Stephen Group last month to help develop recommendations for changes to the Medicaid program.
In a divided voice vote, the task force recommended that the department go forward with the McKinsey contract while seeking the recommended changes.
"We have to think long and hard about pulling the plug on things while we're trying to make assessments, but we also need to perhaps make sure the contract is worded to give us the maximum protection possible," Sen. Jim Hendren, R-Sulphur Springs and a chairman of the task force, said.
The Arkansas Legislature formed the task force earlier this year at the request of Gov. Asa Hutchinson, who cited concerns about the cost of the private option, which uses Medicaid funds to buy commercial insurance for more than 209,000 low-income Arkansans.
By the end of December, the task force is expected to recommend a program that would replace the private option starting in 2017, when the federal waiver authorizing the program expires.
John Stephen, managing partner with the Stephen Group, said insurance companies have expressed concerns about the number of letters to private-option enrollees that are returned as undeliverable.
Arkansas Blue Cross and Blue Shield, which covers the largest number of private-option enrollees, does not have an accurate address for about 7,000 to 8,000 of its 141,829 enrollees, Stephen reported.
Centene Corp. has reported being unable to locate about 10 percent to 15 percent of its enrollees, and QualChoice Health Insurance is unable to locate 20 percent to 25 percent of its enrollees, he said.
Without accurate information about recipients' addresses, the Human Services Department doesn't know whether it is paying for coverage for enrollees who have moved out of the state, Stephen said.
Insurance companies also want to be able to reach enrollees to encourage them to visit the doctor for preventive health screenings, he said.
Selig said insurance companies have notified the department of about 4,000 enrollees whose addresses can't be verified.
When the department receives such a notice, it sends a letter to the address it has on file for the enrollee. If that letter is returned as undeliverable, and the enrollee can't be reached by phone, the department removes the enrollee from the program.
Because of the concern raised by The Stephen Group, Selig said the department is implementing a procedure for insurance companies to notify the department each month of enrollees whose addresses are unknown. The department will then send a letter to the enrollees through an "automated process" and remove those who can't be reached by mail or phone, he said.
Metro on 06/12/2015