DHS contract for health-pay adviser OK'd

State’s Legislative Council approves $15.4 million pact

The Arkansas Legislative Council on Friday signed off on the state Department of Human Services' proposed $15.4 million contract with a Washington, D.C.-based consulting firm for its work on the state's health care payment overhaul.

The council's action came a day after the Health Reform Legislative Task Force recommended the council complete its review of the proposed contract with McKinsey & Co in fiscal 2016.

The task force requested that the department and the task force's consultant, The Stephen Group of Manchester, N.H., "work together to clarify goals and improve performance measures within the next 30 days of the new contract," said Rep. Jeff Wardlaw, D-Warren, who is co-chairman of the Legislative Council's Review Subcommittee.

The contract with McKinsey & Co. is for consulting services to support the Arkansas Health Care Payment Improvement Initiative in the fiscal year starting July 1, the Bureau of Legislative Research said.

The federal government will pick up 66 percent of the tab, while the state will cover the other 34 percent.

On Tuesday, the council's Review Subcommittee referred the proposed contract to the Health Reform Legislative Task Force, after state 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.

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 200,000 low-income Arkansans. The task force is studying changes to the state Medicaid program, including a replacement program for the private option.

Department Director John Selig told the task force on Thursday that McKinsey & Co. has played a key role in implementing the payment overhaul, which he credited with helping to slow the growth of spending in the state's Medicaid program.

While the task force could recommend changes to the payment initiative, Selig said the contract is needed to continue the initiative in the meantime. The task force hired The Stephen Group last month to help develop recommendations for changes to the state's Medicaid program.

Work on the payment overhaul began in 2011. In 2013, Arkansas received a $42 million federal grant to help with the effort.

In other action Friday, the Legislative Council completed its review of two proposed contracts between the Human Services Department and the University of Arkansas for Medical Sciences' Arkansas Center for Health Improvement, after the council's Performance Evaluation and Expenditure Review (PEER) Subcommittee on Tuesday deferred action on the two proposals to the council.

PEER Subcommittee Co-Chairman Rep. David Meeks, R-Conway, said Irvin had the most questions among state lawmakers about the proposed contracts, but "she is OK with going forward on those two contracts."

Irvin, who didn't attend Friday's council meeting, could not be reached for comment by telephone Friday afternoon.

One department contract with the center is for $1.68 million for evaluation of the private option to determine its cost effectiveness in fiscal 2016, according to the Bureau of Legislative Research.

The other department contract with the center is for $2.3 million "to enable the Arkansas Medicaid program to project future payments, improve benefit designs, and identify scope of coverage issues by providing data and policy analyses and reports" in fiscal 2016, the bureau said.

The federal government is paying for 50 percent of these contracts and the state is paying for the other half, the bureau said.

Metro on 06/13/2015

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