System's cost up to $200M, legislators told

Changing government rules to blame, DHS director says

Human Services Department Director John Selig is shown in this file photo.
Human Services Department Director John Selig is shown in this file photo.

The estimated cost of a computerized enrollment and eligibility verification system for Arkansas Medicaid, food stamps and other social services programs has doubled to about $200 million, the director of the state Department of Human Services told legislators on Thursday.

Testifying before the Legislature's Health Reform Legislative Task Force, Human Services Department Director John Selig said the project has already cost about $100 million but is not fully functional. He blamed changing specifications from the federal government and difficulty in processing federal enrollment files for the increase in cost.

The specification changes have been "a huge distraction for us and our vendors," Selig said.

The federal government is expected to pay for 87.5 percent of the cost of the project, meaning Arkansas' share will be about $25 million.

Because the eligibility system project has taken longer than expected, the Human Services Department has been delayed for almost five months in conducting checks of hundreds of thousands of Arkansans enrolled in the state's Medicaid program, including those in the so-called private option.

Since the first checks started about two weeks ago, the department has checked the eligibility of about 10,000 private option enrollees, Selig said.

Within a couple weeks, the department expects to begin checking about 3,000 cases per day, he said.

Federal officials have given the state until September to complete the checks, although state officials expect to have them done well before then, he said.

Sen. Jason Rapert, R-Bigelow, called the project "very problematic."

"I don't understand how you've gotten to this point -- spent $100 million on this project and it's not fully operational," Rapert said.

He pressed Selig to name an employee who was at fault. Selig said he took ultimate responsibility for managing the project with his own staff.

"I didn't want to spend a lot of money on additional vendors to manage this project," Selig said. "I think in hindsight that was probably wrong.

"That's on me," he added. "I was trying to save money, and I think I saved a dime and spent a dollar."

Rapert wasn't satisfied with that answer, however.

"It'd be better off for you to just tell us who's responsible for this mess and get rid of them," Rapert said.

Rep. Kim Hammer, R-Benton, said he wanted a list of employees who made decisions about the project.

Selig said the new eligibility and enrollment system was required because of the 2010 Patient Protection and Affordable Care Act, which required states to adopt new, standardized eligibility rules for Medicaid that Arkansas couldn't implement using its 25-year-old system that is being replaced.

The system is also used to enroll applicants in the private option, which uses Medicaid funds to purchase commercial health insurance for low income Arkansans.

Almost 210,000 Arkansans were enrolled in the private option as of April 30.

Citing a concern about the eventual cost of the private option to the state, Gov. Asa Hutchinson earlier this year called on the Legislature to create the task force, which is expected to recommend a program that would replace the program starting in 2017.

In 2012, the department solicited bids for the eligibility project and tentatively awarded a contract for $60 million, Selig said. But, he said, the department was unable to agree on the terms of the contract with the winning bidder and was told by state procurement officials that too much time had elapsed to negotiate a contract with one of the other bidders.

Because of a deadline to begin private option enrollment on Oct. 1, 2013, with the new eligibility rules taking effect Jan. 1, 2014, the department didn't have time to solicit a new round of bids, Selig said.

Instead, officials decided to hire companies using an existing contract for technology services available to all state agencies. Instead of paying for a final product, the department reimburses the companies for staff time and materials used on the project.

The system has been successful in enrolling private option enrollees, but other features, such as the ability to complete annual checks of eligibility, are still under construction, Selig said.

Late last year, he said, the department fired the lead vendor, Calverton, Md.-based EngagePoint, which had been paid about $32 million, and replaced it with Princeton, N.J.-based eSystems.

The department has also appointed a staff member as manager of the project and will likely solicit bids for a company to coordinate the vendors' work, Selig said.

He added that the department has not been delayed in checking the eligibility of about 175,000 Medicaid recipients, including people with disabilities, who were not affected by the new eligibility rules. The department has checked the eligibility about 60,000 of those recipients this year, he said.

Metro on 05/29/2015

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