Legislators suspended their rules Friday and approved a contract to set up a system by Jan. 1 to make sure Medicaid beneficiaries have the proof-of-insurance form they need for federal taxes.
The state Department of Human Services will pay Tennessee-based Deloitte Consulting more than $2 million under a sole-source contract to track down Medicaid beneficiaries, provide them with a form to show they have health insurance and run a call center and website. The contract was approved by the Legislative Council, a body of lawmakers that reviews state government actions between legislative sessions.
Deloitte needs to complete the system by Jan. 1 to comply with the Patient Protection and Affordable Care Act, said Dawn Stehle, director of the department's Medical Services Divsion, in a letter to the Office of State Procurement.
"If we do not meet these requirements ... we would be out of federal compliance and federal penalties could be possible," she wrote.
The IRS is requiring taxpayers to file a form to verify health insurance coverage. Last year, the IRS asked taxpayers whether or not they had insurance.
Without filling out the tax forms, Arkansans on Medicaid could incur a penalty under the Affordable Care Act for lacking insurance.
"We've known for some time of the requirement but it's only been in the last month that the IRS has provided the technical guidance on how to implement this," Kate Luck, a spokesman for the state Department of Human Services, said in an email. "We tried to get this contract through the regular process but it took us longer than expected to negotiate the performance terms with Deloitte."
Luck said that if someone calls the department because he moved and did not receive a form, Deloitte will provide the updated address to the department.
"Deloitte is providing the software that will be cleaning up addresses, making sure zip codes match, cities are spelled correctly, etc.," she said. "It's standard practice for any mailing of this size. They'll generate the form, mail it" and provide the website.
The sole-source contract was reviewed and approved by Gov. Asa Hutchinson's office, said spokesman J.R. Davis.
In June, Hutchinson said his office and the Department of Information Systems would review any technology contracts before bids are solicited. Additionally, the office reviews all contracts with values greater than $1 million.
The additional scrutiny came after lawmakers questioned the state's payments to CH Mack Inc. to provide an electronic tool to evaluate developmental-disability clients that the company was supposed to develop for $2.14 million by 2012. The Department of Human Services originally contracted with the company in 2011.
The department extended the contract and asked for additional services. By 2014, CH Mack had been paid $4.8 million but had not developed a suitable tool. CH Mack has since changed its name to AssureCare.
CoCentrix has taken over development of the tool and been paid at least $9 million by the state.
During Friday's meeting, Sen. Terry Rice, R-Waldron, asked why the Deloitte contract did not go before a subcommittee before reaching the full Legislative Council.
Victor Sterling, an assistant director at Arkansas Medicaid, said the contract was finalized after the review subcommittee met Tuesday.
Rice said suspending the rules is "objectionable."
During Tuesday's review subcommittee meeting, lawmakers also suspended rules to consider a different Department of Human Services contract instead of delaying action until a Dec. 15 meeting.
Lawmakers approved an $85,000 sole-source contract with The Pace Group Inc. of Tupelo, Miss., to find a new Department of Human Services director. John Selig, the current director, is retiring at the end of the year. On Friday, the full Legislative Council approved but did not discuss the contract.
"For the director search, the governor wants to conduct the search as quickly as possible so we are moving to get that contract through as soon as possible," Luck said. "With it being such a critical position in state government, we want to get that filled as soon as we can."
Metro on 11/21/2015