Private Contractor Pulls the Plug on Medicaid Contract

Medicaid clients become collateral damage

On Tuesday, NH DHHS Commissioner Nick Toumpas distributed a global email to all NH DHHS employees announcing that Meridian, a large contractor for DHHS, is packing up its business and leaving the state as of the end of this month.

Meridian is one of the three Managed Care Organizations that is coordinating care for people in the state Medicaid program.  New Hampshire began switching from a fee-for-service health care system to managed care Dec. 1, 2013 to save money and provide Medicaid clients with allegedly better access to health care, especially those with chronic illnesses such as diabetes or asthma. The system is being implemented in phases. Participating in managed care is mandatory for most Medicaid clients during the first phase, which covers medical care, such as doctors.

Last year, the switch in the health care model got off to a very rocky start when most of the state’s hospitals refused to participate in provider networks because of the low reimbursement rates.

In response, lawmakers provided additional money to increase rates and made participation mandatory if hospitals were to receive state reimbursement for some of the uncompensated care, or services they provide without compensation or below what the service costs. New Hampshire’s reimbursement rate is about 50 cents on the dollars – the lowest Medicaid reimbursement rates in the country.

There have been many news reports of treatment being blocked by these vendors and quality of care being sacrificed; so much so that listening sessions were conducted.

Fast forward, Meridian claims it is pulling out of the state because it wants to return to its roots in Detroit and focus on its core businesses in the Midwest. But, we have to wonder was it because – they believe they are not turning enough profits on their contract with the state of NH and are pulling out quickly to cut their losses?

“This demonstrates the perils of outsourcing critical human services,” said Diana Lacey, President of SEA/SEIU Local 1984.  “The state continues to place its eggs in the baskets of outside contractors, which is risky business, because if a private contractor is not meeting its profit projections, they can simply pull out, and in this case leave thousands of Medicaid clients stranded.”

Yet, the practice continues. DHHS and the NH Dept. of Insurance are each hiring contractors to ramp up for the Medicaid expansion that was signed into law earlier this spring, which calls for a July 1 launch date.

Lean state budgets and a 20% smaller state employee workforce in recent years means there’s no extra slack to take on new projects at the New Hampshire Insurance Department, according to Deputy Commissioner Alex Feldvebel explaining away the Department’s growing dependence on outside contractors.

The Insurance Department has awarded nearly $6 million in federal money to contractors to do a range of jobs, including regulatory oversight for health insurance plans and research into why insurance rates are rising.

In fact, the Department has brought in an outside contractor to manage its other contractors. Martha McLeod, a former state representative, has been awarded more than $425,000 in Affordable Care Act grant money, including $106,000 received last fiscal year. Her job duties include moving contracts through the Executive Council process. This is a job that is professionally and effectively done by full-time state employees throughout the entire state system.

Where does this end? How many NH citizens will suffer from inconsistency and the lack of transparency and trust that leads to poor service delivery? How many public workers are going to be displaced or not even hired when there is a need to? When are we going to put the Human back into Human Services?

“Using for-profit vendors absolutely means that tax payers are paying for profit that they don’t necessarily have to pay for,” says Lacey. “Agency heads are so strapped for internal human resources they are increasingly farming out incredibly important work that NH citizens will depend on.”

The reliance on contractors adds unnecessary and costly layers of bureaucracy and diminishes transparency and accountability. “NH residents simply cannot afford to be treated like guinea pigs (such as trying out managed care) nor have their service needs sold off to the lowest bidder,” said Lacey.

You can learn more about this by listening to a NHPR story about the subject. Click here to continue learning.

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