Kansas tells Medicaid contractor: Shape up, or face millions in fines

By Jonathan Shorman, February 16, 2018

Topeka - The company processing Kansas Medicaid applications is so out of compliance with its contract that it could face fines of more than $250,000 a day.

Maximus is operating with 40 percent accuracy on financial payments; 98 percent is required. The company is also falling behind on handling applications and cases, the state of Kansas says.

The company runs a clearinghouse that is designed to sort through the state’s Medicaid applications, but Kansas’ Medicaid director on Friday described a sense of despair among workers during a recent visit to the Topeka facility.

The clearinghouse includes Maximus workers and state workers, with about 350 in total.

“It’s night and day. It’s a completely different work environment on our side of the house and their side of the house and I think that’s because we at the state value the employees that work for us,” Kansas Medicaid Director Jon Hamdorf said.

Kansas has experienced problems processing Medicaid applications since then-Gov. Sam Brownback’s administration opened the clearinghouse in 2015. At one time, a backlog of unprocessed applications grew large enough to draw the attention of federal regulators.

How fast and accurately the applications are processed is important to the more than 400,000 people enrolled in KanCare, the state’s privatized Medicaid program. Slow processing can create uncertainty for applicants.

Hamdorf disclosed during a legislative oversight hearing Friday that Kansas sent Maximus a letter of non-compliance on Jan. 30.

Kansas has given the company until June 1 to shape up. Otherwise, Maximus will face retroactive fines back to January that could total tens of millions of dollars.

Hamdorf said an examination of the company’s performance on a single day – Feb. 7 – showed enough shortfalls that the company would have to pay $250,000 or more in fines for that day alone.

If that kind of performance is typical, Maximus would face millions in fines.

“I couldn’t even venture a guess,” Hamdorf said when asked how much in fines Maximus would potentially face. “It could be very, very high.”

Maximus spokeswoman Lisa Miles said the company “immediately instituted a compliance achievement plan and we are firmly committed to meeting the requisite compliance targets by June 1st.”

“We have been working closely with the State on number of continuous improvements to increase efficiency and accuracy, and reduce the time it takes to process applications,” Miles said in a written statement.

She also said that the company makes every effort to ensure employees have a “professional, safe and enjoyable work environment.”

Hamdorf said officials are holding daily calls with clearinghouse management and weekly meetings with Maximus leadership to try to improve the company’s performance.

“They’re coming to me and saying they’ve done this in so many states, and yet – I have yet to find a state where they’re doing what they’re doing for us,” Hamdorf said.

He said that Tennessee officials had practically laughed at him when he asked about Maximus in a recent conversation.

House Minority Leader Jim Ward, D-Wichita, said the potential fines faced by Maximus shows the company’s level of incompetency.

“The idea that we can consolidate all of this out into a building (in Topeka) when we had an infrastructure of local agencies, local groups, local people, that was working fine,” Ward said. “We created the most inefficient system.”

If Kansas imposes penalties, the fines will go back only to the start of this year. Advocates for Medicaid recipients say that although Kansas gave Maximus notice in January, the company has been underperforming for years.

“They’ve never been in compliance, and their out of compliance has had a real cost to consumers and providers this whole time that they’ve had to shoulder. And the state has chosen not to pursue that up until this point,” Sean Gatewood, a spokesman for the KanCare Advocates Network, said.

If Kansas parts ways with Maximus, the state could likely handle application processing in-house for about the same price, Hamdorf said. Few companies perform the kind of work that Maximus does, and when Kansas’ contract was initially put out for bid, only two companies made offers.

Rep. Dan Hawkins, a Wichita Republican who chairs the Legislature’s KanCare oversight committee, said having state workers again process applications is under serious consideration.

“I think that’s the plan if Maximus goes away – it will come in-house,” Hawkins said.

“If they don’t get this fixed, they’re gone.”

Jonathan Shorman: 785-296-3006, @jonshorman


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