December 18, 2013

Arbitrator's order will end wasteful outsourcing, return Medicaid oversight to state government

outsourcing graphicAn independent arbitrator’s order issued Dec. 17 will end state government’s wasteful $77 million contract with a private corporation, Maximus, that has been duplicating Medicaid eligibility redetermination work performed by state employees.

Under the terms of the order, the state will use currently appropriated funds to hire a sufficient number of caseworkers to return the work in-house no later than April 30, 2014. Maximus will continue to provide data-matching software and some support services until June 2015.

"The arbitrator's order is a victory for Illinois taxpayers," AFSCME Council 31 executive director Henry Bayer said. "Wasteful spending on a private contract will be eliminated, trained professional caseworkers will replace unqualified call centers, and state government will ensure that Medicaid is available to those who need it, and cut off from those who don't."

Despite a high error rate [PDF] in the work Maximus has performed, the company has curried favor with a small minority of vocal legislators -- including Republicans Sen. Dale Righter and Rep. Patti Bellock -- and right-wing lobbyists like the Illinois Policy Institute. These apologists make misleading statements -- such as claiming that hiring caseworkers will "bust the budget" when in reality only currently appropriated funds will be used, and money previously given to the company will be saved -- and never mention the corporation's record of shoddy work. Maximus recommendations to change existing Medicaid coverage were found in error and overturned in 47% of cases, its cancellations reversed in 31% of cases, and its findings deemed inaccurate in 15% of cases where the company said recipients should continue receiving benefits!

"It's time to end this failed experiment with outsourcing a critical public watchdog role to a private, for-profit corporation," AFSCME director Bayer said. "The arbitrator's order will bring oversight back to state government where it is directly accountable, and save money in the process."

The backdrop to the Maximus contract was a backlog in Medicaid eligibility redeterminations caused by staff shortages in the departments of Human Services (DHS) and Healthcare and Family Services (HFS). Rather than hire sufficient staff, the state outsourced the work to a for-profit company. Council 31 filed a grievance, contending that outsourcing violated provisions of the collective bargaining agreement.

During arbitration, the union demonstrated that the state would save more than $18 million a year by hiring bargaining-unit employees instead of using a contractor. In testimony before a joint legislative hearing of the House and Senate appropriations committees, the state admitted that bringing even a portion of the work in-house would generate substantial savings.

Under the contract, Maximus call-center workers performed duplicative casework functions that federal Medicaid rule and law require state employees to repeat.

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