Kansas replaces troubled Medicaid contractor, Maximus

After years of complaints about backlogs and mishandled Medicaid applications, the Kansas Department of Health and Environment is parting ways with Maximus, the private for-profit company that administered the KanCare clearinghouse.

One of the firms hired by former Gov. Sam Brownback’s administration to bring lower costs and private sector efficiency to state government, Maximus instead got poor marks for processing applications and operating KanCare’s customer service call center.

Nursing homes, which rely heavily on Medicaid reimbursements, reported financial struggles as the number of seniors covered by the federal-state health insurance program dropped despite an increasing elderly population. In 2019, Governor Laura Kelly announced plans to hire 300 state workers to take the most complex Medicaid applications away from Maximus.

Instead of bringing the entire Medicaid screening operation back in-house, Kansas has hired another private contractor beginning next year. The New Jersey-based Conduent has had its own troubles. Among them was a lawsuit alleging Medicaid fraud for overbilling dentists in Texas. It was settled last year.

Maximus referred all questions to KDHE.

In a statement to The Star, Conduent touted its experience in other states.

“We bring operational excellence and innovative technology solutions, as well as strong nationwide expertise,” the statement said. “We help our state agency partners adapt to challenges such as policy changes and transitions to new capabilities and solutions, while maintaining high-quality customer service.”

Before Maximus was brought to Kansas, Medicaid applications were handled by state employees. A KDHE spokeswoman said the agency considered discontinuing the outsourcing of Medicaid eligibility, but decided it was not financially feasible.

Lawmakers, attorneys and advocates expressed cautious optimism about the change. Though many predicted continued struggles during a transition and a desire to return to the “good old days” before private business was engaged in the Medicaid application process.

“Based on what I know now I’d rather go back to the old way but I’m hopeful,” said Rodney Whittington, executive director of Villa St. Francis, a nursing home in Olathe.

“We had a system that worked, maybe it didn’t need to be messed with.”

New contractor

Kansas lawmakers and healthcare providers said they knew little about Conduent, the new contractor for KanCare.

According to the Dallas Business Journal, the company settled a $245.9 million lawsuit with the state of Texas last year over allegations that they over-billed Texas dentists, targeting low-income children for unnecessary dental and orthodontic work.

In a statement to The Star a Conduent spokesman said the lawsuit stemmed from allegations that occured under the company’s previous ownership.

“Nearly two years ago, Conduent settled a matter with the State of Texas due to allegations related to the 2004-2014 time period, when the company was owned by predecessor companies,” the statement said. “We were pleased to put that legacy dispute behind us.”

Conduent and KDHE agreed in early August to a six-year contract, worth just under $134.5 million, according to state documents.

Under the terms of the contract, Conduent will provide workspace for its staff and KDHE employees. It will be responsible for running the KanCare Clearinghouse call center and determining eligibility of all family applications for Medicaid. Applications for elderly and disabled beneficiaries, which are considered to be more complicated, will be reviewed by KDHE personnel.

According to the bid it submitted to Kansas officials, Conduent operates in all 50 states and 22 countries. It supplies Medicaid processing and customer service for 17 states, including Missouri.

The company highlighted its work in Indiana, where it said backlogs in Medicaid applications were reduced with “minimal staff increases.” It also took over New Jersey health benefits from Maximus in 2004.

Conduent, the bid said, is a global company operating in all 50 states and 22 countries.

Jeremy Mohler, communications director for In The Public Interest, a non-profit that monitors government contractors, said the state made a good move shifting away from Maximus but could still face struggles in continuing to work with private contractors.

“Conduent like any contractor is subject to the same market pressures and drive for profit as any other corporation,” Mohler said. “These contractors can’t help but put their bottom line above the public interest.”

Concerns after Maximus

Maximus was one of many contractors hired by Kansas during Governor Sam Brownback’s administration during his push to privatize more of the state’s operations.

“They sunk us into a lot of contracts, many of which were long term contracts, that didn’t perform but yet still seem to have been lucrative for a lot of the contractors,” said Nick Wood, Deputy director of Interhab, a Topeka-based disability rights organization.

When it hired Maximus, the state shed staff with years of institutional knowledge and replaced them with workers who became notorious for ignoring complicated cases and losing documents.

Working with the company was frustrating for lawmakers and practitioners alike, said Rep. Susan Concannon.

“Eligibility applications weren’t being processed in a timely manner and we weren’t serving the people of Kansas and we couldn’t,” the Beloit Republican said. “It was taking so long that we had people who died before they were approved.”

Those delays, said Pittsburg Democrat Monica Murnan, were costly to both beneficiaries and the state.

“The amount of time and effort put into fixing errors was costly,” she said.

Whittington, with Villa St. Francis, said he’d rather return to the old ways but was willing to give the new contractor, Conduent, the benefit of the doubt.

Wood, of Interhab, said delays were a hallmark of the system during the Brownback administration. He hopes that shedding the company will lead to improvement.

“We definitely look forward to the changes and improvement,” Wood said. “It’s kind of heartbreaking to have someone who needs services needs support but just can’t get support because the enrollment process is so slow.”

On the other hand, Molly Wood, a Lawrence Attorney said the issue is reliance on a private call center. She’d like to see a return to a state-run system where beneficiaries can get direct help from state employees.

“I don’t expect it to get better. In the short term I would expect it to get worse,” she said. “It’s really crappy customer service to the state of Kansas and it’s not efficient.”

In the event of issues, House Majority Leader, Dan Hawkins, R-Wichita, said he’s confident the state’s KanCare oversight committee will hold Conduent accountable.

“If there’s something wrong they’re going to find out,” he said.

This story has been updated. An earlier version misidentified Monica Murnan.

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Katie Bernard covers Kansas crime, cops and courts for the Kansas City Star. She joined the Star in May of 2019. Katie studied journalism and political science at the University of Kansas.

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