Monday, December 25, 2006

HHSC Reverses Course on Welfare Privatization

What do you do when you have to release a story that you don't want people to pay attention to? You release the week before Christmas. The following two articles tell the story, but in short, the Texas Health and Human Services Commission is at long last raising the white flag on its privatization plan. For more on the background of this story, click here.

It will be very interesting to see what those who are responsible for these decisions will have to say for themselves in the next legislative session. What an incredible amount of human misery they have caused in the name of saving money... and in the end they have only thrown money down rat holes, and the price to the tax payers will be much higher than they ever needed to be. It will also take years for HHSC to get back to the level it was even a year ago.

Texas cuts contract on benefits
Janet Elliott
San Antonio Express-News Austin Bureau

AUSTIN — Texas is drastically cutting a private contract for social services because of backlogs and errors in processing applications, state officials said Thursday.
The $899 million contract with Accenture to operate call centers to determine benefits eligibility will be reduced by $356 million and will end in 2008, two years early, said Health and Human Services Commissioner Albert Hawkins.

Under the restructured contract, the Bermuda-based company will be largely relegated to data entry, leaving judgments about whether Texans qualify for food stamps, Medicaid and other welfare programs to state workers.

"We didn't draw the line between vendor work and state work in the right place," Hawkins said. "As we rebalance the roles between the state and the vendor, we will be drawing that line in a different place."

For example, if a client applying for benefits fails to list an asset such as a car, and a check of public data indicates a car is registered to the family, the situation now will be investigated by state employees, not Accenture workers.

Additionally, a planned expansion of Accenture-run call centers from two Central Texas counties to other areas of the state won't occur, Hawkins said.

The state will charge Accenture $30 million through service credits and payment discounts to recover costs incurred by the state, which has had to hire extra workers to process applications.

Accenture will retain more control over processing applications for the Children's Health Insurance Program, but state employees will handle all appeals of its decisions. Currently, clients denied benefits must first appeal to Accenture before going to the state.

Critics of privatization seized on the announced changes as evidence that the state's experiment had failed.

"They should have never (embarked on privatization) in the first place," said Rep. Garnet Coleman, D-Houston. "I'm glad they woke up from whatever episode they were having."

No one should interpret the contract changes as a failure of privatization, said Accenture spokesman Jim McAvoy. "Some of the technology and business processes we tried to apply did not succeed. This is why you do a pilot to determine whether new structures will work."

He characterized the $30 million in service credits and discounts as "an accommodation," not a penalty.

The state's announcement was good news for state workers and groups that work with low-income Texans. Hawkins said 900 temporary positions in eligibility offices will be converted to full-time to stabilize the state work force.

"We're glad to see that HHSC is acknowledging that its call-center experiment didn't work," said Mike Gross, Texas State Employees Union vice president.

Gross said the commission should restore staffing levels at its local benefits offices to levels that existed before the contract was signed in June 2005.

Scott McCown, executive director of the Center for Public Policy Priorities, an Austin group that has advocated a more cautious approach to privatization, said Thursday's announcement served as a reminder that not all duties performed by state workers can be transferred to the private sector.

"There's a tremendous amount of expertise and skill in the public sector that the private sector could not replicate," he said.

Hawkins said the state eligibility workers for the most part are better trained and more experienced.

Neither of the authors of the 2003 privatization law, Sen. Jane Nelson, R-Lewisville, and former Rep. Arlene Wohlgemuth, R-Burleson, could be reached Thursday for comment.

Hawkins said the state will continue to convert 8 million food stamp, Medicaid and welfare cases to the state's new computer system, which has had its own problems.

A state audit last month said that failed interfaces between the computer and the HHSC's Office of Inspector General have left investigators unable to check for fraud and overpayments in benefit programs.

Hawkins said he thinks the computer program is working as expected and will serve as the "backbone" of the eligibility-screening system when it is in place statewide in 18 months.

Hawkins declined to comment on a decision by HHSC Inspector General Brian Flood to drop recipient fraud investigations and withdraw pending fraud cases in the Texas Integrated Eligibility Redesign System pilot area.

He downplayed concerns raised by Flood that without electronic tools to ferret out potential fraud in food stamp, aid to needy families, or children's insurance coverage, the state would not know if fraud was being perpetrated and to what amount.

Houston Chronicle:
Dec. 24, 2006, 8:40PM
Undoing the damage
Texas Health and Human Services acknowledges the shortcomings of its privatization plan

When state officials negotiated a contract with private vendors to screen applicants for social service program eligibility, they made an expensive blunder. The privatization scheme caused thousands of recipients to be dropped from the rolls and did not produce the expected savings to taxpayers.

After repeatedly defending the $899 million deal with Accenture against criticism by legislators, Texas Comptroller Carole Keeton Strayhorn and child advocates, Health and Human Services Commissioner Albert Hawkins admitted the obvious. "We didn't draw the line between vendor work and state work in the right place," he said. "As we rebalance the roles between the state and the vendor, we will be drawing that line in a different place."

Accenture leads a consortium hired by the state to handle eligibility screening for Medicaid, food stamps, Children's Health Insurance and other state-managed assistance programs. Private workers at call centers were to replace state employees, but problems created application backlogs. Applicants complained that their documents were mishandled or lost. The Houston Chronicle documented one case in which dozens of applications, including confidential documents, were faxed in error to a Seattle storage warehouse.

Hawkins says his agency is slashing the Accenture contract by $356 million and the pact will be ended in 2008, two years earlier than previously planned. After previously telling state workers they would be laid off, HHS will now convert 900 temporary positions to full time. The state will also charge the contractor $30 million through service credits and payment discounts to recover the costs of rehiring state workers to process backlogged applications.

Unfortunately, Accenture will now handle eligibility screening for the Children's Health Insurance Program, which previously was conducted by a subcontractor, Maximus. Children's Defense Fund Texas Executive Director Barbara Best expressed concern that a privatization process that ended coverage for many children of low-income Texas families will still be handling CHIP applications.

The lesson of the Accenture debacle is that some state services, particularly those that provide a social safety net for the most vulnerable of Texans, should not be contracted out to companies more interested in amassing profits than serving needy citizens. The next time Commissioner Hawkins draws a line between public and private responsibilities, let's hope primary consideration is given for the people who depend on his agency for their health and welfare.