Medicaid vendor ACS under scrutiny

11/18/2009 © News Service of Florida

Affiliated Computer Services Inc., which holds data, call center and Medicaid cost recovery contracts with Florida Medicaid, is one of several state vendors under scrutiny as lawmakers look for places to save money in the budget.

“I think the message is, if these vendors aren’t already puckered up, they’re going to be – because we are going to be coming at them with a proctoscope,” said Rep. Kevin Ambler, R-Tampa, who as chairman last year of the House Health Care budget committee said he wanted to conduct a sweeping review of state public health contracting.

Last year’s effort was short-circuited when federal stimulus money poured into Florida and temporarily eased the looming budget crunch.

“But we’re going to have to make some tough choices this year,” Ambler added. “And we’ve got to figure out the history of why some vendors have contracts, and whether we’re getting our money’s worth.”

Huge swaths of Florida’s $66 billion budget are scattered across scores of contracted services, with leading lawmakers saying most will come under intense scrutiny as they try to offset a looming $2.6 billion budget shortfall.

The approach, if followed by lawmakers, would reverse a historic pattern of contracted programs and services being tucked into department base budgets and being renewed annually by lawmakers mindful of whose districts they serve and which lobbyists represent the vendors.

Health and human services, education and criminal justice programs are the biggest beneficiaries of state contracting, which has always been part of Florida budgeting but which flourished when former Gov. Jeb Bush began championing state outsourcing efforts.

A Senate Criminal Justice budget committee meeting Wednesday in Tampa advanced the Legislature’s tight-fisted tone for the year ahead by setting general standards for dozens of contractors performing drug and alcohol services, mental health treatment and other services.

Similar tough-talk by Senate health care leaders has put three ACS contracts worth more than $200 million in jeopardy.

The largest, a five-year $87.3 million contract with Florida Healthy Kids Corp., has been closely watched by state officials since 62,500 children lost health-insurance coverage because of problems with a computer system developed by ACS a year ago.

Healthy Kids has said it was able to bring many of those who were dropped back onto the rolls through a marketing campaign and outreach efforts last year. But ACS has been kept on a tight leash ever since.

ACS told the News Service of Florida that Healthy Kids enrollment has trended upward, with the more than 255,000 children participating in the program topping goals set by state administrators. Applications also are being processed within four days, according to Ken Ericson, the ACS spokesman.

“Our strong performance shows our commitment to providing high-quality services to Florida’s families,” Ericson said.

While the Healthy Kids contract endures, ACS faces bleaker prospects with other state services.

Sen. Don Gaetz, R-Niceville, said he’s had it with the company and wants to strip ACS of its contract to collect $120 million in Medicaid overpayments to doctors, hospitals and other health care providers.

The five-year contract, which ACS won last year over rival Health Management Systems, has recovered only $15 million in overpayments the past year for a Medicaid program on track to run a more than $200 million shortfall this year.

After being grilled by a Senate budget panel earlier this month, state Medicaid officials are expected to update lawmakers next month on recovery efforts.

“I have no axe to grind with the vendor,” Gaetz said. “I couldn’t pick them out of a lineup – but I’d fire them. We have to be better stewards of the public’s money – this year more than ever.”

ACS is represented by a high-voltage lobbyist team in Tallahassee, with many members close to Republican leaders. Included are Larry Overton, former Rep. Frank Messersmith and Charlie Dudley.

Lobbyists for Health Management Systems, which lost the Medicaid contract last year, include equally well-positioned Republicans, Jim Magill and Mac Stipanovich.

ACS said this week that it has mailed $17.9 million in billing through October – and expects another $22.5 million in recovery demands to go out this month. The company was hit by the state with a $35,000 fine in September for its inaction on recouping state payments.

“This year, every contract the state has needs to be a performance-based contract,” Gaetz said. “If you perform, you stay with us – if not, we need to find a better provider of service.”

ACS could face longer odds of retaining its smallest state contract – a call center serving the five counties that comprise Florida’s Medicaid reform effort. The initiative, begun under Bush, was to expand statewide but has languished because big cost-savings from steering patients to HMOs have not emerged, officials acknowledge.

ACS’ call center has “done a good job,” said Tiffany Vause, spokeswoman for Florida’s Agency for Health Care Administration. But, she added, the state can do the job cheaper itself because of technology changes that make a privatized call center unnecessary.

Instead of steering $1 million a year to ACS, state officials can save $354,000 by bringing the call center in-house, Vause said.

“The agency can perform these same functions faster, cheaper and better than they can be provided under contract,” she said. 

--News Service of Florida covers the Capital.