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On January 1, 2017, the KHI News Service became part of KCUR public radio’s new initiative, the Kansas News Service. The Kansas News Service will continue to cover health policy news and broaden its scope to include education and politics. All stories produced by the former KHI News Service are archived here. Stories and photos may be republished at no cost with proper attribution and a link back to KHI.org.

State contractor oversight criticized in wake of Medicaid mistake

Accenture faces $750,000 fine for incorrect reporting of application backlog

By Andy Marso | June 21, 2016

News of a mistake that dropped several thousand Kansans from state Medicaid backlog reports has advocates and Democratic lawmakers questioning the state’s oversight of the contractor blamed for the error.

Susan Mosier, secretary of the Kansas Department of Health and Environment, sent a letter to federal officials June 10 to let them know that the reports they had been receiving since February — which showed the state’s backlog of Medicaid applications steadily declining — were inaccurate.

The state had previously reported that the backlog of new applications awaiting processing as of May 8 was 3,480 and about 2,000 of those had been pending more than 45 days. After the reporting error was corrected, the state reported that as of May 22, the total backlog of new applications was 15,393 and nearly 11,000 of them had been waiting more than 45 days — the limit set by the federal Centers for Medicare and Medicaid Services.

Mosier placed responsibility for the error on a state contractor not named in the letter.

Angela de Rocha, a spokeswoman for state agencies, said Monday that the contractor in question is Accenture, the multinational firm that Kansas paid to build a new software platform for determining Medicaid eligibility called the Kansas Eligibility Enforcement System, or KEES. But she said the state is accountable for oversight.

“It’s ultimately our responsibility to get people’s applications determined, to get their eligibility determined,” de Rocha said. “But this is a setback.”

De Rocha said the state plans to withhold $750,000 from Accenture’s contract, which was extended through 2021 last year and is worth more than $250 million altogether.

Accenture spokeswoman Deirdre Blackwood said via email that the company did not make an error and was giving KDHE the information it requested.

"KDHE then refined how it wanted the numbers compiled and we worked with the state to revise the reports,” Blackwood said.

Blackwood said the changes in reporting didn’t affect the state’s ability to pare down the backlog.

Legislators voted in April to audit the Medicaid backlog, which began to develop last year after KEES went live. A previous audit, ordered after more than a year of KEES delays, revealed that Accenture had promised more than it could deliver when it signed the initial contract with the state.

Medicaid, which in Kansas is a privatized program called KanCare, is funded through a combination of state and federal dollars. Most of the funding for KEES came from federal coffers. 

“It’s ultimately our responsibility to get people’s applications determined, to get their eligibility determined. But this is a setback.”

- Angela de Rocha, a spokeswoman for state agencies

Sean Gatewood, a former Democratic lawmaker who represents people on Medicaid through a group called the KanCare Advocates Network, said it’s time for executive branch officials and legislators to ask tough questions about Kansas’ ability to hold contractors accountable.

“The underlying thing is, the state’s not watching the problems,” he said.

Gatewood said he hoped CMS officials would force accountability.

A CMS spokeswoman did not respond to a request for comment Monday.

Sen. Laura Kelly, the top Democrat on the Legislature’s KanCare oversight committee, likened the KEES failures to the rocky Division of Motor Vehicles software switch by another contractor, 3M Company.

She said she doubted the state had enough top information technology talent to make sure contractors live up to agreements.

“Whenever you do a massive database software switch, there are going to be issues,” Kelly said. “I think that’s why you have to have very technically skilled people overseeing the process to protect the state’ interests.”

Turnover at the top

Some of the job positions designated to provide KEES oversight recently have been vacant.

Glen Yancey, chief information officer for KDHE, remains in place after three years as executive director of KEES.

But the agency is without a KEES project manager following April Nicholson’s move to the Department of Commerce in May. And the director of Medicaid eligibility position was vacant for more than a month until Kim Burnam was hired to replace Darin Bodenhamer in early June.

State officials have not said whether Bodenhamer quit or was fired.

Photo by Andy Marso/KHI News Service Accenture, the state contractor in charge of developing the Kansas Eligibility Enforcement System, or KEES, has a project office in downtown Topeka.

View larger photo

De Rocha said the error in the backlog reports occurred because Kansans who reapplied for Medicaid after being denied were not being counted.

She said eligibility workers noticed that reapplications were not showing up in the uncompleted section of KEES and flagged the problem.

“So the system itself actually helped us catch this reporting mistake,” de Rocha said.

The reporting error came to light as advocates who help Kansans apply for Medicaid said they were seeing an increase in applications denied incorrectly.

Accenture develops software for government agencies across the country but has a checkered history. Shortly after signing the KEES contract in 2011, the company paid about $64 million to settle a lawsuit alleging kickbacks and other misdeeds in numerous federal IT projects. It has faced scrutiny more recently for cost overruns and delays on projects in Texas and California.

Kelly said it’s probably not feasible to seek another IT company to troubleshoot KEES, given the investment Kansas has made in Accenture and the state’s ongoing budget problems.

“I think it’s difficult to cut the cord, particularly when we don’t have a replacement in mind and we don’t have any money to get something new,” she said.

Blackwood, who works in Accenture’s Arlington, Va., location, said that “Accenture is meeting its contractual commitments to KDHE” and referred further questions to de Rocha. 

A receptionist at Accenture’s KEES project office in downtown Topeka said the only person authorized to talk about the project was managing director Raymond Han, who was on a conference call at the time.

A message left for Han was not returned Monday.

Photo by Andy Marso/KHI News Service A visitor sign-in list at Accenture’s Topeka office showed that Phyllis Gilmore, secretary of the Kansas Department for Children and Families, attended a meeting there Friday.

View larger photo

A visitor sign-in list at Accenture’s Topeka office showed that Phyllis Gilmore, secretary of the Kansas Department for Children and Families, attended a meeting there Friday.

DCF spokeswoman Theresa Freed said it was a routine weekly meeting to talk about KEES.

Consequences

DCF workers processed some Medicaid applications until January, when KDHE took over operations at a centralized KanCare Clearinghouse.

Some DCF workers returned to help about a month later after the backlog ballooned following the Affordable Care Act's open enrollment period. Mosier, in her June 10 letter to federal officials, said they will remain on that job in light of the corrected backlog numbers.

Mosier also said temporary KDHE staff hired through the end of June would be kept on past that date, overtime would be authorized for state and Accenture workers on the project, and resources would continue to be shifted to help trim the list.

De Rocha said the corrected backlog numbers were disappointingly high and frustrating for state officials as well as Medicaid applicants.

“All of that said, we should have this backlog problem solved by the end of the summer,” de Rocha said.

Meanwhile, the glut of unprocessed applications continues to affect thousands of low-income Kansans waiting on their Medicaid cards, most of whom are elderly, disabled, pregnant or children.

The wait for coverage also is affecting those who provide services to those groups. Nursing homes were among the first to raise alarms about long wait times.

Cindy Luxem, president and CEO of a senior services organization called the Kansas Health Care Association, said her group recently surveyed its members about their outstanding bills for residents whose Medicaid applications are pending.

More than 100 nursing homes and providers of home and community-based services responded. Five nursing homes reported having at least one resident whose application had been pending a year or more.

One nursing home company reported 84 residents with pending applications and more than $750,000 in outstanding Medicaid claims.

Luxem said news of the higher backlog numbers made sense to her, in light of the survey responses.

“It did not surprise me when the story came out,” she said. “Because I believe we probably had several hundred in that list.”