Troubled Medicaid contractor Maximus could soon have a new contract with Kansas officials that pays it more to do less.
State officials say that appears to be the price of getting the job of processing applications for the privatized Medicaid program, KanCare, done right.
The deal would also penalize Maximus millions of dollars for past problems, most centered around long waiting periods created by the contractor’s backlogs.
Kansas Department of Health and Environment Secretary Jeff Andersen on Tuesday told a committee of lawmakers overseeing KanCare that Maximus initially underbid to secure the contract.
“In many cases, Maximus was not adequately staffed,” Andersen said. “In some cases, you get what you pay for.”
In a statement, a spokesperson for Maximus said the company’s bid was based on the original contract proposal, but the scope of the work has expanded over several years.
“As a result, Maximus has funded significant financial investments in additional resources,” the statement said.
Some 400,000 Kansans are enrolled in KanCare, which manages the delivery of care to low-income, elderly and disabled.
The current contract with Maximus runs out at the end of this year. Andersen said the state and Maximus had reached a new agreement that extends through the middle of 2019, with the option to add another six months. The new contract has yet to be finalized and signed.
Under the plan, Andersen said the state would take back some responsibilities, including training and processing some of the most difficult claims.
In the end, the state will take on an added cost of $2 million in the current fiscal year to cover both the cost of its new duties and the steeper payments to Maximus.
“Technically, we will pay Maximus more, because we need to do the job right,” Andersen said.
Republicans and a Democrat on the committee expressed frustration at the idea of sending more money to the company after the past problems.
Democratic Sen. Laura Kelly, her party’s nominee for governor, said the plan rewards Maximus for initially underbidding for the job.
“Now we’re saying, ‘OK, we’ll go ahead and pay you what you really should have been getting paid, and we’ll pay you the same or more for doing less,’” she said. “That just makes no sense.”
Republican Rep. Dan Hawkins echoed those concerns, calling the agreement “kind of weird.”
The short timeframe before the current contract expires necessitates the move, Andersen said. He took over the job in January, when the issues with Maximus were already entrenched.
“We have a good long-term plan,” he said. “There’s some short-term pain to get out of this hole.”
As part of the negotiations, the state will not sue Maximus. Andersen said the new agreement would include more accountability measures and Kansas would be entitled to up to $10 million in concessions for past problems.
Maximus said it’s ready to continue work with the state.
“We have made meaningful progress on our performance,” the company statement said. “We are committed to continuing to process applications timely and accurately.”
Stephen Koranda is Statehouse reporter for Kansas Public Radio, a partner in the Kansas News Service. Follow him on Twitter @kprkoranda.
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