SPRINGFIELD -- The fact that the largest union representing state workers is fighting to alter a state contract designed to cut $350 million in waste from Illinois’ Medicaid program surprised some lawmakers at the Capitol last week.
Also surprising was the news from Gov. Pat Quinn’s administration that the state is hiring 200 people — at a cost of $20 million annually in salaries and benefits — to help carry out the contract with Maximus Health Services.
Maximus’ contract is part of the process of removing people from the Medicaid rolls who no longer are eligible for benefits because they have moved out of state, earn too much money, or fail to meet other enrollment standards.
But before considering any actions to tweak Maximus’ contract or tinker with the state workforce, lawmakers say they first want to know how much Maximus actually is saving the state. That information won’t be known for a month or two.
“I’m waiting until I see what the data tells us,” said state Rep. Greg Harris, D-Chicago, chairman of the House Appropriations-Human Services Committee. “We need to figure out what the outcomes are going to be.”
Rep. Patricia Bellock, R-Hinsdale, another member of the committee, said: “We’ve been wondering what’s holding up the process. Hopefully, we will see major savings.”
Just an estimate
The cost for more state workers, in theory, reduces the net impact of the annual $350 million savings.
Bellock said lawmakers didn’t realize, when they approved the Medicaid cuts last year, that the state would have to hire so many people. Federal law requires final decisions on Medicaid eligibility to be made by state employees.
Also reducing the net savings is the cost of the Maximus contract — $76.8 million over two fiscal years though it’s doubtful $350 million will be saved this fiscal year anyway, because the contract didn’t begin July 1.
Whether the $350 million in annual savings will be realized even in fiscal 2014 and beyond is uncertain. The original estimate wasn’t scientific. It emerged last year in negotiations that resulted in the General Assembly’s approval of $1.6 billion in Medicaid cuts and savings through the “Save Medicaid Access and Resources Together Act.”
Quinn’s administration initially guessed that only $120 million could be saved by scouring the Medicaid rolls.
Virginia-based Maximus, with 500 of its own workers, began detailed reviews of the eligibility of the state’s 2.7 million Medicaid recipients in early January. Maximus’ workers are based in the Chicago area.
Verification No. 1
Page 2 of 3 - Julie Hamos, director of the Illinois Department of Healthcare and Family Services, said the contract was awarded and the work begun in record time, given the magnitude of the task.
Hamos said the specific amount of savings isn’t as important as making sure everyone on the Medicaid program deserves to be there.
“We are not going to kick people off, if they’re eligible, just to get to a number,” she said. “The most important part of this is to verify the eligibility of every single Medicaid client, and we will have done this by the end of this calendar year.”
The state’s efforts to verify eligibility were lax in the past, mainly because of inadequate staffing levels, she said.
The Department of Human Services, which deals with eligibility issues, employed 2,315 caseworkers in late 2006. As of December, DHS had 1,870 caseworkers, according to DHS spokeswoman Januari Smith.
A representative of the American Federation of State, County and Municipal Employees told Harris’ House committee the state could save up to $29 million a year by hiring 70 more state workers — bringing the total number of new hires to 270 — and then performing more of the eligibility verification in-house.
In addition to gathering data, Maximus workers contact Medicaid clients and recommend whether people should be retained in the program. State employees then have 20 days to make a final determination.
“A lot of work that is going to be done is duplicative,” AFSCME Council 31 political director Jason Kay told the House committee.
Hamos said the Quinn administration disagrees with the union’s estimates. In addition, she said, changing the contract so state workers perform more of the work would delay the verification process.
Anne Irving, Council 31’s policy director, told The State Journal-Register DHS is “horribly understaffed” and any state workers hired to help carry out verification will be needed in the future, even if the state decides not to renew Maximus’ contract.
The state has hired about 75 of the 200 new workers and is close to hiring the remaining 125, DHS Director Michelle Saddler said last week.
The workers have college degrees and will earn at least $40,000 a year — much more than Maximus employees are being paid, according to AFSCME.
“But the bottom line is the state workers are more efficient and therefore can perform the work more cheaply,” Irving said.
AFSCME filed a grievance with the state in June regarding the outsourcing. Arguments from both sides are being considered by an arbitrator who could rule in the next few months and potentially undo part of the Maximus contract unless the two sides reach an agreement.
Page 3 of 3 - Rep. Chad Hays, R-Catlin, another member of the House Appropriations-Human Services Committee, told Kay AFSCME is being selfish.
Hays said he believes the Maximus contract could generate much more than $350 million in annual savings. AFSCME’s projected savings of an additional $22 million to $29 million is questionable and “not even worth having a discussion over,” he said.
Hays raised his voice and told Kay: “For you to be back here with this nonsense is insulting. ... I know you’re paid to have more people on the payroll and more pensions. I get it. Get a grip!”
Dean Olsen can be reached at (217) 788-1543. Follow him at twitter.com/DeanOlsenSJR.