NC legislators question $3 million, no-bid contract at DHHS

Posted by Lynn Bonner on April 17, 2014 

  • Backlog costly to clear

    The federal government announced this week that the state cleared a troubling backlog of thousands of food stamp applications.

    It turns out all that work came at a cost. It cost the counties $14 million and the state $7 million to deal with NC FAST, the new public benefits software.

    Counties ran into trouble with the NC FAST last year, causing delays in processing food stamp applications that stretched into months. The federal government, alarmed at the delays, threatened sanctions. The state and counties worked overtime to erase the backlog.

    State Social Services Director Wayne Black said the $14 million expended by the counties for NC FAST includes basics such as equipment, plus temporary workers and extra staff hours needed to cut the food stamp backlog. The N.C. Association of County Commissioners calculated the cost, he said.

    Angela Taylor, acting program director for NC FAST, said the Affordable Care Act – which pushed the state to add the Medicaid function to NC FAST before it had planned to – along with new Medicaid eligibility questions county workers must ask applicants, caused the backlog and added to the expense.

    Though the food stamp backlog has cleared, the state now as a backlog of nearly 86,000 Medicaid applications: 26,057 came from the healthcare.gov site; 30,957 require the more complex application; 18,978 are in NC FAST, and 8,098 are in the old computer system counties used before NC FAST.

— Legislators questioned the need for a no-bid, $3 million contract the state health agency awarded a national firm to help improve Medicaid budgeting, as agency officials increased an estimated budget shortfall for this year.

The Washington firm Alvarez & Marsal is working with the state to improve financial controls and budgeting in the $13 billion state and federal health insurance program for poor families, the elderly and people with disabilities. The agency told a legislative oversight committee Thursday that the budget shortfall in the program would be $120 million to $140 million, slightly more than reported last month.

“If I believed in reincarnation, and I don’t, I’d love to come back as a consultant for $3 million,” said Sen. Tommy Tucker, a Union County Republican.

Mentioning the string of sole-source contracts the state Department of Health and Human Services has executed in the last 15 months, Tucker asked why the agency turned to an outside company rather than have some of its own employees restructure Medicaid budgeting.

Rep. Beverly Earle, a Charlotte Democrat, said she was concerned about the agency’s practice of using sole-source contracts in this and in previous administrations.

DHHS Secretary Aldona Wos said state workers did not have the time to do the kind of work Alvarez & Marsal was hired to perform because DHHS is understaffed and employees are busy just doing their regular jobs.

“We have to do our daily work,” Wos said. “As you see, we would love to be at our desks working, but we’re here to provide you with the information you request.”

She called the firm “experts in the United States” in the tasks assigned in the contract. “I’m sure you’ll be happy with the end product as this unfolds,” she said.

Rudy Dimmling, a senior director with Alvarez & Marsal, said the firm had done similar work in South Carolina, Pennsylvania and Maryland.

Medicaid budget overruns have tormented legislators in recent years, forcing them to scramble to find money to fill gaps. One year, the shortfall topped $600 million.

Rep. Nelson Dollar, a Cary Republican, applauded a Medicaid deficit that is comparatively small, considering the size of its budget.

“Everyone should be congratulated for the tremendous progress that’s been made in the state of North Carolina getting a handle on Medicaid at this point, and obviously we have a lot more to do,” he said.

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