Under the Dome

Two more extensions given for state no-bid contract

The state Department of Health and Human Services’ no-bid contract with a Washington-based consultant continues to expand, with the initial $3.2 million deal signed last year now worth more than $9 million.

DHHS has agreed four times to give the firm Alvarez & Marsal more money since the initial February 2014 contract was signed.

The contract grew by $650,000 on Feb. 22 this year. That was a few days after The News & Observer published an article detailing what had been a second increase that put total payments at nearly $8 million.

The company was hired to essentially managed the state’s Medicaid finance office. With that third extension, the company’s role was expanded from Medicaid budgeting to include what’s called “program integrity,” which covers efforts to make sure that the government insurance program for the poor, elderly, and disabled is getting what it pays for.

The fourth contract expansion, which became effective on June 29, ensures “day-to-day management” of program integrity, and adds the job of redesigning it. This latest change added $621,500 to the contract, bringing the total to more than $9 million and extending the end date to Oct. 2.

In a statement, DHHS said the “collaboration” with Alvarez & Marsal “ played a vital role in putting the operations of the Medicaid program on a path to long-term stability and sustainability. Because of that success, it was an obvious decision to ask them to shift their focus to a specific area, program integrity, for additional work.”

In a separate announcement, DHHS said the Medicaid budget recorded a surplus for the fiscal year that ended June 30. This would be the second year in a row that the agency said the program had come in under budget. The statement said details would be released when figures become final.

DHHS said the Medicaid program ended the 2014 budget year with a $63 million surplus. A later audit showed that the program was carrying $350 million in liabilities that year.

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