A Neo-Liberal Nightmare: Contracting Human Services in Texas

In a telephone conversation last week, an L.A. activist talked about “neo-liberalism.” It is a crucial term for globalization activists, but it can be confusing for audiences in the USA, since it denotes right-wing privatization. We’ll use the term in an effort to accustom local readers to international dialogue. At any rate, the Center for Public Policy Priorities has presented an excellent summary of events regarding a Texas experiment with neo-liberalism in human services, pasted below–gm
Background: Integrated Eligibility and Enrollment (IE&E)

The 2003 Legislature directed the Texas Health and Human Services Commission (HHSC) to change the way people apply for public benefits, including Medicaid, CHIP, Food Stamps, and cash assistance (Temporary Assistance for Needy Families), by cutting state workers and relying heavily on telephone call centers.

HHSC was given the option to either operate or outsource the call centers, and opted to turn over a large portion of eligibility system operations to private contractors. HHSC dubbed the new system Integrated Eligibility and Enrollment (IE&E).

The state entered into a contract that included not just the new call centers, but also CHIP eligibility services, several major Medicaid contracted services, and maintenance of the new eligibility computer system (TIERS) the state had been developing for years.

HHSC planned to close 99 of its 381 eligibility offices by the end of 2006, with four new call centers playing a major role in processing applications and renewals. Eventually, clients would be able to apply via the Internet as well.

Children’s Problems Soon Apparent

The new contractor took over CHIP enrollment and renewal for the entire state in November 2005. Transition to the new IE&E system began in Travis and Hays counties in January 2006, and was scheduled to “roll out “ (phase in) across the state over a 10-month period. (This first phase of the IE&E roll-out also affected a small number of clients who used to live in Travis and Hays counties, whose cases were processed and remain in the new TIERS system.)

Serious problems with processing CHIP renewals and new applications for CHIP and Children’s Medicaid soon became apparent: Children’s Medicaid enrollment dropped an unprecedented 29,000 from December 1 to January 1; CHIP renewal rates plummeted from 84% to 52%; and new CHIP enrollees diminished to half their usual level.

By early March it was clear that the Medicaid decline was not a temporary aberration, CHIP renewals remained dismally low, and disenrollments surged (see table, page 7). Child health advocates shared their concerns with HHSC officials and the press. HHSC extended CHIP coverage for about 6,000 children whose parents had not been given proper or accurate notice by the contractor of their correct enrollment fees.

USDA Oversight

Meanwhile, it was also becoming clear that processing of Medicaid and Food Stamps renewals and applications in Travis and Hays counties was significantly backlogged. Problems there with the IE&E pilot (run by the same contractor) included the same issues plaguing the CHIP/Children’s Medicaid operations—multiple computer system issues, training deficits, flawed processes, and staffing shortfalls—but clients’ woes were compounded by the acute and worsening under-staffing of HHSC’s eligibility offices statewide.

The U.S. Department of Agriculture (USDA, which oversees the Food Stamp Program) conducted a Program Access Review of IE&E operations in late March, which included conference calls with community groups, legal services, and anti-hunger advocates to hear their reports on the roll-out.

IE&E Roll-out Delayed for 30 Days…

On April 5, HHSC Executive Commissioner Albert Hawkins announced the agency would delay IE&E roll-out to the next planned region (Hill Country counties) in order to make technical and operational improvements and would review the system’s readiness again in 30 days. HHSC cited the need for “better training for customer service representatives in the call centers, a process to more quickly resolve complicated cases, better reporting tools to track cases and workload, and improved data collection.”

In April legislative hearings, HHSC officials acknowledged many problems with the IE&E transition and contractor including serious state staffing deficits. Based on their review, USDA officials conveyed to HHSC in April their concerns about the project including lack of timeliness in application processing, inability of the contractor’s front-end computer system to interface with TIERS (adding to backlogs), high call abandonment rates and long hold times at the call center, and lack of correct policy knowledge by contractor staff.

USDA’s independent project monitor identified several fundamental concerns: inadequate readiness testing of computer functions, a roll-out timeline that was too fast to allow for identification and resolution of all problems, inadequate staffing levels, insufficient training of private contractor staff, and shortcomings in some aspects of call center technology.

On April 11, HHSC announced that a new $3 million marketing and public information campaign for CHIP and Children’s Medicaid would begin in May (these activities had been largely abandoned after the budget-cutting 2003 legislative session). While notable agency efforts to improve the CHIP and IE&E processes produced a temporary improvement in call abandonment rates and hold times in April, problematic application and renewal trends and client complaints showed little if any improvement.

On reaching the deadline for determining CHIP enrollment for May, HHSC faced terminating a record number of nearly 50,000 children in a single month, for a dismal renewal rate of only 23.5% (compared to a fiscal year 2005 average of 80%). The agency elected instead to continue coverage of 27,768 children for an additional month while their families were given more time to provide missing information or to submit payments.

…And Now On Hold Indefinitely

On May 4, the HHSC Commissioner announced findings of its 30-day review. Importantly, this announcement indicated that the original roll-out schedule has essentially been suspended indefinitely until problems can be resolved. HHSC would retain 1,000 of the 1,900 state eligibility workers it had planned to lay off, and the remaining layoffs would be postponed for 12 months.

It is important to note that this decision did not increase the number of state staff working in the system; it simply reduced and postponed the planned reduction in staff.

Revised procedures announced by HHSC included: having state eligibility workers in the Midland call center oversee private “customer service” staff to ensure they give out correct information; returning most processing of Travis and Hays Medicaid and Food Stamp cases from contractor staff to state workers; new policy training of customer service staff; a new “escalation” process for directing complex policy questions from contractor staff to state workers, and new training for private workers on how to use the contractor’s and the state’s computer systems.

The announcement also noted that many contractor workers were unable to locate information that was already in their system. HHSC’s May 4 announcement also detailed changes to the contractor’s CHIP/Children’s Medicaid operations, including extending timelines for collection of missing information and enrollment fees, allowing third-party verification of income, and accepting some missing information via telephone (rather than extended postal exchanges that cause children to lose coverage through missed deadlines).

HSC staff, the HHSC Office of Inspector
General, and independent evaluators would examine various aspects of the contractor’s performance and processes. The state pledged to more carefully oversee contractor correspondence with families, and to seek stakeholder input in improving those communications. Grave Concerns Remain in Early June Advocates and providers welcomed HHSC’s decision to postpone the rollout, and support its efforts to improve the system and involve advocates in these activities.

However, grave concerns remain for CHIP, Medicaid, TANF and Food Stamps for several reasons. CHIP applications and renewals—and a significant share of new applications for Children’s Medicaid—are still being operated exclusively by the new contractor, because CHIP eligibility has always been primarily operated by a private contractor.

Thus, state workers cannot step in to fix the problems, and HHSC’s contingency plans to stop the dramatic decline in CHIP must instead rely largely on the contractor’s ability to resolve the problems.

On May 25, the Texas CHIP Coalition submitted a letter to HHSC Commissioner Hawkins detailing recommended steps needed to reverse the decline in CHIP and Children’s Medicaid enrollment. The letter (located at (http://www.cppp.org/research.php?aid=534) noted that the new contractor’s CHIP performance has “serious and as yet unresolved problems”, which did not bode well for the same contractor’s take-over of major responsibilities for Medicaid and Food Stamps under IE&E, potentially affecting more than 4 million Texans (thirteen times the size of the CHIP program) including children, the aged, and Texans with disabilities.

The Coalition urged HHSC to make successful reversal of the problems with CHIP a prerequisite for any further roll-out of the IE&E model. Detailed CHIP statistics have not yet been released for June 2006, but preliminary data show that CHIP enrollment fell to 293,564, a drop of 5,212 children from May.

On June 2, HHSC issued a press statement announcing that it would continue to extend deadlines for enrollment fees and missing information to protect children form losing their health coverage and give the agency and the contractor more time to correct the problems causing the decline.

Meanwhile, parents continue to report applications and renewals that appear to have been lost or delayed for months. In the third week of May, the “call abandonment” rate for IE&E was over 22%, and for the CHIP/Children’s Medicaid line was over 41% (average hold times were 6 and 15 minutes, respectively). Get the full report from the Center for Public Policy Priorities

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