An Arkansas legislative committee Tuesday signed off on a $15.1 million increase to a $16.2 million contract with a Princeton, N.J.-based company for work on the state Department of Human Services' computerized eligibility system.
The Joint Budget Committee completed its review of the contract with eSystems Inc. The company can now receive a total of $31.3 million to design, develop, implement and maintain the eligibility and enrollment project, after state Sen. Bryan King, R-Green Forrest, decided he'd no longer try to block the measure.
"[But] there are some things that don't pass the smell test," King added.
The system has already cost $125 million, and there have been numerous cost overruns, a state official said.
eSystems Inc.'s original contract was scheduled to expire at the end of this month; it ran from May 1, 2013, to March 31. The contract extension will from April 1-Dec. 31, said Kathy Schmidt of the Bureau of Legislative Research.
"This contract is critical for us to get in place to continue to work because the biggest part of what they are doing right now is building our re-evaluation system for the private option, where we will look at 220,000 people and see who still qualifies for the private option. And those who don't qualify we'll say, 'You need to go elsewhere to get your coverage,'" said department Director John Selig.
"We think that could be 10 to 20 percent of the people, which means 20,000 to 40,000 people potentially would come off of the private option. If we stop this work, then we just won't be able to do those re-evaluations," he told the Joint Budget Committee.
The state uses federal Medicaid dollars to purchase private health insurance for some low-income Arkansans under the private option, which is the state's version of Medicaid expansion.
The money is available under the federal Patient Protection and Affordable Care Act of 2010.
The program extends insurance coverage to adults who have incomes of up to 138 percent of the poverty level -- $16,105 for an individual, for instance, or $32,913 for a family of four.
The state will have to start paying 5 percent of the cost of the program in 2017, and its share will eventually increase to 10 percent in 2020, when Gov. Asa Hutchinson says the state's cost would be more than $200 million.
A 16-member legislative task force has been appointed to study the state's entire Medicaid program, including the private option, and make recommendations by the end of this year.
Selig told lawmakers that the department started a few years ago to implement an entirely new eligibility and enrollment system and that new federal requirements require the department to replace the previous system, which was 25 or 30 years old. The federal government is providing "enhanced funding" for the project, he added.
The department bid out the project and received an estimate that it would cost about $250 million, he said.
But Selig said the winning bidder submitted a bid of about $60 million, which surprised the department and the federal government. Then, the bidder "backed away and wouldn't do it," he said.
At that point, "because we had to [act] quickly ... we used the state's contract that the Office of State Procurement and DIS have where we use vendors that are already on the state contract," and one of the vendors is eSystems, Selig said.
He said the project has cost about $125 million and that "it has had a number of cost overruns because the initial vendor when they bid assumed this was kind of an out-of-the-box project, which it wasn't."
"It takes a lot of customization to be able to do this, and there have been a lot of challenges," Selig said.
King, who has voted against funding the private option, said that "the fact is, you bid this project, and you are over budget, right?"
Selig replied that "it is certainly more than the original bidder estimated."
King said Selig "hit the panic button that if we don't do this all of a sudden we are not going to knock 20,000 to 40,000 off the private option [by] running this program."
Selig said, "Certainly, our hope is that many of these people have increased their income level and their circumstances have changed, and they probably are no longer eligible for the private option.
"We need to re-evaluate their situation and tell them if they are no longer eligible. It takes software to do that. It takes coding to do that," he said.
Metro on 03/26/2015