Arkansas will pay a consulting firm up to $4.3 million over the next two years to continue sending out proof-of-coverage forms that many Medicaid recipients are required to file along with their taxes, state officials told lawmakers on Tuesday.
The state Department of Human Services first hired Deloitte Consulting, a division of New York-based Deloitte Touche Tohmatsu, in November of last year under a $2 million, sole-source contract to provide Medicaid recipients with Internal Revenue Service-required forms showing that they had coverage during 2015.
Under the contract extension, which took effect Nov. 18, the department will pay up to an additional $4.3 million through June 2018 for Deloitte to provide the forms, known as Form 1095-B, for the 2016 and 2017 tax years.
The form is used to prove to the IRS that an individual had coverage that met minimum requirements under the 2010 Patient Protection and Affordable Care Act.
Under the law, those who go without such coverage for three months or more during the year can face a penalty when they file their tax returns.
In an Oct. 27, 2015, letter to Camber Thompson, then director of the Department of Finance and Administration's Office of State Procurement, Medicaid Director Dawn Stehle said Deloitte was "the only entity already established and operational" with a system allowing the state to meet federal requirements.
In a September letter to current Procurement Director Ed Armstrong, Human Services Department officials said extending the Deloitte contract, rather than bidding it out, would be easier for state employees and Medicaid recipients who are already familiar with Deloitte's services.
In addition to the mailings, the services include a call center and website that can be used to print out the tax forms.
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The letter added that the 2015 tax year was "a learning year," but "penalties and deadlines will be strictly enforced" for tax year 2016.
The Human Services Department's new electronic enrollment system, which it began installing in 2013, is expected to be able to send out the forms by the time the Deloitte contract expires, according to the letter.
At a meeting of the Legislature's Joint Performance Review Committee on Tuesday, Armstrong told lawmakers that any contracts for the service after June 2018 would have to be competitively bid.
"As we all know, things might change dramatically" under the administration of President-elect Donald Trump, who has vowed to sign a repeal of the Affordable Care Act, Armstrong said.
The Legislative Council approved the contract extension on Nov. 18, Human Services Department spokesman Amy Webb said.
She said the federal government is expected to pay half of the $4.3 million cost, but the state has applied for "enhanced funding," under which the federal government would pay three-fourths of the cost.
Rep. Kim Hammer, a chairman of the committee, said he was told that "a significant number" of the tax forms mailed out earlier this year were returned because the addresses on file for the recipients were incorrect.
He said he wants to make sure the department isn't paying premiums to insurance companies under the so-called private option if people have moved outside the state.
Under the private option, the state uses federal funds to pay the premiums for private insurance for Arkansans who became eligible for Medicaid under the expansion of the program approved by the Legislature in 2013.
Mary Franklin, director of the Human Services Department's Division of County Operations, noted that in some cases the forms went out to people who were covered by Medicaid for some part of 2015 but had left the program by the time forms were mailed.
The committee will continue looking into the issue at its Dec. 20 meeting, Hammer said.
Metro on 11/30/2016