As one costly privatization boondoggle ends, another is bearing down


This month, CHIP applications began to be processed by state employees instead of through the private contractor, Maximus. After receiving hundreds of millions of dollars to handle the work, Maximus turned over the responsibilities of processing CHIP applications to HHSC. The fact that state employees are taking over this work after a private contractor proved incapable of doing a better job, illustrates the failure of another privatization boondoggle, just like the failed Accenture call center contract that was canceled in 2007.

In 2011, Maximus was awarded a three-year, $315 million contract to administer CHIP enrollment. Two years later, the privatized functions are being turned over to HHSC workers, but no additional staff are being hired in HHSC to do the work that Maximus was performing. Even though Maximus is eliminating 110 positions because of the loss of the CHIP work, state employees are expected to pick up the slack with no new staff. This raises the question: what has Texas been paying Maximus for? . One thing that is certain is that, as a result of this wasteful contract, there was an increase in administrative costs for the CHIP program. In Texas, 4% of Medicaid spending is on administration, whereas administrative costs in CHIP (as implemented by Maximus) accounted for 10% of spending.

Unfortunately, while Maximus was profiting from this wasteful, ineffective privatization experiment, funding for payments to CHIP non-physician providers has been cut 10% since 2009. Mental health providers, speech and physical therapists are being paid significantly less to provide services for poor children today. All the while, Maximus stock prices have nearly quadrupled.

HHSC workers are already swamped by high workloads due to increasing demand for services, a rapidly growing Texas population, and the rollout of the new health care law. Now, state employees are being asked to pick up the slack for a failed privatization experiment that cost the state hundreds of millions of dollars. TSEU is calling for all the money that was being paid to Maximus to now be used to hire more state workers to meet the increased workload.

Here we go again?

Senate Bill 8, passed during the 2013 Legislative Session, mandates the complete privatization of the Medical Transportation Program. Eligible Medicaid, CHIP and Medicare clients can call a 1-800 number to arrange transportation to doctor visits or for other medically related trips. The MTP is partially privatized, with two contractors in the Houston-Beaumont Region and the Dallas-Ft. Worth Region running call centers and providing transportation services. State employees at four call centers handle and coordinate services for the rest of the state.

Before the ink was dry on this latest privatization endeavor, a major red flag shot up. In July, federal administrators of Medicaid and Medicare Services announced a moratorium on new providers enrolling in the MTP program in the Houston area. This means that fraud was so prevalent that in order to get a handle on the situation, no new providers will be allowed to enter the program for six months. An earlier warning also was clear in Dallas/Ft. Worth, when over 6000 complaints were filed against Logisticare in the six months of their contract. Fraud, waste and abuse have grown, while the quality of services provided has diminished in privatized areas.

They say privatize, we say organize!

As those on the frontlines, we know privatization is a bad deal for Texans. Clients and taxpayers lose, while unaccountable privateers rake in profits. TSEU has a long history of fighting privatization and working to improve our agencies. Get involved now, and join the movement to stop the attacks on the services we provide, and the clients we serve.