Saturday, November 24, 2012

Wisconsin DHS doubles down on Logisticare, Badgercare fails

The other big news on Wedensday (other than the bloodbath at WTDY), dealt with Wisconsin Medicaid transportation contractor, Logisticare. The Atlanta-based Logisticare informed the Wisconsin Department of Health Services that they were terminating their contract and pulling out of Wisconsin. Logisticare won a bid from the Doyle Administration for the statewide service, and received a 3-year, $60 million dollar ontract to start work in July 2011 to contract with providers to give Medicaid patients rides to medical appointments and procuedures in all parts of Wisconsin except for the Milwaukee area. This was a change from the previously-run method of this type of Medicaid transport, which passed these responsibilities off to the individual counties to make deals with transportation providers. The DHS's thinking was that going to a "one-stop shop" to work out rides would save the state millions in taxpayer dollars, while taking the program under more direct state control.

The move to hire Logisticare immediately met resistance, as Madison's Badger Cab pulled out of ther contract with Logisticare one day after starting, claiming the company was incompetent and uncommunicative, and was hurting Badger Cab's regular operations. Other parts of the state had large numbers of complaints in other parts of the state about long wait times and bad customer service.

Then Logisticare took the Milwaukee-area contract in September 2012, and immediately the roof fell in. Within 2 weeks, the Journal-Sentinel was running articles describing massive no-shows by drivers for appointments and a huge increase in rides that Logisticare said it had not prepared for.

And these un-foreseen needs were a major part of Logisticare's letter informing the DHS they were pulling out of Wisconsin.
Since we started the contract on September 1, the usage of transportation services by the Wisconsin SE Medicaid members completely outstrips all other markets in Logisticare's experience....Utilization is running more than twice what we anticipated, and we cannnot sustain the program on the amount we bid.

It is interesting to note that in reveiwing the RFP pricing submitted by three bidders, the two national within 3% of each other, while the third bidder, which is a local taxi company that was providing the bulk of service under the old program, offered a price over twice as much as the national brokers. Clearly, with its knowledge of the program, the local firm was much more informed regarding the trip volume, and bid appropriately.

We are disappointed that the data was not made available in the RFP and that as a result program implentation did not go well. The negative press has caused irreparable damage to our reputation both in Wisconsin and nationally. Unfortunately, we do not have the luxury of waiting out another year of losses as we did on our other contract in the state.
Logisticare also blames DHS for not working with them to adjust services statewide, once it became obvious that things weren't working out well. So what's DHS Secretary Dennis Smith's response? To say the problem was in having the state privatize the services to a third party with a "one-size fits all" system, and that they're going to go back to the GOP's small government roots as the party of local control? Oh hell no. The DHS is doubling down on Doyle's strategy.
This announcement is not an indicator that we will go back to the old county-based system for providing members transportation to medical appointments or that we will be changing our approach to providing transportation to our members. We are committed to the transportation manager model in here in Wisconsin. I am confident that this model will work here in Wisconsin, as it has in other states.

We recognize that there were limitations to the original RFPs. The Department had limited data to share regarding utilization of these services and prospective bidders, including LogistiCare, did not have all of the data needed to submit a reasonable estimate of the costs to adequately staff to serve as the state’s non-emergency medical transportation manager.

This situation will be corrected and we believe a new contract can be secured that is both financially viable for a transportation manager and will still achieve savings for the state.”
Yep, the Walker folks think they can improve on the Doyle privatization idea merely by writing a better bid. And I'm sure this will be a clean bid with no preferred winner in mind when the parameters are written up. You know, like the multi-million dollar bid that had WEDC tax credits attached to a certain business before the bid closed, causing the bid to be withdrawn after the news became public. Even if this bid is done cleanly, hold onto your wallets, because you know this is going to cost a whole lot more than what was projected. So much for that "balanced budget", eh?

The people in western Wisconsin have seen how this works under Walker's DHS. Eau Claire-based Community Health Partnership announced in September that it could not continue to do DHS services for the elderly and disabled due to low reimbursement rates from the DHS, and over 350 people will lose their jobs at the end of the year as a result. This will probably lead to another business charging higher prices to DHS come January 1, and also will feature the inevitable adjustments and disruptions that come from having a new contractor in place for these vulnerable populations.

But that's not the only extra cost us taxpayers will be shelling out for the state's lowballing of CHP. Check out what just dropped this past week.
Wisconsin Department of Workforce Development (DWD) Secretary Reggie Newson [on Monday] announced $25,000 in assistance is being provided to help Community Health Partnership employees facing layoffs.

DWD provided its regional partner, the West Central Wisconsin Workforce Development Board, the funding to initiate services to 353 employees of Community Health Partnership that are facing layoff on December 31. In the weeks ahead, the funding will be used to provide such services as career assessment and job search workshops....

As part of the Wisconsin dislocated worker program, DWD and the West Central WDB will continue to help the employees who request assistance in finding new employment.

In addition to the $25,000 for pre-layoff services, Workforce Resource may be eligible to receive a Special Response Grant to further assist the workers in search of new employment.
So instead of paying CHP a proper amount to continue services, Walker's DHS decided having a short-term cost savings was more worthwhile so they could claim a false budget surplus, and brag how their strategies are "working."

Now it'll cost us a whole lot more in the long-run as a result, with a lower level of service to Wisconsinites. Get used to this trend, because you're going to see a whole lot of it in the next year. None of these increases are reflected in the recently-released budget requests, which means they'll pop up as the budget is debated early nexct year. And those coming increased costs are a big reason why I've said the Walker claims of a "balanced budget" are bogus.


  1. Exceptionally well-reasoned essay. Thanks.

  2. Thanks for the props George. From things I've been told, Logisticare ticked off pretty much every constituency involved in NEMT- customers, providers, and taxpayers.