Gov. Hutchinson moves to increase oversight of ‘high-risk’ DHS contracts

Gov. Asa Hutchinson said Thursday (June 11) he has spent considerable time studying concerns expressed by lawmakers on ways to improve and review a growing list of “high-risk” state contracts within the expansive state Department of Human Services.

In his first official “pen and pad” session at the Governor’s Mansion in Little Rock, Hutchinson spent the bulk of his time with reporters expressing concerns about a litany of troublesome contracts at DHS that “have a lot of money at stake on behalf of taxpayers.”

During his 45-minute intimate session that included a few testy exchanges, the governor handed out a two-page letter to reporters he said would be distributed to lawmakers who have publicly criticized a number of third-party state contracts where vendors have not completed work or met performance measures.

“I want the General Assembly to know the steps that this administration is taking to deal with these contracts that have been problematic, and problems that have surfaced last year have continued to fester,” the governor told reporters. “We have taken a number of steps in terms of oversight, not only for these contracts but also the entire procurement process.”

Hutchinson not only said he was looking at “systematic” procurement and contract issues at DHS, but was also taking steps to address specific concerns with past and current vendor contracts with the state.

In his letter to lawmakers, he listed questions surrounding a $4.8 million contract with C-H Mack, an Ohio-based company that provides software and technology solutions for DHS and other health and human services organizations nationwide. Officials with the Ohio firm, which recently changed its name to AssureCare, did not immediately respond to media queries from Talk Business & Politics.

Hutchinson had previously said that an internal review of that contract was made by his staff and Attorney General Leslie Rutledge in late May. In the letter he shared with reporters, Hutchinson wrote that the Ohio vendor has been referred to the AG’s office by DHS legal counsel “for possible legal action and collection efforts.”

“Both entities are working together on collecting documents and interviewing participants,” the governor said, reiterating the same statement in his letter.

But the letter also revealed three new contracts that were now being reviewed by state officials that had not previously been disclosed. The first related to the CoCentrix project, a new statewide software tool that DHS officials have said would “transform” financial and clinical delivery at four of the agency’s largest divisions – the Division of Aging and Adult Services (DAAS), the Division of Behavioral Health Services (DBHS), the Division of Developmental Disabilities Services (DDS), and the Division of Medical Services’ Office of Long Term Care (DMS/OLTC).

The governor said at his urging, DHS has increased management oversight of that project and is in talks with the CoCentrix to decrease the project’s estimated costs and improve the performance of the software management tool. That contract was awarded to Sarasota, Fla.-based provider of behavioral health software almost a year ago.

Hutchinson also said the state has hired Gartner Group at a cost of $410,000 to conduct a contract review of DHS’s Enrollment and Eligibility Framework software, the tool the state uses to determine the eligibility of Arkansans who receive Medicaid and Private Option benefits.

“This EEF software is critical to determine the eligibility of Medicaid (recipients),” the governor said. “This review will provide a roadmap of how to best spend taxpayer dollars on this program.”

In a discussion of an “unnamed” ongoing DHS contract that Hutchinson said has had $1.2 million in funds withheld, the Republican governor went back and forth with reporters on whether the name of the vendor should be divulged.

“We did not put that (information) in there intentionally,” the governor said. “We didn’t want to target the vendor … because this is an ongoing contract. We have contacted the vendor and told them we need them to perform.”

Later, a Hutchinson aide told reporters that the name of the vendor would likely be made available through state Freedom of Information request. Hutchinson spokesman J.R. Davis would not comment on whether the vendor was consulting group McKinsey and Co., which is under consideration for a $15.4 million contract to study elements of the state’s Medicaid program.

That contract was part of the discussion today (Thursday) during a Health Reform Task Force meeting at the State Capitol.

Hutchinson also said he is working with DHS Director John Selig on what he called a “systemic problem” with the lack of oversight within the state’s largest department.

“I think the greatest challenge is systemic management of these contracts,” the governor said.

In other topics discussed during the media roundtable, Hutchinson revealed his budget director Duncan Baird had taken a similar administration with the state Department of Finance and Administration. Baird is a former Arkansas House member who served as chairman of the powerful joint budget committee. The governor said he doesn’t expect to fill that position at this time.

Gov. Hutchinson also said his general counsel, Elizabeth Smith, had taken a position as Medicaid Inspector General. He also said that position will go unfilled for now.