Medicaid consultant lacks relevant expertise

The firm employed by the state Department of Health and Human Services to help accomplish its goal of so-called “Medicaid modernization” has little experience in doing so.

Yet HHS awarded the $200,000 contract to the Pennsylvania firm of Sellers Feinberg without giving other firms who do specialize in restructuring Medicaid a chance to bid on it.

Sellers Feinberg is a four-year-old health-care lobbying and consulting group with expertise in extracting large amounts of money from the federal government through Medicaid, a practice commonly referred to in New Hampshire as “Mediscam.” But the firm has apparently little experience in writing the crucial waivers needed to make the sweeping changes discussed by HHS in a series of forums around the state. The forums were held with the aim of crafting a proposal this month, one that proponents say could save the state millions of dollars without slashing services.

“The question is whether or not the consultants have the horsepower to do it,” said John Prior, president of the New Hampshire Health Care Association, which represents nursing homes that would be affected by the changes. “If you want to have a plan that will actually work in the real world, you have to have a proven track record in major systems change that is acceptable to authorities down the road.”

Several national experts, asked to name consulting firms that normally work with states to develop Medicaid waivers, rattled off the same handful of names. Sellers Feinberg isn’t on anyone’s list.

Officials from the state and Sellers Feinberg did not return phone calls by deadline about the firm’s qualifications.

The state plan to overhaul Medicaid – by far the largest item in the HHS budget — has become a hot topic over the past months, ever since Gov. Craig Benson met with federal HHS Secretary Tommy Thompson to discuss Medicaid funding and increasingly controversial Mediscam money.

After the meeting, Benson said that he was thinking of turning Medicaid – an entitlement program based on a recipient’s need – into a block grant program, which would receive a set amount of money, no matter how much care people needed. After a barrage of criticism, the state dropped using the words “block grant,” and instead referred to its plans as “restructuring,” “modernization” – and the latest, “GraniteCare.”

HHS Commissioner John Stephen said plans haven’t been ironed out completely but there should be more details coming out in September, when the consultants draw up a draft plan.

Contract questions

Although the consulting contract to restructure Medicaid, signed last June, originally went to Maximus, a publicly traded company based in Virginia, almost all of the work and money went to Sellers Feinberg.

Maximus also works on maximizing federal revenue. Last year, HHS awarded the firm a $3 million contingency contract (again without competitive bidding). But Maximus has thus far not been able to come up with any savings, so it suggested that the department work with subcontractor Sellers Feinberg.

The department then hammered out a $200,000 flat-fee contract as an amendment to the original Maximus contract.

The Maximus contract was not bid because Maximus “developed an extensive knowledge of the Medicaid program in New Hampshire due to its intensive review of DHHS programs over the past seven months,” according to an explanation presented by the department to the Executive Council.

In reality, Maximus did not directly work on this project. The four consultants identified in the Medicaid Modernization Project Status Report before the Legislative Fiscal Committee are all from Sellers Feinberg.

This is no accident. In a confidential working paper drafted before the contract was signed, Maximus would only get $16,000 as an “oversight” fee. The rest (with $20,000 set aside for travel) would go to Sellers Feinberg at an hourly rate as high as $350 an hour.

The contract itself says that “most of the services will be provided by … Sellers Feinberg” and that no other subcontractor could be used without departmental permission.

Sellers Feinberg, wrote Stephen in justifying the arrangement to the Executive Council, “has a national reputation for Medicaid-related work and is familiar with the federal waiver process. … In particular, Sellers Feinberg has detailed knowledge of similar projects going on in other states that will be of value in New Hampshire and has the expertise in Medicaid regulatory procedures necessary for the successful development and implementation of changes to the Medicaid program as well as securing the requisite federal approvals.”

None of the resumes of Sellers Feinberg’s consultants were included in the package submitted to the council – all of the resumes included were those of Maximus consultants.

There is no dispute that Martin Sellers and several of his consultants have had experience with Medicaid programs. Indeed, Sellers was once Pennsylvania’s Medicaid director – a position his former partner, Joshua Feinberg, currently holds.

Nor does anyone familiar with the firm impugn their competence.

“They are smart people,” said Alicia Smith, a Washington D.C., consultant who specializes in writing federal waivers.

“Marty is certainly qualified,” added Gretchen Engquist, another recognized Medicaid consultant from EP&P Consulting Inc., a health-care consulting firm.

‘Lobbying relationships’

Judging from the Sellers Feinberg Web site, the firm’s main expertise is in designing an intergovernmental transfer (IGT) fund program that would increase the inflow of federal matching funds, primarily via county nursing homes. Such programs have generated hundreds of millions of dollars for other states.

Indeed, in one management letter Maximus suggested that Sellers Feinberg be brought in to help redesign its hospital provider assessment program – in other words, Mediscam.

But the federal government is increasingly frowning on such programs. Indeed, one of the main reasons that HHS is trying to restructure Medicaid is because it fears losing some $50 million a year (in both hospital and nursing home ITG funding).

Critics contend that it’s unfair to cut Medicaid to offset that financial loss, since the Mediscam money has always gone to the state’s general fund and not to Medicaid services.

Besides, New Hampshire is an old pro at such programs, and thus far neither Maximus nor Sellers Feinberg has come up with a way to squeeze out any more funding from the federal government in the future.

Instead, HHS negotiated a contract based on another Maximus recommendation to employ Sellers Feinberg to restructure Medicaid with the “aggressive use of federal waivers.” Sellers would be useful, said the letter, primarily through its “political resources via lobbying relationships in the nation’s capital.”

One relationship Sellers Feinberg has is with HHS Secretary Thompson himself, when he was governor of Wisconsin.

Sellers worked on an IGT program for Wisconsin that helped the state receive $400 million in increased matching funds and, according to federal records, lobbied for the state in Washington. Indeed, Wisconsin is the only state government the firm represented.

Triad Strategies, the Pennsylvania-based lobbying firm with which Sellers Feinberg merged in 2002, has a wider variety of clients, though a large number are health care-related.

But other firms also have had relations with the Centers for Medicare & Medicaid Services, the federal agency within HHS that approves the crucial 1115 waivers that New Hampshire is seeking.

The 1115 waivers are five-year experimental programs that are supposed to be revenue-neutral, to give state governments greater flexibility in structuring their Medicaid program.

“I guess you could say I’m the queen of 1115 waivers,” said Alicia Smith, who once ran the Florida Medicaid program and negotiated the law concerning 1115 waivers when she was with the National Governors Association.

Smith said that she worked on dozens of such waivers as a consultant and would have liked a chance to bid on New Hampshire.

Similarly, Mercer HR Consulting claims it worked with about half of the states on Medicaid and wrote a broad 1115 waiver for Massachusetts. The company also has worked on waivers for Maine, Connecticut, Rhode Island and Pennsylvania – Sellers Feinberg’s home state – though Steve Schramm, a principal of the firm, had only heard of Sellers Feinberg after Feinberg became the state Medicaid director.

“We would be definitely interested in bidding, and so would a number of other firms,” said Schramm of the New Hampshire contract.

Schramm and other consultants agreed that the price of the $200,000 contract was extraordinarily low, given the task of writing a broad 1115 waiver, which usually includes an actuarial analysis that would cost more than that amount alone.

“Writing a waiver for 200k is a fairly good deal,” he said.

But it is important, he stressed, to get an experienced firm when negotiating such a contract.

“With so much federal money at stake, it’s not a good idea to give someone on-the-job training on this.”

On the other hand, said Engquist – whose consulting firm comes highly recommended by Mercer – no consultant really has experience working on the broad waiver that New Hampshire is seeking, particularly if it involves some kind of block grant program. And it is unclear whether such a program would be approved and could withstand legal challenge, she said.

“When you talk about redesigning Medicaid, that’s a big beast,” said Kevin Londeen, a principal with Myers and Stauffer, a Kansas City consulting firm. Some firms – like Sellers Feinberg, an expert in maximizing federal revenue — could handle “one piece of the pie,” but you need a “broad spectrum of expertise to pull this thing off. Medicaid is so big and complicated that no single firm could really design it.”