What do consultants do for the money?

Should the state pay high-priced consultants to design the state’s Medicaid plan and write federal waivers that could help implement it?

That’s the question raised by Cindy Mann, consultant for the New Hampshire Endowment for Health, one of the chief critics of the Department of Health and Human Services’ Medicaid modernization plan.

But it also was raised by some HHS officials before agreeing to award a $200,000 no-bid contract to a small Pennsylvania firm to do the job, according to internal e-mails obtained by the New Hampshire Business Review through a Right-to-Know request.

The contract was awarded in June to Maximus, a large publicly traded company, but most of the money and the work went to subcontractor Sellers Feinberg even though the 4-year-old firm did not provide any documentation about its qualifications to do the job, according to the e-mails. Nor was there any question about putting the contract out to bid.

But there is quite a bit of skepticism about Sellers Feinberg’s original cost estimates, which were as high as $350 an hour, or $2,800 a day, for their top consultant. The consultants also were proposing a contingency fee that would be capped at $4 million.

For instance, in April, Nicholas Toumpas — an HHS administrator who is part of Commissioner John Stephen’s transition team — wrote “The daily rates for the S-F is at the very high end of any consultant fee I have ever seen.” The e-mail was sent two months before the contract was signed.

Toumpas also questioned Maximus’ $16,000 “oversight” fee “and their value add is what?”

Indeed, Toumpas suggested not hiring consultants in the first place.

“This is a very expensive project management and hand-holding proposal as I fail to see what they are bringing to the table that we could not do.”

In early May, Lloyd Peterson – director of HHS reorganization and planning — agreed that the fees must be brought down, but he added that the “Commissioner appreciates SF’s experience, expertise and values the relationship,” but would be willing to “walk away from it” if the firm couldn’t agree to a proposal for less than $200,000. This was the amount that was eventually agreed to.

Filing the federal waivers requires technical expertise, but much of it is “boilerplate,” said Mann. Besides, she said, she had not heard that Sellers Feinberg had much experience in the matter. The firm is mainly known for drawing down money from the federal government, she said.

“As far as I know they have not been originators of 1115 waivers in other states. It is an unusual choice,” she said.

As for actually redesigning the program, Mann added, “Why do you need an outside contractor to do it? It’s your Medicaid program. What does an outsider bring to the table?”

Department officials did not return phone calls on the Pennsylvania firm or its contract. Calls to Sellers Feinberg also have not been returned. – BS