When private firms take over public jobs, does the public win?

In the past several weeks I met with many local social workers who may lose their job under a budget proposal to privatize public services. This decision is under review by the budget committee.

The social workers are not complaining. They are sharing information about their successes and ideas on how to make the system better.

These workers properly sign up folks for health care and Food Share (formerly food stamps). Most counties run zero or very low error rates. They know local people. This knowledge helps provide quality services and even helps uncover fraud and illegal activities.

The Governor’s budget includes rules to centralize all of the sign-up for Medicaid through a computer-based system run by Hewlett-Packard Enterprise Services, Inc.

People would not meet face-to-face with a social worker. Instead they would sign-up on-line. Many are concerned this system would increase fraud and be very difficult to use for the disabled, elderly or those in rural areas.

I have long been concerned about proper oversight of state contracts. The track record of private contractors providing efficient and effective services for Medicaid has been poor. For three years I worked to shine a light on problems by advocating for an audit of Medicaid.

The first phase of this audit was released late last week. The report tackled the enrollment or sign-up for services like BadgerCare and Food Share.

People generally sign up for BadgerCare at the courthouse. But private contractors sign up people in Milwaukee. They also enroll people for other programs like BadgerCare Core - health care for adults without children.

This arrangement is known as “Enrollment Service Centers”. Nearly $28 million was paid to contractors with little public scrutiny. The audit shined a light on what’s happened.

The state repeatedly changed the terms of contracts, added new programs and even changed firms without public bid or legislative approval. The state’s yearly contacted costs rose from $2.8 million to almost $17 million.

A timeline created by audit staff shows a clear picture of deception. In October 2007, the Legislature approved expansion of BadgerCare to those without children. The Department of Health (DHS) signed a contract to run the enrollment for this program a little over a year later. Two years after that DHS stopped enrolling people because costs far exceeded budgets. Even though the program was closed the contract continued.

DHS extended the contract and involved a new company in contracted work. The federal government warned DHS officials they could not expand the contracted work. But in June 2010, DHS expanded the contracted work to an entirely new program. Again, this action was without legislative oversight or public bidding.

Quality control measures were not put in place. Counties and tribes are required to conduct quality assurance tasks to assess accuracy. But no similar requirements were made of contracted firms until just 6 months ago. At that time there was a backlog of more than 400 applications. It took two years after the initial contract for DHS to establish a quality unit to oversee the contracted work.

The federal government sees other problems. Recently, federal officials ordered the state to comply with a 30 day corrective action plan for Food Share. Improper action may force the state to forfeit over $20 million in federal Food Share dollars.

My Audit Committee colleagues and I are concerned about the potential fraud in Food Share. We directed the Legislative Audit Bureau to study the program. Since the audit was approved federal officials chastised the state for failing to inform them of fraud discovered in Milwaukee County.

The problems we face are solvable. There must be strict quality standards and financial penalties for poor performance. Counties require applicants show up in person and produce documents to substantiate claims of eligibility. Personal interaction with contracted firms does not exist.

Recent action of the state’s budget committee encourages counties to work together. I support this work. We should not expand the use of computers and private firms to do the work best done by local social workers with local knowledge. We must keep the personal touch in public services.