Legislative Audit questions lack of performance review of $363M contract

“People are getting less restrictive care,” she said. “Some of the main goals were reduction in hospitalizations, emergency room care ... We are seeing significant reductions in inpatient care.” KATHY KLIEBERT, DHH secretary

In a report released Monday, the Legislative Auditor’s Office criticized the Jindal administration’s oversight of a $363 million contract that ensures thousands of people in Louisiana receive treatment for mental health problems and substance abuse issues.

An 11-page audit by the office concluded the state Department of Health and Hospitals allowed the privately owned Magellan Health Services to handle paperwork and connect Medicaid patients with health care providers for 18 months without completing an external evaluation of the company’s performance.

“DHH will have allowed the program to operate ... without independent verification that Magellan has substantially complied with Medicaid regulations, state regulations, and contract requirements,” the auditor’s office wrote.

DHH plans to hire Island Peer Review Organization to do an evaluation. Magellan’s contract with the state ends in February.

The auditor’s office warned DHH could wind up renewing Magellan’s contract without ever determining whether Gov. Bobby Jindal’s idea of privatizing the management of 151,000 people’s health care needs worked as planned. The danger, the auditor said, is that Magellan is making mistakes in the handling of Medicaid claims that will require repayment to the federal treasury.

The auditor’s office said: “DHH has relied on the performance of Magellan without externally monitoring that performance.”

DHH Secretary Kathy Kliebert said Monday afternoon that the agency is looking over Magellan’s shoulder through quarterly business reviews and regular sitdowns. She said DHH monitors such things as hospitalizations. The fact that fewer people require hospitalization indicates Magellan is doing a good job of helping people manage their illnesses and addictions, she said.

“People are getting less restrictive care,” she said. “Some of the main goals were reduction in hospitalizations, emergency room care ... We are seeing significant reductions in inpatient care.”

Kliebert said Magellan was not fully up and running on the state contract until last summer. She said a good evaluation requires a year’s worth of benchmark data. The external review, she said, will be completed sometime next year.

The Jindal administration hired the Connecticut-based Magellan in 2012 to help manage the treatment of troubled Louisiana children, youth and adults who qualify for Medicaid, a federal and state-funded health care program aimed at the poor. It was Magellan’s job to build up a network of psychiatrists, psychologists, social workers, addictive disorder clinicians and treatment facilities across the state. The contract called for the company to maintain around-the-clock crisis response.

The governor contends private companies often work cheaper than state government. The Jindal administration also hoped a revamp of the state’s behavioral health system would reduce costly emergency room visits.

The hiring of Magellan involved a lot of money and a lot of patients. It is part of a new partnership that has served 79,000 children and 72,000 adults. Magellan’s contract is likely to be extended for another year.

In August, the legislative auditor’s office found that claims payments have been problematic to four state-aligned agencies seeking reimbursement for mental health and addiction services. The office also faulted Magellan for failing to meet significant technical requirements. Kliebert said the privatization is working. She said the number of health care providers has expanded from 800 to 1,700.

“More people are accessing services,” she said.