This Is What Happens When You Let a For-Profit Company Run Public Benefits

Maximus is already making millions off health care programs. With Medicaid work requirements, it could profit even more.

Mario Henderson leads chants of "save Medicaid" in a 2017 protest in Jackson, Mississippi.Rogelio V. Solis/AP

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Children lost health coverage, pharmacies stopped filling prescriptions, and seniors were unable to access the care they needed due to problems at Maximus, a private company that administers public services like state Medicaid programs and food stamps, according to a new report from the Government Contractor Accountability Project.

“Problems at Maximus have at times directly impeded vulnerable Americans from accessing the health services that they desperately needed,” the report, released last month, says. “Maximus has also been implicated in performance failures that affect the security of health system information, health care provider payments, and stewardship of public dollars.”

Those conclusions jibe with the findings of a Mother Jones investigation, published earlier this year, that revealed Maximus earned at least $1.6 billion in government contracts for managing health care services in 28 states in the last decade. The company, which was founded in the 1970s, has faced its share of controversies:

Wisconsin was among the first states to contract with Maximus to run welfare-to-work programs in the 1990s, but the company was criticized for spending taxpayer money intended for the poor on marketing materials and workfare programs in other states. After Jason Turner, an architect of Wisconsin’s welfare overhaul, was hired by New York City Mayor Rudolph Giuliani, Maximus consultants met with New York City welfare officials months before new contracts were even put out for bid. Maximus was initially awarded $104 million out of nearly $500 million in welfare­-to-work contracts there. The city’s comptroller rejected the deal based on what he described as “corruption, favoritism, and cronyism.” (A court upheld the contract; Mayor Michael Bloomberg let it quietly expire.) And of course the biggest potential conflict is Seema Verma, the current head of the federal Centers for Medicare & Medicaid Services, who has long-standing ties to the company. During her confirmation hearings in 2017, her consulting firm still held a $10,000 contract with Maximus.

[…]

More recently, Maximus’ work for a $108 million Medicaid enrollment contract in Kansas came under fire because of interminable backlogs that prevented low-income residents from getting care. State officials said Maximus had intentionally lowballed the contract to win it. To make matters worse, assigning the contract to a private company had eroded the state’s capacity to perform the work itself. Without infrastructure to run enrollment for the entire state, Kansas officials agreed to bring the most difficult cases in-house—and to extend Maximus’ contract so it could do a better job with the rest. “In some cases,” Kansas Secretary of Health and Environment Jeff Andersen told the Wichita Eagle, “you get what you pay for.”

GCAP, a project of the Communications Workers of America and Change to Win, recommends that states exercise vigilance when awarding Medicaid contracts to private companies and enforce accountability after the contract has been awarded. It suggests contract monitoring to ensure compliance, including contract provisions to allow states to institute penalties when companies are not meeting obligations, and cooperating with oversight agencies to support audits.

Among the report’s findings:

  • In Kansas, prospective Medicaid recipients faced significant delays in application approval beyond the 45-day federal time limit. The problems began almost immediately after Maximus began processing applications in 2016. Elderly patients and senior living homes were especially affected. Some pharmacies stopped filling prescriptions and nursing homes turned patients away over concerns they would not be reimbursed. “Our elderly in Kansas and our nursing facilities that care for those elders are being penalized because Maximus lacks the education and commitment to follow the policies in regard to Medicaid eligibility,” said Holly Noble, administrator of a Kansas senior living home. Maximus agreed to pay Kansas $10 million in concessions.
  • In Tennessee, “alarming numbers” of children lost health coverage through the state’s Medicaid and CHIP programs. Tennessee’s number of uninsured children increased by nearly 23 percent in 2017. In 2018, Tennessee disenrolled more children from Medicaid than any other state. In April, 25 state legislators called on the state comptroller to audit Maximus’ contract performance, expressing “grave concerns with how exhaustively this out-of-state company [Maximus], acting under contract with the State, conducted this eligibility redetermination process for the specific purpose of ensuring that Tennessee children had necessary access to health coverage.” Seniors also faced problems with redeterminations. When they were incorrectly ruled ineligible, their Medicare premiums were deducted from their monthly Social Security checks.
  • In Pennsylvania, seniors and people with disabilities faced delays enrolling for home-based care. After Maximus took charge of enrollment, the number of completed enrollments dropped. Some ailing seniors who preferred to stay in their homes had to go to nursing homes when they could not access home-based care. The state Department of Human Services notified Maximus it would withhold payments until the company resolved its issues processing applications.
  • In Texas, an audit found that Maximus did not comply with state information security standards.
  • In North Carolina, Maximus was implicated in the rollout of a faulty Medicaid billing system that “inflicted real damage on Medicaid patients and providers across the state.”
  • Arizona, Missouri, New Jersey, and Wisconsin all improperly claimed federal reimbursements for Medicaid they submitted with Maximus’ aid.
  • In Massachusetts, a Maximus employee fraudulently obtained $490,000 over nine years from funds to help Medicaid enrollees travel to medical appointments. Maximus agreed to pay restitution to the state.
  • In Washington, D.C., Maximus accepted responsibility for causing the district to submit 26,863 claims for federal reimbursement for foster care services that, according to the U.S. Attorney’s office, “likely were never provided to some of the neediest citizens of the District of Columbia.” Maximus had to pay the DOJ $30.5 million in a settlement and another $460,000 to the whistleblower who sounded the alarm.

Despite these issues, the company likely isn’t going anywhere. Given the Trump administration’s push to add work requirements to Medicaid, which would add layers of the bureaucracy and paperwork Maximus specializes in, the company’s profits could grow even bigger:

Maximus knows a market opportunity when it sees one. When the company held its quarterly conference call for investors last May, an analyst questioned whether a stronger economy would weaken the market for Maximus, since it deals in programs aimed at the poor. Not at all, said Bruce Caswell, who took over last April as CEO, a position whose last occupant earned $9.5 million a year. He added, “The movement to add work requirements—it’s a competency that no other company in the market has like Maximus.”

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DEMOCRACY DOES NOT EXIST...

without free and fair elections, a vigorous free press, and engaged citizens to reclaim power from those who abuse it.

In this election year unlike any other—against a backdrop of a pandemic, an economic crisis, racial reckoning, and so much daily crazy—Mother Jones' journalism is driven by one simple question: Will America will move closer to, or further from, justice and equity in the years to come?

If you're able to, please join us in this mission with a donation today. Our reporting right now is focused on voting rights and election security, corruption, disinformation, racial and gender equity, and the climate crisis. We can’t do it without the support of readers like you, and we need to give it everything we've got between now and November. Thank you.

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