There’s more details today on the N.C. Department of Health and Human Services’ recent hire of two top-dollar consulting firms to examine the $13 billion Medicaid program.
Rose Hoban of N.C. Health News has this story today with more about two no-bid contracts the agency hired after a consultant’s report last fall that the state’s massive Medicaid program needed organizational restructuring and better ability to forecast its budget, often one of the biggest unknowns in state spending.
Medicaid, funded with federal and state dollars, is a required government program that provides medical care to some of the state’s most vulnerable residents, including low-income seniors, children and disabled individuals.
The $3.25 million contract DHHS gave to the international management consulting firm Alvarez & Marshal was announced last Friday and includes up to $800,000 in annual pay for one project director, and $84 hourly pay for interns to help with the examination of the state’s Medicaid agency.
Other pay includes $394 and $473 hourly pay for top consultants, as first reported by the News & Observer last week. The Medicaid contracts follow other controversial no-bid personal services contracts that HHS Secretary Aldona Wos awarded to Joe Hauck, an employee of her husband’s company, and to former State Auditor Les Merritt, who stands to earn more than $300,000 annually from the state agency.
From the N.C. Health News story:
The firm Alvarez & Marsal is best known for being tapped in 2008 to manage the bankruptcy of financial giant Lehman Brothers at a cost of nearly a half-billion dollars. Critics of the financial bailout said that bill was too high.
The contract calls for work to be done by eight people with salaries ranging from $242 to $473 per hour and an “intern” earning $84 per hour. One of the consultants, a “director,” is slated for 2,040 hours of work for total earnings over the year of $803,760 (see chart.).
More recently, Alvarez & Marsal drew scrutiny in Louisiana, where the firm received a $4 million contract to find efficiencies in that state’s Department of Administration. Louisiana included a clause in its contract with the firm that if the state does not meet savings targets based on Alvarez & Marsal’s suggestions, the state can withhold $600,000 of the total payment.
No such clause exists in the North Carolina contract, which also stipulates that the state can extend the contract for another year if necessary.
You can read the rest of the N.C. Health News story here.
The Alvarez & Marshal contract can be viewed here, and the second contract of $487,500 for Navigant Healthcare to look at the organizational structure of the Medicaid program’s auditing functions is here.