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WEST LAFAYETTE – State officials claimed Friday that they’re closely monitoring Indiana’s failing attempt to privatize welfare. But they admitted to lawmakers that they don’t know what the penalties might be for not meeting federal standards.
Lawmakers pressed Anne Murphy, secretary of the Family and Social Services Administration, for details on how a 10-year, $1.16 billion deal with IBM Corp. can be salvaged and what progress has been made since the state ordered corrective steps July 1.
Gov. Mitch Daniels’ administration awarded the 10-year contract to IBM and Affiliated Computer Services Inc. to process Medicaid, food stamps and Temporary Assistance for Needy Families, eliminating individual caseworkers by shifting to a system of telephone and Internet service.
The FSSA’s Division of Family Resources rolled out the changes in some counties in late 2007 and has since expanded to all but 33 counties in northern and central Indiana. Allen County and most in northeast Indiana switched to the new system in May 2008.
Murphy told the state budget committee that no decision has been made on whether to cancel the IBM contract and that she won’t decide until next month.
She would not say how much the problems are costing the state compared with the old system, or how much the federal government might fine Indiana if benchmarks for food stamp and Medicaid services aren’t met.
Rep. Dennis Avery, D-Evansville, asked Murphy why more details of how the state is planning to fix the system have not been made public. She replied that the details are part of an ongoing investigation by Daniels’ administration.
Murphy initially declined to say when the report would be released. When Avery pressed her for details, she said it would be available by the budget committee’s meeting next month.
“So, by mid-October?” he said.
“I think that’s safe to say,” Murphy said.
Murphy said the state and IBM have invested in additional staff and training.
She presented oft-repeated details about why the state entered into the contract with IBM in the first place: low client satisfaction, high error rates.
But in response to questioning by lawmakers, she said there has not yet been a survey of client satisfaction in areas under the new system, and current error rates are not available to present to the board.
Indiana’s negative error rate, which tracks improper denials or termination of food stamp benefits, was 16 percent in March – a poor rank based on the federal standard – but improved in April, the most recent month with statistics listed in a report on the FSSA’s Web site.
FSSA officials said Friday that it’s difficult to separate data for counties that are on the new and old systems for comparison.
Most northeast Indiana counties have been operating under IBM since May 2008. The Journal Gazette reported this year that decisions on food stamp cases in northeast Indiana worsened in the last three months of 2008, with seven counties seeing declines of about 10 percentage points.
Using county-by-county data provided by the FSSA, The Journal Gazette reported in July that the backlog of pending Medicaid applications has ballooned in counties where welfare is handled by private contractors.
From May 2008 – after the most recent wave of counties joined the new system – to December 2008, pending cases increased 86 percent. The backlog increased 16 percent in counties under the old system. FSSA officials declined to comment for that story.
Some opponents pushed to scrap the contract. Rep. Gail Riecken, D-Evansville, who pushed legislators during the special session for an independent audit, told the panel Friday it’s too late for that.
“We are beyond the time for audits and investigations,” she said. “We know there are problems. We also know that the neediest of our citizens cannot wait any longer for these vital health care services.”
The state budget committee will form a subcommittee to study the issue.
Committee Chairman Sen. Luke Kenley, R-Noblesville, seemed to say the billion-dollar deal could be saved so long as some services were being rendered. He pointed out that the number of Hoosiers receiving assistance is higher than ever.
“We fixed the BMV,” Kenley said with a laugh. He defended a comparison of the two agencies, saying both deal with people on a one-on-one basis.
“I don’t think we know the answer whether or not we are really hurting a lot of people,” he said. “There are obviously individual cases that are not being taken care of adequately, but … many more people are receiving services, so somehow the services are getting out.”
