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Zeigler asks Contract Review Committee to Reject a $1.3M legal contract for the Medicaid RCOs

By Brandon Moseley
Alabama Political Reporter

Tuesday, October 4, 2016 state Auditor Jim Zeigler (R) has asked the legislature’s Contract Review Committee to delay a controversial $1.3 million contract for legal services for implementation of the regional care organizations (RCOs) to deliver Medicaid healthcare.

Auditor Zeigler said that the contract needs to be scrapped, and as a first step, he filed a written request for the maximum delay of 45 days.

Zeigler said, “This huge legal cost needs substantial review by all in authority. A contract of this size does not need to be approved and should be scrutinized and scrapped.”

The Bentley Administration wants the troubled Alabama Medicaid Agency to pay the law firm of Capell & Howard the $1.3 million for legal advice in implementing the plan to turn over administration of Medicaid to regional care organizations (RCOs) run by the hospitals and other service providers rather than the current fee for service government administered model that presently manages the increasingly expensive state agency. Proponents argue that managed care will improve healthcare outcomes and will save the state money in the long run.

As Alabama did not expand Medicaid to include poor, non-disabled, non-senior adults and the RCO program was not extended to nursing homes; most of the beneficiaries affected are children. Thus the largest Medicaid provider is Children’s Hospital of Alabama.

Their CEO Michael Warren recently blasted the RCO plan.

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Warren’s report said “RCOs will actually cost the state’s general fund a substantial amount more than keeping the current program funded. The numbers are frightening.”

Warren said claimed, “The RCOs design is contrary to the model contemplated by the Governor’s Task Force on Medicaid Reform.”
Warren continued with a point-by-point negative assessment of the RCO plan.

The text of the report from Michael Warren and Children’s of Alabama is at:

Zeigler cited the Warren report which he called, “persuasive” and said that the RCO plan has been delayed by Medicaid until July of 2017.

Auditor Zeigler said, “It appears that the plan for regional care organizations as now formatted will cost the state millions instead of saving the state millions. This plan needs to be halted now, before millions are spent in the implementation stage. Approval of this contract would be throwing good money in front of bad.”

Zeigler added, “Sadly, it is typical of the Bentley administration that they have taken a strategy intended to save taxpayer money and have “Bentleyized” it into a losing proposition of millions. The report from Mike Warren of Children’s of Alabama is persuasive.”

Of the proposed $1.3 million legal services contract, $650,000 would be state dollars and $650,000 would be federal.

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Since being inaugurated in 2015, Zeigler has been a vocal critic of Governor Bentley and his administration.

The Contract Review Committee meets on Thursday, October 6, 2016 at 1:00 p.m. in Room 200 of the Alabama Statehouse to review this contract as well as other proposed contracts from state agencies. On the agenda are fifteen contracts totaling $2,969,000. The Contract Review Committee is a permanent standing joint committee comprised of members of both the House and the Senate.

Brandon Moseley is a former reporter at the Alabama Political Reporter.

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