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Audit: Mental health contract raised local costs

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BATON ROUGE, La. (AP) — Louisiana Gov. Bobby Jindal’s hiring of a private company to manage mental health and addictive disorder treatment services has created confusion and added costs for the local human services districts that provide the care, according to an audit released Monday.

The review by Legislative Auditor Daryl Purpera’s office looked at the first year of the Louisiana Behavioral Health Partnership, which shifted oversight and claims processing for the health programs to Magellan Health Services, in a two-year contract worth $354 million.

The auditor’s office looked at how the privatization affected four human services districts, those based in Baton Rouge, Houma, New Orleans and Amite. The districts are local government agencies that receive state funding to provide health care services.

The audit says the outsourcing has caused problems with claims payments, which have increased costs for the human services districts and have made it more difficult for them to get reimbursed for their services. It also says the same districts lost money under a requirement that they use Magellan’s electronic health records system.

Meanwhile, the state Department of Health and Hospitals didn’t make sure Magellan processed claims on time and failed to penalize the private company when it didn’t meet planning and technical benchmarks, the audit says.

“No sanctions have been imposed on Magellan for not meeting all required contract provisions,” the review says.

DHH Secretary Kathy Kliebert defended the management deal in a statement, saying the changes have expanded access to care, growing from 800 health care providers that serve patients to 1,700 providers. She said the audit was a limited analysis of four providers that didn’t look at the full implications of the contract.

“The partnership has allowed us to expand access to care for more individuals and provide better quality services through managed care,” Kliebert said. She added, “This was the program’s first year and, as with any new program, we’ve learned what works and how to improve it.”

The contract with Magellan began in March 2012 and runs through February 2014. The state paid Magellan $156 million for the first year of work, according to the audit.

Magellan pays the local human services districts a fee for each service delivered. The fees make up as much as 15 percent of the local agencies’ operating budgets, according to the legislative auditor’s office.

But the audit says Magellan often took weeks or months to process claims, creating cash flow problems for the human services districts.

In some instances, changes in fee schedules, claims handling and coding have led to denial of claims, which then couldn’t be refiled fast enough before billing expiration dates, the audit says. Certain nursing and professional services that had previously been paid are no longer being covered since the privatization.

Any lost revenue for the districts can limit their ability to provide health care services.

The Capital Area Human Services District, based in Baton Rouge, told auditors that its administrative costs for billing claims have increased $270,000 a year since the privatization took effect because of problems with claims reconciliation and collection.

“There were some administrative claims and billing lessons learned by four providers, the human services districts. We worked closely with the districts on solutions. Many changes have already been implemented. We continue to work with the districts on their outstanding concerns,” Kliebert said in her statement.

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