2006 Nov CPPP Updating and Outsourcing Enrollment in Public Benefits
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Updating and Outsourcing Enrollment in Public Benefits: The Texas Experience

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Four million Texans—mostly children, the elderly, and persons with disabilities—rely on public benefits for health care, food, temporary cash assistance, child care, and other critical services. In 2006, Texas launched a new system for enrolling these vulnerable Texans in public benefits. This new system is named Texas Integrated Eligibility and Enrollment Services (TIEES).

TIEES is an unprecedented and ambitious attempt to modernize the eligibility and enrollment processes for Food Stamps, Medicaid, the Children’s Health Insurance Program (CHIP), and Temporary Assistance for Needy Families (TANF).

The restructuring entails significant changes to the way clients apply for services through the use of call centers, a heavier reliance on technology, and new partnerships with nonprofit organizations. Texas is outsourcing the administration of the new system to private companies and substantially reducing the state’s eligibility determination workforce.

Since its launch in January 2006, the system has been marked by technical difficulties, staffing shortages, and inadequate training of private call center staff. The state has not saved a penny in administrative costs. The children, elderly, and persons with disabilities who rely on these services have suffered through a frustrating enrollment process, been caught in long backlogs, and often been wrongly denied benefits.

Children’s health care has been especially hard hit. The number of children receiving health care through Medicaid and the Children’s Health Insurance Program dropped by more than 127,000 (6%) between December 2005, when the new contractor took over, and April 2006. Though enrollment has rebounded somewhat since then, the recovery has been slow.

In May 2006, the state delayed indefinitely the rollout of the new system, restricted the duties of the contractor, and announced plans to retain 1,000 state staff to prevent disruptions in services to clients. At the request of several legislators, the State Comptroller of Public Accounts initiated an audit of the contract.

The Texas experience raises important issues for the entire nation to consider about the advantages and limitations of technology and the merits and risks of outsourcing in social service programs. This paper explores these issues in the context of the changes taking place in Texas. We identify obstacles to modernization, areas for improvement in Texas’ approach, and measures to protect client interests and maintain public accountability in the contracting and outsourcing process. Our goal is to help other states address the challenges related to the updating and outsourcing of public benefits administration.

Texas has advanced the changes to its public benefits system with the goal of cutting costs and improving access to services by creating new application options and a simpler enrollment process. A modernized system run by private companies, the state projects, would generate more than $100 million in savings annually, which could be reinvested in direct services to clients.

In this new system, Texas is closing one-third of its local eligibility offices and adding centralized call centers and an online application. Though clients still have the option to apply at a local benefits office, the ultimate goal of the new system is to encourage most clients to do their business over the phone, via mail or fax, or on the Internet.

The plan contains many elements that client advocates have long supported, such as an online application and fewer office visits. Texas’ eligibility system is badly in need of better technology, and the local office model does not accommodate the needs of the increasing number of working families served by these programs. A flexible enrollment process supported by new technology is a logical step toward addressing these challenges, but investing adequate time and resources is critical to ensure success in a project of this magnitude. Unfortunately, Texas has rushed to implement the new system, placing the desire to achieve savings ahead of client interests.

At the core of the new business model is a significant reduction in eligibility workers in a system already struggling with massive understaffing and underfunding. The timeline is aggressive and has allowed little time to test the technology, train staff, and evaluate clients’ ability to adapt to the self-service model. Nonprofits are expected to play a vital role in helping clients navigate the more automated system. Yet, the state did not assess their willingness or capacity to shoulder the new responsibility, and has offered very little compensation or support to community-based organizations wanting to take on this new role.

The state awarded a consortium of private companies, led by Accenture, LLP, a five-year, $899-million contract to develop and administer the new system. Many question the wisdom of outsourcing the new system. Although private firms have made important contributions in performing discrete tasks in the administration of public benefits, Texas’ decision to outsource so much of the operation and management of its public benefits system is unprecedented. No company has ever had so much control over the system for administering the benefits—in particular, the decisions about who receives the benefits.

Because this is a new area in social services outsourcing, there is little evidence to judge whether outsourcing the administration of public benefits can improve services to low-income people while reducing costs. Texas’ contract with Accenture does not adequately address how clients’ rights and interests will be protected in the new system. Past problems in the oversight of health and human services contracts in Texas also raise the concern that the state does not have sufficient oversight mechanisms in place to monitor and enforce such a large contract.

Some federal officials have responded with alarm to both the substance and the speed of the changes unfolding in Texas. USDA’s Food and Nutrition Service tied funding for the project to the state’s ability to meet general performance standards, and federal officials in Texas are monitoring the rollout.

Though efforts in Congress and the Texas legislature to block the outsourcing of Texas’ eligibility system have so far failed, a growing number of federal and state lawmakers are pressing for more stringent regulatory and congressional oversight of Texas’ new system.

Before turning to the detail of this report, we want to say a word about the administrators and staff of the Texas Health and Human Services Commission (HHSC) who have been charged with developing and implementing TIEES. While this report is critical of TIEES, it does not dispute the competence or diligence of HHSC personnel or doubt their commitment to the low-income Texans dependent on these services. HHSC has worked professionally and tirelessly to make TIEES work. The challenges facing TIEES are the result of misguided state policies and inadequate funding—not incompetent or indifferent state administrators. This report focuses on these key policy and funding concerns.