$1.3 million contract delayed after State Auditor Jim Zeigler’s objections

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Designed to be the state’s solution to the perennial problem of rising costs of Medicaid, the cost-effectiveness of regional care organizations (RCOs) are being debated yet again.

On Tuesday, State Auditor Jim Zeigler asked the Alabama Legislature’s Contract Review Committee to delay a controversial $1.3 million contract for implementation of RCOs to deliver Medicaid healthcare.

Medicaid is seeking to pay $1.3 million to the Montgomery-based law firm of Capell & Howard for legal advice in implementing the new system of private providers in each area of Alabama instead of the present statewide administration by the state Medicaid agency.

But Zeigler belives the RCO plan “is fatally flawed and needs to be scrapped.”

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

As a first step, he filed the written request asking to delay the contract for the maximum delay the panel can mandate of 45 days.

The Committee met on Thursday and agreed to the delay.

Zeigler is hoping the plan will altogether be scrapped in the future.

“It appears that the plan for regional care organizations as now formatted will cost the state millions instead of saving the state millions,” said Zeigler. “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 continued, “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.”

Warren, CEO of Children’s of Alabama and the state’s top Medicaid provider, in the report said the plan is flawed and the program would cost the state more money than anticipated.

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

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