Maine hired Atlanta-based LogistiCare as one of two contractors to coordinate rides for MaineCare recipients starting Aug. 1 even though the company’s problems in Wisconsin were reported thoroughly in the news media there over the past two years.
In several respects, Wisconsin’s troubles with its nonemergency Medicaid transportation system mirror those that have developed in Maine this month. Both states got swamped with complaints about missed rides to doctor’s appointments.
Mary Mayhew, Maine’s health and human services commissioner, said the state knew of the problems in Wisconsin but believed they could be avoided here.
Before Wisconsin and Maine overhauled their Medicaid transportation systems, both relied heavily on local systems to dispatch and give rides to low-income patients to doctor’s appointments, therapy and other medical services. Each state has a large rural population without easy access to public transportation.
“You would just call Joe’s Van Service, and they would come and give you a ride,” said Kit Kerschensteiner, managing attorney for Disability Rights Wisconsin, a group that advocates for patients. “There was much more direct contact with the provider and an ability to work things out.”
In 2011, Wisconsin hired LogistiCare to broker rides statewide.
Maine devised the regional system that it has now, dividing the state into eight regions. It hired LogistiCare to coordinate rides in the York County region for $5.1 million a year and hired Coordinated Transportation Solutions of Connecticut for $28.3 million to coordinate rides in most of the rest of the state.
One Maine nonprofit, Penquis, won a $7 million state contract to maintain service in the Bangor region. Since Aug. 1, MaineCare patients have lodged more than 2,000 complaints about MaineCare rides, according to the state. The dozens of complaints the Portland Press Herald has received by phone and email have been about Coordinated Transportation Solutions or LogistiCare.
Mayhew said in a telephone interview that Maine looked at what happened in Wisconsin and concluded that that state had underestimated the number of patients who would use the ride system. She said Maine officials saw that as an avoidable problem.
Since contractors are paid flat fees based on the number of patients, Wisconsin made it difficult for LogistiCare – a for-profit company that NASDAQ listed as having more than $1 billion in revenue in 2012 – to earn a profit because it underestimated the number of patients, according to Mayhew.
LogistiCare officials made that argument, saying they lost money in Wisconsin.
“LogistiCare lost more than $6 million over a 20-month span, an untenable amount for any organization,” wrote LogistiCare CEO Herman Schwarz in an online opinion column earlier this year. “So, we made a business decision and in accordance with our contract terms we resigned from the program.”
After LogistiCare dropped the contract in 2012, Wisconsin solicited new bids and is now paying another company millions more for the same service, the Milwaukee Journal Sentinel reported this spring.
While LogistiCare was still providing service, one person died after missing rides to his dialysis treatments, according to a Journal Sentinel story published last year.
Gary Goyke, legislative director for the Specialized Medical Vehicle Association of Wisconsin, said regardless of whether it’s LogistiCare or another contractor, flat fees give a company incentive to arrange as few rides as possible.
The contractor is paid the same amount regardless of how many rides it arranges, he said.
“The less service they provide, the more money they make,” said Goyke, a former Wisconsin legislator.
While Maine pays its contractors flat fees, Mayhew said, Goyke’s view “completely ignores” the performance standards that Maine’s contractors must meet, including a requirement that complaints from riders be below 1 percent of all calls. The state may cancel the contract at any time if the contractor’s performance is unsatisfactory.
Goyke said he will lobby for Wisconsin to return to a system that’s similar to the county-based plan the state used before 2011.
“We got rid of a system that worked well,” Goyke said.
Many patients who have called the Press Herald have described a system that had few problems before Aug. 1.
Maine changed its system in response to a demand by the U.S. Centers for Medicare and Medicaid Services for greater accountability and transparency. The local nonprofits did not have formal contracts with the state.
The state had flexibility to devise a system and did not have to convert to the much-criticized regional broker system.
LogistiCare operates in 43 states, and most report few problems, said Todd DeFeo, a company spokesman. “Operations in most of these states run smoothly.”
Coordinated Transportation Solutions has a much smaller national presence than LogistiCare. It failed to win a new contract in 2011 for statewide service in its home state of Connecticut, according to state officials.
The company served thousands of Medicaid patients in parts of Connecticut before losing out in a competitive bidding process.
After losing the Connecticut contract to LogistiCare, Coordinated Transportation Solutions laid off nearly half of its work force in 2012, according to news accounts.
Winning the MaineCare contracts this year boosted the company’s bottom line. It generated $18 million in revenue in 2010, according to Internal Revenue Service filings.
David Dearborn, a spokesman with the Connecticut Department of Social Services, said by email that the state did not anticipate cost savings but wanted to streamline its nonemergency Medicaid transportation system by switching from a local system to a statewide model.
Joe Lawlor can be contacted at 791-6376 or at: [email protected]