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Letter from the Comptroller Strayhorn
Regarding the Integrated Eligibility and Enrollment contract
between the Health and Human Services Commission
and Accenture LLP


Letter from Comptroller Strayhorn


Background Information - Overview
Background Information - Problem Overview


Findings

1. The Health and Human Services Commission (HHSC) has substantially understated the state's costs for Integrated Eligibility and Enrollment (IEE) system.
2. Due to unanticipated costs, the state will spend an additional $99.9 million in general revenue on the Integrated Eligibility and Enrollment program.
3. HHSC's contract with Accenture contains perverse incentives that encourage the contractor to process applications inefficiently.
4. HHSC's contract defines "profit" in an unusual manner and attempts, unsuccessfully, to limit the amount of profit Accenture may earn.
5. Accenture billed HHSC hourly labor rates far higher than those allowed by contract terms, and failed to disclose the rate being billed to HHSC.
6. HHSC's contract focuses on Accenture's expenses and profits rather than the contractor's performance.
7. HHSC's contract pays Accenture for its effort rather than for specific, desired results.
8. The contract's Key Performance Requirements and associated liquidated damages do not protect the state from poor vendor performance.
9. The contract limits Accenture's ultimate liability to a fraction of the contract's total value.
10. HHSC's handling of the Accenture contract has put several significant federal funding sources at risk.
11. HHSC's initial rollout of the Integrated Eligibility and Enrollment system carried none of the protections of a true pilot program―and all of the risks a pilot is designed to avoid.
12. HHSC relied on an unfinished and unproven software system, TIERS, to serve as the technological base of the Integrated Eligibility and Enrollment program.
13. Both HHSC and Accenture went forward with the IEE rollout on the assumption that the company's MAXe system could be integrated with the TIERS system―a dangerous assumption that proved to be incorrect.
14. HHSC's rollout of the integrated eligibility/call-center process attempted to incorporate far too many drastic changes simultaneously.
15. HHSC attempted to implement the new integrated eligibility and CHIP systems far too quickly, resulting in a chaotic and unsuccessful rollout.
16. HHSC ignored repeated warnings from stakeholders about flaws in its project approach.
17. HHSC rolled out the Integrated Eligibility and Enrollment system without testing it first.
18. HHSC had no real contingency plan for failures during the IEE rollout.
19. HHSC refuses to allow its food stamp clients to apply via telephone, as recommended repeatedly by the federal government.
20. Both HHSC and its vendors underestimated the numbers of employees they would need for the IEE project.
21. HHSC's arrangement with Accenture lacks the accounting controls needed to protect public funds.
22. HHSC's contract with Accenture was poorly executed and the agency has made limited effort to manage it effectively since its signing.
23. Since the beginning of HHSC's contract with Accenture, thousands of Texas children have lost their health insurance coverage.
24. In the past, Children's Medicaid may have come to the aid of some children who lost CHIP coverage, but now its enrollment is falling as well.
25. Sweeping changes to CHIP policies and procedures contributed to the fall in enrollment.
26. Some of HHSC's most significant changes to its policy and application procedures have circumvented the state's normal rulemaking process.
27. HHSC does not track or enforce Accenture's timeliness and accuracy in processing CHIP eligibility applications, renewals and appeals.
28. CHIP is plagued by inadequate data that make it difficult to track the program's success.
29. Accenture and HHSC policy changes have significantly increased the decline of Texas CHIP enrollment relative to that in other states.
30. Texas does not have sufficient oversight mechanisms to prevent or minimize the sorts of project failures experienced with integrated eligibility and enrollment.


Lessons Learned


Solutions


Appendices

Appendix 1. Legislators' Letters
Appendix 2. State Auditor's Office: History of HHSC Poor Contract Agreements and Inadequate Contract Management
Appendix 3. Timeline HHSC Accenture IEES Project
Appendix 4. Letters from Accenture to Clients
Appendix 5. Accenture's Pricing Summary
Appendix 6. Key Performance Requirements (KPR)
Appendix 7. Integrated Eligibility: Medicaid, TANF and Food Stamps Eligibility Determination Timeliness and Accuracy Key Performance Requirements
Appendix 8. Interactions between HHSC and the federal Food and Nutrition Service: Timeline
Appendix 9. 2003 Changes to Eligibility, Procedures and Contractor Requirements HHSC Rules
Appendix 10. CHIP Eligibility Determination Key Performance Requirements

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