Lawmaker blasts Abbott appointee, health agency over contracting; agency fires back

^{*Editor's note: This story has been updated to include a response from the Health and Human Services Commission.}

The chairman of a legislative oversight panel chided Gov. Greg Abbott’s top health care appointee this week for allegedly failing to identify all of his agency’s high-dollar government contracts and gave him less less than a week to come into compliance.

The health commission later fired back, saying the fault lay not with them but with the independent government body that operates the website where contract information is published.

Rep. Giovanni Capriglione, R-Southlake, told Health and Human Services Commissioner Charles Smith in a letter dated March 9 that his agency’s reporting of contracts worth $100 million or more to the Legislative Budget Board were “neither timely or complete.” Capriglione, who chairs the budget transparency and reform subcommittee in the Texas House, said the reporting failure “limits the usefulness of this data and may adversely affect decisions we make.”

Capriglione accused the health agency of failing to report at least 42 large contracts to a central database the state uses to track high-value private projects. He gave Smith until the close of business Wednesday to make sure the contracts were disclosed on a public website.

“It’s a $40 billion or so problem, so I would say it’s a really huge problem,” Capriglione told The Texas Tribune. He called the lack of reporting “very distressing,” particularly given the agency’s past controversies involving contractors.

“Most of the agencies have been reporting this information, but one is a clear standout,” he said.

Later Friday, Smith wrote a response to Capriglione blaming the problem on a technological failure at the Legislative Budget Board. Smith, who promised to fix the situation, said the contracts in question were old and should have been included in the computer database when it went live on Sept. 1, 2015.

“We did not know that these older contracts were missing from the portal,” Smith said. “Now that we are aware that the LBB data from the old Portal did not fully populate into the new Contract Portal, we will work with LBB to identify contracts that did not properly populate into their new portal.”

In a subsequent statement, a spokeswoman for the health commission said the failure to include the contracts in the database lay with the Legislative Budget Board.

"The onus has been on them to do this work," spokeswoman Carrie Williams said in an email. The Legislative Budget Board accepted responsibility for publishing information about old contracts to the database, a 2015 document shows.

The rebuke from Capriglione comes as the Health and Human Services Commission is struggling to regain the confidence of the Texas Legislature after a series of damning news reports and audits about contracting failures and abuses.

Last month, the State Auditor’s Office released a scathing audit of one of the agency’s large private contracts with a health insurance company called HealthSpring, which the state paid more than $700 million in fiscal year 2015. Healthspring, based in Houston, provides acute and long-term care services for elderly or disabled individuals.

Calls placed to the company Friday afternoon were transferred to a line that played hold music but did not produce human interaction after several minutes.

The audit identified three high-priority issues that “substantially affect” the company’s ability to administer functions it handles as part of the contract.  

Auditors found $53.8 million in non-compliant costs that HealthSpring billed the state agency for. For example, the company spent $3.8 million on inappropriate expenses, including gifts, stock options and advertising costs, according to state auditors. There were another $34 million in “questioned costs” that auditors said the health insurance company had not justified.

In another recent example, a January report from an independent government agency found issues with the health commission’s handling of a private contract to transport poor Texans to their medical appointments. 

Since privatization of the program in 2009, the percentage of Medicaid clients receiving transportation services plummeted by half, while the average cost per trip more than doubled. In addition, substantiated complaints about the program rose 43 percent. Medicaid is the federal-state insurance program for the poor and disabled, which is administered by the Health and Human Services Commission.

The report, authored by the Legislative Budget Board, faulted the health agency for not tracking the transportation contractor’s performance, including whether Medicaid clients were being taken to their appointments on time.

Costs rose by an estimated $316 million after the program shifted from the state to private contractors, the report found.

Issues with private contracts are nothing new for the Texas Health and Human Services Commission, which became embroiled in a scandal involving a $20 million contract with a software company that caused several executive employees to resign.

The health commission’s handling of the 21CT contract, which was supposed to track Medicaid fraud, first came under fire in late 2014, when a $90 million extension was canceled after news reports revealed that a lobbyist for the company was a former business partner of Jack Stick, a senior official at the agency. Multiple investigations into the contract culminated in the forced resignation of Stick and his former boss, Inspector General Doug Wilson.

With such a troubled history, Capriglione told the Tribune the commission “should be the most responsive” of all state agencies when it comes to publicly disclosing the details of its contracts with private entities.

“I just want to know, is the reason you aren’t doing this because you don’t want us to look at the contracts, or is the reason because you don’t know if you have them?” Capriglione added. “If you don’t know that you have tens of billions of dollars in contracts, we have a big problem.”