Medicaid determinations present profit opportunity for contractors


The company that stands to profit the most during Medicaid redeterminations is Maximus, the largest Medicaid eligibility and enrollment administrator with a 60% market share. After Biden signed a bill allowing the “continuous coverage” requirement from the 2020 law to end March 31, Maximus boosted its annual revenue guidance by $100 million to $5 billion. The company, which also operates the federal Medicare and health insurance exchange call centers, did not respond to interview requests.

With Medicaid redeterminations beginning, demand from state Medicaid departments is rising, Maximus CEO Bruce Caswell said during the company’s first-quarter earnings call in February.

“There’s about 39% of the Medicaid population that is not currently in states that use vendors to support eligibility support and, therefore, redeterminations,” Caswell said. “These are customers that, if they find themselves in a pinch, that we can develop relationships with. [We can] add, if you will, new state customers through this process, not dissimilar to what we did during the pandemic.”

Most of Maximus’ new contract work will begin during the third quarter and last a year, Caswell said. Many of the company’s agreements with states include pay-for-performance provisions, he said, which gives Maximus a financial incentive to find as many people ineligible for Medicaid as possible.

The logistics

As many as 8 million people could lose Medicaid for procedural reasons, such as not having current contact information on file even though they are financially eligible, according to the Health and Human Services Department. Health insurance companies that administer Medicaid benefits, states, federal authorities and patient advocates are engaged in a multifaceted effort to mitigate that risk.

Federal law limits the services contractors such as Maximus, Public Consulting Group and Automated Health Systems can provide. State civil servants must make final decisions regarding eligibility, for instance. But state employees may base those calls on data that contractors and other entities provide. Furthermore, if states rely on automated eligibility systems, contractors can input those data into algorithms used to determine eligibility.

States have 14 months to complete the redetermination process, although additional federal funding for Medicaid will wind down by the end of the year. Accelerated timelines add pressure for some Medicaid departments to ink outside contracts.

After the Arkansas Legislature ruled its Department of Health Services must finish Medicaid eligibility reviews in six months, the agency skipped the competitive bidding process and doubled its existing Maximus contract to $58 million.

“We needed to move quickly and we used a cooperative contract to lock in the rates of a competitive solicitation run by another state,” department spokesperson Gavin Lesnick said in an email. “We are confident that we have developed a plan for unwinding that fulfills requirements at both the state and federal levels, that protects taxpayer dollars and that will properly protect benefits for eligible Medicaid recipients.”

Arkansas is relying on Maximus to process Medicaid applications, conduct customer service and support agency staff, Lesnick said.. The state will monitor the company through observation, reports, case reviews and regular meetings with Maximus representatives, he added.

More than 230,000 Arkansans will be dropped from Medicaid, according to the Modern Healthcare analysis.


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