Why corporate con-artists under investigation are preparing for a windfall.
An information technology (IT) company in line to bid on billions in new contracts as a result of ObamaCare is the subject of a growing list of scandals and investigations in which its alleged that, among a number of abuses, the company has produced low ball bids in order to win Medicaid related contracts, only to create overages that balloon the expense of the project as it is implemented.
The name of the company is Client Network Services, Inc (CNSI) and it’s headquartered in Maryland. The company will be able to bid on billions in new ObamaCare-related IT contracts because, in order for states to receive new grants for expanded Medicaid rolls, ObamaCare requires states to have IT systems that are able to share data at so-called finger-tip access. Because most states have antiquated systems, such overhauls will often require the assistance of companies like CNSI.
In March, Louisiana Governor Bobby Jindal canceled one such contract between CNSI and his state after it came to light that a federal grand jury was investigating the relationship between one of his top aides and CNSI.
Aswell said he first became aware something was amiss in June 2011, when Bruce Greenstein went before the Louisiana Senate Governmental Affairs Committee to be confirmed as the secretary of Louisiana’s Department of Health and Hospitals (DHH), the equivalent of the US Health and Human Services (HHS) secretary.
During the proceedings, things became contentious and confusing when Greenstein refused to divulge the recipient of a contract to upgrade the State of Louisiana’s antiquated computer system, which electronically processed Medicaid health care claims.
Greenstein went back and forth with lawmakers for quite a while before he finally admitted it was CNSI, his own former employer. He assured the state legislators at that hearing that he created a firewall between himself and his former employer during the contractual process.
That turned out not to be true, and, instead, in March 2013, news was leaked that a federal grand jury was investigating the potentially illegal relationship between Greenstein and CNSI during the process in which this contract was awarded.
Once that came to light, not only did Jindal cancel the contract, but Greenstein resigned shortly after. Aswell said that all sorts of issues were raised with CNSI’s bid ($194 million), and a number of people in the media raised concerns that CNSI would not be able to achieve the contract for the pre-arranged price.
In 2012, Southeast Michigan Healthcare Information Exchange (SEMHIE), a multi-stakeholder initiative trying to integrate a health information exchange throughout southeast Michigan, sued CNSI for breach of contract after CNSI allegedly failed to provide SEMHIE with prior agreed upon software. An email was left unreturned by SEMHIE for this story. Jennifer Bahrami, press secretary for CNSI, also didn’t respond to an email for comment for this story.
In 2011, CNSI was accused of lowballing a contract in South Dakota, only to have expenses increase exponentially as the project wore on. A local story on the affair explained:
The South Dakota Department of Social Services has paid $49.7 million so far for a new Medicaid processing system that at this point remains inoperable.
The original contract was for $62.7 million, but the new system is now expected to cost far in excess of $80 million to complete and will take two to three more years to get running, according to court documents filed as part of a lawsuit between the contractor and the department.
The most in-depth investigation of CNSI occurred in Maine in 2006, and it was conducted by the magazine CIO, a journal for IT professionals. In that piece, CIO concluded that not only did CNSI’s system end up costing 20% more than the company's originally bid, but its implementation was a logistical nightmare.
The department’s Bureau of Medical Services, which runs the Medicaid program, was being deluged with hundreds of calls from doctors, dentists, hospitals, health clinics and nursing homes, angry because their claims were not being paid. The new system had placed most of the rejected claims in a ‘suspended’ file for forms that contained errors.
Tens of thousands of claims representing millions of dollars were being left in limbo.
About 15 IT staffers and about 4 dozen employees from CNSI, the contractor hired to develop the system—were working 12-hour days, writing software fixes and performing adjustments so fast that Hitchings knew that key project management guidelines were beginning to fall by the wayside. And nothing seemed to help.
Because CNSI is a private company, their financials aren’t published, and thus, the exact amount of business it does with our government isn’t known. Furthermore, because most IT-related Medicaid contracts are done on the state level, tracking the amount of IT business that ObamaCare will create is also very difficult to do. It is clear that one company that should be happy with the implementation of ObamaCare is CNSI because it is without a doubt a boon to a company like it. The company’s behavior before and during the implementation of ObamaCare should therefore be watched very carefully and Front Page Magazine intends to do so.
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