Cost Overruns Plague Sacramento County Deal for Health Care Claims
Sacramento County is facing unexpected cost overruns in a contract with Benefit & Risk Management Services to administer claims for indigent county residents and county jail inmates, the Sacramento Bee reports.
Historically, the county had contracted directly with UC-Davis Medical Center to provide health care services to uninsured, low-income county residents and inmates, but the county board of supervisors voted unanimously to approve a $36.6 million contract with Benefit & Risk in June 2008.
The change was intended to improve low-income county residents' access to medical specialists through a PPO option and control medical costs by managing care more effectively.
However, figures from UC-Davis indicate that $35.8 million in claims was approved through Feb. 28, 2009.Â With four months left in the fiscal year, the county had almost hit the full amount budgeted for the contract, and tens of millions of dollars in additional claims are pending.
UC-Davis Criticizes Contract
UC-Davis Medical Center officials maintain that the contract leads to significant payment delays.Â
Ann Frankel, assistant director of finance for UC-Davis Health System, said the county has not paid $19.3 million in authorized claims.
In addition, UC-Davis officials criticized the county for entering the contract using cost projections based on just one month of data, arguing that several years of data should have been considered.
What Happens Next?
According to the county, the contract has a cost cap of $36.6 million, and it will only be liable for a small percentage of all fees due to UC-Davis.
However, Matt Schafer, CEO of Benefit & Risk, said the fees are the county's responsibility. He added that his firm would never enter into a contract assuming such risks and that his company could not afford to cover the additional costs.
The Bee reports that it remains unclear whether UC-Davis Medical Center will be paid until the county and Benefit & Risk resolve their dispute (Lewis, Sacramento Bee, 4/15).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.