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                       HHSC Plans Repeat of Call Center Mistake

The Health and Human Services Commission in May issued a Request for Information (RFI)
seeking input from vendors about how to resurrect its failed attempt to provide health and human
services through call centers. In June, HHSC held a vendor conference to provide more
information about the RFI and its call center plans.

HHSC's presentation at the vendor conference made it clear that it has learned little from its
disastrous experiment last year to create a privately operated call center-based health and human
services eligibility system. In January 2006 HHSC and its contractor Accenture implemented a
call center-based eligibility system in Travis and Hays counties.

People applying for food stamps, Medicaid, and public assistance in the Travis and Hays service
area were required to do so through the so-called "modernized" call center-based eligibility
system. But call centers made access to services more difficult.

Many seeking help were cut off as they waited to speak to an operator. Those who got through
often endured long waits. Many of those who spoke to an operator received incorrect or
incomplete information that caused benefits to be delayed or denied incorrectly.

Each month, the call centers' performance worsened and each month the backlog of unprocessed
applications grew. Customer dissatisfaction with the call centers mounted, and legislators began
to complain on behalf of their constituents.

Finally, three months into the experiment HHSC pulled the plug, returned most of the eligibility
work being done by Accenture and its subcontractors back to state employees, and postponed
further rollout of the call center-based eligibility system.

At the time, HHSC indicated that Accenture needed to work out some technical problems and
provide better training to its call center staff. HHSC indicated that when Accenture fixed these
problems rollout of the call center eligibility system would resume.

But Accenture never fixed the problems, and there is every reason to believe that the problems
are not fixable.

HHSC in March 2007 canceled the Accenture contract, but it appears that HHSC has learned little
from last year's experiment. At the vendor conference, an HHSC spokesperson told the gathering
that "the [call center] concept is sound."

HHSC assertion that the call center concept "is sound" is based on a number of faulty
assumptions including the following:

    ·   Call centers will modernize and improve service deliver
    ·   Call centers will be more convenient for customers


HHSC Plans Repeat of Call Center Mistake
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    ·   Customers are clamoring for call centers
    ·   New (Old) business processes will improve access to service
    ·   Applying for health and human services is easy and most of the initial work can be done
        by unskilled, low paid data entry clerks
    ·   A new contractor can make call centers work

Faulty Assumption #1: Call Centers Modernize and Improve Service Delivery

HHSC still clings to the discredited notion that privately operated call centers will improve and
modernize the delivery of health and human services. At the June vendor's conference, HHSC's
spokesperson declared that "there is a clear and compelling need to modernize the eligibility
system." She then went on to mischaracterize the problems with the current system and asserted
without any compelling proof that call centers would improve access to services.

There may be a "compelling need" to modernize the current eligibility system, but ill-suited
technology such as call centers should not be mistaken for modernization. In fact, evidence from
the call centers' actual performance clearly demonstrates that they don't modernize service
delivery.

A truly modernized system would speed up the eligibility determination process and make the
delivery of services more timely. HHSC's call center-based eligibility system did just the
opposite.

HHSC implemented its new eligibility system for three months during the spring of 2006 in a
limited area of the state--Travis and Hays counties. During this three-month pilot period, the call
centers' food stamp timeliness rate never rose above 80 percent. In fact, it declined from month to
month. By the time, HHSC ended its call center experiment, the new system's food stamp
timeliness rate was barely above 60 percent, well below the federal performance standard of 95
percent.

                            Food Stamp Timeliness Rate
                     Call Center-based     Current Eligibility
                     Eligibility System           System
February 2006               80.8                   94.2
 March 2006                 73.1                   94.2
  April 2006                61.5                   94.5

During the same period, the current system's timeliness rate hovered close to 95 percent, even
though thousands of experienced state eligibility workers had quit after being notified that their
jobs would be outsourced.

If the call centers' timeliness rate had shown some improvement or had at least maintained its
original rate, you could argue that the system just needed some adjustments to work out the kinks.
But over the course of three months the call centers' food stamp timeliness rate plunged by 23
percent.

If you look back a little further in history when staffing shortages were not as severe as they are
today and in 2005 and 2006, the current eligibility system looks even better than the call center-
based system. Between fiscal years 2000 and 2004, the timeliness rate for determining food stamp
eligibility averaged between 95.7 percent and 97.2 percent and improved between 2000 and 2004.


HHSC Plans Repeat of Call Center Mistake
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     Food Stamp Timeliness Rates (%) FY 2000 - FY 2004
              2000        2001        2002        2003       2004
    Sep       93.6        96.3         96         96.5       97.2
    Oct       92.9         96         95.4        96.4       96.5
    Nov       93.3        96.6        96.5        97.5       97.3
    Dec       94.6        96.7        96.7        97.8       97.2
    Jan        96         96.6        96.6        97.5       97.3
    Feb       97.1         97         97.3        97.2       97.5
    Mar       96.8        97.1        97.6        97.1       97.7
    Apr       96.7        97.5        98.1        97.9       97.5
    May       96.9        97.2        98.1        97.5       97.3
    Jun       97.2        96.8        97.9        97.2       97.1
    Jul       96.9         97         97.8        97.4       96.8
    Aug       96.5        95.8        97.2        97.4        97
    Ave       95.7        96.7        97.1        97.3       97.2

Source: HHSC report RF-50, September 1999-August 2004

This improvement took place even as staffing declined and the caseloads increased. Between
2000 and 2004, the number of food stamp recipients increased from about 1.4 million to 2.2
million, an increase of nearly 60 percent.1 During the same period, the number of eligibility
workers dropped by 25 percent declining from about 10,000 in 2000 to about 7,500 in 2004.2
During this time, the statewide average food stamp timeliness rate increased from 95.7 percent to
97.2 percent.

In addition to food stamps, the call-center based eligibility system also failed to deliver timely
services for Medicaid and Temporary Aid to Need Family applicants. In April 2006, the TANF
application timeliness rate was 52.7 percent and the Medicaid application timeliness rate was 57.8
percent.

Other Problems
Even though HHSC canceled further implementation of the new call center-based system,
elements of its new system remain in place and are consistently outperformed by the current
system.

A major feature of the new call center-based system is a new eligibility computer system known
as TIERS, which has been in pilot phase for the last four years. The timeliness rate for HHSC's
Region 7, the area with by far the most cases in TIERS, consistently under performs other regions
in the state. In May 2007, Region 7's food stamp timeliness rate was 83.6 percent. The statewide
average was 92.5 percent. If Region 7 is excluded from the timeliness calculation, the statewide
rate jumps up to 96 percent.

Finally, despite being under funded and under staffed, the current system consistently earned
federal performance bonuses--at least it did until HHSC precipitated a mass exodus of
experienced eligibility workers with its decision to outsource eligibility determination. Between

1
  Hagert, Celia. Updating and Outsourcing Enrollment in Public Benefits: The Texas Experiment. Austin:
Center for Public Policy Priorities, November 2006. 43.
2
  Ibid. 19

HHSC Plans Repeat of Call Center Mistake
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1999 and 2004, the current eligibility system earned $142 million in federal performance bonuses
for processing food stamp applications quickly and efficiently.3

HHSC's new system, on the other hand, put the state at risk of losing federal bonuses. According
to the Texas Comptroller of Public Accounts, who studied the performance of HHSC's new
system, the system put the state "[at risk] losing $23.7 million annually in enhanced federal
funding for food stamps because processing timelines for the [new] system do not meet federal
standards."4

Faulty Assumption #2: Call Centers Will Be More Convenient for Customers

HHSC told potential vendors that its new call center-based eligibility system will make applying
for health and human services more convenient. But people's actual experience applying for these
services through call centers shows otherwise.

While the call centers were being piloted in Travis and Hays counties, callers had great difficulty
getting through to a call center operator. For example, during the week ending March 12, 2006,
the contractor reported that 54.5 percent of the calls to the call centers for food stamps, Medicaid,
and public assistance went unanswered.5 For those who did get through the average wait time was
more than 21 minutes.

Things didn't improve much as the call center experiment limped along. In April, the US
Department of Agriculture in a letter to HHSC Executive Commissioner Hawkins observed that
"call center statistics continued to show long wait times and high abandonment rates."6

In the letter, USDA said that when it was observing call center operations it was taking operators
up to 45 minutes or longer to answer calls and that 39.3 percent of the callers hung up before they
got an answer.

By early May, the call center experience was going so badly that HHSC returned most of the
work that had been done by Accenture to state employees. Nevertheless, the privatized call
centers continued to handle CHIP applications.

Even though, the call centers contractor's duties were greatly reduced, people still had a difficult
time accessing services. During the middle of May after HHSC had returned most work to state
employees, 42 percent of people calling to apply for CHIP hung up before an operator answered
their call.7

Speaking before a House Government Reform hearing in July 2006, Raquel Oliva, executive
director of AVANCE, a nonprofit organization that helps eligible families enroll children in CHIP
told the committee that HHSC's call center-based eligibility system "creates more barriers, . . .
3
  HHSC Press Release. "Texas Food Stamp Program Awarded $7.4 Million," September 23, 2004.
http://www.hhs.state.tx.us/news/release/092304_FoodStamps.shtml
4
  Accenture Findings #27. Texas Comptroller of Public Accounts, October 25, 2006.
www.cpa.state.tx.us/comptrol/letters/accenture/ch27.html. 1
5
  Texas Access Alliance. Texas Integrated Eligibility and Enrollment Serives, TR-084 Post Transition
Status Report Week ending 03112/06. p.4,
6
  Ludwig, William, Southwest Regional Administrator, Food and Nutrition Services, United States
Department of Agriculture. Letter to Albert Hawkins, Executive Commissioner, Texas Health and Human
Services Commission. April 5, 2006.
7
  Garrett, Robert. "Privatized services stumbling." Dallas Morning News, May 28, 2006.

HHSC Plans Repeat of Call Center Mistake
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makes the application process more complicated, more inaccessible and fails to inform applicants
of necessary information needed to successfully comply with eligibility requirements.

Faulty Assumption #3: Customers Are Clamoring for Call Centers

At the vendor conference, HHSC asserted that customer are clamoring to apply for services
over the phone and by internet. As proof, it cited a survey showing that 80 percent of those
responding said that they "would likely use the phone to apply for services."

The survey, however, was conducted before implementation of the call centers. If HHSC had
surveyed those who tried to apply over the phone, they would have likely gotten different results.

Unlike HHSC, the Texas House Committee on Government Reform did try to learn what people
who used the call centers thought of them. At hearings held in the summer of 2006, applicants
unanimously testified that the privatized call centers made access to services more difficult.

Lorna Harvey of Missouri City, whose son has chronic asthma, told the committee that her son
lost CHIP coverage because of mistakes made by call center workers.8

Richard Uhr of Houston told the committee that dealing with the privatized call center "[has]
been a nightmare from the start."9

Margot Roxana Henriquez told the committee that when she applied for CHIP coverage for her
two sons four separate errors by the call center contractor caused the processing of her application
to be held up for eight months, which delayed badly needed care for one of her chronically ill
sons.10

Barbara Best of the Children's Defense Fund, a national child advocacy organization, told the
committee that her organization had documented a number of instances in which call center errors
had caused children to lose CHIP coverage11

Call Centers Won't Eliminate Office Visits
Even though it knew better, HHSC told potential vendors that if the new call center-based system
is implemented "Texans will not have to take off work, pay for transportation, or arrange child
care to apply for services."

But HHSC is being less than candid when it says or implies that call centers will allow people to
apply for services over the phone or over the internet, thus saving travel to local benefits offices.
They won't.

State and federal regulations require applicants for food stamps and Medicaid to visit a benefits
office before the application can be completed. State regulations require a visit for applicants to
be fingerprinted and to receive benefits. Federal regulations require a face-to-face interview with
a public employee before the application can be completed.


8
  Ibid.
9
  MacLaggen, Corrie. "One Family's Struggle with CHIP." Austin American Statesman, July 26, 2006.
10
   Hughes, Polly Ross. "House Panel Holds CHIP Hearings Today." Houston Chronicle, July 26, 2006.
11
   MacLaggen, Corrie. "Lawmakers Hear Update on Accenture Contract." Austin American Statesman, July
26, 2006.

HHSC Plans Repeat of Call Center Mistake
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HHSC had a chance to eliminate the face-to-face visits and allow applications to be completed
over the phone or internet, but chose not to do so. Prior to implementation of the call center pilot,
USDA told HHSC that it could eliminate the face-to-face interview, but that HHSC would have
to request a waiver from federal regulations in writing to do so. USDA pretty much guaranteed
that it would approve such a waiver request.

HHSC declined to make a formal request for the waiver.

Faulty Assumption #4: New (Old) Business Processes Will Improve Access To Service

HHSC told vendors that it is seeking business processes that will improve service delivery. Then
it outlined the requirements of the business processes, which were exactly the same as the ones
that caused the first call center experiment to fail so miserably.

The general idea behind the new (old) business processes is that much of the work will be done
remotely in a centralized location and that there will be little accountability for ensuring that
eligibility is determined quickly and accurately.

HHSC holds up as an example of the new business processes it is seeking from vendors, the food
stamp application process that was in use while the call centers were taking food stamp
applications.

The main features of this process are that

    ·   most of the work involved in processing the food stamp application is done remotely,
    ·   nobody is responsible for ensuring that applications get processed in a timely way, and
    ·   there is an assumption that the multiple actors involved in processing an application will
        be able to communicate and coordinate their work with each other easily and effectively.

Unlike the current food stamp eligibility system in which a caseworker is responsible for ensuring
that a food stamp application is processed timely and accurately, no one in the new business
process envisioned by HHSC is responsible for such work.

Instead of going to a local office where one caseworker is assigned and is responsible for the
client's application, the new business process would have applicants mail or fax their applications
to a document processing center in Midland where it is received, sorted, scanned, and prepared
for meta data index (?).

Someone at the document processing center (not really sure who) notifies someone at some call
center that an application has been received. Someone at the document processing center
associates a case, creates/assembles a case, and reviews the case to make sure that all
documentation and information is complete.

While all this is being done at the document processing center, someone else at the document
processing center calls the client and tells him or her when to visit a local benefit office for a
face-to-face interview. The benefit office through a software application known as Task List
Manager is also notified of the appointment.

In the meantime, if any of the documentation and information needed to determine eligibility is
missing, someone at the call center puts the application in pending status and someone sends a


HHSC Plans Repeat of Call Center Mistake
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letter to the client requesting more information. This request is in the form of a form letter with
little explanatory information.

When the client provides all information and documentation, a state employee working at the call
center determines eligibility. If eligibility is determined before the interview, then the benefits can
be issued to the client after the interview is complete.

If however, eligibility is not determined before the face-to-face interview is complete, the client
must return to the office to collect the benefits and be fingerprinted.

Does this sound like a business process that will make access to services easier?

Faulty Assumption #5: Applying for Health and Human Services Is Easy and Most of the
Initial Work Can Be Done by Low-Skilled, Low-Wage Data Entry Workers

One of the biggest obstacles that a call center contractor will have to overcome was not even
mentioned in HHSC's vendor presentation. A major assumption of the call center business model
is that applying for federally funded health and human services is as simple as applying for a
drivers license and that most of initial contact with applicants can be done by low-wage, low-
skilled data entry workers.

During the time that call centers were processing applications for these services, this assumption
proved to be disastrously wrong and was an important reason that the call centers failed.

Unlike an application for a drivers license, applications for health and human services are long
and complex, require detailed information, and must be accompanied by a wide array of
supporting documentation. The regulations--both state and federal--governing eligibility for
these services are equally complex and change often.

Applicants often have questions about the application and the application process. It takes a
person with extensive knowledge and familiarity with complex state and federal regulations and
services to answer these questions correctly. You can't expect a low wage, low skilled worker
hired primarily as a data entry clerk to have these skills.

Yet, call center promoters and HHSC management assume that they will.

The results of this assumption were predictable. In May 2006, HHSC cancelled further rollout of
the call centers and transferred most work being done by Accenture to state employees because,
among other things, call center operators were "giving erroneous or contradictory information to
applicants."12

The Dallas Morning News reported that despite previous assurances that the call centers were
working well, HHSC admitted in May that the call centers weren't doing a good job of
"gathering all information needed so a state workers can quickly [determine eligibility]."13




12
     Garcia, Guillermo. "State Takes Back Aid Tasks." San Antonio Express News, May 10, 2006.
13
     Garrett, Robert. "Privatized services stumbling." Dallas Morning News, May 28, 2006.


HHSC Plans Repeat of Call Center Mistake
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Before the decision was made to take back work from the call centers, an AP Wire report
revealed that HHSC had to send state employees to the call centers because operators were giving
incorrect information and didn't know how to search for information in the eligibility database.14

In April, Rep. Eddie Rodriguez who represents a low-income, working class district whose
residents are mostly Latino and African American told the Austin American Statesman that
"people aren't getting the services they need [from the call centers] They're not getting a lot of
help, they're getting bounced around, their questions are not being answered at all or they're being
given wrong information."15

According to a log kept by one state employee who observed Midland call center operators
handling calls, 46 out of the 107 calls observed received incorrect or incomplete information. An
Accenture spokesman admitted that it was difficult to find qualified workers for the wages that it
was paying call center operators.16

After HHSC returned most of the work done at call centers to state employees, call centers
continued to handle CHIP applications, the simplest of all the health and human service
applications. But in June, the Austin American Statesman reported that Maximus, a call center
subcontractor, fired more than 50 call center staff because of their failure to meet performance
standards.17

Despite these setbacks, HHSC and Accenture promised that services would improve after call
center staff received more training. The new training was characterized by an Accenture
spokesperson as "intensive." She told the American Statesman that the training had "turned a
major corner."18

Despite this "intensive" training, services didn't improve. In December HHSC announced that it
would not resume further call center rollout and that it had curtailed its call center contract with
Accenture. In March 2007 the contract was terminated.

It's unlikely that any new vendor will ever be able to attract and maintain workforce for $8 an
hour, the entry level pay for call center operators in the new eligibility system. And its unlikely
that a company can pay wages and benefits needed to attract and maintain a stable and
knowledgeable call center workforce and still make a profit.

Faulty Assumption #6: A New Contractor Can Make Call Centers Work

Another faulty assumption not mentioned in HHSC vendor presentation is that a new vendor can
make a call center-based eligibility system work.

Accenture, the original call center vendor, has more experience delivering health and human
services through call centers than any other potential vendor. Accenture designed and
implemented a new public benefits system for the Canadian province of Ontario. One of the key

14
   AP Wire. "Snags Delay New System for State Aid." May 5, 2006.
15
   MacLaggen, Corrie. Benefits Call Center Plan Put on Hold." Austin American Statesman, April 4, 2006.
16
   Garrett, Robert. "Privatized services stumbling." Dallas Morning News, May 28, 2006.
17
   MacLaggen, Corrie, Dozens Lose Jobs at Texas Access Alliance in San Antonio." Austin American
Statesman, June 28, 2006.
18
   MacLaggen, Corrie, "A Call for Better Training by Phone Center Workers," Austin American Statesman,
August 12, 2006

HHSC Plans Repeat of Call Center Mistake
Page 8
features of this system was a network of call centers that performed tasks similar to the call
centers that Accenture operated in Texas.

Accenture didn't do any better in Ontario.             The Texas Access Alliance brings the
                                                           capabilities for IEES success
In December 2004, the provincial
government announced that it was                  The Right Team ­ Accenture and MAXIMUS
revamping the public assistance system            have proven performance in eligibility and
designed by Accenture and that it would           enrollment, technology management and within
close the call centers.                           the State of Texas
                                                  The Right Leadership ­ over 80% of key people
The Income Security Advocacy Center of            have experience in the referenced past
Toronto in a report written before Ontario        performance or with HHSC
scrapped the call centers said that the call      The Right Solution ­ leveraging TIERS, and
centers "decreased accessibility and service      adding efficient and integrated operational and
                                                  management processes
standards for both applicants and agencies
                                                  The Right Transition ­ moving to the new
assisting applicants."19                          operating model with managed risk
                                                  The Right Commitment ­ a track record of
A government report that led to Ontario           standing behind our work.
closing of the call centers found that
Accenture's call centers were "frustrating        Cutout from Accenture's call center proposal
for applicants."20

Maximus, Accenture's primary call center sub-contractor, also had experience delivering health
and human service and seemed to be well qualified. According to Accenture's proposal that won
it the call center contract, "Maximus brings capabilities in transition and operations of Health and
Human Services eligibility and enrollment demonstrated by performance in 20 states."21 Further
in the proposal, Accenture touts Maximus for bringing "exceptional experience in eligibility and
enrollment."22

But Maximus didn't do any better than Accenture. The call centers operated by Maximus
performed poorly and the company failed to deliver a highly touted software application known
as MASe3 that was supposed to make it possible for call center operators to interface with
TIERS. A TIERS audit conducted in the summer of 2006 found that MAXe3's lack of
functionality contributed to the backlog of more than 20,000 unworked applications.23

In its call center proposal, Accenture asserted that it was the right choice to implement the call
center project because it had the

     ·   "right leadership,"
     ·   "right solution,"
     ·   "right transition," and

19
   Denial by Design: The Ontario Disability Support Program. Income Security Advocacy Center, Toronto.
2003. 6.
20
   Matthews, Deb, MPP Parliamentary Assistant to the Minister. Report to the Honourable Sandra
Pupatello, Ministry of Community and Social Services. Review of Employment Assistance Programs in
Ontario Works and Ontario Disability Support Program. December 2004. 25.
21
   Integrated Eligibility and Enrollment Services Proposal. Accenture. September 30, 2005. 2.16-2.
22
   Ibid. 2.17-2.
23
   TIERS IT Application and Security Audit. Clifton Gunderson LLP. Discussion Draft. June 27, 2006. p.
30.

HHSC Plans Repeat of Call Center Mistake
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     ·   "right commitment"

Despite having all the right stuff, Accenture and its partner Maximus couldn't make the call
centers work. Why would HHSC think that a less experienced company would do any better or
that Maximus, which was one of the company's present at the vendors conference, will do any
better if it gets a second chance?

Who Benefits from Privatized Call Centers

HHSC's failure to learn from its experiences is troubling but not unexpected. Its latest effort to
revive the privatized call center experiment is the third incarnation of the project.

In the mid-1990s state leaders mandated the Department of Human Services to use privately
operated call centers to deliver federally funded health and human services. The project known as
TIES was touted as a premier example of reinventing government.

It, however, faltered, and the Legislature cut off most of its funding.

The one piece of the TIES project that the Legislature continued to fund was the development of
a new eligibility computer system, which became known as TIERS. The Department of Human
Services and HHSC paid Deloitte, the TIERS contractor, $300 million to design TIERS.

In 2003, HHSC implemented TIERS on a pilot basis in Travis and Hays counties. Four years
later, TIERS is still being piloted. The pilot area expanded to Williamson County, but the plan to
expand the TIERS service area to the rest of the Hill Country was postponed.

But TIER's lack of success and TIERS's faulty pilot program didn't stop privatization promoters
from pursuing their vision of turning health and human service eligibility determination into a
profit center for well connected contractors. The idea of privatizing eligibility services surfaced
again in 2003 when the Legislature passed HB 2292.

Among other things, HB 2292 instructed HHSC to replace its community-based eligibility system
with privately operated remote call centers. The author of the bill, Arelene Wohlgemuth, had
never before shown interest in expanding access to health and human services; in fact, she voted
against the bill that established the Children's Health Insurance Plan.

She was assisted in writing bill by HHSC's deputy executive commission Gregg Phillips. Phillips
came to Texas from Mississippi where as director of the state's human services department he led
an unsuccessful attempt to privatize the state's human services.

The Mississippi legislative performance review said this about Phillips: "His actions relative to
the contractual arrangement [with a welfare reform contractor] create the appearance of
impropriety and could constitute a violation of state ethics laws."24

Wohlgemuth's and Phillips' bill became the basis for the next version of the privatized call center
boondoggle. Accenture was awarded an $899 million contract to replace HHSC's community-
based eligibility system with call centers.

24
  A Review of the Mississippi Department of Human Services' Administration of Project LEAP, a JOBS
Educational Component. Mississippi Legislature Joint Committee on Performance Evaluation and
Expenditure Review, November 16, 1995. http://www.peer.state.ms.us/330.html.

HHSC Plans Repeat of Call Center Mistake
Page 10
The effort failed. But it earned Accenture more than $100 million for less than one year's worth
of poor work.

After two failures, HHSC still wants to resurrect its privatized call center fantasy. And one has to
wonder why. It certainly hasn't helped people seeking health and human services. It has,
however, been a cash cow for the various contractors and subcontractors who have received
hundreds of millions of dollars and delivered very little.




HHSC Plans Repeat of Call Center Mistake
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