The state of Texas has announced that it will transition back to the state certain health and human services eligibility services that were previously outsourced to Accenture Ltd.
The Texas Health and Human Services Commission in 2005 awarded Accenture a five-year, $840m contract to handle a range of services for the agency, most of which had historically been outsourced, such as Medicaid and Children’s Health Insurance Program eligibility. Others functions such as call center work were being outsourced for the first time.
Under the deal, government services contractor Maximus was a subcontractor to Accenture, with an estimated $370m chunk of the total contract value.
The contract came under fire by Texas officials last year for allegedly poor performance and coming in over budget. In December the state announced it would reduce the scope of the contract and take certain parts of the deal back in-house and Maximus agreed to transfer some of its work, primarily CHIP management, over to Accenture.
But now, according to an Accenture statement, the company hasn’t been able to agree with the state on the final terms of the contract changes. The two parties are now working to transition services back to the state, and HHSC expects the transition to be complete by November 1. Accenture said it doesn’t expect the early termination to have a material impact on its financial results.
Maximus, however, will still perform certain services for HHSC under separate contracts, the company said. It will continue to administer Texas’ Medicaid enrollment program and expects the new deal to extend this work through 2010. And as part of an interim contract, Maximus will continue to support CHIP functions including systems, staffing, and application processing.
Maximus has already filed an arbitration claim against Accenture, saying it defaulted on the contract terms. Accenture has filed a counterclaim saying the same thing about Maximus. Arbitration processing are still underway, Maximus said yesterday.