The state of Nebraska finalized a child welfare contract for the Omaha area this month with a Kansas-based company amid concerns by the current contractor and some child welfare advocates.
The $39.2 million annual contract with Saint Francis Ministries will last five years, with an option for two additional years.
PromiseShip of Omaha, formerly Nebraska Families Collaborative, filed a formal protest with the state over the bid award. That protest was denied, according to a statement from Ron Zychowski, PromiseShip CEO.
"We are disappointed in this decision but we also know that this is just the first step in the process and we continue to stand by the significant and legally disqualifying defects we identified in Saint Francis Ministries’ bid," he said.
He said the quality of PromiseShip's proposal was "far superior" to the one submitted by Saint Francis Ministries. The Kansas company was chosen because it was the cheapest bidder, Zychowski said.
HHS spokesman Lee Rettig said Saint Francis was not selected based on cost alone, but as a result of a comprehensive process conducted by the Department of Administrative Services that considered several factors.
Saint Francis' proposal scored highest, based on corporate overview, technical approach, financial requirements, cost proposal and oral interview, Rettig said.
"This change creates an opportunity to further strengthen families through a shared vision and strong collaboration designed to improve outcomes in the Omaha area," he said.
Forty percent of child welfare cases in Nebraska are in the eastern service area of Omaha and Sarpy County. It is the only area in Nebraska with a private contractor. Lincoln's southeast service area cases are managed by HHS.
PromiseShip complained primarily about the undercutting of the costs to provide services to children and families, which resulted in part in not having enough case managers and supervisors to meet the state law-required lower caseload. As of June 30, he said, 1,808 cases needed case management in the eastern service area which would require a minimum of 106 case managers, not the proposed 62.
Sixty-two case managers in the Saint Francis bid would mean 29 cases per manager, not the 12 to 17 prescribed by state law. Zychowski said a bid that violates state law should have been disqualified and rejected. But he said the Department of Administrative Services offered Saint Francis a "special opportunity" to correct its proposal and identify 54 more staff that would add case management to their responsibilities.
He said Saint Francis also proposed to spend $27 million less on direct services to children and families than PromiseShip.
In 2017, PromiseShip's cost per case was $2,900, he said, while the state's cost per case in four regions where it provides services was $3,200, according to an independent cost analysis commissioned by the department. In 2018, PromiseShip's cost per case was $3,200 and the state's $3,100.
That showed, he said, PromiseShip's costs were overall in line with state costs.
Other child welfare advocates also weighing in on the contract decision were concerned about the cost cutting. But a foster parent and coordinator of the Nebraska Foster Parent Advocacy Network, said he has been monitoring problems with PromiseShip for several years, and he is hoping Saint Francis will be able to rise to the occasion and offer foster kids and families a good experience.
Bobby Loud said foster families had issues with Promiseship that involved placements and reimbursements, among others.
A Nebraska state audit of 18 months between July 2016 and December 2017 showed $25.8 million in questionable child welfare spending by both PromiseShip and the Department of Health and Human Services. In 113 claims selected randomly, the audit found a 40 percent error rate. That included services paid by HHS that should have been by Medicaid, payment of unreasonable rates and excessive charges for travel.
Considering the amount of money PromiseShip was receiving that wasn't going to direct care of children, Loud said, if Saint Francis can potentially deliver a more fiscally responsive level of care than PromiseShip, "we're all good with that, as long as that level of care does not negatively impact the children that foster parents provide care for."
But Kerry Winterer, former Department of Health and Human Services CEO who left the job at the close of 2014, said the new contract hearkens back to 2009 when the state embarked on statewide privatization of child welfare.
"There was never enough money in those contracts to pay for the services the state was requiring to be delivered," he said. "We lost contractors from the beginning. One went bankrupt, others just withdrew."
The state is going to be back where it started, in a situation that led to pain, uncertainty and, effectively, higher costs, he said. He speculated Saint Francis would eventually be asking for more money.
Sarah Helvey, Nebraska Appleseed program director for child welfare, said she is also concerned the cost of the Saint Francis bid was a determining factor in awarding the contract. She also worries about caseload issues. Her agency will be keeping a close eye on how Saint Francis carries out the contract, she said, and on transition and workforce.
Rettig said Saint Francis is an established partner that already provides services in central and western Nebraska, and the contract is designed to improve outcomes. Contract performance, financial performance and child welfare outcomes will be closely monitored by HHS, he said.
"The agreement we have reached with Saint Francis will deliver improved outcomes for the kids we serve, while following the contracting process laid out in law," he said.
Saint Francis Ministries spokeswoman Morgan Rothenberger said the nonprofit is committed to meeting all expectations of the contract, and will conform to all applicable state regulations and laws.
"One of the components of the Nebraska contract, which we understand to be a new approach over previous contracts, is a focus on oversight and accountability," Rothenberger said. "We’ll be working closely with DHHS and providers to meet and exceed their expectations."