UMass Medical School laying off 65
Grant Welker
Editor's note: The story has been updated with more information from the Executive Office of Health and Human Services.
The University of Massachusetts Medical School is laying off 65 employees in a Shrewsbury division because it lost a MassHealth contract, the school confirmed Tuesday.
The layoffs are happening at Commonwealth Medicine, UMass Medical School’s public service consulting and operations support arm. Commonwealth Medicine has been providing a series of third-party administrative services, including some prior authorization services, for MassHealth since 1999.
Mark L. Shelton, a spokesman for the medical school, said that MassHealth put out a procurement request for a range of third-party administrative services, including prior authorization.
"[MassHealth] chose a vendor for this broad range of services and as a consequence, MassHealth chose to end its relationship for prior authorization with [Commonwealth Medicine] – services that had been provided under an 'interdepartmental services agreement,' and that are subject to renewal annually," he said.
MassHealth has instead decided to contract those services through Optum Government Solutions/United Healthcare, and therefore, the school will have to lay off those 65 people, said Shelton.
This is Optum's second foray into the Central Massachusetts healthcare industry this month, as it is in negotiations to acquire Worcester-based Reliant Medical Group, pending a vote by Reliant's board on May 9. Optum is based in Minnesota but has major operations in Boston and operates in eight other states, including Connecticut.
Most of the affected employees will stay on until June to finish the contract’s current obligations, said Shelton, and some workers might end up staying on a transitional basis through fiscal year 2018.
In a February press release announcing the agreement, MassHealth said Optum will employ 90 people under the three-year contract, which started April 15.
Under the contract, Optum supports MassHealth's management and oversight of fee-for-service Long-Term Services and Supports provided by over 2,100 health care entities for about $3.5 billion a year, according to the press release.
Michelle Hillman, a spokeswoman for the Executive Office of Health and Human Services, said that the contract is valued at $19.5 million per year, on average, which is less than one percent of current fee-for-service spending on long term services and support, and much less than what is paid in administrative rates to health plans.
Correction: Because of a clarification from UMass Medical School, the name of the medical school spokesperson this information is attributed to has been changed.
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