(I realize the original title of this post did not really reflect the content and its importance so I changed it.)

I’m seeing the writing on the wall.

A friend of mine is very involved from a legal perspective with the Medicaid program. I’ll decline to say which company and which state because it is actually irrelevant but I was told a little story.

Traditionally, state’s pay insurance companies a capitation fee (call it a premium) per Medicaid recipient. This premium goes to the insurance company to cover the risk of a Medicaid recipient needing services the same as any other health insurance policy. The difference is the state is the premium payor versus you or I.

Insurance companies don’t always make money on such programs as you can get one or two patients, a baby that needs an extensive NIC stay which can run into the millions or a cancer patient in lengthy chemo, and profits are gone. Losses are common. Well, in order to reduce capitation costs, states are deciding to self-insure – willing to take the risk themselves (meaning tax payers bear the risk) and instead paying the insurance companies a greatly reduced capitation fee per Medicaid recipient to operate call centers and and claims processors. The insurance companies no longer bear the risk, you and I do. This cost savings may look good on paper for the first year because of the traditional length of time for an actual payout, but in the long run it will prove very costly to the states who opt to self-insure.

Now let’s take Legal Aid. Legal Aid is traditionally funded by states and is supplemented with a percentage of court filing fees and interest from IOLTA monies. When lawyers are struggling, interest  on trust accounts go down substantially. In some states they have lost as much as 80% of their funding due to IOLTA drying up. This costs the state even more then to run a bare bones legal aid operation. It would be very attractive to states to outsource this function.

Now let’s get to Walmart, the largest corporation in the world. It was announced July 1:

For the first time in its history, the nation’s largest retailer Wal-Mart is providing free legal support for patients at the Arkansas Children’s Hospital, many of whom are from low income families on Medicaid.

This type of arrangement means Wal-Mart’s lawyers will be helping families as they struggle through Medicaid’s bureaucracy. The lawyers will also help families’ challenges with landlords and school boards in order to help sick children get access to programs, services and equipment that they have been denied.

This type of arrangement means Wal-Mart’s lawyers will be taking on the government and other entities in order to help sick children get access to programs, services and equipment that they have been denied.

As states go to self-insured status, as states run out of money for Medicaid claims because they underestimated the risk, as legal aid services are under pressure because of funding drying up, in steps the largest corporation in the world to take on legal services to protect the rights of Medicaid recipients. Walmart’s 142 lawyers are doing it pro bono…. for now.

Many have discussed large companies getting into the legal services business but envisioned lawyers working out of kiosks within the company such as lawyers available in Walmart or Sears or your chain supermarket.  Did anyone envision this (brilliant) angle?

We all know Walmart is neither benevolent nor profit-averse. The question becomes as Walmart expands their programs to 50 states (which they will if all goes well), will this behemoth become the state’s choice as legal aid alternative by outsourcing their function to a private corporation? Will they be contracting with Walmart making them the preferred provider of legal services for the low-income of this country?  And if they do, will they hire thousands of lawyers as payrolled employees or will there be a Walmart-branded network of solo and small firm practitioners servicing traditional legal aid recipients through Walmart legal services franchises? Will solos who traditionally handled legal aid overflow be competing against Walmart or be a contracted provider in their network receiving a flat fee for each case handled?  Or will solos and small firms who have traditionally handled this work be shut out if they don’t agree to these fees from Walmart and simply can’t compete on price?

There are approximately 44 million low-income people, (many of them Walmart employees) including children and special needs patients. And this number will sadly grow over the next few years due to the state of our economy. You do the math. Walmart is run by very smart people.

If the pilot project with the Arkansas Children’s Hospital is successful, Wal-Mart’s Gearhart said it could roll out nationwide in partnership with other hospitals, companies and law firms.

In the meantime, if Medicaid families from elsewhere in the country approach Wal-Mart for legal help, Gearhart said the retailer will find a way to help them. ”The goal is to build a broader network”

Is this an opportunity for solos to reach out to Walmart now? Clearly they are looking to establish a network as they have proclaimed if any one in any state needs help, they will find a way to help them.

Will you be the first in your state to offer to supply these services (pro bono for now) to get in the door?