Costly Medicaid computer project behind schedule

HELENA . (AP) — The rollout of an expensive, new computer program that will run complicated Montana Medicaid payments is behind schedule and has forced the lead contractor to seek an extension.

Meanwhile, state officials — based on experience with software problems — negotiated a contract stating they don't have to pay Xerox until the $70 million program is finished and working.

The Medicaid Management and Information System is scheduled to replace a system that is more than 30 years old. The old system is unable to keep up with the increasingly complex payment rules and parameters.

The new program will have "millions of lines of code" to handle payments to thousands of Medicaid providers, said Ron Baldwin, state chief information officer. It will need to decipher proper payments for hundreds of millions of dollars in claims for various medical procedures, ensure that state and federal guidelines and parameters are met and run automated fraud detection systems, among other things.

The federal government is picking up 90 percent of the tab on the project as a way to help state modernize antiquated systems.

"They are the biggest system any state can implement," Baldwin said.

The Legislature appropriated spending authority for the project in 2009, knowing that the old system couldn't keep up and urged by the federal promise to pay for a bulk of the cost to meet new demands. A contract was awarded last year to Xerox, which had experience in other states working on the project.

But Montana officials were cautious. More than a decade ago, a failed software program in the Department of Revenue became infamous with lawmakers. The state was forced to abandon the project after spending $40 million dollars and start again from scratch. Case studies have been written on the debacle.

That experience "absolutely," shaped the state's computer projects ever since, Baldwin said.

Xerox won't get any of its money from Montana until the state is satisfied with the project. And the state has hired experienced project managers who over the summer rejected the first stage of the project as unacceptable.

The Medicaid management computer systems are notoriously tricky.

The Legislative Fiscal Division reported that the last 21 states to implement a new system were "late, over budget or failed."

Xerox spokeswoman Jennifer Wasmer said the company is committed to the project.

"These programs are complex technological pursuits, and the timeline for a quality implementation of the Montana MMIS is based on many factors," she said. "We are regularly reviewing the Montana MMIS project in its totality to ensure that resourcing, alignment to our plan, and other critical elements are in place to deliver Montana MMIS."

And there is some risk to Montana, despite its contract. If the project is abandoned, the federal government may seek a return of the money it has spent so far, which could be several million dollars. And the state has spent considerable staff time on the project.

But the Montana Department of Public Health and Human Services doesn't think it will come to that. The state says Xerox is putting in place more experienced managers and allocating more people to the project.

And the company has just recently successfully completed Medicaid software projects in Alaska and New Hampshire — although the one in New Hampshire was six years late.

"They are addressing the issues, very diligently addressing the issues," said Baldwin, who was chief information officer for the state Health and Human Services Department before taking the job for the state this year. "We are right now in a re-planning effort, or Xerox is in a re-planning effort, and we are going to work with them on it."

State HHS officials also say they are getting closer to full implementation of a separate $30-million computer program that determines Medicaid eligibility and handles payments for food stamps and Temporary Assistance for Needy Families. The rollout this year has been plagued by frustrating errors.

Baldwin said he thinks most of the problems have been sorted out, and expects it will be fully running by years' end.