State Healthcare IT Projects Raise Accountability Questions


In recent months, CivSource has reported on a variety of state IT projects in the healthcare arena including health insurance marketplaces, call centers, and Medicaid Management Information Systems (MMIS). Few of these projects have gone well. Many of them are years behind schedule, and contractors have been removed from projects over missed deadlines and an inability to deliver the services they promised. The fact that this story is common among these types of projects raises accountability questions both for public and private sector officials involved.

State level IT officials explain that these projects are highly complex and often involve competing agendas from the statehouse, budget directors office, and federal program administrators like the Centers for Medicare and Medicaid Services (CMS). New federal mandates for services are also included in that mix. Private contractors offer the usual excuses including unclear guidance, inconsistent project funding or complications from legacy systems.

Take a few recent cases involving CGI Federal, Oracle, and Xerox. All three have seen state projects they are involved in come under the scrutiny of officials either before being removed, or facing a no confidence vote like Xerox recently did in Montana. The state legislature there passed a no confidence vote against the company and its contract to update the Montana’s MMIS.

The update in question is a $70 million contract focused on Medicaid payments management. The project is already more than two years behind schedule. The MMIS is supposed to replace a 30-year-old system that handles payments to thousands of Medicaid providers. The old system is unable to keep up with increasingly complex payment rules and parameters.

Ron Baldwin, Montana CIO, said he has seen progress under a recently revised contract arrangement which included more penalties if Xerox failed to deliver and will not cost the state any more money to keep the project moving forward.

In a statement emailed to CivSource, Xerox spokeswoman Jennifer Wasmer said it was important to note that only the legislative panel lost confidence in the project. Xerox for its part, said this:

Xerox is unwavering in its commitment to the state of Montana, its Medicaid clients and healthcare providers. Our objective is to deliver the most advanced tools available to improve the quality of processes associated with healthcare services under the state’s Medicaid program.

A revised MMIS project work plan has been completed and approved by the state, and the status of the project today is “green.” More than 200 Xerox staff are assigned to the project, and we have more than eight concurrent design sessions every day to ensure we are keeping pace with all milestones and deliverables. In fact, while the project is still in design phase, some components are already in development and testing.

As Montana CIO Ron Baldwin has said, the state’s new MMIS is one of the most complex IT projects undertaken by Montana. These projects require high visibility and attention from everyone involved, and Xerox is fully dedicated to continue working side by side with the state to deliver a new MMIS on which Montanans can rely.

While Montana won’t have to spend anymore money on to keep the project going (at least in theory), and has the “unwavering commitment” of Xerox, few other states have been as lucky. Questions remain about the overall accountability of these companies in their relationships with the public sector. What is the public actually getting for its hundreds of millions of dollars? A component of a project completed several years behind schedule if they’re lucky.

Xerox recently finished projects in Alaska and New Hampshire which were both years behind schedule as well. Alaska has also filed a complaint against the company over how that project was managed citing “deceptive practices” on the part of Xerox. Oracle was recently booted from Oregon for failing to meet even a small portion of its agreement with the state over its health insurance exchange. The state still paid out tens of millions of dollars for that failure. Ditto CGI Federal in its dealings with and most recently, the state of Vermont.

Sources familiar with CGI Federal indicate publications like this one may not have the whole story. However, Vermont which is working through $400 million in IT projects focused on its single payer healthcare system has seen its cost per person for coverage continue to rise while the project gets further behind. Much of Vermont’s project money is coming from federal funds as there’s a 90% match on the Medicaid piece. This match holds for other states working on their Medicaid systems and have applied, like Montana. Federal match funds were also available on the health insurance exchanges like Vermont Health Connect which CGI Federal was relieved from working on.

On a comparison basis, VTDigger prices Vermont Health Connect at costing $625 per person to enroll 160,000 people in Medicaid and qualified health plans. Whereas Covered California, that state’s exchange, has enrolled 3.4 million people in Medicaid and qualified health plans at a cost of $173 per person. Vermont residents no longer have a health insurance exchange as it was taken offline for security concerns and prior to that couldn’t update or change already entered information online. Small businesses couldn’t use the exchange for their plans either. Just this week, residents who signed up to pay their insurance online found out they won’t be able to so that either.

In most cases, states shell out tens, if not hundreds of millions of dollars for these systems and have to hope for the best. But, the optics are troubling considering the average food truck can take a debit card payment truckside these days. Legal sources say there is limited recourse for states to get money back that has already been paid out in these contracts. We are left to wonder as state governments move toward more privatization of essential services, how much more taxpayers will be expected to cough up for systems that never fully work or ever see the light of day. Watch this space.