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Xerox bloodied but unbowed seeks new exchange business

Reform Update: Xerox bloodied but unbowed, seeks new exchange business

By Darius Tahir
Posted: June 12, 2014 - 4:00 pm ET

The casual observer might be surprised to learn that Xerox landed a contract to work with Maryland's state exchange and is bidding to help New York with its Medicaid program. After being summarily thrown out of its job working on Nevada's exchange to widespread jeers, one might think Xerox wouldn't want to have anything more to do with state exchanges.

But the business opportunities are simply too enticing to pass up, the technology company's CEO indicated.

Still, whatever opportunity Xerox saw in Nevada went south over 17 months. “If not for Xerox,” said U.S. Senate Majority Leader Harry Reid, (D-Nev.), in a statement, “there is no reason Nevada's exchange couldn't have been as successful as other state-based exchanges, like Kentucky or Connecticut.”

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The feedback from Nevada was so bad that the Las Vegas Review-Journal wrote, “Nevada just one of many states left hanging by Xerox health-system woes,” with Montana's Public Health and Human Services Department director calling the Xerox experience “incredibly frustrating” with regards to an attempted Medicaid payment system upgrade.

What went wrong in Nevada? Xerox officials have trotted out a few explanations. In a May interview with the Wall Street Journal, Xerox CIO Stephen Little said, “We didn't really have the right program management and governance structure in place. You don't expect what you don't inspect.”

But the tools were certainly available. Nevada's exchange website has a record of 34 semi-monthly updates, which tracked the exchange's long slog to completion from September 2012 to January 2014. According to the updates' rating system, problems first emerged in December 2012, when several elements of the project slipped from “on-schedule” to “at-risk.”

From there, according to the update ratings, the project only deteriorated. By April 2013, the overall assessment of the project was “at-risk.” Some subcategories dipped to their lowest rating levels in August. At that time, Nevada's exchange director Jon Hager wondered “how confident we are in making the 10/1 go-live date,” according to the minutes of a Nevada health exchange meeting. A Xerox employee replied that they were still “comfortable going live” but “there is no room for slippage.” The imbroglio became a major discussion point for Xerox executives in their April 2014 quarterly earnings call.

But while Ursula Burns, Xerox chairwoman and CEO, identified the Nevada exchange implementation as a factor behind disappointing results in that division, she also explained why the firm is insistent on pursuing government opportunities. “Demographics are all tailwinds for it, all in the favor of government health,” she said, adding that new management in the firm's services division may help.

Burns also pointed to another factor which may help Xerox in future exchange involvement—less responsibility. Nevada was the “one we led on,” she said, and was a “one-of-a-kind implementation.” The firm handles exchange modules in six or seven other states, including Connecticut, Kentucky, New Jersey and New Mexico, according to Xerox spokeswoman Jennifer Wasmer.

The company's Maryland contract fits that approach—Maryland exchange spokeswoman Alison Walker said that Xerox's contract was designed specifically to host the exchange's website, rather than being the lead contractor.

But Dan Schuyler, senior director of exchange technology for consultancy Leavitt Partners, suggests another reason Maryland might be willing to bring in Xerox: He thinks state leadership is typically the most important variable. “Quite honestly, the vendors—all the vendors—are to some extent getting a bad rap,” he said. “In Nevada and other states where we're seen some issues, a lot of that can be attributed to the scope of work that was developed by leadership there.”

For Schuyler, what matters most going forward won't be the choice of vendor, but the diffusion of experience and best practices. It wasn't an accident, he indicated, that Connecticut did so well. It brought in an experienced executive, Kevin Counihan, CEO of Access Health CT, the Connecticut health insurance exchange. Other states will benefit from that experience, since Connecticut is selling its expertise to other states.

Washington state exchange CIO departs

The chief information officer for one of the more acclaimed state exchanges—Washington state's—is moving on, according to an article in the Seattle Times. Perhaps that's related to reports that 15% of enrollees in the state struggled with technical glitches that made it hard to seek care.

That news accompanies updates on Washington 2015 plan premiums. According to an analysis from Avalere Health, a few smaller plans will seek small rate increases, while the rest will propose rate increases of 8.1% to 11.2%. By contrast, Molina Healthcare seeks a 6.8% premium cut.

Follow Darius Tahir on Twitter: @dariustahir

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