North Carolina lawmakers grilled state Medicaid leaders Tuesday about delays in creating the program's claims processing system.
Delays, overruns plague N.C. Medicaid claims project
The system's launch is running nearly two years behind schedule, and state auditors estimate it will cost more than double the original amount.
The state's Medicaid Management Information System is working with an outside vendor, which has a contract to overhaul and operate the new processing system. Medicaid processes eight million claims a month involving more than 70,000 providers, state Health and Human Services Secretary Lanier Cansler said.
The original contract, announced in early 2009 and awarded to Computer Sciences Corp., was estimated at $265 million. The system was supposed to be operational this year.
Now officials say the project won't come completely online until mid-2013 because of federal and state legislative changes and required updates to the aging processing system, according to a presentation from the system office. Computer Sciences Corp. overestimated how much computer code from New York's claims system could be used in North Carolina's plan, the office said.
State Auditor Beth Wood's office, which is examining the project, believes the project will exceed initial cost estimates by $320.3 million, according to a draft of Wood's report obtained by The Associated Press. The draft report said the Medicaid office did not appear to use controls to be reasonably assured the project would be on time and on budget.
Although 90 percent of the contract cost will be paid for by the federal government — Medicaid is a state-federal partnership — lawmakers on a legislative committee that oversees Medicaid's parent department said money is being wasted on a project that should have been done years ago. The state cancelled a 2004 contract with another company to build and operate the system after similar delays and additional costs led the state's information technology chief to suspend the project.
The project "seems to be turning into a money pit," said state Rep. Justin Burr, R-Stanly. "If this was in the private sector, then somebody would have been let go a long time ago."
Cansler told lawmakers the project is extremely complicated and constantly changing because of mandates. More than 500 state government and outside workers are working on the project, said Angeline Sligh, director of the Medicaid Management Information System office.
"We're still concerned about cost because it's taxpayer dollars," he said.
Cansler said the project needs to be completed by Jan. 1, 2014 because portions of the Affordable Care Act mean more people will start receiving Medicaid, the government health program that already covers 1.5 million people — mostly poor children, older adults and the disabled.
"This is not a simple system that you just build out and accommodate," Cansler told lawmakers. "There's no way to freeze the old system and not make any changes while we make the new one."
Wood's office hasn't released its final audit because Cansler's department hasn't formally responded to the review, Wood spokesman Dennis Patterson said. The Legislature's fiscal staff provided an overview of Wood's findings to committee members Tuesday.
Cansler said the Medicaid information system office would make changes in light of the audit, especially by providing more documentation to explain better how the state is carrying out the contract, such as calculating overruns and how much the vendor should pay.
Committee members questioned Sligh and State Chief Information Officer Jerry Fralick about the state's project leadership team. Fralick said the state is in "pretty good shape" to bring the system online in 2013 as long as two key 2012 deadlines are met.
"We have to stay on schedule," Fralick said. "It's imperative that we meet those dates."
Sligh said some additional costs also can be attributed to a longer contract period from less than 8 years to 11½ years, which includes up to six years for Computer Sciences Corp. to operate the system on the state's behalf. Computer Sciences Corp. also has agreed to pay $10 million for delays and contribute additional system enhancements valued at $37.5 million, she said.
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