New York state's botched effort to modernize its Medicaid billing system is becoming an increasingly costly mistake. Over the past decade, the state has paid a Virginia-based IT company nearly $1 billion to set up and operate a Medicaid billing and processing system hobbled by delays, cost overruns and programming flaws.
State audits have criticized the payments to Computer Sciences Corp. as excessive. But the total is likely to grow by hundreds of millions of dollars, as longstanding plans to pull the plug on the contract and replace the system appear to have been put on hold.
Known as eMedNY, the state's Medicaid management information system is the largest of its kind in the nation, processing roughly $47 billion in claims a year—12 claims a second. It's the system that mails checks to tens of thousands of doctors, hospitals, nursing homes and others enrolled in the insurance program. And it serves as the main Medicaid data hub for financial reporting, quality measures, auditing and fraud control.
Dozens of state audits and reports have pointed to problems with the billing system, prompting the state in 2007 to start looking for a new vendor. Now, the Cuomo administration is strongly considering shelving those plans, according to individuals familiar with the administration's thinking.
Health officials, who issued a request for proposals for a new system last year, had been planning to award a new contract by the end of the year. At least two other companies are vying for the contract, including Hewlett-Packard and Affiliated Computer Services, a division of Xerox.
Cuomo officials now say they're rethinking the entire plan and conducting a broader review of the state's billing system. That's left the status of the contract in limbo—and payments to CSC flowing indefinitely.
The administration says the Medicaid program's move toward managed care and away from fee-for-service means that managed-care companies will assume more responsibility over the review of payment claims. Officials say the state may not need the same kind of billing and data system it had originally sought. Cuomo officials say they intend to complete their review by the end of the summer.
"Given the changes, it is both sensible and responsible to take time now to review the systems improvements that will be required in the short term and the system that will be most appropriate for the long term," said James Introne, deputy secretary for health, in a statement.
"While eMedNY admittedly limits the State's ability to introduce programs that could help control fraud and abuse through better claims management, the transition to managed care will be nearly complete before a replacement system could be brought on line," he said.
A spokesman for CSC, Joel Shadle, said the company "has demonstrated accurate and cost-effective administration for the eMedNY program."The state first approved the CSC contract in 2000 and projected that it would cost $357 million to develop and operate the system. It became fully operational only in 2005, taking nearly three years longer than expected for CSC to get crucial processing and reporting functions off the ground, according to the state comptroller's office.
Those delays increased payments to CSC by an additional $66 million. The state health department then granted the company a three-year extension in 2006, increasing fixed operating fees by 54%. Then-Comptroller Alan Hevesi initially refused to approve the extension, claiming the health department and CSC failed to justify the higher rate.
The comptroller's office changed course after the company threatened to stop making Medicaid payments if the extension wasn't approved when the original contract expired. The comptroller's office said it had no choice but to sign off on the amended contract because the state lacked a back-up plan to avoid a dangerous shutdown of the Medicaid program.
CSC argued that the company simply wanted assurances that the state was going to reimburse the company for expenses outside the existing contract that it had already incurred, an individual familiar with CSC's thinking said. "How much leverage does this state have when they have to continue to make Medicaid payments—and if the vendor walks, the public well-being is at stake?" said a state official.
In the meantime, dozens of state audits conducted between 2006 and 2010 found that health officials lacked oversight over the system's payment functions and that eMedNY routinely failed to catch billings mistakes, resulting in more than $450 million in over-payments, according to Comptroller Thomas DiNapoli, who approved another three-year extension ending in 2012.
When billing errors arose, health officials said it took months to rewrite codes to correct them; the company argued that it worked as quickly as it could within the constraints of a large government. "It's an incredibly antiquated system. They need to get rid of it and modernize," a former senior state health official said.
(Source: The Wall Street Journal)
No comments:
Post a Comment