The California Medicaid Management Information System (CA-MMIS), one of the largest IT projects in state government, appears to be in flux after the project’s vendor reported last week that it’s unlikely to finish the system entirely.
Xerox, the primary contractor working on the $1.7 billion case management system, announced on Oct. 13 it is “probable that it will not fully complete the implementation of the platform” in California and Montana. Xerox said it’s taking a $240 million after-tax charge in its 2015 third-quarter results to reflect “estimated settlement costs and other impacts from these changes.”
The California Department of Health Care Services (DHCS) is the sponsor of CA-MMIS. According to a state project update, DHCS directed Xerox to meet a Sept. 21 go-live deadline for Release 2 of CA-MMIS after the state agreed to delay the original deadline that was set in June. The update said Xerox had requested a further delay past September, but the state did not approve it.
Techwire asked DHCS on Friday if the Sept. 21 deadline was met, and if a “notice to cure” has been sent recently to Xerox. DHCS did not answer those questions, but the department did provide a general statement:
“DHCS is meeting with Xerox to ensure the contractually required delivery of a modern data system for paying Medi-Cal claims, without unwarranted costs or delay,” a DHCS spokesperson emailed to Techwire. “The contract discussions are underway and we cannot discuss them at this time. Xerox will continue operating the existing claims payment system for DHCS.”
CA-MMIS is about 33 percent complete, according to the state. Xerox rolled out Release 1 of its Health Enterprise Platform in California in December 2014. But a February 2015 report on CA-MMIS from the state auditor said there was further risk of significant delays.
“Release 2 is far more complex than Release 1 and is expected to address over 1,300 functional requirements, which is significantly more than the 27 functional requirements addressed by Release 1. In addition, Release 2 will provide functionality to users beyond Health Care Services and Xerox. Specifically, Release 2 is anticipated to provide functionality for processing claims and for plan management as well as financial management for the Child Health and Disability Prevention program,” the state auditor reported.
Medicaid management platforms Xerox has developed for a handful of states have reportedly experienced similar challenges. For instance, one year ago the Alaska Department of Health and Social Services filed a claim against Xerox, saying its Medicaid payment system was defective. New Hampshire’s Medicaid billing system built by Xerox was delayed by seven years; it received federal certification in June.
