The state of California and system integrator Xerox have agreed to stop development of a replacement for the California Medicaid Management Information System (CA-MMIS), the Department of Health Care Services announced in an online posting on Monday.
Under the settlement terms, California will pursue the procurement of a new Medicaid Management Information System as Xerox continues to operate the existing CA-MMIS system through 2019.
Xerox will pay the state $103.3 million in cash, and provide $15 million in hardware and software to the Department of Health Care Services. In turn, the state will pay the company $7 million in withholdings. The parties also agreed to refrain from public comment about the settlement for a 30-day period.
In its announcement Monday, the Department of Health Care Services acknowledged that technology has changed significantly since procurement activities for CA-MMIS began in 2007. Xerox began work in 2010.
"In light of these technological changes and evolving approaches to enterprise data systems, DHCS and Xerox have agreed to discontinue the remaining Replacement System DD&I, enabling DHCS to pursue a new procurement approach that would benefit from the most up-to-date technology and system design strategies available," DHCS wrote.
The settlement was months in the making. Techwire first reported in October 2015 that discussions about the contract were underway between the company and the state.
CA-MMIS was about 33 percent complete in fall 2015, according to the state. Xerox rolled out Release 1 of its Health Enterprise Platform in California in December 2014. But a 2015 report on CA-MMIS from the state auditor said there was further risk of significant delays, and last fall the state notified the vendor that it had missed the deadline for Release 2. Xerox said publicly at the time that it was "unlikely" to finish CA-MMIS and adjusted its corporate earnings accordingly.
This story is developing.
