When the state of California and system integrator Xerox announced in April they had agreed to stop development of a replacement for the California Medicaid Management Information System (CA-MMIS), the settlement included a stipulation that for the following 30 days the two parties would notify each other before commenting about the particulars of the pact.
That period of time, seemingly, is over.
Karen Johnson, chief deputy director of the Department of Health Care Services, answered lawmakers’ questions about the CA-MMIS failure during a May 9 legislative budget hearing.
“One of the critical lessons that was learned was to be more agile in terms of the project design, scale and timing,” Johnson told the Assembly Budget Subcommittee on Health and Human Services.
The CA-MMIS contract was more than 1,100 pages long and the vendor’s narrative technical document was about 11,000 pages; staff had to learn their way around both of them, Johnson said.
She said any future effort to replace CA-MMIS will use a modular, more agile approach.
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 Department of Health Care Services is requesting authority to spend an additional $3.4 million to fund 24 staff positions to work on closeout activities for Xerox’s work on the project, identify any “salvageable assets,” and to identify a path forward to replace the CA-MMIS legacy system.
Assemblymember David Chiu, D-San Francisco, said during the hearing that he wants to see more accountability on the state’s major technology projects. He said he has “sat through too many hearings learning about yet another major IT project that became an implementation disaster.”
“And I want to get a sense of how many project there have been around the state — we keep hearing about more and more, and I know this is just one project in your [DHCS] bailiwick — but there is clearly a pattern in the state’s inability to manage major projects like this. Multiyear projects that turn out to be a train wreck, that waste millions of dollars that should be going to serving the very folks whose department you represent,” Chiu said.
Chiu said he will ask the Department of Technology to compile a full list of projects in the state “that have not resulted in success.”
“Because clearly there’s not oversight that’s happening in the executive branch or the legislative branch. I know these are pretty tough words, but we’ve just sat through too many of these hearings,” Chiu added.
Johnson noted that for CA-MMIS, the state only compensated the vendor for the deliverables that were finished the successfully completed Release 1 and business rules extraction activities. The system replacement work began in 2012.
“So out of the $179 million budget that was allocated to Xerox for this particular project, we only paid $9 million, and then part of the settlement negotiations in the agreement, we were able to secure reimbursement of all of those costs,” Johnson said.
Chiu said he is glad to hear California didn’t burn through the entire budget.
“I guess my question is, how did we enter into a $180 million contract with what should be one of the top companies in the world, and somehow see that project fail?” Chiu asked.
