A failed IT effort to replace California’s Medi-Cal claims processing system fell victim to a monolithic and broadly scoped contract, which limited the state’s ability to adapt to changing conditions.
That finding was included in an 18-page Lessons Learned report (.pdf download) released this week by the Department of Health Services after it terminated its contract last year with system integrator Xerox Corp.
At issue is a project that was nearly a decade in the making to replace a legacy computer system that handles millions of transactions a day for Medi-Cal, the state’s health program for low-income residents.
The 2009 contract was written in way that was “very specific and limited the ability to effectively adapt project activities and deliverables,” according to the report. And the broadly scoped contract made it difficult to adapt when multiple subcontractors were brought on to perform various services.
Those kinds of contracts appear to be a thing of the past.
New guidance from the federal government requires that all state Medicaid Management Information System procurement projects follow a modular approach — a directive released to address problems and concerns similar to those experienced in California. The Department of Health Care Services has incorporated that directive into its lessons learned, the report stated.
“This more modern and incremental approach will help DHCS chart the best course to deliver a robust and sustainable MMIS system for California’s Medi-Cal program, as well as its providers, beneficiaries, and taxpayers,” Anthony Cava, spokesman at the Department of Health Services, said in a statement to Techwire.
The report provided a series of 36 recommendations, from communication to project management and resource management. On contract management, the report recommends that future contracts include termination clauses, detailed outcome-based requirements and tie payments to performance.
It also suggested the state develop and follow a robust state-owned and -managed Release Management Plan, remarking that clear notes from Xerox would have made it easier to determine what functions were included in a release. In addition, system demonstrations by future vendors should use an active system that includes all requirements rather than the simulations often used by Xerox.
To better handle subcontractors, the report recommends the prime vendor on future projects be accountable for its subcontractors and together they should operate as a single company.
The department has begun to integrate the recommendations into its preparations for future projects, the report stated.
California received a $123 million settlement from Xerox after it officially terminated its contract with the company last year. However, the company continues to run the state’s existing computer system. A spokeswoman for Conduent, the company created when Xerox spun off its Business Services division, noted that Xerox had worked collaboratively with the department to reach an amicable resolution after “all the changes that took place since the project’s original conception.”
“We value our long-term relationship with the Department and the support of its mission to provide Californians with access to affordable, integrated, high-quality health care to preserve and improve the overall health and well-being of all Californians,” Conduent spokeswoman Erin Isselmann said in a statement.
