Auditor Again Advises More Oversight of CA-MMIS Modernization

The state auditor voiced concerns Thursday that a key element of a long-planned IT modernization by the Department of Health Care Services (DHCS) is stymied by uncertainties over budget and governance, and she recommended remedies that include new legislation on oversight.

The eight-page “update” letter, from the office of State Auditor Elaine Howle, tracks DHCS’ shift in strategy and scope over the last 10 years:

• In 2010, it embarked on a “single project approach” to replace the entire California Medicaid Management Information Systems (CA-MMIS) system at once. The system consists of 90-plus components, many of which were developed in the 1970s, to handle payments to health-care providers in the Medi‑Cal fee-for-service program.
• Six years later, in 2016, DHCS ended that plan and decided instead to pursue a modular approach on CA-MMIS, modernizing the functions that the system handled and “treating each module as a stand-alone project.”
• The department in 2019 transitioned again, this time adopting a more sweeping Medi-Cal Enterprise System (MES) modernization, of which CA-MMIS would be just one element.

These changes, the auditor says, raise three key issues:

• The 2019 shift of the CA-MMIS modular modernization into the overall MES revamp “has created uncertainty about the budget and schedule for the replacement of CA‑MMIS.” Rather than CA-MMIS being handled as its own modernization project, “the modernization of CA-MMIS functions is now prioritized relative to other MES functions.”
• “DHCS lacks an adequate governance structure for managing the development of CA‑MMIS modules as part of its broader Medi-Cal modernization effort.”
• The California Department of Technology (CDT) “is in the very early stages of developing standards for overseeing state agencies’ modular modernization efforts to ensure that modules ultimately function together as a system.”

The auditor’s letter makes clear the scale — and the stakes — of the undertaking: “According to DHCS, in 2019 CA‑MMIS processed approximately $19 billion in payments to health-care providers, including physicians, pharmacies and hospitals. DHCS stated that CA‑MMIS needs replacement because it is more than 40 years old, its operations are inefficient, its maintenance is difficult, and it has a high risk of failure.”

Techwire requested comment Thursday from DHCS and CDT and will report on any response.  

DHCS began shifting to the modular approach in 2016, in part to comply with guidance from the federal Centers for Medicare and Medicaid Services (CMS).

“In 2018,” the auditor’s update says, “we reported that neither DHCS nor CDT had significant experience using or monitoring this modular approach on such a large and complex project. We recommended in our 2018 report that CDT examine the individual modules closely and oversee DHCS’ efforts to integrate the multiple modules into a complete functioning system.”

The auditor notes that while the enterprise-wide modular approach could have certain benefits, “tracking CA‑MMIS as a distinct project will be difficult as DHCS incorporates it into the broader MES modernization effort. In addition to CA‑MMIS, DHCS intends MES modernization to include the Medi-Cal Eligibility Data System (MEDS), the Comprehensive Behavioral Health Data Systems Project, and future Medi-Cal technology modernization needs.”

The audit letter continues: “We are concerned that the intermingling of all of these system updates into one modernization effort significantly reduces the transparency of DHCS’ efforts to modernize all of the legacy CA‑MMIS functionality and inhibits monitoring of those efforts.”

The letter adds, “According to DHCS’ chief information officer, DHCS intends to develop a high-level approach document and map the modernization of CA‑MMIS subsystems, and it is working toward securing funding for this effort. However, he indicated that it is unlikely that it will complete this work before November 2021. We believe that DHCS needs to prioritize the mapping of CA‑MMIS subsystems to future modules to provide transparency into its modernization efforts.”

The audit report concludes with these key recommendations:

• DCHS should add a “portfolio management” level of planning to its existing project management and program management tiers. The portfolio would encompass programs and their projects, and portfolio management would determine the timing and priorities of those functions. 
• “CDT should further establish guidelines for how state agencies must plan and budget for such efforts, develop overall strategies or road maps, and track and report progress toward completion. The processes should identify both how CDT will approve and oversee the development of individual modules and the integration of those modules into an overall functioning system. This will help to ensure that the individual module projects benefit from identifying and sharing common risks and lessons learned, as well as resolving discrepancies and compatibility issues. Without such processes, the State will lack a consistent approach for approving and monitoring any future modular modernization projects.”
• “The Legislature should amend state law to require CDT to implement processes for overseeing the State’s modular modernization efforts, including a process for approving and overseeing the development of modules and their integration into an overall system. This process should set expectations for state agencies to plan and develop cost estimates for such projects, including developing an overall strategy or road map and reporting progress toward completion. The process should also require state agencies to establish a plan for integrating modules into a complete system.”