$25M more sought for Medicaid computer system

Executive Council votes Wednesday on adding funds to Xerox contract

While the House and the Senate are embroiled in a budget standoff, the state Department of Health and Human Services is asking the Governor and Executive Council for permission to spend another $25 million on the state’s troubled contract with Xerox, to implement and run the state’s Medicaid computer information system.

The proposed increase, scheduled to be voted on Wednesday, would cover three years and cost the state more than $6 million, since the federal government generally picks up four-fifths of the tab. It would be used to implement the continued Medicaid expansion under the Affordable Care Act, as well as the furtherance of the state’s Medicaid managed care program – even though legislature approval of either program, through the end of fiscal 2017, is being voted on Wednesday, within the budget, which is expected to be vetoed by Governor Maggie Hassan.

In return for the extra money, the state would have tighter liquidated damages provisions, as well as updated source codes that would enable it to move to another vendor if necessary.

This amendment – the ninth since the contract was signed in 2005 – brings the total price tag to $145 million, some $85 million more than the $60 million original bid awarded, which beat out the state’s previous vendor, Hewlett Packard, by $10 million. The system, which was suppose to start in 2007, actually went on line in April 2013, and has yet to be certified by the federal government.

“Wasn't the lower operating costs of the vendor the primary reason it was chosen over other bidders?” Executive Councilor Colin Van Ostern, NH-02, asked NH DHHS Commissioner Nick Toumpas in an email. “If so, how can you be sure that increasing the operating costs now, post-contract, is still consistent with the original award decision? Shouldn't the vendor be held to their original operating bid?”

Sources say that several Republican councilors are leaning toward tabling the vote. Van Ostern said he wasn’t sure how he would vote.

Calls to Toumpas were not returned by deadline.

Most observers however expect the council will eventually approve the amendment.

Since the system went live, the Executive Council approved three other price increases totaling $28 million. Each time, it was usually because of new federal or state requirements.

In March of 2014, there was an $18.8 million increase because of new federal requirements in Medicaid Management Informational Systems, health privacy rules and updated medical codes. Last June, the council approved another $6.8 million because of the state’s Medicaid expansion, among other reasons. In April, there was another $2.45 million added on for “unanticipated complexity” of changes needed to meet federal requirements.

In the latest contract, the most significant challenges for the information system would be to help administer the shift of Medicaid recipients onto the exchange. Under Medicaid managed care, it would also have to keep track of support programs for the developmentally disabled, as well as the health care of those who are eligible under both Medicaid and Medicare.

State money to fund the information systems contract would come from “funds anticipated to be available in state fiscal years 2016, 2017 and 2018 upon the availability and continuing operation of funds in future operating budgets,” the department wrote, in support of its proposal. But the Governor has threatened to veto the 2016-2017 operating budget. Instead the legislature plans to pass a continuing resolution based on the current operating budget. 

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