N.H. area agencies voice payment concerns over new Medicaid computer system

Payment backlog is causing accounting headaches, they say

New Hampshire area agencies have complained that the state’s new Medicaid computer system has resulted in a $10 million payment backlog that has created an accounting mess for them. And if it’s not fixed soon, they warn, it “puts the entire system at risk.”

The letter to the Department of Health and Human Services was sent by Community Support Networks, which represents the 10 agencies that provide services to people with developmental disabilities.

The Aug. 22 letter to HHS Commissioner Nick Toumpas is the first significant complaint about the Medicaid Management Information System – run by Xerox Inc. – that went into effect at the end of March after five years of repeated delays.

Xerox (then ACS Inc.) won the contract back in 2005. Under the contract – now worth some $90 million – Xerox manages about $800 million in payments to thousands of providers that serve 100,000 recipients.

The Executive Council approved the contract in a close vote after a long-running battle, during which time the previous vendor, EDS (which was later acquired by Hewlett-Packard), charged that ACS was using New Hampshire as a guinea pig to develop an untested system so it could sell it to other states. ACS has denied the charge.

While there have been some reported problems in New Hampshire, there haven’t been the kind of broader frustrations encountered in other states, reports David Hutton, vice president of the New Hampshire Medical Group Management Association, a nonprofit organization that helps doctor’s offices with the business side of their operations.

But the area agencies’ letter indicates a more widespread concern for the first time.

The problem, wrote Susan Cambria, CEO of Community Support Networks, is that there is no system of prior authorization (which she refers to as PA) in place, thus requiring the area agencies (which she refers to as AAs) to provide the services anyway, in violating federal regulations.

“Technically, the AAs should not be providing services without a PA. We and the state are out of compliance with the federal waivers. We are very concerned that anything short of a full throttle response to this problem puts the entire system at risk,” Cambria wrote. 

There was no such problem under the old system run by HP, wrote Cambria, but under the new system such an authorization is not operational. There are temporary fixes, but those solutions “demand unprecedented increased staff time” and have resulted in a “significant” delay in getting and processing the authorizations.  

The agencies said that they tried to work with HHS, the state Department of Office of Information Technology and Xerox regarding the billing system. The offer “was rejected, and yet now we are coping with issues that could have and should have been avoided,” wrote Cambria.

She wrote that the payment delays are causing “extraordinary Medicaid receivables” on agencies’ year-end balance sheets, resulting in “unusual footnotes” to financial statements. That may result in mandatory adjustments, which could have a negative impact to the statements, she wrote.

In addition, she wrote, the problems may “impact future grant applications, vendor contracts and ability to secure financing.”

Calls to Cambria and HHS were not returned by NHBR deadline.