Governor halts project to check Medicaid rolls

Seek firm for job, DHS told

Gov. Asa Hutchinson answers questions regarding an announcement of a trade mission to Japan and China during a press conference at the State Capital November 6, 2015.
Gov. Asa Hutchinson answers questions regarding an announcement of a trade mission to Japan and China during a press conference at the State Capital November 6, 2015.

Gov. Asa Hutchinson has directed the state Department of Human Services to hold off on adding to a Medicaid eligibility and enrollment system that already has doubled its expected cost.


Rep. Kim Hammer, R-Benton, is shown in this file photo.


Sen. David Sanders, R-Little Rock, (left) talks with Senate President Pro Tempore Jonathan Dismang, R-Searcy, in this file photo.

The unfinished system also has been blamed for delays in processing applications and reviewing the eligibility of those already enrolled.

Hutchinson wants the department to hire a company that will act as a "systems integrator," taking responsibility for the project.

At the governor's direction, the Human Services Department will consider proposals from companies to complete the system using either the same IBM software that the department has been using or a new software platform.

Hutchinson outlined his plan in a letter sent Tuesday to state legislators.

"There are certain changes that DHS must complete to comply with federal mandates, and those will continue," Hutchinson said in the letter.

But he said the pause was needed "to make sure the system we develop matches the policy decisions that will be made on our Medicaid reform efforts" as well as to "conserve state and federal resources."

A legislative task force has been studying possible changes to the state's $7.3 billion Medicaid program, including the so-called private-option expansion and cost-containment measures. The group is to present its recommendations this month.

The governor's plan for the enrollment and eligibility system follows recommendations in a Nov. 10 report by Stamford, Conn.,-based Gartner Inc., which the state Department of Information Systems hired under a $450,000 contract to assess the enrollment system project. The department released the report Wednesday.

In the letter to legislators, Hutchinson said he plans to ask them to approve a sole-source contract with Gartner to prepare the solicitation for a systems integrator.

Under Gartner's proposal, it would be paid $750,000 to help with the solicitation for the systems integrator as well as for a company to handle information-systems support. The contract for a systems integrator would be awarded late next year.

Amy Webb, a spokesman for the Human Services Department, said the department had already planned to hire a systems integrator to coordinate a phase of the project that will involve expanding the system to handle enrollment for all Medicaid recipients.

The system was designed to handle enrollment and eligibility for about 600,000 recipients, including low-income adults and children, whose eligibility is governed by rules that went into effect Jan. 1, 2014, under the 2010 federal Patient Protection and Affordable Care Act.

The eligibility of about 200,000 Medicaid recipients, including the elderly and disabled, was not affected by the new rules.

The department's old eligibility and enrollment system is still being used to review the eligibility of those recipients.

As a result of the Gartner report's recommendations and governor's directive, the department also will stop work on a part of the new system that will handle food-stamp eligibility, Webb said.

The department on Wednesday notified Chicago-based RedMane Technology, which has been working on the food-stamp project, that its contract would be terminated within 30 days, Webb said.

The department "had already determined that we should not move forward with transitioning traditional Medicaid eligibility over until a system integrator could be hired," Webb said.

"The [Gartner] report just provides us with more detailed guidance on how to get to where we feel strongly that the risks for the state are minimized and the system itself is functioning well for both our workers and the public," she said.

Rep. Kim Hammer, R-Benton and a chairman of the Legislature's Joint Performance Review Committee, said he supports Hutchinson's plan.

Over the past several months, the committee has been investigating what led the project to fall behind schedule while the estimated cost more than doubled, to about $200 million.

The state's share of the cost is expected to total about $25 million, with the rest coming from the federal government.

"Nobody feels confident that continuing down the path that we're going is going to produce what we've got to have to verify eligibility in the most efficient and effective manner," Hammer said.

Sen. David Sanders, R-Little Rock, said the plan will give officials an opportunity to "assess what is in the long-term interest of the state."

"It remains to be seen what the state will get," Sanders said. "I'm very excited that the governor is giving the state some real options here."

The enrollment system project is part of an effort to consolidate and streamline the handling of applications for Medicaid and other social services programs.

After soliciting bids in 2012, the Human Services Department tentatively awarded a $65.4 million contract for the project to Fargo, N.D.-based Noridian Healthcare Solutions.

But the department couldn't agree on contract terms with Noridian.

Facing an Oct. 1, 2013, start date to begin enrollment in the expanded Medicaid program, officials ended up using a contract, available to all state agencies, through which the department pays companies for workers' time and materials, rather than for meeting specific goals.

Department officials have said they plan to phase out those contracts in favor of performance-based, sole-source contracts, and eventually competitively bid contracts.

The department met the Oct. 1 deadline in 2013 to begin enrollment, but annual checks of recipients' eligibility were delayed by more than a year.

Late last year, the department fired Calverton, Md.,'s EngagePoint, its lead contractor on the project, and replaced it with eSystems of Princeton, N.J.

In his letter to legislators, Hutchinson said he also will establish a "policy oversight committee" to guide the enrollment system project and a statewide committee, made up of agency directors, to monitor the award of information-technology contracts of more than $50 million.

A Section on 12/03/2015

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