Alaska has begun to finally put some pressure on Xerox Corp. to live up to its contractual obligations to build an online Medicaid Management System that actually works. The state has said that it’s entering into “mediation” with Xerox over the botched rollout, one that has caused no end of problems for hundreds of medical professionals across the state, some of whom have said they’re on the verge of bankruptcy or shutting down because of the lack of payment from the state since the faulty system went on line.
The total contract was for $146 million, including the costs of continuing to run the system for a certain number of years. The system alone, according to news accounts, was $36 million, of which Xerox has been paid $12 million. Most of that money is being paid from federal funds.
The billing system was supposed to be completed in 2010. Instead, it rolled out in Oct. 2013, without being adequately tested, and immediately caused chaos among providers who bill the state for Medicaid services. Five months ago, Xerox and the state assured the state Legislature that the multi-million dollar system would be fixed within 6 weeks. But as of July, only about 60 percent of claims are able to be properly processed through the system.
The problems in Alaska aren’t unique. Xerox’s system is also being used in 37 other states, and has had serious problems in New Hampshire, North Dakota, California and Washington, D.C. Montana is considering cancelling its contract.
Nevada cancelled its contract to run its state health care exchange because of “poor performance,” and now the company is facing a class-action suit. In Texas, the state cancelled its contact with the company and is suing over allegations the company improperly approved $1.1 billion in Medicaid payments. Xerox has won a bid to implement a similar system in New York. Competing firms are protesting and pointing to the problems in other states, including Alaska.
The contract that the state signed with Xerox supposedly allows for penalties, but Department of Health and Social Services Commissioner Bill Streur said he hasn’t imposed any penalties, even though he said countless staff hours have been devoted to the problem, say nothing of what the botched rollout has done to providers.
The state has paid $135 million to health care providers in advanced payments, which according to many of those providers, is going to cause accounting nightmare.
Had Alaska accepted Medicaid expansion—which would have added thousands of people to the Medicaid eligibility rolls-—it would only have caused greater burden to the system. Streur is ultimately in charge of the contract. He also advised Gov. Sean Parnell against accepting Medicaid expansion.
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