State finally putting some pressure on Xerox for botched Medicaid system

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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8 thoughts on “State finally putting some pressure on Xerox for botched Medicaid system

  1. Derp

    No! Couldn’t agree more than Parnell has botched all things financial. But the anti-Parnell vote needs to be unified, not divided. Take Byron Mallott for instance, who is polling like a third party candidate. How many times in the last 14 years have you found yourself wishing that more people voted for Nader in ’00? Or that more people wrote-in Ron Paul in ’08?

    Vote for Bill Walker, because your perfect candidate just isn’t going to win. Voting for them will only help Parnell.

  2. RJ

    I’ve never heard of Carolyn Clift but she’s shown more initiative in one blog comment than Parnell has in +5 years. Unless Parnell gets off his ass, he’s gonna kicked there.

  3. Care Clift for Governor

    This is another example of how the Parnell administration has botched all things financial. There is no excuse for letting the medical providers down. We are talking millions of dollars plus all the state employees’ time trying to fix a problem that we did not need! As your next governor, I will get this problem under control by appointing competent people to head up the DHSS and other departments. VOTE CAROLYN “CARE” CLIFT FOR GOVERNOR.

  4. Lynn Willis

    Insist that the Xerox system be used to pay claims for the government health care provided to legislators and the Governor. The system would be fixed or replaced by noon tommorrow.

  5. Medicaid Provider

    This mess almost cost me my business and my home. It forced me to reduce the size of my workforce. Yet, no one at DHSS lost their jobs or experienced any financial hardships. Promises and time frames in which the system was to be operable have come and gone. The Commissioner doesn’t care, his employees don’t care and I can’t help but wonder that Governor Parnell doesn’t care either. There is a culture of callous indifference that exists at DHSS. Governor Parnell, I beg you to engage, make a change to give us small business owners hope. This is absurd and should be an embarrassment to the state. The Alaska DHSS should be the poster child os what government shouldn’t look like.

  6. Mary D.

    This report is maddening. Waste, waste and waste. Subjecting the health care provider community to such an incompetent system should cost Parnell his job. He obviously doesn’t care as evidenced by his continuing to allow Commissioner Streur to mismanage the system. Ridiculous.

  7. Anonymous

    Welcome to the Do-Nothing Milk Toast Administration. If Parnell wakes up, maybe he’ll realize the need for a new DHSS commissioner.

  8. Truth Teller

    Gee whiz, what iin the world does it take to get the DHSS commissioner to scream “breach of contract.” Whatever cozy relationship that exists between the commissioner and Xerox should NOT be acceptable to the governor either. Reading stories of such mismanagement and this administration’s tolerance for such is unacceptable. Mediation? Now? Really? The way I understand this, Xerox was three years late coming on-line and when they did, it didn’t work and still doesn’t. Where’s the legislature? Are they alright that theu were told in February that it would be fixed in 6 weeks and still isn’t? This is a gross and upsetting example of what is wrong with government. If a private sector company took such a laid back approach, they would go out of business. It’s time that someone in state government stepped up, demanded change and takes action.

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