State’s new Medicaid system makes ObamaCare rollout ‘look good’ says Higgins

25092993_mMembers of the medical community testified at a legislative hearing today about the numerous failures with the state’s new Medicaid payment system, an online system that’s been in the works for seven years and went into effect in October. Some of the providers who testified said that because the payment system doesn’t work and they aren’t getting paid to provide services, they are on the brink of going out of business. One said that she had to take money out of her children’s college fund so that she could keep her assisted living facility in Fairbanks open. Others said that they have had to hire additional staff to deal with the problems in the new system.

House Health and Social Services Committee Chair Republican Rep. Pete Higgins, a Fairbanks dentist, said that the system makes the problem with Obamacare’s rollout “look good.”

The Department of Health and Social Services contracted with Xerox in 2007 to upgrade the 25-year-old Medicaid payment system. The total contract was for $146 million, including the costs of continuing to run the system for a certain number of years. It was supposed to be completed by 2010. Instead, it rolled out in Oct. 2013, and immediately caused huge problems to medical providers who bill the state for Medicaid services.

Alaska is not alone with the issues it’s had with the system. New Hampshire and North Dakota have also experienced problems with the same Xerox system. In Montana, as of December, Xerox missed three deadlines and was facing penalties of $30,000-per-working-day, according to news reports. Montana was considering shelving the system.

In Alaska, the online system apparently was not thoroughly tested before it went live. It did not work, and for months, it appeared as if little was being done to get those providers information regarding payments for medical services.

According to a chart provided by Xerox, in November the call line fielded about 3,500 calls. The average time to get through for those who did not give up was 54 minutes. In December, that number dropped to an average of 45 minutes.

David Hamilton, a representative from Xerox, told the committee that calls now are being answered in five minutes or less. However, some who testified disputed that number. They said when they called, they were still put on hold for much longer than that, and when they did get a person to speak to, the person often didn’t have answers to questions.

“Many have quit calling the line” said Karen Perdue, director of the Alaska State Hospital and Nursing Home Association. Perdue conducted a survey of the association’s members last week. The total amount of money owed by the state to those who answered the question was $198 million. Although she said that the state has been helpful and responsive, 21 hospitals rated the new system’s timeliness and accuracy as either poor, very poor or barely acceptable.

Because of the problems with payments, the state began providing so-called “advances” to providers based not solely on what they billed, but based, at least in part, on historical data. All told, according to DHSS Commissioner William Streur, the Medicaid department has sent providers $118 million in such advance payments.

However, because payments have not corresponded with the patient services, many providers are leery of taking the money, fearing the state will audit them and they will have to try to match payment with services.

MaLane Harbour, the director of Primrose Retirement Communities in Wasilla, said that if such an audit does take place, it will be an “accounting nightmare.” She said that the center has hired a new staff member just to deal with this, and that it’s negatively effecting the patients.

Lisa Smith, director of Choices, an Anchorage mental health center, said that her reserves have run dry, and that she requested advances twice in January but hasn’t heard back. “If this can’t be corrected we’ll be forced to close our doors before the next fiscal year,” she said.

Hamilton, from Xerox, told the committee that the system has improved over time, and they expect to get the bugs worked out in the coming months.

“We do understand the impact, and we apologize for the interruption,” he said.

Contact Amanda Coyne at


11 thoughts on “State’s new Medicaid system makes ObamaCare rollout ‘look good’ says Higgins

  1. John

    They would have been better off building the system with state IT staff instead of hiring a private contractor to do it. And ehy didn’t the state check with people in other states who had already purchased the failed system?

  2. Cathy T.

    Just recently became aware of this situation. First, from a friend in the health care profession and now from this journal. Where in the world is Sean Parnell ? Isn’t this the same guy who was critical of the federal government’s health care website and President Obama. The President, like him or not, at least had the courage to address the public and say when the site would be fixed. Our government lead by Parnell obviously has handled this poorly. What’s his deal ? Does he not know about it or doesn’t care. I think some heads need to roll. It is times like these that present opportunities to see what kind of courage and leadership our elected officials have. I feel bad for the owners and operators that are getting screwed over by the govern$ent.

  3. Magnum

    Alright Representative Higgins. You makin us folks in Fairbanks proud. There are plenty of good state workers and unfortunately some bad ones. Keep kickin the bad ones until they pack up and quit wasting our state’s tax dollars. Looks like old scared of his shadow Parnell is running from this one. Pete, if you ran for Governor I’d give you my vote and electioneer for you too.

  4. Fearful of retaliation

    I am afraid to use my real name for fear of retaliation from the commissioner of DHSS. Think about what I just said. That is so basic and fundamentally wrong that I have to fear my government will retaliate against me for speaking my mind and pointing out the gross inefficiencies and callous disregard by a governmment agency. I am a Medicaid health care service provider and hence a vendor to DHSS. I am a small businesswoman who has worked hard to save enough money and noiw operate an assisted living facility. Because of the department’s lack of payments, I am nervous that my utilities are going to be turned off for lack of payment. I have gome thru all my savings and reserves keeping my small company afloat while DHSS continues to refuse to make payments to us. I wish Commissionmer Streur and his staff weren’t paid sinve October so they would at least know what we are feeling and experiencing. The Commissioner’s attitude is uncaring at best, and more often down right rude and unprofessional. Sure, they say that they can give us an advance but the opaoerwork is horrendous for money already owed us.

  5. Mark

    Talk about suffering fools. This is why people are disgusted with their government. It is a sad commentary on what can be loosely described as public service.

  6. Valley Girl

    This is an amazing story that spitomizes what is wrong with government. I can’t believe they could spend $140 million on a project like this. I am glad that the legislature had the intestinal fortitude to take this issue head on. This is a much bigger story unfolding than what the overall media community is giving it. I’m not sure who’s fault is what and where the blame should be placed. If I were in charge I would order an investigation. This appears to be more than just incompetence. Malfeasance ? I never heard of Representative Higgins but want to applaud him for bringing this issue to the public’s eye. We need more legislators like him that are willing to try to put a stop to government spending run amuk.

  7. Lynn Willis

    So the revolving door passes another state commissioner into this “private job”. I wonder if any past state commissioner had anything to do with creating this 140 million dollar rathole? Aint’t it grand to be a member of the Alaska ruling class – a membership that just keeps on giving..

    From the ADN November 16, 2013: ” Administration Commissioner Becky Hultberg is moving to a private health care job.Gov. Sean Parnell announced Tuesday that Hultberg, 39, was resigning effective Dec. 11 for a private job, but it wasn’t until later in the week that Hultberg revealed what that new position is. She will be the Juneau-based senior vice president for the Alaska State Hospital and Nursing Home Association starting Jan. 2. Then, in late 2014, she will become the organization’s president, replacing Karen Perdue. Perdue, 59, is a former state health and social services commissioner and University of Alaska official who said she plans to retire next year.”.

  8. Howard

    Why would the State of Alaska , or any sophisticated business, turn on a new computer system that was untested. That’s not just irresponsible, it’s crazy. Commissioner William Streure can’t be held accountable for the shody work of the vendor, in this case Xerox. However, it should have been his (Streur) responsibility to manage the vendor to insure the delivery of a workable system. What Alaska got was screwed because the department’s leadership didn’t manage the project. I would like to know why? With over $100 million on the line and every medicaid provider’s invoices depending on the new system, you would think it would be important enough for someone to care enough to manage the project. I would love to hear Governor Parnell make a statement on this issue. I am no fan of President Obama but at least he had the courage to face the public and talk about the shortcomings of the Obamacare website and say when it would be fixed. From the lack of response from the Governor’s office, I’m not even sure that the Governor is aware of the problem. In either case, it is rather disappointing. Is he afraid to speak out or unaware of the magnitude of the problem ? You know its bad when a conservative Republican Legislator says that it makes Obamacre look good.

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