Still problems at state health exchange (XEROX)

HELENA — Officials with the state and Xerox Corp. agreed Friday to take a step back and re-evaluate how best to complete the stalled $70 million redo of a claims-processing system for Medicaid.

Xerox, which is building a new computerized system to process claims for the Medicaid program in Montana, agreed to prepare a report on where the company and the state differ on project expectations.

State officials will analyze that report, due in January, and then decide on a new work plan, said Richard Opper, director of the state Department of Public Health and Human Services.

“We don’t want the contract charging off in a direction that will commit us to a certain outcome that we do not want,” he said after a Friday meeting in Helena with Xerox officials.

“We’re optimistic that at least we think we’ve got a fairly logical set of steps we’re going to be taking, to both identify and address the differences that exist between Xerox and the state on how to deliver the kind of project we’re expecting,” Opper added.

Xerox missed three deadlines this fall on the 20-month-old project and is facing penalties of $30,000 per working day until the goals are met.

The company also said in June that it’s falling behind schedule and wanted to devise a new work plan for the project.

Both Xerox and state officials acknowledged Friday it’s unlikely the project will be done by its scheduled completion date of March 2015, but said it’s important they agree what the final product should look like.

“We want to go through and present to the state what we think is deliverable and work with the state to bridge any gaps,” said Lynn Blodgett, president of business services for Xerox, who was at the meeting. “I just felt it was important that before we spent a lot more time on the work plan, that we were all on the same page.”

The new system will process millions of claims for Medicaid, the $1.1 billion-a-year government program that pays medical bills for the poor and disabled in Montana.

The state’s current Medicaid claims-processing system is 30 years old and had been operated for years by Affiliated Computer Systems. Xerox bought ACS in 2009 and later won the $70 million contract to update the system.

Lawmakers on the Legislative Finance Committee questioned a Xerox official Monday over delays in the contract, saying they are “disappointed and frustrated” by delays and want more information.

Blodgett said Friday the state and Xerox disagree on how the system should achieve certain functions, while Opper said the state wants to ensure the system is easy to operate.

Opper also said it’s inaccurate to compare problems with the Medicaid project to previous disasters the state has had with information technology projects, such as a failed Revenue Department system that cost the state tens of millions of dollars in the late 1990s and never worked.

This time, the state has a contract that doesn’t require payments until a usable product is delivered, he said.

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Just a word from someone who follows press releases for the imaging industry.  Many times I've read the press releases about the White House meeting with industry leaders and on most of those releases Xerox and Ursula Burns are mentioned in the same sentence.  ACS was purchased by Xerox in September of 2009 and then a mere six months later the Affordable Health Care Act was passed.  Until yesterday I had no clue that Xerox was involved with these healthcare web sites, although I'm not one for conspiracies but this one seems that it has insider information that may be growing legs.