N.C. health chief works on Medicaid billing systems

The Associated Press

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RALEIGH — North Carolina's new health secretary announced directives on Friday related to a beleaguered new Medicaid claims processing system she aims to ensure comes online smoothly and without unnecessary expenses.

Health and Human Services Secretary Dr. Aldona Wos ordered no more program changes to the current 1970's-era billing computer system by the system vendor unless they're absolutely required to ensure providers are paid or patients are covered.

Wos also said that outside consultants have been brought in to find any obstacles to the replacement system — one of the largest information projects in state government — to begin operating July 1.

"We have a responsibility to patients, providers and the taxpayers of North Carolina to put our limited resources where they are needed most," Wos said in a statement, adding the "department's priority is to ensure the transition from our current Medicaid computer system to the replacement (system) is smooth, efficient and on time."

HHS spokeswoman Julie Henry said later Friday a "hard freeze" on changes to the new system starting last year had thawed in part because changes to the legacy system kept occurring. That meant requiring more time and money to conform the new system.

The current system, which is managed by HP Enterprise Services, processes 88 million claims and writes $11 billion in checks annually to cover more than 1.5 million Medicaid enrollees. Computer Sciences Corp. is building the new system.

Republican legislators have been skeptical about the replacement Medicaid Management Information system, especially after a 2011 state audit was critical of management of the project, which was two years behind schedule and cost more than twice what was originally projected.

The department, then under Gov. Beverly Perdue's administration, objected strongly to State Auditor Beth Wood's review, which found at the time the new billing system would exceed initial cost estimates by more than twice the original price tag of $265 million. The department said then the new billing system was paid for mostly by the federal government, the state would recoup its investment share within two years and generate additional cost savings once operational.

The department said Friday new Medicaid policies and rates have accounted for much of the legacy system software changes.

Keeping program changes to an absolute minimum in the coming months "will be critical to enable a more predictable transition and avoid disruption of services to the public," said Susan Young, the project's risk management adviser.

Wos and her boss, new Gov. Pat McCrory, have raised concerns about the state's information technology systems, particularly those for Medicaid, since McCrory took office in January.

In 2004, the state awarded a contract to Affiliated Computer Services to replace the current system, but the contract was terminated in 2006 after delays and additional costs.