Plagued by delays, state readies Medicaid billing system for federal certification

MarketsAssociated Press

More than seven years — and $31 million — past its original deadline, New Hampshire's Medicaid billing system is up for federal certification this month, the final step in a long-delayed process to ensure thousands of doctors and hospitals get reimbursed for Medicaid care in a timely manner.

Executive councilors approved the $60 million contract in 2005, expecting to see the system completed and online by the end of 2007. But a series of delays, including the decision to make New Hampshire the guinea pig for a brand new system design, meant the system did not go online until 2013 and the state had to extend the contract with its old provider through that year.

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When the system finally went online, it was plagued with errors that caused delays in payments to hospitals and doctors. In the two years it's waited for federal certification, nearly $6 million in federal matching money has been left on the table, although the state will be eligible to receive it through back payments if the system is certified.

Health and human services commissioner Nick Toumpas agreed the process has been bumpy.

"Were there some mistakes that were made along the way? I'm sure there were," Toumpas said. "But each time when we would have an issue, we would try to correct that and just make ourselves better as a result of it."

Toumpas and officials from Xerox, the vendor, say the delays were frustrating but necessary to build a state-of-the-art system that can handle the state's Medicaid managed care and expansion plans. But critics of the process said the state could have done more to keep Xerox and the federal government, which paid for most of the project, on the promised timeline. Nevada, Alaska and New York have all run into similar issues with Xerox over Medicaid billing systems.

"No question about it, we were on a journey with the commissioner and his team, frankly, to get to where we are today," said Dave Hamilton, Xerox's president of government healthcare solutions. He said New Hampshire's system is "well-running, flexible and adaptable."

The system processes claims and reimburses the thousands of providers caring for Medicaid beneficiaries. Since it went online, New Hampshire's system has processed about 22 million claims for 244,000 Medicaid patients, adding up to $2 billion, officials from Xerox said.

New Hampshire signed a contract for the system in 2005 with Affiliated Computer Systems, later bought by Xerox. A company now owned by Hewlett-Packard had operated the state's system since the early 1990s but when the state put the contract out to bid in 2004, ACS offered a system for about $10 million less.

Rather than implementing an existing system, the company asked to build a brand new system different from anything it had done before, and New Hampshire agreed.

But the contract was continually delayed, in part due to New Hampshire's move from a fee-for-service to a managed care system. The delays grew the contract's cost by $31 million. The federal government will pay the lion's share of the total costs and Xerox was on the hook to cover the costs of continuing to operate the old system in the meantime. But Senate President Chuck Morse, a past critic of the project, said that doesn't make the delays acceptable.

"A guarantee to meet the financial obligation is not a guarantee to get the system built in a timely manner," he said. "In the future, we do learn a lesson from this, we want to make sure that when we expect something to be built in several years — not 10 — that it happens."

Wendy Dumais, director of revenue operations at Concord Hospital, said the new system was denying routine claims when it went online in 2013, causing the hospital's backlog of payments to skyrocket from $1 million to $5 million. On biweekly phone calls with state and Xerox officials, she recalls them being aware of problems but slow to fix them. Most of the major backlogged claims have been cleared, she said.

"We lost confidence in Medicaid and their ability to process claims — it was tough" she said. "We're feeling like maybe we're coming out on the other side of that now, but it was really frustrating and challenging."

The federal government pays 50 percent of the operating costs for non-certified systems and 75 percent for certified ones, meaning the state will be eligible for about $6 million in back payments once it is certified.

Toumpas is counting every penny in his department's tight budget and that $6 million — nearly as much as the nursing home cuts that caused a stir earlier this year — is already part of the plan.