Audit: Xerox Medicaid Project Could be 6 Years Late

State officials received the report last week after the Legislature sought an outside review

By LISA BAUMANN, Associated Press

HELENA — At the pace it’s going, Xerox Corp. will be six years past its renegotiated deadline by the time it completes an $84 million state contract for a new computer program to manage Medicaid payments, according to an audit of the project.

State officials received the report last week after the Legislature sought an outside review. Since the Medicaid Management and Information system project began in 2012, Xerox has been found in breach of contract for missing deadlines and a legislative panel has given them a vote of no confidence.

The state and Xerox resolved breach of contract issues last year and renegotiated the contract with a new deadline of May 2017. The audit by Public Knowledge, LLC, predicts the project could take until 2023 — more than eight years past the original deadline of February 2015.

“At the current average pace of completing work, it would take approximately 96 months to complete the project,” the audit says.

Xerox spokeswoman Debbie Field said the company’s review of the report suggests its methodology is flawed. She said it bases its prediction on the pace early on in the project, when productivity was slow and assumes that productivity level will remain throughout.

“Xerox has already been performing well above the productivity assumptions used for the schedule projections for the past year,” she said in a statement.

But state project director Jeff Buska said at a Legislative Finance Committee meeting in June that Xerox is under a plan to speed things up and is still struggling to meet deadlines.

Department of Health and Human Services staff is also monitoring the project and is reviewing the audit and Xerox’s response, according to department spokesman Jon Ebelt.

“Our contract does not require us to pay Xerox until certain system development milestones are achieved. We are obviously concerned about Xerox’s performance and are likewise committed to protecting Montana taxpayers,” DPHHS director Richard Opper said in a statement.

The computer system to handle payments to Medicaid providers, including doctors and hospitals, is supposed to replace one that is more than 30 years old. The federal government is picking up the tab on 90 percent of the project.

Ebelt said state officials will give recommendations on whether to keep Xerox on the project at the next meeting of the Legislative Finance Committee in September.

A similar project in New Hampshire completed more than seven years past its original deadline received federal certification in June, meaning the system meets federal requirements and the state is eligible to receive the maximum amount of federal funding for its Medicaid program. Other Xerox systems are in use in Alaska and in the works in three other states.

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