03 Jan New Medicaid system the latest IT project to confound state government
Madison, Wis. – The state’s Legislative Audit Bureau issued a warning in April, and by year’s end the bureau looks like a prophet about the cost impact of new rules and regulations for Wisconsin’s Medicaid Management Information System.
State officials confirmed Thursday that a new computer system to operate the Medicaid program will cost $64.2 million, about twice the original price tag of $32.3 million, according to a report in the Milwaukee Journal Sentinel.
The news comes right on the heels of an agreement between Accenture and the State Elections Board on the troubled Statewide Voter Registration Project. The state originally entered into a $13.9 million contract with Accenture, but paid out $23.4 million to the Illinois-based technology services firm, other consultants, and state workers.
As is typically the pattern with problematic IT projects in state government, the Medicaid effort was plagued by delays and cost overruns, some of which are being attributed to new rules and laws governing the Medicaid program. The project, which will replace a 30-year-old system, was to have been completed by May of 2007, but the state now projects that it won’t be completed until October of 2008.
Project cost increases have been attributed to new laws governing Medicaid, policy changes approved by the Legislature, and a recent state focus on testing the new system.
State Medicaid Director Jack Halvorson told the Journal Sentinel that additional testing is needed to find any problems with the system, and much of EDS’ current work is focused on the new testing required by the state.
Medicaid, the federal healthcare program for elderly, disabled, and low-income people, is jointly funded by the federal and state governments but managed by the states. The federal government was to cover about 90 percent of the cost of the new Medicaid Management Information System, and state taxpayers were to pick up the remaining 10 percent. However, the federal government has yet to approve payment of about $19 million in new expenses, and the state has indicated it would pay for new testing work it has requested, according to the Journal Sentinel.
Electronic Data Systems of Plano, Texas, the contractor building the new Medicaid system, will be paid about $44.8 million, about twice as called for in the original contract. A second contractor, Deloitte Consulting of New York, also will see its payments nearly double to $9.3 million.
Told you so
The Medicaid Management Information System was one of 22 large, high risk projects identified in the Legislative Audit Bureau’s report on IT projects. Combined, those projects had a projected cost of $186.4 million, but delays and cost overruns have raised the ante.
At the time the report was issued in April of 2007, the audit bureau noted that costs are likely to increase when projects require more effort than anticipated. The report said the Medicaid management Information System, a project of the Department of Health and Family Services, would require 10 additional months to complete, taking the project to March of 2008.
That projected completion now has been extended by an additional seven months beyond that.
To help prevent future failures, the audit bureau recommended enhanced legislative monitoring and oversight of projects. Among its recommendations is for the Legislature to consider reactivating the Joint Committee on Information Policy and the IT Management Board, which have been dormant for several years.
Thus far, the State Senate Democratic leadership has made appointments to the Joint Committee, but Republicans are awaiting a report from the Assembly Speaker’s Task Force on Information Technology Failures. The Task Force already has recommended the creation of a state chief information officer that reports to the governor and has the authority to provide effective oversight.
In October, state officials Mike Morgan, secretary of the Department of Administration, and Oskar Anderson, administrator for the Division of Enterprise Technology, told the Joint Legislative Audit Committee that new approaches to managing state IT projects have been put in place and should pay dividends over time.
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