Cost of Rhode Island Computer Upgrade Reaches $380 Million

The increase in costs are not overruns, according to one official; they are to build a system with more and better functionality that achieves greater savings than what the state would have built at any other level.

by Richard Salit, The Providence Journal, R.I. / October 21, 2015

(TNS) -- Rhode Island has received an additional $112.8 million in federal funds for a new computer system -- its overall cost has soared to $380 million -- that is being built to verify eligibility for Medicaid, tax credits for HealthSource RI and other public assistance programs, the state disclosed on Monday.

The project, which began in 2013 and was supposed to have been finished in 2015, is now due to be completed in 2016. At that time, it's projected that about $80 million in state money will have been spent creating the Unified Health Infrastructure Project (UHIP).

The federal government has offered a series of grants to states to develop and expand new computerized eligibility systems for health exchanges and expanded Medicaid programs under the Affordable Care Act. Rhode Island, which is seeking to replace its 25-year-old InRhodes eligibility system at the Executive Office of Health and Human Services, won its full request of $112.8 million, according to Michael Raia, the office's communications director.

Raia provided the update upon releasing a copy of the state's application for the federal funding, which The Providence Journal had previously requested under the state's Access to Public Records Act. He said his agency had received preliminary word several weeks ago that its application had been approved, but that the application couldn't be released or an announcement of the award made until some final steps were completed, including notifying state budget officials.

The grant, which requires the state to put up $11.9 million, will require lawmakers to modify the current fiscal 2016 budget as well as the following year's spending plan, Raia said. Health and human service officials have in the past couple of weeks begun giving presentations to State House officials on the project and the new grant.

Rep. Raymond Gallison, who chairs the House Finance Committee, said he received an update on UHIP and the latest federal award from health and human services officials last week.

"I'm very pleased we were able to get more money," he said. Since it requires a state match, "hopefully, the governor will be able to include that money for that in her budget."

"In the long term, once the UHIP project gets going, we will have savings in costs. I know it's taken a long time ... and it's something we were concerned about," Gallison said, but he added, "I think we are on the right track."

His comments echoed sentiments expressed by Health and Human Services Secretary Elizabeth Roberts.

"This is a once-in-a-generation opportunity to build state-of-the-art technology infrastructure that will save Rhode Islanders money in the years to come. We are pleased that our federal partners see an opportunity to invest in Rhode Island. We will constantly monitor the UHIP development to ensure taxpayers are getting the quality results they deserve and demand."

The project costs are dollars well spent, Raia said, since the system will more efficiently deliver benefits to people who are eligible while helping to deter fraud and abuse. Savings are projected at $40.6 million in state money annually and $90.6 million overall. It's estimated that by 2018 that new system will have paid for itself, Raia said.

A first phase of the project, already finished, allowed HealthSource RI to begin offering health plans subsidized with federal premium tax credits. It also has been used for some Medicaid programs.

The system, Raia said, has helped play a key role in cutting in half the state's number of uninsured from an estimated 113,000 to 50,000, according to a recent state survey.

Early projections had put UHIP's cost at about $110 million.

"I don't believe that anyone ever thought that was the ultimate final cost of the project," Raia said. "That was the application for what we needed to be able to participate in the first opening enrollment for HSRI (HealthSource Rhode Island) and to have a basic functioning system, but that did not include other functionality that needed to be built into it."

It's been "new terrain" for many states, said Raia, adding that the federal requirements for the computer systems were revised "after the initial system requirements were put out to states."

"These are not cost overruns," he said. "The increase in costs are the costs to build a system with more and better functionality that meets the requirements of the federal government and achieves greater savings than what we would have built at any other level. And it's a system that pays for itself within a number of years and ultimately provides better quality care, better outcomes and better protections for taxpayers to ensure that the right people are getting the right services."

As for the timing of the project, he said, "We made a management decision to push back the full launch date to ensure that we had the opportunity to make best use of federal dollars and to fully test the system before we go live with functionality that includes eligibility systems for almost all health and human service programs in the state."

Deloitte Consulting has a three-year contract to develop UHIP for the state.

The application for additional money was approved by the U.S. Centers for Medicare and Medicaid Services, in a Sept. 25 memorandum, and on Oct. 5 by the U.S. Department of Agriculture, which oversees the federally funded Supplemental Nutrition Assistance Program, formerly known as food stamps. SNAP eligibility verification is expected to be added to UHIP in 2016.

©2015 The Providence Journal (Providence, R.I.) Distributed by Tribune Content Agency, LLC.