New Mexico Deems New Medicaid System Project High-Risk

Replacing the Medicaid system is required by the federal government, analysts said, but the state has repeatedly missed targets for awarding contracts and encountered staffing problems since the work began in 2014.

by Dan McKay, Albuquerque Journal / May 10, 2019

(TNS) — New Mexico is engaged in a “high-risk” computer upgrade aimed at improving the delivery of Medicaid services — a $201 million project endangered by repeated delays and other problems, legislative analysts say.

Replacing the Medicaid information system is required by the federal government, analysts said, but the state has repeatedly missed targets for awarding contracts and encountered staffing problems since the work began in 2014, making it a high-risk project.

The warning came Thursday in a report by analysts for the Legislative Finance Committee.

They told lawmakers the state should improve oversight of the private vendors hired to handle much of the work and take other steps to keep the project on track.

But analysts also highlighted some positive trends, which they attributed to “active and focused leadership” from new appointees leading the state Human Services Department.

David Scrase, a longtime physician who took over Jan. 1 as secretary of human services, described the push to replace the Medicaid information system as “the largest and most complex project in state government.”

He assured lawmakers Thursday that he and other top executives are moving to address past problems and complete the project successfully. The state has reassigned some duties originally given to vendors and is restructuring contracts, Scrase said.

“We understand the importance of holding our contractors accountable for their performance,” he told a legislative hearing at the Capitol.

The estimated completion of the project has already been pushed back two years, to the end of 2021.

Scrase and Russell Toal, deputy secretary of human services, said the massive project has the potential to transform the way the state provides services. They envision people being able to use smartphones to apply for Medicaid or other assistance and getting immediate answers on their eligibility.

The upgrade will also provide state officials with far greater data on Medicaid programs, allowing the state to better evaluate what works and where problems lie, they said.

Lawmakers, in turn, asked the Human Services Department to provide a timeline that will allow them to monitor progress on the project.

Rep. Patricia Lundstrom, a Gallup Democrat and vice chairwoman of the Legislative Finance Committee, said she has heard state administrators pitch the benefits of information technology projects before, only to see the projects fail and result in requests for more funding to fix the problems.

“We pump a lot of money into these things,” Lundstrom said.

Toal said the project is especially complex because it involves a variety of vendors working on separate parts, or modules, of the information system. The benefit, he said, is that if a problem pops up in one module, the rest of the system should work fine. It can also be brought online piece by piece rather than all at once.

Brenda Fresquez, a program evaluator for the LFC, said the project will replace a 15-year-old information system used in the Medicaid program. The new system is based on requirements of the federal Centers on Medicare and Medicaid Services, and about 90% of the funding for the project comes from the federal government.

The LFC report said that at least one vendor has struggled with repeated staff turnover and that the state has had trouble filling staff positions within the Human Services Department to help with the project.

At one point late last year, the report said, the State Personnel Office approved a staffing plan but delayed authorization to post the jobs until February or later, months later than the department had hoped.

“The report is concerning, without doubt,” said Sen. Carlos Cisneros, D-Questa.

Medicaid is an incredibly important part of the health care system in New Mexico. About 40% of the population receives services through Medicaid, and the state led the nation in the percentage of babies born into Medicaid families, according to a 2017 survey by the Kaiser Family Foundation.

©2019 the Albuquerque Journal (Albuquerque, N.M.). Distributed by Tribune Content Agency, LLC.

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