IE 11 Not Supported

For optimal browsing, we recommend Chrome, Firefox or Safari browsers.

A New Approach to Medicaid Management Information Systems

States consider strategies for replacing or upgrading Medicaid systems.

How old is the Medicaid Management Information System (MMIS) in Illinois? “Our joke is that the grandchild of someone who worked on creating our MMIS is now in long-term care,” said Ivan Handler, who recently left his position as CIO of the Illinois Department of Healthcare and Family Services to become CTO of the Governor’s Office of Health Information Technology, where he will work on the state’s health information exchange.

Traditionally MMIS has been a single mammoth system that handles a series of functions related to Medicaid claims processing and administrative information retrieval. But Illinois’ legacy mainframe system is buckling under the weight of ongoing federal health reforms — and it must be replaced soon, Handler explained. The longtime employees who have worked on the system are starting to retire, and it’s becoming increasingly difficult to find COBOL programmers to write “Band-Aids” to provide new functionality, such as a national provider identity requirement.

Also, deadlines for a host of federal mandates loom, like updates to the Health Information Portability & Accountability Act (HIPAA) and a new clinical and reimbursement coding system called ICD-10. The creation of state health insurance exchanges means eligibility systems must be updated. These changes will require greater interoperability between systems. The mainframe-based systems of the 1980s do not easily interface with each other or with data warehouses, which makes analysis and reporting cumbersome, if not impossible.

In the Same Boat

Illinois is by no means alone. At least 10 states responding to e.Republic’s 2010 Digital States Survey said replacing or upgrading their current MMIS is a top priority.

But Handler is convinced that the old business model of procuring a huge system that costs upward of $100 million and takes six years to implement won’t work considering the pace of health reform change.

“We don’t have six years to wait,” he said. Illinois has to be prepared to handle a half million new Medicaid enrollees by 2014. For that matter, the model in which states possess their own data centers also is outmoded, he added. “We don’t need to be running mainframes. We need to move to a cloud utility model. I want to look at acquiring business services hosted in the cloud instead of procuring and running our own systems.”

Handler would like to have the state health information exchange, hosted by a commercial service provider, house data repositories for different state programs. MMIS primarily involves claims processing, but he envisions a data warehouse supporting business services in a Lego-block kind of architecture. “We want to structure it so it can be built incrementally,” Handler noted, admitting that there aren’t vendors offering the type of services he’s looking for — yet. But he is pushing the half-dozen vendors that traditionally service the MMIS space and perhaps some newcomers to think outside the box.

Handler is currently working on an “MMIS and the cloud” presentation for an upcoming Medicaid IT conference. He would like more IT executives to consider a similar approach. “I wish more people would talk this up,” he said. “If CIOs rely on vendors for ideas, they won’t get the change they need.”

MITA’s Influence

Handler’s belief that the MMIS should be more flexible and modular fits with the strategy IT leaders at the federal Centers for Medicare & Medicaid Services (CMS) have been pushing states to adopt for years. CMS’ Medicaid Information Technology Architecture (MITA) approach seeks to formally define a core set of functions for each state system and make the design of those systems more modular based on a service-oriented architecture. “MITA is pushing states toward a more component-based system and away from mainframe architectures,” said Dan Sisco, director of professional consulting for MAXIMUS, a Reston, Va.-based firm that fosters government-citizen relations.

States are now moving toward plug-and-play and shifting from “big-bang” implementations, and new systems must be configurable. For instance, Sisco said, the rules for different benefit plans must be modified regularly by Medicaid agency staffers, without requiring programming staff to make changes.

Vendors have responded, he added. They are working on developing independent components based on newer technology. Many have developed partnerships with best-of-breed software players to deliver these component pieces, and new vendors may soon enter this MMIS arena.

But some CIOs and consultants say many states are struggling to adopt the MITA approach.

“MITA is a good concept, but there are things that hinder states’ ability to embrace it,” said Andrea Danes, senior principal for Chicago-based CSG Government Solutions.

“If you have a very old legacy system and haven’t done an upgrade in a long time, it is a huge leap,” she added. “Agency leaders are used to a cycle of working with vendor X, and they create specifications and put out an RFP based on what they know.”

Vendors are trying to upgrade their offerings for MITA, but Danes said she believes that the solutions they’re creating aren’t all that different. “They are incremental changes, but not the huge leap that the agencies need,” she said. “The systems are still not flexible enough.”

John Singleton, vice president of state and local solutions for CSC’s North American Public Sector group, said that MITA is the impetus behind much of the positive change in eliminating stove-piped systems at the state level. His company is working with North Carolina on a single enterprise application called NCTracks that will use Web services to serve five different health and human services programs with a single portal on the front end. The new system will offer enhanced reporting and analytics compared to the legacy system now in use. “The key thing is adaptability,” he said, “and the ability to respond to change.” With an older COBOL-based MMIS, staffers would write change requests, and it would take programmers weeks or months to make those changes. Now, with a rules engine and a graphical user interface, changes can be made much more rapidly, Singleton said.

Can States Work Together?

If Handler from Illinois is dissatisfied with the traditional MMIS procurement process, he has company in Steve Fletcher, CIO of Utah, which is currently weighing its options for MMIS replacement.

“These systems cost on average about $120 million, and that is outrageous,” Fletcher said. “Many vendors build these systems from scratch, and basically it’s mainframe technology. That’s why they get this pricey, and I think it’s the wrong way to go. If someone would offer me a transactional service so I don’t have to build it, I would be very interested.”

Fletcher also wants to look at whether states could work together on procurements, which he has begun talking with CIOs in other states about. He noted that Minnesota created an unemployment insurance system for $37 million and gave the code to Iowa, which made $3 million in adjustments and was able to use the same system. “Can we do the same thing with MMIS?” he asks.

Fletcher said he has spoken with federal CTO Aneesh Chopra and CIO Vivek Kundra about this topic. “It drives them crazy that there are 50 MMIS systems,” he said.

But Fletcher stressed that if the federal government wants states to change, it must provide different incentives to the program executives. “The CIOs get it,” he said. “But on the business side of Medicaid, they hear that the feds are going to provide a 90/10 match to do something, and that sounds pretty good to them, even though we have to pay $12 million.”

If Utah creates an MMIS with another state, the federal match would only be 50 percent, he added, so the state Medicaid business people see that as proposing something that will cost around $20 million more, even though it saves money overall. “I think the incentives have to change,” Fletcher said.

Danes from CSG Government Solutions noted that her firm is working with North Carolina, South Carolina, Tennessee and Georgia on a feasibility study for procuring a single unemployment insurance system that each state could customize. “If we can develop a set of best practices there, perhaps we can bring that over to Medicaid,” Danes said, although she added that it’s tough to work through governance and ownership issues.

Fundamental Change in Arkansas

Officials in Arkansas echo Fletcher’s cost concerns as they begin an innovative — and abbreviated — MMIS procurement process. “We expect to fundamentally change the health-care system in Arkansas, and the MMIS by definition has to be changeable and agile,” said Gene Gessow, director of the state’s Division of Medical Services. “We are not going to buy a design/build system. We can’t afford the time or the risk.”  

Time is critical due to mandated changes to Medicaid, ICD-10 deadlines and the contractual end of the existing MMIS contract. The state’s MMIS procurement strategy calls for an ambitious one-year development cycle followed by six months of testing. It expects the shorter implementation time frame will be possible because a systems integrator will create the MMIS by assembling loosely coupled “best-of-breed” modules that already exist rather than creating something from scratch. Gessow stressed that Arkansas is interested in hearing proposals from vendors new to the Medicaid environment.

State CTO Claire Bailey said that unlike some states, Arkansas does not yet have a functioning health information exchange. “But that is good in the sense that we don’t have to retrofit anything. We can look at it with fresh eyes,” she said. “We envision a common portal for the health benefits exchange, the health information exchange and the Medicaid system. We think it makes sense to use a core set of solutions for all these purposes.”

Bailey realizes that Gessow’s ideas are innovative and his timeline ambitious, but she is optimistic that it will get done. “We need the vendors to step up to the challenge of delivering this on time and on budget,” she said.

‘Lipstick on a Pig’

Despite a long procurement process, Washington state’s recent experience with MMIS replacement shows the potential for steady progress, according to Rich Campbell, director of systems and monitoring, and Medicaid CIO in the Department of Social and Health Services. Its legacy system, built in the late 1970s, had connectivity issues and its database was hierarchical. “We had tacked things on, but that had just caused our environment to be more complicated,” he said. “Initially we considered rebidding for maintenance of the same system, but we realized about the same time MITA was in its infancy, that we needed something more flexible, something we could change rapidly.”

Washington’s RFP in 2004 came at the same time that vendors were just starting to move to new architectures. “When we were looking, it was sort of a case of lipstick on a pig,” Campbell said. “It was the same back end with some really nice Web pages on the front end.”

For its new ProviderOne system that went live in May 2010 (which cost around $160 million with a 90 percent federal match), Washington partnered with a relatively new player, CNSI, which had previously done work with Maine and Michigan. Its system was based on Java and an Oracle database platform. ProviderOne is interfaced with eligibility systems to allow real-time updates of records. It offers an updated managed care solution, a real-time rules engine to implement policy changes, and enhanced fraud and abuse detection tools.

Campbell likes that the system is modular. “We asked them to give us the best of breed, so the call-center module is from Siebel and the interface with our state accounting system is from Oracle Financials. But if later we decide we want something else, we can pull that piece out.”

Campbell’s team is preparing the system for the CMS certification process this year.

Envisioning a New Architecture

According to Gartner Research Director Rick Howard, procuring a new MMIS gives CIOs the opportunity to change the perspective of the health and human services enterprise from a collection of discrete programs to a portfolio of interrelated services.

As Medicaid CIO in Oregon, Howard led an effort to rethink how a new MMIS might provide a core set of services to multiple program areas, and he said other CIOs are envisioning a new architecture from both an IT and a business point of view.

For instance, in the financial back end, MMIS handles the processing of payments, he said. That can lend itself to Medicaid, pharmacy benefits management and the Supplemental Nutrition Assistance Program. States could use one enterprise rules engine for all three, he said.

In the midst of all the health-reform activities, the biggest challenge for CIOs is gaining access to the Medicaid program executives who are being pulled in different directions to work on projects. “That creates a real access bottleneck,” he said. “There is much more interaction between CIOs and directors of these agencies as they work on IT decisions related to supporting health reform.” Howard added that such close cooperation hasn’t always been the case. “Now the CIO is a trusted adviser and broker of IT services, some of which his or her organization will be providing, many of which it will not.”

But beyond the federal reforms, there are drivers that make IT-enabled health care inevitable, as consumers, payers and providers seek greater transparency into costs, outcomes and quality data. “Those changes,” Howard added, “are already under way.” ¨

David Raths is a regular contributor to
Public CIO. He also is senior contributing editor of Healthcare Informatics magazine.


Miriam Jones is a former chief copy editor of Government Technology, Governing, Public CIO and Emergency Management magazines.