New Medicaid computer system plagued with glitches

Washington's new computer system for processing Medicaid payments is failing to pay so many valid claims that several doctors and clinics have stopped taking new Medicaid patients until they get paid for the ones they've already treated.

Others say they may need to do the same, or even stop treating Medicaid patients altogether.

The Web-based program, ProviderOne, was $54 million more expensive and three years later than planned when it launched in May, replacing a mainframe system for processing claims submitted by health-care providers on behalf of the state's poorest patients.

"The claims aren't getting processed, so we're not getting paid," said Andrea Gannon, director of patient financial services for Valley Medical Center, which she said is awaiting payments totaling some $3.8 million from ProviderOne.

While Valley may be large enough to wait it out, some smaller health-care providers say they can't handle the disruption in their cash flow. Making matters worse, many of those calling the state to get help say they are put on hold for 45 minutes or more before a recording tells them no one is available.

"When you're desperate, and you cannot reach a human on the phone, it's very frustrating," said Barbara Berg, president of the Rural Health Clinic Association of Washington and administrator at Lake Chelan Clinic.

"We're very rural, very small, and any impact to our budgets is huge," she said.

Medicaid, which is funded jointly by the federal and state governments, provides health-care coverage for many low-income or disabled Americans, including 1.1 million Washington residents.

The federal government had encouraged states to adopt cutting-edge technology for Medicaid claims systems, and in early 2005, Washington signed a contract with a promising but untested private vendor — Client Network Services Inc., or CNSI. The Maryland-based company was developing a Medicaid-processing program for Maine at the time but had not yet brought such a system online.

Maine's system proved to be hugely problematic. Within a year after it went live in January 2005, its backlog of unpaid claims was so large Maine ended up paying more to fix its program than to install it. Some doctors' offices took out loans to stay afloat, and some stopped treating Medicaid patients.

Since ProviderOne launched in Washington earlier this year, similar system problems are being reported here: Because of glitches, the new computer system has failed to process — or "suspended" — hundreds of thousands of claims, which then must be processed by hand by an ever-shrinking number of state-employed claims adjudicators.

Officials at the Department of Social and Health Services (DSHS) and CNSI insist ProviderOne's kinks are being worked out, and the state soon will be able to handle the enormous backlog.

Cathie Ott, who manages ProviderOne's day-to-day operations, said she is "really confident that we have a state-of-the-art system," although her staff is "struggling with a learning curve."

But a review of its performance reveals ProviderOne is failing to process more claims than it did three months ago. And while it has not performed as poorly as the Maine program did early on, the backlog of unpaid claims is growing steadily, prompting concerns that what happened in Maine may be slowly happening here.

Backlogs grow

Putting a system in place as expansive and complex as ProviderOne is an enormous undertaking.

Understanding this, government officials and the doctors, clinics and hospitals in Washington that treat Medicaid patients said they did not expect the system to be perfect from day one of the May 9 launch. And after an expected rocky first few weeks, the system seemed to be improving.

By late August, the rate of suspended claims had fallen from more than 50,000 per week to about 45,000. While this was still far too many — DSHS can get through only 37,500 suspended claims per week by hand — the decrease was promising.

But since then, the Medicaid claims staff, which has lost about 30 claims adjudicators to budget cuts in recent years, has been inexplicably overrun by such claims. Although the state has removed almost 2,000 "bugs" that cause claims to suspend, ProviderOne still has suspended about 58,000 claims per week since the beginning of September.

The total backlog of suspended claims has reached about 271,000, according to a DSHS report in mid-November. There is an additional backlog of 281,000 claims completed on paper rather than filed electronically.

Paper claims take more time because they need to be scanned into ProviderOne by DSHS staff, further draining the department's resources.

Other states that have launched new Medicaid computer systems — including Maine — have temporarily paid providers based on their previous expenses, said David Meacham, a senior adviser for the federal Centers for Medicare & Medicaid Services. But Washington law prevents that.

When provider billing offices do wait out the long hold times on the phone and are lucky enough to get through to DSHS, the staffer may be as perplexed as the billing agent, said Shari Johnson, revenue manager for Valley Medical Center's network of smaller clinics and practices.

"They don't understand why things are happening the way they are," she said.

Wellspring Family Services, which provides care for low-income families and children in King County, announced last week in a news release that it has been "forced to stop enrolling Medicaid clients until this is resolved and we can be assured of payment."

Steck Medical Group, a network of rural physicians' offices in Lewis and Thurston counties, also has stopped accepting new Medicaid-dependent patients because of the payment delays, said Chris Bredeson, Steck's CEO.

And if things don't improve, he said, Steck may need to stop treating some existing Medicaid patients.

Some people who receive pharmaceutical coverage from Medicaid also have reported problems with ProviderOne.

Tammy Gauthier was told DSHS dropped her coverage when she went to pick up an antibiotic for her daughter at a Walmart pharmacy. Unable to pay for the drug on her own, Gauthier gave her daughter an antibiotic the mother had been prescribed for an unrelated illness.

In reality, Gautheir's premium was delayed by ProviderOne, said Nina Florenz, Gauthier's insurance agent who has had Medicaid clients for 18 years.

"There have been instances — for the first time in all my years with DSHS — when my clients will go to the pharmacy or try to make an appointment for services, and get turned down because of a ProviderOne systems error," said Florenz, who added she is not upset with DSHS' management of ProviderOne but believes the system is being hindered by budgetary restraints.

State-of-the-art system?

Six years ago, DSHS determined its 1970s Medicaid payment system was ill-equipped for the modern health-care industry, and moved to replace it.

DSHS officials advised the state to act quickly, saying other states also were needing to replace their Medicaid computer systems and could crowd Washington out of the market for a state-of-the-art vendor, according to records.

In March 2004, the Information Services Board, which oversees the state's IT projects, approved a plan for a $71 million project to replace the system by December 2006. The federal government is paying 90 percent of the system's startup costs.

Three IT companies bid for the contract, and the board chose CNSI, which received the highest score in the state's evaluation, said DSHS' Heidi Robbins Brown, who has managed much of the project.

Web-based systems like CNSI's have greater flexibility in keeping up with changes in federal health-care law, said Vivek Gore, a CNSI vice president. And the board considered CNSI's proposal to be the future of state Medicaid systems, said state Rep. Ross Hunter, D-Medina, who sits on the board.

"If you went with the old ones — one of the existing vendors — you were never going to get a cutting-edge project," Hunter said. "We would have gotten what they knew how to do."

Gore, of CNSI, said the Maine meltdown resulted from managerial mistakes, not deficiencies in the product itself. "We did not understand the magnitude of such an implementation," he said. "It was a new arena for us."

ProviderOne's budget has ballooned from $110 million to $164 million, with much of the extra costs helping health-care providers learn how to use the new system, something that wasn't done adequately in Maine, Robbins Brown said.

In 2005, when the glitches with Maine's new system were surfacing, CNSI was missing deadlines in the development of its system for Washington, according to state records. DSHS attributed the problem to inexperienced CNSI personnel and told the company to replace the project manager and take other corrective actions. Hunter, a former Microsoft manager, explains what happened with an industry joke:

A man has a choice between heaven and hell, and he tours both. Heaven seems boring, while hell is a rambunctious party, so he picks hell. When he gets there, though, he's shocked to find it's a torturous inferno, and he inquires about what changed.

"That was just the demo," the devil says.

For Hunter, the project has been through its hellish period, and the state's demands on CNSI have helped put ProviderOne on course.

"You saw us insistent on a certain level of talent, and you saw it pay off," he said, adding that it's now a matter of fixing the glitches and persuading providers to submit claims electronically.

Sean Collins Walsh: 206-464-3195 or swalsh@seattletimes.com