Case Study - Maine's New Mediciad system

Case Study:
1. Maine’s department of health and human services provided Medicaid health insurance to over 260,000 eligible members. Most of the healthcare providers i.e. doctors and institutions submitted electronic claims to DHHS in order to get paid for the services rendered to the Medicaid members.

The Medicaid claims processing system had also to comply with the Health Insurance Portability and Accountability Act (HIPPA).
Each of the services rendered had a corresponding code and payments were made automatically based on the service code as per the Medicaid agreed rates defined by DHHS.
To reduce provider’s call volumes to the Bureau of medical Services which was supported by a limited staff the state also wanted to offer providers online access to patient eligibility and claims status.

In order to enable the above requirements it was very critical for Maine’s DHHS to have a robust IT application

The implementation of a faulty claims processing system caused several issues apart from the fact that it was delivered 27 months after the planned go live date

Ø The system rejected several claims from the providers as it could not do an intelligent match of providers against their database. Within two months 300,000 claims were frozen. The new system rejected 50 % of the claims in the first week where as the old system rejected 20% claims on an average.
Ø The suspended claims due to the system rejection were handled manually that resulted in enormous delays to issue payments The DHHS staff was not geared to handle the unprecedented call volumes from providers neither could they manage the manual claim processing. A limited 13 member staff could not handle calls from 7000 providers
Ø Even for the ones for which the system made automatic claims payment resulted in overpayments eventually totaling to $9 million
Ø The electronic claims forms were incorrectly filled by the providers and the system did not have data checks and mandates that could have ensured the right data to flow in their systems.
Ø The overall cost for the faulty claims processing system resulted in an additional $30 million to the state
Ø Doctors received multiple claims rejection statements via mail. The claims rejection and the consequent delayed payments resulted in providers refusing rendering services to Medicaid members
Ø Last but not the least the claims system was not built as per HIPPA guidelines and hence did not satisfy HIPPA requirements.



3. The problems faced by DHHS in implementing its new Medicaid claims processing system can be classified as listed below

Management:
The state took 6 months in its due diligence process to select a vendor i.e. from time of request for proposal in April 2001 to selecting a vendor in Oct 2001.
Only 2 firms responded to the RFP shows that vendor outreach was poor and DHHS did not have several options to compare and select the best bid.

The management decision to go with the cheapest bid and inexperienced vendor proved costly in the long run as they had to spend additional $30 million in disaster recovery process.
Lack of competent management staff, budget constraints and lethargic decision making without proof of concept for the Medicaid system was a major lapse on the part of the DHHS management.

Organization
The vendor did not get the much needed support from DHHS staff in terms of subject matter experts in Medicaid claims processing neither did they have the functional domain expertise on Medicaid systems.
The project suffered from ineffective project management and dearth of communication among Maine’s IT staff, CNSI the vendor and the end business users.

The project was also poorly staffed which resulted in delayed response to provider complaints and manual claims processing.

The providers were not trained to fill the claim forms correctly in the new system reflected lack of provider training that usually is part of the states outreach program to providers on claims procedures.
The organization did not adequately staff its call centers nor did it sufficiently train its staff to handle provider calls and grievances.

Technology
The Medicaid claims system application design itself was flawed as the J2EE based system was a mis-match with the legacy code from the old mainframe system.
There was no system back up or roll back plan or parallel system to support the deployment because the legacy system was incompatible with the new code.
Due to short time frames to deliver the project detailed system testing was compromised which resulted in several glitches in the production system that was rolled out.