After delays, overruns, audits, new Medicaid claims system begins

lbonner@newsobserver.com June 29, 2013 

— The state’s long-delayed system for paying Medicaid claims will finally have its debut on Monday. Now that the system is built, it’s time to see how it performs.

Tens of thousands of health care providers will rely on the new system to pay Medicaid claims swiftly and without hassle. Legislators – who have witnessed years of conflict, cost overruns and contract troubles – are eager for the thing to work.

The medical-bill processing software will handle more than 2 million claims a week, sending about $13 billion in payments each year to more than 70,000 health care providers.

“Fingers crossed,” said Sen. Louis Pate, a Mount Olive Republican who observed a successful test run.

The Department of Health and Human Services has spent the last months “making sure the system is as good as it can be,” said Pate, a Senate Health Care Committee co-chairman. “But we’re all anxious, and I’m sure the providers are.”

The state has a $484 million contract with Computer Sciences Corp. to develop and operate the system through 2020.

The state Department of Health and Human Services says it has done everything it can do to get everything ready, or “push this project over the finish line,” as Dr. Aldona Wos, the department secretary, has written.

“Our confidence level is high,” said Joe Cooper, the department’s information technology chief.

But the agency still expects it must remain on alert for problems for two to three months, Cooper said. The department and Computer Sciences Corp. have set up a “command center” of top-level managers who will monitor how problems are handled.

State officials are looking forward to a much speedier system, one that operates in real time and without the assortment of 57 paper forms providers use to submit information supporting their bills. The state makes payments in batches, and with the new software, the state can make payments 50 times a year rather than 42 times, Cooper said.

As billers submit claims, they’ll know within minutes whether they’ll be paid, he said. “It’s a really, really big deal,” Cooper said.

The plan for replacing the aging claims system with what the department dubbed NCTracks is a series of false starts and ballooning costs that stretches more than a decade.

A second try after Affliated

Computer Sciences Corp. is the second company the state has worked with since 2004 to try to replace its old billing system, which was shut down this month after 35 years. The state first signed Affiliated Computer Services in 2004 to a $171 million, five-year contract to develop and operate a new Medicaid payment system. The relationship between Affiliated and the state soured. The state canceled the contract in 2006 and ended up paying the company $16.5 million.

The state signed Computer Sciences Corp. to a $265 million contract in 2008, with a plan to have the system running by mid-2011. The project again suffered delays, and a scathing 2012 state audit concluded that DHHS had done a poor job managing the installation and tracking damages CSC owed. The department disagreed with the entire report.

This year, the state Auditor’s Office reported that the department had done a poor job testing the system. Department officials said they had corrected many of the problems in the audit report by May, when the audit was made public.

Criticism lingers

The preparations still faced criticism. An executive with Availity, a claims clearinghouse that submits bills from thousands of providers, said in a June 14 letter to Wos that preparations for the switch to Computer Sciences Corp. did “not begin to address best practices or even minimally sufficient efforts to prepare for changes of this impact.” In the letter, Scott E. Herbst, a senior vice president, said almost 12,000 North Carolina providers used the company and it sends more than 450.000 claims to North Carolina Medicaid each month.

About 80 percent of the state’s Medicaid claims are sent in by 150 clearinghouses that work to get insurance payments to providers, according to DHHS. Nearly all those clearinghouse companies have been certified to use the system, the department said.

For providers who haven’t been trained, a plan is in place to get them going so they can use the system, Cooper said. It may be hard for some small businesses to take time out to learn a new claims system, said Pate, but they now have real incentive to take the training the state’s offering.

“We do want providers to be paid on time,” he said.

Bonner: 919-829-4821

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