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NC Medicaid payment system subject of class action lawsuit

By Kyle Murphy, PhD

- The North Carolina Department of Health and Human Services (DHHS) is again coming under fire for its handling of the state’s Medicaid program. This time it is the form of a class action lawsuit against the state agency for its implementation and operation of the Medicaid Management Information System (MMIS), NCTracks.

This is the same state agency that last week apologized for health data breach after it had sent the Medicaid cards of 48,752 beneficiaries to the wrong address. DHHS Secretary Aldona Wos revealed that the state agency was experiencing a number of problems as a result of implementing provisions of the Affordable Care Act.

The lawsuit filed in the Superior Court of Wake County alleges that DHHS and its MMIS partners — Computer Sciences Corporation (CSC, the system developer), Maximus Consulting Services (the organization responsible for system validation and verification), and SLI Global Solutions (the organization responsible for testing prior to launch) — are the cause of millions of dollars in damages to North Carolina Medicaid providers since the launch of NCTracks on July 1, 2013.

“In all, NCTracks had over 3,200 software errors in the first few months of operation, and payments to Medicaid providers were delayed, unpaid, or ‘shorted’ by over half a billion dollars in the first 90 days,” states the 48-page lawsuit via NC Policy Watch.

DHHS has had a shaky history with implementing an MMIS. According to the allegations in the lawsuit, the state agency’s first attempt ended in a failure in 2006, with the state footing $30 million for a new system that never panned out. The following year, a new request for proposal (RFP) was issued in July and then withdrawn, revised, and reissued in December. A $287-million contract was eventually rewarded to CSC which indicated a completion deadline of Aug. 22, 2011. The deadline was missed by nearly two years and the budget almost doubled as well as $207 was added to the budget.

If the allegations hold up, DHHS should have known better than to have chosen CSC. All it had to do was review the company’s history in New York where the company failed its contract for the New York MMIS. That two-year, $357-million project was hampered by delays which ultimately led to the project finishing up close to 3 years behind and $166.4 million over budget. As recently as 2010, the New York Comptroller set in motion the abandoning the CSC-developed MMIS and the pursuit of a replacement.

According to the lawsuit, CSC intended to reuse 90 percent of the Common Business-Oriented Language (COBOL) code from the New York MMIS to create NCTracks. Ultimately, the MMIS developer decided to reuse only 32 percent of the code and opted to write new code, leading to delays and opening the system up to new flaws.

“As with any implementation of an IT system of this size and complexity, the transition has not been without challenges,” DHHS CIO Joseph Cooper, Jr., told the Charlotte Observer. “To date, the new system has processed more than 104 million claims and paid more than $5.5 billion to North Carolina healthcare providers, out-performing the 35-year old system it replaced. DHHS continues to address provider issues as they arise.”

CSC has deemed the lawsuit without merit, but findings from the state’s own auditing of the system appears to show otherwise when it revealed that 600 of the known 3,200 defects in existence since July 1 had not be remediated by November 5.

The lawsuit has received backing from the likes of the North Carolina Medical Society.

Read the full lawsuit here.



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