Gov. Hutchinson tells DHS to pause over-budget Medicaid computer system

Gov. Asa Hutchinson has directed the Department of Human Services to pause development of its $112-million-over-budget computerized Medicaid Enrollment and Eligibility Framework (EEF) after receiving a report from a consultant recommending he do so.

The state awarded the eligibility system to IBM’s Curam with an original budget of $108 million to examine household incomes on tax filings to determine if recipients are still eligible for Medicaid, as required by federal law. The system was supposed to replace the state’s current systems over time. However, it did not function properly, resulting in the redeterminations being delayed and DHS customizing its software with help from other vendors.

“Because of mismanagement and federally mandated changes, the original estimate has ballooned to be $220 million before its completion in 2017,” Hutchinson wrote in a letter sent Dec. 1 to Speaker of the House Jeremy Gillam, R-Judsonia, and Senate President Pro Tempore Jonathan Dismang, R-Searcy, and copied to other members of the Legislature.

Hutchinson said he is directing DHS to pause development of the system to ensure it matches the state’s future Medicaid reforms. A Health Reform Legislative Task Force is working to make recommendations by the end of the year that will help form the basis of a special session in 2017.

His actions come after a report released by Gartner, a technology consultant that was contracted in July 2015 to examine the DHS project.

Hutchinson wrote that he had directed DHS to put the remainder of the contract for the EEF system out to bid, with vendors asked to build on the current Curam system or propose a new platform. Hutchinson said he would ask the Legislature to approve a contract for Gartner to develop and manage the request for proposal.

Hutchinson wrote that he is directing DHS to hire a systems integrator on a fixed-price contract to oversee the development of the system and ensure time frames and budgets are met. A systems integrator is a company that integrates computing systems provided by multiple vendors.

Hutchinson wrote that he is establishing a policy committee that will oversee the eligibility and benefits management system to ensure it matches state policy. The committee will propose guidelines for DHS’ efforts.

Finally, Hutchinson wrote that he has named an oversight committee of agency directors for all future state information technology contracts over $50 million. He wrote that “similar challenges must not happen again.”

Hutchinson’s actions are similar to recommendations made in Gartner’s report, which is dated Nov. 10. That report said DHS needs organizational change to manage this type of large, complex technology project. It said the Curam system remains a viable option, but that no further deployment should continue and that vendors should be encouraged to propose alternatives.

The Gartner Group recommended that DHS not move forward with any development until executive agencies significantly enhance their capabilities, including hiring the systems integrator. That entity would work with a variety of programs: traditional Medicaid, the Children’s Health Insurance Program, Supplemental Nutrition Assistance Program, and Temporary Assistance for Needy Families.