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A Tale of Two Systems: Washington and New York By Kristin Patterson Mon, Nov 07, 2011

The passage of the Health Information Technology

for Economic and Clinical Health Act in 2009

(HITECH) demonstrated the federal government’s

commitment to improving its Medicaid

Management Information Systems (MMIS). The

upgrade to state Medicaid systems will hopefully

bring long term improvements to claims

processing and reducing overpayments.2 It is up to

the each state government and its Medicaid

program to determine whether upgrading its MMIS is financially feasible or to improve

its current system.2The states of Washington and New York have taken two distinct

approaches to improve its Medicaid system, each with its own consequences.

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The state of Washington implemented a single

provider payment system called ProviderOne to

replace its 25 year old Legacy mainframe.1 It was

budgeted to cost $161 million to develop and would

pay 100,000 providers who serve 1 million people

annually.1 The project was approved by the

Department of Social and Health Services (DSHS) and was paid for by a 90-10 federal

match.2 ProviderOne went live on May 2010 and has paid and processed more than

$5.4 billion worth of medical and nursing home billings.2 In 2011, Federal reviewers

from the Centers for Medicare and Medicaid Services formally certified ProviderOne as

successfully implemented and fully operational.2 The certification from the federal

government allows the state to claim an enhanced match of 75-25 percent back on the

system’s funding operations.2

The state of New York, on the other hand, implemented a system called eMedNY in

2005. New York’s effort to modernize its MMIS has become an increasingly costly

mistake. Over the past decade, New York has paid the IT company charged with

developing and operating the system nearly $1 billion dollars.4 Unfortunately, state

Comptroller reports have found that eMedNY was not developed with the best

technology available at the time and identified $936 million in overpayments and audit

savings in the 2010-2011 fiscal year.3,5 These billing errors could potentially be greater

since eMedNY processes $47 billion in claims annually or about 12 claims per

second.4 The Department of Health wants to take advantage of the federal match and

scrap eMedNY in favor of a new system that meets the needs of the Medicaid

program.5 Governor Cuomo, along with his Medicaid Review Team, believe eMedNY

can be upgraded to catch fraud and overpayment errors. Unfortunately given the costs

of implementation, even with a federal match, the cost of a new system is not currently

financially feasible since the state is experiencing a $2.4 billion deficit.6

Although Washington’s health and government officials could not have foreseen the

current economic recession, their decision a decade ago to begin implementing a new

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MMIS proved shrewd and will save the state millions

of dollars in the future. They were able to convince

state budget officials and tax payers that ProviderOne

would create long-term benefits for the state’s

Medicaid program. Even in growth periods, investing

tax dollars into technology is a difficult sell politically.

The benefits of technological investment, whether to MMIS or the energy grid, are

intangible yet often provide a positive return long after they are implemented. To the

average citizen, however, tangible spending (e.g. bridges, road repairs) is more justified

regardless if said dollars are spent wisely or effectively. Given this phenomenon, the

state of New York will be forced to utilize eMedNY and potentially miss federal dollars in

the process. Moreover, the cost overruns for improving eMedNY, the continual auditing

of its records and the recouping overpayments will cost the state more money than a

new MMIS system would have.

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4 Goto mostlymedicaid.com and use Coupon Code: “ISS_11_X2” to get an MM premium subscription for 33% off the normal price (Reg $19.99, you get it for $19.99)

1) Washington State Department of Social & Health Services. “Provider One: Project

Overview.” Wednesday, August 18, 2011.

2) Washington State Health Care Authority. “Federal Review Certifies Medicaid

Payment System as Fully Compliant and Successfully Implemented.” July 20, 2011

3) Herman, Bob. “New York Recovers $2.3M in Medicaid Overpayments.” Becker

Hospital Review, August 23, 2011.

4) Gershman, Jacob. “Medicaid Contract Bleeds New York.” Wall Street Journal,

July 9, 2011.

5) DiNapoli, Thomas. “Replacing the Medicaid Computer System: Getting It Right for

Taxpayers.” Office of the State Comptroller May 2011.

6) Gralla, Joan. “NY State Tells Agencies to Cut Budgets 2.5 percent Next Year.”

Reuters, Thursday, November 3, 2011.

By Kristin Patterson

Kristin Patterson is a blogger for Mostlymedicaid.com. She's from Seattle, WA and

graduated from Vanderbilt University with a degree in Political Science. Her interest in

politics and their impact on healthcare reform led her to seek a Master of Public Health

from Emory University.