Dive Brief:
- The California Department of Health Care Services entered into an agreement with Xerox Corporation in 2010 to upgrade its Medicaid Management Information System (MMIS), which was scheduled to be completed by the end of this year. requirements for the project changed due to ACA regulations and the upgrade fell behind schedule.
- The two entities agreed Monday to discontinue the modernization project for Medi-Cal.
- This enables DHCS to take a new procurement approach that will benefit from the most up-to-date technology and system design strategies available, according to the agency's press release.
Dive Insight:
Xerox will continue to operate and maintain Medi-Cal claims through September 2019, even though it has struggled with running several state programs in the past, according to Democrat & Chronicle.
Texas cut its contract with the company in May 2014 and then sued Xerox. Montana said the company breached its contract in June 2014 (which was later resolved) and Alaska went into mediation with Xerox after it complained about the state's new Medicaid payment system the same year.
However, the company noted success in states like New Hampshire, Wyoming, and California. It currently covers 11 states.
In 2012, Xerox announced that it was managing claims processing for California's Medicaid program, or Medi-Cal, with a 10-year $1.6 billion contract initially signed by ACS, which was acquired by Xerox in 2010. Although Xerox took over responsibility in 2011, it did not publicly announce it until 2012, as reported by Washington Technology.
Under terms of the settlement, Xerox will pay California $120 million ($103 million in cash, $15 million in computer hardware and software, and abandon $5 million in payments), and the current Medi-Cal computer system will continue to run until the state builds a replacement.