News: CJ Exclusives

Deadline To Launch NCTracks Medicaid Computer System Looming

Half-billion-dollar system will process $12 billion yearly in payments

RALEIGH — The Department of Health and Human Services is taking an “unbelievably risky” approach to activating a nearly half-billion-dollar, high-powered Medicaid computer system, one state senator says. And a blistering state audit says NCTracks, plagued by major delays and cost overruns, may not be ready as its launch date draws near.

“This thing isn’t done yet in terms that we know for sure it’s an absolute success. We’re going to have some indication of that come July 1” when the system is scheduled to go live, replacing an outdated, 25-year-old Medicaid Management Information System, said Sen. Jeff Tarte, R-Mecklenburg.

DHHS Secretary Aldona Wos has repeatedly said NCTracks will be ready next month. It is designed to process and pay more than $12 billion a year in health care claims for 70,000 enrolled medical providers serving 1.5 million Medicaid recipients, along with state-paid mental health, public health, and rural health services.

Tarte, along with Sens. Louis Pate, R-Wayne, and Ben Clark, D-Hoke, recently were given an overview and demonstration of the new system by Wos and DHHS Chief Information Officer Joe Cooper.

“All of us had some critical questions relative to stress testings, what this thing’s going to be like in production, user training being ready, data being tested and loaded so it’s ready to be used, [and making sure] claims checks [go] out to all the docs and hospitals,” Tarte said.

“They’re saying yes to everything, the critical stuff,” he said. Even if the Medicaid computer launch goes well, ensuing problems are inevitable, he said, based on his 30 years of experience with development and testing large systems for Blue Cross plans, hospitals across the country, and systems in several other nations.

Most worrisome to Tarte is a federal requirement to shut down the existing computer network operated by HP Enterprise Services when it fires up NCTracks.

“You cannot run two Medicaid systems in parallel,” he said, calling that “Stupid is as stupid does. Again, it’s just the Forest Gump rule of governance.

“That is unbelievably risky. That puts a tremendous burden to ensure you’ve done all the thorough and rigorous systems testing to minimize any exposures and risks,” Tarte said.

“So when you turn one off and turn one on you better doggone hope that it works, and you better hope with a high degree of confidence you’ve done enough system testing with a very high degree of confidence it’s going to work, at least core functionality,” he said.

The correct approach would be to have a parallel period of running both systems, “at least something that’s impactful,” he said.

“When you’re talking 80,000 checks per month for hospitals and providers throughout the state it would be pretty ugly if we couldn’t pay them on a timely basis,” Tarte said. “We’re being assured they will be able to. My only response to that is I hope so.”

Tarte, an executive with Applied Revenue Analytics, a consulting firm, said regardless of any preparation, “there’s going to be bumps on Day 1, you have to anticipate it.”

The state needs to create the equivalent of a technology SWAT team to “help navigate this beast” after launch, and prepare contingencies “for what you know is going to go wrong, and reserves for what you just don’t know, but you know something’s going to happen, Murphy’s Law,” Tarte said.

Cooper agrees.

“While the technology has been tested and remaining critical issues will be resolved prior to [going live], other states that have implemented a new claims processing and payment system say the first few months are bumpy as everyone adjusts to the new platform,” Cooper said last week in a DHHS news release.

“For instance, we know from the experience in other states that the call center is going to be overwhelmed in the first couple of weeks after the July 1 [launch], and we’re staffing it up as a result,” said Ricky Diaz, DHHS communications director.

Tarte said NCTracks “will be a massive timesaver,” much more flexible and functional than earlier systems. “It’s pretty freaking off the charts.”

Compared to the old system, “it’s the difference [between] basically having a wax tablet and an iPad,” he said.

“One thing we’ve got, if there’s any hope for this thing going live, is the fact that they hired Joe Cooper. He’s the real deal,” Tarte said.

“He and [Wos] made some excruciatingly difficult decisions” to be in position to go live by July 1, Tarte said. “They know what they’re doing, but they inherited a complete train wreck.”

Tarte said the project has been delayed and costs have nearly doubled from the original contract because of “mismanagement, for no other reason. … I guarantee you had I had a project like this, as a former partner of Ernst & Young, I would have been fired.”

A 2013 performance audit by the State Auditor’s Office disparaged DHHS for poor oversight of the project and questioned whether NCTracks could meet its deadline.

An earlier audit from last year also noted DHHS failings to keep the project on track.

Plans for a new system have been beset with problems for years. In 2004, DHHS awarded a $171 million contract to Affiliated Computer Services for a system to be ready by the summer of 2006. The launch date was pushed back to August 2007, while another request for delay until November 2007 was denied. The contract was terminated and ACS was paid about $16.1 million.

A $265 million contract to develop NCTracks then was awarded to Computer Sciences Corporation in December 2008. CSC missed its August 2011 startup, and was awarded an 18-22 month extension that hiked the contract price to $484 million. Another contract amendment in December 2012 delayed the target launch date to July 1, where it now stands.

The current deadline matters because of the amount of money at stake.

The federal government provides up to 90 percent of the costs associated with NCTracks, but that support will drop to 50 percent of operational costs after the system goes live. If the system is certified by the federal Centers for Medicare and Medicaid Services, the share of federal support would rebound to 75 percent.

Yet the 2013 audit determined “hundreds of critical user test cases were not executed,” including prescription drug claims, provider, recipient, financial, managed care, and medical claims. Moreover, the audit said, “critical NCTracks functions could have major errors on go-live and possibly lead to a delayed CMS certification of the system.”

DHHS “did not provide adequate oversight during user testing,” the audit found. “The department created a conflict of interest for CSC by asking the vendor to propose the acceptance criteria for production testing” and readiness, putting the launch in jeopardy, the audit found. Generally, criteria are built in consultation with the user, DHHS, rather than the vendor.

A number of other critical findings included DHHS lacking clear benchmarks for testing, sloppily written contracts, and inadequate planning to determine whether NCTracks would be ready on time.

Even an independent assessment of system readiness was compromised, according to the audit.

“Maximus, the independent verification and validation services vendor, relied exclusively on the test result reports of other vendors to conduct its own test case analysis. By relying on other vendors, Maximus did not minimize system implementation risks as required by the federal Centers for Medicare and Medicaid Services,” the audit determined.

And the state’s Enterprise Project Management Office failed to assess the NCTracks project properly, which “increased the perception that this project has no issues or risks as it nears go-live.”

Dan E. Way (@danway_carolina) is an associate editor of Carolina Journal.