Sending Medicaid to the Cloud

January 12 01:00 2016 by ushadmin

The Wyoming state government already has considerable experience with cloud-based services. It uses Google Apps for Government, NEOGOV for human resources and is looking at Salesforce.com for customer relationship management. But as its Department of Health prepares to issue an RFP to replace its Medicaid Management Information System (MMIS), all eyes in the Medicaid IT sector are on Wyoming because it will be the first time a state has tried to move away from an expensive custom-developed system to an MMIS-as-a-service approach.

The project is called WINGS (for Wyoming Integrated Next Generation System). “When you look at the overall costs of traditional MMIS to the federal government and the states, it is a little on the insane side,” said Teri Green, senior administrator and state Medicaid agent in the Wyoming Department of Health’s Division of Healthcare Financing. “It is time to take a hard look at what we want and need.”

An April 2015 Government Technology story detailed the difficulties states face with the ever-changing federal and state requirements for what MMIS platforms must do. Because there are just 50 such systems in the country, only a handful of software vendors respond to procurements for new systems. Cost overruns, critical audits, lawsuits and finger pointing between states and IT vendors are commonplace.

But the embrace of a service-oriented architecture (SOA) by the federal Centers for Medicare and Medicaid Services (CMS), which funds most MMIS development work, has set the stage for states to finally start breaking up big procurements into smaller chunks, which should also allow new vendors to enter the market.

Although large geographically, Wyoming’s relatively small Medicaid organization is an advantage as it tries to innovate. “We are small enough that we are more intimately involved with projects, contracts and systems at almost every level of our organization,” Green said. “We have an awareness of what it means to procure a system. The larger an organization is, the further away the levels of management are from those details. For us, we are aware of the pros and cons of the current system and models available to us going forward.”

Replacing a traditional MMIS, which is like trying to do enterprise resource planning system replacements in other industries, has a lot of risk and costs associated with it, said Jesse Springer, an IT project manager for the Wyoming Medicaid organization. “Generally that model hasn’t worked well in the last decade. We don’t have the risk tolerance to do that kind of project.”

Wyoming considered sharing an MMIS with another state, like the partnership developed between Michigan and Illinois Medicaid agencies, but ultimately decided against it. “Those models are interesting, but the state loses a lot of flexibility, and it depends on who you are partnering with,” Springer noted.

Wyoming also explored modernizing the user interfaces and portals of its current system but continuing to use the core claims engine, which is a COBOL-based legacy system. “That would be the lowest cost but wouldn’t be a long-term solution,” he said. “It would be putting a Band-Aid on it for another decade or so.”

Finally, the state considered both a pure software-as-a-service (SaaS) model and a hybrid model where some MMIS components would be hosted and others would be state owned and operated. In the end, the hybrid approach won out. “Just because of the state of the industry, we think we are going to have to do some type of hybrid model, but we are going to try to take SaaS as far as we can go with it,” said Springer.

One goal for Wyoming and other innovative state Medicaid organizations is to broaden the number of vendors competing in the MMIS space. Jim Plane, a partner with consulting firm Public Knowledge, which has helped Wyoming with the planning phase of its project, noted that many of the largest health-care claims processors in the country are not present in the Medicaid space. “For a long time, federal regulations around MMIS procurement led to the market shrinking rather than expanding,” he said, “but I think CMS is showing great leadership in trying to maintain the existing marketplace of MMIS vendors while encouraging states to innovate and bring in new vendors, and we are starting to see that.”

Plane said Wyoming realized that in order to meet state and federal requirements on the horizon, it needs to get services up and running more quickly than the five to seven years an MMIS replacement typically takes…