CA Junks $179 Million Medi-Cal IT System, Will Start From Scratch

CA Junks $179 Million Medi-Cal IT System, Will Start From Scratch

Combine years of delay, ever-changing rules and requirements, state and federal red tape and a once-mighty company now in deep financial trouble. What do you get?

In California’s case, a $179 million computer modernization project that has to be junked.

The project, which went to bid in 2007 and still is far from completion, was to process claims for Medi-Cal, the state’s health-payment program for low-income residents.

It finally was put to rest on April 11, 2016 when the state Department of Health Care Services announced a legal settlement with Xerox Corp., the project contractor, under which Xerox will pay the state approximately $120 million. (The state had paid Xerox $9 million so far, $8.1 of it with federal funds.)

That means Medi-Cal’s existing computer system — creaky, patched-together and, decades old — will continue to operate for however long it takes the state to contract out and build a replacement.

According to the settlement, Xerox will continue to run the existing system until 2019.

The health care services department is putting a bright face on the project’s demise calling it an “opportunity” to reevaluate current needs, it in a press release issued Monday. A fresh start, it went on, will ensure “modern, robust and sustainable system.”

The department noted California’s not the only state with such problems: “Many other states … have adjusted their strategies” toward their Medicaid computer systems, the release said. Medi-Cal is California’s version of Medicaid.