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North Dakota Medicaid payment system changes delayed again

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BISMARCK, N.D. (AP) - A chronically delayed new computer software system to handle North Dakota's Medicaid bills, which was to be finished in nine months, will not be working until mid-2013, an executive told state legislators Thursday.

The project was originally scheduled to be finished two years ago. Last summer, a vice president for the software's developer, Affiliated Computer Services Inc., promised it would be functioning by June 2012. ACS is a unit of Xerox Corp.

``We will not miss another day,'' the vice president, Tom Burlin, told North Dakota lawmakers last year. ``You have my personal commitment that there will be no other slips in this program.''

On Thursday, another executive, David Bywater, apologized for the newest delay, but said the project had reached some important milestones. He spoke to the North Dakota Legislature's Budget Section committee, which includes legislative leaders and members of the appropriations committees in the North Dakota Senate and House.

IBM, which was hired to examine the system's design, pronounced it superior, and another company hired by North Dakota's Department of Human Services to test how the system worked had good results, Bywater said.

``We recognize the repeated delays in completing this project,'' he said. ``Since I overtook this project last fall, I believe we have rectified the issues that caused the delays, and solidified the path to bring this project to a successful completion.''

Medicaid is a medical assistance program that serves the poor and elderly. The software project will handle billings from doctors, dentists and other medical providers who serve Medicaid clients.

The Department of Human Services processes about 244,000 claims per month, while making about $62.4 million in monthly payments to medical providers.

The agency takes more than a month to pay 20 percent of its Medicaid bills. In early September, it had a backlog of more than 23,000 claims.

Bywater attributed the latest hiccup to the need for further testing of the new system, and the work required to include a newly overhauled system of payment codes. The federal Centers for Medicare and Medicaid Services is requiring that state programs begin using the new codes by October 2013.

Carol Olson, the director of the North Dakota Department of Human Services, said the agency is negotiating with ACS about covering expenses it has paid because of the tardy development, as well as the cost of integrating the new codes.

Some of the talks ``have not been all that cordial,'' she said.

``I understand the feelings of the Budget Section and the Legislature as to the frustrations about why it's taken so long,'' Olson said. ``I would not be truthful with you if I didn't tell you I had the same frustrations.''

Legislators demanded to know whether the state would be repaid for expenses caused by the delays, and what the system's ongoing operating costs would be.

Sen. Bill Bowman, R-Bowman, wondered if the drawn-out project would result in the North Dakota system having less modern software when the effort was finally completed.

``It just grows and grows and grows and iit gets more expensive and more expensive, and what have we got for the money we've invested?'' Bowman asked.

The upgrade is costing $62.5 million, of which the state is paying about $5.1 million. Most of the remainder is federal money. ACS's share of the work is $39.9 million, and Bywater said North Dakota's contract expense has not grown because of the delays.

``This is actually leading-edge technology,'' Bywater said. ``I think you're actually far ahead of where most of your peers are ... I do not believe you are falling behind. You are leading.''

Rep. Kathy Hawken, R-Fargo, said the delays ``have been going on for six years, and I'm not sure what we're going to have when we're done.''

``I'm one of the easy legislators. I vote yes most of the time,'' Hawken said. ``I'm not happy.''

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