Peter Shumlin signed the historic health care reform act on the Statehouse steps. VTD/Taylor Dobbs.
The state scrapped bids on one of its biggest contracts last month.
The Agency of Human Services abruptly withdrew the request for proposal for the multi-million Medicaid IT system because it didn’t address the state’s new single-payer health care reform plan. The contract, for the Medicaid Enterprise Solution or Medicaid Management Information System, was originally supposed to be awarded in July. Instead, bidders received notice that the RFP had been pulled.
Robin Lunge, the director of health care reform for the Shumlin administration, told members of the Joint Fiscal Committee last month that the Agency of Human Services withdrew the RFP when officials realized that the new single-payer health care plan would significantly alter the design of the complex data system. The federal government is also coming out with new recommendations under the Affordable Care Act that it has asked states to incorporate into new IT systems.
“We decided to re-bid because we wanted to be absolutely certain that the RFP was sufficient for getting the system we needed going into single payer,” Lunge told lawmakers last month. “We issued the bid before the bill was passed. We believe it’s better to reissue the bid than end up with a system that might not work in the long run.”
A formal RFP for the 10-year contract was officially issued in February, after months of negotiations between potential vendors and the Department of Vermont Health Access. By June, the state had four bidders it was considering for the contract. (We reported on two of the IT giants that were vying for the gig – Hewlett Packard, which has held the state contract since 1992, and Affiliated Computer Services, a subsidiary of Xerox.)
The bidding parties, who spent thousands of dollars preparing formal responses for the RFP, sources say, received an email from the state on July 8, shortly before the decision was to be made regarding a bid award, informing them that the agency determined it is “in the best interest of the State to withdraw the MES (Medicaid Enterprise Solution) RFP and re-evaluate the agency’s information technology strategy with a view to reposting an MES RFP at some future date.”
Information about the scrapped bid proposals is confidential, according to officials. In New Hampshire, which is in the process of developing a similar system that has not been completed (the original deadline for the project expired in 2007), has set aside $61 million for its system. The federal government is encouraging states to improve Medicaid Management Information Systems, and is providing 90/10 matching funds to embark on the projects.
The shift in expectations for Vermont’s Medicaid IT is the result of a fundamental change in health care policy. The RFP was originally developed under the Douglas administration. In the middle of the bidding process, newly elected Gov. Peter Shumlin, a Democrat and champion of single-payer health care, helped to push through Act 48, a new state law that will fundamentally reform the current system.
Anya Rader Wallack, a special assistant for the governor, said, “It’s fair to say that’s a major agenda change, and we need to make purchasing decisions that are consistent with that.”
Wallack said the state has to make sure, given the money and resources at stake, that it gets the system right the first time. It didn’t make sense, she said, to award such a large bid, without ensuring that it would be compatible with the regulations for the new federal exchanges and the state’s plans for a single-payer health care system.
There are several other issues that made the Shumlin administration a little queasy. The RFP was for a 10-year contract, and Wallack said the long-term contract “seemed to lock us into something that might not be ideal.”
Under the RFP, the system also would have remained the property of the vendor, she said. Given where the state is headed, Wallack said, it’s unclear with single payer how much of the responsibility for the system would rest with the state or would be contracted out.
State officials say no date has been set for reissuing the RFP. The state’s action was sanctioned by the Centers for Medicare and Medicaid Services.
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So on one hand the Administration is saying “we won’t move forward with single payer unless we can find a way to make the numbers work and control costs”, while on the other hand they are moving right ahead and preparing the government superstructure of gov’t for single payer . . . even if that means scrapping the RFP for upgrading Medicaid’s IT systems (a 10-year, multi-million dollar project). What message does this send to the vendors that “collaborated” with the state on designing the RFP so that the state got exactly what they were looking for? “thanks for your help folks, but we’re moving in an entirely different direction.”
Shumlin’s moves towards single payer are creating real-world consequence already, both outside government and within government. This only increases the pressure on the Administration to develop and release a funding plan ASAP, before we get much further down the track.
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Having been involved in state IT issues for many years, it is probably a good thing that the RFP was pulled regardless of you thoughts about single-payer. We have a new Governor, a new head of DII and new federal guidelines, which can cause big changes in expectations.
Regardless, the new RFP will probably slow down any progress toward single-payer by causing delay in developing the IT system. The quick, dirty and expensive way would be to just sign a contract and then proceed to change the entire system using amendments and change orders. This process will provide more transparency. If you are interested, I would suggest keeping a close eye on the forthcoming RFP documents. It will give you more insight into the system Governor Shumlin is envisioning than any executive or legislative action.
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Having been an employee of the State and seen first hand the many things they do that don’t make sense it’s nice to see a plan that does make sense, not implementing a system that immediately doesn’t work. I’m still waiting for them to only selectively mow the roadsides (wastes time, money and increases emmisions)for an example.
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Dear Lord, do not hire Affiliated Computer Services! They are the worst company you will ever deal with.
Just Google them and see all the scew ups they have done when it comes to these medical systems.
They use offshore labor to displace state workers and could care less about quality. All they wantis profit. The system will be rushed and the promised featured will take 10 times as long to develop as they say.
Avoid them!