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.
