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Are Medicaid IT Systems Ready to Join the 21st Century?

January 14, 2016
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Wyoming embraces an MMIS-as-a-service approach

This week my Healthcare Informatics colleague Heather Landi wrote a story about how the Centers for Medicare & Medicaid Services (CMS) has launched a new online resource to help states modernize outdated Medicaid IT systems. The new online resource is designed to serve as a one-stop-shop for private-sector companies to identify opportunities to participate in Medicaid IT investments. 

This announcement from CMS coincided with the publication of a story I wrote for Government Technology magazine about the Wyoming state government’s efforts to become the first state to move away from an expensive custom-developed Medicaid Management Information System (MMIS) to an MMIS-as-a-service approach. The project is called WINGS (for Wyoming Integrated Next Generation System).

In April 2015 I wrote an earlier story for Government Technology detailing 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 CMS 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.

Wyoming officials explained to me their thought process behind trying something new. “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.”

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.”

Jim Plane, a partner with consulting firm Public Knowledge, which has helped Wyoming with the planning phase of its project, 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.

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,” Springer told me. “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.

Where this story and the one Healthcare Informatics just published come together is in the goal of broadening the number of vendors competing in the MMIS space. Plane noted that many of the largest healthcare 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.”

It will be interesting to follow Wyoming's experience over the next few years to see if it is successful and if its approach spreads to other states.