After six years, California's Department of Health Care Services and Xerox will discontinue their Medicaid IT system modernization project, reports California Healthline.
DHCS awarded Xerox a contract to take over, operate and upgrade the agency's legacy system and to design and implement a replacement management system for Medi-Cal, the state's Medicaid system. The legacy system is more than 30 years old, according to the report.
So far, the state paid Xerox $9 million, according to California Healthline. As part of the settlement agreement, Xerox will pay DHCS approximately $123 million in cash, $15 million hardware and software costs as requested by DHCS and will dismiss $5 million worth of payment claims.
The state health agency said in a news release their decision to scrap the project was influenced by the quickening pace of technological change in the years since it first sought a bid to upgrade the system. "Many other states, as well as [CMS], have adjusted their strategies on modernizing Medicaid management information systems to embrace a modular approach to procurement, design and implementation. These changes have created an opportunity for DHCS to reevaluate the nearly decade-old design, development and implementation strategies of the replacement system and to reconsider the best course to ensure that California has a modern, robust and sustainable system."
The project was scheduled to for completion by the end of this year, according to the report. Xerox will continue working with DHCS to process Medi-Cal claims through September 2019, unless DHCS secures another contractor to meet its system modernization goals before then.
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