Since being unveiled in October, the state of Alaska's new Medicaid payment system has been plagued with glitches, bouncing back claims and prohibiting payment to health care providers who testified on Tuesday that they still await payments from September and are struggling to stay afloat as they burn through savings.
In a legislative hearing Tuesday afternoon, Department of Health and Social Services Commissioner William Streur and two representatives from the Xerox company took questions from the Health and Social Services Committee and then listened to providers detail their struggles to make do while the glitches are resolved.
Providers echoed each other as they ticked off complaints:
The new system went live in October 2013, a replacement for a system that had been used for 26 years, Streur said before the hearing. New federal requirements didn't jibe with the antiquated technology the state was using, so Alaska switched to the new Medicaid Management Information System (MMIS). The contract for the system was awarded to the Xerox company in 2007. It was supposed to be ready in 2010. "They didn't design it as quickly as they should have," Streur said.
The system cost $32 million, 90 percent of which will be paid by the Federal government. Xerox is still owed roughly $25 million as they work to fix the electronic system. "I'm just not paying them until it's right," Streur said.
The state chose to take the system live in October. "When we tested it, we were amazed at how well it worked," Streur said. Issues became apparent after about three weeks, however. The system was plagued with connectivity issues, programming glitches, and claims that would get bounced back due to slight inconsistencies in the forms previously accepted by the old system.
Roughly $26 million in Medicaid payments are made every week, and $1.5 billion in payments are made annually. About 140,000 Alaskans receive health care under Medicaid.
During the first few weeks using the new system, only $10 to $14 million was processed each week. Now, the state is playing catch-up and paying out about $30 million a week.
"Ultimately, the responsibility doesn't lay with Xerox," Streur said. "It lies with me, it lies with the department."
David Hamilton, senior executive for Xerox in charge of all government programs, said the company is committed to Alaska and resolving the issues rapidly. The program Xerox built "was our latest and greatest solution," to payment systems. In the past few weeks, "we've made significant progress" in processing electronic claims, and more than 400 employees are working to fix the problems.
'Accounting nightmare'
Providers who testified expressed frustration and worry over how they will continue to provide services without getting paid.
Karen Perdue, president and CEO of the Alaska State Hospital and Nursing Home Association, testified that in a survey of its member hospitals, 62 percent said the system had not improved since November. "New problems are appearing at each cycle," Perdue said. Total reported back payments were nearing $200 million, she added.
Nancy Lovering, speech language therapist in Anchorage, testified that she took a personal loan to stay afloat. Even claims that were filed before the shutdown have not been paid, she said.
Cheryl Campbell, speech language pathologist in Anchorage, testified that she has not received any payments for claims submitted on paper, and is owed $13,000 for just two clients. She said she was advised not to send in any additional claims.
"I work with children ages 2 to 6," Campbell said, a critical age for language development. "Ethically I cannot discontinue service," but she is quickly approaching a critical point in providing service, she said. "I have essentially extended a loan to the state of Alaska," Campbell said.
MeLane Harbor, executive director with Primrose Retirement Community in Wasilla, testified that the situation was an "accounting nightmare." Harbor said the provider was owed more than $300,000 at one point, and that its accounts payable staff had spent more than 16 hours billing for claims from the first two weeks of September alone. Now, they are getting checks back -- but without any statements attached. "We don't even know what the checks are for," Harbor said.
Tom Chard, the director of the Alaska Behavioral Health Association, said that its more than 50 members are "on the ropes" due to the major disruption. They're also concerned that once the system is up and working that "it's the providers that are going to be cleaning up the mess," Chard said.
Theresa Sabens with Building Blocks Occupational and Physical Therapy in Fairbanks testified that the provider is awaiting back payments for $250,000. Wait time on phone calls has been close to an hour, Sabens testified. Xerox employees say "they will pay us eventually, they just don't say when."
Sabens' company has gone through its savings and "we're currently taking money from our kids' college savings funds," she said.
Streur hopes all back payments will be paid off in the next few months. The state is also offering providers advance payments. Around $118 million in advance payments have been made. Several providers testified that they were cautious about taking an advance due to concerns over potential audits.
Once the program is fixed, "it's going be far more efficient. I firmly believe that," Streur said. He has worked in health care for decades, and he said he's seen similar issues. "I've never had a system change and go live that didn't have some challenges with it," he said.
Contact Laurel Andrews at laurel(at)alaskadispatch.com. Follow her on Twitter @Laurel_Andrews