he Alaska Department of Health and Social Services has filed a claim against the private company responsible for rolling out a Medicaid payment system that the state says is riddled with defects.
In the claim filed Monday, the health department said Xerox State Healthcare LLC breached its contract after it failed to implement the multimillion-dollar software system within the timeframe agreed upon. Once the system did go live in October 2013, it failed to issue timely and accurate payments to Alaska health care providers, the claim said. Xerox State Healthcare is a subsidiary of Xerox Corp.
According to Health and Social Services Commissioner William Streur, the system is paying some providers too much, some too little and some not at all. He said the depth and breadth of the problem is not yet fully realized, describing it as his “greatest challenge in over 40 years of working in health care.”
In its claim filed with the Alaska Department of Administration, the state health department has demanded that Xerox produce an extensive corrective action plan to remedy the broken system. The state and Xerox have already attempted unsuccessful mediation.
Streur said the state is seeking $46.7 million in liquidated damages.
Jennifer Wasmer, a spokesperson for Xerox, wrote in a statement that Alaska’s Medicaid payment system continues to improve and where concerns exist, the company “has been working diligently with the state to address them.”
“Medicaid systems are some of the most complex projects undertaken by a state or by a health IT vendor,” she wrote. “As with any major technological implementation, they have settling-in periods. In the first year or so, it is normal and expected for there to be defects revealed in the system’s million lines of code.”
Xerox’s web-based Medicaid Management Information System is used in both Alaska and New Hampshire “and is rolling out in other states now,” Wasmer wrote.
In New Hampshire, agencies complained in September 2013 that the Xerox system had resulted in $10 million in payment backlog. Texas filed a lawsuit against Xerox in May to reclaim hundreds of millions of dollars it said the company erroneously gave out in Medicaid claims, according to local news reports.