Case Study Maine's Medicaid
Chapter 14 Project Management: Establishing the Business Value of Systems and Managing Change
589
What Went Wrong with Maine’s New Medicaid System?
CASE STUDY he state of Maine provides medical coverage for over 260,000 of its residents through its Medicaid program. Healthcare providers, including doctors, hospitals, clinics, and nursing homes, submit claims to Medicaid in order to be paid for the services they provide to Medicaid patients. As the 1990s drew to a close, Maine, like many other states, began planning for a complete overhaul of its Medicaid claims processing systems to comply with the Health Insurance Portability and Accountability Act of 1996 (HIPAA). HIPAA was enacted to standardize the management of patient health and records, and, most notably, the protection of patient privacy. HIPAA provided a deadline of October 1, 2002, to meet its patient privacy and security standards. Maine had to consider a number of factors in addition to HIPAA in preparing for its systems overhaul. The Medicaid program, as outlined by the federal government, was becoming increasingly complex with new services added, each with codes and subcodes assigned to them. As a result, payments to providers were broken down into smaller and more numerous pieces. The state also wanted to offer providers access to patient eligibility and claim status data online in the hopes of reducing the volume of calls to the state Bureau of Medical Services, which ran Medicaid under the Department of Human Services (DHS). At the time, Maine was processing over 100,000 Medicaid claims per week on a Honeywell mainframe that dated back to the 1970s. The system was not capable of supporting HIPAA requirements or the online access that the state wished to implement. The state’s IT department decided that a completely new system would be more cost-effective and easier to maintain than an upgrade of the old system. This approach contrasted with what some other states had done. Nearby
589
What Went Wrong with Maine’s New Medicaid System?
CASE STUDY he state of Maine provides medical coverage for over 260,000 of its residents through its Medicaid program. Healthcare providers, including doctors, hospitals, clinics, and nursing homes, submit claims to Medicaid in order to be paid for the services they provide to Medicaid patients. As the 1990s drew to a close, Maine, like many other states, began planning for a complete overhaul of its Medicaid claims processing systems to comply with the Health Insurance Portability and Accountability Act of 1996 (HIPAA). HIPAA was enacted to standardize the management of patient health and records, and, most notably, the protection of patient privacy. HIPAA provided a deadline of October 1, 2002, to meet its patient privacy and security standards. Maine had to consider a number of factors in addition to HIPAA in preparing for its systems overhaul. The Medicaid program, as outlined by the federal government, was becoming increasingly complex with new services added, each with codes and subcodes assigned to them. As a result, payments to providers were broken down into smaller and more numerous pieces. The state also wanted to offer providers access to patient eligibility and claim status data online in the hopes of reducing the volume of calls to the state Bureau of Medical Services, which ran Medicaid under the Department of Human Services (DHS). At the time, Maine was processing over 100,000 Medicaid claims per week on a Honeywell mainframe that dated back to the 1970s. The system was not capable of supporting HIPAA requirements or the online access that the state wished to implement. The state’s IT department decided that a completely new system would be more cost-effective and easier to maintain than an upgrade of the old system. This approach contrasted with what some other states had done. Nearby