| The Medicaid Management
Information System (MMIS) is the claims processing system for Nebraska’s Medicaid
Program. In addition to processing claims, the MMIS also supports coordination of
benefits, surveillance and utilization review, federal and management reporting, and case
management. In fiscal year 2004 the MMIS was used to process nearly 10 million Medicaid
claims, and issued over $1.3 billion in payments to providers. Over the past ten
years, the number of Medicaid claims processed has nearly doubled, and the average monthly
number of Medicaid eligible persons has increased from 135,159 in fiscal year 1994 to
197,152 in 2004. |
Significant problem areas of the current system
Benefits of a new MMIS
Four MMIS alternatives
Summary of
the consultant’s analysis
Projected
annual cost for each alternative
Recommendation |
The Centers for Medicare and Medicaid Services (CMS) requires a
certified and continuously operational MMIS to fully fund administrative functions. CMS
funds the MMIS at 75 percent for operations and 90 percent for MMIS enhancement and
replacement. The federal fiscal year 2005 budget proposal released on February 5,
2004 proposed to cut the federal matching rate for MMIS enhancements and replacements from
90 percent to 75 percent. Although this proposal was not adopted, the potential
elimination of federal funding exists.
Health and Human Services Finance and
Support recognizes the importance ofNebraska’s MMIS. Federal Health Insurance
Portability and Accountability Act (HIPAA) regulations have and will continue to impose
significant requirements on the MMIS. A Request for Proposals was released on April
8, 2004, for an analysis of the current MMIS and recommendations. First Data
Government Solutions was selected and performed the analysis.
Three significant problem areas of the current system are:
Outdated Technology: Nebraska’s
MMIS was developed 27 years ago and has outlived most other states’ Medicaid
Management Information Systems. The current MMIS uses outdated technology and an
older, inflexible technical design. Staff have worked hard to maintain the
functionality of the MMIS; however, it is an extremely tenuous system often requiring
“Band-Aid” solutions. The consultants have concluded that the
current MMIS is incapable of meeting expectations and future needs.
Needs Outgrew System: The Medicaid
program has become increasingly complex, with service changes (e.g., hospice, behavioral
health), eligibility changes, and new regulations (e.g., HIPAA). New program needs
are difficult to address with the existing system. Labor-intensive
“workarounds” are used to address these changes in the short-term, but do not
represent a long-term solution.
Costly to Maintain: Because the MMIS is
based on outdated technology and older, inflexible programming, it is costly to maintain,
operate and enhance.
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The benefits
of a new MMIS are:
Administrative Benefits: A new MMIS will
result in improved customer service, enhanced reporting, improved decision-making tools,
and better use of staff (shift staff to activities such as Quality Assurance, Utilization
Review and Customer Service).
Cost Savings: A faster and more
efficient claims processing system will save money through reduced manual processes,
increased recoveries, reduced information technology staffing needs, and the potential to
incorporate claims processing for other health programs. The Hospice program MMIS
modifications required 11 staff (six programmer analysts, three business analysts, and two
testers) and over 6,000 hours of staff time. A new MMIS would have required only
four staff (two business analysts and two testers) and less than 400 hours of staff time
to make the same modifications, resulting in significant savings.
Positioned for the Future: A new MMIS,
with a more adaptable design, will better position DHHS for the future. The ability
to more quickly address Medicaid program change. A new MMIS will also take full advantage
of new technologies such as a secure web portal for electronic transactions.
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Four MMIS alternatives
were analyzed:
MMIS Procurement: A replacement MMIS is
transferred or developed by a vendor and maintained by state staff or the vendor.
In-House Development: A replacement MMIS
is developed and maintained by State of Nebraska staff.
MMIS Replacement with Fiscal Agent
Maintenance: A replacement MMIS is developed and maintained by a vendor. The vendor
also performs all system maintenance and claims processing functions, including activities
to manage providers.
Enhance Current MMIS: Modification
of the current MMIS performed by either a vendor or by state staff, but maintained by
state staff.
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Summary of the consultant’s
analysis:
| - |
10-Year Total System and
Processing Costs (federal and state) |
Implementation Timeframe |
Overall Risk |
Operational Flexibility |
| 1) MMIS
Procurement |
$164 million
(costs less than continuing the FY2005 funding level for 10 years) |
24 months |
Low:
·Experienced vendors with skilled staff
· Transfer knowledge to state staff |
High:
· State owns and maintains system |
| 2) In-House
Development |
$193 million |
48 months |
High:
· Staff not experienced in required technology |
High:
· State owns and maintains system
· Staff can be reassigned to meet priorities |
| 3) MMIS
Replacement w/Fiscal Agent |
$200 million |
24 months |
Medium:
·Experienced vendors
· Transition many state positions to contractor |
Low:
· State must negotiate all changes |
4) Enhance
Current MMIS |
$205 million |
48 months |
High:
· Technical complexity
· Staff not experienced in required technology |
Medium:
· State must negotiate changes for off-the-shelf products |
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Projected annual cost for each
alternative:
Below is a graph of the projected annual state's share cost of
each alternative. Solution 1 (navy blue line on graph) represents the lowest ten-year
costs for implementation and maintenance.
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Recommendation:
Solution 1 - MMIS Procurement
Install a new MMIS with the help of a
vendor, which State staff would maintain and operate. MMIS procurement is the lowest
cost, lowest risk and most timely for the State’s system.
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