February 14, 2002 - EDS awarded Medicaid Managed Information System contract

Kansas Department of Social and Rehabilitation Services' Secretary Janet Schalansky announced today that the state has awarded Electronic Data Systems Corporation a multimillion dollar contract to operate the state's Medicaid Managed Information System (MMIS) for six years, beginning in July.

Under terms of the contract, Electronic Data Systems (EDS) will take over the current MMIS system, which is now being operated by Blue Cross & Blue Shield (BC&BS) of Kansas, on July 1 of this year. On July 1, 2003, EDS will begin operating a new MMIS system that will be adapted to fit the needs of Kansas. BC&BS did not bid on the new contract. EDS, based in Plano, Texas, previously ran the Kansas MMIS system from 1978 to1996.

The MMIS system processes claims turned in by medical providers serving Medicaid customers across the state. Medicaid is a federal/state health insurance program for persons with low incomes or disabilities. Under the contract, EDS will also manage enrollment into managed care for both the children's health insurance program and Medicaid. This task is currently performed by a separate contractor, Maximus. Medicaid processes 1 million claims each month from about 19,000 medical providers across the state, including doctors, dentists, hospitals, and pharmacists.

The total cost of the contract is $160 million. This includes $25.1 million in developing the new MMIS system. The federal government covers 90 percent of development costs. The annual cost of operating the system ranges between $21.5 million and $24.7 million. The operating costs represent a savings of between $2.7 million and $4 million per year compared to the current cost for similar services. The federal government pays between 50 and 75 percent of the operating costs.

Secretary Schalansky said when the new MMIS system comes on line in July, 2003, it will be of benefit to both Medicaid recipients and to the medical providers serving Medicaid and HealthWave clients across the state.

"Through this bid process, it has been the department's intent to maintain effective, efficient fiscal agent services for medical providers and our customers, as well as to bring the administration of all health care under a single fiscal agent," she said. "I have every confidence that EDS will provide excellent customer service and much-improved technology."

A driving force behind the need for a new MMIS system was passage by Congress of the
Health Insurance Portability and Accountability Act (HIPAA) in 1996. Under the law, all health care providers and health care plans must use a standardized format for information exchange. In addition, HIPAA created a number of privacy and information security regulations concerning information systems.

The current MMIS system operated by BC&BS was not HIPAA compliant, and the cost of fixing the old system was greater than the cost of replacing the system. There are also severe fiscal penalties involved for states who fail to integrate HIPAA regulations into MMIS systems.

Many of the features of the new MMIS system that will come on line in 2003 will be
Internet-based, which will allow medical providers to submit claims quickly or check the status of claims.

"The new MMIS moves us from the old-style mainframe-based system to a modern, multi-platform system that includes several web-based applications," said Laura Howard, Assistant Secretary for Health Care Policy at SRS.

As examples, Howard pointed to the following:
• A fraud and abuse detection system, which will make it much easier to detect unusual patterns of medical care utilization, and to take appropriate action.
• A pharmacy benefit management system that will provide improved data reporting and increased clinical expertise to assist the state in managing its pharmacy budget.
• Management reporting improvements will make it much easier for SRS to look at claims history and provide quicker and more accurate reports to the Kansas Legislature concerning health care utilization in the state.

In addition, Howard said the new MMIS will be much easier to update in the fast-changing health care environment. The current main-frame system is labor-intensive and expensive to maintain and reprogram to reflect new policy initiatives.

Overall, Howard said, the new MMIS system will bring about better service to providers and cost savings.

"It will allow us to better tailor health care benefits to health care needs," she said.