They received two offers. DHS chose the lowest bid from a company called CNSI. CNSI had no experience with a Medicaid system. When trying to build this new system there was very little communication between CNSI and the medical experts. In 2003 the new governor John Baldacci merged the Department of Behavioral and Developmental Services with the Department of Human Services in the new Department of Health and Human Services (Oz, 2009). In doing this the new system was a disaster.
The claims were being denied and medical providers had to take out loans and some had to close their businesses because of no payments. DHHS fell so far behind due to the system they had to hire more experts. Instead of the system costing $15 million they had to pay out $70 million and they were six years behind. Were there any factors that contributed to the project failure which were not the fault of the project team and its leaders? There were several factors that played a roll in the project failure.
The first issue was the fact that they only had two RFP’s and the states head of procurement that chose the lower of the two bids. When making the decision he/she didn’t hold in account that they didn’t conduct any type of research for either company, they checked no references, they checked no past projects of CNSI, and left no room for negotiations for the more experienced company. By choosing CNSI because of the lower bid they took a very big risk. The project team and leaders weren’t the biggest factor in this disaster. The new governor was.
When he chose to merge systems from several departments in the attempt to save money he made the project cost go from $15 million to $22 million because the project team had to go back and rework the project they had already started for only DHS. Some critics said that the fact that only two bidders made offers, and that the price quotes were so different, should have alerted DHS that either the RFP was unrealistic or that the low bidder could not develop the system properly. What is your opinion? They totally could have taking the additional measures in submitting more than two RFP’s.
It is very important to “avoid nebulous, unprioritized requirements, and never used canned RFP’s” (Byrne, 2010). RFP’s are sometimes not cost effective for vendors where they may not make the profit margin they hope to, so not as many are responding to them as in the years past (Byrne, 2010). DHHS should have made sure that listed all requirements they needed very clear so that potential companies could have offered up bids. They may have received bids from companies that had the experience and knowledge needed to make sure the system was correctly.
In actuality DHHS paid twice the amount of the bid from Keane. Some states decided to continue to use their old (legacy) Medicaid claim systems, update them, and provide a Web link to the system, instead of developing a new system. What are the advantages of this approach? There are several advantages that this approach would have shown such as: • The legacy system will still contain all the old medical information. • Old claims are still able to be accessed and researched with the legacy system.
The legacy system is not likely to have the same problems occur that a new system is expected to. By updating the legacy system can cut down on the cost and time that it would take for a new system. • “Investment in a new system would not justify the improved features because the old systems have some advantage that cannot be obtained from newer systems” (Oz, 2009) In many cases organizations decide to convert to a new IS by cutting over. In what sense was the cutover in this case riskier than in other such conversions? As for DHHS they chose to build a new system unlike most states that chose to only integrate their systems so they met HIPAA requirements.
By choosing to build a new system they would have no access to the legacy system and all information would now become extinct once the cut over occurred. By DHHS rushing the conversion they in turn were not ready for the cut over and in turn also fell behind on the agreed schedule. By this occurring and the merging of departments the IT department was cut in half and no one discussed what the other was doing. Also, there was no one from HIPAA on the committee to begin with to approve and assist with all programming rules and regulations (Oz, 2009).
Recommendations: There are several ways that DHHS could have conducted this conversion. My recommendations are as follows: (1) A project team should have been selected before the RFP’s were to be processed. (2) DHHS should have made some efforts to negotiate with Keane seeing that they were more qualified out of the two. (3) DHHS should have conducted more research on the companies that offered the bids. (4) DHHS should have conducted research on other states that just integrated their system to see if it worked for them. 5) DHHS should have used the agile project management model so that there could be open lines of communication and room for any changes that needed to be made.
They would have been able to test their work every two to three weeks to see what worked for them and what didn’t. (6) The project teams should have worked together and shared all ideas instead of working separate. These are my recommendations. As of today DHHS no longer uses the CNSI systems. “As a result of certification, MIHMS has been found to meet the standards of CMS for a certified claims management system.This will allow Maine to claim 75% reimbursement for ongoing operations retroactive to Sept 1, 2010-the date that the system began processing claims.