Monday, June 20, 2011


Ross Perot’s old company, EDS, has had North Carolina’s contract for 35 years for processing Medicaid claims.

Our Democrat governor (Easley) decided this needed to be upgraded and put out bids.  In 2004, the state awarded a $171 million, five-year deal to Affiliated Computer Services, which eventually went south.  The state ultimately canceled the contract; ACS sued, and the state eventually paid $10.5 million to settle.

The state rebid the contract and awarded it to Computer Services Corp. in 2008.  At the time, CSC had been in the news for its problems building New York's Medicaid system.  (According to an audit from the New York State Controller, CSC was 33 months late and $166 million - or 47 percent - over budget, with a system that couldn't detect fraud and was hard to modify.)  So N.C. gives them the contract at a cost of $287 Million.

This contract was SCHEDULED to have the new processing system on line this August.  However, the state HHS officials now say it will be July of 2013, and the NEW cost will be $495 Million (up from the original bid price of $287 million).  During that two-year delay, the state will continue to pay about $110 million for Medicaid claims processing to EDS.

State officials place the blame for the delay on changes in the law made by Congress and the state legislature that force the state and contractor to revise the computer system.  However, "Medicaid changes constantly on a daily or weekly basis," said Dan Stewart, a deputy director of NCHHS. "There is a never-ending series of changes."

There's other bad news for the state's Medicaid division.  A recent federal audit found that North Carolina owes the federal government $42 million for paying unallowable Medicaid claims.  The refund means that Medicaid spending in North Carolina will be reduced by $42 million.

At the time North Carolina awarded the contract to CSC, Lanier Cansler, who is now SECRETARY OF HEALTH AND HUMAN SERVICES, was the lobbyist for CSC.  Cansler had also worked under contract for ACS while it worked for the state.


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