Pa. outsources Medicaid payments

After decades of handling its Medicaid and human services provider systems

by itself, the commonwealth of Pennsylvania has opted to outsource that

responsibility, getting the benefits of a leading-edge Web-based system

as a result.

Pennsylvania officials recently announced the award of a five-and-a-half

year contract to EDS, which will use its interChange Medicaid Management

Information System (MMIS) to perform online process management services,

such as claims and financial processing, and to provide better program reporting.

Peg Dierkers, deputy secretary of the Pennsylvania Department of Public

Welfare's Office of Medical Assistance Programs called the move "the biggest

change in our provider payment technical and business solution in 23 years."

The decision to outsource was made after an analysis of the costs associated

with several actions, including making the current phone-based system compliant

with the Health Insurance Portability and Accountability Act, showed outsourcing

would be cheaper, said Jay Pagnini, a spokesman for the department.

In all, Pagnini said, it would have cost around $20 million a year for

the state to put the compliant system together and to run it in-house, whereas

it will cost $17 million through the EDS contract. Plus Pennsylvania officials

are confident about EDS' capabilities, because the company already performs

eligibility work for the department.

"It also gives us the ability of doing online, real-time remittance

checking with our providers, something that can't occur now with the phone-based

system," Pagnini said. "It gives us Web-enabled interaction with our providers."

Medicaid provides health care coverage to 1.4 million Pennsylvania residents,

and home- and community-based services are provided to more than 19,000

aged or disabled residents. Some 60,000 health care professionals around

the state participate as care providers.

Robinson is a freelance journalist based in Portland, Ore. He can be reached

at hullite@mindspring.com.