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Medicaid system fails to pay claims

Problems plague Web-based processing program

SEATTLE – Washington state’s new computer system for processing Medicaid payments is failing to process hundreds of thousands of claims.

Some doctors and clinics have stopped taking new Medicaid patients until they get paid for ones they’ve already treated, the Seattle Times reported.

The Web-based program ProviderOne by vendor Client Network Services Inc. launched in May. The system processes claims submitted by health care providers on behalf of the state’s poorest patients.

Because of glitches, the computer system has suspended thousands of claims, which then must be processed by hand. A state report in mid-November said there was a total backlog of about 271,000 suspended claims.

Officials with the state and CNSI say the problems are being worked out and the state soon will be able to handle the backlog.

Cathie Ott, who manages ProviderOne’s day-to-day operations, said she is “really confident that we have a state-of-the-art system,” although her staff is “struggling with a learning curve.”

Andrea Gannon, director of patient financial services for Valley Medical Center, said the center is waiting for a total of $3.8 million in payments from ProviderOne.

“The claims aren’t getting processed, so we’re not getting paid,” she said.

Some smaller health care providers say they can’t handle the disruption in their cash flow.

“We’re very rural, very small, and any impact to our budgets is huge,” said Barbara Berg, president of the Rural Health Clinic Association of Washington and administrator at Lake Chelan Clinic.

The federal government had encouraged states to adopt cutting-edge technology for Medicaid claims systems, and Washington in early 2005 signed a contract with Maryland-based CNSI.

CNSI also developed a Medicaid-processing program for Maine, which has had problems since it launched in January 2005. Its backlog of unpaid claims was so large that Maine ended up paying more to fix its program than to install it, the Times reported. Some doctors’ offices took out loans to stay afloat; others stopped treating Medicaid patients.

Vivek Gore, a CNSI vice president, said the Maine meltdown resulted from managerial mistakes, not deficiencies in the product itself. “We did not understand the magnitude of such an implementation,” he said. “It was a new arena for us.”

He said Web-based systems like CNSI’s have greater flexibility in keeping up with changes in federal health care law.

In Washington, after a rocky start this year, the ProviderOne system seemed to be improving. By late August, the rate of suspended claims had fallen, from more then 50,000 claims a week to about 45,000.

Since September, however, the rate of suspended claims has gone up, to about 58,000 per week, despite the state removing nearly 2,000 bugs that caused the claims to suspend.

Other states with new Medicaid computer systems, such as Maine, have temporarily paid providers based on their previous expenses, said David Meacham, a senior adviser for the federal Centers for Medicare & Medicaid Services. Washington law prevents that.