State contract for updating computer system soars in cost

Source: Joseph Neff, Charlotte Observer, June 18, 2012

State’s effort to modernize the way it processes Medicaid claims will take nearly a decade, cost almost $900 million….The project has gone in fits and starts since it began in 2004: cancelled and rebid, then amended and extended. Costs have kept rising, so much so that the expense of setting up the new system and running it for seven years, plus maintaining the old system, now adds up to an eye-popping figure: $851 million.
Delays, overruns plague NC Medicaid claims project
Source: Gary D. Robertson, Associated Press, December 14, 2011

North Carolina Republican lawmakers grilled state Medicaid leaders Tuesday about delays in replacing the government health program’s claims processing system, which has faced operational hurdles since the project first began almost eight years ago.

The system’s launch is running nearly two years behind schedule. State auditors also estimate it will cost more than double the originally projected amount because of expanded contract expenses and the expense of keeping the current aging system running with its longtime vendor….

…The original contract, announced in late 2008 and awarded to Computer Sciences Corp., was estimated at $265 million….

…In 2004, the state awarded a $171 million contract to Affiliated Computer Services to replace the current system, but the contract was terminated in 2006 after delays and additional costs. The state had to pay $16 million for project costs and a legal settlement….

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