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"I pledge on my honor that I have not given or received any unauthorized assistance on this assignment.


1. What was/were the business problem(s) that required a solution?

 The then existing claims processing system,1970 Honeywell mainframe, was not up to the

mark, nor could it meet HIPAA’s demands or provide online access. To address this issue, at

the beginning of 2005, the state of Maine eliminated the old Medicaid claims processing

system for a new web enabled, more secure, and faster system.

 As additional health services were added, the number of codes and sub codes for services

grew, and payments to doctors and hospitals were parsed accordingly. The transfer of

information and dealing with all the specifics of codes regarding the laws and systems

implemented by the government.

 Maine also needed to give providers a way to check the eligibility of Medicaid patients and

the status of their claims. Making this information available online, they hoped, would cut

down on the number of calls to the state Bureau of Medical Services, thereby saving the state


2. What were the outcomes of the project compared with the desired solution?

Desired Solution: Over 100,000 Medicaid claims per week must be managed by the new

information systems, as they are crucial to the organization. The more secure system would clear

claims faster, track costs better and give providers more accurate information on claims status.

Outcome: This new system was $25 million and created a lot of problems for the state of Maine,

doctors, hospitals, and patients. The impact of its faulty Medicaid claims processing system was
vast. The State was unable to process claims for six months and issued $575 million dollars in

interim estimated payments to providers.

 Millions of dollars of claims were withheld due to system errors.

 The system was holding back approving claims and with it came over 300,000 frozen claims

in the first two months. The system would send checks to doctors for the entire amount billed

versus the Medicaid amount. In total this mishap cost the state 30 million dollars.

 With their bills unpaid, some of Maine’s recipients were turned away from their doctors. It

was also noted that several dentists and therapists were forced to close and some had to take

out loans to stay afloat.

3. What did the project managers do correctly?

In such a disaster of an IT project it is hard to look for silver linings. A lack of proper governance

model led to a lot of mistakes and no body knew who to hold accountable for what. One highly

appreciable point about the project was Maine officials did have one contingency plan: They

would pay providers for two to four weeks if the new system failed. Under the interim payment

plan, if a provider’s claims were not being processed in a timely manner, the provider would

receive a payment based on the average monthly payment the provider had received the five

weeks prior to the new system coming on. Although there was a delay in requesting help XWave,

It was the right idea to bring in Project Management experts when realized what the problem was.

4. What did the project managers do incorrectly?

 Maine had two bids for the project. Since they only received two bids, this should have raised

a clue that the requirements of the project were unreasonable. There first mistake is not
revising the requirements in hopes of getting more bids. There second mistake is accepting

the bid from CNSI because they had no experience with Medicaid systems.

 The likely cause of the project failure started from the beginning when CNSI and Maine’s

Department of Human Services (DHS) IT staff didn’t meet with Medicaid experts to discuss

the Medicaid rules. Instead, CNSI contractors had to decide how to meet Medicaid


 To build a new and relatively unproven technology platform for the entire system rather than,

integrating a Web-based portal with back-end legacy systems.

 IT switched over to the new system overnight with no backup system in case something went


 No, End-to-end testing or training was conducted before the switch over.

 The other issues were lack of preparedness and security systems created for the software.

This resulted in costs to the state and much inconvenience to many people.

 The risks involved with health care information systems are very serious. Confidential

information must be kept safe, billings and services rendered must be accurate and truthful,

and payments must be accounted for and supplied by the state for the persons on Medicaid.