California Healthline Daily Edition

Summaries of health policy coverage from major news organizations

Xerox Will Not Finish Implementing Medi-Cal Management System

On Tuesday, Xerox announced that it will not finish implementing Medi-Cal's new payment management system, the AP/Sacramento Bee reports.

Medi-Cal is California's Medicaid system (AP/Sacramento Bee, 10/13).

Background

In 2010, California awarded a contract to Xerox to develop a $1.7 billion case management computer system, called the California Medicaid Management Information System. The contract was scheduled to expire on June 30, 2016, but it included a five-year extension option.

The new system -- which was set to be rolled out in five phases -- was intended to replace the current, 30-year-old system that processes payments for the Medi-Cal fee-for-service program.

In February, a state audit found that the rollout of the new system was at risk of facing significant delays (California Healthline, 2/20).

Details of Decision

According to the AP/Bee, Xerox announced that it will not complete the implementation of new Medicaid payment systems in California and Montana, both of which have experienced delays in launching their respective platforms.

Xerox said it will continue to process Medicaid claims in both states via existing legacy systems to avoid service interruptions (AP/Sacramento Bee, 10/13). Meanwhile, the company said it plans to continue providing Medicaid health care services to 35 other state clients.

Xerox said it expects to report a third-quarter loss of between three and five cents per share, resulting in a $385 million pretax charge. Among other things, the charge reflects estimated settlement costs (Minaya, Wall Street Journal, 10/13).

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