Statewide computer overhaul looms for Medi-Cal

California is in the midst of developing a complex new computer system called Health Enterprise to replace the decades-old hook-up that handles billings under Medi-Cal, the state-federal health care program for the poor, disabled and elderly that covers perhaps a fifth of the state’s population.

In a letter to Gov. Brown and legislative leaders, State Auditor Elaine Howle said the new system will replace what is known as the Medicaid Management Information System, which has been in place since the 1970s. MMIS is a computer system that processes payments to doctors, hospitals, pharmacies, clinics and others who provide care for reimbursements. Medi-Cal has some 8.8 million enrollees, according to 2010 state figures, and about $12 billion annually in state funding.

But the aging system must be jettisoned because “it is about 30 years old, its operations are inefficient, maintenance is difficult, and the risk of system failure is high,” Howle wrote Thursday, citing complaints from state Health Care Services officials. Officials say they must begin the transition to the new system by next year or risk losing federal funding.

The newly installed contractor handling MMIS under a $1.7 billion contract, Affiliated Computer Services, is poised to develop the new system as a requirement of its state contract which runs at least through 2016, although options could extend the pact an additional six years.

“AFS is in the preliminary stages of developing a replacement” for MMIS … which will be called Health Enterprise,” Howle noted in her letter, which gave no estimate of the cost.

MMIS was operated under contract since 1987 by Electronic Data Systems, which was acquired in 2008 by Hewlett Packard. ACS won the contract in 2010 and took over the operation the following year.

A copy of Howle’s letter can be seen here.