Medical records go global

From the hospital to the battlefield, new IT systems put patient information at doctors' fingertips.

Health care contracts in 2003

Louisiana Department of Health and Hospitals

Project: Medicaid Management Information System Fiscal Agent

Value: $400 million over five years with five one-year options

RFP: Fourth quarter

Summary: Louisiana is seeking a contractor that will provide MMIS hardware, software and services as well as fiscal agent services.

Department of Defense Tricare Management Activity

Project: Tricare Retail Pharmacy Contract

Value: $250 million over five years

RFP: Released in March

Summary: The Defense Department is seeking a contractor for a variety of functions, including the operation of a retail pharmacy network, provider relations, technical help desk, eligibility verification, clinical services, point-of-service claims processing, paper claims processing, Tricare Management Agency systems interfaces, member help desk and appeals processing.

Alabama Medicaid Agency

Project: Medicaid Management Information System Fiscal re-bid
Value: $90 million. Length to be determined.

RFP: April

Summary: Alabama is seeking a contractor to provide fiscal agent services.

Los Angeles County Department of Health

Project: MIS Implementation

Value: $10 million. Length to be determined.

RFP: June

Summary: Los Angeles County is seeking a contractor to provide systems implementation for a management information system.

California Health Services Department, Health and Human Services Agency

Project: Med-Cal Budget Estimate System

Value: $300,000. Length to be determined.

RFP: Released in March

Summary: California is seeking a contractor to test, install, modify and maintain a replacement system for the Med-Cal budget estimate.

Pennsylvania Health Cost Containment Council

Project: Risk Adjustment/Severity Adjustment System

Value: $100,000. Length to be determined

RFP: June

Summary: Pennsylvania is seeking a contractor to provide a risk adjustment and severity adjustment system to collect and disseminate data about the cost and quality of health care in the state.

Virginia Health Department, Health and Human Resources Secretariat

Project: Electronic Claims Submission/Electronic Document Interchange Services

Value: $100,000. Length to be determined.

RFP: August

Summary: Virginia is seeking a contractor to implement a system to handle electronic claims submission and electronic document interchange services within six months.

The Theater Medical Information Program will provide information that is "going to dramatically improve the quality of care" for soldiers on the battlefield after they return home, said Larry Albert of Integic Corp.

Olivier Douliery

Harvey Braswell of Affiliated Computer Services Inc. said more than a dozen contractors have expressed interest in the Tricare retail pharmacy service contract.

WT file photo

When military personnel ship out for the Persian Gulf, they now have their complete medical history waiting for them when they arrive, and every physician who treats them will have access to that information through laptop computers at medical facilities on the battlefield.

The program making this happen, the Theater Medical Information Program, is part of a massive undertaking by the Defense Department to establish an electronic patient records system for all military personnel in the theater of war.

Having this kind of information available "is going to dramatically improve the quality of care" for soldiers while they are on the battlefield and after they return home, said Larry Albert, senior vice president of health care practice for Integic Corp., Chantilly, Va.

The prime contractor for the Theater Medical Information Program is Northrop Grumman Corp. of Los Angeles. Litton PRC, now part of Northrop Grumman, won the prime contract nearly five years ago. Integic is the prime contractor for the Composite Health Care System II program, a separate program that provides the clinical encounter module to the Theater Medical Information Program.

These programs are part of a wave of health care initiatives under way among federal, state and local agencies. These efforts have two main thrusts. One set of programs is aimed at creating systems that give doctors and other caregivers access to vital medical information. The other set would streamline the claims process for both caregivers and medical beneficiaries in various government insurance programs.

Federal agencies are expected to spend roughly $2 billion in fiscal 2003 and 2004 on such programs in health care information technology, according to Federal Sources Inc.

At the state and local level, spending on health care is expected to grow an average of 5.5 percent from $4.2 billion in fiscal 2003 to more than $5 billion in fiscal 2006, according to Gartner Inc.

The advent of homeland security following Sept. 11, 2001, means an integrated health infrastructure is becoming as critical to the nation's welfare as a public safety or criminal justice network, according to analysts and industry officials.

"Homeland security is pushing [these initiatives] along faster than would have been done," said Michael Hogan, director of marketing for North American public sector for Unisys Corp. "There will have to be increased public health awareness related to homeland security."


Composite Health Care System II, a new, massive medical information system, is being rolled out for the more than 8.7 million military personnel and their families. Integic began limited deployment of the system in November following a successful pilot project.

The company's initial award was for about $60 million for its work on the composite health care project, Albert said. When deployment is completed in about three years, the system will link disparate networks of more than 100 military health care system hospitals around the world.

At the same time, the Department of Defense is preparing to award several new projects this year for its managed health care system, known as Tricare, which received $911 million in IT funding in fiscal 2003 to launch several initiatives.

One of the larger projects is the five-year, $250 million Tricare national retail pharmacy service program, for which bids are due in May. The winning contractor will provide a variety of services, such as operating a retail pharmacy network and handling provider relations, technical help desk, eligibility verification, clinical services and claims and appeals processing.

More than a dozen contractors have expressed interest in the Tricare retail pharmacy service contract by attending bidders meetings, said Harvey Braswell, group president of government services for Affiliated Computer Services Inc.

Another major Tricare initiative is the Dual Eligible Fiscal Intermediary contract, which includes claims processing and associated customer support services for both Tricare and Medicare benefits. The winning contractor also will be responsible for providing pharmacological services to more than 4.7 million beneficiaries under 65 and an additional 1.7 million Medicare dual-eligible beneficiaries.

Three companies -- Palmetto Government Benefits Administration Inc. of Columbia, S.C.; Wisconsin Physicians Service Inc. of Janesville, Wis.; and Unisys of Blue Bell, Pa. -- submitted bids on the fiscal intermediary contract in February. The value of the five-year contract has not yet been determined.

Health care experts said Composite Health Care System II will dramatically improve the services' ability to cope with the medical needs of the hundreds of thousands of soldiers now fighting in Iraq.

For example, if U.S. soldiers come under chemical or biological attack, military physicians will be able to develop a complete record of the symptoms, diagnoses and responses to treatment, something that couldn't be done during the Persian Gulf War of 1991.

Similarly, the centralized database and improved claims processing will enable the Pentagon to avoid the system overload that occurred when veterans suffering from Gulf War Syndrome filed thousands of claims, which, together with more routine health care claims, overwhelmed the military network.

"The Department of Defense doesn't want another Desert Storm coming back on it," Hogan said. This time, the department is taking great pains to ensure that its health care network "can handle a spike in activity," he said.


At the state and local level, the financial crisis among state governments -- a collective budget shortfall of $30 billion this year -- is helping spur interest in new solutions for administering Medicaid and Medicare benefit programs.

ACS' Braswell said state officials have been eager to meet with IT companies to discuss ways to cut the costs of administering these huge programs.

ACS, along with Unisys and Electronic Data Systems Corp. of Plano, Texas, are the largest providers of Medicaid administrative services. EDS holds contracts in 18 states, ACS in 14 states and the District of Columbia and Unisys in five.

Because of the need to contain Medicaid costs, industry officials said states are asking contractors to help manage a broader range of Medicaid-related services, including eligibility determination, fraud and abuse containment, pharmacy benefit management services, disease management and decision support systems.

This is a significant departure from the way requirements for Medicaid management information systems were structured in the past, Braswell said.

"It makes the competitive landscape different, and changes who will compete in it," he said.

In the past, states typically issued a separate procurement for these systems, but the trend of bundling related contracts together means that contractors must have experience in Medicaid, business process outsourcing and other associated services, he said.

This trend can be seen in procurements in Alaska, Nevada and West Virginia, company officials said. Upcoming Medicaid procurements in Louisiana, Massachusetts and North Carolina are expected to follow the pattern.

The North Carolina contract, a four-year deal worth $160 million, is scheduled for award Aug. 1, according to FSI. The Louisiana contract is for five years with five one-year options, worth a total of about $400 million, according to state officials. The request for proposals will be released in the last quarter of 2003, they said. No details were available on the Massachusetts contract.

These projects are "monster engagements," Hogan said, and their value has increased proportionately.


Systems integrators are finding rising opportunities in several other health care markets. One of those is pharmacy benefit management, where ACS has become a dominant player.

The company, which has contracts in 16 states, won 11 of the 13 pharmacy benefit management contracts it has bid on in the past two years, Braswell said.

Under the contracts, ACS handles pharmaceutical claims processing, drug use reviews and prior authorization. Customers generally want the solution deployed in 60 to 90 days, he said.

Greg Baroni, president of Unisys' global public sector, said the company plans to make acquisitions to strengthen its ability to provide pharmacy benefit management systems. Unisys views pharmacy benefit management as an emerging growth area and plans to make acquisitions to strengthen its offerings, Baroni said.

Another related area of growth for integrators is helping to combat fraud and abuse associated with Medicaid and Medicare benefits. EDS has partnered with analytics and decision technology firm Fair Isaac and Co. Inc. of San Rafael, Calif., to develop a solution known as Payment Optimizer, which uses predictive analytic capabilities to detect fraudulent and abusive patterns in the benefit claims review process.

EDS and Fair Isaac have deployed Payment Optimizer for Medicaid programs in California, Kansas, Oklahoma and Texas. EDS also is deploying the solution at the Eastern Medicare Benefit Integrity Center. The center was established by the Department of Health and Human Services' Centers for Medicare and Medicaid Services to combat fraud and abuse in New Jersey and New York.

Fair Isaac receives several million dollars for each of the engagements, said Steve Biafore, vice president of the company's health care management unit.

The difficulty of this forensic work is compounded by the sheer size of the databases that must be analyzed and monitored, said Susan Rucker, vice president of Unisys' global operations.

"It's an emerging opportunity, but it hasn't been broadly accepted yet," she said.

As if there aren't enough challenges facing them, states must comply with the Health Insurance Portability and Accountability Act of 1996. The law requires all public and private providers of health services to adhere to standards for electronic data interchange, privacy and security when handling medical records.

A number of states are either behind on HIPAA training or lagging in compliance, said John Goggin, vice president and director of government strategy for the market research firm Meta Group Inc., Stamford, Conn. As a result, they will have to pay for training and may suffer noncompliance penalties.

ACS has HIPAA compliance contracts in all 13 states and the District of Columbia where it is the Medicaid fiscal services administrator, Braswell said. HIPAA opportunities will continue in 2003 and 2004, he said.

EDS also is reporting brisk HIPAA business, said John Engler, president of EDS' state and local government. The company recently deployed a new Medicaid system in Oklahoma that is HIPAA compliant, he said.

A number of states have been trying to comply with HIPAA standards on their own rather than seeking assistance from the private sector, an approach that is likely to hurt them in the long run, Braswell said, adding that if they don't get help soon, it may be too late.

"They will want companies to sign up for the risk, and companies won't want to do it," he said. *

Staff Writer William Welsh can be reached at

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