Georgia Readies 'Bellwether' Project For Administering Health Care

Georgia Readies 'Bellwether' Project For Administering Health Care<@VM>Vendors to Converge on Massive Ga. Telecom Outsourcing

Larry Singer

The Georgia Department of Community Health is planning a lucrative outsourcing project for health care administration that could have a profound influence on how state governments administer health benefits programs.

The planned multiyear project, said to be worth at least $280 million and perhaps far more, will consolidate the administration of health care programs for Medicaid recipients, state government employees and employees of state colleges and universities. States ordinarily administer these programs separately.

The Department of Community Health is seeking to establish a long-term partnership with one or more companies. The contract will be for an initial period of one year with the possibility of nine one-year extensions, said Martin Smith, a department spokesman.

Altogether, the contract will administer benefits to a population of about 2 million ? 25 percent of the state's population ? comprising about 1.3 million Medicaid recipients, 580,000 state employee benefit recipients and 90,000 higher education benefit recipients.

State officials declined to disclose the value of the contract, which they intend to award in June. Electronic Data Systems Corp. holds an existing $28 million, one-year contract extension for the Medicaid work that will fall under the contract.

When the state and higher education health care programs are added, the new contract will have a value far exceeding the $280 million that the Medicaid contract alone would be worth over 10 years, said analysts and industry observers.

Among the systems integrators that have expressed an interest in serving as the prime or in support of some particular aspect of the contract are Affiliated Computer Services-Consultec of Dallas; Bull Americas of Billerica, Mass.; EDS of Plano, Texas; and Maximus Inc. of McLean, Va.

The contract for management information services and administrative services potentially could transform the way states administer Medicaid programs, said Larry Singer, Georgia chief information officer and executive director of the Georgia Technology Authority.

The procurement also provides Medicaid fiscal agents with an opportunity to expand their businesses to other populations, according to Tom Davies, senior vice president of Current Analysis Inc., a business intelligence firm in Sterling, Va.

Industry observers said health care providers are reluctant to serve Medicaid recipients, because the reimbursement rate is lower for them than for other segments of the population. This problem has been particularly acute in Georgia.

For 14 months, from October 1997 to December 1998, Maximus served as a health benefits enrollment manager, counseling Georgia's Medicaid recipients as to which plan was best suited for them. However, all of the managed care plans except one eventually dropped out of the Medicaid program.

"When the health care plans withdrew, the contract ended," said John Boyer, Maximus' president of health management services division.

To remedy this situation, the Georgia Department of Community Health plans to combine the administration of Medicaid with two other groups.

State officials are hoping that physicians and health plans will be enticed to provide better health care options to Medicaid recipients when public employees are added to the program, because they want the opportunity to serve the large public employee population that traditionally has a better reimbursement rate for health services.

By reorganizing health care administration and applying new technologies and processes, Georgia would remove the stigma attached to the Medicaid program and make an attractive and financially rewarding opportunity for health care plans, said state and industry officials.

The consolidation "will remove one of the primary barriers to providing care to low-income individuals," said Singer.

The rewards to the state would include lower costs, better quality care for beneficiaries and greater access to health care plans, according to analysts and industry officials.

"Not only will they have a greater pool of people to enroll, but they may also have the opportunity to raise the reimbursement rates for the health plans," said Boyer, who added that the greater volume of patient participation should be enough to draw more plans back into the system.

The strategy of combining all of the state-driven administration of health care into a single infrastructure is a new approach and "has the possibility of being an industry bellwether," said Matt Chambers, general manager of administrative process management for EDS.

Should Georgia's approach to consolidation of state health care administration become a trend, then "we're interested in being at the head of the trend," Chambers said. EDS has Medicaid management information system contracts in 18 sates, including Georgia.

The contract marks the first time the Health Care Financing Administration is undertaking a best value procurement, Singer said.

HCFA, which is part of the Department of Health and Human Services, oversees how federally funded Medicaid programs are administered at the state level.

EDS installed Georgia's Medicaid management information in 1987. EDS provides Medicaid support services in 18 states and has 1,300 of its 122,000 employees assigned to Georgia, said Chambers.

Blue Cross Blue Shield of Georgia, a subsidiary of WellPoint Health
Networks Inc. of Thousand Oaks, Calif., administers the state employees and higher education employees health care programs.Georgia also is undertaking a telecommunications outsourcing project this year that will rival its health care outsourcing contract both in terms of cost and scope of work.

The project is estimated to be worth between $600 million to $1 billion over seven to 10 years, said Joyce Goldberg, a spokeswoman for the Georgia Technology Authority, the agency that manages and coordinates information technology for state agencies.

The project will include everything from desktop management to signal transport, said Larry Singer, Georgia chief information officer.

Specifically, the state is seeking a contractor or contracting team that will provide voice, data, two-way radio, wireless technologies and support services such as desktop management and billing.

While Georgia would prefer to award the contract to a single prime contractor, it is willing to accept a team or joint venture to manage a project of such size, Singer said.

Georgia Technology Authority will issue request for quotations in May, request for proposals in August, and award the project early next year.

About the Author

William Welsh is a freelance writer covering IT and defense technology.

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