JUNEAU, Alaska — The state of Alaska has requested mediation over what it considers a failure by the vendor Xerox Corp. to address problems with Alaska's new Medicaid payment system.
Gov. Sean Parnell, in a statement Thursday, said that if mediation doesn't work, "the state is prepared to pursue all remedies available under the contract, including legal action."
A state Department of Law spokeswoman said the two sides have begun discussions on how the mediation will proceed.
The new system has been plagued by problems since it went live last year, prompting one state lawmaker, at a hearing in February, to say its launch made the rocky rollout of the federal online insurance marketplace look good.
At that hearing, a Xerox executive said the program built for Alaska to replace an older system represented the company's "latest and greatest solution" and that signs of progress had begun to emerge, including improved processing of claims.
The following month, state health Commissioner Bill Streur sent a letter to the company's president demanding a corrective action plan. Streur said health care providers had sustained thousands of dollars of losses related to non-payment, rebilling and waiting "inordinate" amounts of time to authorize a service or verify the status of claims. The department had been receiving notifications several times a week of providers no longer accepting new Medicaid patients or those suspending service until claims were settled, he said. In an interview Thursday, Streur said those types of notifications have largely stopped.
Problems identified in March, as part of the state's claim, included providers being paid for services they didn't render, pricing errors and Xerox not having sufficient staff to address the problems on an agreed-upon schedule. At that time, more than $130 million in advance payments had been made to providers who requested them.
In April, David Zirl, a senior vice president with Xerox Government Healthcare Solutions, said Streur's concerns were being taken seriously. "Xerox firmly believes that through rigorous program governance and disciplined change control, system changes can be appropriately prioritized and managed to the satisfaction of all stakeholders," he wrote.
Streur rejected the response as incomplete, and, according to a letter from the Department of Law, the two sides did not reach resolution during a May meeting.
Assistant Attorney General Rachel Witty, in the letter requesting mediation, said a proposed corrective action plan submitted by Xerox on June 30 also was deemed unacceptable by the state.
In a statement issued Thursday, Xerox said it is "committed to delivering the citizens of Alaska the most advanced tools available to improve the quality of healthcare and services related to the State's Medicaid program. We are working with the state to address its concerns and comply with their wishes to achieve our mutual objective of providing the citizens and healthcare providers of Alaska with a system they can rely on."
Streur said Thursday that issues like errant payments have generally been addressed. The biggest concern now, he said, is with failed linkages in code. Certain lines on a claim might not get picked up, resulting in things like the wrong amounts being paid or claims being denied, Streur said.
While progress is being made, it's not being made fast enough, he said. The contract allows for penalties, but Streur said he has not moved to levy those yet to see if a resolution could be reached.
He wants to see a clear plan for resolving the problems, a date for completion and to know what will be different from what Xerox has been doing, Streur said.