IT procurement cycle stuck on spin? Here are 3 ways to get it sorted.

No matter the size of the state nor the type of system being developed, large government technology projects seem to share the same time frame: long, convoluted and often very different from the end users’ initial goals.

To learn why, we studied a number of Medicaid Managed Information System (MMIS) development projects from across the country. Turns out, these large IT projects take at least twice as long as projected to complete with substantial budget deviation. And how much do the Centers for Medicare and Medicaid Services (CMS) pay above the initially contracted price? Approximately $24 million more per implementation — and states pay $2.6 million more.

Why are large state IT projects so hard to get over the finish line, completed on time and under budget? It’s not for a lack of resources — most projects have more than enough funding, as well as access to hundreds of talented, intelligent individuals. So what’s going on?

Several common challenges stand out:RFP language is often unnecessarily confusing and restrictive, with arbitrary limitations that hinder vendors’ ability to give more expansive responses. New elections often set off a wave of time-consuming policy or programing adjustments as incoming administrations usher in different priorities and political agendas. This leads to delays in critical IT projects and related programs.

Then there’s also the sheer size of Medicaid to consider. It’s a program that not only covers medical and pharmacy services but also includes heating assistance, child welfare, child protection, food stamps and many other kinds of social services. As a result, contracts for MMIS projects are proportionally large and long-term, touch many facets of all services and unfortunately still take an all-or-nothing “systems” view of possible solutions versus the modular design approach proffered by CMS.

Nevertheless, I believe it’s possible to counteract the challenges above and move to a procurement process that’s more nimble and reflects the intent of vendor participants and the states they serve.

For your consideration, I humbly offer these suggestions:

  1. Make RFPs more flexible. Give vendors the option to ask for more information before they submit their proposals. Also, since existing terms, conditions and compliance requirements are often excessive or reflect unrealistic standards, consider allowing vendors to respond openly on RFP questions and project deliverables, so they can give responses that reflect their unique strengths and approaches. States can even let qualified vendors propose and design their own implementation time frames, and then hold them accountable for meeting their suggested deadlines. The road to workable contracts and projects starts with your RFP, realistic implementation requirements, and early and consistent interaction.

  2. Look for modular and service-based solutions. When procuring an MMIS, states often want vendors to give them everything and the kitchen sink in one proprietary, made-from-scratch program. The resulting contracts are so unwieldy that they’re virtually impossible to fulfill in a reasonable time frame. Instead, states should look for modular, service-based solutions that are owned, hosted and operated by vendors. This is called the BPaaS via SaaS model (Business Process as a Service via Software as a Service). This model not only produces more streamlined contracts but also allows for more efficient implementation and maintenance later on.

  3. Be diligent about surfacing best practices, including those from the commercial sector. The National Association of State Procurement Officials (NASPO) has several articles and issue briefs on technology procurement, as well as a useful guide detailing some of the best practices for managing large government contracts. But don’t just look to other states for good ideas. Some of the most useful procurement approaches come from the commercial sector. For example, Medicaid commercial payers can be a rich source of information for states. Since these payers face similar program issues — and experience similar technological challenges — as state Medicaid agencies, they can easily serve as models for state MMIS projects.

There are already promising signs of progress. CMS is encouraging modular IT solutions for MMIS projects and has said they’re eligible for federal funding. On the ground level, more professionals are moving from the commercial sector into civil service, bringing with them a desire to work smarter and the knowledge and willpower to do just that.

Beyond these changes, another big reason to be optimistic about the future of state IT contracts: individual passion. In my time at Optum, I’ve discovered that folks who are involved in Medicaid are passionate about what they do, and their passion often drives wonderful behaviors like advocating for transparency and reaching across silos to create groundbreaking solutions.

State IT contracts will always involve some level of complexity, but there’s ample reason to hope for a brighter, more efficient future.

Now it’s your turn: How would you improve state IT contracts? Seen any promising practices or emerging approaches in your neck of the woods? If so, let me know in the comments.

About the Author:

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Andrew G. Cone
Sr. Vice President, State Government Solutions

Andrew Cone leads solution and business development / strategy for Optum State Government.  His experience spans the health spectrum, including commercial, government (Medicare and Medicaid), payer, provider and pharmacy benefit services.  A graduate of Hamline University in St. Paul, Minnesota, his 30 + year career includes business and software development, service delivery, and consumer engagement.

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