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Analyst Calls for Oversight of Medi-Cal IT Modernization

In a Budget and Policy Post, the Legislative Analyst’s Office recommends approving a governor’s proposed budget request that would continue a slate of IT projects – but with input from lawmakers.

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Proposed funding for a multimillion-dollar IT modernization in the governor’s budget should be approved, but the administration should regularly inform lawmakers on changes to project processes being considered, an state analyst has recommended.

The Legislative Analyst’s Office (LAO), which provides fiscal and policy advice to the state Legislature, has examined funding proposed for the Medi-Cal Enterprise System (MES) Modernization Effort in Gov. Gavin Newsom’s 2021-2022 Fiscal Year budget; and, while supportive, is calling for better oversight of “costly and complex IT projects.” Among the takeaways:

  • The LAO recommends approving the governor’s proposed budget request for $22.3 million in funding for the Department of Health Care Services — $4 million of that from the General Fund — to continue the MES Modernization. The project comprises a number of Medi-Cal IT system modernization efforts, the LAO said in its Feb. 17 Budget and Policy Post, aimed in part at better aligning “some Medi-Cal IT systems” with federal Medicaid Information Technology Architecture guidelines and standards. These include the California Medicaid Management Information Systems (CA-MMIS) — subject of a state auditor update letter in December — the Comprehensive Behavioral Health Data System, and the Medi-Cal Eligibility Data System Modernization.
    “The administration decided last year to consolidate the previous Medi-Cal IT system modernization initiatives and associated projects into a single MES Modernization effort,” the LAO wrote.
  • That’s not all. DHCS “expects” the MES Modernization to include “previous Medi-Cal IT system modernization initiatives,” the LAO said. But the endeavor “also will include other projects and substantially broadens the scope of Medi-Cal IT system modernization,” it said, indicating the department “expects to identify business needs” that might be addressed with “modern technology.” CA-MMIS, it said, centered on updating “subsystems that handle payments for Medi-Cal’s fee-for-service program,” which provides services to under 20 percent of Medi-Cal enrollees. The MES Modernization, the LAO said, “also will include modernization and/or replacement of subsystems that operate the Medi-Cal managed care program,” which supports more than 80 percent of enrollees “served by Medi-Cal managed care plans.”
  • The LAO’s recommendations could yield significant changes to the oversight of major state IT projects. In its analysis, the Office recommends the Legislature “direct the administration” to keep it “regularly informed of key changes to existing IT project processes that the administration is considering for the MES Modernization effort,” suggesting “at least quarterly” updates. It also recommends the Legislature adopt “supplemental report language” directing the administration to report back before Jan. 10 on changes to existing IT initiative processes for the MES Modernization; new options for MES Modernization legislative oversight; and other possible improvements to oversight. The administration is now working on “modifications to existing IT project processes (including project oversight) to accommodate the MES Modernization effort,” Brian Metzker, LAO senior fiscal and policy analyst, told Techwire via email.
  • The Office highlights the varied approval status of projects with the MES Modernization. Some, the LAO said, went through the California Department of Technology’s Project Approval Lifecycle process, while others started but “were withdrawn as the administration moved away from individual initiatives and towards a single, consolidated modernization effort.” Metzker said the Office expects oversight discussions to happen “as the MES Modernization effort is being re-planned and other IT projects are progressing through planning, development and implementation,” noting changes to existing IT initiative processes would likely help refine and direct work in the future.
  • It’s not clear what sort of “baseline cost, schedule and scope information” will be available about the MES Modernization, the LAO said, calling that information “critical” for identifying project start dates, the impact of any failures on the project as a whole, and project interdependencies that could impact the schedule. Metzker said the lack of this information during “initial planning stages of an IT project” is not unusual; and said the LAO recognizes the consolidation to the MES Modernization will necessitate a re-planning in “(at least) 2021-22,” which will delay such estimates. The LAO’s concern, he said, is whether the administration “will ever be able to provide this information,” noting its absence would inhibit legislative oversight.
    “We think the administration and the Legislature should meet to consider new oversight mechanisms for complex and costly IT projects and, in general, projects using newer approaches to development and implementation such as the agile approach,” Metzker said. “Improved oversight will help prevent possible issues related to (for example) dependencies between individual projects.”
Theo Douglas is Assistant Managing Editor of Industry Insider — California.