NASHVILLE -- It's back to the drawing board for TennCare officials on a new Medicaid eligibility determination system after the state and contractor Northrop Grumman Corp. agreed to part ways over a troubled $37.5 million system that shows few signs of ever working.
In a statement issued Monday, the TennCare Bureau said that after receiving a detailed report on problems from its consultant, KPMG LLC, "the state and current vendor have mutually decided it to be in their respective best interests to terminate the current contract early."
"The state will be moving forward with the process to select a new vendor," the statement adds.
TennCare officials on Monday gave no timetable on selecting another contractor or when it will eventually have a system that was supposed to begin interacting last January with the federal government's system under the Affordable Care Act.
Gov. Bill Haslam's administration is already under a federal judge's order telling the state to address woes faced by would-be TennCare enrollees who've spent months unsuccessfully trying to learn the status of their Medicaid applications filed through the federal government's system.
Tennessee's problem is a computer system that is nowhere near completion and consistently has missed ongoing performance benchmarks, according to the KPMG report.
KPMG says the system has a 90 percent probability of failure in any number of key areas. The list includes:
* The "business operating model for Medicaid Member Services currently is incomplete for the [Tennessee Eligibility Determination System] future state. The system processes are not at a sufficient level of detail to support business operations."
* The "system infrastructure could be prone to crashes or significant degradation in performance upon stress."
* The system isn't meeting milestones toward completion.
* "At least one component of the system architecture will be at end of life within the next year."
And no fix is in sight.
KPMG also found that turnover within Northrup Grumman's team of business analysts assigned to the Tennessee project created problems as has their "lack of Medicaid eligibility domain knowledge."
The state bears responsibility, too.
"The State has not developed a comprehensive, documented business operating model for the future state of Medicaid Member Services," KPMG found. "As a result, the State may not be able to effectively align its new business processes" with its Tennessee Eligibility Determination System.
The state already has paid Northrop Grumman $4.6 million on development of its Tennessee Eligibility Determination System. Because 90 percent of the project was funded by the federal government, the state is out about $460,000.
The state will make a final $1.6 million to Northrop Grumman with Tennessee's share coming to about $160,000, said TennCare spokeswoman Kelly Gunderson.
Gunderson said in response to questions the state believes "some" of Northrop Grumman's work "is usable."
"Once we have a new vendor they will also be able to perform an assessment to determine the extent to which the current technology could be integrated with the new technology," he said.
Most if not all other states in the country have new computer systems compatible with the federal system, but TennCare officials say some states have had major problems.
Some states, such as Kentucky, appear to have smoothly running systems.
Michele Johnson, executive director of the Tennessee Justice Center, said in a statement that "it's clear that progress wasn't being made with Northrop Grumman."
The Justice Center was one of the groups that sued the state in an effort to force TennCare to develop adequate work-around remedies to the lack of having a functioning computer system. The system is intended to provide a second "portal" to the federal system.
It's needed because the state's decades-old existing eligibility determination computer isn't compatible with the new federal system. Applicants said when problems developed with federal determinations on their eligibility, the state didn't have a suitable backup to help them.
TennCare was one of three state agencies sued. The state, which insists its remedies to get around the lack of a compatible system are working, has appealed the Nashville federal judge's ruling.
Johnson said that "while the delay is frustrating to those who are eligible and can't get covered, if the state's plan results in a quicker remedy to determine eligibility then we certainly we support it.
"In the meantime," Johnson added, "we look forward to learning how the state will manage over the extended period during which a new contractor is recruited and a new system is being built."
Contact staff writer Andy Sher at asher@timesfreepress.com or 615-255-0550.