[Status report on agreement between AHCCCS and the State of Hawaii using (PMMIS)]

              ,

AHCCCS

Ourfirst care is your health care

ARIZONA HEALTH CARE COST CONTAINMENT SYSTEM

December 22, 2008

The Honorable Timothy S. Bee, President

Arizona State Senate

1700 W. Washington

Phoenix, AZ 85007

The Honorable James P. Weiers

Speaker of the House

Arizona House ofRepresentatives

1700 W. Washington

Phoenix, AZ 85007

The Honorable Robert Burns

Chairman ofthe Senate Appropriations Committee

Arizona State Senate

1700 W. Washington

Phoenix, AZ 85007

The Honorable Russell Pearce

Chairman ofthe House Appropriations Committee

Arizona House ofRepresentatives

1700 W. Washington

Phoenix, AZ 85007

Janet Napolitano, Governor

Anthony D. Rodgers, Director

801 East Jefferson, PhoenixAZ85034

PO Box 25520, Phoenix AZ85002

Phone 602- 417- 4000

www. azahcccs. gov

RECEI\/ ED

OFFICE OF THE PRESIDENT

Dear President Bee, Speaker Weiers and Chairmen Burns and Pearce:

Pursuant to A. R. S. § 36- 2925. subsection H, AHCCCS is submitting this status report on the

agreement between AHCCCS and the State of Hawaii for data processing activities using the

AHCCCS Prepaid Medicaid Management Information System ( PMMIS).

This report summarizes the financial and operational activities for the current Interstate

Agreement ( ISA 3) between AHCCCS and the Med- QUEST Division/ Department of Human

Services for Hawaii which began in 1999. The prior two ISAs have been completed and have

been recapped in prior reports.

The seven major " phases" of ISA 3 are as follows:

1. Design, Development and Implementation of the PMMIS Managed Care Module

2. Design, Development and Implementation of the Fee- For- Service Module

3. Provision of Ongoing Hawaii Operations and Maintenance Support

4. Hawaii- Arizona Health Insurance Portability and Accountability Act of 1996 ( HIPAA

Implementation) including the development and implementation of the National Provider

Identifier ( NPI) requirements

5. Design, Development and Implementation ofthe Executive Information System/ Decision

Support System ( EIS/ DSS)

6. Design, Development and Implementation of Medicaid Information Technology

Architecture ( MITA)

7. Design, Development and Implementation ofHIPAA Standards, Second Generation.

The following briefly recaps the operational activities of each of the phases along with the

revenue and expenditure activity for Fiscal Year 2008.

In accordance with A. R. S. § 36- 2927 Intergovernmental Services Funds have been set up to

deposit the monies received from Hawaii and to account for the expenditures that are incurred on

its behalf. The attached Chart 1 summarizes the revenues and expenditures ofmonies from these

funds for Fiscal Year 2008.

Design, Development and Implementation - Managed Care

This phase began in November 1999 and was implemented by Hawaii in December 2000. Its

purpose was to modify the Arizona PMMIS system to allow for the processing of Hawaii

information as well as upgrading and updating AHCCCS' system to accommodate new federal

reporting requirements.

Design, Development and Implementation - Fee- For- Service

This phase began in June 2001 and was implemented in November of 2002, The purpose ofthis

phase was to design, develop, and implement enhancements to the claims processing module as

well as modifications to the existing managed care functionality ofPMMIS for Hawaii's use.

Ongoing Hawaii Operations and Maintenance Support

Once PMMIS went live in Hawaii, Arizona began providing ongoing operations and

maintenance for the system. Hawaii is charged for work done by Arizona Information

Technology ( IT) staff and independent contractors, a designated percentage of other specified

AHCCCS personnel in IT, direct Hawaii costs, and a portion of AHCCCS indirect operating

costs which benefit the project.

Hawaii- Arizona HIPAA

Hawaii and Arizona had a joint Advanced Planning Document ( APD) for both States to perform

, the activities necessary to implement the Health Insurance Portability and Accountability Act of

1996 ( HIPAA) requirements at a mixture of federal financial participation rates. The APD

amount was for · $ 5,217, 211 for Hawaii expenditures paid locally here in Arizona and $ 8,512,304

for Arizona costs. Fiscal Year 2008 Arizona expenditures totaled $ 599,194 which equates to

$ 71,203 in State funds due to the various federal fund matches and this APD was closed in June.

Hawaii- Arizona NPI

In September of 2006 the states received approval of a joint Implementation Advance Planning

Document ( IAPD) from CMS for enhanced funding towards modification of their Medicaid

Management Information Systems to come into compliance with the National Provider Identifier

( NPI) requirements of HIPAA. The IAPD approved an Arizona total computable budget of

$ 1,152,044 and a Hawaii total computable budget of $ 980,650 of which $ 756,250 was allocated

for Hawaii expenditures to be paid from Arizona. For Fiscal Year 2008, Arizona expenditures

totaled $ 192,235, of which, $ 19,223 were State funds. This brought the total funds expended in

this project to $ 278,936 or $ 27,894 in State funds.

Arizona- Hawaii EISIDSS ( Executive Information SystemlDecision Support System)

Phase I of the EIS/ DSS Advanced Planning Document was approved for Arizona in 2004. This

was to design, develop and implement an Executive Information System/ Decision Support

System which would develop a more efficient way to extract information requested. An APDU

was approved in 2005 which was for an updated project implementation schedule and an

adjustment to project costs to reflect actual costs in the contract awarded to EDS ( Electronic

Data Systems) for developing and implementing the DSS. A further APDU was approved in

2006 to include additional funds as well as $ 50,000 for a requirements analysis for Hawaii. In

April of 2008, another APDU was approved to reflect Phase III of the project bringing Hawaii's

total approval to $ 1,470,000 ($ 1,390,000 to be paid from Arizona) and the Arizona total

computable budget to $ 5,698, 190. For Fiscal Year 2008 Arizona expenditures for Phases 1 and

II were $ 76,749 ( State share of $ 7,675) and $ 39,379 ( State share of $ 5,138) for Phase III.

Arizona- Hawaii MITA ( Medicaid Information Technology Architecture)

During 2008, Arizona and Hawaii received approval from CMS to prepare a Planning Advance

Planning Document ( PAPD) to perform a Medicaid Information Technology Architecture

( MITA) State Self- Assessment. This process was to promote improvements in Medicaid

information technology planning on a program- wide or enterprise- wide level. This PAPD would

allow the states to document current business processes, map them to the appropriate MITA

capability and maturity matrices and begin development of a MITA Transition Plan. A total of

$ 1,600,000 in total computable costs was approved ($ 800,000 for each state). For FY2008,

Arizona expended $ 59,000 in total computable costs for a State share of $ 5,900.

Arizona- Hawaii IDPAA Standards, Second Generation

In May 2008, Arizona and Hawaii received approval for a PAPD to begin planning and

assessment activities related to the adoption of the next mandated versions of the electronic

Transaction and Code Set ( TCS) standards under the Health Insurance Portability and

Accountability Act of 1996 ( HIPAA). This included the impact and requirements analysis

related to design, development and implementation of enhancements to the Medicaid

Management Information System ( MMIS) to implement these standards. The approvals were

$ 1,075,466 total computable for Arizona and $ 607,213 total computable for Hawaii based on a

mixture ofFFP percentages. No expenditures were made during FY08 so we will report more on

this in next year's letter.

HAPA Savings

Because ofthe HAPA project, Arizona has benefited through obtaining enhanced funding as well

as the sharing of both direct and indirect costs. A separate fund was set up to capture the dollars

attributed to the savings/ benefits achieved because ofthe project. The Fiscal Year 2008 fmancial

activities ofthis fund ( Fund 2439) are illustrated on Chart 1A.

In FY2009, the agency plans on spending revenues generated and a portion of the fund balance

for critical technology equipment replacements and programming for projects such as HIPAA 2nd

Generation, MITA, NPI, ACE, Imaging, Business Continuity, Virtual Office and the Decision

Support System. By utilizing this fund, we are able to lessen expenditures from the General

Fund in an ongoing effort to reduce expenditures due to continued budget constraints.

Additionally, we anticipate part of the savings in the account will be given to the State to help

with the budget shortfall.

Project Summary

We continue with ongoing operations and maintenance work as well as working on all the other

projects as indicated above. Both states continue to work cooperatively and both benefit by

improving business knowledge and processes, efficiencies, as well as a stronger infrastructure.

Hawaii continues to share in the costs of modifications to the majority of subsystems as well as

certain other expenditures which result in a reduction of costs to AHCCCS. This has enabled

AHCCCS to maintain the level of service required for our increasing membership along with

making Federal and State mandated system requirements with less contribution from the General

Fund than would otherwise been necessary.

Everyone remains pleased with the results of the project. Arizona has been able to receive

enhanced funding from CMS for many of its information technology activities as well as share

the maintenance and development of PMMISIHPMMIS hardware and software costs. We

continue to share ideas, methodologies and strategies and believe this is a good model for

potential future partnerships for other state joint ventures.

If you have any questions, please feel free to contact me at ( 602) 417- 4776.

lrector/ Chief Information Officer

C. James Apperson, Director, Governor's Office of Strategic Planning and Budgeting

Bret Cloninger, Analyst, Governor's Office of Strategic Planning and Budgeting

Richard Stavneak, Director, Joint Legislative Budget Committee

AHCCCS Hawaii Intergovernmental Service Funds

Revenues/ Expenditures and Fund Balance

Fiscal Year 2008

Chart 1

Chart 1A

Revenues/ Expenditures

Fund 2439- HAPA Savings

Fund Balance

Revenues

Indirect Transfers In*

Personal Services & ERE**

$ 263,076

392,763

655,839

Beginning Fund Balance FY 2008 $

Expenditures in Excess of Revenues

2,170,805

( 446,655)

Expenditures

Salary & ERE

Other Professional & Outside Services

Travel - In- State

External Programming - Mainframe

Repair & Maintenance

Software Support & Maintenance

Capital Equipment

Non Capital Equipment

Operating Transfers

1,102,494

1,102,494

Ending Fund Balance FY 2008 $ == 1,= 72==: 4=, 1= 51= 1

Expenditures in Excess of Revenues $ =====( 4= 4= 6:=, 6=: 5= 5=)

* Designated AHCCCS Operating Costs which are allocated and charged to Hawaii

** Portion of employees' salaries representing work done on the HAPA project charged back to Hawaii

Chart 1B

Fund 2442- ISA # 3 ( DOl, Ongoing, HIPAA, NPI, DSS)

Revenues/ Expenditures Fund Balance

Revenues

Advanced from HI for expenditures

Interest earned on HI fund balance

$ 8,137,454 8137454 Beginning Fund Balance FY 2008 $

41,105 41105.05

8,178,559 Expenditures in Excess of Revenues

1,491,683

( 319,181)

Expendituras

Personal Services & ERE

Professional & Outside Services

External Programming- Mainframe

Travel

Internal Service- Data Processing

Software Support & Maintenance

Capital & Non Capital Equipment

Indirect Cost Transfers Out

Other

3,145,098

10,253

546,795

3,098

2,983,569

714,097

915,012

179,817

Ending Fund Balance FY 2008 $ 1,172,502

8,497,740

Expenditures in Excess of Revenues $ =====( 3= 1= 9=, 1= 8::: 1=)

12/ 22/ 2008 3: 01 PM

Note: This fund is comprised of deposits from

Hawaii and is to be used for Hawaii's share of

PMMIS and other expenditures.

FY08 RevExp Chart for Annual Report ( 2). xls Annual Activity