On this episode of The #hcbiz Show! we talk with  Roger A. Maduro and David Perara of Open Health News about the $7.5 Billion/yr Medicaid Open Health IT initiative.

The state-based Medicaid Management System infrastructure is woefully out-of-date, disconnected, and increasingly expensive to maintain. Many of the platforms are 30-40 years old and were written in the COBOL programming language (you know… of Y2K bug fame). The systems were built by 5 main vendors who, despite a large amount of consistency in business rules from state to state, built each system from scratch. Nothing is modular or reusable and each state has to maintain their own monolith.

There have been several failed attempts to modernize these systems, including a $179 million deal between Xerox and the state of California that ran for 6 years before they threw in the towel.

Now CMS is taking a new approach. They’ve spent the last 10 years evaluating open models and are now moving aggressively to do away with long-running, expensive, single-vendor projects.  Far from your typical command and control government program, this initiative will be guided by 3 core principles: Open, Collaborative, and Modular. If successful, the Medicaid IT world will be infused with new technologies that can solve specific problems quickly and states will be poised to collaborate and build off of each other’s success.

This is an exciting approach and a major opportunity for new entrants to the market. Check out the video below to get more background on the program and pointers on how to get started. You should also check out the OHN’s brand new OpenMedicaidIT News – the first and only newsletter dedicated to understanding and taking advantage of this initiative.

Full Video

1:00 – Why does Medicaid need a new approach to Health IT and innovation?

3:30 – Complexity has insulated the incumbents

5:25 – Medicaid accounts for more than $500 Billion in annual healthcare spend

6:28 – Every state built their own platform and many are 30-40-year-old COBOL systems

8:50  – There have been many failed attempts to modernize the system with old-fashioned development strategies

9:40 – CMS has studied the Open IT model for the past 10 years

10:30 – CMS calls for technology solutions that are open, cloud-based and modular and will facilitate collaboration amongst states

11:45 – CMS will target basic payer operations first, but the model will quickly open up specialized opportunities for Precision Medicine, Health Information Exchange, etc

12:50 – The approach is similar to what we’re seeing in the commercial payer world

14:30 – Medicaid faces many data blocking issues and data access is an issue for commercial payers too

15:30 – The new model will even open opportunities for non-healthcare-specific solutions like Customer Relationship Management (CRM) platforms that have been proven in other industries

18:00 – What will Medicaid’s technology framework look like? How will the money flow?

22:25 – What will the technical certification process look like?

26:28 – What’s the innovators perspective? How can new entrants prepare themselves to take advantage of the opportunity?

30:15 – Who should jump in the market right now? Who should wait?

32:18 – Financial and anomaly (fraud) detection systems will be prioritized early on

34:30 – Innovators should be careful to not introduce Medicaid-only solutions. Think about how your technology can be applied to all payers.