Board assured Medicaid computer won't become another NOMADS

After multiple assurances the project won't turn into another NOMADS, the Board of Examiners on Friday approved a $61 million contract to buy and operate a new Medicaid computer system in Nevada.

"I want to make sure we don't have the same problem we did with NOMADS," said Gov. Kenny Guinn.

NOMADS is the cutting-edge welfare computer system Nevada contracted for a dozen years ago, which escalated out of control from about $30 million to more than $125 million in total costs before it was put on line less than two years ago.

Guinn and Attorney General Frankie Sue Del Papa questioned Health Care Financing and Policy Administrator Charles Duarte and Tim Brewer of First Health Services Corp. extensively about cost and performance controls in the contract.

Brewer said First Health already has installed the base system in Virginia and Alaska. Nevada is getting a system that has undergone extensive development and will need less than 10 percent modification to work for the state, Brewer said.

He said the other users will benefit Nevada in the future since any system changes required because of federal law changes will be split among the different users of the system.

"We're not building this from whole cloth," Duarte said. "It's something that exists."

Duarte told the board the contract provides for performance bonds to ensure the state can recover damages and that training and transition issues are being planned.

Most importantly, he said, the contract provides the state will pay for performance -- for completed, working products -- and not just pay billable hours for endless work as was done in NOMADS.

"I want to make sure this is not a pay for daily booking of hours," Guinn said.

"That's correct, governor," Duarte said. "This is a deliverable-based contract."

The computer system will handle claims for the state's Medicaid system, which now has more than 161,000 customers.

Duarte said the pharmacy portion of the system should be running within a few months and the claims system operating by October 2003. The contract runs through 2005 but has options to renew for a total of six additional years.

The federal government is paying for 90 percent of the system's cost and installation. The federal government will then pay for 75 percent of the operational costs.