Cost of RI’s biggest-ever IT project soars to $364M

Officials say they're happy with Deloitte's work on UHIP despite tripled budget

PROVIDENCE, R.I. (WPRI) – The projected cost to finish Rhode Island state government’s biggest-ever IT project has nearly tripled to $364 million, WPRI.com has learned.

The Unified Health Infrastructure Project (UHIP) – a sprawling effort to build a new computer system to handle public-assistance programs such as Medicaid and food stamps as well as HealthSource RI – was launched by the Chafee administration four years ago partly to take advantage of federal funds made available to carry out President Obama’s health law.

“UHIP represents the largest scale information technology project ever undertaken by the State of Rhode Island,” officials declared in budget documents this past spring.

Early estimates pegged UHIP’s budget at $135 million and then $151 million, before the Chafee administration bumped the forecast up to $209 million in 2014. Another cost increase was disclosed this past March, when the new Raimondo administration put forward an updated projection of $229 million.

In the past four months, however, UHIP’s projected cost has soared by well over $100 million. In July the Executive Office of Health and Human Services filed an application seeking an additional $109 million from the federal government to spend on UHIP, and said if the request is approved, the project’s cost will total $364.1 million through 2020.

While the bulk of UHIP’s cost is being borne by the federal government, Rhode Island taxpayers are also responsible for a portion of it. If the new $364-million budget is approved by federal officials, the state would be responsible for about $77 million total. UHIP will also cost millions of dollars a year to operate once it’s up and running.

Sophie O’Connell, a spokeswoman for the health office, confirmed the new UHIP forecast but cautioned that it isn’t official yet.

“We won’t know the total cost of the project until a decision on the new application is made and we know the amount of new funding that has been approved,” she told WPRI.com. “We expect to receive a decision by the end of September or early October.”

Health and Human Services Secretary Elizabeth Roberts, who helped create the UHIP project when she was lieutenant governor, declined a request for an interview, as did her chief of staff, Jennifer Wood, citing the fact that they are waiting for a decision from federal officials.

The state’s contract for the project with Deloitte, the private contractor building UHIP, has been amended 31 times since the company was hired in early 2013, according to documents provided by the health office. Deloitte did not respond to a request for comment on the new cost projections.

Raia emphasized that officials are pleased with Deloitte’s work on UHIP so far. “We’ve been very happy with the role that Deloitte’s been playing,” he told WPRI.com. “They’ve been very helpful.”

In addition to its work on UHIP, Deloitte has taken on a number of projects pro bono for Gov. Gina Raimondo’s administration since she took office in January, such as helping to facilitate the work of Raimondo’s Working Group to Reinvent Medicaid, examining the state’s unemployment benefits system, and reviewing the operations of the troubled R.I. Department of Children, Youth and Families.

Deloitte has faced criticisms in other states for the results of its IT projects, including in Massachusetts, where The Boston Globe reported that two of its efforts – a new tax collection system and a new unemployment claims system – ran into serious problems in 2013.

UHIP was created in an effort to solve two problems: how to sell insurance in Rhode Island under President Obama’s health law, and how to replace InRhodes, Rhode Island’s existing computer eligibility system for social-service programs, which has been in use for 25 years. Chafee administration officials decided to do the two projects as one so Obamacare funding could also be tapped to replace InRhodes.

O’Connell stood by the original argument for UHIP, saying it will allow Rhode Island “to create an effective, efficient, 21st-century human services technology platform,” as well as “replace a number of very old technologies that no longer support the programs they were designed for, and support the automation of a number of paper-based systems.”

Asked why the UHIP budget has soared by more than $200 million, Raia said: “There’s been no change in scope, no change in focus. … This is new terrain for Rhode Island and all other states. It’s a new world with the [Affordable Care Act].”

So far, getting UHIP up and running hasn’t been a smooth process.

Christine Ferguson, the former executive director of HealthSource RI, Rhode Island’s Obamacare insurance marketplace, disclosed to then-Gov. Lincoln Chafee last year that “defects” in UHIP had forced HealthSource to spend more than half its non-technology resources on “workarounds.” In other recent documents, the state has acknowledged “implementation delays and technical issues” with UHIP.

The timeline for completion of UHIP has slipped, as well. Two years ago state officials had expected to replace InRhodes with UHIP by April 2015. Earlier this year, though, they acknowledged the state would have to keep using the older eligibility system – at a significant cost – at least into 2016.

UHIP has critics outside government, too. The Rhode Island Center for Freedom and Prosperity, a limited-government advocacy group, has described the project as an effort to build a “dependency portal” to encourage residents to sign up for social services.

On the positive side, Raia pointed out that UHIP received an award last week from Governing magazine parent e.Republic’s Center for Digital Government, in the Government-to-Citizen State Government category. The center said the award recognized “impressive work to make government more accessible and responsive to citizens.”

O’Connell said Rhode Island is seeking more money for UHIP now in part because the Obama administration has created “an incredible opportunity” by extending its offer to states of an enhanced federal funding match for Obamacare-related IT spending. Under the enhanced match, the federal government covers 90% of state spending on IT projects.

“We’ve needed these updates for decades, and the enhanced federal matching funds will help make them happen and improve the services we’re able to offer to all Rhode Islanders,” O’Connell said.

A breakdown of the UHIP project's various parts by the Senate Fiscal Office.
A 2014 breakdown of the UHIP project’s various parts by the Senate Fiscal Office; the target dates have since been delayed.

Ted Nesi (tnesi@wpri.com) covers politics and the economy for WPRI.com. He hosts Executive Suite and writes the Nesi’s Notes blog. Follow him on Twitter: @tednesi

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