RI leaders wrongly promised UHIP would ‘pay for itself’ by next June

One year after launch, Raimondo says state is 'on our way to fixing' $445M system

PROVIDENCE, R.I. (WPRI) – Two years after insisting Rhode Island’s new $445-million benefits system would pay for itself by next June, state officials now admit they have no idea if the problem-plagued computer system will ever save enough to cover its cost.

The most expensive IT project in state history, the Unified Health Infrastructure Project – or UHIP – has become synonymous with government failure since its disastrous launch a year ago this week. The problems affected tens of thousands of Rhode Islanders enrolled in programs including food stamps and Medicaid, and the fiasco forced Gov. Gina Raimondo to fire senior officials and apologize for going forward over federal objections.

“I’m not a happy customer,” Raimondo told Target 12 in an interview this month.

“Mistakes are going to be made,” she said. “The question is, do you have a leader who’s going to acknowledge the mistakes, take action, hold people accountable and fix them. And in the past few months I’ve replaced my entire team, we’ve shown results, and we’re on our way to fixing the system.”

Yet concerns about UHIP were being raised long before it launched, as the project’s initial budget soared from roughly $200 million to $364 million – at the same time that its go-live date was being pushed back more than a year, to July 2016. (It was later delayed another two months.) Legislative budget experts privately questioned why it was rising so fast.

In response to Target 12’s inquiries at the time, the R.I. Executive Office of Health and Human Services in October 2015 provided a 12-page presentation it now says was prepared by Deloitte, the vendor building UHIP, that dismissed the cost concerns and painted a rosy picture. The document was also given to the legislature.

“UHIP will save Rhode Islanders more than $90 million each year (including $40 million general revenue) and pay for itself by FY18,” the presentation declared – a reference to the current 2017-18 fiscal year, which ends June 30. It said the savings would come from “waste and fraud prevention, operational improvements, more efficient services and error reduction.”

From an October 2015 state presentation defending UHIP.

Now, though, state officials say that estimate was wrong – and they cannot offer a new one. They also acknowledge UHIP generated no net savings in the fiscal year that ended June 30, despite promises as late as last November that it could still save $13.8 million.

“The savings estimates were released based on overly optimistic accounting,” said Alisha Pina, a spokeswoman for the R.I. Department of Human Services (DHS).

‘It has the potential to pay for itself’

In the interview, Governor Raimondo emphasized that the UHIP contract with Deloitte was signed by her predecessor, Lincoln Chafee, and suggested she might not have made the same decision. But she also said some sort of project like UHIP was necessary because the state had to replace its previous benefits system, which had been built in the 1980s.

“It had to be done because the federal government said we weren’t going to be in compliance with the law if we had the old system,” Raimondo told Target 12. “I think over time, yes, it will certainly save money. It will be easier to use and it has the potential to pay for itself.”

But pressed on whether UHIP will actually fulfill her administration’s 2015 promise, the governor said, “I think at this point it’s a little too soon to tell.”

UHIP’s latest budget pegs its cost at $445 million through 2018-19, but that number could climb further. The state has yet to sign a new deal with Deloitte, whose current UHIP contract expires this month; the company had received about $200 million before Raimondo stopped paying them earlier this year, and has since credited the state $27 million because of UHIP’s problems. Meanwhile, the federal government is threatening to levy “significant” fines for over-payment of food stamps tied to the system failures.

Raimondo, who said she spends hours a week on UHIP, described her conversations with top Deloitte executives as “difficult” and suggested the state may wind up suing the company.

“I’ve already gotten almost $30 million back from Deloitte,” Raimondo said. “We’re not going to stop there. They will see. I’ll take them to court if I need to.”

“I don’t want to give away the whole strategy, but they didn’t do right by us,” she said. “The state and the federal government have spent an enormous amount of money on the system, and there’s a lot more negotiation to be done – either credit or a lawsuit. But yes, right now I need them focused to get the system to work. But they know, and I told them, we’re not happy.”

“I think the federal government will fine the state of Rhode Island, and then as part of my negotiation with Deloitte … I would argue that they ought to reimburse us,” she said. “Because if the system was working, we wouldn’t be fined.”

Deloitte did not respond to Target 12’s requests for comment.

‘I don’t feel like they care’

The problems with UHIP quickly became clear after its launch a year ago, with long lines at the six DHS field offices, extended waits to get through on the phone, delayed benefit payments and late vendor reimbursements. DHS was eventually forced to reverse a decision to lay off dozens of workers who were supposed to be unneeded thanks to UHIP’s new efficiencies.

House Oversight Committee Chairwoman Patricia Serpa, a West Warwick Democrat who has led a series of high-profile hearings on the UHIP fiasco, recently described herself as “outraged and losing patience” with DHS for withholding information about the situation.

“I don’t entertain any hopes that this problem is going to be fixed through the next legislative session,” Serpa warned.

Rhode Islanders continue to complain about problems tied to UHIP. Jessica DeAngelis, a Warren resident, said she dreads taking her four-month-old daughter to the doctor because the infant’s Medicaid coverage has been in flux since she was born.

“They’ve sent me about 10 insurance cards so far,” DeAngelis said, “some with different last names – they say she’s active, then she’s not active. … Then they say she’s covered for dental when she’s only four months old, and not medical. Then they say she’s covered for medical, but it doesn’t go through.”

DeAngelis said she spends hours on the phone with DHS trying to get answers. “I don’t feel like they care that when I have to bring my daughter to the doctor that she doesn’t have insurance,” she said, adding, “If I’m having this problem, I can only imagine what other people are going through.”

Raimondo acknowledged such stories are still too common.

“We care,” the governor said. “We’re fixing it. We want to make it better. You deserve better, and we’re going to continue that until it’s where it needs to be.”

“I go to the grocery store and meet people whose lives are affected by the system,” she said. “I go to the DHS office and sit with the employees who’ve been struggling with this for a year. So this matters a lot.”

There are signs the UHIP situation is improving compared with its lowest point last winter.

A set of DHS performance metrics released last week showed the application backlog has fallen from more than 14,000 in February to under 4,000 at the start of this month, and a growing number of users are submitting their applications online. However, as of August the average wait time in DHS field office lobbies remained high, at 82 minutes.

A Department of Human Services graphic shows the UHIP backlog since January.

Raimondo said she has “learned so many lessons from the mistakes that we made,” and that her administration has “used those lessons to improve other projects.” She cited the DMV’s new computer system, a notoriously long-delayed project that finally launched this summer and has appeared to have a smooth rollout.

“With DMV, we did a reservation system,” she said. “We also only launched it at one office. We did an incremental launch.”

“The other thing is, I have learned so much about holding the vendor accountable,” she said. “You know, the state, any state, is reliant on a company – in this case, Deloitte – to do what they said they were going to do. And they didn’t. Truthfully, they didn’t. And we let them go too far without holding them accountable at each step.”

When it came to DMV computer vendor HP Enterprise, she said, “we kept them on a much shorter leash. And required accountability. Even took them to court in that case. So accountability, communicating, rolling it out a bit at a time – these are all some of the lessons learned.”

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

Susan Campbell (scampbell@wpri.com) is the Call 12 for Action and Target 12 consumer investigator for WPRI 12 and Fox Providence. Follow her on Twitter and on Facebook.