Michael F. Easley

The Great Seal of the State of North Carolina Carmen Hooker Odom

North Carolina
Department of Health and Human Services

For Release: IMMEDIATE
Date: March 27, 2007

  Contact: Mark Van Sciver

DHHS and ACS Reach Settlement on Medicaid Payments Contract

State Could Save Tens of Millions of Dollars

RALEIGH – The North Carolina Department of Health and Human Services (DHHS) and Affiliated Computer Services (ACS) have settled a contract dispute over the Medicaid Management Information System (MMIS), which is the state’s system for processing Medicaid claims.

Under the settlement, the state will pay ACS $6.2 million for the work ACS did on the $171 million contract. DHHS will get rights to all materials ACS produced. ACS also agrees to install a suite of software to help Medicaid generate savings; the state will use savings generated by the new software to pay ACS an additional $4.3 million.

“We are pleased with this settlement,” said DHHS Secretary Carmen Hooker Odom. “This settlement ends all issues between the state and ACS regarding this contract. In addition, DHHS gets software that is expected to generate tens of millions of dollars in savings. We talked with other states that are using this software and know that it works and will pay off for North Carolina taxpayers. This will also help provide some relief to the counties.”

The settlement was reached after two days of mediation between DHHS and ACS, which was mediated by former Superior Court Judge Robert Farmer.

DHHS awarded the MMIS contract to ACS in April 2004, but cancelled the contract in July 2006.

Like many states, DHHS is operating its Medicaid claim services with old software. North Carolina’s system is 30 years old.


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Debbie Crane