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Raimondo reaches deal to keep Deloitte running UHIP through 2021

Politics
DHS Department of Human Services Rhode Island_358743

PROVIDENCE, R.I. (WPRI) — Gov. Gina Raimondo’s administration has reached a deal to extend Deloitte’s contract running UHIP after the company agreed to more than $200 million in financial concessions for its role in building the botched computer system.

“This agreement is unprecedented,” Raimondo told reporters at a news conference.

The decision marks a reversal for Raimondo, who previously extended Deloitte’s contract but told reporters she couldn’t imagine keeping the company in charge beyond that. Deloitte has become synonymous with public frustration over UHIP, a sprawling $617-million new system for public benefits like Medicaid and food stamps that all but collapsed when it first launched in September 2016.

“Our system is the most complex and comprehensive integration of benefits programs of any state in the country,” Raimondo said.

In addition to Deloitte’s monetary offerings — which include a $50 million cash payment to the state — the governor’s aides said they were motivated by concern about disruption during a potential transition to a new vendor that could hurt vulnerable residents. They also praised Deloitte’s collaboration with them in stabilizing and improving UHIP since the initial failure.

R.I. Department of Human Services Director Courtney Hawkins said she understood the decision to stick with Deloitte through at least June 2021 would likely lead to criticism.

“I was hired to make sure that DHS customers get their benefits, not to make decisions that are politically popular,” she said. “Ultimately, it is the customers of DHS that I think about every day, and I think this decision is right for them and for my workforce who have worked really hard to help the department get here.”

Nearly one in three Rhode Island residents uses one of the government programs run through UHIP, which the state is now calling “RI Bridges,” a name that was being used before launch and then discarded.

Deloitte’s current contract with the state ends March 31. The proposed contract revision announced Friday — which still needs approval from Washington because the federal government is funding the bulk of UHIP’s costs — is complicated.

The state paid Deloitte about $200 million for UHIP before the system launched, then halted payment as the problems became clear. No money has gone to Deloitte since December 2016, though the company says it has provided about $87 million in credits and free services working on UHIP since then.

Under the revised contract, Deloitte will be paid nothing more for its work on UHIP in recent years. Payments will resume in July, and Deloitte will receive $35.5 million for its work over the next two fiscal years; the company estimates that represents a discount of $75 million. Deloitte has also agreed to pay the state $50 million cash, though it’s unclear how much of that money could wind up being taken by the federal government.

Another way to look at it: Deloitte says its services and payments related to UHIP will total $448 million through mid-2021, but state and federal taxpayers will only be paying the company about $236 million in exchange.

In return, the state has agreed not to sue Deloitte over UHIP. However, officials said the company will still be liable to pay any fines eventually levied by the federal government, and to fix bugs and other errors as required by a reworked warranty.

Raimondo said, “We cannot find another state, and we do not know of another state, that has received such a large cash payment and credit relative to the size of the project, and a system that is functioning and working, and ironclad commitments from a company to see us through to the end.”

House Speaker Nicholas Mattiello reacted cautiously to the announcement.

“The governor has already booked over $34 million in her budget proposal in anticipation of this settlement, so we’ll have to review more details and related issues to determine if this is truly positive news,” he said in a statement.

Deloitte currently has 200 employees working on UHIP in Rhode Island and an additional 250 working on the system outside the state, a state spokesperson said.

In a statement, Deloitte said it “not only stood behind our work, we stepped up.”

“We accepted responsibility for the technical issues that impacted Rhode Island residents and worked collaboratively with the state to make things right,” the company said. “We have consistently acted in good faith and will continue to do so, with a relentless commitment to the people of Rhode Island and the long-term success of the UHIP project.”

The Raimondo administration began the process last year of seeing if a different company was available and willing to take over UHIP at an acceptable cost, and officials said eight other firms including IBM and Northrop Grunman expressed interest. But they ultimately concluded there was still too much risk in making a change.

“This is a tough decision,” Raimondo said.

“Every decision I made — should we sue Deloitte, should we not, should we settle, should we keep them on, should we get a different vendor — I’ve made through the lens of, what is the right thing for taxpayers, and what is the right thing for the people of Rhode Island, and what is the best outcome for the vulnerable Rhode Islanders who need this system?” she said.

The new contract includes a provision requiring Deloitte to help with any future transition of UHIP’s maintenance to a different company, Hawkins said.

Deming Sherman, the court-appointed special master who has been overseeing the UHIP turnaround for food stamps, said he has seen “very good progress.” He said most applications are being processed on time, the customer portal is working well and wait times are down.

UHIP has its roots in a 2011 decision by then-Gov. Lincoln Chafee to comply with a federal mandate by ditching Rhode Island’s Reagan-era computer system for social services and build a brand-new one that integrates 16 different programs. The project was partly required to get HealthSource RI up and running, and the federal government offered extra funding to help.

“I think we now know in retrospect that was a mistake, because it’s unnecessarily complex,” Raimondo said. “But we are where we are, and we have fixed it.”

Then-Lt. Gov. Elizabeth Roberts, who was Chafee’s point person on health care, was a major force behind that decision. Raimondo appointed Roberts as secretary of health and human services on taking office, but Roberts stepped down after the UHIP failure.

Ken Block, a former gubernatorial candidate and technology entrepreneur who has been highly critical of how state leaders managed UHIP, suggested keeping Deloitte was likely inevitable.

“It was either throw the whole thing out and start from scratch or keep this broken system limping along,” Block tweeted. “This decision postpones big cost of starting from scratch, but Deloitte is only realistic vendor who can keep it going.” There was “management failure on all sides,” he wrote.

Ted Nesi (tnesi@wpri.com) covers politics and the economy for WPRI.com. He is a weekly panelist on Newsmakers and hosts Executive Suite. Follow him on Twitter and Facebook

Susan Campbell and Kim Kalunian contributed to this report.

Copyright 2019 Nexstar Broadcasting, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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