State IT projects could reach $1.3 billion

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One hundred thirty-two projects worth $1.3 billion. That's the latest inventory of the information technology projects underway across Vermont state government, according to public documents from the department that provides oversight.

The numbers from the Department of Information and Innovation outline the cost to implement, maintain, and operate each project over its first five years. Not all of the projects will be done at the same time. And in the case of Vermont Health Connect, some figures represent the closest estimate the state could come up with as of Oct. 1.

The Department of Vermont Health Access, which oversees Medicaid programs and Vermont Health Connect, is involved in the vast majority of IT projects, $866.1 million worth, to deliver health care and other services to vulnerable populations or replace outdated systems at the Agency of Human Services.

Hal Cohen, the secretary of the Agency of Human Services, said the costs of IT projects over five years aren't so big when compared to Vermont's $5.5 billion annual budget. "It's still a lot of money, but it makes sense for having to run a government that you need to have this infrastructure," he said.

The state's health exchange is set to cost $302.3 million to implement and maintain from 2015 to 2016, making it the state's most expensive project to date. While the federal government will pay for the vast majority of that, the Department of Information and Innovation keeps the project marked as "red" on its red-yellow-green grading scale, meaning the site still faces plenty of challenges to figure out.

As of Oct. 1, Vermont had one other project in that "red" category—a project that with a $3.3 million implementation cost at the Vermont Department of Liquor Control to update its point-of-sale system. That's in the red category because of administrative issues with a vendor, according to Richard Boes, the commissioner of the Department of Information and Innovation.

Eleven more of 132 ongoing projects were in the "yellow" category on Oct. 1, meaning they have issues with scope, budgeting or something else, but the project manager has a plan to correct the identified problems. Boes said the projects most likely need to be closely watched to make sure they meet federal funding deadlines.

And while the majority of Vermont's IT projects don't present major or long-term issues to the scale of Vermont Health Connect, the Legislature is looking at ways to improve the way all projects are managed. Each of Vermont's IT projects presents unique challenges with regard to accounting, education, management, and spending. Meanwhile, state officials say they've learned from their mistakes.

"It is a huge amount of money," said Rep. Cynthia Browning, D-Bennington. "This is the problem for me and for other Vermonters. Where the hell does that money go? I guess we're paying programmers to sit in rooms and build this neurological system of communication."

Browning sits on the House Committee on Corrections and Institutions. She said the state has sought customized software in the past, and that drove up the price and complexity of a handful of IT projects that later failed or had significant problems. Instead, she suggested the state buy off-the-shelf software and build less-complex expansions onto it when necessary.

"Software can do all these really magical things, but they can't do it reliably," she said. "The vendors have an incentive to try to get us to do all this customized stuff because of course, that's what they get paid for. We would like to be able to deliver incredible functionality for the agencies and for Vermonters."

Where are the bugs?

Ten of the 11 "yellow" projects facing slight issues fall under the purview of the Agency of Human Services, and most of those are within the Department of Vermont Health Access. The projects will be used in part to deliver Medicaid coverage.

They include almost all projects within the comprehensive, largely federally-funded Health Services Enterprise Platform: the Integrated Eligibility project, which will allow Vermonters to find out almost instantly which of 44 benefit programs they qualify for; and several parts of the Medicaid Management Information System platform, the agency's second-most expensive project, which helps providers coordinate electronic medical records for Medicaid patients, among other things.

The "yellow" projects also include the Blueprint Clinical Registry, which will cost $364,724 to implement and $1.4 million to maintain in its first five years; the Vermont Health Information Technology Plan, which will cost $95,560 to implement and $3.1 million to maintain in the first five years of its lifetime; and one related to the Vermont Information Technology Leaders, which will cost $530,000 to implement and $360,000 to maintain for five years.

Another "yellow" project would help the Department of Corrections coordinate health care for inmates; another "yellow" project would improve a reporting tool at the Department for Children and Families to bring it into compliance with federal laws; and only non-human services project in the "yellow" category has to do with telephone services at the Department of Information and Innovation.

"Yellow is not a bad thing at all," said Stephanie Beck, the director of health care operations at the Agency of Human Services. "Our job is to manage through that."

The agency is currently in negotiations with Wipro to set up Integrated Eligibility. The project will replace the current ACCESS system that's more than 30 years old, and requires Vermonters to fill out a lengthy questionnaire, and then send it into the agency, where a staffer transfers information from the questionnaire to the computer system to determine what benefits programs the person can get.

"I think you have to look at the integration of health and human services," Beck said. "What we're doing is determining people's eligibility to avert more expensive types of health care services."

Sen. Tim Ashe, D/P-Chittenden, the chair of the Senate Finance Committee, said there's no doubt that ACCESS and other technology systems need to be replaced. But he said as IT systems become more complicated, it becomes harder for Vermont to manage the projects.

"Attempting to do the Integrate Eligibility, (and) the MMIS upgrade, all while still trying to deal with Vermont Health Connect's problems, seems like a strategy designed to fail," Ashe said, "which is why a number of us were urging the administration to pause on some of these other large projects until they got Vermont Health Connect sorted out."

Building out Integrated Eligibility could run from 2016 to 2019, Beck said, and MMIS would be essentially a build-out of that program that uses the same back-end databases. The agency also expects to have federal money pay for 90 percent or more of most of its IT projects—and says the long-term maintenance costs would be the same for Vermont under new systems as it's currently paying to run the old systems.

"That's one of the dilemmas—is that lots of money is pouring in from the feds," Ashe said. "If you don't have good systems in place to manage the money and deliver successful outcomes, it's too easy to excuse extra costs when it's not your money. But we're all federal taxpayers and state taxpayers."

Hal Cohen, the secretary of the Agency of Human Services, said the administration has learned from mistakes made during Vermont Health Connect, whose annual maintenance cost is now pegged around $51.8 million. (That includes personnel and other costs, in addition to the OptumInsight Inc. contract.)

Cohen said the agency has strong staff, and strong portfolio management office. It's undergoing an internal review with the Department of Information and Innovation, and the federal government has monitoring requirements because they're paying for so much of the projects. The agency has also learned from Vermont Health Connect about what should be written into vendor contracts to protect the state, he said.

"What we're committed to is if a vendor doesn't meet milestones, we're not going to pay them," Cohen said. "From experience now, we've learned that we're not going to continue until you meet the milestones that we've agreed upon."

Trying to track the money

State officials say they can't easily zero in on an exact number to budget for IT, how much they've been spending each year, or how much they should spend each year. There are around 400 IT jobs throughout state government, officials think, and those jobs are not put into one line item in the state's budget or even one department.

The Department of Information and Innovation, which is essentially the government's IT desk, has about 125 of the state government's IT jobs. They provide public data and public information, and they give general advice on best practices for handling IT projects. Project management is generally left up to the individual agency or department, and it's always hard to find IT workers, officials say.

A three-person Special IT Committee has now been tasked with examining how the state should, fund, plan and manage IT projects. They have been meeting since September and need to report to the Legislature by Jan. 15. Their next meeting is Thursday, Nov. 12.

"We don't currently have the capacity to capture IT expenses the way they should be captured," Sue Zeller, the chief performance officer at the Agency of Administration, told the committee on Oct. 15. "We're in the middle of revising the chart of accounts so that IT expenses will be captured appropriately."

The Department of Finance and Management ran a report for VTDigger showing how much the state spends in categories such as "IT," and "software," within its accounting system. The state spent $93 million on those accounts fiscal year 2015, according to the report, and that's a rough spending estimate that includes laptop and telephone system upgrades.

When the finances become more organized, Zeller said, the state could perhaps leverage more funding for IT projects. She recommended a "permanent and stable source of funding" in the $20 million to $30 million range that could fund IT projects on a prioritized basis.

Steve Klein, the chief fiscal officer of the Legislature's Joint Fiscal Office, testified Oct. 15 that coming up with an innovative way to finance a new IT project is a big part of IT management, but that's "somewhat dysfunctional" as it stands right now.

"The executive branch needs to have the capacity to educate and teach the project to staff as opposed to just a project description," he told the panel. "You don't have a centralized pot of money, so you're not having one entity oversee it."

Michael Schirling, the executive director of BTV Ignite and former police chief in Burlington, chairs the Special IT Committee. He said the committee has already eliminated one of their legislated goals — to essentially audit and review the state's legacy technology systems such as the ACCESS system that the Agency of Human Services uses — because they don't have enough time to get the work done by January.

Instead, they're preparing all their other legislated priorities, which include modeling how the Legislature could oversee IT projects, suggesting a methodology for determining when the state should use customized versus off-the-shelf software, and recommending whether to separate duties of the current commissioner of the Department of Information and Innovation and Chief Information Officer into two separate jobs.

Schirling said, these days, Domino's is an IT company that also delivers pizza. He said the state should consider itself an IT company that also runs a state government. "What the state struggles with, what the City of Burlington struggles with, or any municipality for that matter, is to keep up without going too fast," he said.

"Much of the challenge around IT today is the pace of change in the nature of the platforms that IT operates on has evolved so rapidly in the past 10 years that keeping up, even if you're a nimble business or a nimble government, is hard," Schirling said.

The Special IT Committee continues to take public comment through its website. Schirling said interested parties can also attend their meeting Thursday at the Agency of Human Services Central Office in Williston to voice their opinions.


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