The state computer system that pays out $11 million each day in Medicaid bills is so old it's hard to find programmers to keep it running. The Medicaid Management Information System...

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The state computer system that pays out $11 million each day in Medicaid bills is so old it’s hard to find programmers to keep it running.

The Medicaid Management Information System was invented in 1979, two years before Microsoft revolutionized the computing world with DOS version 1.0. Using outdated COBOL language, the Medicaid computer has been in operation since 1982.

Last year, it helped pay about $4 billion to 40,000 providers and tracked 1 million clients — a big chunk of the $6.1 billion Washington state auditors say Medicaid spent.

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The Department of Social and Health Services (DSHS) points to the antiquated system as one of the reasons Medicaid is about to receive a scathing audit from the state Auditor’s Office. DSHS officials say the computer doesn’t allow the kind of rigorous data analysis and verification that modern systems provide.

The DSHS manages Medicaid, the federal-state health-care program for the poor. The agency released the audit’s 22 draft findings this week, and auditors expect to release the final report within two weeks.

The draft audit estimated that Medicaid paid $22 million in questionable claims to about 15,000 clients without Social Security numbers in the computer. It also said the DSHS cannot account for 1.4 million pills.

State Auditor Brian Sonntag said he will issue an unusual “disclaim” label for the entire Medicaid system after DSHS staff members deliberately obstructed auditors from completing the review.

DSHS Secretary Dennis Braddock has said he was shocked at the obstruction allegations and that he thinks the audit “falls short” of professional standards.

Federal investigators are taking notice and may decide to intervene.

“We are fully apprised of the situation in Washington state,” said Donald White, a spokesman from the U.S. Department of Health and Human Services Office of Inspector General. “We are monitoring events and we will be very closely studying the final state audit report when it comes out.”

The federal government pays about half the cost of Medicaid, with the state picking up the rest.

This state’s Medicaid computer system has been patched and reprogrammed for more than two decades in “a piecemeal fashion,” said Heidi Robbins Brown, a DSHS deputy assistant secretary. The system is “very inflexible” to changes, she added.

The computer system is due to be replaced in 2007.

Cathie Ott, chief of Medicaid systems and data, said that Social Security numbers are carefully checked before being entered into the computer. But once in the system, those numbers cannot be automatically matched against other databases that could reveal errors. Rather, Social Security numbers are checked “one by one, on a manual basis,” when problems crop up, Ott said.

Social Security numbers are not checked by the computer before payments are made, Robbins Brown added.

Medicaid pays $6.2 million each year to a computer vendor to maintain and update the system, Robbins Brown said. Over the years, the federal government has encouraged the state to keep using the system, she said, in part because of replacement costs.

Medicaid is finalizing an eight-year deal for a new computer system, which likely will cost between $150 million and $200 million. Ninety percent will be paid by the federal government. The system is due to be up and running by December 2007, although a rival vendor is challenging the deal in a dispute that could delay implementation.

“COBOL programmers are hard to come by these days,” Robbins Brown said. “Remarkably, we are not alone in using this vintage system.” Other states also are replacing aging Medicaid technology, she said.

Internal investigations turned up a payment error rate of 2.5 percent, Robbins Brown said. Last year, Medicaid managed to recover almost $20 million in erroneous, wasteful or fraudulent payments, she said.

Craig Chambers, a computer-science professor at the University of Washington, said the COBOL language, developed in 1959, has not been taught for years and has long since been replaced by more flexible and modern computer languages. However, some big businesses and government agencies continue to use it rather than upgrade.

“It’s unfortunate, but it’s not unusual,” Chambers said.

Aside from the computer problems, Medicaid officials are looking into the auditor’s finding that 1.4 million pills could not be accounted for at four institutions within the Division of Developmental Disabilities.

Linda Rolfe, director of that division, said she disputes the number of pills in question but acknowledges there is a problem tracking them. She said the four institutions, for people with developmental disabilities, typically are overstocked with pills to prepare for worst-case scenarios.

She believes theft and loss account for only a fraction of the pills. The remainder may have been discarded or not tracked through proper paperwork, Rolfe said.

“We agree we need a better process for tracking the medications we distribute,” she said. “We are putting together a quality-improvement team, with pharmacies and distributors and all parts of the system.”

Nick Perry: 206-515-5639 or nperry@seattletimes.com