HP, Xerox vie for $500M NY Medicaid deal

Hewlett-Packard (HP) and Xerox are competing for an estimated $500 million contract to manage New York's Medicaid program.

The five-year contract includes three one-year renewal options. The company selected to process claims for the state's $52 billion Medicaid program may get similar contracts with other states, according to a bloomberg.com story.

Computer Sciences (CSC), which operates the current New York program, didn't bid on the new contract. CSC has been cited in audits for losing more than $500 million through fraud, waste, and abuse, according to the story.

New York is moving to a managed-care approach for Medicaid that's aligned with the goals of the Patient Protection and Affordable Care Act (ACA), and other states are likely to follow. The ACA is expected to increase Medicaid enrollment by more than 9 million, while it pushes states to move recipients to managed-care plans with set costs for each patient, which is meant to save money. New York Gov. Andrew Cuomo began moving the state's Medicaid recipients into managed care in 2011.

California-based HP is the principal internal technology provider for Medicaid in 19 states. Connecticut-based Xerox does Medicaid-related work for 12 states, the District of Columbia, and the U.S. Labor Department.

Last month, Texas Attorney General Greg Abbott filed a lawsuit against Xerox, alleging the company wrongly approved hundreds of millions of dollars' worth of Medicaid claims for orthodontic services that were not medically necessary.