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State Junks $179 Million Medi-Cal IT System, Will Start from Scratch
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Combine years of delay, ever-changing rules and requirements, state and federal red tape, and a once mighty company now in deep financial trouble, and what do you get?

In California’s case, the junking of a $179 million computer modernization project to process claims for Medi-Cal, the state’s health-payment program for low-income residents.

The project, put out to bid in 2007 and still far from completion, was finally put to rest on Monday when the state Department of Health Care Services announced a legal settlement with Xerox Corp., the project contractor, under which Xerox will pay the state approximately $120 million.

That means Medi-Cal’s existing computer system – creaky, patched-together, and decades old – will continue to operate for however long it takes the state to contract out and build a replacement.