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The federal director of Medicaid programs has put Tennessee on notice that it has failed to provide services for people as required by the Affordable Care Act and is giving the state 10 days to submit a correction plan.

The crux of the problem is delays with bringing a $35 million computer system online. However, Tennessee is also criticized for not providing people with face-to-face help in applying and for not setting up a program that allows hospitals to temporarily enroll people in Medicaid if they are presumed eligible.

With this year's full implementation of the Affordable Care Act, Tennessee stopped providing state personnel to help people sign up for Medicaid and, instead, began directing them to use healthcare.gov, the federal health exchange.

Cindy Mann, the federal director of Medicaid, said this arrangement "was approved as a short-term measure, not a long-term solution," in a letter dated June 27 to TennCare Director Darin Gordon. She said her agency had expressed concerns for the past nine months about continued delays and the "downstream impact" on the state's ability to enroll Medicaid-eligible people.

Gordon, in an interview with The Tennessean, said he would have liked to have seen better performance from Northrop Grumman, the company that got the bid to build the $35 million computer system.

"Out of their total $35 million contract, they've been paid $5 million," Gordon said. "They met those deliverables to get paid that $5 million, but they haven't met the others. That's why they haven't been paid."

He said TennCare's project management team had "grown skeptical" of the company's ability to predict benchmarks toward bringing the system online. So the state will contract with another company to audit Northrop Grumman's progress and provide projections for when it will be ready.

He also said the state was hampered at meeting deadlines when federal officials changed what they required out of the new system.

Mann in her letter said that of seven critical success factors required of states, Tennessee had met only one — the ability to receive and process application files from the Health Insurance Marketplace.

Gordon said TennCare has enrolled more than 95,000 people since January — the highest number since TennCare started in the 1990s. However, the state does not have a reliable system for confirming eligibility, according to TennCare rules, according to the letter from Mann.

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