Kansas state has signed a $135 million contract this week for a new state computer system known as the Kansas Eligibility Enforcement System, designed to centralize applications for Medicaid.
The new system will serve as the state's alternative to a health insurance exchange, required by the federal healthcare law starting in 2014.
Kansas Gov. Sam Brownback, a Republican, had earlier returned nearly $32 million in funding to the federal government, saying the state could not take the money for an exchange without tying itself to the health reform law.
Kansas is one of 26 states suing the federal government to overturn provisions of the Patient Protection and Affordable Care Act, part of which requires uninsured Americans to purchase health insurance through an exchange if no other source is available.