MEDICARE: HCFA Defends Y2K Trouble-Shooting Strategy

      Fixing the Year 2000 problem in Medicare's computer system will cost "more than $477 million over the next two years," according to a General Accounting Office report released yesterday. However, the Wall Street Journal reports that Medicare officials "took issue" with some of the report's conclusions, namely that the Health Care Financing Administration is "severely behind schedule" in addressing the Y2K problem. HCFA Administrator Nancy-Ann Min DeParle said, "Ensuring that Medicare beneficiaries will continue to receive services after Jan. 1, 2000, is my No. 1 priority. To achieve this goal, we are doing whatever it takes and devoting whatever resources are necessary to make sure Medicare claims are paid properly." DeParle said "she was establishing a 'war room' at HCFA's headquarters in Baltimore to track Medicare's progress on the Year 2000 front." HCFA officials said "that if they get the money they need, they'll be able to avoid disruptions in the program." The Journal reports that while HCFA officials conceded that "$477 million is a high number, they noted that it pales in comparison to "the more than $200 billion in claims that Medicare processes annually" for its 38 million beneficiaries. DeParle also pointed out that HCFA faces "unique challenges" in addressing the Y2K problem because the agency's claims are processed by private contractors. "We have only recently been able to change our contracts with these contractors to require Year 2000 compliance," she said.

Too Little Time
      In releasing the GAO report, Senate Aging Committee Chair Chuck Grassley (R-IA) called the findings "alarming" (McGinley, 9/29). In a statement, he said, "It gives us the strongest indication yet that Medicare computers won't be ready for the Year 2000. It also indicates to me that HCFA is far behind in developing contingency plans for a computer failure that is likely to happen. This is unacceptable. We have to do whatever it takes to ensure that 39 million Medicare beneficiaries will continue to receive service without interruption. Illness strikes regardless of the date." Grassley contended that DeParle's target date -- June 20, 1999 -- for testing the new computer system "leaves too little time for implementation" and does not take into account the "last minute problems and glitches" that the outside contractors are likely to face. In a letter to DeParle, Grassley requested that HCFA submit an update of Y2K problem-shooting to the Aging Committee by Nov. 30, 1998. If the computer systems are not fixed by Jan. 1, 2000, Grassley predicted malfunctioning enrollment systems and cash flow problems for doctors, hospitals and laboratories (Grassley release, 9/28).

Medicare MSA Update
      American Medical News reports that seniors will not be able to select a medical savings account option when the Medicare+Choice program takes effect Jan. 1. To date, no health insurers "have applied to the government for approval to offer" MSAs through Medicare. Insurers cited the tight deadline HCFA set for receiving applications -- Medicare+Choice guidelines were released in June and the application deadline was set for August. However, HCFA officials noted that insurers "will be allowed to submit late applications" for offering MSAs, which would allow newly Medicare-eligible seniors to select the policies in advance of the November 1999 open-enrollment period (Aston, 10/5 issue).