The Georgia Scroll
July 1997
"At a time when Medicare is going broke,
we cannot afford any boondoggles like this."
House Ways and Means health subcommittee Chair Dill Thomas
(R-Cal)
criticizing HCFA for cost overruns on the MTS system.
In 1992, the federal Health Care Financing Administration (HCFA), (he government agency that runs the Medicare program and oversees the states in their administration of Medicaid, with great fanfare announced its plans for a bold new step into the 21st century world of' electronic commerce - a paperless, computer-driven system to manage these important programs, pay their bills, and save taxpayers what HCFA said would be more than'$200 million a year in administrative overhead. It was also widely predicted that the new system would help program administrators better manage the escalating costs of providing health care to the nation's elderly, sick and poor. Today, facing more than $65 million in cost overruns and a system which is still not ready to deliver its promised capabilities, HCFA has virtually ended its MTS effort. An unhappy Congress has demanded an accounting.
In a letter to HCFA Administration Bruce Vladeck, House Ways and Means health subcommittee Chair Bill Thomas (R-Cal), asked that progress reports, future spending projections, a cost-benefit analysis and other information about the project be sent to Congress. Following the announcement of the MTS project under the administration of President George Bush, the new administration of President Bill Clinton saw the proposed system as a lynch-pin in its proposal to redesign health care for all Americans and enthusiastically embraced the project.
With the passage of the Health Care Portability and Accountability Act of 1996 (the "Kassebaum-Kennedy" legislation from the last Congress), perhaps Congress is finally getting the message. The private sector is well on its way to creating its own version of a health care "operating system" utilizing widely-accepted standardization accepted by the health care industry itself and not imposed by a package of government-designed software. The new law encourages this development; sets time frames and outlines area where the private sector can work. Private companies, software developers. clearinghouses and value-added networks are already producing results with little or no costs to the taxpayer. Who'd a figured?
The collapse of HCFA's grand plans for a Medicare Transaction System means that providers will see themselves caught in the middle of what might start to seem to many as a never ending cycle of transition.
At first everyone will be shifted to the Florida Shared System (FSS) (which is the interim temporary "fix" proposed by HCFA), but following almost immediately will be the application of the Kassebaum-Kennedy (K-2) mandated "administrative simplification" standards. For providers this means that nothing will be simple, everything will be changing.
K-2 in the long run will mean that even more transactions will flow electronically. During the transition, pending repairs to MTS and a temporary shift to FSS, will leave everything in turmoil. You'll need to ride herd on your vendors. Several companies have played a lead role in implementing these changes nationally, but even we see these coming 2-3 years as a period of inevitable stress as we work our way through these transitions.
The Project was designed to consolidate 72 Medicare payment systems into a centralized system. At the time, HCFA officials called the project "the single most visible and aggressive step towards program modernization HCFA will take in the remainder of this century.
In November of 1995, a GAO report found problems with the project, including "extensive delays, large cost increases, and the inability to achieve potential benefits." HCFA's Vladeck replied to Congressman Thomas saying that his agency had "suspended" GTE from continuing work on most of the contract and that HCFA was effectively policing the contract. Mr. Vladeck acknowledged, however that HCFA may have contributed to the problems and that it was "unlikely" GTE could resume work on the project. He added that a new firm would most likely have to be hired to finish the project. HCFA acknowledged that MTS would be set back 6-7 years, although some parts of the original project may be implemented as early as next year.
The federal government over the years has not had all that much success with its efforts to quickly and efficiently bring on new computer large-scale systems, The MTS failure is only the latest in a line that includes a failed Federal Aviation Administration air traffic control "super system" to the Internal Revenue Services long delays in bringing on its promised capabilities. MTS is particularly disheartening since so much was promised - and with the Medicare program facing dramatic cost overruns of its own - so much was depending on the hope the success of system would have in helping to bring these costs under control.