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1998-05-11 22:03:13


Soothing Words from Medicare Senior Official -- But No Proof



The May 16, 1997 report by the General Accounting Office made it clear that Medicare is not going to make the 2000 deadline.

One year later, Medicare's senior computer officer, who will be blamed if Medicare doesn't make it, came before a House Ways & Means subcommittee and assured the committee of the following:

They're working on it.

Of course, they need more money to get compliant.

He warned: "Nearly one quarter of the external Medicare contractors have not yet completed assessments of their systems." (The California White Paper says that awareness is 1%; inventory is 1%; assessment is 5% of a y2k project.)

He did not say that any of the 70 contractors is compliant. There was a reason for this. Not one is. (If there is a compliant firm on the list, an official should send me a statement to this effect on letterhead stationery. Mail to P. O. Box 8000, Tyler, TX 75711.)

I know: picky, picky, picky.

He went on to say that under present law, Medicare has almost no authority to force the contractors to get its Medicare operations compliant, other than firing it. But how can Medicare fire one without firing them all? That might lead to a discrimination suit. So, Medicare wants bureaucratic authority. He begged Congress to pass such legislation.

Check the date, folks. It's a little late for administrative matters. But in an age of administrative law, which ours is, administration is what matters.

Meanwhile, they have 900 million checks to process this year.

So, here's the situation. The software vendors have yet to deliver compliant software to the contractors. The contractors have not been able to get their Medicare payments system compliant. Medicare tried to centralize the whole process, failed, and got its knuckles whapped in public by the Clinton Administration, which vetoed the centralization project.

My opinion: Granny will not be getting her Medicare checks in 2000. There will be about 33 million budgets to be adjusted (grannies'), and then 33 million more (sons').

* * * * * * * * *

May 7, 1998

Good morning. I am John Callahan, Assistant Secretary of the Department of Health and Human Services for Management and Budget (ASMB) and Chief Information Officer (CIO). . . .

The Secretary, the Deputy Secretary, and I have declared the Year 2000 (Y2K) date issue to be our highest information technology priority. We have already taken several steps, and we will continue to take action, to ensure that all HHS information systems are Year 2000 compliant. We have involved all parts of our organization, including staff with expertise in information systems, budget, human resources, and acquisition management in solving the Year 2000 problem. No matter what else we do and what other initiatives we undertake, we must ensure that our ability to accomplish the Department's mission is not impaired.

For this reason, we have established December 31, 1998 as our internal deadline for Year 2000 compliance of mission critical systems. This was done in order to provide a full year of operations in which to detect and remedy any adverse interactions among HHS systems and those of our many service partners, including other Federal agencies, state and local governments, tribes, and contractors. . . .

In our February 1998 quarterly report to the Congress, HHS reported 491 mission critical systems. About 40 percent of these systems are now Year 2000 compliant. . . .

We also know there is a possibility that, try as we might, some systems may not be fully compliant in time. Therefore, we are requiring the OPDIVs to develop contingency plans that permit business continuity in the event of system failure. These contingency plans will be noted in our next Year 2000 quarterly report. . . .

Late last week, the President signed a 1998 supplemental appropriations bill directing $20 million of HCFA contractor funds to be redirected toward HCFA's Year 2000 remediation efforts. While these funds will certainly help, HCFA still must find ways to address the shortfall. We estimate that HCFA will require additional Year 2000 funding in FY 1998 and FY 1999. In FY 1998, HCFA estimates it needs an additional $43 million, and in FY 1999, HCFA may require an additional $60 million for HCFA contractor remediation efforts. . . .


Our greatest Year 2000 concern is for HCFA's Medicare program. This program is run by over seventy external contractors, including several shared systems maintainers, who operate and maintain a base of software programs that process 900 million fee-for-service claims payments annually for nearly 33 million Medicare beneficiaries. Nearly one quarter of the external Medicare contractors have not yet completed assessments of their systems. . . .

Most importantly, because HCFA is required to reimburse its Medicare contractors for all allowable costs, the agency's ability to exert financial leverage over its contractors to direct funds toward such activities as Year 2000 compliance is limited.

HCFA has been proactive in exerting what pressure is possible on the Medicare contractors with regard to Year 2000 compliance. HCFA has proposed amendments to Medicare contracts requiring millennium compliance, and has released guidance that would provide more restrictive definitions of compliance and testing requirements. Nonetheless, we remain greatly concerned about the need for a faster pace of progress by Medicare contractors in meeting our Year 2000 goal. . . .

We have requested Medicare contracting reform from Congress for a number of years and recently submitted a proposal with our FY 1999 Budget request. While we understand that, due to uncontrollable variables, no organization can provide an absolute guarantee of end-to-end processing throughout the Millennium change, swift passage of this legislation now will provide HCFA with greater leverage to proactively manage Medicare contractors. We therefore, respectfully request, and encourage, your assistance in securing enactment of this very important proposal. . . .

HHS still faces substantial challenges in our Year 2000 efforts. However, let me assure you, on behalf of Secretary Shalala and Deputy Secretary Kevin Thurm, that we will continue to vigorously pursue Year 2000 remediation as our most important information technology initiative. We recognize our obligation to the American people to assure that HHS's programs function properly now and in the next millennium.


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