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Thompson announces overhaul of Medicare's Accounting System - Updata

Healthcare Financial Management, Nov, 2001

Medicare's various accounting systems will be consolidated into a single, integrated system that is expected to dramatically improve payment accuracy, HHS Secretary Tommy Thompson announced on September 27. The new, integrated system eventually will replace 53 different systems now in use by the private insurance companies that process and pay nearly 3 million Medicare claims every day. The overhaul is expected to save $1.2 billion through FY10.

The new system will be called the Healthcare integrated General Ledger Accounting System (HIGLAS). CMS will be assisted with implementation by three international service vendors:

* PricewaterhouseCoopers, New York, New York, to provide systems integration;

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* Oracle Corporation, Redwood Shores, California, to provide financial-accounting software; and

* EDS, Plano, Texas, to handle the application service provider services.

More than $300 million will be spent on the contract. Planning of the system is under way, with completion targeted for the end of FY06.

The project is expected to begin in about a year with a pilot program involving two Medicare fiscal intermediaries: Palmetto Government Benefit Administrators, Columbia, South Carolina, which processes claims primarily for hospitals and other healthcare provider institutions; and Empire Blue Cross & Blue Shield, Melville, New York, which processes claims primarily for physicians and suppliers.

Government audits have been highly critical of Medicare's current accounting systems, and congressional Democrats and Republicans applauded HHS's new effort to modernize the system.

In a letter dated May 14, 2001, Rep. Nancy Johnson (R-Conn.), chairman of the Ways and Means Health Subcommittee, and Rep. Pete Stark (D-Calif.), ranking member of the subcommittee, urged Thompson to develop an integrated accounting system as one of many steps HHS could undertake to reform Medicare without congressional action.

To read Thompson's announcement, go to http://www.hhs.gov/news/press/2001pres/20010927.html. To read the letter, go to http://waysandmeans.house.gov/press/2001/may/5-15-01.htm.>