Medicare Computer Systems:

Year 2000 Challenges Put Benefits and Services in Jeopardy

AIMD-98-284: Published: Sep 28, 1998. Publicly Released: Sep 29, 1998.

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Pursuant to a congressional request, GAO reviewed the extent to which the Health Care Financing Administration (HCFA) is: (1) making progress in renovating its Medicare systems to be year 2000 (Y2K) compliant; (2) directing and overseeing the Y2K effort; (3) ensuring that all data exchanges necessary for processing Medicare claims are identified, renovated, tested, and validated; and (4) developing and initiating business continuity and contingency plans for key business processes.

GAO noted that: (1) HCFA and its contractors are severely behind schedule in repairing, testing, and implementing the mission-critical systems supporting Medicare; (2) HCFA has recently begun improving its management of Y2K matters, including establishing a Y2K organization and hiring independent contractors to assist in overseeing the Y2K work; (3) in August HCFA reported that as of June 30, 1998, less than a third of Medicare's 98 mission-critical systems had been fully renovated, and none had been validated or implemented; (4) compounding this difficult task is HCFA's lack of key management practices necessary to adequately direct and monitor its Y2K project; (5) to date, HCFA has not: (a) developed an adequate overall schedule and a critical path that identifies and ranks Y2K tasks, and helps ensure that they can be completed in a timely manner; (b) implemented risk management processes necessary to highlight potential technical and managerial weaknesses that could impair project success; and (c) planned for or scheduled end-to-end testing to ensure that Medicare-wide renovations will work as planned; (6) HCFA has also not been effectively managing the identification and correction of its electronic data exchanges; (7) neither has HCFA determined whether needed agreements with data exchange partners have been made; (8) this increases the risk that Y2K errors will be transferred through data exchanges from one organization's computer systems to another's; (9) given the magnitude of the task and risks ahead, and the limited time remaining, it is highly unlikely that all of the Medicare systems will be compliant in time to ensure the delivery of uninterrupted benefits and services into the year 2000; (10) it is more critical than ever that HCFA have sound business continuity and contingency plans in place, which can be implemented should systems failures occur; (11) HCFA is late in establishing its business continuity and contingency plans; (12) HCFA is relying on its Medicare contractors to develop plans for their own systems; several contractors told GAO they do not plan to begin developing their individual plans until 1999; (13) also, HCFA has not yet developed a Medicare-wide business continuity and contingency planning framework; and (14) HCFA has only recently completed drafting a set of contingency planning guidelines, and does not plan to have its Medicare-wide plan completed and tested until June 20, 1999.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: HCFA completed all 29 of its internal Business Contingency and Continuity Plans (BCCP). HCFA also reviewed BCCP's of 75 Medicare contractors and 359 managed care organizations.

    Recommendation: To minimize disruption of Medicare benefits and services, the Administrator, HCFA, should accelerate the development of business continuity and contingency plans for the Medicare program to allow time to ensure that they are reliable and ready when they may be needed.

    Agency Affected: Department of Health and Human Services: Health Care Financing Administration

  2. Status: Closed - Implemented

    Comments: HCFA agreed to implement this recommendation and has developed a pivot year tracking list that identifies each pivot year used by a system, the date the system will fail, and the maintainer/contractor responsible for the system. Additionally, HCFA reported implementing this recommendation in their quarterly report to HHS for March 31, 1999.

    Recommendation: To minimize disruption of Medicare benefits and services, the Administrator, HCFA, should enhance management control over data exchanges by developing a pivot year tracking system that identifies each pivot year used, the expected date when the pivot year will fail to function, and the contractor or maintainer responsible for the system.

    Agency Affected: Department of Health and Human Services: Health Care Financing Administration

  3. Status: Closed - Implemented

    Comments: According to HCFA, it identified all of its approximately 200,000 data exchanges and obtained signed agreements with key data exchange partners.

    Recommendation: To minimize disruption of Medicare benefits and services, the Administrator, HCFA, should ensure that all external and internal systems' data exchanges have been identified, and agreements signed between the data exchange partners.

    Agency Affected: Department of Health and Human Services: Health Care Financing Administration

  4. Status: Closed - Implemented

    Comments: To more effectively identify and manage risks, HCFA is relying on multiple sources of information including test reports, reports from IV&V contractors, and weekly status reports from their Y2K Contractor Oversight Teams. HCFA has stationed staff at critical contractor sites to assess the data being reported and to identify problems. HCFA recently upgraded its Y2K project tracking system, WebTrack, to list known problems and their resolution.

    Recommendation: To minimize disruption of Medicare benefits and services, the Administrator, HCFA, should develop a risk management process that identifies all risks and their interdependencies, assesses their impact on the Y2K program, establishes timeframes for mitigation and criteria for determining when risks should be considered mitigated, and follows this criteria to ensure that risks are indeed fully mitigated.

    Agency Affected: Department of Health and Human Services: Health Care Financing Administration

  5. Status: Closed - Implemented

    Comments: HCFA carried out testing and certification of its internal systems and contractor systems. Furthermore, HCFA encouraged its providers to test their systems with contractors through letters, advertisements, and other outreach efforts. By December 1999, a substantial percentage of providers had tested their systems. Moreover, HCFA provided data sets to the banks to use in testing.

    Recommendation: To minimize disruption of Medicare benefits and services, the Administrator, HCFA, should define the scope of an end-to-end test of the Medicare claims process, and develop plans and a schedule for conducting such a test. This work should include developing testing procedures and a plan for executing the test, obtaining commitments from participating data exchange partners, confirming that telecommunications infrastructures are Y2K compliant, and reaching an agreement on dates for conducting the test.

    Agency Affected: Department of Health and Human Services: Health Care Financing Administration

  6. Status: Closed - Implemented

    Comments: HCFA developed an integrated summary project schedule that included a critical path analysis.

    Recommendation: To minimize disruption of Medicare benefits and services, the Administrator, HCFA, should identify the critical path for the Y2K program on the basis of a complete and integrated Y2K project schedule and use it to: (1) ensure that all critical tasks are prioritized and completed in time to prevent unnecessary delays; and (2) report a more realistic completion date.

    Agency Affected: Department of Health and Human Services: Health Care Financing Administration

  7. Status: Closed - Implemented

    Comments: HCFA produced a summary schedule that included milestones for (1) renovating and testing most of its mission-critical systems, (2) conducting end-to-end testing, and (3) developing contingency plans.

    Recommendation: To minimize disruption of Medicare benefits and services, the Administrator, HCFA, should rank the remaining Y2K work on the basis of an integrated project schedule that includes milestones for the renovation and testing of all: (1) Medicare contractors systems; (2) internal mission-critical systems; (3) mission-critical data exchanges; and (4) the common working file. This schedule should include time to conduct end-to-end testing of the Y2K compliant Medicare claims process, and incorporate timeframes to develop, implement, and test business continuity and contingency plans.

    Agency Affected: Department of Health and Human Services: Health Care Financing Administration

  8. Status: Closed - Implemented

    Comments: HCFA has retained an IV&V contractor to review the Y2K activities of Medicare external claims processing contractors and internal systems development activities. The reviews have focused on personnel assigned to the Y2K projects, staffing levels, project planning, configuration management, Y2K testing, and risk identification and mitigation. The IV&V contractor also witnesses HCFA internal systems Y2K testing and reviews the progress of external claims processing contractors as part of the recertification program that is to be completed by November 1, 1999.

    Recommendation: To minimize the disruption of Medicare benefits and services, the Administrator, HCFA, should ensure that HCFA is adequately assessing the scope of the remaining Y2K work by independently verifying the reported status of its claims processing contractors systems, internal systems, and data exchanges--either internally or through its independent verification and validation contractor. All reports submitted to the Department of Health and Human Services should be included as part of this independent verification.

    Agency Affected: Department of Health and Human Services: Health Care Financing Administration

 

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