Medicare:

Information Systems Modernization Needs Stronger Management and Support

GAO-01-824: Published: Sep 20, 2001. Publicly Released: Nov 14, 2001.

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Congress has questioned whether the Centers for Medicare and Medicaid Services (CMS), formerly the Health Care Financing Administration, adequately implemented new payment methods, effectively safeguarded program payments, and adequately oversaw the quality of care provided to beneficiaries. CMS depends on hundreds of information technology (IT) systems to help manage the Medicare program. With year 2000 systems renovations successfully completed, CMS has focused on modernizing its IT systems. The agency's information systems are crucial to carrying out Medicare's core missions of claims processing and payment, program oversight, and administration of participating health plans. Medicare's major systems are aged, however, and many are incompatible with one another. To address these problems, CMS intends to modify, replace, or redesign systems on which key Medicare missions depend. CMS plans to make incremental system improvements while maintaining current functions and accommodating changes mandated by legislation. The agency's IT planning and management processes--intended to increase the likelihood that new systems will be successful and cost-effective--have shortcomings. The agency's blueprint documenting its existing and planned IT environments, also known as its enterprise architecture, is missing essential detail in critical parts, including well-documented business functions, information flows, and data models. CMS is trying to strengthen its planning and has developed guidance for an improved management process, but will need to make considerable effort to ensure that modernization stays on track. These weaknesses in IT planning and management are part of larger agency management challenges. Resource gaps, both in funding and staff expertise, threaten the success of planned IT improvements. At the same time, CMS has made little use of performance measures to ensure accountability and increase the likelihood of achieving results.

Matters for Congressional Consideration

  1. Status: Closed - Not Implemented

    Comments: Congress has not made agency funding contingent upon CMS providing a satisfactory plan specifying the use of the funds or demonstrating sufficient progress in implementing GAO's related recommendations to the agency made in this report. However, in fiscal year 2004, the Congress provided CMS with $29.6 million for its IT modernization initiative in appropriations that can be obligated over a 2-year period.

    Matter: Congress may wish to make subsequent funding available for new IT development projects contingent on the agency's (1) providing a satisfactory plan specifying the use of funds for the upcoming fiscal years and (2) demonstrating sufficient progress in implementing the following recommendations for improving critical IT capabilities necessary to successfully manage large and more complex projects.

  2. Status: Closed - Not Implemented

    Comments: Congress had not provided additional multi-year funding for CMS's IT projects that was contingent upon agency efforts to improve and demonstrate progress in technical, program, and human capital management. However, in fiscal year 2004, the Congress provided CMS with $29.6 million for its IT modernization initiative in appropriations that can be obligated over a 2-year period.

    Matter: To help CMS successfully modernize its IT environment, Congress may wish to provide additional, multiyear funding for CMS' IT projects, under certain conditions that link funding increases to efforts to improve and demonstrated progress in technical, program, and human capital management. Because the absence of an effective enterprise architecture and IT investment management process hinders CMS' ability to manage its IT environment, Congress may wish to consider making the authority to obligate funds contingent upon the agency using the funds initially to support only (1) ongoing program operations, maintenance of existing systems, and IT projects currently under way; (2) efforts to develop an effective enterprise architecture and IT investment management process, as well as to obtain the human capital needed to modernize IT practices and operations; and (3) statutorily required activities.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: The CMS Chief Information Officer created the CMS IT Investment Review Board (ITRB) and its associated steering committees in January 2004 to oversee the agency's MMA and Revitalization investments. The ITRB is responsible for overseeing IT Modernization operating plan activities, and members of this investment board are overseeing completion of the CMS Business and IT strategic plan. HHS/CMS recently approved, and CMS's Office of Information Services created, the Information Services Modernization Group to implement the IT Modernization activities. In the spring of 2005, the ITRB's responsibilities were expanded to include all IT investments. CMS is currently defining procedures for involving the board in overseeing IT projects/monitoring their status.

    Recommendation: To ensure the success of the agency's IT modernization, the Administrator of CMS and its senior management should become more involved in IT planning and management efforts, and thus elevate the priority given to these efforts throughout the agency.

    Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services

  2. Status: Closed - Not Implemented

    Comments: CMS has taken a number of steps to improve development and implementation of its architecture. In February 2002, CMS published a new edition of its architecture that enabled users to better identify the relationships between specific parts of its architecture--its goals and objectives, standards, business functions, data, software applications, and hardware. CMS also completed a detailed analysis of Medicare claims processing and a model of net data exchanges between all significant internal applications systems and those of external partners, most recently updated in January 2004. CMS is currently conducting sessions with its business components to further refine understanding of its current and future business processes, system interactions, and data. In addition, CMS has drafted a series of guidance documents for project managers and others.

    Recommendation: To improve development and implementation of the agency's enterprise architecture, the Administrator should direct center and administrative unit officials to complete, in conjunction with the Office of Information Services, the enterprise architecture documentation, particularly of the business functions, information flows, and data elements for the systems for which their respective units are responsible.

    Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services

  3. Status: Closed - Not Implemented

    Comments: Version I of the CMS IT Modernization Five Year Business Plan was presented to the IT Investment Review Board. This plan includes a sequenced implementation strategy.

    Recommendation: To improve development and implementation of the agency's enterprise architecture, the Administrator should direct the Chief Information Officer (CIO) to specify in a migration plan the priorities for, and sequencing of, IT projects.

    Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services

  4. Status: Closed - Implemented

    Comments: In its "CMS IT Policy for Investment Management" (published December 5, 2001), CMS developed six written criteria for investing in IT projects that: (1) they are aligned with strategic business objectives; (2) they represent a positive return on investment; (3) they are at an acceptable level of risk; (4) they are with an appropriate risk mitigation strategy; (5) they follow an acceptable technical strategy in compliance with CMS's IT architecture; and (6) they follow an acceptable acquisition strategy. CMS has issued additional guidance for developing a business case analysis that provides more detail on these criteria in August 2001. CMS also developed the ROADMAP intranet site to provide IT project managers and the responsible programmatic units within CMS access to tools and resources to assist them in developing and managing their IT investments.

    Recommendation: To improve the investment management process, the Administrator of CMS should establish sufficient and written criteria to ensure a consistent process for funding IT projects agencywide.

    Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services

  5. Status: Closed - Not Implemented

    Comments: In December 2001, CMS issued policy for its investment management process that requires all projects of a non-routine nature to complete a business case analysis that will outline the projects' technical strategies and compliance with CMS's IT architecture. All projects of a non-routine nature are required to undergo a technical review at two points in the process of selecting projects before the agency approves them for further development. This technical review is conducted by the CIO technical advisory board (CTAB) and is designed to ensure that the project complies with the CMS Enterprise Architecture, which includes using the approved technical products and standards, as outlined in CMS's IT enterprise architecture (Technical Reference Model). Any variances from the approved products and standards must be approved by the CTAB and Chief Information Officer (CIO) or Chief Technical Officer. In addition, CMS has established detailed review processes for the consideration of all new products and standards proposed to be added to the approved list to ensure that the business and technical implications of adding them are fully described and considered as part of the decisionmaking by the CTAB and CIO. Since then, CMS has implemented additional tools to assist project managers in implementing their IT projects in a technically sound way that adheres to CMS's architecture. CMS's System Life Cycle Framework includes 3 checkpoints during which projects are reviewed to determine if they meet requirements for further development. They are the Investment Selection Review, Preliminary Design Review, and Operational Readiness Review.

    Recommendation: To improve the investment management process, the Administrator of CMS should require that major IT projects undergo a technical review before the agency approves them for further development.

    Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services

  6. Status: Closed - Not Implemented

    Comments: CMS has taken a number of steps in the last 4 years to better monitor the status of IT projects. These have been done with three objectives: (1) to standardize the agencies systems development life-cycle processes to promote repeatable processes based on industry best practices; (2) to identify performance metrics (cost, schedule, quality) and require reporting against these metrics to monitor performance and address problems in a timely way; and (3) to improve awareness and competency of IT project managers through standardized training. To standardize processes, CMS established an agency-wide contract for IT contractor services to provide a pool of qualified IT contractors for systems integration and project management support, training, systems documentation, maintenance, and custom development. CMS also created a standard statement of work of IT systems development projects. This was tailored from the IEEE 12207 and is designed with consistent project management deliverables and development deliverables and review, to guide programmatic components involved with IT projects in obtaining an appropriate level of service, reporting, and deliverables. CMS has developed a standard reporting form for monthly reporting on earned value and performance metrics, patterned after the industry reporting format developed by DOD--the Cost, Schedule Status Report. Through this reporting, CMS IT project managers can monitor contractor and project performance. This process and form is being used on the CWF Redesign and the Managed Care Systems Redesign, but will be required on all new major IT investments. CMS has also developed the Quality Management Model, which provides additional tools within the repeatable process to aid managers in implementing their projects. In addition, CMS established an IT Investment Review Board in January 2004 to oversee some of the agency's investments (MMA and Revitalization investments). In the spring of 2005, the board's responsibilities were expanded to include all IT investments. CMS is currently defining procedures for involving the board in overseeing IT projects and monitoring their status.

    Recommendation: To improve the investment management process, the Administrator of CMS should direct the CIO and the Federal Management Investment Board to develop sufficient information to monitor the status of IT projects.

    Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services

  7. Status: Closed - Not Implemented

    Comments: CMS has not developed a systematic process for evaluating completed IT projects, including cost, milestone, and performance data. The agency is modifying the Business Case Analysis required for new investment proposals to identify critical success factors and outcome measures. In addition to supporting the investment selection and control phases, these critical success factors and outcome measures will provide the basis for conducting post-implementation reviews. During fiscal year (FY) 2004, CMS participated in HHS's re-engineering of its capital planning and investment control process and will incorporate these changes into CMS's current investment management process. In addition, CMS has revised and implemented its Business Case Analysis process and has started to implement a full cost estimating strategy for budget formulation.

    Recommendation: To improve the investment management process, the Administrator of CMS should establish a systematic process for evaluating completed IT projects that includes cost, milestone, and performance data.

    Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services

  8. Status: Closed - Implemented

    Comments: The CMS Office of Information Services completed its IT workforce plan, which included categorizing functions for IT Operations, Rx Drug Card and other Medicare Modernization Act implementation, and IT Revitalization. In addition, OIS performed a rigorous staff resource analysis for all categories of staff and a gap analysis against the baseline workforce data. As part of this analysis, OIS identified optimal redeployment, hiring, and outsourcing numbers. OIS also developed a 2-year staff plan and initiated requests for staffing authority in each category. During fiscal year 2004, OIS developed and implemented two certification programs, including one for CMS IT project managers.

    Recommendation: To improve the investment management process, the Administrator of CMS should direct the CIO to develop an IT workforce strategy that outlines a plan to assess staffing needs, identify skill gaps, and fill the gaps.

    Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services

 

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