Medicare: Shared Systems Policy Inadequately Planned and Implemented

GAO commented on the Health Care Financing Administration's (HCFA) Medicare Program, focusing on HCFA plans to implement the shared systems policy, an initiative to encourage contractors to share automatic data processing (ADP) systems. GAO noted that: (1) despite the need for early planning, HCFA did not develop a list of minimum automation requirements for Medicare; (2) HCFA failure to perform system evaluations to assist contractors in identifying the most appropriate systems for sharing resulted in costly claims-processing problems; (3) HCFA focused primarily on administrative savings and ignored the effect that ADP systems would have on Medicare claims-processing effectiveness; and (4) HCFA did not define a long-term automation strategy to determine how best to process Medicare claims given current technology. GAO believes that HCFA should suspend further implementation of its shared policy until it addresses the identified deficiencies.