Information Technology:

Health Care Financing Administration's Budget Process Needs Improvement

IMTEC-89-31: Published: Aug 11, 1989. Publicly Released: Aug 11, 1989.

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Pursuant to a congressional request, GAO analyzed the Health Care Financing Administration's (HCFA): (1) fiscal year (FY) 1990 budget request for its information technology systems and data processing needs; and (2) efforts to reduce Medicare contractors' automatic data processing (ADP) costs.

GAO found that HCFA: (1) requested $73.6 million for its information technology systems for FY 1990; (2) cited the closeness of budget deadlines in explaining its inability to support its inclusion of a $22-million cost estimate in the budget request for implementing the Medicare Catastrophic Coverage Act of 1988; (3) included $13.1 million in its budget request for a computer improvement program, which it had expected to complete during FY 1990; (4) after submitting the request, projected an additional $7.2 million for FY 1991 and FY 1992 to complete the computer improvement program; (5) included in its programmatic budget estimates about $947 million in ADP-related costs for paying states and contractors for processing Medicaid and Medicare claims and for implementing a new ADP system for processing Medicare claims; and (6) in January 1989, announced a policy to minimize Medicare ADP operations maintenance and enhancement costs by limiting the funding for system changes to encourage contractors to use shared ADP systems maintenance and processing and adopt HCFA standard software packages.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The Department agreed that Medicare ADP costs should be identified in the information technology budget. The Department disagreed with the recommendation to include state agency ADP costs for Medicaid because it believed that state agencies should not be considered contractors under the Brooks Act.

    Recommendation: The Secretary of Health and Human Services should direct the Administrator, HCFA, to report all ADP costs, including Medicare contractor and Medicaid state operations, in the information technology system's budget.

    Agency Affected: Department of Health and Human Services

  2. Status: Closed - Implemented

    Comments: The Department concurred with the recommendation and maintained that it was actively promoting the shared systems policy. However, GAO later determined that HCFA implemented its shared system policy without the well-supported analysis GAO recommended. GAO therefore again recommended that HCFA perform the necessary analyses to support the shared systems policy, in GAO/IMTEC-92-41, March 18, 1992.

    Recommendation: The Secretary of Health and Human Services should direct the Administrator, HCFA, to consider pursuing a more direct approach to cut Medicare contractor ADP system costs through shared processing and shared maintenance. This should include preparing a well-supported analysis of the benefits of sharing and an analysis of available approaches to implementing systems standardization and consolidation, including a determination of whether specific legislative authority is necessary.

    Agency Affected: Department of Health and Human Services


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