Reported Medicaid Year 2000 Readiness

Pursuant to a congressional request, GAO determined: (1) what the Health Care Financing Administration (HCFA) is doing to ensure that the year 2000 computing challenge does not adversely affect the delivery of Medicaid benefits; and (2) the readiness of states to successfully transition to year 2000 for Medicaid.

GAO noted that: (1) HCFA has taken several actions that have significantly reduced the risk that the Medicaid program will encounter year 2000 failures; (2) in particular, it has adopted an approach that includes three rounds of on-site contractor reviews of states using a standard methodology; (3) between November 1998 and April 1999, the contractor completed the initial round of on-site reviews in all 50 states and the District of Columbia; (4) these reviews included assessments of states' integrated eligibility systems and Medicaid management information systems (MMIS) in areas such as project management and planning, remediation progress, testing, and contingency planning; (5) since May 1999, HCFA's contractor has conducted a second round of on-site reviews in 40 states; (6) to complement its system reviews, HCFA obtained another contractor to review state business continuity and contingency plans; (7) without contingency plans, if unpredicted failures occur, an entity will not have well-defined responses and may not have enough time to develop and test alternatives; (8) in addition to evaluating state system remediation activities and business continuity and contingency plans, HCFA has provided assistance to states through the issuance of guidance and best practices documents; (9) according to the system assessment contractor's completed round 2 reports of 37 states and the District of Columbia that had been visited during both rounds, half of the state systems risk ratings improved, 45 percent stayed the same, and 5 percent declined; (10) as of October 4, 1999: (a) 4 eligibility systems and 5 MMISs were assessed at high risk; (b) 13 eligibility systems and 8 MMISs were assessed at medium risk; and (c) 36 eligibility systems and 40 MMISs were assessed at low risk; (11) HCFA's business continuity and contingency plan contractor found problems in state efforts as well; (12) in particular, of the 33 states and two territories that have been reviewed, 11 were considered high risk, 11 medium risk, and 13 low risk; (13) many states were reported to have open issues, such as insufficient plan details, inadequate project documentation, and incomplete plans; (14) states that are in a particularly difficult position are those that have a high-risk system as well as a high risk business continuity and contingency plan; (15) two states fall into this situation; and (16) also in a difficult position are the six states with at least one medium-risk Medicaid system and a high-risk business continuity and contingency plan.