Medicare Computer Systems

The Health Care Financing Administration (HCFA) and its contractors are extremely behind schedule in repairing, testing, and implementing the mission-critical computer systems supporting Medicare. HCFA has recently begun to improve its management of Year 2000 issues, including establishing a Year 2000 organization and hiring independent contractors to oversee the work. However, because of the complexity and magnitude of the problem and HCFA's late start, the repairs lag far behind schedule. Less than one-third of Medicare's 98 mission-critical systems had been fully renovated as of June 1998, and none had been validated or implemented, according to HCFA. Compounding this difficult task is the absence of key management practices HCFA needs to adequately direct and monitor its Year 2000 project. HCFA also has not effectively managed the identification and correction of its electronic data exchanges. Because of the magnitude of the tasks ahead and the limited time remaining, it is unlikely that all of the Medicare systems will be compliant in time to guarantee uninterrupted benefits and services into the year 2000.

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

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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