Two Medicare initiatives encountering problems
Two major Medicare initiatives one of which would speed reimbursements to hospitals and other providers are in trouble.
A new Medicare claims system that promised to streamline and revolutionize federal claims and reimbursement is encountering logistical and political problems, and an experiment in which HMOs would bid for regional contracts also has stumbled into opposition.
In April, the Health Care Financing Administration (HCFA) changed the focus of the expedited claims and reimbursement project, called the Medicare Transaction System (MTS), from fee-for-service plans to Medicare managed care, which covers only about 13% of beneficiaries. Implementation of the rest of the program has been halted for 90 days for officials to consider how to proceed.
The MTS was begun in 1994 to move to a single electronic claims process, replacing the 70 systems now in use. It offered hospitals hope for faster and easier reimbursements, while saving the government $200 million a year in administrative costs. The new system also was to make fraud and abuse detection easier.
The project also has encountered congressional criticism because of cost overruns. GTE Government Systems Corp. was given a $19 million contract in 1994 to design software needed for the project and to set up a test site. But in April, U.S. Rep. Bill Thomas (R-CA), chairman of the House Ways and Means subcommittee that oversees Medicare, revealed that HCFA had increased its contract with GTE to $92 million.
"This breakdown threatens our ability to pay Medicare’s bills, and it does great damage to our ability to fight fraud and abuse," Thomas wrote in a letter to Bruce Vladeck, HCFA administrator.
Medicare documents released by Thomas included a statement that "Both [Medicare[ and GTE had underestimated, in their planning, the number and complexity of Medicare requirements."
Problems also have developed in HCFA’s plan to test regional bidding for Medicare managed care contracts in Denver. The pilot project was intended as a national model for Medicare reform, but is facing opposition in Colorado after being driven out of Maryland last year.
Both U.S. Sen. Ben Nighthorse Campbell (R-CO) and Gov. Roy Romer, a Democrat, have asked the Department of Health and Human Services to halt the pilot project after strong opposition by HMOs.
Critics say that while competitive bidding might lower government payments, it might also result in some HMOs raising their fees, dropping free services they now offer the elderly, or halting services to Medicare beneficiaries.
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