Will Medicare Survive Y2K?

y 2000, HCFA will be electronically processing 1 billion Medicare claims a year. That's roughly 2.7 million claims a day, a task only possible using computers.

So solving the year 2000 computer problem is naturally the agency's top priority. HCFA's task is daunting. Nearly 50 million lines of code need to be fixed and 75 percent are on contractor computer systems. The agency has set the end of 1998 as the deadline for completing coding fixes. That gives the agency and its contractors a year to identify glitches and test data exchanges among the numerous systems that make up Medicare and Medicaid's digital backbone.

As HCFA Administrator Nancy-Ann Min DeParle noted in testimony before a House committee this summer, nothing brings together a group of people like a crisis.

"There's no question that the year 2000 problem has caused a focus and a coordination at the Health Care Financing Administration that perhaps wasn't there before," DeParle said. "What we had to do was sit down as a group, the policy people, the information systems people, the whole group of us, and decide what was possible to get done. You had to balance the risk that you wouldn't be paying claims at all against our strong desire to get all of the changes in the Balanced Budget Act implemented."

However, HCFA so badly managed its most recent major information technology challenge as to inspire little confidence the newfound togetherness will be enough to exterminate the millennium bug. The Medicare Transaction System, which HCFA began crafting in 1991, would have created a single processing system for much of the agency's work, which was then--and to an extent, still is--performed on a variety of aging, proprietary systems that communicated poorly. But HCFA bit off more than it could chew, poorly managed its software development contractor and used unsound technology investment strategies, the General Accounting Office reported repeatedly. HCFA canceled the project in August 1997.

If HCFA can pull off a year 2000 victory, the Medicare Transaction System failure may be looked back on as a lesson well learned. If not, the failure may be seen as a warning of computer nightmares to come.