All Medicare payment transactions will be routed along a federal electronic "highway" by 1998, saving $200 million annually in administrative costs, HHS officials announced last week.
HHS has issued a $19 million, six-year contract to GTE Government Systems Corp. to design and develop the Medicare Transaction System, under which all claims processing and payment will be conducted electronically.
The MTS also will generate information on benefits, payments and claims status for providers and beneficiaries. The system will coordinate beneficiaries' Medicare and Medigap coverage.
Implementation of the program, under which all healthcare providers will be legally required to transmit Medicare claims electronically, will be gradually implemented starting in late 1996 and will be fully operational by 1998, HHS officials said.
Medicare claims and payments totaling more than $130 billion annually now are processed by 79 contractors-most of them Blue Cross and Blue Shield plans-in 14 regions around the country. The budget for their activities this year is $1.6 billion. The federal government expects to save $200 million annually on administrative costs by shifting payment transactions from several contractors to the MTS, which will be owned and operated by the government.
Bruce Vladeck, head of HCFA, said at a press briefing that the system would "consolidate our current frag mented Medi care claims-pro cessing system" and make it eas ier to detect fraud and abuse.
Under this system, contractors no longer will process claims and payments. Instead, they will monitor the medical necessity of physician services for which claims are submitted, audit cost reports, look for fraud and abuse, and respond to beneficiary concerns, Mr. Vladeck said.-Lynn Wagner