A new HCFA computer system intended to streamline Medicare claims processing is far over budget and may be beyond repair, a top Republican lawmaker contends.
HCFA officials say the system is workable and was delayed by several problems, some beyond the agency's control.
The complaining lawmaker is Rep. William Thomas (R-Calif.), chairman of the House Ways and Means health subcommittee. He calls the Medicare Transaction System "one more example of a government bureaucracy out of control."
The MTS system was launched in 1994. At the time, HCFA called it "the single most visible and aggressive step toward program modernization HCFA will take in the remainder of the century." HCFA said it would save $200 million a year when fully operational.
The system is designed to consolidate processing of Medicare claims from more than 70 sites to a few regional centers, removing some of the functions currently performed by Medicare intermediaries. HCFA also has said the system will make it easier to detect fraud and abuse, an assertion that has been questioned by some fraud experts (June 17, 1996, p. 33).
According to Thomas, HCFA has known for months that the contractor for the MTS system, GTE Government Systems Corp. was falling behind and was unlikely to be able to complete the contract. But HCFA hid the problems from lawmakers, Thomas said.
HCFA announced last month that it had suspended work on much of the contract and that GTE would continue work on only a fraction of the program.
Thomas said as late as February he toured HCFA's main office in Baltimore and was given a briefing on the MTS, but no mention was made of the problems with the system.
"I am just as amazed that (HCFA) would present what we commonly call a dog-and-pony (show)" but not mention that the "dog has no legs and the pony has no hooves," Thomas said.
According to internal HCFA documents released by Thomas, the program is more than $65 million over budget. The system was supposed to cost $36.6 million, but HCFA has already spent nearly $102 million.
HCFA says about $45 million of the cost overage was from problems standardizing the more than 70 contractor systems currently in place. An additional $20 million of overage came from changes in the managed-care piece of the system necessitated by new estimates of higher managed-care penetration in Medicare.
Steve Pelovitz, HCFA associate administrator for operations and resource management, said HCFA is "still committed to work on the MTS."
Pelovitz adds that officials expect the first piece of the system, which would affect managed-care claims, to be on line in June 1998. Instead of bringing the entire system into service at one time, as was first planned, HCFA now has decided to add new pieces as they are finished.
Pelovitz also denies HCFA tried to mislead Thomas about the state of the project.
While saying he supports the goals of the system, Thomas says it "will not do what it is supposed to.
"It's like a warp-speed spaceship. Would it be nice if we could have it? Yes. Can we have it? No. It's called fantasy."
Thomas isn't the first person to raise questions about the MTS.
In 1995, the General Accounting Office, Congress' investigative arm, released a report on the progress of work on the system. The GAO said the project was on time but raised concerns that HCFA was not tracking the costs or defining goals.
The GAO concluded the MTS "may suffer the same fate as many other complex systems: extensive delays, large cost increases and the inability to achieve" the advertised benefits.
In a letter to HCFA Administrator Bruce Vladeck, Thomas called for biweekly status reports on progress on the MTS. At deadline, there had been no response from Vladeck.