A report from the General Accounting Office said HCFA's 3-year-old computerized claims-handling system eventually will cost about $1 billion to develop-nearly seven times HCFA's original estimate.
The report, released last month, said HCFA has poorly managed the Medicare Transaction System, which 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." The agency in charge of Medicare said it would save $200 million a year when fully operational.
The system is designed to consolidate processing of Medicare claims from 70 sites to a few regional centers, taking away some of the functions currently performed by the Medicare intermediaries. HCFA has also said the system will make it easier to detect fraud and abuse, a promise that's been questioned by some fraud experts (June 17, 1996, p. 33).
In April, House Ways and Means health subcommittee Chairman William Thomas (R-Calif.) attacked HCFA and said the MTS project may be beyond repair.
Thomas accused HCFA of knowing for months that the contractor for the MTS system, GTE Government Systems Corp., was falling behind on the proj-ect and hiding that information from lawmakers. HCFA said last month that it had suspended work on much of the contract, and GTE would continue work on only a fraction of the program.
HCFA Administrator Bruce Vladeck agreed the MTS project was more difficult than the agency had estimated. But he said HCFA was still committed to the project. He said the agency's decision to halt work temporarily is the first step in re-evaluating the program and that HCFA will have a new plan of action by July.
The GAO also attacked HCFA's management of the MTS project.
"HCFA has not applied all the sound systems development practices necessary to reduce risk and assist management in controlling development of system requirements and software," the GAO said.