Medicare: Shared System Conversion Led to Disruptions in Processing Maryland Claims (Letter Report, 05/23/94, GAO/HEHS-94-66). Since 1989, the Health Care Financing Administration (HCFA) has tried to reduce administrative costs by urging Medicare contractors to share claims processing system software and hardware with other contractors. In October 1991, Blue Cross and Blue Shield of Maryland began using claims processing software developed by another contractor. For more than a year after the system conversion, Medicare payments to Maryland physicians were frequently late and often contained errors, resulting in unanticipated costs of more than $5 million. The Maryland contractor has yet to realize any of the anticipated annual savings of more than $600,000 in administrative costs. Poor management by Blue Cross and Blue Shield of Maryland and poor decisions by HCFA contributed to the contractor's costly and turbulent shared system conversion. In particular, HCFA and the Maryland contractors did not allow enough time to plan the effort and scheduled the conversion during a period of Medicare program changes requiring major computer system modifications. The Maryland contractor's experience provides valuable lessons for the future, especially given HCFA's plan to convert the 14 systems that the contractor now uses to a single automated claims processing system. HCFA needs to ensure that planning and testing time for major system changes are adequate and not compromised by its desire to achieve administrative savings. --------------------------- Indexing Terms ----------------------------- REPORTNUM: HEHS-94-66 TITLE: Medicare: Shared System Conversion Led to Disruptions in Processing Maryland Claims DATE: 05/23/94 SUBJECT: Claims processing Health care cost control Systems conversions Medical expense claims State-administered programs Contractor performance Medical information systems Administrative costs Computer networks Systems management IDENTIFIER: Medicare Program Maryland ************************************************************************ We regret that the full text of this item is presently unavailable. See the GAO FAQ - Section 2.0 for printed copy ordering information. The FAQ is automatically retrieved with all WAIS search results or can be obtained by sending e-mail to: [email protected]