April 16, 1999

The Health Care Financing Administration (HCFA) has assured Congress repeatedly that it will make Medicare payments to hospitals and doctors on time by next January. However, a recent government report raises questions about whether some of its external computer systems will be fully Y2K compliant.

The Government Accounting Office (GAO), which is the investigative and auditing arm of Congress, specifically charged that some of HCFA's 54 computer systems listed as Y2K compliant malfunctioned during tests and or were not fully tested, according to GAO testimony before a House Ways and Means subcommittee in February.

The GAO is monitoring federal agencies' efforts to change their computer systems to read the year 2000 without glitches.

HCFA has responded to this criticism by stating that these computer problems are minor and will not disrupt Medicare payments.

However, the GAO report notes that HCFA's Y2K readiness has resulted in delaying implementation of important Medicare provisions called for in the 1997 Balanced Budget Act (BBA). "HCFA officials were slow to realize that the complexity and magnitude of the Y2K problem would stall implementation of key BBA requirements," according to the GAO testimony.

The GAO also notes that HCFA was late in addressing the Y2K problem. As a result, Medicare payment updates for calendar and Fiscal Year 2000 and a hospital outpatient prospective payment system will be postponed until after its computer systems have completed the final Y2K testing.

The BBA mandated that new prospective payment systems be designed and implemented that pay providers fixed, predetermined rates that vary according to patient need, according to the GAO testimony.

HCFA has stated that it will continue to use its current payment methods for hospital outpatient visits and that routine payment updates for this year will not be affected, according to an agency fact sheet.

Ronald Shellow, M.D., chair of APA's Joint Commission on Government Relations, told Psychiatric News, "It's a shame that psychiatrists will have to pay the price for HCFA's inability to make the necessary Y2K changes without disrupting the scheduled BBA payment updates."