Medicare agency expected to fall behind on reforms Focus on year 2000 fix slows implementation of mandatory changes


WASHINGTON -- Just three months before a new era in the history of Medicare is to begin, members of Congress and health policy experts are expressing alarm that the federal Medicare agency cannot make many of the changes scheduled to take effect over the next two years.

Overwhelmed with new responsibilities, federal health officials say they will miss statutory deadlines for some of the changes required by the 1997 budget law, which was adopted with bipartisan support. The changes are intended to save money and to modernize Medicare by opening the government program to a wider range of private health plans.

Moreover, members of a federal advisory commission studying how to preserve Medicare for the baby boom generation say they worry that some of the more attractive policy options under consideration may prove unworkable for a similar reason: They cannot be carried out in a timely way.

Republicans complain that Medicare officials have been dragging their feet, even though President Clinton proposed many of the changes enacted.

Administration officials say they have made great efforts to carry out the law and have met most deadlines, but now have more urgent tasks: fixing computers to cope with the year 2000. In computers that use two digits to indicate the year, 2000 is often indistinguishable from 1900.

In any event, it is clear that Congress overestimated the agency's ability to make hundreds of complex changes in a health insurance program created 33 years ago on the model of Blue Cross and Blue Shield plans.

William Scanlon, director of health care studies at the General Accounting Office, a nonpartisan investigative arm of Congress, said the Medicare agency's new duties "appear to be outstripping its capacity to manage its existing workload."

The agency in question, the Health Care Financing Administration, is swamped with work.

In a report to be issued next month, the GAO says Medicare officials are "severely behind schedule" in fixing and testing their computer systems.

The draft report, requested by the Senate Special Committee on Aging, says, "It is highly unlikely that all of the Medicare systems will be compliant in time to insure the delivery of uninterrupted benefits and services into the year 2000."

In a written response to the auditors, HCFA Administrator Nancy-Ann Min DeParle said her agency "got a late start" on renovating computers, but was making "credible progress."

Moreover, she said, the agency has "postponed important projects, including activities required by the Balanced Budget Act" of 1997, to avoid diverting resources from its year 2000 work.

Medicare and Medicaid benefit payments have increased 44 percent in the past five years, to $315 billion in 1998. But the agency's budget for people and equipment to operate the programs has been relatively flat, around $2.2 billion a year, and the number of employees has actually declined, to 3,942 from 4,272. Medicare officials say they can do more with less because the agency is more productive.

But the delays in carrying out the 1997 law will affect Medicare beneficiaries. One of the provisions being delayed would reduce the amounts, known as co-insurance, that elderly people pay for hospital outpatient services such as diagnostic tests, cataract surgery and hernia operations.

Other delays will prolong the use of an interim payment system for home health care, which is prompting many home health agencies to cut back services to the elderly.

Pub Date: 9/27/98

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