Medicare fix may be bad medicine

Although the check may not be in the mail as quickly as doctors would like, a government plan to modernize Medicare's payment system for doctors could cost too much to adopt.

Testifying last week before the House Government Reform Committee's Government Management, Information and Technology Subcommittee, health experts suggested moving slower to replace Medicare's 20-year-old legacy system and cautioned that modernization could cost billions of dollars with few immediate benefits.

"We must remember the lessons of past efforts at our agency and others in attempting to build a single 'big-bang' system, and plan our modernization carefully, proceed incrementally and build modularly," said Gary Christoph, chief information officer for the Health Care Financing Administration, which runs the federal program.

HCFA has been working at modernizing Medicare's array of internal and external computer payment systems for years. In the mid-1990s, it tried to come up with a better payment system, but the agency ended the project in 1997 after the government had spent $80 million and didn't find a solution. The General Accounting Office estimated the system would have cost more than $1 billion.

The lesson from that project, said Christoph: "Don't bite off more than you can chew."

Still, Medicare's computerized systems are plagued with problems, including the inability to spot waste, fraud and abuse. Although 90 percent of all claims are paid electronically, it takes an average of 18 days for doctors to receive their checks. Any plan to overhaul the system is fraught with problems, officials testified (see box).

"We've been conservative about moving our services to the Internet because we have concerns about privacy. We use leased net private networks now, [but] we're unwilling to put privacy information at risk until the technology is there to support it," Christoph said.

Sen. Richard Lugar (R-Ind.), a co-sponsor of legislation to overhaul the payment system, said a streamlined program would "efficiently process the vast number of basic transactions that now clog the pipeline and drain health care resources." He added that a new system would be "a huge improvement in the quality of Medicare and a source of enormous annual savings for the program and the wider health care economy."

Complaints about the Medicare bureaucracy have long dogged the government. Some doctors have become so frustrated with the payment system that they refuse to treat Medicare patients. Seniors are angry because they can't tell what procedures are covered and for how much. And study after study has shown that the $200 billion program is plagued with duplication, excessive charges, double billings and confusion among those it is intended to serve.

But Christoph said Medicare still pays doctors faster than most other health insurance companies, despite its problems. "Nevertheless, there is an urgent need to update our systems," he said.

A pilot program would put 6 million Medicare beneficiaries who are on managed care plans into a new electronic system. But that represents only 15 percent of the 40 million elderly Americans eligible for Medicare.

The outcome of the struggle over designing a new electronic Medicare system could have an impact on every other federal health care network in the United States.

It also is likely to influence private insurance carriers because Medicare uses 22 private companies to process claims for the elderly. These companies could easily adapt a computerized system for both the public sector and private payments.

"The current system is struggling," acknowledged Christoph. "But we are doing an incredible job considering the old technology."

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