HHS to unify Medicare accounting

In an effort to untangle Medicare's antiquated and multiple accounting systems, the Department of Health and Human Services has awarded a $328.4 million contract to create a single system that will help ensure the program makes the correct payments.

PricewaterhouseCoopers won the contract for the Healthcare Integrated General Ledger Accounting System, which will eventually replace the 53 systems insurance companies use to process and pay nearly 3 million Medicare claims daily.

PricewaterhouseCoopers is the lead vendor for the project, with Oracle Corp. and Electronic Data Systems Corp. as subcontractors. The contract work will begin with developing and pilot-testing the new system, then HHS will make a decision on whether to proceed.

The total value of the contract is $328.4 million across 10 years, and full implementation is projected for October 2007.

"This project will make it far easier for Medicare to track and pay claims quickly and accurately on behalf of the 40 million Medicare beneficiaries and all American taxpayers," HHS Secretary Tommy Thompson said.

The project's participants face the difficult task of integrating the new system with Medicare's three standard computer systems and replacing the current mainframe-based financial system with a modern, Web-based accounting system.

The General Accounting Office has produced a series of reports about problems with Medicare systems.

Morris Zwick, a partner with PricewaterhouseCoopers' management consulting division, acknowledged that the program is daunting. "This is a very unique challenge," he said. But the company and the agency are "well-positioned to take this on."

Currently, most Medicare contractors do not use double-entry accounting methods and lack general ledger capabilities. Therefore, the accuracy of their books must be verified manually. Despite those limitations, HHS' Centers for Medicare & Medicaid Services (formerly the Health Care Financing Administration) has maintained clean audit opinions in recent years.

The pilot program will begin with one Medicare contractor that processes primarily hospitals and other institutional claims, and another that processes primarily physician and supplier claims, HHS officials said.

HHS officials could not be reached for details on the deal.

About the Author

Christopher J. Dorobek is the co-anchor of Federal News Radio’s afternoon drive program, The Daily Debrief with Chris Dorobek and Amy Morris, and the founder, publisher and editor of the DorobekInsider.com, a leading blog for the Federal IT community.

Dorobek joined Federal News Radio in 2008 with 16 years of experience covering government issues with an emphasis on government information technology. Prior to joining Federal News Radio, Dorobek was editor-in-chief of Federal Computer Week, the leading news magazine for government IT decision-makers and the flagship of the 1105 Government Information Group portfolio of publications. As editor-in-chief, Dorobek served as a member of the senior leadership team at 1105 Government Information Group, providing daily editorial direction and management for FCW magazine, FCW.com, Government Health IT and its other editorial products.

Dorobek joined FCW in 2001 as a senior reporter and assumed increasing responsibilities, becoming managing editor and executive editor before being named editor-in-chief in 2006. Prior to joining FCW, Dorobek was a technology reporter at PlanetGov.com, one of the first online community centers for current and former government employees. He also spent five years at Government Computer News, another leading industry publication, covering a variety of federal IT-related issues.

Dorobek is a frequent speaker on issues involving the government IT industry, and has appeared as a frequent contributor to NewsChannel 8’s Federal News Today program. He began his career as a reporter at the Foster’s Daily Democrat, a daily newspaper in Dover, N.H. He is a graduate of the University of Southern California. He lives in Washington, DC.


  • Management
    shutterstock image By enzozo; photo ID: 319763930

    Where does the TMF Board go from here?

    With a $1 billion cash infusion, relaxed repayment guidelines and a surge in proposals from federal agencies, questions have been raised about whether the board overseeing the Technology Modernization Fund has been scaled to cope with its newfound popularity.

  • IT Modernization
    shutterstock image By enzozo; photo ID: 319763930

    OMB provides key guidance for TMF proposals amid surge in submissions

    Deputy Federal CIO Maria Roat details what makes for a winning Technology Modernization Fund proposal as agencies continue to submit major IT projects for potential funding.

Stay Connected