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The Centers for Medicare and Medicaid Services has outlined plans for updating its computer and data systems to comply with the Patient Protection and Affordability Act. The agency projects that it will complete the overhaul in five- and 10-year increments, with "usable functionality" delivered every six months.

CMS released the 73-page document, "Modernizing CMS Computer and Data Systems to Support Improvements in Care Delivery," in late December. CMS says it needs the technology upgrade to transform itself "from a passive payer of claims to an active purchaser of quality health care," according to the report. The upgrade also will help CMS to facilitate development of a national health IT network, the report said.

By modernizing its IT systems, CMS will be able to improve business operations, better measure and oversee performance, improve accountability and innovate, it says. The two primary goals are to develop systems to analyze results of new health care delivery systems and to reward providers that meet quality-performance metrics.

The overhaul will save money by reducing the risk of system failure, simplifying infrastructure, eliminating costly product licenses and updates, cutting the IT labor force, and negotiating better rates for resources that do not require special domain knowledge, CMS said. The organization predicted that it would see major savings after the core capabilities are established in fiscal 2015.

Major initiatives include:

• A single source of data for Medicaid and the Child Health Insurance Program.
• An encounter data processing system using a service-oriented architecture.

The Health Care Data Improvement Initiative is the major funding source. Other funding comes from the Affordable Care Act, the Health Information Technology for Economic and Clinical Health Act, and the 2010 Small Business Jobs Act.