HHS building virtual bookkeeping system

The Department of Health and Human Services has begun work on a Web-based system to keep track of the 1 billion Medicare claims filed each year and make sure the government can balance its books.

The HCFA Integrated General Ledger and Accounting System (HIGLAS) will serve as a virtual set of books with which the Centers for Medicare and Medicaid Services (formerly the Health Care Financing Administration, or HCFA) will track the 3 million Medicare claims it receives each day.

HIGLAS will act as a central system for insurance companies to file claims. HHS will track the filings via a Web site that integrates information from health care providers and the government, and allows an HHS accounting office to dig out a specific claim and payment at any time. PricewaterhouseCoopers will be the lead integrator for the 10-year, $328 million contract, while Electronic Data Systems Corp., under a $150 million subcontract, will oversee the operation and security of the systems involved. Oracle Corp. will provide the financial software.

"What we want to do is provide a standard framework for the processes as well as the software so the results will be predictable," said Morris Zwick, the PricewaterhouseCoopers partner in charge of the project.

Until now, officials at the Centers for Medicare and Medicaid Services could only provide a summary of their finances on a quarterly basis and could not tell Congress or the General Accounting Office how much money was in their accounts. Part of the problem is that private insurance companies use 53 systems to file the 3 million daily claims. HHS currently uses an aging mainframe system to match the amount of claims paid with the claims received, based on the agency's own records. But the Medicare and Medicaid centers have no easy way to integrate the numbers and generate an accurate account.

John Moeller, HHS' program office director for HIGLAS, called the contract a "tough challenge, but doable."

At the core of the solution is Oracle Financials, which will gather and consolidate information from multiple sources. The data will be transferred to systems hosted and managed by EDS in its Plano, Texas, facilities.

Zwick likens the project to building a suburban development with three house models. Each home is built on the same foundation and the same infrastructure, but details may differ.

"The idea is to standardize business systems," he said. "It's really a business accounting problem. You need to go in and look at how each part of the [HHS] system operates. They are all doing things differently to track accounting."

Long considered one of the biggest headaches in federal government, the Medicare program, the national health plan for the elderly, has come under repeated criticism for failing to pay health care providers on time, creating a bureaucracy to deal with payments and failing to spot fraud and waste in the system. A GAO report issued in January said the agency's financial tracking system was in shambles. It cited one case in Texas where home health agencies that had gone out of business owed millions to Medicare, but federal officials were unable to determine just how much.

"When you can get better data, and it hits the system in real time, you can manage your portfolio better than you can today," Zwick said.

Earlier this month, HHS launched two pilot projects to test HIGLAS — one makes Medicare payments to hospitals through the Palmetto Government Benefits Administrators, and the other pays doctors for office visits and supplier claims through Empire Blue Cross & Blue Shield.

Once the pilot projects are completed, Medicare officials will decide whether to install the accounting system for all of their contractors. Full implementation is projected for the end of 2006.

A healthy improvement

The HCFA Integrated General Ledger and Accounting System (HIGLAS) is expected to be welcomed by both the agency and its contractors. Each health care contractor will have its own virtual set of books, and will be able to look up a specific transaction, according to Morris Zwick, the PricewaterhouseCoopers partner in charge of the project.

For example, say a doctor submits a claim to a Medicare contractor. The data arrives in the Medicare system, and it's processed at Electronic Data Systems Corp. The system tells Medicare to pay the bill, and the payment is made electronically or a paper check is cut. Then a notice is sent back to Medicare, saying that the claim has been paid.

Each part of the transaction is recorded, and a contractor can "drill back to the specific transaction at any time," Zwick said. If there's a question about the claim, a claims representative can pull up the transaction and trace the problem.

"We're implementing the [Oracle Corp.] accounting system that will allow us to control and monitor expenditures and receivables," said John Moeller, the Department of Health and Human Services' program office director for HIGLAS. "Right now, we do not have a full entry accounting system."