<DOC>
[106th Congress House Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:56606.wais]
Y2K AND THE MEDICARE PROVIDERS: INNOCULATING AGAINST THE Y2K BUG
=======================================================================
JOINT HEARING
before the
SUBCOMMITTEE ON HEALTH AND ENVIRONMENT
and the
SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS
of the
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTH CONGRESS
FIRST SESSION
__________
APRIL 27, 1999
__________
Serial No. 106-20
__________
Printed for the use of the Committee on Commerce
<snowflake>
U.S. GOVERNMENT PRINTING OFFICE
56-606CC WASHINGTON : 1999
------------------------------------------------------------------------------
For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402
COMMITTEE ON COMMERCE
TOM BLILEY, Virginia, Chairman
W.J. ``BILLY'' TAUZIN, Louisiana JOHN D. DINGELL, Michigan
MICHAEL G. OXLEY, Ohio HENRY A. WAXMAN, California
MICHAEL BILIRAKIS, Florida EDWARD J. MARKEY, Massachusetts
JOE BARTON, Texas RALPH M. HALL, Texas
FRED UPTON, Michigan RICK BOUCHER, Virginia
CLIFF STEARNS, Florida EDOLPHUS TOWNS, New York
PAUL E. GILLMOR, Ohio FRANK PALLONE, Jr., New Jersey
Vice Chairman SHERROD BROWN, Ohio
JAMES C. GREENWOOD, Pennsylvania BART GORDON, Tennessee
CHRISTOPHER COX, California PETER DEUTSCH, Florida
NATHAN DEAL, Georgia BOBBY L. RUSH, Illinois
STEVE LARGENT, Oklahoma ANNA G. ESHOO, California
RICHARD BURR, North Carolina RON KLINK, Pennsylvania
BRIAN P. BILBRAY, California BART STUPAK, Michigan
ED WHITFIELD, Kentucky ELIOT L. ENGEL, New York
GREG GANSKE, Iowa THOMAS C. SAWYER, Ohio
CHARLIE NORWOOD, Georgia ALBERT R. WYNN, Maryland
TOM A. COBURN, Oklahoma GENE GREEN, Texas
RICK LAZIO, New York KAREN McCARTHY, Missouri
BARBARA CUBIN, Wyoming TED STRICKLAND, Ohio
JAMES E. ROGAN, California DIANA DeGETTE, Colorado
JOHN SHIMKUS, Illinois THOMAS M. BARRETT, Wisconsin
HEATHER WILSON, New Mexico BILL LUTHER, Minnesota
JOHN B. SHADEGG, Arizona LOIS CAPPS, California
CHARLES W. ``CHIP'' PICKERING,
Mississippi
VITO FOSSELLA, New York
ROY BLUNT, Missouri
ED BRYANT, Tennessee
ROBERT L. EHRLICH, Jr., Maryland
James E. Derderian, Chief of Staff
James D. Barnette, General Counsel
Reid P.F. Stuntz, Minority Staff Director and Chief Counsel
______
Subcommittee on Health and Environment
MICHAEL BILIRAKIS, Florida, Chairman
FRED UPTON, Michigan SHERROD BROWN, Ohio
CLIFF STEARNS, Florida HENRY A. WAXMAN, California
JAMES C. GREENWOOD, Pennsylvania FRANK PALLONE, Jr., New Jersey
NATHAN DEAL, Georgia PETER DEUTSCH, Florida
RICHARD BURR, North Carolina BART STUPAK, Michigan
BRIAN P. BILBRAY, California GENE GREEN, Texas
ED WHITFIELD, Kentucky TED STRICKLAND, Ohio
GREG GANSKE, Iowa DIANA DeGETTE, Colorado
CHARLIE NORWOOD, Georgia THOMAS M. BARRETT, Wisconsin
TOM A. COBURN, Oklahoma LOIS CAPPS, California
Vice Chairman RALPH M. HALL, Texas
RICK LAZIO, New York EDOLPHUS TOWNS, New York
BARBARA CUBIN, Wyoming ANNA G. ESHOO, California
JOHN B. SHADEGG, Arizona JOHN D. DINGELL, Michigan,
CHARLES W. ``CHIP'' PICKERING, (Ex Officio)
Mississippi
ED BRYANT, Tennessee
TOM BLILEY, Virginia,
(Ex Officio)
(ii)
Subcommittee on Oversight and Investigations
FRED UPTON, Michigan, Chairman
JOE BARTON, Texas RON KLINK, Pennsylvania
CHRISTOPHER COX, California HENRY A. WAXMAN, California
RICHARD BURR, North Carolina BART STUPAK, Michigan
Vice Chairman GENE GREEN, Texas
BRIAN P. BILBRAY, California KAREN McCARTHY, Missouri
ED WHITFIELD, Kentucky TED STRICKLAND, Ohio
GREG GANSKE, Iowa DIANA DeGETTE, Colorado
ROY BLUNT, Missouri JOHN D. DINGELL, Michigan,
ED BRYANT, Tennessee (Ex Officio)
TOM BLILEY, Virginia,
(Ex Officio)
(iii)
C O N T E N T S
__________
Page
Testimony of:
Corlin, Richard F., Speaker of the House of Delegates,
American Medical Association............................... 65
DeParle, Hon. Nancy-Ann Min, Administrator, Health Care
Financing Administration, Department of Health and Human
Services................................................... 11
Grob, George, Deputy Inspector General, Department of Health
and Human Services......................................... 31
Mackin, Annette L., Chief Financial Officer, VNS of Rochester
and Monroe Counties, Inc., National Association for Home
Care....................................................... 61
Margolis, Ronald, Chief Information Officer, University of
New Mexico Hospital, American Hospital Association......... 54
Willemssen, Joel C., Director, Civil Agencies Information
Systems, Accounting and Information Management Division,
General Accounting Office.................................. 17
Material submitted for the record by:
DeParle, Hon. Nancy-Ann Min, Administrator, Health Care
Financing Administration, Department of Health and Human
Services, letter dated June 28, 1999 to Hon. Michael
Bilirakis, enclosing material for the record............... 85
(v)
Y2K AND MEDICARE PROVIDERS: INOCULATING AGAINST THE Y2K BUG
----------
TUESDAY, April 27, 1999
House of Representatives,
Committee on Commerce,
Subcommittees on Health and Environment
and Oversight and Investigations,
Washington, DC.
The subcommittees met, pursuant to notice, at 1 p.m., in
room 2123, Rayburn House Office Building, Hon. Michael
Bilirakis (chairman) presiding.
Members present Subcommittee on Health and Environment:
Representatives Bilirakis, Upton, Burr, Whitfield, Norwood,
Coburn, Bryant, Brown, DeGette, Barrett, Capps and Eshoo.
Members present Subcommittee on Oversight and
Investigations: Representatives Upton, Burr, Whitfield, Bryant,
Klink, Green, and DeGette.
Staff present: Lori Wall, majority counsel; John Manthei,
majority counsel; Pat Morrisey, majority counsel; Mike Flood,
legislative clerk; and Chris Knauer, minority professional
staff member.
Mr. Upton. It's 1 o'clock. Thank you all for coming. Today,
the Subcommittee on Oversight Investigations and the
Subcommittee on Health and the Environment--and I must
apologize for the lateness of the Chairman of the Subcommittee
of Health, Mr. Bilirakis. His plane is a little delayed. It
should be landing right about now, in fact.
We are holding a joint hearing on the issue of Medicare
provider readiness in becoming Year 2000 ready or, as we all
know, Y2K compliant. Over the past several months, the
Committee on Commerce has undertaken an extensive review of the
progress that the Health Care Financing Administration, its
Medicare contractors and its hospitals, nursing homes, doctors
and other providers have made in becoming Y2K complaint.
The chairman of this committee as well as the ranking
member sent letters to the Health Care Financing Administration
on the issue of Year 2000 readiness. In addition, letters were
sent by the chairman of this committee to several health care
associations that represent Medicare contractors and providers
inquiring about their outreach efforts in helping their members
become Y2K compliant.
Today our hearing will focus on the status of our Medicare
providers. We will examine what we know, but more importantly,
what we still do not know about how ready our Medicare
providers are for Y2K. Specifically, this hearing will address
the readiness of their billing and financial systems. This
issue is critical. If provid-
ers are not able to send bills in a Year 2000 format, they will
not be able to get reimbursed from Medicare.
Without reimbursement for a period of time, there is a
possibility that a provider would have to close its doors. This
could cause a great deal of anguish for providers as well as
many beneficiaries who rely on that care.
For some time now, the GAO has been monitoring the progress
of HCFA and its Medicare contractors in becoming Y2K compliant.
This issue has been followed extremely closely by the Oversight
Subcommittee and others.
Today, I would like to look at the other side of the
equation and find out where our Medicare providers are in terms
of preparedness for Y2K. Today, there are some 1 million
Medicare providers who treat patients day in and day out. Each
one of those providers has a responsibility to its patients to
make sure that its system is ready when we ring in the new
century.
The responsibility is a very important one, because it
affects 38 million Medicare beneficiaries. I appreciate the
willingness of several health care associations who represent
the vast majority of Medicare providers to testify here today.
Your insight into where members of your associations are with
respect to Y2K is very valuable. However, I want to caution
everyone. I'm afraid that what we do know about the readiness
of our Medicare providers is less than what we think.
I've studied the various surveys that have been conducted
on Medicare providers readiness. I'm concerned that these
surveys may not present an accurate picture of where our
Medicare providers are in terms of Y2K compliance. Therefore,
today along with Chairman Bilirakis and Chairman Bliley and
ranking members Dingell, Klink, and Brown will ask the GAO to
examine the issue. The purpose of this is request is to gain a
better understanding of where Medicare providers are in terms
of Y2K.
With respect to the progress of HCFA, I commend the
progress that they have made to date in addressing the Year
2000 issue. However, there is still a long road ahead. The
critical test that still awaits HCFA and its Medicare
contractors will begin in summer when they will start to retest
their systems. This retesting process will need to be rigorous
and thorough to ensure against mission critical failures in the
Medicare claims processing systems in the Year 2000.
With that in mind, HCFA will need to make sure that
contingency plans are comprehensive enough to manage any
critical failures that may, in fact, occur. We all need to
remain committed to make sure that as we begin the new
millennium, our Medicare beneficiaries will get the medical
care and treatment they need.
I welcome all of our panels here to testify. And with that,
I recognize the ranking member of the Subcommittee on Oversight
and Investigations, Mr. Klink.
[The prepared statement of Hon. Fred Upton follows:]
Prepared Statement of Hon. Fred Upton, Chairman, Subcommittee on
Oversight and Investigations
Today, the Subcommittee on Oversight and Investigations and the
Subcommittee on Health and the Environment are holding a joint hearing
on the issue of Medicare provider readiness in becoming Year 2000
ready, or Y2K compliant. Over the past several months, the Committee on
Commerce has undertaken an extensive review of the progress the Health
Care Financing Administration, or HCFA, its Medicare contractors and
its hospitals, nursing, doctors and other providers have made in
becoming Y2K compliant. The Chairman of this Committee as well as the
Ranking Member sent letters to the Health Care Financing Administration
on the issue of Year 2000 readiness. In addition, letters were sent by
the Chairman of this Committee to several health care associations that
represent Medicare contractors and providers inquiring about their
outreach efforts in helping their members become Y2K compliant.
Today, our hearing will focus on the status of our Medicare
providers. We will examine what we know, but more importantly, what we
still do not know about how prepared our Medicare providers are for
Y2K. Specifically, this hearing will address the readiness of their
billing and financial systems. This issue is critical--if providers are
not able to send bills in a Year 2000 format, they will not be able to
get reimbursed from Medicare. Without reimbursement for a period of
time, there is the possibility that a provider would have to close its
doors. This could cause a great deal of anguish for providers as well
as many beneficiaries who rely on their care.
For some time now, the General Accounting Office, or GA0, has been
monitoring the progress of HCFA and its Medicare contractors in
becoming Y2K compliant. This issue has been followed extremely closely
by the Oversight Subcommittee and others. Today, I would like to look
at the other side of the equation and find out where our Medicare
providers are in terms of preparedness for Y2K.
Today, there are over one million Medicare providers who treat
patients day in and day out. Each one of those providers has a
responsibility to its patients to make sure its system is ready when we
ring in the new century. This responsibility is an important one
because it affects thirty-eight (38) million Medicare beneficiaries.
I appreciate the willingness of several health care associations
who represent the vast majority of Medicare providers to testify here
today. Your insight into where members of your associations are with
respect to Y2K compliance is very valuable. However, I want to caution
everyone here. I am afraid that what we do know about the readiness of
our Medicare providers is less than we think.
I have studied the various surveys that have been conducted on
Medicare provider readiness. I am concerned that these surveys may not
present an accurate picture of where our Medicare providers are in
terms of Y2K compliance.
Therefore, today I, along with Chairman Bilirakis, Chairman Bliley
and Ranking Members Dingell, Klink and Brown, will ask GA0 to do some
additional work on the issue of Medicare Y2K provider readiness. The
purpose of this request is to gain a better understanding of where
Medicare providers are in terms of Y2K compliance efforts.
With respect to the progress of the Health Care Financing
Administration or HCFA, I commend the progress they have made to date
in addressing Year 2000 issues. However, there is still a long road
ahead. The critical test that still awaits HCFA and its Medicare
contractors will begin this summer when they will start to re-test
their systems. This re-testing process will need to be rigorous and
thorough to ensure against mission critical failures in the Medicare
claims processing systems in the year 2000. With that in mind, HCFA
will need to make sure that contingency plans are comprehensive enough
to manage any mission critical failures that may occur. We all need to
remain committed to making sure that as we begin the new millennium,
our Medicare beneficiaries will get the medical care and treatment they
need.
I would like to welcome all of our panels here today to testify.
Thank you all for coming and appearing before us today.
Mr. Klink. Thank you, Mr. Chairman. And I really want to
thank you for having this, what I consider a very important
hearing. The Y2K issue has been of concern to Congress and this
committee for some time now. Mostly, however, this effort has
been focused on the government side of the problem. But if
we're to get serious about focusing our health care and
Medicare billing, light must also be shed on areas beyond just
the government and must include the private providers.
And I thank the chairman for having the insight to
recognize this fact and for using this hearing to focus on both
sides of the problem. I will remind the committee that to
execute a single Medi-
care reimbursement requires many steps, and it relies on many
computer systems that are susceptible to the Y2K bug.
To begin with, a provider must be able to reconcile what it
is owed by the Federal Government. If the provider's internal
computer billing system isn't Y2K compatible, it may not be
able to accurately determine what it is owed. Assuming that a
provider's internal billing system is able to function, its
bill may be sent through a third-party billing agency who must
also have a Y2K compatible system.
Next, the billing agent will directly send the billing
information to one of its many fiscal intermediaries that the
government has used to process those claims. Those FIs have a
wide range of internal computer operations, and they also must
be Y2K compatible. Finally, once the bill is reconciled and
paid, information is ultimately sent to HCFA, which has its own
internal computer system that must also be Y2K compatible.
Nonetheless, our present position regarding Y2K readiness
in this chain of Medicare providers, processors, and payers is
at best shaky. The positive news, thanks to the effort of HHS,
the OIG, the GAO, and HCFA itself, is that we now have
significant information about the government side of the Y2K
problem, including what needs to be tested and fixed. In fact,
it appears that HCFA has dedicated serious resources to the Y2K
problem and has made significant progress.
Nonetheless, there may be bad news, because information on
the provider side of the problem is seriously lacking. In fact,
while we've received mountains of data from HCFA on its Y2K
efforts, we have only the faintest information about the
efforts of hospitals, nursing homes, individual doctors,
equipment suppliers, home health agencies, and other providers.
Most of the information that we do have on the provider
community is based only on a few surveys which at best provide
limited information. That we are using only the most
rudimentary of instruments to collect the data about provider
Y2K readiness troubles me on its face. But even more disturbing
is that for the little information we have obtained, it is not
clear if such information is positive or even reliable.
The American Hospital Association, for example, did a
simple 2-page survey. It found that, while most of its
hospitals report that they will be Y2K ready by the end of the
year, less than 13 percent say they are presently compliant.
But what does that really mean, and how do we ultimately make
use of that information? If only 12 to 13 percent of the
hospitals are now Y2K compliant, can we really expect them to
get their act together in the 8 short months that are
remaining?
Further, what are the real details about what is wrong with
the hospitals that are not reporting they are presently Y2K
compliant? If only 13 percent now are reporting they are Y2K
compliant, what specifically is wrong with the other 87
percent? What progress is or is not being made? For example, do
those not reporting current Y2K readiness have a clear
technical understanding of what needs to be done, and, if so,
do they have the resources to do it?
The information on doctors is also very troubling. My good
friends from the American Medical Association, an association
of more than 300,000 members, also tried to learn the state of
readiness about their members. They sent surveys to nearly
7,000 of their 300,000 members. Alarmingly, the AMA had a
response rate of only about 6 percent. That means they never
heard from 94 percent of the 7,000 of the 300,000 that are
members.
What does that mean? Why didn't they respond? Does this
mean that the doctors are fully prepared for the Year 2000, or
does it mean exactly the opposite? I don't know. But I do know
that I'm more than a bit uncomfortable making assumptions about
the 94 percent who didn't respond. So I don't want to single
out our friends at AMA or AHA for the rather disconcerting
results they received in their surveys. At least they were
willing to come to this hearing, and at least they have been
willing to talk to us about the challenges they are facing.
I realize in the grand scheme of many of the problems
facing many providers, the Y2K problem may not seem terribly
important. Nevertheless, without correcting the problem at the
provider level, we may be running a significant risk that the
government won't be able to make the necessary Medicare
reimbursements. If this occurs, this can and will put providers
at significant class-flow risks which could put the
beneficiaries at risk. This is unacceptable.
We must do more now to correct not only what the government
and its own state of Y2K readiness is but also the readiness of
the provider community. This requires that for each provider
group we must learn what the Y2K issues that are presently
affecting their operations. Two, what is required to fix those
problems, and what will happen to the reimbursement stream if
those problems are not addressed?
Mr. Chairman, while there are many other health-related Y2K
questions, I want to thank you personally for having this
hearing today as a first step in your willingness to focus, not
on just the government side of the problem, but, as
importantly, on the provider, the private provider side.
And finally, I want to thank both you and your personal
staff and the committee staff for how you've worked with our
side on this issue. We've had some differencess in the past,
and we've talked about those publicly. I would like to thank
you just as publicly for being professional and thorough and
thank you and your staff for doing that.
And with that I yield back.
[The prepared statement of Hon. Ron Klink follows:]
Prepared Statement of Hon. Ron Klink, a Representative in Congress from
the State of Pennsylvania
Thank you Mr. Chairman, and thank you for having this important
hearing.
Mr. Chairman, the Y2K issue has been a concern for Congress and
this Committee for some time now. Mostly, however, this effort has
focused on the government side of the problem.
But if one is serious about focusing on healthcare, and Medicare
billing, light must also be shined on areas beyond just government and
include private providers. I thank the chairman for having the insight
to recognize this fact, and for using this hearing to focus on both
sides.
I will remind the Committee that to execute a single Medicare
reimbursement requires many steps and relies on many computer systems
susceptible to the Y2K bug. To begin with, a provider must be able to
reconcile what it's owed by the federal government. If the provider's
internal computer billing system isn't Y2K compatible, it may not be
able to accurately determine what it's owed. Assuming a provider's
internal billing system is able to function, it's bill may be sent
through a third-party billing agent who must also have a Y2K-compatible
system. Next, the billing agent (provider directly) will send the
billing information to one of the many fiscal intermediaries (FIs) that
the government uses to process claims. These FI's have a range of
internal computer operations that must be Y2K compatible. Finally, once
the bill is reconciled and paid, information is ultimately sent to
HCFA, which has its own internal computer systems that must by Y2K
compatible.
Nonetheless, our present position regarding Y2K readiness in this
chain of Medicare providers, processors, and payers is shaky. The
positive news--thanks to the efforts of the HHS' OIG, the GAO, and HCFA
itself--is that we now have significant information about the
government side of the Y2K problem including what needs to be tested
and fixed. In fact, it appears that HCFA has dedicated serious
resources to the Y2K problem and has made significant progress.
Nevertheless, there may be bad news because information on the
provider-side of the problem is seriously lacking. In fact, while we've
received mountains of data from HCFA on its Y2K effort, we have only
the vaguest of information about the efforts of hospitals, nursing
homes, individual doctors, equipment suppliers, home health agencies
and other providers. Most of the information we do have on the provider
community is based on a few surveys which at best provide limited
information. That we are using only the most rudimentary of instruments
to collect data about provider Y2K readiness troubles me on its face.
But even more disturbing is that for the little information we have
obtained, it is not clear if such information is positive or even
reliable.
The American Hospital Association (AHA), for example, did a simple
two-page survey. It found that while most of its hospitals report they
will be Y2K ready by the end of the year, less than 13 percent say they
are presently compliant. But what does that really mean, and how do we
ultimately make use of that information? If only 12 to 13 percent of
the hospitals are now Y2K compliant, can we really expect them to get
their act together in the short eight months remaining? Further, what
are the real details about what is wrong with the hospitals that are
not reporting they are presently Y2K compliant? If only 13 percent now
report they are Y2K compliant, what specifically is wrong with the
other 87 percent? What progress is or is not being made? For example,
do those not reporting current Y2K readiness have a clear technical
understanding of what needs to be done, and if so, do they have the
resources to do it?
The information on doctors is also troubling. My good friends from
the American Medical Association (AMA)--an association with more than
300,000 members--also tried to learn the state of readiness about their
own members. They sent surveys to nearly 7,000 of their 300,000
members. Alarmingly, the AMA had a response rate of only about 6
percent. That means they never heard from about 94 percent of the
intended sample. What does that mean? Why didn't they respond? Does
this mean that the doctors are fully prepared for the Year 2000, or
does it mean the opposite. I don't know, but I do know that I am more
than a bit uncomfortable making assumptions about the 94% percent that
did not respond.
Mr. Chairman, I don't want to single out our friends from either
the AMA or the AHA for the rather disconcerting results they received
in their surveys. At least they were willing to come to this hearing
and talk about what challenges they are facing.
I realize that in the grand scheme of the many problems facing many
providers, the Y2K problem may not seem terribly important.
Nevertheless, without correcting the problems at the provider level, we
may be running a significant risk that the government won't be able to
make the necessary Medicare reimbursements. If this occurs, this can
and will put providers at significant cash-flow risk, which could
ultimately put beneficiaries at risk. This is unacceptable. We must do
more now to correct not only what the government and its own state of
Y2K readiness is, but also the readiness of the provider community.
This requires that for each provider group, we must learn (1) what Y2K
issues are presently affecting their operations; (2) what is required
to fix those problem (and whether resources exist to do so), and (3)
what will happen to the reimbursement stream if those problems are not
addressed.
Mr. Chairman, while there are many other health related Y2K
questions--I want to thank you for having this hearing today as a first
step and for your willingness to focus on not just the government side
of this problem, but as importantly, on the private provider side.
Finally, I would like to thank both your personal staff and your
Committee staff for how they have worked with our side on this issue.
They have been both professional and thorough, and I thank them for
that.
With that, I yield back.
Mr. Upton. Thank you, Mr. Klink.
Mr. Burr.
Mr. Burr. I also want to thank the chairman for his
willingness to hold these hearings and to take this opportunity
to welcome both panels, especially Nancy-Ann DeParle. It's good
to have you back and also apologize to the committee and the
panels. Because of a prior conflict, I have to go over on the
other side of the Capitol, not looking too forward to it, but I
do have to do it.
And, Mr. Chairman, at this time, I would ask unanimous
consent that the record remain open so that members would have
an opportunity in writing to send questions to these panels and
to receive those answers for the record.
Mr. Upton. Without objection, all members will have the
chance to put in an opening statement. And we will, in fact,
leave the record open so that members will be able to ask
questions in writing for those that are not able to appear or
as a follow-up.
Mr. Burr. I thank the Chair. I also again thank the panel.
And I yield back.
Mr. Upton. Thank you, Mr. Burr.
Mr. Brown.
Mr. Brown. Thank you, Mr. Chairman. Thank you for holding
this hearing today. I would like to especially thank
Administrator Nancy-Ann DeParle and others on the two panels
for joining us today. In the health care arena, Y2K
compatibility resonates not only as a economic issue but as a
health care quality and consumer safety issue. Accommodating
the transition is an imperative for both the public and private
sectors, since each plays a major role in the financing and
delivery of health care.
And the Medicare program is an important focal point for
Y2K preparations. Successful transition depends on the
individual and collective efforts of HCFA, its 70 fiscal
intermediaries and Part B carriers, and, as Mr. Klink and
others has said, some 1 million health care providers. The
benefits of the successful transition spread further to the
program's 36 million beneficiaries and the Nation's 125 million
taxpayers.
Readiness in regard to the Y2K transition is a somewhat
nebulous target. One of the tricks to gaining a better
understanding of how we will fair come January 1, 2000, is
making sure that the questions and the answers raised here
refer to the same systems, the same stakeholders, and the same
set of potential outcomes. Perhaps the most difficult question
we can begin to tackle today is what are we missing? Is the
private sector data sufficient to paint a realistic picture of
their Y2K readiness? Are there areas of health care we are
overlooking, facets, perhaps, of HCFA's role that may still be
compromised by systems' problems.
I hope we can come away today, Mr. Chairman, from today's
hearing with a better understanding of where we are and where
we need to go to prevent needless problems from cropping up
next year. Thank you, Mr. Chairman.
Mr. Upton. Dr. Coburn.
Mr. Coburn. I have no opening statement.
Mr. Upton. Mr. Whitfield.
Mr. Whitfield. Mr. Chairman, I filed my opening statement
with the record.
Mr. Upton. Ms. DeGette.
Ms. DeGette. Thank you, Mr. Chairman. I'm very glad that
we're having this hearing today to talk about Y2K readiness of
medical providers. I understand that the primary direction of
the hearing today is on billing issues. But I think that we
need to look beyond that. I want to congratulate Administrator
DeParle on the efforts that she's made within HCFA for Y2K
readiness overall. I think that the agency has made great
strides.
And also I want to congratulate you on the elimination of
waste and abuse or at least working toward that end, from the
Medicare payment process. I'm concerned, as I say, about the
implications of the Y2K problem on the billing process. But I'm
also concerned, for example, that the machinery in the
intensive care unit at Denver General Hospital will fail on
January 1 or that the ambulance communication dispatch units
will crash, because of the lack of Y2K readiness.
If those mechanisms fail within our hospital system,
medical providers are going to have a much larger problem than
worrying if their computers work for billing systems.
Yesterday, for example, the House Diabetes Caucus, of which I'm
the cochair with Congressman Nethercutt, hosted an
informational briefing to correct the misinformation
surrounding the pharmaceutical industry's preparations for Y2K.
It's essential for the pharmaceutical industry to inform
the public that they've addressed Y2K concerns to avoid the
hoarding of medicines. But I know that's a very real concern
within the industry as well. How can they manufacture enough
medicine, insulin, for example, if people don't believe them,
and think that there is not going to be enough of a supply of
insulin or any other kind of pharmaceutical.
I hope both committees today will come away from today's
hearing with more information about Medicare providers' Y2K
compliance in as many areas as possible, not just billing. And
if we can't get to those other areas, I would hope, Mr.
Chairman, we would be able to hold further hearings, because I
think that the soundness of our medical delivery system is
going to be one of the most key components with Y2K compliance.
And with that, Mr. Chairman, I think I've made my point,
and I would yield back.
[The prepared statement of Hon. Diana DeGette follows:]
Prepared Statement of Hon. Diana DeGette, a Representative in Congress
from the State of Colorado
Thank you Mr. Chairman. I am pleased that we are holding this joint
hearing today to discuss and investigate the Y2K readiness of medical
providers. Certainly the preparedness of hospitals and other health
care providers is one of, if not the most important concerns as we face
the Y2K bug.
Both the Subcommittee on Health and Environment and the
Subcommittee on Oversight and Investigations have been diligent in our
efforts to eliminate fraud, waste and abuse from the Medicare system.
The Y2K bug could eliminate years of efforts to combat efforts to
eradicate waste in Medicare and could wreak havoc on the Medicare Trust
Fund. The billing concerns alone merit our meticulous examination of
providers' preparedness. This is one case where the Federal Government
is leading the way--HCFA is well on its way to Y2K compliance--and we
must prod the private sector to catch up.
The elimination of waste and abuse from the Medicare payment
process is an area of concern. I urge both Committees to carefully
examine Medicare providers Y2K readiness in terms of patient care. I am
also concerned that the machinery in the Intensive Care ward will fail
on January 1st or that communications in ambulance dispatch units will
crash. Should these mechanisms fail, medical providers will have a
crisis on their hands that is far more grave than faulty billing
records.
Yesterday, the House Diabetes Caucus, of which I am Co-Chair,
hosted an informational hearing to correct the misinformation
surrounding the pharmaceutical industry's preparations for Y2K. It is
essential for the pharmaceutical industry to inform the public that
they have addressed Y2K concerns to avoid hoarding of medicines.
Because information is a critical component of successfully addressing
Y2K, I am concerned that the information we do have on Medicare
providers' Y2K compliance varies and is often contradictory. I hope
both Committees will come away from today's hearing with more
information about Medicare providers' Y2K compliance. Once the
information is there, we will have a clear concept of where the holes
exist and what problems need to be addressed by the 70 Medicare
contractors and over one million physicians, hospitals, medical
suppliers and home health agencies that serve Medicare beneficiaries.
I look forward to today's testimony and hope this is the first in a
series of hearings on the effects of Y2K on the health care industry
and patient care.
Mr. Upton. Thank you. I would just like to tell the
gentlelady that we do intend to have a number of hearings, not
only in the health care field, but others as well, on Y2K
compliance. We look forward to your participation.
Mr. Upton. Mr. Green.
Mr. Green. Thank you. Like my colleague, I would like to
congratulate HCFA for what they've done so far, and just a
little parochial interest, I notice 2000 Action Week
conferences in 12 cities in the plan and your testimony. I
would encourage you to look at Houston, for one, just because
of the medical center and the need there. And so if you could
just have the staff look at that so--because we don't always go
to Dallas from Houston. Thank you.
Ms. DeParle. Yes, sir.
Mr. Upton. Ms. Capps.
Mrs. Capps. I will submit my statement for the record. But
I also want to thank the Chair for holding this hearing. And I
want to thank you for being here to address such an important
topic. Seniors are waiting to make sure their issues are going
to be addressed by the readiness of a number of agencies coming
together. And I'm appreciative of the efforts that you're
taking on a massive task ahead.
I'm shocked to see the results of HHS, AMA, and hospitals'
associations surveys and--rather the lack of results. And we've
been hearing a little bit of this in our districts too, how
well prepared are some of our facilities for meeting the needs
on January 1. And I'm looking forward to hearing how you would
be addressing this. Thank you.
Mr. Upton. Ms. Eshoo.
Ms. Eshoo. Thank you, Mr. Chairman, for having this joint
hearing. I think it's a very important one. The word readiness
is almost always been applied to our armed forces in the
military. But readiness has taken on a new connotation as we
try to prepare ourselves for the new century and what that
means with all of our competing systems. So I'm looking forward
to hearing the testimony today and how ready we indeed are. And
I will also have some questions. But I thank those that are
here to answer our questions to testify and also to the
leadership of our committee for putting this together. It's a
timely hearing to have.
I yield back.
[Additional statement submitted for the record follows:]
Prepared Statement of Hon. Tom Bliley, Chairman, Committee on Commerce
Several months ago, this Committee began an in-depth look at the
health care industry and its efforts to become ready for the Year 2000.
Letters were sent to the Health Care Financing Administration and
health care associations representing Medicare contractors and Medicare
providers asking them about their progress in becoming Year 2000 ready,
or Y2K compliant.
Over the past year, this Committee has received regular updates on
the progress the Department of Health and Human Services, specifically
the Health Care Financing Administration, has made in addressing their
Y2K problems. Today, we will hear how Medicare providers are coping
with Y2K.
The Medicare program has over one million Medicare providers who
serve thirty-eight million Medicare beneficiaries. Each and every day,
our nation's seniors rely on the Medicare system for their health care
needs. These Medicare providers consist of doctors, hospitals, nursing
homes, home health agencies and others who are responsible for treating
our seniors.
What we know about their readiness to prepare for the Year 2000 is
less than what we don't know. I am concerned for the health and well
being of America's seniors and disabled persons who rely on HCFA, its
contractors and providers for medical care. Any disruption in benefits
can be an issue of life or death for many seniors and disabled
individuals. If claims are unable to be processed due to lack of Y2K
compliance, our nation's health care system will be put at risk.
Second, I am concerned that if either HCFA, its contractors, or its
providers are not Y2K compliant, the opportunities for waste, fraud and
abuse will increase significantly, thus putting the fiscal solvency of
Medicare at great risk.
Medical care to our nation's seniors must not go uninterrupted as
we enter the new millennium. Our Medicare providers have a duty to make
sure their information systems, medical equipment and clinical records
are able to function as we enter the year 2000. This hearing should be
a wake-up call to our health care providers to make sure they are ready
for the new millennium. We need to know more and that is why I applaud
the chairmen of these two subcommittees for holding this hearing today.
I would like to welcome all of our panels here today. Thank you all
for coming and testifying before us today.
Mr. Upton. Well, thank you. We're delighted to have the
three witnesses that we have--and Nancy-Ann DeParle,
administrator of HCFA, Joel Willemssen from the General
Accounting Office, as well as George Grob from the Department
of Health and Human Services. This has been a long-standing
tradition and practice in this subcommittee, as you know, to
testify under oath.
And my first question is do you have any reason to need
counsel this afternoon? Figuring not, would you stand and raise
your right hand.
[Witnesses sworn.]
Thank you. You're now under oath. And we will start with
the very Honorable Nancy-Ann DeParle.
Ms. DeParle. Thank you, Mr. Chairman.
Mr. Upton. Let me just note for all the witnesses, if you
will try to limit your remarks to 5 minutes. Your whole
statement will be made a part of the record, but if you could
try to limit to 5 minutes, that would be terrific. And thank
you very much for submitting your testimony in advance.
TESTIMONY OF HON. NANCY-ANN MIN DEPARLE, ADMINISTRATOR, HEALTH
CARE FINANCING ADMINISTRATION, DEPARTMENT OF HEALTH AND HUMAN
SERVICES; JOEL C. WILLEMSSEN, DIRECTOR, CIVIL AGENCIES
INFORMATION SYSTEMS, ACCOUNTING AND INFORMATION MANAGEMENT
DIVISION, GENERAL ACCOUNTING OFFICE; AND GEORGE GROB, DEPUTY
INSPECTOR GENERAL, DEPARTMENT OF HEALTH AND HUMAN SERVICES
Ms. DeParle. Thank you, Mr. Chairman, and Representative
Klink and distinguished members of the subcommittee, both
subcommittees. Thank you for inviting me here to discuss my
number one priority, which is the Year 2000 computer challenge.
The Health Care Financing Administration continues to make
solid progress in meeting our responsibility to make our
internal and external systems compliant and to develop
contingency plans to ensure payments in the event of unforeseen
problems.
As of today, all 75 of our external claims processing
contractors in the Medicare program have certified that they
have renovated and future-date tested their systems as we
instructed them to. Seventy-three of the 75 met this deadline
by March 31, and all of our mission and non-mission critical
internal systems, including the systems that process managed
care payments and do enrollment, are now compliant and have
been tested.
Providers also have Y2K challenges and responsibilities.
And I know that's one of the focuses that this committee has
today. And as you know, Mr. Chairman, as we discussed, HCFA
doesn't have the authority or the resources to step in and
personally fix all the provider computer systems. Providers
themselves have to make sure that their systems are Y2K
compliant, not just so they can get paid, but to ensure
continued high quality care for their patients.
One of the problems that we've had in the health care
industry is that it is so diverse and so diffuse. So we, at the
Health Care Financing Administration, have gone directly to the
providers. We have undertaken unprecedented outreach efforts to
help providers know what they must do to meet their
responsibilities. In fact, we sent a letter in January to 1.3
million health care providers outlining the Year 2000 challenge
and including a checklist for what they need to do to get their
systems ready.
We also have a Website, a 1-800 number, a speakers bureau,
and experts prepared to share the insights we have gained in
our own Y2K efforts. And, Representative Green, you invited us
to come to Houston. I want you to know that we have people
ready to go with you, if you want, to your hospitals and other
providers. And to all the members, we've offered to send people
out to your districts, if that would help, to meet directly
with providers. We're looking for opportunities to do that.
We're sponsoring conferences and learning sessions
throughout the country. Colleagues at the Small Business
Administration and FDA, and other agencies, have been
participating with us in those--and we're meeting regularly
with the provider trade groups. We are also targeting groups
for special attention based on the results of some of the
surveys that we've received, including the most recent survey
that the Inspector General has done.
The good news is that I think provider organizations are
increasing their efforts to measure and promote Y2K compliance
among their members. But as you said, Mr. Chairman, there are a
lot of unknowns here based on the surveys. And I'm going on
what I do know.
So based on information about the percentage of Medicare
fee-for-service providers that met our April 5 deadline for
submitting Y2K compliant claims, I feel relatively optimistic
about providers' ability to be ready on the billing or
financial side. Just based on the fact that upwards of 99.98
percent, I think, of the Part B providers or submitters are
submitting appropriate claims. And it's upwards of 93 percent
on the Part A side.
But I do have more questions. I think there is a question
mark about provider's readiness in terms of equipment and
patient care. And as you know, under John Koskinen's
leadership, the Department of Health and Human Services, along
with the Veterans Administration and Department of Defense, are
aggressively working with providers on those issues.
We at HCFA still have a great deal of testing and retesting
to do over the next 8 months. We've come a long way. But as you
said, Mr. Chairman, we still have a long way to go. We're in
the process also of validating our contingency plans based on
making sure that we can continue all of our business processes.
I want to acknowledge that we've had a lot of help with our
Y2K effort. We have benefited greatly from the advice of our
independent validation and verification contractor, AverStar,
as well as advice from the HHS Inspector General and the
General Accounting Office. And I want to thank personally June
Gibbs Brown from the IG's office and Joel Willemssen from the
General Accounting Office, because they have played a role, not
just as critics, but as people who are trying to help us get to
a solution; and that is something that I have benefited greatly
from. I thank them.
And, Mr. Chairman, I also want to thank the members of the
committee. We would not have made the progress that we've made
this year without the support and the funding that you and
others in Congress have provided to us. And I want to thank you
for that.
The GAO recently advised us that our testing regimen for
the remainder of the year should be more rigorous, that we need
to be more precise with the contractors about what we expect
and more exacting about the documentation we get from them on
testing.
That is a difficult challenge because we are modifying
systems and have been throughout the year in order to comply
with changes in the Balanced Budget Act and other changes in
the law at the same time that we're preparing for Y2K. But I
want to be clear, I will do whatever it takes to make sure that
our systems are able to process and pay accurate and timely
claims.
Medicare beneficiaries should not worry about a disruption
in service. There is no higher priority at HCFA than Y2K. We
will meet our responsibilities, and we will also continue to do
what we can to help providers meet their responsibilities.
Thank you.
[The prepared statement of Hon. Nancy-Ann Min DeParle
follows:]
Prepared Statement of Hon. Nancy-Ann Min DeParle, Administrator, Health
Care Financing Administration
Chairman Upton, Chairman Bilirakis, Congressman Klink, Congressman
Brown, distinguished committee members, thank you for inviting me here
today to discuss my number one priority--the Year 2000 computer
challenge. It is a challenge that we at the Health Care Financing
Administration (HCFA) and the health care providers who serve our
programs' beneficiaries must meet. I am happy to report today that we
continue to make remarkable progress. All of HCFA's Year 2000 systems
issues will be resolved and thoroughly tested and retested before
January 1, 2000.
It is equally essential that providers ready their systems for the
new millennium. Our systems will be able to accurately and timely
process and pay claims, but providers must be able to generate and
submit legitimate claims to our contractors. We are, therefore, engaged
in an unprecedented outreach effort to raise awareness of the need to
be Year 2000-ready and provide information to health care providers and
other parts of the health care system where we have little authority
and control. As a part of our broad provider outreach effort, we have:
<bullet> mailed a letter on the importance of the Year 2000 and how to
achieve compliance to each of our 1.3 million providers;
<bullet> established a website (www.hcfa.gov/y2k) with information and
checklists on what providers must do to meet their Year 2000
responsibility;
<bullet> held Year 2000 Action Week conferences in 12 cities across the
nation to raise provider awareness of Year 2000 issues;
<bullet> created a speakers bureau with agency staff around the country
who are speaking to provider groups about Year 2000 readiness;
and
<bullet> initiated other efforts to work with provider groups and
institutions to help them meet their Year 2000
responsibilities.
Background
Our foremost concern has been, and continues to be, ensuring that
our more than 70 million Medicare, Medicaid, and Children's Health
Insurance Program beneficiaries continue to receive the health care
services they need in the new millennium. We are aggressively
addressing Year 2000 issues in the systems over which we have
responsibility. We continue to test and retest our renovated systems. I
am pleased to announce that we have made extraordinary progress on our
renovation, testing, and implementation of Year 2000-ready systems.
<bullet> All of our internal systems were renovated, tested, certified,
and implemented by the government-wide Year 2000 deadline of
March 31, 1999. In fact, our 25 mission-critical internal
systems were compliant, including end-to-end and future-date
testing, three months ahead of that deadline. Among other
things, these internal systems:
--manage the eligibility, enrollment, and premium status of our 39
million Medicare beneficiaries;
--make payments to approximately 386 managed care plans on behalf
of over six million beneficiaries; and
--operate HCFA's accounts receivable and payable operations.
<bullet> As of last week, 73 of 75 mission-critical claim processing
systems, operated by private insurance contractors that process
Medicare claims and pay bills, were certified as compliant,
including end-to-end and future-date testing. Since last week
the remaining two contractors have furnished documentation of
certification, and we are evaluating that information now.
The process by which we analyzed and certified these claims
processing systems has received much attention, appropriately, from the
Congress, the GAO, and the provider community. I would like to take a
moment to explain the process we used for declaring a system to be
compliant. As you are aware, we required that all mission-critical
systems be renovated, tested, and implemented by the federal
government's March 31, 1999 deadline. Seventy of the systems were
actually self-certified as compliant by the contractors at the end of
1998, but we accepted only 54 of those certifications--those with
qualifications that we deemed to be minor--at that time. And we asked
the contractors to address and resolve those qualifications. We then
required that all contractors, including those that we had previously
certified as compliant with qualifications, to complete their Year 2000
readiness work by March 31, 1999, and submit written reports on the
status of their systems by April 5, 1999.
We thoroughly reviewed all of the certifications and accompanying
qualifications, if any, that we received by April 5, 1999. We
supplemented our analysis of the paperwork with evidence gathered by
our own on-site review teams. We provided all the certifications and
accompanying qualifications to our independent verification and
validation (IV&V) expert, AverStar, and, in conjunction with them, then
made an assessment of each system. Also, as a part of our ongoing
collaboration with the Department of Health and Human Services Office
of the Inspector General (OIG) and the General Accounting Office (GAO),
we provided these oversight bodies all of the certification and
qualification information and reviewed our analysis and conclusions
with them. Because of the rigor and thoroughness of our testing and
reviews, I am quite confident that our systems will be able to process
and pay claims timely and appropriately at the turn of the millennium.
Our progress on remediation and testing has been so successful that
we would like to attempt to carry out the Fiscal Year 2000 and Calendar
Year 2000 provider payment updates as close to their statutory schedule
as possible. We had previously announced to the Congress and provider
community that we might have to delay these updates. In consultation
with our IV&V contractor, we recently determined that the updates to
hospitals, skilled nursing facilities, home health agencies, and other
Part A providers can be implemented on schedule on October 1, 1999
without jeopardizing our Year 2000 readiness. Our IV&V contractor
describes these changes at that time as ``low impact.'' However,
because of the potential for system disruptions, we cannot make changes
to the International Classification of Disease, 9th Revision, Clinical
Modifications (ICD-9-CM) coding for fiscal 2000.
We also hope to implement the updates to physicians and other Part
B providers and suppliers starting January 17, applying them
retroactively to all claims for services on or after January 1. Our
IV&V contractor describes this as the ``optimal solution'' because it
avoids a payment freeze while providing a reasonable amount of time for
cleaning up any Year 2000-related problems identified in early January
before the systems changes would be made. Of course, our top priority
will remain the readiness of our systems, but as long as our Year 2000
efforts continue on track, we will try our best to meet our statutory
obligations and implement these updates on schedule.
All of our remediated claims processing systems are implemented and
paying claims today. And we have given providers the opportunity to
test with those systems to determine whether their claims, including
future-dated claims, can be successfully accepted and processed. Our
test results have been encouraging, thus far. For example, a major
national hospital network has future-date tested successfully with nine
claims processing contractors. We do not know of any other payers that
are giving providers the opportunity to test the submission of future-
dated claims.
Such provider testing gives us a better indication of how many
providers have actually done the necessary renovations to make their
billing systems compliant. As such, we will continue to closely monitor
these provider tests, as well as track the number of providers and
other claims submitters who test simulated future-date claims with the
claims processors. This will help us refine and target our future
outreach efforts to providers who may not be making adequate progress
in meeting their Year 2000 responsibility. Of course, providers receive
payment from sources other than Medicare. We hope that our outreach
efforts will prompt providers to ensure that other payers also are
meeting their Year 2000 obligations.
Being able to submit claims and get paid is, however, only one
reason why health care providers must meet their Year 2000
responsibility. Computer system problems could impact quality of care
and patient safety. Patient management systems, clinical information
systems, medical devices, such as defibrillators and infusion pumps,
and even elevators and security systems all must be checked, renovated,
and tested to make sure they are ready so that providers can give
quality care.
We are concerned that some providers will not meet the Year 2000
challenge on time. Health care sector monitoring by us, the OIG and
others, indicates that some providers are substantially behind in their
remediation efforts and could well fail. Providers have the primary
responsibility to ready their own systems for the Year 2000 in a timely
manner to meet the millennium challenge successfully. We do not have
the authority, ability, or resources to step in and fix systems for
others. We are providing assistance to the extent that we are able, but
in some cases that likely will not be enough. This matter is of urgent
concern, and literally grows in importance with each passing day.
Provider Outreach Activities.
From our own efforts, we know first hand the difficulties inherent
in achieving Year 2000 compliance, and we are eager to share with
providers and their billing agents the lessons we have learned along
the way. Therefore, as I have mentioned above, last year we initiated a
vigorous outreach campaign to raise awareness of this critical issue
and to encourage providers to take the steps necessary for ensuring
their own millennium compliance.
<bullet> We are leading the health care sector of the President's
Council on Year 2000 Conversion. We chair twice-monthly
meetings in coordination with a number of provider trade
associations and our public sector health partners, like the
Food and Drug Administration, the Defense Department, the
Department of Veterans Affairs, and the Labor Department, among
others, to share insights, raise millennium awareness, and
encourage all providers to become Year 2000 compliant.
<bullet> This past January, in an unprecedented step, we sent a letter
to each of our more than 1.3 million Medicare and Medicaid
providers stressing the importance of Year 2000 readiness,
including the need to assess readiness, test systems, as well
as develop contingency plans for unanticipated failures. We
also provided an inventory checklist of office equipment and
supplies they need to assess for Year 2000 compliance. A copy
of this letter was printed in the Federal Register and
distributed to every Member of Congress.
<bullet> We established a website dedicated to the Year 2000
(www.hcfa.gov/y2k) advising providers how to identify mission-
critical hardware and software and assess its readiness; test
systems and their interfaces; and develop contingency plans
should unexpected problems arise. The website also includes
links to other pertinent sites, such as the Food and Drug
Administration's website on medical device readiness. The site
registered nearly 25,000 visits last month.
<bullet> Last month, we set up a Year 2000 toll-free phone line, 1-800-
958-HCFA (1-800-958-4232) where callers can receive up-to-date
answers to Year 2000 questions that relate to medical supplies,
their facilities and business operations, as well as referrals
for more specific billing-related information. The hotline also
will update callers on HCFA's Year 2000 policies and provide
general ``how to'' assistance to help callers prepare their own
computer systems for the millennium.
<bullet> In March, we hosted Year 2000 Action Week seminars in
Washington, D.C. and eleven other cities, including Baltimore;
Boston; New York; Philadelphia; Atlanta; Chicago; Dallas;
Kansas City; Denver; San Francisco; and Seattle. These
conferences provided attendees with detailed information about
what doctors' offices, hospitals, equipment suppliers,
pharmacies, and other health care providers and their billing
agents need to do to be Year 2000-ready.
<bullet> Two weeks ago, we began a series of provider educational
conferences which will take place over the next three months in
twelve cities across the country. We have already held
conferences in Kansas City and Atlanta. Tomorrow, we will hold
a conference in Cleveland. In May, we will visit Hartford, Salt
Lake City, Los Angeles, Fargo, and Minneapolis. And in June, we
will be in Tampa, Phoenix, and Portland, Oregon. These one-day
conferences are offered free-of-charge and feature readiness
strategies, as well as information about biomedical equipment
and pharmaceutical risks. The seminars have been well-received
by providers. Over 175 providers attended our conference in
Kansas City and Atlanta drew over 200 participants. I invite
any of the members of these subcommittees to participate in
these events and my staff would be pleased to work with your
staff to make arrangements.
<bullet> We are developing smaller, more individualized Year 2000
educational sessions targeted towards rural providers, in
consultation with rural provider associations.
<bullet> And agency staff across the country have been actively
involved in sponsoring and participating in conferences,
symposiums, and other outreach programs through our speakers
bureau. They have made literally hundreds of presentations on
Year 2000 issues to providers and others around the nation.
We have been working to address the Year 2000 readiness of managed
care plans. Our primary objective--to ensure that our own internal
mission critical systems for paying managed care plans are compliant--
is done. At the same time, we have been proactive in our efforts to
raise managed care plans' awareness of the importance of being Year
2000-ready. We have established a Year 2000 managed care workgroup that
is focusing its efforts in three critical areas: readiness education
and information; certification; and contingency planning. Similar to
our efforts to reach the provider community at large, we have sent
managed care plans letters providing guidance on Year 2000 readiness;
posted updated information on our Year 2000 website; and conducted
several national conferences geared specifically towards managed care.
In addition, we meet regularly with managed care industry groups and
trade associations to discuss and resolve Year 2000 issues. We know
that our partners, including the American Association of Health Plans
(AAHP) and the Health Insurance Association of America (HIAA) have been
actively involved in outreach to their members.
Importantly, we required all Medicare managed care organizations to
submit certifications to us about their Year 2000 readiness by April
15, 1999. We are quickly working to obtain an initial sense of the
certifications submitted under the managed care data request. We also
are requiring them to provide contingency plans by July 15, 1999. Also,
earlier this year, we contracted with an IV&V expert, SRA, Inc., to
help us assess health plan readiness. We currently are establishing
criteria for identifying managed care organizations that will receive
on-site reviews and are planning reviews at all national Medicare plans
and those with more than 50,000 Medicare enrollees. We share the OIG's
concern over the readiness of small plans and will include a number of
these smaller plans in our review efforts. By September 1999, we should
have a more accurate assessment of overall plan readiness. We will work
closely with and monitor those plans at greatest risk and are
developing contingency plans should problems arise in this area.
I was pleased to learn that some provider associations, including
the American Medical Association and the American Hospital Association,
have begun to assess the Year 2000 readiness of their membership and to
step-up their educational efforts on the critical nature of this
problem. This is an essential undertaking. Quite simply, Year 2000
compliance cannot be a one-way street. All providers must meet the Year
2000 challenge head on, or risk not being able to receive prompt
payment from Medicare, Medicaid, or virtually any other insurer, as
well as risk serious compromise to patient care and safety.
We also welcome Congress' help in making all providers aware of the
need to become Year 2000-ready and appreciate your ongoing attention to
this critical issue. You can help in identifying additional
opportunities to publicize the Year 2000 message and we encourage you
to stress the importance of this issue whenever you meet with
providers.
Achieving Year 2000 Readiness.
One of the first steps providers should take to achieve millennium
readiness, and perhaps the easiest, is changing Medicare claims to the
Year 2000-compliant format allowing for 8-digit date fields. We
required that all providers and their billing agents submit Year 2000-
compliant claims by no later than April 5, 1999. To ease the transition
to the new format, our claims processing contractors made compliant
billing software available to all providers and submitters for free or
at minimal cost.
Our electronic claims monitoring indicates that, as of last week,
more than 99.98 percent of Part B claims submitters (either physicians,
suppliers, or their billing agents) and over 93 percent of Part A
submitters (hospitals, other institutions, or their billing agents)
that submit claims electronically are using the 8-digit fields. Most of
those not yet using the new format are in the process of testing their
format changes. We will continue to work closely with providers and
health industry trade groups to reach our goal of 100 percent
compliance.
While the ability to submit 8-digit date claims is an important
step toward Year 2000 readiness, it is only a first step. The ability
of a provider to submit a claim with 4-digit years does not mean its
office computer or practice management software will function into the
millennium. If the systems do not function, a provider may not even be
able to obtain the information needed to generate a paper claim.
Providing quality care to beneficiaries goes well beyond billing and
claims processing. It depends upon doctors, hospitals, and other
service providers ensuring that their medical equipment will work and
their offices remain open. It also depends upon pharmaceutical and
medical supply chains continuing to operate uninterrupted.
Providers also need to make sure they are able to submit claims to
their State Medicaid systems, and in turn, the State systems must also
be ready. We are conducting on-site visits, with the assistance of an
expert IV&V contractor, in every State to review Year 2000 readiness
and provide advice where necessary. To date, we have visited all 50
States and the District of Columbia. GAO staff have accompanied us on
some of these visits. Our preliminary surveys are consistent with
earlier work by the GAO that suggests some States may not be ready on
time. We and our IV&V team will revisit approximately 35 states between
May and the end of August to follow-up on earlier visits and to
continue to monitor progress. Again, we do not have the ability,
authority, or resources to step in and fix State systems, and can
provide only limited assistance. We are sharing whatever survey
information we gather directly with the States, to provide them, at a
minimum, with an independent appraisal of their Year 2000 issues and
progress. It is the responsibility of each State to determine the
appropriate steps it must take to meet its Year 2000 responsibility and
the needs of its beneficiaries.
Contingency Planning.
Regardless of success in renovating and testing systems for Year
2000 readiness, both we and providers must have business continuity and
contingency plans prepared in case unanticipated problems arise. We
have undertaken an extensive effort to develop these plans for all our
mission-critical business processes, as should providers. Our
priorities are to ensure that we can:
<bullet> continue prompt and accurate payments to providers, suppliers,
and others;
<bullet> safeguard the Medicare Trust Funds by preventing and
recovering inappropriate payments;
<bullet> protect quality of care; and
<bullet> sustain beneficiary entitlement and enrollment.
For HCFA, contingency planning is an agency-wide effort with active
participation of all of our senior executives. We are closely following
the GAO's advice on contingency planning outlined in their August 1998
guidance, Year 2000 Business Continuity and Contingency Planning and in
their September 1998 report, Medicare Computer Systems--Year 2000
Challenges Put Benefits and Services in Jeopardy. We have developed and
are now validating our contingency plans. This validation phase of our
effort will run through the end of June. We intend, however, to provide
the Office of Management and Budget with a status of our business
continuity and contingency planning on June 15, 1999, as all Federal
agencies are doing. Each contingency plan has a designated Emergency
Response Team responsible for executing the various contingency plans,
if necessary. During the validation phase, these teams will run
practice exercises and rehearse plans in a simulated environment.
It is important to note that contingency planning is not a static
process. We will continue to rehearse and refine our plans throughout
the coming year and up until December 31, 1999. We will make changes,
if necessary, as we learn more about the readiness status of those with
whom we interact, such as providers, pharmaceutical and medical
equipment suppliers, and States, among others.
Our contingency plans will, of course, factor in the possibility of
provider failure. I hope the subcommittees will appreciate the delicate
balance that exists between our top two contingency planning goals of
paying providers promptly and preventing payment errors. Let me stress
that I firmly believe that no contingency plan should cause providers
who fail to prepare for the Year 2000 to be rewarded for their lack of
attention, effort, or due diligence. It is quite clear that it would
not fulfill our fiduciary responsibilities to pay monies from the
Medicare Trust Funds in the absence of appropriate evidence that a
covered service was delivered to a beneficiary.
Conclusion.
We have made remarkable progress in meeting the Year 2000
challenge, as have many providers. However, we remain seriously
concerned with the progress of some providers in meeting their own Year
2000 challenges. We are committed to raising awareness and providing as
much assistance as we can, but in some cases that may not be enough. We
all share a common goal of having our systems and programs function and
care for our programs' beneficiaries continue throughout the millennium
transition. I thank you for your attention to this essential issue, and
I am happy to answer any questions you may have.
Mr. Upton. Thank you very much.
Mr. Willemssen.
TESTIMONY OF JOEL C. WILLEMSSEN
Mr. Willemssen. Thank you, Mr. Chairman, Mr. Ranking
Member, Chairman Bilirakis. Thank you for inviting us to
testify today. As requested, I will briefly summarize our
statement on Medicare and on the health sector overall.
Regarding Medicare, HCFA has continued to make progress in its
efforts to become Y2K compliant. For example, HCFA is more
effectively identifying and managing risks, further defining
its testing procedures and enhancing its testing oversight,
developing business continuity and contingency plans and
continuing its outreach efforts with providers.
Despite this progress, HCFA still faces a considerable
amount of work and risks. For example, systems will have to
undergo a significant amount of change between now and July.
HCFA plans to conduct final tests of these change systems
between July and November and then recertify systems as
compliant.
To date HCFA's testing of its external systems has not been
rigorous enough. HCFA's contractor has reported concerns with
test documentation, readiness, and coverage. The agency also
still lags in developing an integrated schedule that has
milestones for testing of all systems.
HCFA's late start and the limited time remaining has also
led to planned concurrent testing that is overlapping testing.
HCFA also still lacks a detailed end-to-end test plan
explaining how multiple systems will be tested to make sure
that they can work together.
HCFA has several other areas that it needs to work on in
the time remaining, including getting all of its data exchanges
compliant, testing, business continuity and contingency plans,
implementing provider payment updates, transitioning workloads
of contractors leaving the program, and overseeing managed-care
organizations' Y2K efforts.
Looking beyond Medicare and at the health sector overall,
available data that's out there indicates that there's much
work remaining.
According to the report of the President's Council on Year
2000 Conversion issued last week, the health care sector has
not made adequate progress in addressing Y2K. In response to
the council chairman's request, the amount of readiness
information on this sector has increased recently. However, the
picture is still incomplete, because many have not responded to
surveys.
One crucial area for providers and for the health sector
overall is that of biomedical equipment. For this type of
equipment, progress has been made in obtaining Y2K compliance
information for manufacturers. Specifically, FDA has
established a biomedical equipment clearinghouse that provides
the public with such information.
Less progress has been made in reviewing biomedical
equipment results. Last year we recommended that HHS take steps
to review manufacturers' compliance test results for critical
care and life support biomedical equipment to give added
assurance that such equipment was indeed compliant. The
response to our recommendation has been disappointing.
HHS said that submitting compliance certifications was
sufficient. In contrast to that position, some hospitals in the
private sector believe that testing biomedical equipment is
necessary to show that they have exercised due diligence in the
protection of patient health and safety. In fact, hospital
officials have told us that their testing has identified some
noncompliant equipment that manufacturers had certified as
compliant.
Pharmaceuticals represent another health-related area with
growing recognition of Y2K risks. Pharmaceutical trade
associations have performed recent surveys of their memberships
and based on those surveys believe there should be an
uninterrupted flow of medicines. However, the association
surveys do not provide detailed information on the information
on the Y2K readiness of specific manufacturers.
In an effort to assure the public that Y2K is being
addressed, last evening, the Food and Drug Administration
informed us that it is now sending surveys to drug
manufacturers requesting specific compliance information.
That concludes a summary of my statement. I would be
pleased to address any questions at the conclusion of Mr.
Grob's statement.
[The prepared statement of Joel C. Willemssen follows:]
Prepared Statement of Joel C. Willemssen, Director, Civil Agencies
Information Systems, Accounting and Information Management Division,
GAO
Messrs. Chairmen and Members of the Subcommittees: We appreciate
the opportunity to join in today's hearing and share information on the
readiness of automated systems that support the nation's delivery of
health benefits and services to function reliably without interruption
through the turn of the century. This includes the ability of Medicare
and Medicaid to pay for services to millions of Americans and the
overall readiness of the health care sector, including such key
elements as biomedical equipment used in the delivery of health
services. Successful Year 2000--or Y2K--conversion is critical to these
efforts.
We reported in February that while some progress by the Department
of Health and Human Services' (HHS) Health Care Financing
Administration (HCFA)--and its contractors--had been made in addressing
the numerous recommendations we made last year <SUP>1</SUP> to improve
key HCFA management practices associated with its Y2K program, many
significant challenges remained.<SUP>2</SUP> At the time, we also
reported that while some progress had been achieved, many states'
Medicaid systems were at risk, and much work remained.<SUP>3</SUP>
---------------------------------------------------------------------------
\1\ Medicare Computer Systems: Year 2000 Challenges Put Benefits
and Services in Jeopardy (GAO/AIMD-98-284, September 28, 1998).
\2\ Year 2000 Computing Crisis: Medicare and the Delivery of Health
Services Are at Risk (GAO/T-AIMD-99-89, February 24, 1999).
\3\ Year 2000 Computing Crisis: Readiness of State Automated
Systems That Support Federal Human Services Programs (GAO/T-AIMD-99-91,
February 24, 1999).
---------------------------------------------------------------------------
Beyond Medicare and Medicaid, the information available on the
national level concerning Y2K readiness throughout the health care
sector--including providers, insurers, manufacturers, and suppliers--
indicates much work remains in renovating, testing, and implementing
compliant systems. Also, as we recently testified, while information on
the compliance status of biomedical equipment is available through a
clearinghouse maintained by the Food and Drug Administration (FDA), the
test results for this equipment are not reviewed.<SUP>4</SUP> Finally,
information on the Y2K readiness of pharmaceutical and medical-surgical
manufacturers is incomplete.
---------------------------------------------------------------------------
\4\ See Year 2000 Computing Crisis: Action Needed to Ensure
Continued Delivery of Veterans Benefits and Health Care Services (GAO/
AIMD-99-136, April 15, 1999).
---------------------------------------------------------------------------
hcfa's ability to process medicare claims into the next century
As the nation's largest health care insurer, Medicare expects to
process over a billion claims and pay $288 billion in benefits annually
by 2000. The consequences, then, of its systems' not being Y2K
compliant could be enormous. We originally highlighted this concern in
May 1997 and made several recommendations for improvement.<SUP>5</SUP>
Our report of last September warned that although HCFA had made
improvements in its Y2K management, the agency and its contractors were
severely behind schedule in making their computers that process
Medicare claims Y2K compliant. In February, we testified that although
HCFA had been responsive to our recommendations and that its top
management was actively engaged in its Y2K program, its reported
progress was highly overstated. We testified that none of HCFA's 54
external mission-critical systems reported compliant by HHS as of
December 31, 1998, was Y2K ready, based on serious qualifications
identified by the independent verification and validation (IV&V)
contractor. Further, we reported that HCFA continued to face serious
Y2K challenges. Specifically, HCFA
\5\ Medicare Transaction System: Success Depends Upon Correcting
Critical Managerial and Technical Weaknesses (GAO/AIMD-97-78, May 16,
1997).
---------------------------------------------------------------------------
<bullet> lacked an overall schedule and critical path to identify and
rank Y2K tasks to help ensure that they could be completed in a
timely manner;
<bullet> needed a formal risk management process to highlight potential
technical and managerial weaknesses that could impair project
success;
<bullet> continued to have thousands of electronic data exchanges that
were not Y2K compliant;
<bullet> faced a significant amount of testing in 1999, especially
since changes will continue to be made to its mission-critical
systems to make them compliant; and
<bullet> needed to sustain its efforts to complete and test business
continuity and contingency plans to ensure that Medicare claims
will be processed next year.
The Office of Management and Budget (OMB) also continues to be
concerned about HCFA's progress. In its March 18, 1999, summary of Y2K
progress reports of all agencies for the reporting quarter ending
February 12, 1999, it concluded that HCFA remains a serious concern due
to external systems testing, implementation schedules, and the
qualified compliance of a number of external mission-critical systems.
OMB further stated that although Medicare contractors had been making
an intensive effort to complete validation and implementation by the
governmentwide deadline of March 31, 1999, some external contractors
may not succeed. Due in large part to HCFA's status, OMB designated HHS
as a tier 1 agency on its three-tiered rating scale, meaning it had
made insufficient progress in addressing the Y2K problem.
HCFA's Actions To Achieve Compliance and Bolster Outreach Efforts to
Medicare Providers
HCFA has been responsive to our recommendations. To more
effectively identify and manage risks, HCFA is relying on multiple
sources of information, including test reports, reports from its IV&V
contractors, and weekly status reports from its recently established
contractor oversight teams. In addition, HCFA has stationed staff at
critical contractor sites to assess the data being reported and to
identify problems.
HCFA also is more effectively managing its electronic data
exchanges. It issued instructions to its contractors (fiscal
intermediaries and carriers) to inform providers and suppliers that
they had to begin submitting Medicare claims in Y2K-compliant data
exchange format by April 5 of this year. HCFA now reports that 93
percent of the fiscal intermediaries and 99 percent of the carriers are
complying. HCFA also established new instructions for contractors to
report on data exchanges, and created a new database to track status.
HCFA continues to further define its testing procedures. It
required that existing qualifications be addressed and tested by March
31, 1999. It also issued instructions--on January 11, 1999--for all
contractors to recertify their systems from July 1 to November 1, 1999.
To more clearly define this testing, HCFA issued additional
recertification and end-to-end testing guidance on March 10, 1999.
HCFA has also begun to use several Y2K-analysis tools to measure
testing thoroughness, and its IV&V contractor is assessing test
adequacy of the external systems (e.g., test coverage and
documentation). In addition to the IV&V contractors' efforts, HCFA has
engaged a separate contractor to conduct independent tests on some of
its mission-critical systems. HCFA further plans to perform end-to-end
testing with its Y2K-compliant test sites. These end-to-end tests are
to include all internal systems and contractor systems; however, they
will not include testing with banks and providers.
Another area in which HCFA has demonstrated progress is developing
business continuity and contingency plans to ensure that, no matter
what, beneficiaries will receive care and providers will be paid. HCFA
established cross-organizational workgroups to develop contingency
plans for the following core business functions: health plan and
provider payment, eligibility and enrollment issues, program integrity,
managed care, quality of care, litigation, and telecommunications.
HCFA's fourth and final iteration of this plan was issued on April 1,
1999, and the plan is expected to be tested by June 30.
HCFA has continued to strengthen its outreach efforts to the
providers of Medicare services. On January 12, 1999, the Administrator
sent individual letters to over 1.3 million Medicare providers in the
United States, alerting them to take prompt Y2K action on their
information and billing systems. Three days later, the Administrator
sent a letter to Congress, with assurances that HCFA is making progress
and stressing that physicians, hospitals, and other providers must also
meet the Y2K challenge. HCFA also offered to provide speakers in local
congressional districts, is holding a series of conferences throughout
the country, and has established a toll-free information hotline.
Reported Status of HCFA's Mission-Critical Systems
HCFA operates and maintains 25 internal mission-critical systems;
it also relies on 75 external mission-critical systems operated by
contractors throughout the country who process Medicare claims. These
external systems include six standard processing systems and the
``Common Working File.'' Each contractor relies on one of these
standard systems to process its claims, and adds its own front-end and
back-end processing systems. The Common Working File is a set of
databases located at nine sites that works with internal and external
systems to authorize claims payments and determine beneficiary
eligibility.
In HHS' latest Y2K quarterly progress report to OMB, dated February
10, it reported that as of December 31, 1998, all 25 of HCFA's internal
mission-critical systems were reported to be compliant, as were 54 of
the external systems. Yet as we testified in February, none of these 54
systems was Y2K ready because all had important associated
qualifications (exceptions), some of them significant.<SUP>6</SUP> HCFA
issued a memorandum in early January requesting Medicare carriers and
fiscal intermediaries to resolve these qualifications by March 31, the
federal target date for Y2K compliance. HCFA reported to us on April
19, 1999, that most of these qualifications have been resolved and that
73 of 75 external systems are now compliant (the total number of
external mission-critical systems decreased from 78 to 75 because three
contractors plan to leave the Medicare program before the end of the
year).
---------------------------------------------------------------------------
\6\ GAO/T-AIMD-99-89, February 24, 1999.
---------------------------------------------------------------------------
HCFA's IV&V contractor's analysis of the qualifications was
consistent with what HCFA reported to us. Specifically, the IV&V
contractor's analysis of the 53 external systems concluded that 19 had
no remaining qualifications, 33 had qualifications it deemed ``low
impact'' (i.e., could be addressed within the next 3 months or would
have a minor impact on the site's ability to meet Medicare
requirements), and 1 had qualifications deemed critical. The IV&V
contractor recommended that all qualifications be resolved by June 28,
1999, so that HCFA's final testing of its mission-critical systems
could begin on July 1, 1999, with no open qualifications.
Despite Reported Compliance, HCFA's Mission-Critical Systems Still
Require Additional Y2K Renovation and Testing
The HCFA mission-critical systems that have been characterized as
Y2K compliant are not, however, the final systems that will be
processing Medicare claims on January 1, 2000. These systems will
undergo a significant amount of change between now and July 1, 1999,
for both Y2K and other reasons. These changes will require a complete
retest to ensure that the systems have not been contaminated by the
changes and that they still are indeed Y2K compliant.
Specifically, these changes will address (1) outstanding
qualifications, (2) additional Y2K changes, (3) a critical software
release of the Common Working File, and (4) legislative
mandates.<SUP>7</SUP> In addition to the changes required to address
outstanding qualifications, changes are also occurring because of other
compliance issues not listed as qualifications. For example, three
standard system maintainers are currently updating their systems
because the earlier renovation was performed with noncompliant
compilers.<SUP>8</SUP> Each of these three upgrades is scheduled to be
completed by July 1999. In addition, analyses using tools that
determine the Y2K readiness of software code are uncovering additional
Y2K programming errors. For example, 28 programming errors were
recently identified using a Y2K tool on the Florida standard system.
These errors are to be corrected and tested by June 1999. According to
HCFA officials, such errors were uncovered based on an inspection of
only about one seventh of the software code associated with the Florida
standard system. If time permits, HCFA is considering using this Y2K
tool on 100 percent of the code on all of the standard systems.
---------------------------------------------------------------------------
\7\ These legislative mandates include software changes required to
implement new policies for the Balanced Budget Act of 1997, such as
hospice updates and Medicare+Choice.
\8\ A compiler is a computer program that converts human-readable
source code into a sequence of machine instructions that the computer
can run.
---------------------------------------------------------------------------
In addition to these Y2K-related changes, HCFA is planning a major
software release of the Common Working File in late June, and
legislatively mandated changes are to occur through June. HCFA plans to
conduct final tests of its systems between July 1 and November 1, 1999,
then recertify all mission-critical systems as compliant without
qualification or exception. These final tests will ultimately determine
whether HCFA's mission-critical systems are Y2K compliant. The late
1999 time frames associated with this testing represent a high degree
of risk.
Other Critical Risks and Challenges Remain
Testing is a critical area in which HCFA faces significant
challenges. Complete and thorough testing is essential to providing
reasonable assurance that new or modified systems will process dates
correctly and will not jeopardize an organization's ability to perform
core business operations. Because the Y2K problem is so pervasive,
potentially affecting an organization's systems software, applications
software, databases, hardware, firmware, embedded processors,
telecommunications, and interfaces, the requisite testing can be
extensive and expensive. Experience is showing that Y2K testing is
consuming between 50 and 70 percent of a Y2K project's time and
resources. According to our guide, to be done effectively, testing
should be planned and conducted in a structured and disciplined
fashion.<SUP>9</SUP>
---------------------------------------------------------------------------
\9\ Year 2000 Computing Crisis: A Testing Guide (GAO/AIMD-10.1.21,
November 1998).
---------------------------------------------------------------------------
To date, HCFA's testing of its external systems has not been
rigorous. HCFA's IV&V contractor has reported concerns with test
documentation, readiness, and coverage associated with HCFA's external
mission-critical systems. Specifically, the IV&V contractor reported
that the quality of test documentation has been found to be incomplete
and inadequate during a significant number of site visits. In addition,
the results of using a Y2K tool to assess renovation quality and test
readiness on each of the standard systems revealed that both indicators
are primarily rated in the low to medium ranges, meaning that errors
exist that could cause Y2K-related system failures.
The IV&V contractor also reported that HCFA's contractors have no
satisfactory mechanism for determining the quality of test coverage
(e.g., systems functionality, HCFA-mandated dates, interface coverage)
associated with the self-certification testing. Because of this, HCFA
issued instructions on April 9, 1999, that required contractors to
submit information on the functionality covered by their test cases.
Until test coverage is determined and testing is fully executed, the
quality of the testing conducted will remain unknown.
In addition, two standard system maintainers did not test with the
Common Working File, rather, they used a system that simulates the
functions performed by the Common Working File. Testing with a system
that simulates the Common Working File is less than ideal since the
simulated system is not identical to the actual system. HCFA has
acknowledged this and plans to have these two standard system
maintainers test with the Common Working File during the
recertification testing.
Further, testing has not been completed in the optimal sequence to
ensure compliance of all systems. Since each contractor relies on one
of the six standard systems to process its claims, ideally each of
these six standard systems should have been completely tested before
the contractors tested their front-end and back-end processing systems
with their respective standard systems. However, only the Florida
standard system maintainer completed future-date testing before the
system was provided to its 29 contractors. Thus, more than half of the
contractors tested with standard systems that had not completed Y2K
testing. Managing multiple testing baselines and ensuring that
corrections to one system's testing errors does not lead to problems in
another system is a major challenge.
In September 1998 we recommended that HCFA rank its remaining Y2K
work on the basis of a schedule that includes milestones for renovation
and testing of all systems, and that it include time for end-to-end
testing and development and testing of business continuity and
contingency plans.<SUP>10</SUP> Such a schedule is extremely important
because of the number of systems, their complexity, and
interdependencies among them. However, HCFA still lacks an integrated
schedule. The complexity and required sequencing of the 75 external and
25 internal systems associated with the recertification requires an
integrated testing schedule to avoid scheduling constraints. For
example, the Common Working File and standard systems should be tested
initially so that the contractors can test with fully compliant
systems. Without an integrated schedule, HCFA cannot effectively
prioritize remaining work or ensure that all Y2K testing will be
completed on time.
---------------------------------------------------------------------------
\10\ GAO/AIMD-98-284, September 28, 1998.
---------------------------------------------------------------------------
HCFA's late start and the limited time remaining raises risks that
the recertification testing will likewise not be as rigorous as
necessary. Two areas already have us concerned--testing overlap and a
decrease in the number of future dates that will be tested. HCFA
officials told us that contractors will begin to test with the Common
Working File before it is completely Y2K-tested. Ideally, these tests
should be done sequentially so that each contractor can test with a
fully Y2K-tested Common Working File. Also, although HCFA's
recertification will test four future dates, two more than the self-
certification testing, this total is fewer than what HCFA had
originally planned. Initially, HCFA planned to test with nine future
dates.
In addition to such individual systems testing, HCFA must also test
its systems end-to-end to verify that defined sets of interrelated
systems, which collectively support an organizational core business
function, will work as intended. As mentioned, HCFA plans to perform
this end-to-end testing with its Y2K-test sites. These tests are to
include all internal systems and contractor systems, but will not
include testing with banks and providers. HCFA has required its
contractors to future-date test with providers and financial
institutions. Even excluding banks and providers, end-to-end testing of
HCFA's internal and external systems is a massive undertaking that will
need to be effectively planned and carried out. HCFA has not yet,
however, developed a detailed end-to-end test plan that explains how
these tests will be conducted or that provides a detailed schedule for
conducting them.
A final aspect of testing concerns the independent testing
contractor. HCFA expects this testing to be completed by August 31.
This contractor currently plans to test eight internal systems and the
six external standard systems. Originally, all 25 internal mission-
critical systems were to be tested. In addition, because of the
changing nature of the Medicare systems and the limited remaining time,
the independent testing will be conducted with systems that were
available January 1999, not with the exact systems that will be
operating on January 1, 2000.
HCFA also faces risks because it has thousands of data exchanges
that are not yet compliant. HCFA's systems--both internal and
external--exchange data, both among themselves and with the CWF, other
federal agencies, banks, and providers. Accordingly, it is important
that HCFA ensure that Y2K-related errors will not be introduced into
the Medicare program through these data exchanges. HCFA's total number
of data exchanges dropped significantly since February 10, 1999. The
number of internal data exchanges declined from 7,968 to 3,209, while
the number of external data exchanges dropped from 255,383 to 141,866.
HCFA officials attributed this decrease to ``performing a major cleanup
of the data.'' As of April 9, 1999, HCFA reported that only four of its
3,209 internal data exchanges were still not compliant, and that over
3,000 of its 141,866 external data exchanges were not compliant. To
ensure that HCFA's internal and external systems are capable of
exchanging data between themselves as well as with other federal
agencies, banks, and providers, it is essential that HCFA take steps to
resolve the remaining noncompliance of these data exchanges.
Given the magnitude of HCFA's Y2K problem and the many challenges
that continue to face it, the development of contingency plans to
ensure continuity of critical operations and business processes is
absolutely critical. Therefore, HCFA must sustain its efforts to
complete and test its agencywide business continuity and contingency
plans by June 30. Another challenge for HCFA is monitoring the progress
of the 62 separate business continuity and contingency plans that will
be submitted by its contractors. We will continue to monitor progress
in this area.
Other issues that further complicate HCFA's Y2K challenge are
planned October 1, 1999, and January 1, 2000, provider payment updates;
the known and unknown contractor transitions that are to take place
before January 1, 2000; and the unknown status of the managed care
organizations serving Medicare beneficiaries. We have requested
detailed information on the specific changes that the October 1 and
January 1 updates will require to determine the amount of testing that
will be necessary after these changes are made. HCFA already is faced
with too much to test in too little time, and these updates further
contribute to already monumental testing challenges.
As reported in HHS' quarterly submission to OMB, HCFA is concerned
about the possibility of Medicare contractors, fiscal intermediaries,
and carriers leaving the program and notifying HCFA of this after June.
If this were to occur, the workload would have to be transferred to
another contractor whose Y2K-compliance status may not be known.
According to both contractor and HCFA officials, it requires 6-12
months to transfer the claims processing workload from one contractor
to another. At present, HCFA is transitioning the work of the three
contractors that are leaving the program.
HCFA required the 386 managed care organizations currently serving
6.6 million Medicare beneficiaries to certify their systems as Y2K
compliant by April 15. As of April 21, 1999, HCFA had received
certifications from 315 of the organizations. Similar to fee-for-
service contractors, 271 of the 315 certifications contained
qualifications. We plan to review these certifications as part of our
ongoing work for the Senate Special Committee on Aging to determine
whether the managed care organizations' systems are Y2K compliant and
whether a formal recertification would have to be performed later this
year.
medicaid systems are at risk
Similar to Medicare, the systems supporting the Medicaid program
also face Y2K challenges and risk. In fiscal year 1997, Medicaid--a
joint federal-state program supported by HCFA and administered by the
states--provided about $160 billion to millions of recipients. Medicaid
provides health coverage for 36 million low-income people, including
over 17 million children. Its beneficiaries also include elderly,
blind, and disabled individuals.
In surveying states' Y2K status last summer,<SUP>11</SUP> we found
that many systems were at risk and much work remained to ensure the
continuation of services. The states' reported compliance rate for
Medicaid systems was only about 16 percent, and 18 states reported that
they had completed renovating one quarter or fewer of their Medicaid
claims processing systems. These 18 states had Medicaid expenditures of
about $40 billion in fiscal year 1997--one quarter of total Medicaid
expenditures nationwide, covering about 9.5 million recipients.
---------------------------------------------------------------------------
\11\ Year 2000 Computing Crisis: Readiness of State Automation
Systems to Support Federal Welfare Programs (GAO/AIMD-99-28, November
6, 1998). We sent a survey to the 50 states, the District of Columbia,
and three territories (Guam, Puerto Rico, and the Virgin Islands). All
but one of the 54 entities surveyed responded.
---------------------------------------------------------------------------
In response, HCFA administered two state self-reported surveys and
conducted several on-site visits and found that overall state Medicaid
systems status had improved little. To obtain more reliable Y2K state
Medicaid status information, HCFA also hired a contractor to conduct
independent verification and validation of states' systems.
HCFA reported in HHS' February 1999 quarterly report to OMB that
based on seven site visits, some of the dates that states had reported
to us in July/August 1998 had already slipped, underscoring the need
for on-site visits to secure more accurate information. In addition,
according to HCFA, while four states appeared to have made some
progress in the 6 months since our survey, three states' status
remained the same. Further, HCFA found that one state's Medicaid
eligibility system was not as far along as the state had reported in
our survey. To assist states with their effort, HCFA's IV&V contractor
plans to make on-site visits to all 50 states and the District of
Columbia by the end of this April. For states considered at risk, HCFA
will conduct second site visits between May and September 1999 and, if
necessary, third visits between October and December 1999. The later
visits will emphasize contingency planning to help the states ensure
continuity of program operations in the event of systems failures.
y2k readiness of the health care sector: much work remains
At this point, I would like to broaden our discussion to the Y2K-
readiness status of the health care sector, including biomedical
equipment <SUP>12</SUP> and pharmaceutical and medical-surgical
products used in the delivery of health care. While it is undeniably
important that Medicare and Medicaid systems be compliant so that the
claims of health care providers and beneficiaries can be paid, it is
also critical that the services and products associated with health
care delivery itself be Y2K compliant. However, with just over 8 months
until the turn of the century, the level of progress to date is not
reassuring.
---------------------------------------------------------------------------
\12\ Biomedical equipment refers to both medical devices regulated
by the Food and Drug Administration (FDA), and scientific and research
instruments, which are not subject to FDA regulation.
---------------------------------------------------------------------------
Virtually everything in today's hospital is automated--from the
scheduling of procedures such as surgery, to the ordering of medication
such as insulin for a diabetic patient, to the use of portable devices
as diverse as heart defibrillators and thermometers. It, therefore,
becomes increasingly important for health care providers such as
doctors and hospitals to assess their health information systems,
facility systems (such as heating, ventilating, and air conditioning
equipment), and biomedical equipment to ensure their continued
operation on January 1, 2000. Similarly, pharmaceutical manufacturers
and suppliers that rely heavily on computer systems for the manufacture
and distribution of drugs must assess their processes for compliance.
Given the large degree of interdependence among components of the
health sector--providers, suppliers, insurance carriers, and patients/
consumers--the availability and sharing of Y2K readiness information is
vital to safe, efficient, and effective health care delivery.
In response to an October 1998 request from the Chair of the
President's Council on Year 2000 Conversion, several federal agencies
and professional health care associations surveyed key components of
the health care sector. Accordingly, the amount of readiness
information on this sector has increased in recent months. The survey
results, however, indicate that much work still remains in renovating,
testing, and implementing compliant systems. Further, readiness
information on the health sector is still incomplete because a
significant number of sector members did not respond to the surveys.
According to a survey that the American Hospital Association (AHA)
sent to 2,000 of its members in February 1999, much work remains. For
example, based on the 583 responses received as of March 1, 1999, the
hospitals reported that only about 6 percent of the medical devices, 13
percent of information systems, and 24 percent of physical plant/
infrastructure are compliant. However, most hospitals indicated that
they expect to be compliant by the end of the year.<SUP>13</SUP>
---------------------------------------------------------------------------
\13\ Compliance refers to the hospitals' information systems,
medical devices, and physical plant/infrastructure.
---------------------------------------------------------------------------
The American Medical Association's (AMA) survey to 7,000 physicians
showed that approximately 47 percent of the 522 physicians that
responded by mail or telephone indicated that they do not have a good
understanding of Y2K conversion, and have practices that are not Y2K
ready. Almost all of these physicians reported that they would be ready
by the end of the year. The survey disclosed no difference between the
Y2K preparedness of large physician groups and solo or small physician
groups (10 physicians or fewer). However, AMA stated that caution
should be taken in interpreting the survey results due to the low
response rate.
According to responses received to a December 1998 survey sent by
HHS' Office of the Inspector General to a sample of 5,000 Medicare
providers--1,000 each to hospitals, nursing homes, durable medical
device manufacturers, physicians, and home health agencies--except for
hospitals, providers reported making limited progress in assessing
their biomedical equipment for Y2K compliance. All providers reported
making limited progress in testing data exchanges between their
computers and external vendors, and developing emergency backup plans
in case of computer failures. Further, many Medicare providers did not
respond to this survey. For example, the response rates for medical
device manufacturers, physicians, and home health agencies were less
than 30 percent.
A survey sent by the Association of State and Territorial Health
Officials and the Centers for Disease Control and Prevention (CDC) to
57 state and territorial health officials in December 1998 showed that
two thirds of the 29 respondents did not have contingency plans. CDC is
also concerned about the lack of readiness information on local public
health agencies.
Finally, according to the second quarterly report by the
President's Council on Year 2000 Conversion, the health care sector has
not made adequate progress in addressing the Y2K problem.<SUP>14</SUP>
The report stated that while recent surveys indicate that health care
providers have a high level of confidence that they will complete much
of the work on mission-critical systems before the end of the year, the
actual number of systems made compliant to date is relatively low in
areas from recordkeeping to infrastructure. The report noted that
recordkeeping systems are ``of great concern'' because they play an
essential role in processing payment claims to insurance companies and
government health agencies.
---------------------------------------------------------------------------
\14\ The President's Council on Year 2000 Conversion: Second
Summary of Assessment Information, April 21, 1999.
---------------------------------------------------------------------------
Biomedical Equipment: Status Information Available for Many Items, But
Test Results Not Reviewed
The question of whether medical devices such as magnetic resonance
imaging (MRI) systems, x-ray machines, pacemakers, and cardiac monitors
can be counted on to work reliably on and after January 1, 2000, is
critical to medical care delivery. To the extent that biomedical
equipment uses embedded computer chips, it is vulnerable to the Y2K
problem.
Such vulnerability carries with it possible safety risks. This
could range from the more benign--such as incorrect formatting of a
printout--to the most serious--such as incorrect operation of equipment
with the potential to adversely affect the patient. The degree of risk
depends in large part on the role the equipment plays in a patient's
care.
Responsibility for oversight and regulation of medical devices,
including the impact of the Y2K problem, lies with FDA. Last September
we testified that FDA, like the Veterans Health Administration (VHA)--a
key federal health care provider--was trying to determine the Y2K
compliance status of biomedical equipment.<SUP>15</SUP> FDA's goal was
to provide a comprehensive, centralized source of information on the
Y2K compliance status of biomedical equipment used in the United States
and to make this information publicly available on a web site. However,
at the time, FDA had a disappointing response rate from manufacturers
to its letter requesting compliance information. And, while FDA made
this information available to the public, it was not detailed enough to
be useful. Specifically, FDA's list of compliant equipment lacked
information relating to the particular make and model of the equipment.
---------------------------------------------------------------------------
\15\ Year 2000 Computing Crisis: Leadership Needed to Collect and
Disseminate Critical Biomedical Equipment Information (GAO/T-AIMD-98-
310, September 24, 1998).
---------------------------------------------------------------------------
To provide more detailed information on the compliance status of
biomedical equipment, as well as to integrate more detailed compliance
information gathered by VHA, we recommended that VA and HHS jointly
develop a single data clearinghouse that provides such information to
all users. We said development of the clearinghouse should involve
representatives from the health care industry, such as the Department
of Defense's Health Affairs and the Health Industry Manufacturers
Association. In addition, we recommended that the clearinghouse contain
such information as (1) the compliance status of all biomedical
equipment by make and model, and (2) the identity of manufacturers that
are no longer in business. We also recommended that VHA and FDA
determine what actions should be taken regarding biomedical equipment
manufacturers that have not provided compliance information.
In response to our recommendation, FDA--in conjunction with VHA--
has established the Federal Year 2000 Biomedical Equipment
Clearinghouse. With the assistance of VHA, the Department of Defense,
and the Health Industry Manufacturers Association, FDA has made
progress in obtaining compliance-status information from manufacturers.
For example, according to FDA, 4,251 biomedical equipment manufacturers
had submitted data to the clearinghouse as of April 5, 1999. As shown
in figure 1, about 54 percent of the manufacturers reported having
products that do not employ a date, while about 16 percent reported
having date-related problems such as incorrect display of date/time.
FDA is still awaiting responses from 399 manufacturers.
[GRAPHIC] [TIFF OMITTED] T6606.001
Note: Total number of manufacturers = 4,251.
Source: FDA.
FDA has also expanded the information in the clearinghouse. For
example, users can now find information on manufacturers that have
merged with or have been bought out by other firms.
In collaboration with the National Patient Safety
Partnership,<SUP>16</SUP> FDA is in the process of obtaining more
detailed information from manufacturers on noncompliant products, such
as make and model and descriptions of the impact of the Y2K problem on
products left uncorrected. For example, FDA sent a March 29, 1999,
letter requesting that medical device manufacturers submit to the
clearinghouse a complete list of individual product models that are Y2K
compliant.
---------------------------------------------------------------------------
\16\ The National Patient Safety Partnership is a coalition of
public and private health care providers, including VA, the American
Medical Association, the American Hospital Association, the American
Nurses Association, and the Joint Commission on Accreditation of
Healthcare Organizations.
---------------------------------------------------------------------------
We reported last September that VHA and FDA relied on manufacturers
to validate, test, and certify that equipment is Y2K
compliant.<SUP>17</SUP> We also reported that there was no assurance
that the manufacturers adequately addressed the Y2K problem for
noncompliant equipment, because FDA did not require medical device
manufacturers to submit test results to it certifying compliance.
Accordingly, we recommended that VA and HHS take prudent steps to
jointly review manufacturers' compliance test results for critical
care/life support biomedical equipment. We were especially concerned
that VA and FDA review test results for equipment previously determined
to be noncompliant but now deemed by manufacturers to be compliant, or
equipment for which concerns about compliance remain. We also
recommended that VA and HHS determine what legislative, regulatory, or
other changes were necessary to obtain assurances that the
manufacturers' equipment was compliant, including the need to perform
independent verification and validation of the manufacturers'
certifications.
---------------------------------------------------------------------------
\17\ GAO/AIMD-98-240, September 18, 1998.
---------------------------------------------------------------------------
At the time, VA stated that it had no legislative or regulatory
authority to implement the recommendation to review test results from
manufacturers. In its response, HHS stated that it did not concur with
our recommendation to review test results supporting medical device
equipment manufacturers' certifications that their equipment is
compliant. It said that the submission of appropriate certifications of
compliance was sufficient to ensure that the certifying manufacturers'
equipment was compliant. HHS also stated that it did not have the
resources to undertake such a review, yet we are not aware of HHS'
requesting resources from the Congress for this purpose.
More recently, VHA's Chief Biomedical Engineer told us that VHA
medical facilities are not requesting test results for critical care/
life support biomedical equipment; they also are not currently
reviewing the test results available on manufacturers' web sites. He
said that VHA's priority is determining the compliance status of its
biomedical equipment inventory and replacing noncompliant equipment.
The director of FDA's Division of Electronics and Computer Science
likewise said FDA sees no need to question manufacturers'
certifications.
In contrast to VHA's and FDA's positions, some hospitals in the
private sector believe that testing biomedical equipment is necessary
to prove that they have exercised due diligence in the protection of
patient health and safety. Officials at three hospitals told us that
their biomedical engineers established their own test programs for
biomedical equipment, and in many cases contacted the manufacturers for
their test protocols. Several of these engineers informed us that their
testing identified some noncompliant equipment that the manufacturers
had previously certified as compliant. According to these engineers, to
date, the equipment found to be noncompliant all had display problems
and was not critical care/life support equipment. We were told that
equipment found to be incorrectly certified as compliant included a
cardiac catheterization unit, a pulse oxymeter, medical imaging
equipment, and ultrasound equipment.
VHA, FDA, and the Emergency Care Research Institute <SUP>18</SUP>
continue to believe that manufacturers are best qualified to analyze
embedded systems or software to determine Y2K compliance. They further
believe that manufacturers are the ones with full access to all design
and operating parameters contained in the internal software or embedded
chips in the equipment. VHA believes that such testing can potentially
cause irreparable damage to expensive health care equipment, causing it
to lock up or otherwise cease functioning. Further, a number of
manufacturers also have recommended that users not conduct verification
and validation testing.
---------------------------------------------------------------------------
\18\ An international, nonprofit health services research agency.
This organization believes that superficial testing of biomedical
equipment by users may provide false assurances, as well as create
legal liability exposure for health care institutions.
---------------------------------------------------------------------------
We continue to believe that, rather than relying solely on
manufacturers' certifications, organizations such as VHA or FDA can
provide users of biomedical equipment with a greater level of
confidence that the equipment is Y2K compliant through independent
reviews of manufacturers' compliance test results. The question of
whether to independently verify and validate biomedical equipment that
manufacturers have certified as compliant is one that must be addressed
jointly by medical facilities' clinical staff, biomedical engineers,
and corporate management. The overriding criterion should be ensuring
patient health and safety.
Y2K-Readiness Information on Pharmaceutical and Medical-Surgical
Manufacturers Is Incomplete
Another question critical to the delivery of health care is knowing
whether there will be sufficient supplies of pharmaceutical and
medical-surgical products available for consumers at the turn of the
century. As the largest centrally directed civilian health care system
in the United States, VHA has taken a leadership role in the federal
government in determining whether manufacturers supplying these
products are Y2K-ready. This information is essential to VHA's medical
operations because of its ``just-in-time'' <SUP>19</SUP> inventory
policy. Accordingly, VHA must know whether its manufacturers'
processes, which are highly automated, <SUP>20</SUP> are at risk, as
well as whether the rest of the supply chain will function properly.
---------------------------------------------------------------------------
\19\ This term refers to maintaining a limited inventory on hand.
\20\ Pharmaceutical manufacturers rely on automated systems for
production, packaging, and distribution of their products, as well as
for ordering raw materials and supplies.
---------------------------------------------------------------------------
To determine the Y2K readiness of its suppliers, VA's National
Acquisition Center (NAC) <SUP>21</SUP> sent a survey on January 8,
1999, to 384 pharmaceutical firms and 459 medical-surgical firms with
which it does business. The survey contained questions on the firms'
overall Y2K status and inquired about actions taken to assess,
inventory, and plan for any perceived impact that the century turnover
would have on their ability to operate at normal levels. In addition,
the firms were requested to provide status information on progress made
to become Y2K compliant and a reliable estimated date when compliance
will be achieved for business processes such as (1) ordering and
receipt of raw materials, (2) mixing and processing product, (3)
completing final product processing, (4) packaging and labeling
product, and (5) distributing finished product to distributors/
wholesalers and end customers.
---------------------------------------------------------------------------
\21\ This organization is responsible for supporting VHA's health
care delivery system by providing an acquisition program for items such
as medical, dental, and surgical supplies and equipment;
pharmaceuticals; and chemicals. The NAC is part of VA's Office of
Acquisition and Materiel Management.
---------------------------------------------------------------------------
According to NAC officials, of the 455 firms that responded to the
survey as of March 31, 1999, about 55 percent completed all or part of
the survey. The remainder provided either general information on their
Y2K readiness status or literature <SUP>22</SUP> on their efforts. As
shown in table 1, more than half of the pharmaceutical firms surveyed
responded (52 percent), with just less than one third (32 percent) of
those respondents reporting that they are compliant. The table also
shows that 54 percent of the medical-surgical firms surveyed responded,
with about two thirds of them (166) reporting that they are Y2K
compliant.
---------------------------------------------------------------------------
\22\ This includes annual and quarterly financial reports required
by the Securities and Exchange Commission for companies listed on the
New York Stock Exchange.
Table 1: Status of Companies Surveyed by VHA as of March 31, 1999
------------------------------------------------------------------------
Pharma- Medical-
Responses ceutical surgical
------------------------------------------------------------------------
Y2K compliant....................................... 65 166
Will be compliant by 1/1/2000 or earlier*........... 90 70
Provided no compliant date.......................... 50 14
Total number of responses......................... 205 250
Non-responses....................................... 179 209
Total number of firms surveyed.................... 384 459
------------------------------------------------------------------------
*Estimated compliance status ranged from 3/31/99 through 1/1/2000; about
71 percent of pharmaceutical firms and 80 percent of medical-surgical
firms estimated they will be compliant by 7/31/99. One firm responded
that it will be compliant by 1/1/2000.
Source: VA. We did not independently verify these data.
On March 17, 1999, NAC sent a second letter to its pharmaceutical
and medical-surgical firms, informing them of VA's plans to make Y2K
readiness information previously provided to VA available to the public
through a web site (www.va.gov/oa&mm/nac/y2k). VA made the survey
results available on its web site on April 13, 1999. The letter also
requested that manufacturers that had not previously responded provide
information on their readiness. NAC's Executive Director said that he
would personally contact any major VA supplier that does not respond.
On a broader level, VHA has taken a leadership role in obtaining
and sharing information on the Y2K readiness of the pharmaceutical
industry. Specifically, VHA chairs the Year 2000 Pharmaceuticals
Acquisitions and Distributions Subcommittee, which reports to the Chair
of the President's Council on Year 2000 Conversion. The purpose of this
subcommittee is to bring together federal and pharmaceutical
representatives to address issues concerning supply and distribution as
it relates to the year 2000. The subcommittee consists of FDA; federal
health care providers; and industry trade associations such as the
Pharmaceutical Research and Manufacturers of America (PhRMA), Generic
Pharmaceutical Industry Association, the National Association of Chain
Drug Stores, and the National Wholesale Druggists' Association; and
consumer advocates.
In response to the Chair's request for Y2K-readiness information on
the pharmaceutical industry, several of these trade associations,
representing both brand name and generic pharmaceutical manufacturers,
have surveyed their members on this issue. Table 2 summarizes the
survey results available to date.
Table 2: Summary of Y2K-Readiness Survey Results From Pharmaceutical
Manufacturers
------------------------------------------------------------------------
Number of
Industry Trade Association Members Number of Summary of
Surveyed Responses Results
------------------------------------------------------------------------
Pharmaceutical Research and 25 \1\ 24 All respondents
Manufacturers of America have Y2K plans
(PhRMA). and are
developing
contingency
plans to ensure
continuous
supply of
medicines to
patients.
Respondents
expect to
collectively
spend $1.75
billion to
address Y2K
problem. Most
repair work is
expected to be
completed in
early to mid-
1999.
Generic Pharmaceutical Industry \2\ 16 14 All respondents
Association (GPIA). have Y2K plans
and individually
expect to spend
no more than
$1.5 million on
Y2K problem.
Most repair work
is expected to
be completed in
June or July
1999.
National Association of 12 7 Most respondents
Pharmaceutical Manufacturers have Y2K plans.
(NAPM).
Association of Military \3\ 41 41 All respondents
Surgeons of the U.S. (AMSUS). have Y2K plans.
Respondents are
spending from $2
million--$70
million on Y2K
problem. All
repair work is
expected to be
completed by
June 30, 1999.
------------------------------------------------------------------------
\1\ These members comprise more than 90 percent of the industry capacity
represented by PhRMA, which represents more than 95 percent of the
research-based pharmaceutical manufacturers in the United States.
\2\ This number only represents those members that are generic
pharmaceutical manufacturers.
\3\ Of the members surveyed, 24 are also members of PhRMA and 22 of
these participated in the PhRMA survey.
Source: Associations listed. We did not independently verify these data.
In addition, the National Wholesale Druggists' Association sent a
survey to 240 of its associate members that are pharmaceutical
manufacturers requesting information on patient stockpiling of
pharmaceutical products. Three quarters of the 77 members responding as
of November 1998 said they could currently fill orders which will
provide patients with a 3-month supply. Less than 20 percent of the
respondents said they could provide a 1-year supply. Finally, in
January 1999, the National Association of Chain Drug Stores sent a
survey to over 130 of its members and received responses from about 25
percent. These respondents indicated that they will finish Y2K
renovations by September 30, 1999, and two third of the respondents
have developed contingency plans.
Based on their survey results, these industry trade associations
believe that computer systems and software application problems will
not substantially impede the ability of the supply chain to maintain an
uninterrupted flow of medicines. However, in contrast to VHA's survey,
the associations' surveys were provided in summary format and did not
contain detailed information on the Y2K readiness of specific
manufacturers or members of the supply chain. This information is
necessary if consumers are to have confidence that there will be a
sufficient supply of medications on hand at the turn of the century.
FDA's Y2K Efforts for Pharmaceutical and Biological Products Industries
Focused Initially on Awareness
FDA's oversight and regulatory responsibility for pharmaceutical
and biological products <SUP>23</SUP> is to ensure that they are safe
and effective for their intended uses. Because of its concern about the
Y2K impact on manufacturers of these products, FDA has taken several
actions to raise the Y2K awareness of the pharmaceutical and biological
products industries. In addition, it is thinking about conducting a
survey to determine the industry's Y2K readiness.
---------------------------------------------------------------------------
\23\ Biological products include vaccines, blood, and blood
products.
---------------------------------------------------------------------------
One of FDA's actions to raise industry awareness was the January
1998 issuance of industry guidance by the Center for Biologics
Evaluation and Research (CBER) on the Y2K impact of computer systems
and software applications used in the manufacture of blood products. In
addition, as shown in table 3, FDA has issued several letters to
pharmaceutical and biological trade associations and sole-source drug
manufacturers.
Table 3: FDA Letters to Manufacturers Regarding Y2K
----------------------------------------------------------------------------------------------------------------
Date FDA Source Recipient Purpose
----------------------------------------------------------------------------------------------------------------
October 1998......................... Center for Drug Pharmaceutical To relay to members
Evaluation and manufacturer trade FDA's expectation that
Research. associations. the pharmaceutical
industry would (1)
make resolution of Y2K
a high priority, (2)
ensure that production
systems were fixed and
tested prior to
January 1, 2000, and
(3) urge manufacturers
to develop Y2K
contingency plans.
October 1998......................... Center for Biologics Biologics manufacturer Same as above.
Evaluation and trade associations.
Research.
January 1999......................... Center for Drug Sole-source drug Same as above. Also (1)
Evaluation and manufacturers. noted that the impact
Research. of Y2K on
pharmaceutical safety,
efficacy, and
availability merits
special attention for
firms who are the sole
manufacturers of drug
components, bulk
ingredients, and
finished products; and
(2) stated that
pharmaceutical
industry suppliers
must have Y2K-
compliant systems to
protect against
disruption in the flow
of product components,
packaging materials,
and equipment to
pharmaceutical
manufacturers.
----------------------------------------------------------------------------------------------------------------
Source: FDA.
Further, on February 11, 1999, FDA's director of emergency and
investigation operations sent a memorandum on FDA's interim inspection
policy for the Y2K issue to the directors of FDA's field
investigations. The policy emphasizes FDA's Y2K awareness efforts for
manufacturers. It states that FDA inspectors are to (1) inform firms of
FDA's Y2K web page (URL http://www.fda.gov/cdrh/yr2000/year2000.html);
(2) provide firms with copies of the appropriate FDA Y2K awareness
letter; (3) explain that Y2K problems could potentially affect aspects
of the firms' operations, including some areas not regulated by FDA,
and that FDA anticipates that firms will take prudent steps to ensure
that they are not adversely affected by Y2K; and (4) provide firms with
a copy of FDA's compliance policy guide ``Year 2000 (Y2K) Computer
Compliance.''
In addition, FDA and PhRMA jointly held a government/industry forum
on the Y2K preparedness of the pharmaceutical and biotech industries on
February 22, 1999. The objectives of this forum were to (1) share
information on Y2K programs conducted by health care providers,
pharmaceutical companies, FDA, and other federal agencies; (2) provide
a vehicle for networking; and (3) raise awareness.
On March 29, 1999, FDA revised its February 11, 1999, interim
inspection policy. The revision states that field inspectors are now to
inquire about manufacturers' efforts to ensure that their computer-
controlled or date-sensitive manufacturing processes and distribution
systems are Y2K compliant. Inspectors are to include this information
in their reports, along with a determination of activities that firms
have completed or started to ensure that they will be Y2K compliant.
Further, FDA inspectors may review documentation in cases in which
firms have made changes to their regulated computerized production or
process control systems to address Y2K issues. The purpose of this
review is to ensure that the changes were made in accordance with
firms' procedures and applicable regulations. If inspectors determine
that a firm has not taken steps to ensure Y2K compliance, they are to
notify their district managers and the responsible FDA center.
FDA's interim policy describes steps inspectors are to take in
reviewing manufacturers' Y2K compliance. However, FDA stated that the
primary focus of its inspections for the remainder of 1999 will be to
ensure that products sold in the United States are safe and effective
for their intended use and comply with federal statutes and
regulations, including current ``good manufacturing practice''
requirements (GMP).<SUP>24</SUP> FDA officials explained that the
agency does not have sufficient resources to perform both regulatory
oversight of the manufacturers and in-depth evaluations of firms' Y2K
compliance activities.
---------------------------------------------------------------------------
\24\ These include federal standards for ensuring that products are
high in quality and produced under sanitary conditions (21 CFR parts
210, 211).
---------------------------------------------------------------------------
Nevertheless, according to the March 29, 1999, memorandum, field
inspectors are to note, in the administrative remarks section of their
inspection reports, any concerns they may have with a firm's Y2K
readiness. These reports are to be reviewed by FDA district managers.
According to FDA, if a Y2K-related concern affects the identity,
strength, quality, purity, and potency, as well as safety,
effectiveness, or reliability of a drug product, the district manager
can discuss this issue with FDA's Office of Regulatory Affairs and
determine a course of action, including product correction or removal.
Like VHA, FDA is interested in the impact of Y2K readiness of
pharmaceutical and biological products on the availability of products
for health care facilities and individual patients. FDA's Acting Deputy
Commissioner for Policy informed us on March 24, 1999, that the agency
is thinking about surveying pharmaceutical and biological products
manufacturers, distributors, product repackagers, and others in the
drug dispensing chain, on their Y2K readiness and contingency planning.
In anticipation of a possible survey, the agency published a notice in
the March 22, 1999, Federal Register, regarding this matter. The Acting
Deputy Commissioner said that potential survey questions on contingency
planning would include steps the manufacturers are taking to ensure an
adequate supply of bulk manufacturing materials from overseas
suppliers. This is a key issue because, as we reported in March 1998,
<SUP>25</SUP> according to FDA, as much as 80 percent of the bulk
pharmaceutical chemicals used by U.S. manufacturers to produce
prescription drugs is imported.
---------------------------------------------------------------------------
\25\ Food and Drug Administration: Improvements Needed in the
Foreign Drug Inspection Program (GAO/HEHS-98-21, March 17, 1998).
---------------------------------------------------------------------------
In summary, HCFA and its contractors have made progress in
addressing Medicare Y2K issues that we have raised. However, until HCFA
completes its planned recertification between July and November, the
final status of the agency's Y2K compliance will be unknown. Given the
considerable amount of remaining work that HCFA faces, it is crucial
that development and testing of HCFA's business continuity and
contingency plans move forward rapidly to avoid the interruption of
Medicare claims processing next year. Also, because many states'
Medicaid systems are at risk, business continuity and contingency plans
will become increasingly critical for these states in an effort to
ensure continued timely and accurate delivery of benefits to needy
Americans.
Regarding the health sector overall, while additional readiness
information is available, much work remains in renovating, testing, and
implementing compliant systems. Aggressive action is needed in
obtaining information on the Y2K readiness of hospitals, physicians,
Medicare providers, and public health agencies. Until this information
is obtained and publicized, consumers will remain in doubt as to the
Y2K readiness of key health care components. In addition, while
compliance status information is available for biomedical equipment
through the FDA clearinghouse, FDA has not reviewed test results
supporting manufacturers' certifications; this would provide the
American public with a higher level of confidence that biomedical
equipment will work as intended. The public also needs readiness
information on specific pharmaceutical manufacturers to address
concerns about the stockpiling of drugs and medications.
Messrs. Chairmen, this concludes my statement. I would be pleased
to respond to any questions that you or other members of the
Subcommittees may have at this time.
Mr. Upton. A bonus. I think you're the first witness this
year that has completed his time or her time when the green
light has been on.
Mr. Grob.
TESTIMONY OF GEORGE GROB
Mr. Grob. Good morning, Mr. Chairman and members of the
subcommittee. Thank you for this opportunity today to discuss
Medicare health providers' readiness for the Year 2000. In a
nutshell, health care providers got off to a late start and
they're behind the power curve. Recent events indicate a
productive spurt of activity, but a concerted, disciplined
effort will be needed for them to be ready on January 1 in the
Year 2000.
In order to gauge the readiness of health care providers,
we designed two preliminary surveys which address several key
areas, including Y2K awareness, computer systems readiness,
contingency planning, and vendor cooperation. These surveys
were developed with the assistance of HCFA and of many of the
health care provider organizations, some of whom will speak in
the next panel. And we appreciate their help and support in the
survey.
And in late December 1998, we sent anonymous surveys to a
random sample of 5,000 providers representing hospitals,
nursing facilities, home health agencies, durable medical
equipment suppliers, and physicians. Response rates range from
a high of 49 percent for hospitals to a low of 22 percent for
the physicians. In January we sent a similar survey to 407
Medicare+Choice managed care organizations. We received
responses from 76 percent of them.
We cannot make any statements about people who did not
respond to our survey. Overall, we found that in January 1999
about half of the fee-for-service providers reported that their
computer systems were Y2K ready. You can see this on the charts
over here, about half of them with respect to their billing
systems and with respect to their medical records. Okay?
And most providers who were not ready, believed they will
be ready. And--Mike, if you show the next two charts--you will
see much higher numbers of people who think they will be ready,
almost pushing 90 or 100 percent if you add the two numbers
together.
However, our survey indicated that many providers have not
taken the steps necessary to justify their optimism. And if I
can make reference to Mr. Klink's remarks about the
unreliability of information from people from whom we have not
received information, I could add, that even from those from
whom we did receive information, we have indications of
potential problems. Less than two-thirds had renovated or
replaced their computer systems. Many had not tested their new
or renovated systems. Less than 1 in 5 had tested data exchange
with their vendors. For most, the readiness of biomedical
equipment continues to be a great unknown. And only one-fourth
to one-half had developed contingency plans.
The responses from our Medicare managed-care organizations
were similar, but half of them had tested their systems and
two-thirds had developed contingency plans.
What may be a better indicator of providers' progress is
not what they said in our survey, but how they are currently
submitting claims. Since the release of our survey, HCFA
established April 5, 1999, as the deadline for submitting 8-
digit dates on electronic claims. After this date, claims that
are not in the required 8-digit format would be returned.
This requirement was stressed in a January letter to all
Medicare providers as well as published on the Website in
numerous provider association newsletters. It appears that
health care providers have stepped up their effort to submit
claims that are Y2K compliant. On April 14, the Department
reported that more than 99 percent of Part B claims and 90
percent of Part A claims were sent to HCFA with newly required
8-digit dates.
While this preliminary information is promising, because of
our findings, we are concerned that some providers have yet to
perform the necessary steps to ensure that all of their systems
will be ready on time. Unlike most public agencies, where there
is a constant measurement and evaluation of Y2K progress,
health care providers are under no requirements for renovation
schedules, end-to-end testing of systems, independent
verification of compliance efforts, et cetera.
Neither HCFA nor any of the provider associations, such as
the physician and hospital associations, have the authority to
compel individual health care providers to act. With the
exception of HCFA's April 5 deadline for 8-digit claim
submissions, there are no readiness timelines or schedules
which providers must follow. In essence, there is nobody ``in
charge'' of the providers with regard to the Year 2000
readiness.
The primary responsibility lies with the providers
themselves. We hope the provider community, both individual
providers and their national associations, will rise to the
challenge. However, it is also important that the Department
monitor the progress and assist them by making Y2K information
readily available. HCFA has done a lot of this recently, and
that's encouraging. But everyone must do his part to have any
hope of making it.
I will be pleased to answer any questions you may have.
Mr. Upton. Or her part.
Mr. Grob. Or her part.
[The prepared statement of George Grob follows:]
Prepared Statement of George Grob, Deputy Inspector General for
Evaluation and Inspections, Department of Health and Human Services
Good morning, Mr. Chairman and members of the Subcommittee. I am
George Grob, Deputy Inspector General for Evaluation and Inspections,
Department of Health and Human Services. I am here today to discuss
Medicare health care providers' readiness for the Year 2000.
background
The Y2K problem impacts health care systems in several ways. For
instance, medical records systems need to be updated to ensure
providers are able to access patient histories. Biomedical devices such
as defibrillators and infusion pumps must be checked to ensure they
will continue to operate properly. Furthermore, both government and
provider computer systems must be able to process claims after December
31, 1999 to ensure that providers get paid for services rendered.
As all of you know, the Health Care Financing Administration (HCFA)
has made Y2K readiness its top priority. Recognizing the seriousness of
this challenge, the Office of Inspector General is taking numerous
steps to monitor Y2K progress. For example, we continuously evaluate
the status of HCFA contractors' and other Medicare computer systems.
Meanwhile, we have also collected information from Medicare health care
providers regarding their readiness for Y2K. It is the latter
initiative that I wish to discuss with you today.
In order to gauge the readiness of health care providers, we
designed two surveys which addressed several key areas, including Y2K
awareness, computer system readiness, contingency planning, and vendor
cooperation. The surveys were developed with assistance from HCFA and
several provider associations, including the American Association of
Homes and Services for the Aging, the American Health Care Association,
the American Hospital Association, the American Medical Association,
the Health Industry Distributors Association, the National Association
for Home Care, the National Association for Medical Equipment
Suppliers, the Health Insurance Association of America, and the
American Association of Health Plans.
In late December 1998, we sent anonymous surveys to a random sample
of 5,000 providers representing five provider groups: acute-care
hospitals, nursing facilities, home health agencies, durable medical
equipment (DME) suppliers, and physicians. Response rates ranged from a
high of 49 percent for hospitals to a low of 22 percent for physicians.
In January, we sent a similar survey to 407 Medicare + Choice managed
care organizations. We had responses from 310, or 76 percent of those
surveyed. Our findings are based solely on the providers who responded
to our survey. We cannot make any statements about the Y2K-readiness of
those providers who did not respond.
survey findings
Overall, we found that as of January 1999, about half of fee-for-
service providers reported that their computer systems were Y2K-ready;
and most providers who were not ready believed they will be Y2K-ready
by December 31, 1999. However, our survey indicated that many providers
had not taken the steps necessary to justify their optimism. For
instance, of the fee-for-service providers responding to our survey:
<bullet> Less than two-thirds had renovated or replaced their computer
systems.
<bullet> Many had not tested their new or renovated systems.
<bullet> Less than 1 in 5 had tested data exchange with their vendors.
<bullet> For most, the readiness of biomedical equipment continues to
be a ``great unknown.''
<bullet> Only one-fourth to one-half had developed contingency plans.
The responses of managed care organizations were similar, although
half of the plans have tested their systems and about two-thirds have
developed contingency plans.
recent developments
What may be a better indicator of providers' progress is not what
they said in our survey, but how they are currently submitting claims.
Since the release of our survey, HCFA established April 5, 1999 as the
deadline for submitting eight-digit dates on electronic claims. After
this date, claims that are not in the required eight-digit format would
be returned. This requirement was stressed in a January letter to all
Medicare providers, as well as published on HCFA's web site and
numerous provider association newsletters. Therefore, by monitoring
providers' adherence to the new claim requirements, we can evaluate the
progress providers have made in getting their billing systems ready for
the new millennium. While the ability of a provider to submit claims in
an eight-digit format does not mean that all of its systems are ready,
it does serve as an indication that the provider has taken a critical
step toward full Y2K compliance.
It appears that the health care providers have stepped up their
efforts to submit claims that are Y2K compliant. On April 14, 1999, the
Department reported that more than 99 percent of Part B claims and 90
percent of Part A claims were sent to HCFA with the newly-required
eight-digit date. This is a significant increase from December 1998
when Medicare carriers reported that approximately 96 percent of
Medicare Part B bill submitters and only 33 percent of Part A
submitters that bill electronically were doing so in a compliant eight-
digit date manner. We are monitoring the situation closely.
remaining concerns
While this preliminary information is promising, because of our
findings, we are concerned that some providers have yet to perform the
necessary steps to ensure that all their systems will be ready on time.
Unlike most public agencies, where there is constant measurement and
evaluation of Y2K progress, health care providers are under no
requirements for renovation schedules, end-to-end testing of systems,
independent verification of compliance efforts, etc. Neither HCFA nor
any of the provider associations, such as physician or hospital
associations, have the authority to compel individual health care
providers to act. With the exception of HCFA's April 5th deadline for
eight-digit claim submission, there are no readiness timelines or
schedules which providers must follow.
The HCFA is in a somewhat stronger position with Medicare + Choice
managed care organizations since it contracts directly with them to
provide care to Medicare beneficiaries. The agency is requiring these
organizations to certify that they understand HCFA's Y2K compliant
definition and have tested all of their data systems/interfaces to
ensure Y2K compliance. The HCFA is also requiring them to have a
contingency plan in place in the event that internal systems or key
external business partners fail. However, HCFA does not have the
authority to require all health care providers to meet similarly
specific requirements.
At this time, we have no additional updated information about the
readiness of providers' medical record systems or biomedical equipment.
We believe the primary responsibility for ensuring Y2K readiness
lies with providers themselves. We hope the provider community--both
individual providers and their national associations--will rise to the
challenge. However, with no one ``in charge'' of the providers, it is
important that the Department monitor the progress of the providers,
and assist them by making Y2K information readily available.
This concludes my testimony. Thank you, Mr. Chairman, for the
opportunity to discuss Medicare providers' readiness for the Year 2000.
I would be happy to answer any questions you may have.
Mr. Upton. Well, thank you. I certainly always appreciate
your testimony and your hard work in trying to comply with what
is going to be going on at the end of the year. And I would
have to say about a year ago not a lot of Americans knew what
Y2K meant. And there has been a quick realization in terms of
what it will mean to all of us.
And I know that for me, I visited one of my large hospital
operations 2 weeks ago back in Michigan--this is a hospital
chain that services about 170,000 folks throughout the county
that I live in--and one of the questions that I asked the
administrators and a number of people that were on the tour,
literally for the entire afternoon, was how much was it going
to cost the hospital for compliance. And they sort of scratched
their head and they said, well, probably about $250,000.
At least that is where we are today--and in terms of what I
hear from your statement this afternoon, despite the late
start, it seems that you feel, and the survey that was done
with the hospitals, my own sense is that we're probably going
to meet the deadline for the billing and the payments, because
of the hard work, particularly that's been done the last couple
of months. Would that be your gut reaction as well, from all
three?
Ms. DeParle. As I said, that's my feeling. Again, there are
so many unknowns here. So I'm going on what we know. And as I
said, we know that a very high percentage of claims submitters
are submitting claims to us that are compliant that have the 8-
digit fields. So I believe, yes, that they've gotten the
message there and that on that side of it they will be
compliant. I think the greater unknowns to me are in the
patient care and equipment side of things.
Mr. Upton. Well, that's what I wanted to get to. And we had
a chance to talk a little bit earlier this morning when you
came by, and, you know, I remember looking at the kidney
dialysis unit with about 25 patients that were there and
literally there around the clock. People get appointments for
the 3- or 4-hour program while they're on these machines and
literally every other day three times a week.
And, Mr. Willemssen, you indicated in your testimony that
particularly on the biomedical equipment that the response was
disappointing; the test results didn't know exactly where they
were. I think you had had some communication with HHS in terms
of what their knowledge was. And, you know, whether it be that
or a CAT scan or any of these other megadollar pieces of
equipment that so many Americans rely on, that could, in fact,
be a real problem.
In other words, the billing operation, the providers are
going to be taken care of. But the real question about care for
the patient coming in with the equipment is, in fact, a real--
could be a real problem. Is that your sense?
Mr. Willemssen. Yes. And I would point out, FDA has made
good progress in terms of posting information on the compliance
that manufacturers are certifying to. But it has not made as
much progress in looking independently at test results for
those critical-care and life support items.
Mr. Upton. Now, you all at the GAO did contact HHS, right,
in terms of what they were doing?
Mr. Willemssen. Oh, yes.
Mr. Upton. And you found that response to be?
Mr. Willemssen. HHS's response was quite disappointing. In
fact, the response we got to our recommendation was we don't
have the resources to do this. However, we were unaware that
any such request for resources was ever put forward to the
Congress.
Mr. Upton. Mr. Grob, do you have any comment on that?
Mr. Grob. We haven't independently looked at that
particular issue.
Mr. Upton. You haven't.
Mr. Grob. We have not at that issue. We are a--we have----
Mr. Upton. Can you pull the mike just a little closer.
Mr. Grob. I'm sorry. We have in our audits noted the
problem with the equipment. In fact, in our survey less than
one-third of the people who responded to our survey and, again,
the response rate wasn't what we wanted it to be, only one-
third of them said they were aware of the Y2K readiness of the
biomedical equipment that they used.
Mr. Upton. So is there any--do you contemplate any action
going back to those that didn't respond at all?
Mr. Grob. We can't make people respond to our surveys. It
has to be a voluntary response on an item like that. In fact,
we even made our serveys anonymous so people wouldn't be afraid
to answer questions from the Inspector General's Office. And we
felt the response rate would be higher.
Mr. Upton. Is that anonymous going in the door or anonymous
coming back to you?
Mr. Grob. Either way. They knew that it was an Inspector
General survey, but we had set it up in such a way that they
knew that we wouldn't know who answered. And after much
discussion, we believed that we would get a much higher
response rate if we did it that way. And, in fact, our surveys
have the highest response rates of any surveys that have been
conducted on this, even though they still range from about 25
to 50 percent.
Mr. Upton. Okay. Mr. Klink.
Mr. Klink. It's hard to know where to begin, to be honest
with you. It's such a large issue. Let me start first off, Ms.
DeParle, your comment about--you're optimistic that the
hospitals are getting--let's deal with the hospitals for the
time being. If we can believe the survey, which I want to get
into how accurate that may be later on, but if we can believe
it just for the time being, how do you get from around 13
percent now to somewhere in, you know, the 85, 90, 95 percent
in the next 8 months? How are you convinced that we're headed
in the right direction?
Ms. DeParle. Well, first of all, I'm not relying on the
surveys, because I do think there are a lot of unknowns, as you
pointed out, Representative Klink, on those, although the IG
survey, which is the most recent data and had the best response
rate, better than the RX2000 survey that I looked at before and
the Gartner Group, seems to show a higher percentage of
hospitals are compliant.
And I even thought, going into it, there might be some
difference between rural and urban. So, we asked the IG to
oversample rural providers. And it turns out that there doesn't
seem to be much difference. It seems to relate more to bed
size. So putting that in one place and then looking, as I said,
at sort of the ``proof is in the pudding,'' and what I'm
looking at is the providers that are submitting compliant
claims to get paid by Medicare. And since we required them to
be compliant by April 5 of this year, upwards of 93 percent of
Part A claims submitters are submitting compliant claims. That
says something different to me.
Let me be clear, it does not say that they've done
everything in their hospital that they need to do to be Year
2000 compliant. What it says is they're able to submit a bill
to us in a compliant format. And that gives me the basis for
saying I'm relatively optimistic.
But I would agree with you and with the other panelists
that there are still unknowns here.
Mr. Klink. Mr. Willemssen, do you agree with what the
administrator just characterized?
Mr. Willemssen. I would definitely agree that there are
many unknowns. I would also mention two other points----
Mr. Klink. Do you share her optimism? Let me ask you that.
Mr. Willemssen. I'm by nature more of a pessimistic sort.
What I would also point out is if you look at the health sector
compared to many other sectors in our country on Y2K readiness,
the health sector does not fare well. It is generally not in
good shape, again not because of what we know, but because of
what we don't know.
One other item I would point out for consideration in the 8
months remaining until January 2000 is in some of the other
sectors an approach that is occasionally proven effective is to
actually publicize those respondents who did respond to a
survey instrument, and then it becomes clear who hasn't
responded. And it tends to put, in some cases, some peer
pressure on those nonrespondents to, indeed, also respond to
surveys. So it's something that may be of consideration within
the health sector, too, that has been used effectively
elsewhere.
Mr. Klink. Let's step back a second, Mr. Willemssen. How
effective is a survey instrument in making these
determinations, in your estimation?
Mr. Willemssen. Well, on the one hand, a survey instrument
gives you information that you previously didn't have. So it's
better than nothing. Unfortunately, it is self-reported data,
self-reported data that for the most part has not been verified
and validated by an outside party.
That goes hand in hand also with the low response rates
that have frequently been realized. It is a difficult venture
to try to get as much useful information. Among the things that
can be done is asking questions and surveys about what kind of
independent ver-
ification and validation efforts the respondent has that can
give further proof of their statements of compliance. So there
are some vehicles around that, but it is a difficult challenge.
Mr. Klink. Not only that, Mr. Willemssen, are you asking
them to fill out the survey and give you their best guess? But
I notice that some of the surveys--again I'm not picking on
these groups because they attempted to do something at least--
but it even tells them that they need to verify whether or not
they understand what Y2K is all about. Are there some--just
kind of give me your idea--and I see the red light is on--what
are the primary weaknesses of a survey that attempts to figure
out where providers are in relationship to the Y2K readiness?
Mr. Willemssen. A key weakness is those providers
themselves don't have necessarily the needed information at
hand to know whether their practice, so to speak, is compliant;
whether it's related to biomedical equipment, pharmaceuticals,
or various commercial off-the-shelf items provided by vendors.
That kind of information is not always available. So it is a
challenge in some cases to accurately respond.
Mr. Klink. Mr. Grob, could you just give a quick follow-up
to that? Do you agree?
Mr. Grob. May I--a few comments, first of all. I think what
everyone has been saying about the surveys is true: what you
see is what you get. These are questions with answers not
validated. But some perspective is useful here. These surveys
were done at a time when nothing was known. The response rates
are relatively high compared to all other surveys that were
done.
We saw the surveys that we did as sort of an awareness
campaign. Even sending out the surveys was enough to sort of
turn on the awareness to the subject. Another thing we tried to
do with our surveys was model them after the disciplined
approach which the Health Care Financing Administration has to
follow and which GAO has recommended; so we hope that our
surveys could be used by the providers as a self-test that they
could administer to themselves. They could turn them in to us
and we had our samples, but we also encouraged the various
providers to take it and see, because it will take you through
the steps that you need in order to get ready. So we thought
they could be educational as well.
And one other thing, if I could mention about the thing
that Ms. DeParle said, our survey results showed in January
that half the providers, only half of them, thought that they
would be ready to submit 8-digit bills within 6 months of
January. Only half of them thought they would be able to. But
here it is only 3 or 4 months later and virtually all of them
are submitting this bill. So the uncertainty about the surveys
runs both ways. And what I would say is that there has been a
lot of activity in the last few months as a result of the
growing awareness that would give us more confidence than we
had at the time that the surveys were taken.
So those are some thoughts. I'll have more, perhaps, when
the light comes on again.
Mr. Upton. Thank you.
Dr. Coburn.
Mr. Coburn. Thank you. I guess my only real question is,
Does everybody out there know there's a problem? You know, what
have we done to test to know that they know there's a problem?
Ms. DeParle. What we've done is--and when you ask a
question like that, I have a feeling you may have a view on it,
since you're a health care provider yourself. But what we've
done is to go directly to every provider, and as you know
better than anybody, we, HCFA, don't generally do that. We go
through the carriers and intermediaries and they deal with
providers.
This time I sent a letter directly to 1.3 million providers
that work in the Medicare program telling them about Y2K, what
it is and with a checklist of what they needed to get done. And
we had a survey group--I think it was RX2000 again--go behind
that. And they reported back to me that it had a--I want to say
about a 40 percent retention rate, which they said was very
high for something like that; that a lot of people might have
thrown away. The providers remembered having received the
letter and remembered that there was an issue that they needed
to do something about.
So that's--I guess I believe that the chairman was right
that a year ago a lot of them wouldn't know what we were
talking about. And I have found when I talk to providers that
now they all know. They groan when I bring it up, and they all
say they will be glad when we're at the point when we don't
have to talk about it again. So I guess I do think now, Dr.
Coburn, that most of them do know about it.
Mr. Coburn. Can we imply from the response rate--was it
April 5 mandated deadline?
Ms. DeParle. Yes.
Mr. Coburn. That the knowledge associated with just the
dating, can we extrapolate that to say that has application at
the other areas where Y2K is a problem?
Ms. DeParle. No, sir, I wouldn't do that, for two reasons.
One is, as you know, I don't know how your practice is run, but
many providers use claims submitters, billing services. And, in
fact, some doctors have told me, ``Oh, I got your letter and I
gave it to my billing service; it's their responsibility.''
Well, that's partly true, and it's partly not true. Yes, the
billing service has to translate whatever the doctor gives them
to make sure that it can be paid by Medicare, but that may not
say whether Dr. Coburn's office is really ready, either on the
billing side to generate a bill or on the equipment and patient
care side.
So that's why I've been cautious about kind of limiting my
response to saying I feel more confident today based on the
April 5 response that they will be ready on the billing side to
submit a compliant claim. But I can't say that about biomedical
equipment or about patient care. And I would--again you're the
one with the experience as a provider, but I suspect that a lot
of providers delegate that responsibility.
Mr. Grob. I can shed some light on the awareness, because
I'm looking at our survey form here--and the first question
that we asked our respondents was about their awareness. Most
of them said they were aware of it; they were quite aware of
the impact. They had given thought on it. They were concerned
about the impact that it would have in their care. These are in
the high 90's, even 99 percent. But as soon as we asked them if
they had done certain things, they said, no, or maybe, or some.
And it's interesting that you get that.
If we were getting self-serving answers to all of the
questions, you could suspect it. But we're getting what seemed
to be pretty frank answers to the questions that we were
asking. So when they say, yes, they're aware and they've done
some initial planning, I think we can believe that now. I'm
reading the answers from the hospitals where we got a 49
percent response rate--not great, but still not bad in this
field.
As you go through the questions, the percentages get lower
as you go through the process. So my sense of it is that there
in January, they were at the beginning of the process--
awareness and assessment--and then it was falling off.
Mr. Coburn. Do you know the other thing to bear in mind in
this is you've got to be ready for Year 2000, but a lot of
small practices are going to spend a lot of money, and a lot of
them are waiting to spend that money till the very last moment
that they have to spend it. So I think that gives us some
insurance. Our group just spent $60,000 upgrading computers and
programs for five doctors, which is ludicrous, because of this.
The other question I have is, is there anything we can do
on the equipment side to put the onus on the manufacturer? I
was just sitting here during your testimony thinking about all
the pieces of equipment that I have in my practice, from an EKG
machine, to a fetal nonstress monitor, to laboratory equipment.
That all has internal dating.
Is there a possibility that we can require a notification
for manufacturers as to the Y2K certification by model number
so we don't have to move advanced dates and think we've got it
and not got it?
Mr. Willemssen. That kind of information is now available
in the FDA data base for specific types of biomedical equipment
items, and they are moving to obtain all of that, the
particular make and model numbers which the Department of
Veterans Affairs has had for many of those devices for some
time. So there have been good strides in that area.
That kind of data is publicly available on FDA's Website,
again, in terms of what the vendors are saying, what is
compliant and what is not.
Mr. Coburn. Okay. Thank you.
Mr. Upton. Thank you. Mr. Brown.
Mr. Brown. Thank you, Mr. Chairman. First, I have some
questions from the gentlelady from California, Ms. Eshoo, that
she would like answered both to--put to both panels. If I could
enter those in the record and ask unanimous consent that----
Mr. Upton. No problem. All members will have the chance to
put questions into the record.
Mr. Brown. Thank you. Administrator DeParle, walk us
through the implications of what occurs if a provider isn't
ready, if a provider has serious Y2K problems with regard to
that provider being able to accurately assemble a bill stating
what is owed by the government. What happens to that provider?
Walk us through that, if you would.
Ms. DeParle. Well, we are in the process right now of
validating contingency plans for lots of different scenarios.
But as I have said a number of times, we are starting from the
assumption that providers have to be able to submit a valid
claim. We believe that it would be a mistake to suggest that
they can just sit back and not worry about this problem,
because it's a problem that we all have and providers need to
make sure their systems are ready.
Having said that, we will, as I said, be addressing in our
contingency plans, areas like the one that you've brought up.
There is also, of course, the option, and this happens
nowadays, sometimes providers have a problem, and as long as
providers have documentation, they could submit a paper claim.
However, you can imagine with almost a billion claims a year
our contractors would not be in a position to process a high
percentage of paper claims.
So that is why we think the number one thing we have to do
to get ready is to make sure that providers are doing the
remediation and the testing they need to do to be able to
submit compliant claims; and that's why I regarded the April 5
deadline as so important. And I regard the fact that providers
are submitting, for the most part, compliant claims to be a
good sign of progress there.
Mr. Brown. Thank you, Mr. Chairman. That's all I have.
Mr. Upton. Mr. Bilirakis.
Mr. Bilirakis. Thank you, Mr. Chairman. Mr. Chairman, I ask
unanimous consent my opening statement be made a part of the
record.
Mr. Upton. Without objection.
[The prepared statement of Hon. Michael Bilirakis follows:]
Prepared Statement of Hon. Michael Bilirakis, Chairman, Subcommittee on
Health and Environment
Thank you Chairman Upton. I am pleased to co-chair this hearing
today with you on how Medicare providers are preparing for the Year
2000 date problem, commonly known as Y2K. If left unfixed, this
``computer glitch'' could have a devastating impact on the ability of
any physician, hospital or health care organization to provide medical
services to patients.
By now, we have all heard about some of the potential horror
stories: supply shortages of critical drugs, malfunctions of EKG
machines and other lifesaving devises, or inaccessible medical records
during a life or death situation due to a computer malfunction. The
list goes on and on.
This hearing will also focus on another particularly troublesome
Y2K problem: will providers be able to submit claims in a Y2K compliant
form in order to obtain reimbursement from HCFA.
I believe that even a short-term disruption in provider
reimbursement may have severe ramifications for patients. We must avoid
a situation where home health agencies, nursing homes and other health
care providers operating under tight financial margins are forced to
close their doors because Medicare didn't pay them for their services.
America's seniors simply cannot afford to lose access to care because
our nation's health care providers didn't take appropriate steps to
become Y2K compliant.
Y2K problems facing both the government and providers are enormous.
However, both HCFA and Medicare contractors are making some progress
toward achieving their compliance goals. Many providers, by contrast,
appear ill-prepared to meet their Y2K challenges by the end of this
year.
A recent survey by the Inspector General of HHS found that only
half of physicians, hospitals and nursing homes billing systems are Y2K
compliant. Fewer than 20% of providers have even tested how their
computers' interact with outside vendors. Many organizations lack a
contingency plan to process claims and guaranteed patient care should
their computers malfunction. The health care industry could be more
adversely affected by the Y2K bug than almost any other sector, yet it
has not taken the necessary steps towards addressing its problems.
Our first panel has three witnesses who will testify about HCFA,
Medicare contractor and provider readiness for the Y2K bug. We
especially thank Nancy-Ann Min DeParle, Administrator of HCFA for being
with us today. Ms. DeParle, we would like an update on HCFA's efforts
on becoming Y2K compliant. We would also like to know how HCFA will
direct all medical providers to be Y2K compliant by December 31, 1999.
Our second panel of experts are representatives from our nation's
largest health care associations. Witnesses will discuss their
organization's outreach efforts and will provide the Committee with
recommendations the federal government may take so that patients'
access to care is not compromised.
I want to welcome all of our witnesses. I appreciate everyone
taking the time out of their busy schedules to join us and I look
forward to hearing your testimony.
Mr. Bilirakis. I apologize for being late, but the airplane
did not cooperate. We have an awful lot of that these days. In
fact, this particular flight is being canceled based on the new
schedule coming out in a week or so, so that is going to make
things that much more difficult.
Madam Administrator, Mr. Willemssen, and Mr. Grob, first of
all, welcome. And I know that you're besieged by this problem,
not only besieged in terms of trying to solve it but besieged
by virtue of Congress constantly holding hearings and that sort
of thing.
The equipment manufacturers were invited to testify today
and didn't want to do so. You know, I guess everybody says
leave us alone; we're trying to solve the problem. I don't
know.
But, you know, I take a look at the chart--and by the way I
might add that paperwork is important. The software is
important. Obviously, reimbursements to providers are darn
important, but they're not life and death issues. What's life
and death is the equipment, for crying out loud. And I guess
those charts show provider readiness, I suppose for the most
part, but DMEs are on there, on the paperwork, I don't know.
But even based on the optimistic responses and, you know, I
guess a response--and Mr. Grob made a comment that he was--they
seem to be candid responses, honest responses which I'm very
glad to hear. But I mean, 70 percent, 75 percent, I mean that's
better than the actual figure today. But still that means 25,
30 percent are not going to be ready.
Mr. Grob. That's not quite true. But I won't be able to
ease your concerns completely. That's 75 percent, say, of those
who said they were not ready. So if half of them said they were
ready and then three quarters of the remainder said they would
be, then that's going to tease the total number up a bit.
Mr. Bilirakis. Whatever that percentage then ultimately
comes out to be half of whatever it is?
Mr. Grob. Yes. But your point is still well taken. You're
talking about maybe between 80 and the high 90's who think they
will be ready, even if they haven't taken all of the steps that
would be required to do so.
Mr. Bilirakis. You know, we run into an awful lot of
strange things in life and strange things in this job and, you
know, based on things that we learn and whatnot. But what
really blows my mind is that everybody has known that the Year
2000 was coming for crying out loud. You know, we put people on
the moon. We've done so many great things.
And yet it seems like we fell asleep at the switch, and a
lot of you, Madam Administrator, others have taken over in
recent times, and so we can't certainly blame you for that. But
the real world is that it looks like we aren't going to be 100
percent ready, and when it comes I think to--when it comes to
equipment, medical equipment, anything less than 100 percent is
just not acceptable, because it means life or death.
So what should we do? What should we do? What can we do?
What can we as a Congress do maybe to help out here? How about
the--there's some--equipment manufacturers have shown an
interest. They've shown an awareness. They've shown some
progress, and there are others, based on your testimony,
haven't. I mean, what the heck can we do? We've got to be
ready, as far as those chips are concerned, as far as those
computers are concerned. Go ahead.
Mr. Willemssen. If I may answer that in terms of biomedical
equipment, among the things that you can do is call FDA up here
and ask them about critical-care and life support items; why do
you not want to independently look at the test results to make
sure that those items are indeed compliant?
Contrasting that approach, you may want to invite some
hospitals up who have actually gone and independently tested
some of those items and found that they are not compliant.
I think that kind of approach can further publicize the
issue, publicize the critical health nature of the issue, and
hopefully get further action.
Mr. Bilirakis. But, Mr. Willemssen, the thing about it is
here it is practically May. We don't really have that much time
to go.
Mr. Willemssen. That's correct.
Mr. Bilirakis. And you're right in terms of improving the
improvement or improving the progress, if you will. But it
still looks like by the Year 2000 we're not going to be ready.
We're not going to be 100 percent or we may be 90 percent
ready, 85 percent, 95 percent or something of that nature.
In the meantime, because of the life or death issues--and
I'm referring mostly to the equipment here. And I do have one
question to the administrator that I would like to present,
maybe for the record; and maybe you can respond in writing,
because my time is up.
But in the meantime, what do we do about the fact that
there's going to be medical equipment out there with life or
death repercussions and they are not ready?
Mr. Willemssen. As part of that, I would narrow it down to
critical-care and or life support equipment, because there are
so many pieces of different biomedical equipment. Let's focus
on those most important critical-care and or life support
items.
And I would say that the Federal Government needs to make
sure that those items have been independently checked. And I
think there's time in the remaining 8 months to do that and to
publicize the results so that providers are aware of whether an
item that is critical care and or life support and that has
been deemed noncompliant so they have an opportunity to take
action, that is, either replacing the item or putting an
upgrade in.
Mr. Bilirakis. My time is up. And I'm not going to take any
more advantage. But I guess I think in terms of that great big
word penalty or maybe the people who should be made aware or
should be aware and who are not cooperating out to be should in
some way or other be penalized, but maybe that's another
subject that we ought to talk about.
Thank you, Mr. Chairman.
Mr. Upton. Thank you, Mr. Chairman. Ms. DeGette.
Ms. DeGette. Thank you, Mr. Chairman. I'm wondering if you
can comment particularly, Ms. DeParle, and Mr. Grob, on whether
or not you think certain provider categories like doctors,
hospitals, nursing homes, groups like that are more vulnerable
to not being Year 2000 compliant than other groups? What I want
to know is, are we concerned--are we more concerned of
hospitals as a category that aren't Y2K compliant versus
nursing homes, or is there any differentiation there?
Ms. DeParle. I guess I will take a shot at it. I would say
on the equipment side--I'm concerned about all of them. But
based on the survey that the Inspector General did and
primarily on the responses to the survey, because they were
lower in some areas, I have asked my staff to focus on skilled
nursing facilities and on home health agencies as our next
level of targeted outreach, that those areas seem to me not to
be responding in as high a percentage as the hospitals and that
we needed to do more targeted outreach to them.
And, particularly, with respect to nursing homes, as you
know, in addition to the Medicare beneficiaries who use nursing
homes, we have a substantial Medicaid population who is
residing there. And I would be very concerned both from a
billing, financial perspective and a patient care perspective
if the nursing homes were not ready.
So we've made that judgment. Again, as everyone here has
emphasized, it's based on the data that we have. There are a
lot of unknowns here, but that is my sense of it.
Mr. Grob. I really have to speculate. And it's a mixture
across the board. We've given a lot of thought of this
ourselves, and we came up with not a very definitive answer. It
runs something like this: the more sophisticated providers,
such as hospitals who have many feeder information systems,
much more equipment, more elaborate facilities, have the
biggest problem, but they seem to be the ones that are
concentrating most on it.
And those that have the simpler problems of submitting
simple bills, I will say an office visit bill, a medical record
that could be a paper record that could easily be handled, say
physicians would be the best example of that, they would
probably have the smallest problem. But on the other hand, they
don't seem to be focusing as much on it, at least were not
focusing on it. But I don't know which of those factors end up
with the result that you worry the most about.
Ms. DeGette. I appreciate your candor. Let me follow up,
because I know that HCFA has threatened to withhold Medicare
reimbursements from entities that are not fully Year 2000
compliant. And I think that's probably a significant deterrent
to the big hospitals and some of the others who have the
capability and the sophistication to deal with this.
But what happens if some of these other people who are
providing very important patient care, nursing homes to the
elderly and others. You know, you don't want to sit here and
say I'm sure today we're not going to take away your
reimbursement.
But what reassurances do you have to give these folks that
if they get their act together, you're still going to----
Ms. DeParle. Well, what I've been saying is, all of our
contingency plans are based on the assumption that providers
will be able to submit compliant claims. And as I mentioned
earlier, I think it's very important that that message be sent.
And from what we can tell, as Mr. Grob suggested, providers are
listening. And, again, the ``proof is in the pudding.'' But I
judge that by their having met our April 5 deadline.
In fact, some percentage of the ones that didn't meet the
deadline, we believe we know who they are, and we've been
dealing with the trade associations on that. We think some of
them that did not meet the deadline are no longer Medicare
providers, so we think it's a very small percentage.
Ms. DeGette. But groups like nursing homes and these folks
who are not reporting in, as you say, you really don't have a
clear idea as to whether or not they're compliant. And I think
if you're going to be withholding--potentially withholding
reimbursements to them, something more needs to be done to
reach out and make them compliant or make sure that you help
them get compliant.
Ms. DeParle. Well, I may have confused things a little bit.
When I say I felt like we didn't have as good information on
them, I meant I was referring to the Inspector General's
survey. And they were, as I recall, less responsive than
hospitals and some of the other organized care facilities were.
But when it comes to our submission of compliant claims and
meeting the April 5 deadline, I don't have any evidence to
suggest that skilled nursing facilities or home health agencies
missed the deadline in any higher percentages than anyone else.
But just anecdotally, my sense is that is a place we need
to focus. Again, partly just looking at the risk. The risk
feels higher to me there, especially with the kind of
vulnerable beneficiaries that you have who are residing, for
example, in a skilled nursing facility.
Again, what we have said is that if a provider submits a
valid compliant claim to us, to one of our carriers or
intermediaries, we will be able to pay it; and we're developing
contingency plans in the event that for some reason one of our
contractors was not ready.
And as I said this afternoon, we have a lot of work to get
done between now and the end of the year to make sure we're
ready, but I believe we will be ready to pay a claim that a
provider can submit to us.
Ms. DeGette. Thank you, Mr. Chairman.
Mr. Upton. Thank you. Dr. Norwood.
Mr. Norwood. Thank you, Mr. Chairman. I'm led to believe
that if you all do everything that you can do by December 31,
that on January 1, there would be some surprises with the Y2K
problem. In other words, some of this actually can't be worked
out until we physically get to the date. Am I right in the area
there?
Ms. DeParle. I think that's right. I find those surprises
every day. But I think that certainly then there will be----
Mr. Norwood. But in this particular case, we can pretty
well be assured that there will be some surprises January 1, 2
and 3, for which perhaps we can go right in and correct the
problems then after we physically get to the date, but you
cannot in any way correct them until you get to the date,
because you're not sure what they're going to be.
Under those circumstances, I would like to understand why
your contractors then could not be ready to utilize paper at
least the first month?
Ms. DeParle. I don't mean to suggest that the contractors
will not be ready to accept some paper claims, Dr. Norwood. The
concern is that with almost a billion claims being processed,
it would send the wrong message if I were to say to you,
everyone in Georgia can submit a paper claim because the
contractor for Georgia could accept them. I don't believe the
contractors could accept that volume of paper claims.
So those kinds of scenarios are certainly among the things
we're looking at in our contingency planning and our goal is to
be ready so that that there are no surprises----
Mr. Norwood. But we already agreed there are going to be
some?
Ms. DeParle. There probably will be, but it won't be the
things we will be thinking about today. It might be something
that we hadn't even thought of. But if you operate on that
basis, we cannot accommodate 900 million paper claims. And so
we have to do everything we can, and I think this committee and
the Congress needs to help us to do everything that we can to
make sure that we mitigate the risk. That's how we will be
prepared to deal with surprises.
Even if you agree that surprises are going to occur, you
minimize the number of those and the nature of them if you have
mitigated the risk. And a big factor in risk mitigation is
making sure that providers are ready.
Mr. Norwood. I would agree with you. And I certainly agree
with you that we don't want to send the message out that all
during January of 2000 don't worry about it, just send in a
paper claim. I don't want to send that message either. However,
it might be useful for everybody concerned to understand that
we are sort of going to expect the contractors to be able to
handle some of this, as a contingency too; that we don't want
to encourage it. We hope nobody needs it.
But part of the responsibility on the Y2K problem is your
subcontractors, and we need to have some assurances that they
don't draw a line in there and say, well, too bad you can't
work out the problems on your computer and we will see you next
year.
Ms. DeParle. It won't be done that way, Dr. Norwood. What
we are talking about is contingency planning. The contractors
have to develop plans that we accept and the contingency
planning at HCFA will be done at the highest levels by HCFA,
not by individual contractors. And we have also----
Mr. Norwood. I would like the things that you accept to be
things that I would accept.
Ms. DeParle. Sir?
Mr. Norwood. I would like for you to say to me some of the
things that you're willing to expect from your contractors and
would accept are some of the things that I might be willing to
accept as well.
Let me ask each of you briefly to read the tea leaves for
me. I ask you this question based on your hard work, based on
your experience, your knowledge, expertise in this area. How do
you think each of you--how do you think January will look? What
do you really think is going to happen?
Ms. DeParle. Do I go first?
Mr. Norwood. We don't hold you to it. I'm asking you to
read the tea leaves. I'm saying it up front. I know this is not
scientific, but you do have lots of information. You do have a
lot of feel for this. How does this feel to you?
Ms. DeParle. I am feeling more and more confident. I
believe there may be some limited problems that would be a week
or so in duration, not a major catastrophe where we can't pay
claims. I'm focusing on my piece of the problem and on that I
feel confident that our contractors will be ready to pay
claims.
And, again, on the provider side, based on the dramatic
increase in activity and understanding that I've seen over the
past 6 months or so--and I think it's consistent with what Mr.
Grob said about the IG's analysis--I believe providers will,
for the most part, be ready.
Mr. Willemssen. I would say it's probable that there will
be some system-based disruptions. That's why it's especially
important that HCFA continue its excellent efforts in the
business continuity and contingency planning area because in
the event that those system disruptions do occur, then HCFA
will be ready with those contingency plans.
The other thing I would add is I know that the time is
getting late, and we're in April; but we still have 8 months to
do something that will impact what happens in January 2000.
Mr. Norwood. So it's just probable that there will be--Mr.
Chairman, I know my time is expired. It's just probable that
there will be interruptions?
Mr. Willemssen. I think it's probable there will be
disruptions, because there are so many systems; there's so many
data exchanges, so many data flows, that even in an ideal
world, you can't guarantee perfection. And that's why the need
for contingency plans.
Mr. Norwood. Well, I would agree with you. I think it's
absolutely assured there will be some problems. I don't see how
it's avoidable.
Mr. Grob. My prediction. I predict that in the Medicare
arena the billing will probably be okay. And I think that the
medical records will probably be okay. I'm less optimistic
about the equipment. And my reason is that for the billing and
the medical records, I see in place various activities that are
addressing that quite systematically with schedules, where I
don't see the same schedules and systematic addressing of the
equipment.
Now beyond that--disruptions that might occur as a result
of electrical systems, transportation systems, communications
systems--I'm not prepared to even begin to guess at that at
all.
Mr. Norwood. I thank the chairman.
Mr. Upton. Mr. Grob, I know you're a Cub fan too. That's
why you're just an optimist, right?
Mr. Grob. I can't help it. Probably in the long run, it's
the wrong line of work as a result.
Mr. Upton. I have--you know, as I think about the questions
by my colleagues and your answers and in reading through your
testimony, I have really sort of three questions. And I know,
Ms. DeParle, you talked a little bit earlier about maybe
there's a way we can get access to the lists of those
providers, at least in our own districts of those that both
responded and those that did not.
Is that possible to do for the members of the subcommittee?
Ms. DeParle. We do have--we do know which providers are
submitting compliant claims. And, in fact, as we discussed
earlier, we have made those lists available to the trade
associations so they can help us contact the providers and
claims submitters directly. So, yes, we can work with you on
that.
Mr. Upton. Yes. I think that would be valuable for all the
members of the subcommittee. And I sure would like to see the
ones in my district as I know many of them, if not all.
The second question that I have, again, it sort of goes
back to those that did respond. There's really no way to find
some independent verification. It's just like if you had to
take paper claims for Georgia, all of a sudden 900 million--you
can't do it, and you're talking about, you know, tens of
thousands of different providers. There's no way you can have a
Whirlpool repairman go visit every one of those households and
figure out who is doing the job and who is not. Whirlpool is in
my district, not Maytag.
Ms. DeParle. There's one thing we can do, Mr. Chairman; and
I've been remiss in not mentioning this. Our contractors are
doing testing with a number of providers. And, for example, I
was down in Florida last week with the Federation of American
Health Systems, the proprietary hospitals--I don't know if one
of those is in your district or not--but one of the large
national chains told me that they have tested against our
contractors, and I think seven different contractors, in a
number of different States, and everything worked.
And, in fact, what they told me was that they were so glad
that Medicare was doing that testing, because there are other
insurance companies that were not allowing them to test. So one
thing I can say to you is that we can do this testing; we've
made providers aware of that. That would help providers to feel
more confident right there.
Mr. Upton. You know, Ms. DeGette asked a question a little
bit earlier--I think it was Ms. DeGette--about having further
hearings, particularly, and I would like to have one with both
FDA and the device manufacturers to come up and tell us what
they're doing. But I related to a small plant tour that I had a
couple weeks ago. I visited a steel plant. And as we walked
into this plant that was decades and decades old, literally on
every piece of machinery there, there was a little sticker as
to whether it had been checked out or not.
And I think that it would be a valuable exercise to see at
least some encouragement, if not perhaps a mandate, for device
manufacturers of real critical care to have some say or some
relay of in-
formation to those folks using that. It's almost like a
warranty as to whether or not they need--whether it's in
compliance or not. As I think about Dr. Coburn's practice, a 5-
member operation, different small practices around the country,
without some information, without some checklist, they really
are lost. And it's almost like starting all over again.
What would your comment be on that, Mr. Grob?
Mr. Grob. It seems to be----
Mr. Upton. Is there anything in place to see some type of
requirement or some expert that can come in and help providers
large and small?
Mr. Grob. I don't think there's answers to that. I think
the GAO has described what is the case, which is there's an
attempt to jack up considerably the information sharing and to
make it public. So that if you look on FDA's Website, you also
have the equivalent of that for those who get to information
that way, because manufacturers are writing in, declaring about
their equipment, you know, and providing, I guess, numbers to
call where people can find information about the equipment.
What's been pervading this hearing is interesting from this
point of view: it has an HCFA orientation to it, although the
FDA issue arises as well. But----
Mr. Upton. You have that empty chair next to you right
there.
Mr. Grob. The empty chair, okay. But in no case do we have
anyone who is in charge of that. Medicare at most is probably
half the medical care--I don't know what the percentage is
these days. And all the things that HCFA has been doing has
almost been on behalf of the entire industry because all of its
testing and all of its standards will spill over into the rest
of the industry.
But that's not the case with the Food and Drug
Administration. Where HCFA has been successful, in addition to
its testing and its rigorous schedules and its GAO and OIG
oversight--the additional success, for example, with the
billing--has been the increase in knowledge, the increase in
expectations, and the knowledge of the consequences of it not
happening.
So to some extent, jacking up the public knowledge of
what's going on, as you suggested earlier, might be, without
any other authority, the most immediate effective thing that
can be done. However, I have to categorize everything I just
said as speculation on my part. We haven't done a formal study
of this particular aspect of the problem, but have given some
thought of the overall mechanisms that are available to push
this on a little bit.
Mr. Willemssen. If I might add, Mr. Chairman, much of the
information on equipment items from a vendor perspective is
available currently via the FDA Website. It's a matter of
further publicizing that availability. And, again, if I may
repeat, making sure that for critical care and life support
items that there's some independent check on their compliance
status.
Mr. Upton. All right. In fact, I think I'm going to ask Dr.
Coburn when I see him next, I wonder if his practice, in fact,
checked before they spent the money that they did to replace
it. Mr. Klink.
Mr. Klink. To the administrator. On the panel after you,
one of the witnesses, Annette L. Mackin, chief financial
officer VNS of Rochester and Monroe County in New York--and
part of her testi-
mony, I want to read to you a line to you and I want you to
react to it, if you would. She said: ``The NAHC's main concern
is that HCFA will fail to take into consideration unique
challenges facing home health care and hospice providers and
becoming Y2K compliant. Failure to reimburse claims would be a
death now for providers who are already struggling with lower
reimbursement rates and increased regulatory burdens. HCFA by
withholding reimbursements on claims that are not Y2K ready
will unfairly and adversely impact those smaller providers who
cannot survive interruptions in payment.'' And it goes on and
on.
How do we get to that position? Isn't it possible for them
to just do things the old-fashion way, that is, sit down with a
piece of paper and send out a bill, or, in fact, have we become
so dependent on computers that that is an impossibility today?
Ms. DeParle. No, it's not an impossibility. And as I said,
we are--among our contingency plans we're looking at things
like what if providers had to submit paper claims. But that's
not how I hear that testimony that you just read. What some
providers, Mr. Klink, have wanted is for us to say that even if
they can't submit a claim or show any documentation that we're
going to put money out the door.
And I think this committee knows of my concern about
program integrity. I know of your concern. I talked to most of
you individually about your concerns about waste, fraud, and
abuse in the Medicare program. So I think it would be a mistake
to suggest to providers at this point, when there are 8 months
to go, ``don't worry about it; you're not going to have to
worry about submitting a valid claim.''
The first step is for our providers to get ready for the
Year 2000. I believe they can do it. And, second, if there are
providers who for some reason can't submit a computer-generated
claim, as I said, we have contingency plans in place. But I
don't want to suggest that it's going to be easier, that we
want them all to sit back and not do what they need to do.
Mr. Klink. How realistic is it to believe if they have to
go back to billing the old fashioned paper way, that the error
rate, in fact, would go up significantly?
Ms. DeParle. Oh, I don't know that I can speculate about
what would happen with the error rate. But I can tell you that
given our resources, if it were a large number of providers who
had not made the changes they need to make to their computer
systems to be able to submit a valid claim, we would not be
able to pay them in a timely manner.
So what I have said is all of this effort over the last 18
months that we have put forward, making this our number one
priority, was to make sure that our claims processing systems
were ready, so that if a provider can submit a valid claim, we
will be able to pay it.
Mr. Klink. My concern, and I don't want to get off into the
weeds here because we've got a limited amount of time, but you
testified before about how many of them you thought would
comply by being able to do the 8-digit format.
My question is, what systems are there behind that claim
form that actually put all of that information together to make
sure that, yeah, you used an 8-digit format, but how do you
know the accuracy of everything that's being done once we think
we're Y2K compliant?
Ms. DeParle. We don't know for a fact the accuracy of
everything that's being done, and that's one of the things
we're going to focus on over the next few months. As I said,
based on that and based on the Inspector General's survey
results, I believe that home health agencies and skilled
nursing facilities need some special outreach to make sure that
they are, in fact, prepared to submit valid claims.
Mr. Klink. See, that's where I'm confused. And I don't mean
to be difficult. I want to get to the bottom of this. On one
hand, you're optimistic that they are getting their billing
systems together; on the other hand, we don't know what's going
into all the information that's coming into the claims that are
being filed with HCFA. And we have no idea whether the error
rate will go up or go down.
And I guess, you know, the tone of my voice is only out of
my own frustration, because I can't--I mean, I can't get a
handle on this either. But I sure as heck know that those
Members of Congress, not just the ones sitting here, but our
friends, are going to be hearing from our hospitals and
providers back home once claims are not being paid in a timely
fashion; and there's a threat that the doors are going to be
closed and services are going to be shut down, then everybody
will be paying attention. We got 8 months to really get our
arms around there.
Mr. Willemssen, if we really wish to understand what is
going on with regard to these provider groups, what do we
really need to do beyond these survey instruments to kind of
get at the underlying roots of the problems that we're faced
with?
Mr. Willemssen. Well, one, I would say HCFA should continue
its very strong outreach efforts. I think the administrator has
talked about some of the things that she's done over the last
several months. I think to continue that is especially
important, so that from the perspective of awareness that that
awareness level continues to escalate.
Second, I believe it's important to start considering
publicizing information on exactly who is providing readiness
information on Y2K and who is not. This can possibly spur
others to act accordingly. And as I mentioned earlier, this has
been a successful mechanism in other sectors that we may want
the administrator and others to consider applying to this
particular sector.
Mr. Klink. Mr. Chairman, you've been very patient today.
And, again, I want to thank you. I don't know that we've much
more than begun to scratch the surface. I know that in
elections and politics we do polling to tell us where we are,
how popular we are, what issues, but we actually sample--and I
used to be in the TV business, and we had these firms that made
very good money going out and sampling what people were
listening to, what they were viewing.
I don't know if we can do the same thing by choosing
certain provider groups and going in and doing a full audit,
have the auditors actually go in and take so many rural
hospitals and so many urban hospitals and so many in the
Midwest and however scientifically they do this. But I really
am concerned that this is going to be an issue come the first
of the year that all of our colleagues are going to be
interested.
I will make you a deal. I would like to be able to come to
Michigan and sit--if we can conduct a field hearing, if we can
get cooperation of our witnesses to come there, and I would
invite you to come to Pennsylvania. I think that we need to get
to take a look at what some of our local hospitals are doing,
and we can do that armed with the information as to which
hospitals and which providers in your district have actually
filled in the survey and which have not, and we can do the same
thing in my area.
It might give us a little better handle on where these
survey instruments are accurate and where they are not. If we
can see specifically where some of our providers are in
becoming Y2K compliant. And I certainly would welcome the
opportunity to come into your district as well.
Mr. Upton. I think that's a good idea. I'll look at my
Cubs-Pittsburgh schedule here in my wallet and see what we
might be able to do. Mr. Bilirakis.
Mr. Bilirakis. Mr. Chairman, I've said that we all should
be concerned and not belittle our concern with the
reimbursements to the providers and whatnot, Okay? And we have
representatives from providers in the next panel; we will hear
from them. So I don't mean to belittle all of those.
But I guess is there a provider out there--is there a
single provider out there no matter how big or how small who
does not know that there's a Y2K potential problem and that
something has got to be done? I think that there probably isn't
a single provider out there. And I--if they're not ready by the
first of the year, they're just not going to be reimbursed on
time, is that correct, Madam Administrator?
Ms. DeParle. What we've said is that providers need to be
able to submit a valid claim.
Mr. Bilirakis. All right. If they're not, if they're not
valid, then there is going to be a delay in reimbursements; is
that right?
Ms. DeParle. That's probably right.
Mr. Bilirakis. They're going to be penalized, and the
penalty is serious. And my own son is one of those providers,
et cetera, et cetera. I'm not trying to belittle that. It's a
paperwork thing when we're talking about equipment?
Ms. DeParle. It's a paperwork and a program integrity
issue.
Mr. Bilirakis. It's a lot of those things. It affects the
patients, too, when the providers are not happy, because
they're not reimbursed on time; she's not reimbursed on time
and all of that. So we know that that's serious. And I don't
mean to belittle it. But, you know, we know that there's
equipment out there, critical, EKG monitoring equipment, other
type of monitoring equipment, all sorts of things of that
nature that there isn't that business where they're not going
to get reimbursed, a patient dies.
I guess I should know the answer to this, but I know it's
an FDA situation----
Ms. DeParle. Yes, sir, I agree with you. And I said, I
think, before you were able to get here today, that I'm dealing
with the financing side of it. That's an important side of
health care as you well know. But I agree with you that patient
care and safety of pa-
tients is the most important thing. And that is the thing that
I think that all of us have agreed is the biggest question
mark.
Mr. Bilirakis. All right. I'm a medical equipment
manufacturer provider, okay; and I'm not a big guy. I'm a
little guy. I'm not--I don't want the press to pick up that I
have that as a side. But if I were and I'm a little guy, can
I--I mean, do I have--I have the power without too much of
expense to get this thing done in time? Mr. Willemssen?
Mr. Willemssen. You would have the means to find out
information in all likelihood on the equipment you're using and
what the vendor or the manufacturer of that equipment is saying
about its Y2K compliance status.
Mr. Bilirakis. All right. So if I----
Mr. Willemssen. That kind of information is, for the most
part, readily available via the FDA Website, which the VA site
has supplied a lot of information to so that the FDA Website
has a lot of rich data.
Mr. Bilirakis. All right. So should there be some kind of a
timeline insofar as I'm concerned or if I haven't shown enough
interest in terms of progress and that sort of thing that I
maybe lose that contract or I lose that right to furnish the
durable medical equipment, which again stands for life and
death?
Mr. Willemssen. Yes. I think that's a very good point you
raise. What has happened, for example, at the Department of
Veterans Affairs is that they notify all of their medical
facilities of particular pieces of equipment that have been
deemed noncompliant, and they direct all of those facilities to
get that equipment out of their inventories and replace it as
soon as possible. And I think that is a model that can be used
by other medical facilities across the country.
Mr. Bilirakis. Do you know if we know whether FDA--they're
not here to respond for themselves--do you know if FDA is
showing any kind of inclination that they're doing anything
similar?
Mr. Willemssen. I think it is charitable to say FDA has
been predominantly reactive on this issue rather than
proactive.
Mr. Bilirakis. Before my time is up, Ms. DeParle--Nancy, in
your testimony, you discuss the difficulties of implementing
system changes so close to the end of the year. We know how
very difficult that will be.
Is it, therefore, your position that if Congress passes any
legislative changes to provider reimbursement during 1999 that
the law's effective dates should not be triggered until
sometime next year, let's say the springtime of the Year 2000?
Ms. DeParle. In general, yes, sir. We have, as you know,
had a big challenge in trying to implement the Balanced Budget
Act on top of making all of these Y2K changes. And we've had
to, in fact, delay some provisions. And there is a distinction,
I will just suggest to you, there are some changes that are
easier to make than others.
If you were to enact a new prospective payment system, I
would plead with you not to require us to do anything on that
until well into the next year. If it's a simple change in a
price, what our systems experts called a pricer, that is easier
to do. But my colleague, Mr. Willemssen, tells me every time we
talk that any change we make introduces risk.
I don't have the luxury of operating a fixed system,
because we've got new beneficiaries coming on every day.
Mr. Bilirakis. That effective date can vary depending on
how major the change might be; is that right? It doesn't
necessarily have to be one date?
Ms. DeParle. That's right. We would want to work with you
on that. And I appreciate your acknowledging the difficulty
that we have.
Mr. Bilirakis. Thank you. Thank you very much, Mr.
Chairman.
Mr. Upton. Thank you. Panel, we very much appreciate your
time well spent with us this afternoon. And we wish you a
terrific week, and we look forward to seeing you in the future;
and we've not been disappointed by your performance. And you
are now formally excused.
Ms. DeParle. Thank you.
Mr. Willemssen. Thank you, Mr. Chairman.
Mr. Grob. Thank you.
Mr. Upton. The next panel, panel 2, we have Mr. Ron
Margolis, chief information officer of the University of New
Mexico Hospital, representing the American Hospital
Association. Mrs. Annette Mackin, CFO of Rochester and Monroe
Counties, National Association for Home Care, New York. And Dr.
Richard Corlin, Speaker of the House of Delegates from the
American Medical Association here in Washington.
Again, I appreciate you all submitting your testimony in
advance. We had a chance to take a look at it. And as you know,
as was the first panel, we have a long history of testifying
under oath before this subcommittee.
And do any of you need to have a lawyer or have private
counsel? Would you then rise, raise your right hand?
[Witnesses sworn.]
Mr. Upton. Thank you. You are now under oath. Your
testimony is submitted for the record in its entirety. And we
would like to limit your presentation to 5 minutes.
And we will start with Mr. Margolis. Thank you.
TESTIMONY OF RONALD MARGOLIS, CHIEF INFORMATION OFFICER,
UNIVERSITY OF NEW MEXICO HOSPITAL, AMERICAN HOSPITAL
ASSOCIATION; ANNETTE L. MACKIN, CHIEF FINANCIAL OFFICER, VNS OF
ROCHESTER AND MONROE COUNTIES, INC., NATIONAL ASSOCIATION FOR
HOME CARE; AND RICHARD F. CORLIN, SPEAKER OF THE HOUSE OF
DELEGATES, AMERICAN MEDICAL ASSOCIATION
Mr. Margolis. Thank you, Mr. Chairman, for the opportunity
to come before you today to discuss and clarify hospital
readiness to the best of my ability.
Mr. Chairman----
Mr. Upton. Can you bring the mike just a little bit closer.
Mr. Margolis. Good. I feel like a disc jockey. Mr.
Chairman, I am Ron Margolis, chief information officer at the
University of New Mexico Hospital in Albuquerque. I'm here on
behalf of the American Hospital Association, 5,000 hospitals,
health systems, networks, and other connected-related providers
of care.
The AHA and its members are committed to ensuring the
smooth delivery of high quality health care is not disrupted by
potential Year 2000 problems. A very recent February survey of
AHA members found that the majority expect to be Y2K compliant
by January 1. Almost all expect to be sufficiently prepared so
that the critical operations will not be affected; that
ambulance communication systems, for example, will not fail;
that patient monitoring systems will be fully operational; and
that billing and reimbursement systems will be working
properly.
On the topic of this hearing, information systems, we found
similar results: 12.9 percent of hospitals said their
information systems were already Y2K compliant. Another 85
percent expected their information systems to be ready by year
end or expected no operational problems. Less than 1 percent,
.5 to be exact, expected noncompliance with possibly adverse
effects.
Of course, hospitals and health systems are establishing
contingency plans in case of disruption. Hospitals are in the
business of dealing with the unexpected, floods, hurricanes,
other potentially disastrous events that unfortunately are a
fact of daily life. It is incumbent upon hospitals to also
prepare to the potential Y2K disruption of any essential
services. And our survey indicates that members are doing just
that.
They are directing their efforts both internally across
their facilities and externally within their communities. This
includes working with such entities as utility companies,
emergency medical service suppliers, and other health care
providers.
Contingency planning is not something that must be done
only by hospitals. On average, hospitals and health systems
receive roughly half of their revenues from Medicare and
Medicaid. If that much revenue were to be cutoff, hospitals
could not survive and, of course, patient care would be
jeopardized. That's why it is imperative that the Health Care
Financing Administration establish a fail safe contingency plan
itself that anticipates and addresses how to respond in case
payment mechanisms, either on the provider side or on the
government side or in some intermediary connection such as the
phone system, failed. We have offered to work with HCFA and we
look forward to hearing from the agency on the details of its
contingency planning.
We believe that a system of advanced payments based on past
payment levels is one way to ensure that beneficiaries continue
to receive the care they need by assuring that hospitals have
the resources they need to care for Medicare and Medicaid
patients.
Also, the Medicare Payment Advisory Commission has included
its hospital perspective payment system update recommendation
for fiscal Year 2000 and additional .5 percent to cover the
hospital's costs of becoming Y2K compliant. We ask Congress to
increase the congressionally mandated hospital update factor by
this .5 percent to reflect this MedPAC recommendation.
At the University of New Mexico hospitals, we're working
very hard to ensure that our information systems are ready for
Y2K. Critical systems include information systems for patient
care, medical devices, medical records, billing, and others all
served by emergency and backup power. External contingencies
such as a power outage or a phone transmission loss or a
failure of HCFA to be able to respond to claims submitted.
Our power supplies, for example, are represented by two
levels of fail-safe. The major computers which do the patient
information systems, which are responsible for electronic
medical records, and which support the network that connects
patient monitoring devices are on what's called uninterruptable
power, which is basically a large battery backup system which
provides upwards of 3\1/2\ hours of continued service should
there be a power outage.
In addition, we have just completed the testing and
installation of a major diesel fuel generator system, which
keeps that system charged.
May I have an extra couple of minutes? I'm sorry to run
overtime.
Phone systems, we have overnight backups of previous day's
activities, which allows us to recreate at any point in time
any failure in data that may have occurred, so we can go back 5
days or 5 years and recreate what happened. The system can be
restarted, recreated from the data base so that, for example,
on January 3, if we found that our January 1 bills were not
received properly, we could go back and recreate them in
various formats. We also could accumulate bills for several
days, or several weeks for that matter, should HCFA or a phone
system failure preclude us from sending the bills in on time.
Our internal information systems, we're in the process
right now of completing end-to-end testing of computer systems.
What is required for this is parallel testing using live data
with January 1 dates and thereafter, leap year dates and
thereafter, the other critical dates that will occur very
shortly after the beginning of January 1.
For us self-sufficiency is not just in-house, but also it
includes the general community, county of Albuquerque,
including the emergency, police, fire and other hospitals, as
well as referring hospitals and transportation services.
Mr. Chairman, the Year 2000 issue will affect every aspect
of American life. Few, if any of us, are as important as are
the health care community. Americans hospitals and health
systems and the AHA are partners in the effort to prepare for
the year 2000.
We encourage Congress and our Federal agencies to work with
us as well. In this project of highest priority, together we
can ensure a smooth and healthy transition into the new
millennium. Thank you.
[The prepared statement of Ronald Margolis follows:]
Prepared Statement of Ronald Margolis on Behalf of the American
Hospital Association
Mr. Chairman, I am Ronald Margolis, chief information officer at
University of New Mexico Hospitals in Albuquerque, New Mexico. I am
here on behalf of the American Hospital Association's (AHA) nearly
5,000 hospitals, health systems, networks, and other providers of care.
The AHA and its members are committed to taking the steps necessary
to prevent potential Year 2000 problems from interrupting the smooth
delivery of high-quality health care. We appreciate this opportunity to
update you on our efforts, to outline the role that the AHA has taken
in aiding the health care field, and to highlight some areas in which
the government and its agencies can help as they play their critical
roles in this historic effort.
progress on y2k compliance
The majority of the nation's hospitals expect to be completely
``Y2K compliant'' by January 1, 2000, based on the results of a
nationally representative survey we conducted. Of the balance, almost
all expect to be sufficiently prepared that critical operations will
not be affected. The survey occurred in February 1999, and asked
hospitals about their Y2K readiness by the end of this year in three
areas: information systems, medical devices and infrastructure/physical
plant.
Our Y2K readiness survey indicates that almost all of the nation's
hospitals expect to be prepared to meet the Y2K challenge. Respondents
represented not-for-profit and investor-owned hospitals in urban and
rural areas. Following are highlights.
Information Systems
Information systems include financial, billing, human resources,
clinical, inventory control, and other systems.
<bullet> 12.9% of hospitals said their information systems were
compliant when they responded in February 1999
<bullet> Another 84.7% of hospitals either expected their information
systems to be Y2K compliant by year end or expected no problems
in their operations
<bullet> 0.5% expected non-compliance with possible adverse effects
Medical Devices
<bullet> 5.7% of hospitals said their devices were compliant when they
responded in February
<bullet> Another 90.4% of hospitals expected their devices to be Y2K
compliant by year end or expected no problems in their
operations
<bullet> 0.5% expected non-compliance with possible adverse effects
Physical Plant/Infrastructure
Physical plant/infrastructure includes such areas as heating and
cooling, environmental control systems, telecommunications, and
security systems.
<bullet> 23.8% of hospitals were compliant when they responded in
February 1999
<bullet> Another 71.7% expected to be Y2K compliant by year end or
expected no problems in their operations
<bullet> 0.4% expected non-compliance with possible adverse effects
In the survey, less than one percent of hospitals predicted
possible ``adverse effects'' in their critical operations as a result
of the change to the Year 2000.
The AHA survey comes on the heels of a report issued last month by
the Health and Human Services' Office of Inspector General (OIG) that
also indicates high confidence in hospital Y2K readiness by the end of
the year. The OIG report reaffirms what we've been hearing from our
hospitals on their Y2K efforts. The fact that hospitals represented the
largest percentage of responses to the OIG report shows their
willingness to be forthcoming in their Y2K preparation.
Our confidence in the accuracy of our polling methods is shared by
the Medicare Payment Advisory Commission (MedPAC), the federal body
that advises Congress on issues affecting the Medicare program. MedPAC
relies on other AHA member surveys when the commission deals with
Medicare payment issues.
Part of hospitals' Y2K preparation is to meet HCFA's requirement
that Medicare bills be submitted in an 8-digit format--two slots each
for the month and date, and four slots for the year. HCFA found that,
as of mid-April, 90 percent of Part A bills, from organizations such as
hospitals, skilled nursing facilities and home health agencies, were
submitting Y2K compliant claims. Since this marks a more than 30
percent increase from the 58 percent compliance HCFA cited just two
months ago in congressional testimony, we have every reason to believe
that the percentage will approach 100 percent very soon.
The AHA survey results also respond to questions and statements
suggesting that rural hospitals, contrary to what has been widely
reported anecdotally, are keeping pace. According to the rural
hospitals that responded to our February survey, 93 percent said their
information systems were either totally compliant or were moving toward
compliance without major difficulty; 92 percent said their medical
devices were either totally Y2K compliant or were moving toward
compliance without major difficulty; and 96 percent said their physical
plants were either totally Y2K compliant or were moving toward
compliance without major difficulty.
These findings are in line with the OIG's survey, which also found
no statistically meaningful differences in Y2K readiness between rural
hospitals and other categories of hospitals.
And the Healthcare Year 2000 Readiness Assessment #2, prepared for
HCFA by the Rx2000 Solutions Institute and released in January,
identified hospitals as the healthcare sector that is ``among the most
aggressive towards meeting its Year 2000 deadlines.''
Taken together, all of this--the AHA survey, the OIG survey, HCFA's
information about billing compliance, statements by key government
representatives, and the Rx2000 survey--points toward the same
conclusion: hospitals expect to be ready to meet the Y2K challenge.
contingency planning
America's hospitals and health systems are in the business of
dealing with the unexpected. They are used to mobilizing quickly in the
face of floods, hurricanes and potentially disastrous events that are
an unfortunate fact of life. There is no reason to believe that they
will not also be ready for the Year 2000.
The AHA believes that the best approach for hospitals to manage
potential disruptions on January 1 is to anticipate them. Specifically,
it is incumbent upon hospitals to prepare now to respond to the
potential loss or disruption of any essential hospital processes or
services, and our survey indicates that our members are doing just
that. They are directing their efforts both internally across
hospitals' facilities, and externally within communities. This includes
working with such entities as utility companies, emergency medical
services, and other health care providers.
According to the AHA's survey, 66 percent of hospitals have
initiated contact with utilities in their area; 44 percent have
initiated contact with other hospitals; 38 percent have initiated
contact with fire and police authorities; 36 percent have initiated
contact with ambulance services; and 35 percent have initiated contact
with their local governments.
The AHA, along with state, regional and metropolitan hospital and
health system associations, is working hard to make sure that America's
hospitals and health systems are informed about, educated on, and
assisted with Year 2000 contingency planning. We recently distributed
to every AHA member a briefing on hospital contingency planning. This
briefing emphasizes the interdependent nature of health care, and
stresses the need for hospitals to plan in advance, with their key
partners, how they will handle potential Y2K-induced losses or
disruptions.
This executive briefing was followed up early last month by ``how-
to'' materials for hospital contingency planning, including a business
continuity planning guide.
In addition, the AHA will be working with the Federal Emergency
Management Administration to coordinate emergency preparedness efforts
at a national level with contingency planning taking place at
individual hospitals in local communities. We plan to bring together
representatives of major health systems and health care manufacturing
and supply companies to discuss how we can provide guidance to the
health care field on issues related to Y2K preparedness and concerns
about health care equipment and pharmaceutical and medical supply
stockpiling.
HCFA's contingency plan
On average, hospitals and health systems receive roughly half of
their revenues from government programs like Medicare and Medicaid. If
that much revenue were to be suddenly cut off, hospitals could not
survive, and patient care could be jeopardized. Hospitals would not be
able to pay vendors. They would not be able to purchase food, supplies,
laundry services, maintain medical equipment--in short, they would not
be able to do the job their communities expect of them. All this would
occur even as hospitals and health systems faced the substantial costs
of addressing their own Year 2000 system needs--costs that are not
recognized in the calculation of current Medicare payment updates.
We applaud HCFA's announcement that the Fiscal Year 2000 PPS update
will no longer have to be delayed while the agency prepares its
computer systems for Y2K. We congratulate the agency's personnel for
tackling the problem in such a way that it apparently will no longer
require nearly $300 million in payment updates to be held back from the
hospitals that need them. However, at the same time we are concerned
that HCFA has not announced that it has an adequate contingency plan in
place.
HCFA also must make sure its contractors--including Medicare+Choice
plans--take steps to ensure that their performance will not be
interrupted by Year 2000 problems caused by the millennium bug. HCFA
should continue to make readily available its work plan, and progress
reports, for bringing the contractors and Medicare+Choice plans into
compliance and monitor their efforts. Letting providers know what
changes may be required of them is also important. This would allow
providers, contractors and plans to prepare simultaneously and ensure
that their systems are compatible.
Even if HCFA and its contractors express confidence that their
payment mechanisms will not be affected by the millennium bug,
unforeseen problems could crop up. Therefore, it is imperative that
HCFA establish a fail-safe contingency plan that anticipates and
addresses how to respond in case payment mechanisms, either on the
provider side or on HCFA's side, are disrupted at the turn of the
century. We have offered to work with HCFA to ensure that these
concerns about the Year 2000 are adequately addressed. However, HCFA
has not yet shared with us any details of their contingency planning.
Medicare beneficiaries' health care needs will remain constant,
regardless of how well payment systems are prepared for Year 2000
problems. If carrier and fiscal intermediary payment systems are
clogged up by the millennium bug, hospitals' ability to continue
providing high-quality health care could be severely affected. A system
of advance payments, based on past payment levels, is one way to ensure
that beneficiaries continue to receive the care they need, by assuring
that hospitals have the resources necessary to care for Medicare
patients. Congress should require HCFA to commit to such advance
payments, or to other alternatives that would ensure continuity in case
of a Y2K failure.
It is important to note that Medicare is not the only payer for
hospital services. Similar payment delays could occur if private health
insurers and, in the case of Medicaid, individual states, have not
addressed their own Year 2000 problems. HCFA has the authority and
leverage to prevent this from happening, and we urge the agency to
exercise that authority.
the supply chain--more information is needed
More than 60 percent of the hospitals responding to the AHA's Y2K
readiness survey cited lack of information from suppliers as the number
one barrier to achieving total Y2K compliance. The AHA is working with
the Food and Drug Administration (FDA) to ensure that hospitals obtain
the compliance information they need on medical devices and equipment.
The AHA is also now focusing on a broad range of other suppliers to get
the vendor information its members need, from medical device
manufacturers to pharmaceutical and other medical supply companies.
Experts in the field are advising health care organizations to
employ a risk management methodology to identify their most critical
supply issues, focusing on those that are critical to patient health.
Hospitals must know how their suppliers and manufacturers plan to deal
with potential disruptions to the flow of medical and surgical
supplies, or the raw materials necessary to produce those supplies.
Prudent contingency planning will require an exchange of
information between suppliers and providers. In the absence of reliable
information, hoarding and stockpiling may occur, creating the very
supply chain disruptions that everyone should be working to avoid.
the role of the aha and other associations
Mr. Chairman, all of the activities I've described above are part
of an overall effort by the AHA and its state associations to help
hospitals and health systems in their Y2K preparation. This effort
includes:
<bullet> Developing a members-only Y2K section of AHA's Web site with
up-to-date news and resources to help manage the Y2K computer
challenge;
<bullet> Using a toll-free 800 number to provide Y2K information to
members on educational opportunities, peer and consultant
referrals and speaker recommendations, and other customized
resources;
<bullet> Creating the ``Y2K: Mission Critical'' executive briefing, a
notebook for hospitals that outlines the Y2K problem and offers
information on how to deal with it;
<bullet> Using AHA's publications to provide members with the latest
information, including ``The Clock's Ticking'' column, devoted
entirely to Y2K, in AHA's weekly newspaper;
<bullet> Developing the members-only ``Y2K Communications Action Kit,''
a resource with tools to help communicate a hospital's Y2K
progress with the public;
<bullet> Distributing a contingency planning workbook, which contains
templates to help hospitals create internal and external back
up plans for their facility with their community partners; and
<bullet> Working with state hospital associations to sponsor Security
Third Millennium (SIIIM), an Internet-based tool that helps
health care providers get information that can help minimize
malfunction or failure of biomedical devices and equipment on
January 1, 2000.
Protecting Public Confidence, Staying Abreast of Progress
We believe it is critical that the communities we serve understand
what hospitals are doing to prevent any disruption to the provision of
health care services. The AHA, in collaboration with our state,
regional and metropolitan associations and other key strategic
partners, is working hard to stress to our member hospitals the
importance of managing the Y2K issue from a public confidence
perspective. We have made available tools to counsel hospitals and
health systems about how to talk with the public about Y2K and health
care. A Y2K Communications Action Kit was developed that was
distributed in early March to all of our members. Our members were
encouraged to adapt the materials in the kits for use in their
communities. The kit includes samples of how to communicate to various
audiences about the Y2K issue.
We are continuing our efforts to make sure that hospitals and
health systems have the latest information on what their colleagues and
other organizations are doing to address the Y2K problem. And we are
helping them learn about potential solutions.
Our State Issues Forum, which tracks state-level legislative and
advocacy activities, is hosting biweekly conference calls dedicated
entirely to the Year 2000 issue. On these calls, state hospital
association and AHA staff share information. A special AHA task force
on the Year 2000 problem has been drawing up timelines for action to
make sure our members get the latest information and know where to turn
for help.
Articles are appearing regularly in AHA News, our national
newspaper, in Hospitals and Health Networks, our national magazine for
hospital CEOs, in Trustee, our national magazine for volunteer hospital
leadership, and in several other national publications that are
published by various AHA membership societies. Several of these
societies, such as the American Society for Healthcare Engineering, the
American Society for Healthcare Risk Management, and the Association
for Healthcare Resource and Materials Management, are deeply involved
in helping their members attack the millennium bug in their hospitals.
the costs of compliance
What are the costs of Y2K compliance expected to be? An earlier AHA
survey researching this issue points to a huge financial investment by
hospitals and health systems. The bottom line is that America's
hospitals and health systems expect to spend somewhere around $8
billion to become Y2K compliant.
Smaller hospitals, those with fewer than 100 beds, will spend close
to $1 billion on Y2K fixes, or an average of $435,000 each. Hospitals
with between 100 and 300 beds will spend $2.5 billion, an average of
$1.2 million each. Hospitals with 300-500 beds will spend nearly $2
billion, or $3.4 million each. The largest amount of spending, $2.2
billion, will occur at hospitals that have more than 500 beds.
Much of the $8 billion that hospitals expect to spend on Y2K
compliance will be spent this year. This presents an immense challenge,
because that spending comes on top of significantly declining Medicare
reimbursement in the Balanced Budget Act of 1997. The Balanced Budget
Act reduced payments to hospitals by $44.1 billion over five years.
the role of congress
As I have described, health care providers and the associations
that represent them are devoting significant time, resources and energy
to preventing potential Year 2000 problems from affecting patient
safety. It is essential that we all look for ways to help prepare
America's health care system for the turn of the century, and Congress
can play an important role. Your attention to this issue, through
hearings such as this, reflects your understanding of the gravity of
the situation.
One major step toward Y2K compliance occurred when Congress passed
its ``Good Samaritan'' legislation. By shielding from liability the
sharing of information among businesses that provide it in good faith,
this law encourages all parties--providers, suppliers, manufacturers,
and more--to work together.
We ask you to help America's health care system avoid Year 2000
problems by taking several other steps:
<bullet> Congress should provide the FDA with any additional authority
or resources it needs to ensure the necessary information is
disclosed by medical device manufacturers, and to serve a
``rumor control'' function regarding devices.
<bullet> Congress should insist that HCFA use its authority to make
advance payments under Medicare. These payments, based on past
payment levels, should be implemented to ensure adequate cash
flow for providers in case carrier and fiscal intermediary
payment systems fail, or other disruptions to the normal
operation of payments systems should occur due to the date
change.
<bullet> Last week John Koskinen, chairman of the President's Council
on Year 2000 Conversion, mentioned the possibility of creating
a contingency fund from which states (in the case of Medicaid,
for example) or hospitals could draw monies needed to continue
operating in case of a Y2K disruption. We support that
principle, and would be glad to be a part of any discussions
concerning how such a fund should be set up.
<bullet> MedPAC has included in its hospital prospective payment system
update recommendation for fiscal year 2000 an additional 0.5
percent to cover hospitals' costs of becoming Y2K compliant. We
ask Congress to increase the congressionally mandated hospital
update factor by 0.5 percent to reflect this MedPAC
recommendation.
conclusion
Mr. Chairman, the Year 2000 issue will affect every aspect of
American life, but few, if any, are as important as health care.
America's hospitals and health systems, their state associations, and
the AHA are partners in the effort to prepare for the Year 2000. We
encourage Congress and our federal agencies to work with us as well.
Together, we can ensure a smooth--and healthy--transition into the new
millennium.
Mr. Upton. Thank you.
Ms. Mackin.
TESTIMONY OF ANNETTE L. MACKIN
Ms. Mackin. Thank you, Mr. Chairman. Thank you for the
opportunity to present testimony today on issues related to Y2K
compliance and Medicare home health providers. My name is
Annette Mackin, and I am the chief financial officer and the
chief information officer of the Visiting Nurse Service of
Rochester in Rochester, New York. I also serve on the board of
directors of the National Association for Home Care.
Mr. Upton. One second. If you can pull the mike a little
closer, too, a little closer. There you go.
Ms. Mackin. I will do it this way, how is that? When you
get old, you have to have the bifocals.
Mr. Upton. It's the people in the back of the room, too.
Ms. Mackin. I serve on the board of directors of the
National Association for Home Care, and I chair the government
affairs committee. NAHC is the largest national organization
representing home health care providers, hospices and home care
agencies. Among NAHC members are every type of home care
agencies, including the not-for-profit agencies like the
Visiting Nurse Associations, for-profit chains, hospital-based
agencies and freestanding agencies.
The VNS of Rochester has over 950 employees, an annual
operating budget of $43 million and serves over 11,000 clients
in the Rochester and Monroe County and New York area. In 1998,
the VNS received $14.3 million in Medicare revenues.
The VNS began its Y2K compliance efforts in 1997. A
multidisciplinary team developed an exhaustive inventory of all
potential date-sensitive internal and external equipment
software and services impacting the agency's normal operations.
Each item on the inventory was then evaluated for compliance
through vendor contacts and Internet searches.
Our efforts were supplemented by efforts of the National
Association for Home Care, who conducted an all-out effort
including our home care and--educating our home care and
hospice members on Y2K compliance. This has been a top priority
since all home care claims received by our fiscal
intermediaries on or after April 5 must be Y2K-compliant or
they will be returned as unprocessable. Failure to receive
reimbursement for services could quickly lead to additional
severe cash-flow problems for agencies and could ultimately
compromise patient care and access to care.
NAHC is concerned that despite the best efforts of the home
care community and HCFA, some home care agencies and hospices
may still not be prepared for the millennium. Many of these
providers, which will most likely be freestanding agencies in
rural and remote areas, may lack the resources to participate
in State and national association training or have access to
information on Y2K. It is also very likely that smaller
agencies do not have the technical people on staff to address
Y2K issues.
Home care agencies' efforts to comply with the Y2K
requirements should be evaluated in light of the agencies'
resources, both dollars and staff, and their access to
information.
In addition to lowering home care reimbursement rates by
approximately 30 percent through the establishment of the
interim payment system, the Balanced Budget Act of 1997 led to
an imposition of--a myriad of new regulatory burdens on home
care agencies. Such new requirements included sequential
billing, the OASIS patient assessment data collection and
transmission and increased medical review. Home care agencies
have expended huge sums of money to comply with these new
regulations. And despite 1998 changes to the current Medicare
home health payment systems, virtually all agencies are
reimbursed less than their actual operating costs of providing
care. Moreover, maintaining regulatory compliance has siphoned
funds away from necessary patient care and has left virtually
zero dollars for overhead expenses such as new computer
hardware, software and technical consulting, much less having
dollars to continue memberships in State or national
associations that provide so much valuable information,
particularly around Y2K compliance.
It appears that HCFA has placed the lion's share of the
burden of not only providing information, but of assuring
compliance, on the associations that represent home care and
hospice providers. NAHC has taken responsibility for educating
its members, but cannot reach providers who do not belong to an
association. HCFA has stated that provider failure to comply
with Y2K for any reason will mean that the provider will not be
paid for services rendered to Medicare beneficiaries. HCFA,
however, has failed to reveal its own contingency plans in the
event that their systems fail. How can HCFA expect providers to
comply when it has given no assurances to providers that it has
its own house in order and will be able to meet its payment
obligations?
HCFA has the capability to identify and communicate with
all Medicare-certified home health and hospice providers. Home
care associations don't have these capabilities, nor do they
have the resources to conduct ongoing outreach efforts. NAHC is
currently struggling with its efforts to contact hundreds of
home care providers, members and nonmembers, who are believed
to be out of compliance with Y2K requirements. HCFA should
utilize the informa-
tion it has to target those providers most at risk for not
becoming compliant.
Once targeted, HCFA can then engage in a more active
information campaign for those at-risk agencies who are not
members of any trade association and may not have the
capabilities to obtain on-line information. Moreover, HCFA can
work more closely with State and national associations to help
get those who fly below the radar screen. HCFA has free
software available to help providers, but many providers are
not aware that such software exists.
In conclusion, NAHC urges HCFA to take a more flexible
approach when processing claims from providers that are not
Y2K-compliant. NAHC is hopeful that HCFA will take into account
where good faith efforts have been made by providers in
becoming compliant or where providers have failed to be
compliant because of factors outside of their control. In such
cases HCFA should engage in outreach and help the provider
achieve compliance as opposed to imposing financial penalties
that could jeopardize the future of the agency, as well as
access to and quality of patient care. Thank you.
[The prepared statement of Anette L. Mackin follows:]
Prepared Statement of Annette Mackin on Behalf of the National
Association for Home Care
Mr. Chairman, thank you for the opportunity to present testimony
today on issues related to Y2K compliance and Medicare home health
providers. My name is Annette Mackin. I am the Chief Financial Officer
of the Visiting Nurse Service (VNS) of Rochester and Monroe County,
Inc. I also serve on the Board of Directors of the National Association
for Home Care (NAHC) and chair the Government Affairs Committee.
NAHC is the largest national organization representing home health
care providers, hospices, and home care aide organizations. Among
NAHC's members are every type of home care agency, including: non-
profit agencies like the Visiting Nurse Associations, for-profit
chains, hospital-based agencies and freestanding agencies.
My testimony today will focus on the difficulties and costs
associated with getting a home care provider Y2K compliant. I will also
outline NAHC's efforts to educate the home care community as a whole on
Y2K issues. My testimony concludes with several suggestions that the
Health Care Financing Administration (HCFA) can adopt to ensure that
all Medicare home health and hospice providers are Y2K ready so that
beneficiary safety and access to quality home care services is not
compromised.
y2k efforts of vns of rochester & monroe county, inc.
The VNS of Rochester & Monroe County, Inc., has over 950 employees,
an annual operating budget of $43 million, and serves over 11,000
clients in the Rochester, New York, area. In 1998, the VNS received
$14.3 million in Medicare revenues.
The VNS began its Y2K compliance efforts in 1997. A
multidisciplinary team developed an exhaustive inventory of all
potential date-sensitive internal and external equipment, software, and
services impacting the agency's normal operations. Each item on the
inventory was then evaluated for compliance through vendor contacts and
Internet searches.
Several critical internal systems were found to be noncompliant and
resulted in significant financial expenditures to bring them into
compliance. For example, the agency revenue, billing and statistical
system was updated at a cost of $200,000 and the telephone and voice
mail systems were updated at a cost of $150,000. Virtually all other
software applications, such as payroll, human resource management, e-
mail, and accounting, required updating to Y2K-compliant versions at
costs averaging approximately $5,000 per application.
We are currently testing all client servers and personal computers
to ensure that the hardware as well as the software is compliant.
Additional expenditures may be required to bring some of the older
equipment into compliance.
The next step in the process is the development of contingency
plans to ensure that patients receive care and the agency can operate
if major internal and/or external systems fail for any period of time.
nahc's efforts to educate providers
NAHC has conducted an all-out effort in educating our home care and
hospice members on Y2K compliance. This has been a top priority since
home health claims received by fiscal intermediaries (FIs) on or after
April 5, 1999, that are not Y2K compliant will be ``returned as
unprocessable.'' Failure to receive reimbursement for services could
quickly lead to additional severe cash flow problems for agencies and
could, ultimately, compromise patient care and access.
Since July 1998, NAHC has provided outreach to members through its
weekly newsletter, member e-mail listserv and website. NAHC has
suggested strategic planning and preparation and has provided
information to assist home care and hospice providers in following
through on Y2K readiness efforts. NAHC has provided the addresses of
numerous websites where NAHC members can obtain more information on Y2K
compliance, including the websites established by HCFA, the Food and
Drug Administration (FDA) and others. HCFA has released program
instructions to its carriers and fiscal intermediaries, and NAHC has
passed the information contained in these transmittals to the home care
and hospice community in a timely fashion.
NAHC has also held several educational programs and has featured
the millennium compliance issue at industry conferences. For example,
Kenneth Kleinberg, a leading expert in Y2K information technology
issues from the Gartner Group, was a keynote speaker at NAHC's recent
policy conference. During his talk to over 500 home care and hospice
providers, he outlined the millennium readiness of the health care
sector. In a smaller session, Kleinberg, HCFA's Joe Brosecker, and I
provided more detailed guidance specific to home care to conference
attendees. Further educational sessions are planned for NAHC's annual
meeting to be held in October.
NAHC is developing a Y2K Failure Contingency Planning Workbook for
home care and hospice providers. The workbook will contain checklists
and sample contingency plans to provide home care providers with
concrete guidelines to follow to be assured Y2K compliance. NAHC is
hopeful that use of this notebook will further ensure home care
compliance with Y2K.
NAHC is concerned that, despite the best efforts of the home care
community and HCFA, some home care agencies and hospices may still not
be prepared for the millennium. Many of these providers, which will
most likely be freestanding agencies in rural or remote areas, may lack
the resources to participate in state or national association training
or to access information on Y2K compliance. Home care agencies' efforts
to comply with Y2K requirements should be viewed in light of the
agencies' resources and access to information.
home health difficulties with y2k compliance
In addition to lowering home care reimbursement rates by
approximately 30% through the establishment of an interim payment
system (IPS), the Balanced Budget Act of 1997 (BBA '97) led to
imposition of a myriad of new regulatory burdens on home care agencies.
Such new requirements included sequential billing, OASIS patient
assessment data collection and transmission and increased medical
review. Home care agencies have expended huge sums to comply with these
new regulations. Despite 1998 changes to the current Medicare home
health payment system, virtually all agencies are reimbursed less than
their actual costs of providing care. Moreover, maintaining regulatory
compliance has siphoned funds away from necessary patient care and has
left little for overhead expenses such as new computer hardware,
software, and technical consulting, much less dollars for continuing
memberships in state or national associations that alert agencies and
make efforts to help them with Y2K compliance.
These regulatory burdens have also slowed down claims processing,
drastically reducing cash flow to agencies. The vast majority of home
care agencies are small businesses with little in the way of tangible
assets. These small, ``mom and pop'' providers cannot operate if cash
flow is significantly interrupted. NAHC's main concern is that HCFA
will fail to take into consideration unique challenges facing home care
and hospice providers in becoming Y2K compliant. Failure to reimburse
claims will be the death knell for providers who are already struggling
with lower reimbursement rates and increased regulatory burdens.
HCFA, by withholding reimbursement on claims that are not Y2K
ready, will unfairly and adversely impact those smaller providers who
cannot survive interruptions in payment. The smaller agencies are also
the ones that will have the most difficulty becoming Y2K compliant and
yet will have the most to lose if their reimbursement is halted.
HCFA has led many to believe that the cost of becoming Y2K ready is
minimal, offering web-based resources addressing various aspects of the
year 2000 challenge. Yet, many home care and hospice providers do not
have access to the Internet and, therefore, this avenue of information
is closed off to those less sophisticated providers. A NAHC survey of
home care providers in July 1998 indicated that only one-quarter had
computer systems sufficiently sophisticated to collect and transmit
OASIS patient assessment data. This finding provides some indication of
agencies' likelihood of having Internet access.
Providers of home care and hospice services face unique challenges
that are not faced by providers in other environments, such as
hospitals or nursing homes. The patients they serve are homebound and
may experience more severe consequences as a result of Y2K
noncompliance, not only in health care, but in all aspects of their
lives. Home caregivers must educate their patients to ensure that the
home environment is millennium compliant on December 31, 1999. An
agency can have contingency plans for everything, but if the patient
does not have access to needed medications and medical equipment or, if
their power or water source fails, the patient could face a tragic
situation.
recommendations
It appears that HCFA has placed the lion's share of the burden of
not only providing information, but of assuring compliance, on the
associations that represent home care and hospice providers. NAHC has
taken responsibility for educating its members but cannot reach
providers who do not belong to an association. HCFA has stated that
provider failure to comply with Y2K, for any reason, will mean that the
provider will not be paid for services rendered to Medicare
beneficiaries. HCFA, however, has failed to reveal its own contingency
plans in the event that systems fail. How can HCFA expect providers to
comply when it has given no assurances to providers that it has its own
house in order?
HCFA has the capability to identify and communicate with all
Medicare certified home health and hospice providers. Home care
associations don't have these capabilities, nor do they have the
resources to conduct ongoing outreach efforts. NAHC is currently
struggling with its efforts to contact hundreds of home care providers
(NAHC members and non-members) who are believed to be out of compliance
with Y2K requirements. HCFA should utilize the information it has to
target those providers most ``at-risk'' for not becoming Y2K compliant.
Once targeted, HCFA can then engage in a more active information
campaign for those at-risk agencies who are not members of any trade
association and may not have the capabilities to obtain on-line
information. Moreover, HCFA can work more closely with state and
national associations to help get to those who ``fly below the radar
screen.'' HCFA has free software available to help providers but many
providers are not aware that such software exists.
In conclusion, NAHC urges HCFA to take a more flexible approach
when processing claims from providers that are not Y2K compliant. NAHC
is hopeful that HCFA will take into account good faith efforts made by
providers in becoming compliant, or that providers who failed to be
compliant because of factors outside of their control. In such cases,
HCFA should engage in outreach and help the provider achieve compliance
as opposed to using a heavy hand that could jeopardize the future of
the agency as well as access to and quality of patient care.
Mr. Upton. Thank you.
Dr. Corlin.
TESTIMONY OF RICHARD F. CORLIN
Mr. Corlin. Thank you, Mr. Chairman. My name is Dr. Richard
Corlin. I'm Speaker of the House of the Delegates of the
American Medical Association and a practicing
gastroenterologist. I want to thank you for inviting me to
testify today.
The Year 2000 problem will affect virtually all aspects of
the medical profession. Most all physicians use computers in
our practices for scheduling, reimbursement, and increasingly
for more clinical functions, such as logging in patient
histories. We and our patients also rely on medical equipment
with embedded microchips. The AMA realizes that with this
reliance comes the risk of malfunction due to the Y2K bug.
We have consistently been directing our efforts toward
assisting physicians to achieve compliance and have been
focusing on three areas: cooperation, education, and
communication. The AMA has been promoting cooperation through
our involvement in the National Patient Safety Foundation. The
AMA launched a foundation with the support of other health care
organizations and safety experts.
In addition, we helped to form a public-private partnership
with the National Patient Safety Partnership, which was
convened by the Department of Veterans Affairs. This
partnership has shown particular leadership in the Y2K problem.
For more than a year, the AMA has also been educating
physicians and medical students with two of its publications,
AMNews and the Journal of the American Medical Association. We
have been raising physicians' level of awareness of the year
2000 problem with numerous articles on a variety of Y2K
subjects.
Nearly a year ago, the AMA also launched a national
campaign with the Federation of Medical Societies focusing on
both education and communication. As part of this campaign, the
AMA has been holding regional seminars across the country to
talk about the Y2K problem, encourage physicians to make Y2K
assessments, identify and correct problems and establish
contingency plans.
We have made available to hundreds of thousands of
physicians a solution manual entitled ``The Year 2000 Problem:
Guidelines for Protecting Your Patients and Practice,'' which
each of your offices have been given a copy of. This booklet
talks about Y2K compliance requirements, how to obtain
information about medical devices, self-assessment programs,
contingency plans and a lot more. It also identifies a host of
other resources for physicians to obtain help in becoming Y2K-
compliant.
An AMA subsidiary, AMA Solutions, Incorporated, has also
been working extensively with physician group practices,
hospitals and medical societies and has assisted them in
hosting Y2K presentations.
To better assess physicians' readiness, the AMA is
presently conducting a series of Y2K surveys. With these
surveys, we hope to identify those segments of the medical
profession most in need of additional assistance. Although the
results of our first survey were inconclusive due to the low
response rate, the results did suggest that around three-
quarters of the physicians responding have conducted a Y2K
inventory of their practices. Seventy-one percent of the
respondents have also developed a strategy for dealing with
potential Y2K problems. Our most promising finding was that of
those physicians who report that their practices were not yet
Y2K-compliant, almost all, 94 percent, indicated that their
practices will be compliant by the end of the year. We
anticipate that our next survey, which we will conduct in the
near future, will confirm many of these findings.
To foster greater communication among physicians about the
Y2K problem, the AMA last year established a special section on
Y2K on its award-winning Website. It provides regularly updated
information about the millennium bug, enabling physicians to
assist each other in solving their Y2K problems.
What more can be done? First, we cannot allow ourselves to
become complacent. The AMA acknowledges that the year 2000
problem still poses a risk for patient care and may adversely
affect physicians' administrative responsibilities.
This month we are also asking State, county and specialty
medical societies to join us in our educational facilities.
Second, physicians and other patient advocates continue to
call on medical device manufacturers to disclose immediately
whether their products will malfunction. Only they have the
information; and that applies to software manufacturers as
well.
Third, as we obtain information, we need to reassure
patients that medical devices will continue to work safely. We
do not want a lack of information to cause patients to panic.
The patient has to be our No. 1 concern in all of our Y2K
efforts.
Thank you very much, once again, for inviting me to testify
today.
[The prepared statement of Richard F. Corlin follows:]
Prepared Statement of Richard F. Corlin on Behalf of the American
Medical Association
Mr. Chairman and members of the Committee, my name is Richard F.
Corlin, MD. I am the Speaker of the House of Delegates of the American
Medical Association (AMA). I am also a practicing gastroenterologist
from Santa Monica, California. On behalf of the three hundred thousand
physician and medical student members of the AMA, I appreciate the
opportunity to discuss the impact of the federal government's efforts
to address the year 2000 problem, the anticipated impact on patients
and physicians and the AMA's efforts to assist physicians in dealing
with this problem.
Introduction
As most all of us know, many computer systems, software and
embedded microchips cannot properly process date information or date
data. As programmed, these devices and software can only read the last
two digits of the ``year'' data field. Consequently, when data requires
the entry of a date in the year 2000 or later, these systems, devices
and software are incapable of correctly processing the data. This
inability to properly process year 2000 date data is commonly referred
to as the ``Y2K problem'' or the ``Y2K bug.''
By the nature of its work, the medical industry relies heavily on
technology, on computer systems--both hardware and software, as well as
medical devices that have embedded microchips. A survey conducted last
year by the AMA found that almost 90% of the nation's physicians are
using computers in their practices, and 40% are using them to log
patient histories.<SUP>1</SUP> These numbers appear to be growing as
physicians seek to increase efficiency and effectiveness in their
practices and when treating their patients. Physicians' dependence on
technology consequently creates some vulnerability to the Y2K bug.
---------------------------------------------------------------------------
\1\ ``Doctors Fear Patients Will Suffer Ills of the Millennium Bug;
Many Are Concerned That Y2K Problem Could Erroneously Mix Medical
Data--Botching Prescriptions and Test Results,'' Los Angeles Times,
Jan. 5, 1999, p. A5.
---------------------------------------------------------------------------
Current Level of Preparedness
Assessing the status of the year 2000 problem has been difficult
not only because the inventory of the information systems and equipment
that will be affected is far from complete, but also because the
consequences of noncompliance for each system remain unclear.
Additionally, the health care industry is extremely fragmented and
consistently requires complex information transactions.<SUP>2</SUP>
Nevertheless, if the studies are correct, malfunctions in noncompliant
systems will occur and equipment failures can surely be anticipated.
---------------------------------------------------------------------------
\2\ Violino, B., ``Health Care Not Y2K-Ready--Survey Says Companies
Underestimate Need for Planning; Big Players Join Forces,'' Information
Week, January 11, 1999.
---------------------------------------------------------------------------
After conducting a series of 10 congressional hearings, the Senate
Special Committee on the Year 2000 Problem (the ``Special Committee'')
recently reported that the healthcare industry continues to lag behind
other industries in addressing the Y2K problem.<SUP>3</SUP> According
to its findings, the vast majority of physicians have yet to address
the Y2K issue. The report attributed some of the industry's most
significant problems to its highly decentralized health claims
processing system, the anticipated domino effect, the lack of adequate
parallel testing, the dearth of contingency plans, and the ongoing lack
of cooperation from biomedical device manufacturers.<SUP>4</SUP>
---------------------------------------------------------------------------
\3\ ``Investigating the Impact of the Year 2000 Problem,'' U.S.
Senate Special Committee on the Year 2000 Technology Problem, February
25, 1999, p. 45.
\4\ Id. at 45-48.
---------------------------------------------------------------------------
The Special Committee's findings appear to reaffirm previous
studies by various research and advisory groups. The Odin Group, a
health care information technology research and advisory group, for
instance, found from a survey of 250 health care managers that many
health care companies by the second half of last year still had not
developed Y2K contingency plans.<SUP>5</SUP> The GartnerGroup has
similarly concluded, based on its surveys and studies, that the year
2000 problem's ``effect on health care will be particularly traumatic .
. . [l]ives and health will be at increased risk. Medical devices may
cease to function.'' <SUP>6</SUP> In its report, it noted that most
hospitals have a few thousand medical devices with microcontroller
chips, and larger hospital networks and integrated delivery systems
have tens of thousands of devices.
---------------------------------------------------------------------------
\5\ ``Health Care Not Y2K-Ready--Survey Says Companies
Underestimate Need For Planning; Big Players Join Forces,''
InformationWeek, January 11, 1999.
\6\ GartnerGroup, Kenneth A. Kleinberg, ``Healthcare Worldwide Year
2000 Status,'' July 1998 Conference Presentation, p. 2 (hereinafter,
GartnerGroup).
---------------------------------------------------------------------------
Based on early testing, the GartnerGroup also found that although
only 0.5-2.5 percent of medical devices have a year 2000 problem,
approximately 5 percent of health care organizations will not locate
all the noncompliant devices in time.<SUP>7</SUP> It determined further
that most of these organizations do not have the resources or the
expertise to test these devices properly and will have to rely on the
device manufacturers for assistance.<SUP>8</SUP>
---------------------------------------------------------------------------
\7\ Id. at p. 8.
\8\ Id.
---------------------------------------------------------------------------
Despite the rather bleak outlook, other surveys offer some
favorable information. Rx2000 Solutions Institute, a non-profit
organization established to address Y2K issues in the health care
industry, reports that recent data show that while Y2K progress among
health care providers is lagging behind other industries, an increasing
number of providers are beginning to address the issue. Rx2000 reports
further that greater numbers of physicians and other health care
providers have documented Y2K plans; currently, 76% of health care
providers have plans for addressing the Y2K problem. Moreover,
increasing numbers of physicians and other health care providers have
set aside funds for Y2K remediation efforts and have begun exploring
the Y2K status of their business partners.
Results from the AMA's March 1999 survey, while inconclusive due to
the relatively low response rate, nevertheless appear to confirm
Rx2000's findings. Approximately three-quarters (76%) of the physicians
who responded have conducted an inventory of their practices to
determine whether they are Y2K dependent, and 71% of the respondents
have developed a strategy for dealing with potential Y2K information
systems problems. Very important, of the physicians who reported that
their practices were not currently Y2K ready (53%), almost all--94%--
indicated that their practices will be Y2K compliant by December 31,
1999.
With less than 250 days left, the medical industry continues to
diligently prepare for the new millennium. While the Special Committee
reported that the health care industry significantly lags behind most
other industries, it also emphasized that Americans, and patients in
particular, have no reason to panic. In response to reports that many
Americans are preparing for the worst, Senator Dodd stated ``We''re
discouraging people from going out and stockpiling.'' After the
hearings, Senator Bennett, the Committee's Chairman, stated that ``I
don't believe the health care industry's lack of preparedness will
necessarily mean loss of life, but it could seriously impact care for
millions.''
A Collaborative Effort
Patient Care--Assessing the current level of risk attributable
specifically to the year 2000 problem within the patient care setting
remains problematic. We do know, however, that the risk is real and
present. If certain imbedded microchips, for instance, were to
malfunction due to a Y2K problem, monitors relying on those microchips
could fail to sound alarms when patients' hearts stopped beating.
Similarly, respirators could deliver ``unscheduled breaths'' to
respirator-dependent patients. Digital displays could incorrectly
attribute the names of some patients to medical data from other
patients. These scenarios are not hypothetical or based on conjecture.
Software problems have caused each one of these medical devices to
malfunction with potentially fatal consequences.<SUP>9</SUP>
---------------------------------------------------------------------------
\9\ Anthes, Gary H., ``Killer Apps; People are Being Killed and
Injured by Software and Embedded Systems,'' Computerworld, July 7,
1997.
---------------------------------------------------------------------------
The risk to patient safety is real. Since 1986, the FDA has
received more than 450 reports identifying software defects--not
related to the year 2000--in medical devices. Consider one instance--
when software error caused a radiation machine to deliver excessive
doses to six cancer patients; for three of them the software error was
fatal.<SUP>10</SUP> We can anticipate that, left unresolved, medical
device software malfunctions due to the millennium bug would be
prevalent and could be serious.
---------------------------------------------------------------------------
\10\ Id.
---------------------------------------------------------------------------
The AMA continues to strongly recommend that medical device
manufacturers immediately disclose to the public whether their products
are Y2K compliant. Physicians and other health care providers do not
have the expertise or resources to determine reliably whether the
medical equipment they possess will function properly in the year 2000.
Only the manufacturers have the necessary in-depth knowledge of the
devices they have sold.
Nevertheless, medical device manufacturers have not always been
willing to assist end-users in determining whether their products are
year 2000 compliant. Last year, the Acting Commissioner of the FDA, Dr.
Michael A. Friedman, testified before the U.S. Senate Special Committee
on the Year 2000 Problem that the FDA estimated that only approximately
500 of the 2,700 manufacturers of potentially problematic equipment had
even responded to inquiries for information. Even when vendors did
respond, their responses frequently were not helpful. The Department of
Veterans Affairs reported last year that of more than 1,600 medical
device manufacturers it had previously contacted, 233 manufacturers did
not even reply and another 187 vendors said they were not responsible
for alterations because they had merged, were purchased by another
company, or were no longer in business. One hundred two companies
reported a total of 673 models that were not compliant but should be
repaired or updated this year.<SUP>11</SUP>
---------------------------------------------------------------------------
\11\ Morrissey, John, and Weissenstein, Eric, ``What's Bugging
Providers,'' Modern Healthcare, July 13, 1998, p. 14. See also, July
23, 1998 Hearing Statement of Dr. Kenneth W. Kizer, Undersecretary for
Health Department of Veterans Affairs, before the U.S. Senate Special
Committee on the Year 2000 Technology Problem.
---------------------------------------------------------------------------
After a series of U.S. Senate hearings, the Special Committee
reported that ``[e]very major medical organization testified that they
were experiencing significant problems with biomedical device
manufacturers. In many cases, manufacturers were unable or unwilling to
comment on their product's ability to function after the millennium
change.'' Moreover, it stated that only after informing device
manufacturers that the Congress would enact legislation requiring
mandatory disclosure if the manufacturers did not voluntarily
disclosing compliance information, did the manufacturers begin
providing compliance data to the Food and Drug Administration (FDA). We
continue to urge Congress to assist physicians and other health care
providers in obtaining necessary compliance information for medical
devices.
Administrative
Many physicians and medical centers are also increasingly relying
on information systems for conducting medical transactions, such as
communicating referrals and electronically transmitting prescriptions,
as well as maintaining medical records. Many physician and medical
center networks have even begun creating large clinical data
repositories and master person indices to maintain, consolidate and
manipulate clinical information, to increase efficiency and ultimately
to improve patient care. If these information systems malfunction,
critical data may be lost, or worse--unintentionally and incorrectly
modified. Even an inability to access critical data when needed can
seriously jeopardize patient safety.
Other administrative aspects of the Y2K problem involve Medicare
coding and billing transactions. In January 1999, HCFA instructed both
carriers and fiscal intermediaries to inform health care providers,
including physicians, and suppliers that claims received on or after
April 5, 1999, which were not Y2K compliant would be rejected and
returned as unprocessable. We have heard virtually nothing about HCFA
encountering any significant problems with ``unprocessable'' claims due
to Y2K noncompliance.
We understand why HCFA has issued this ultimatum. We genuinely
hope, however, that HCFA, to the extent possible, will assist
physicians and other health care professionals who have been unable to
achieve full Y2K compliance. Physicians are genuinely trying to comply
with HCFA's Y2K directives. In fact, HCFA has already represented that
98% of the electronic bills being submitted by physicians and other
Medicare Part B providers already meet HCFA's Y2K filing criteria.
The AMA was pleased to hear recently that more 90% of the
Department of Health and Human Services (HHS) critical systems are
currently Y2K compliant. We note though that in late February 1999, a
representative of the U.S. General Accounting Office (GAO) testified
that the GAO had found that HCFA had considerably overstated its
present level of Y2K compliance. In fact, ``all 54 external systems
that were reported as compliant had important associated qualifications
(exceptions), so of them very significant. Such qualifications included
a major standard system that failed to recognize `00' as a valid years,
as well as 2000 as a leap years; it also included systems that were not
fully future-date tested.'' <SUP>12</SUP> The GAO further cautioned
that HCFA needs to ensure that Y2K-related errors are not introduced
into the Medicare program through data exchanges. According to the GAO,
HCFA had reported as of February 10, 1999, that over 6,000 of its 7,968
internal data exchanges were still not compliant, and more than 37,000
of its nearly 255,000 external data exchanges were not
compliant.<SUP>13</SUP> The GAO strongly recommended that HCFA perform
detailed end-to-end testing, and test its agency-wide business
continuity and contingency plans. The public consequently remains
concerned that the federal government may not achieve full Y2K
compliance before critical deadlines.
---------------------------------------------------------------------------
\12\ February 26, 1999, Written Testimony of Joel C. Willemssen,
Director, Civil Agencies Information Systems Accounting And Information
Management Division U.S. General Accounting Office, The House
Government Reform And Oversight Committee Government Management,
Information And Technology Subcommittee, Year 2000 Computing Crisis:
Readiness Status of The Department of Health And Human Services.
\13\ Id.
---------------------------------------------------------------------------
We believe that HCFA should lead by example, while fully
cooperating with physicians and other health care provides in parallel
and end-to-end testing that will ensure that the entire claims
submission process will be fully functional before January 2000. Such
testing would also allow for further systems refinements, if necessary.
We understand and concur with HCFA, when it states that it does ``not
have the authority, ability, or resources to step in and fix systems
for others, such as States or providers.'' <SUP>14</SUP> The AMA
believes though that the Y2K problem demands collaboration among and
the full cooperation of all parties involved, including HCFA.
---------------------------------------------------------------------------
\14\ February 24, 1999, Written Testimony of Nancy Ann Min DeParle,
Administrator of the Health Care Finance Administration, The House Ways
And Means Committee, Year 2000 Conversion Efforts And Implications For
Beneficiaries And Taxpayers.
---------------------------------------------------------------------------
Reimbursement and Implementation of BBA
To remedy its own problems, HCFA has stated that it will
concentrate on fixing its internal computers and systems. As a result,
it has decided not to implement some changes required under the
Balanced Budget Act (BBA) of 1997, and it plans to postpone physicians'
payment updates from January 1, 2000, to about April 1, 2000.
HCFA has indicated to the AMA that the delay in making the payment
updates is not being done to save money for the Medicare Trust Funds.
In addition, the agency has said that the eventual payment updates will
be conducted in such a way as to fairly reimburse physicians for the
payment update they should have received. In other words, the updates
will be adjusted so that total expenditures in the year 2000 on
physician services are no different than if the updates had occurred on
January 1.
We are pleased that HCFA has indicated a willingness to work with
us on this issue. But we have grave concerns about the agency's ability
to devise a solution that is equitable and acceptable to all
physicians.
Also, as it turns out, the year 2000 is a critical year for
physicians because several important BBA changes are scheduled to be
made in the resource-based relative value scale (RBRVS) that Medicare
uses to determine physician payments. This relative value scale is
comprised of three components: work, practice expense, and malpractice
expense. Two of the three--practice expense and malpractice--are due to
undergo Congressionally-mandated modifications in the year 2000.
In general, the practice expense changes will have different
effects on the various specialties. Malpractice changes, to some modest
degree, would offset the practice expense redistributions. To now delay
one or both of these changes will have different consequences for
different medical specialties and could put HCFA at the eye of a storm
that might have been avoided with proper preparation.
To make matters worse, we are also concerned that delays in
Medicare's reimbursement updates could have consequences far beyond the
Medicare program. Many private insurers and state Medicaid agencies
base their fee-for-service payment systems on Medicare's RBRVS. Delays
in reimbursement updates caused by HCFA may very well lead other non-
Federal payers to follow Medicare's lead, resulting in a much broader
than expected impact on physicians.
AMA's Efforts--A Chronology
AMA policy directs the AMA to study the Y2K problem and its
possible adverse effects on patient care and physicians, and to educate
and assist physicians in becoming Y2K compliant.
Diligently pursuing its policy, the AMA has devoted considerable
resources to assist physicians and other health care providers in
learning about and correcting this problem. As a precursor to its Y2K
remediation efforts, the AMA in early 1996 began forming the National
Patient Safety Foundation or ``NPSF.'' Our goal was to build a
proactive initiative to prevent avoidable injuries to patients in the
health care system. In developing the NPSF, the AMA realized that
physicians, acting alone, cannot always assure complete patient safety.
In fact, the entire community of providers is accountable to our
patients, and we all have a responsibility to work together to fashion
a systems approach to identifying and managing risk. It was this
realization that prompted the AMA to launch the NPSF as a separate
organization, which in turn partnered with other health care
organizations, health care leaders, research experts and consumer
groups from throughout the health care sector.
One of these partnerships is the National Patient Safety
Partnership (NPSP), which is a voluntary public-private partnership
dedicated to reducing preventable adverse medical events and convened
by the Department of Veterans Affairs. Other NPSP members include the
American Hospital Association, the Joint Commission on Accreditation of
Healthcare Organizations, the American Nurses Association, the
Association of American Medical Colleges, the Institute for Healthcare
Improvement, and the National Patient Safety Foundation at the AMA. The
NPSP has made a concerted effort to increase awareness of the year 2000
hazards that patients relying on certain medical devices could face at
the turn of the century.
For more than a year, the AMA has also been educating physicians
and medical students through two of its publications, AMNews and the
Journal of the American Medical Association (JAMA). AMNews, which is a
national news magazine widely distributed to physicians and medical
students, has regularly featured articles over the last fourteen months
discussing the Y2K problem, patient safety concerns, reimbursement
issues, Y2K legislation, and other related concerns. Some of these
articles will focus on the top ten Y2K issues for physicians. Beginning
this month, the AMA will also be placing ads in AMNews in a further
effort to bring physicians' attention to the Y2K issue.
The AMA, through these publications, has been raising the level of
consciousness among physicians of the potential risks associated with
the year 2000 for their practices and patients, and identifying avenues
for resolving some of the anticipated problems.
The AMA has also developed a national campaign entitled ``Moving
Medicine Into the New Millennium: Meeting the Year 2000 Challenge,''
which incorporates a variety of educational seminars, assessment
surveys, promotional information, and ongoing communication activities
designed to help physicians understand and address the numerous complex
issues related to the Y2K problem. In June 1998, the AMA launched this
campaign by assembling State, County and Medical Specialty executives
from around the country for an informational seminar, presenting an
overview of the Y2K problem and its potential impact on the medical
profession.
In August 1998, AMA staff met with attendees of the American
Association of Medical Society Executive (AAMSE) annual meeting to
discuss, answer questions regarding, and in general raise the level of
physician awareness of the year 2000 problem. During this meeting, the
AMA also sought ways to work collaboratively with AAMSE to further
education physicians and effectively address the Y2K problem.
As a follow-up to this meeting, the AMA held a ``Federation
Seminar'' in Michigan, where AMA staff met with the executives of the
State and County medical societies (the ``Federation'') to coordinate
efforts to assist physicians in identifying and resolving Y2K practice
problem areas. The AMA actively participated in another Federation
Seminar at the Minnesota Medical Society's Annual Meeting in October
1998.
Another seminar series the AMA is sponsoring is the ``Advanced
Regional Response Seminars'' program. We have been holding these
seminars in various regions of the country and providing specific,
case-study information along with practical recommendations for the
participants. The seminars provide tips and recommendations for dealing
with vendors and explain various methods for obtaining beneficial re-
source information. Seminar participants receive a Y2K solutions
manual, entitled The Year 2000 Problem: Guidelines for Protecting Your
Patients and Practice. This seventy-five page manual, which we have
made available to hundreds of thousands of physicians across the
country, offers a host of different solutions to Y2K problems that
physicians will likely face. It raises physicians' awareness of the
problem, year 2000 operational implications for physicians' practices,
and identifies numerous resources to address the issue.
In addition to these seminars, an AMA subsidiary, AMA Solutions,
Inc., has been enlisting the cooperation of physician group practices,
hospitals and Federation members across the country to host Y2K
presentations. We have already scheduled seminars on May 18 with the
Indiana State Medical Association, on May 25 in Barberton, Ohio, and
tentatively on May 26 with the Pennsylvania Medical Society. We will
use The Year 2000 manual as the text for the classes.
The AMA last year opened a web site (URL: www.ama-assn.org/not-mo/
y2k/index.htm) to provide the physician community additional assistance
to better address the Y2K problem. The site serves as a central
communications clearinghouse, providing up-to-date information about
the millennium bug, as well as a special interactive section that
permits physicians to post questions and recommended solutions for
their specific Y2K problems. Last month we also included on this site
an equipment inventory checklist for physicians to use to help assess
their level of compliance. Additionally, the site includes a Tip of the
Week that systematically provides practical compliance tips, as well as
information about Y2K testing, up-to-date seminar information, toll-
free Y2K help lines and more. To facilitate access to other Y2K
information, the site also incorporates links to other sites that
provide helpful resource information.
The AMA is currently conducting a series of surveys to measure the
medical profession's state of readiness, assess where problems exist,
and identify what resources would best reduce any risk. The AMA already
has already conducted its first survey, and intends to use the
information we have obtained to identify which segments of the medical
profession are most in need of assistance. Through additional timely
surveys, we will appropriately tailor our efforts to the specific needs
of physicians and their patients. The information will also allow us to
more effectively assist our constituent organizations in responding to
the precise needs of other physicians across the country.
During its 1999 Annual Meeting, the AMA will be featuring a Y2K
exhibit, to draw physicians' attention to the AMA website and the AMA
Year 2000 manual. We will also be offering suggestions on how they can
assess their readiness, answering their questions, and encouraging them
to develop detailed contingency plans. We intend to set up this exhibit
also at the Medical Group Management Association regional meetings in
June and July.
In an effort to offer leadership to the Federation, the AMA has
been communicating with State, County and Specialty medical societies
across the country, explaining the Y2K problem and urging them to alert
physicians. We have offered our assistance to these societies and
requested that they inform us of their efforts to assist physicians in
becoming Y2K compliant.
To ensure that the AMA itself is Y2K compliant, in 1996 we began
reviewing our own computer systems and identifying areas on which to
focus our compliance efforts. We established a timeline and have been
consistently meeting our goals. In 1998, we established an Internal
Steering Committee, composed of a diverse group of individuals from the
entire organization. The committee seeks to ensure that all technology
used by the Association is Y2K compliant. It also periodically reports
to the Board of Trustees on the status of the AMA's Y2K compliance, so
the Board may fulfill its fiduciary duties.
The Challenge
We suggest that both the public and private sectors encourage and
facilitate health care practitioners in becoming more familiar with
year 2000 issues and taking action to mitigate their risks. Greater
efforts must be made in educating physicians, other health care
providers and health care consumers about the issues concerning the
year 2000, and how they can develop Y2K remediation plans, properly
test their systems and devices, and accurately assess their exposure.
We recognize and applaud the efforts of this Committee, the Congress,
and the Administration in all of your efforts to draw attention to the
Y2K problem and the medical community's concerns.
We also recommend that communities and institutions learn from
other communities and institutions that have successfully and at least
partially solved the problem. Federal, state and local agencies as well
as accrediting bodies that routinely address public health issues and
disaster preparedness are likely leaders in this area. At the physician
level, this means that public health physicians, including those in the
military, organized medical staff, and medical directors, will need to
be actively involved for a number of reasons. State medical societies
can help take a leadership role in coordinating such assessments.
We also must stress that medical device and software manufacturers
need to publicly disclose year 2000 compliance information regarding
products that are currently in use. Any delay in communicating this
information may further jeopardize practitioners' efforts at ensuring
compliance. A strategy needs to be developed to more effectively
motivate all manufacturers to promptly provide compliance status
reports. Additionally, all compliance information should be accurate,
complete, sufficiently detailed and readily understandable to
physicians. We suggest that the Congress and the federal government
continue to enlist the active participation of the FDA or other
government agencies in mandating appropriate reporting procedures for
vendors. We applaud the Department of Veteran Affairs, the FDA, and
others who maintain Y2K web sites on medical devices and offer other
resources, which have already helped physicians to make initial
assessments about their own equipment.
We also have to build redundancies and contingencies into the
remediation efforts as part of the risk management process. Much
attention has been focused on the vulnerability of medical devices to
the Y2K bug, but the problem does not end there. Patient injuries can
be caused as well by a hospital elevator that stops functioning
properly. Or the failure of a heating/ventilation/air conditioning
system. Or a power outage. The full panoply of systems that may break
down as our perception of the scope of risk expands may not be as
easily delineated as the potential problems with medical devices.
Building in back-up systems as a fail-safe for these unknown or more
diffuse risks is, therefore, absolutely crucial.
To the extent that physicians--particularly those in small
practices, and other health care providers, do not have the required
capital to remedy their Y2K problems, we welcome the Small Business
Administration's (SBA) efforts to ensure that loans are made available
on a restricted basis for businesses to correct Y2K problems. We
understand that local lenders will begin offering the loans on May 3,
with the SBA guaranteeing up to 90% of the loan amounts. We have been
informed that these loans can be processed within two weeks and the
rates are up to 2.75% above prime. Undoubtedly, this program will
benefit many physicians and other health care providers, assisting them
in becoming Y2K compliant. We welcome this initiative and appreciate
Congress's initiative in creating the loan guarantee program.
As a final point, we need to determine a strategy to notify
patients in a responsible and professional way. If it is determined
that certain medical devices may have a problem about which patients
need to be notified, this needs to be anticipated and planned.
Conversely, to the extent we can reassure patients that devices are
compliant, this should be done. Registries for implantable devices or
diagnosis- or procedure-coding databases may exist, for example, which
could help identify patients who have received certain kinds of
technologies that need to be upgraded and/or replaced or that are
compliant. This information should be utilized as much as possible to
help physicians identify patients and communicate with them.
As we approach the year 2000 and determine those segments of the
medical industry which we are confident will weather the Y2K problem
well, we will all need to reassure the public. We need to recognize
that a significant remaining concern is the possibility that the public
will overreact to potential Y2K-related problems. The pharmaceutical
industry, for instance, is already anticipating extensive stockpiling
of medications by individuals and health care facilities. In addition
to continuing the remediation efforts, part of our challenge remains to
reassure patients that medical treatment can be effectively and safely
provided through the transition into the next millennium.
Conclusion
We appreciate the Committee's interest in addressing the problems
posed by the year 2000, and particularly, those problems that relate to
physicians. Because of the broad scope of the millennium problem and
physicians' reliance on information technology, we realize that the
medical community has significant exposure. The Y2K problem will affect
patient care, practice administration, and Medicare/Medicaid
reimbursement. The AMA, along with the Congress and other
organizations, seeks to better educate the health care community about
Y2K issues, and assist health care practitioners in remedying, or at
least reducing the impact of, the problem. The public and private
sectors must cooperate in these endeavors, while encouraging the
dissemination of Y2K information.
Mr. Upton. Well, thank you, all of you. And as you were
here for the first panel, I think you saw us reach into--from
beyond the billing with HCFA really to the care and the life-
and-death issues of the patients.
And I have a number of questions myself. Dr. Corlin, you
talked about all of the steps that the AMA has done
particularly in sending the surveys out and looking for
compliance and making docs aware of the situation. Too bad our
three docs on the subcommittee--we have a bill on the House
floor, so I think Dr. Coburn, Dr. Ganske and Dr. Norwood may
have gone over to speak on the House floor on an important
issue to a lot of us, particularly in rural areas, a satellite
TV issue. And I hope we get there a little bit later this
afternoon as well.
But in any event, you heard Dr. Coburn talk about the costs
to his five-member operation in Oklahoma. And I am going to be
meeting with my docs in Michigan in about 2 weeks, and I'm
going to be asking them how they are complying with Y2K.
I guess what is disturbing to me, despite all of the good
work by the AMA to reach out and to alert folks, in terms of
some of the problems, and obviously we've seen a big
educational issue over the last few years, that still you only
received, I think in the testimony some of the information that
came before me, only about a 6 percent response.
Mr. Corlin. Eight percent.
Mr. Upton. Eight percent. All right. I will give you 10 if
you need it. But you know it's still pretty pathetic.
Mr. Corlin. Yes, it is.
Mr. Upton. And you talk about, you know, of the studies of
those that responded, it seemed to be pretty good. But, you
know, 90 percent, better than that, didn't even take the time
to respond.
Mr. Corlin. I share your concern, Mr. Upton, very much. So
I think part of the reason is that physicians and physicians'
offices get inundated with so many requests for certification
and surveys and other information, that it just got lost--gets
lost in the shuffle. That is an explanation. An explanation is
different from an excuse.
One of the things we're going to do is repeat the survey.
And I think with the additional----
Mr. Upton. You need someone else to write it, you know.
Mr. Corlin. I think with the additional educational efforts
that have gone on in the past 90 days--and also I can tell you
coming up at the June annual meeting of the House of Delegates,
since I run that meeting, we are going to have a very strong
presentation to the delegates who are there and use them as a
network to get out to the other physicians.
There are a few things I think we need to talk about
though. First of all, the issue of are patients going to be
directly damaged and put in harm's way by what's going on, or
is this going to be a problem for the physician; and
reimbursement, which, while it's a problem, it certainly is a
problem of the lower order of magnitude.
Many of the medical devices that are crucial for patient
care, monitors, respirators and so on, can be checked now
relatively easily. They have time clocks on them that are not
integral to the operation of the machine, but are simply time
marks. Many of those can be wound ahead to December 31, 1999,
and run for 48 hours and see what happens. Many of those will
be compliant. Probably the majority of those will continue to
operate normally only printing out on the bottom of the strip,
perhaps, the wrong date. That, while it may be a problem, it is
not serious. We need to verify it is nothing more than that.
Part of the difficulty we have is that some of the software
manufacturers, Microsoft among them, have refused to certify
their software as Y2K-compliant, and certainly when it comes to
obtaining those operating bills, no physician office has that
information. Nathan Myhrvold, who is the chief technician at
Microsoft, who has been referred to by many as the brightest
person in the world on this issue, has made the comment in the
end analysis nobody can really know for sure, we just have to
wait and see. That's not terribly reassuring to me with regard
to that.
With regard to the issue of billing systems, I take the
greatest assurance from some of Nancy-Ann Min DeParle
testimony, who said that 99.98 percent of the electronic claims
currently being submitted are submitted in a Y2K-compliant
manner; 80 percent of the claims are currently coming in
electronically. So while that's not the be-all and end-all of
our system, it means there is a far greater degree of either
preparation or simply older systems being more compliant than
we realized that exists in physicians' offices.
Mr. Upton. Thank you.
Mr. Klink.
Mr. Klink. Also, Dr. Corlin, in quoting Nancy-Ann Min
DeParle, while it was being provided to HCFA in an 8-digit
billing format, she was unable to tell me how the information
was gathered, and what kind of sources were behind it and what
the error rate was or project what the error rate would be. So
we really don't know where we're going.
Mr. Corlin. We do not know where we're going with those
that are not compliant. But if her testimony, as I heard it,
was that 99.98 percent of the electronic claims currently
coming in are Y2K compliant----
Mr. Klink. That's not what she--at least--I want to go back
and revisit her testimony, because when I pushed her on the
issue, I said it's coming in--she said it's coming in the 8-
digit billing format. And I said, okay, what about the systems
that are behind that billing format pulling the information
together, how accurate is that information? And my recollection
was--and we will check the record--that she wasn't sure about
that, nor of the error rate.
So let's get beyond that, because we will have to check and
see whether your recollection is right or mine. I still want to
get back to the survey, Dr. Corlin. You sent out 7,000 surveys
to your 300,000 members on Y2K. And I have the survey in front
of me. It's rather simple, it's only two pages long, relatively
simple, check the box. Why do you think you only got a 6
percent or an 8 percent or 10 percent, if the chairman will
give you the 10 percent, of the sampled members responding to
the survey?
Mr. Corlin. I thank the chairman, but it is only 8. I think
I like the extra 2 also, but it's only 8.
As I said, Mr. Klink, I think the reason is there is a
massive overabundance of surveying and certification and work
that goes to physicians' offices, and, unfortunately, things
that do not require responses often don't get them.
I can tell you, as an example from my particular office, I
have a six-person gastroenterology group. We get, let's see, 26
times 6 is 156--we get 156 recertification requests just from
managed care organizations in our office every year. We are
totally swamped by that requirement to do so.
Mr. Klink. Let me ask you a question. How many--because my
time is going to run out here. How many of these surveys do
they get that come from the AMA? Do you send them a lot? And
certainly if they get a survey from the AMA, I would guess that
they would take it seriously. Or my question is, is there not a
sense of urgency by the doctors that belong to the AMA that
this Y2K is a problem?
Mr. Corlin. There is a sense of concern. I wouldn't know
about--I can't say that there's a sense of urgency. We are
going to repeat the survey. And earlier today, just prior to
this hearing, we spoke with some of the representatives of HCFA
about a way of perhaps jointly having HCFA and the AMA do the
surveys to gather information over both signatures.
Mr. Klink. So you think a survey instrument is the best way
you can go about gathering the information?
Mr. Corlin. I don't want to say that it's necessarily the
best. I think the survey instrument is a good instrument, and
particularly if we get a large enough sample with a large
number return, it will be statistically significant. The
suggestion we made or that HCFA considered doing a joint survey
with us and that the survey be physically attached to
reimbursement check and directed principally to the person who
received the check to gather the information, rather than the
physician in the practice, because, quite frankly, that person
in the billing office may be more knowledgeable about the
information than the physician is, even if his or her own
office.
Mr. Klink. As time is moving on, you're going to be given--
I mean, year 2000 is quickly approaching, 8 months and
counting, and during that time, you still have to be concerned
about what--how your doctors are going to deal with this. And
you indicate that about 41 percent of your members have
contingency plans in place if the systems should fail. Can you
tell me the nature of those plans that are in place?
Mr. Corlin. I can tell you what is not in place, which is
only a part answer, but this relates back to a question that
was asked earlier. We were not absolutely under any
circumstances advocating that physicians as a contingency
revert back to paper claims submission. That is a major
regression. It is a potential escape that we don't think is
appropriate, and we are intensifying our efforts, both directly
and indirectly, with physicians to increase those percentages
to get them compliant well before December 31 so that they can
continue to submit their claims electronically.
Mr. Klink. Dr. Corlin, let me get back to my question. If
you're not going back to your paper, which was your answer, and
you are not Y2K-compliant to bill by computer, what are we
going to do?
Mr. Corlin. We were attempting to educate the physicians
both directly and networking with others, including the Patient
Safety Foundation, which I indicated earlier we're having a
meeting in 2 days in Los Angeles about that. We spoke earlier,
as I indicated, to try to do something cooperatively with HCFA.
We believe this is a problem that has got to be dealt with
by educating physicians to get compliant in a timely manner.
There's a massive incentive on the physician's part to become
compliant; i.e., 50 percent of their money coming into their
office depends on it.
We think our educational efforts, combined with the
incentive that's in place, will help to a very high degree.
Will it be 100 percent? Of course not. No system that anybody
could ever envision will be 100 percent effective. But we think
it will be close enough by the end of the year that we can be
comfortable saying we've done the best job that we can.
Mr. Klink. Well, the best job we can sometimes can be a
failing grade.
Let me ask you, are there going to be any physical audits,
where someone--beyond the survey instrument, is there going to
be any survey audits? If so, how many? How will you determine
how many you're going to have to do?
Mr. Corlin. Mr. Klink, the AMA does not have the legal
authority to go into any physician's office and do a physical
audit.
Mr. Klink. HCFA does; do they not?
Mr. Corlin. That's up to HCFA.
Mr. Klink. You said you're going to work with HCFA. That's
why I'm wondering.
Mr. Corlin. We're going to work with HCFA.
Mr. Klink. It's like pulling teeth now. In your work with
HCFA, are there any plans, Dr. Corlin, for there to be any
actual physical audits, or are we going to just do the best we
can by the end of the year and accept it at the end of the
year, we've done as good as we can and que sera sera? That's
the question I would like you to answer.
Mr. Corlin. Mr. Klink, I am not in the dentist's chair, nor
am I demanding you to pull teeth. I am trying to be open and
responsive as I can. We will work with HCFA. We have made some
suggestions to them. Whatever HCFA comes back to us with
further suggestions, we are more than willing to sit down and
work with them. I can't tell you now that I will agree to a
suggestion that I don't know what it is.
I can tell you that the AMA shares your concern with the
seriousness of this problem, and we will work with HCFA or any
other responsible body as vigorously as we can with any methods
that we believe will be appropriate to get this problem solved.
Mr. Klink. Mr. Chairman, here's--and I understand that the
red light is on. Here's the problem that I have. We are going
to be hearing from a lot of doctors, both those that are
members of the AMA and those that are not; providers, may
belong to the AHA, may not; may belong to other organizations
and may not, and here we are 8 months ahead of time. And if we
do not know and cannot get from these--the people who represent
them exactly where we're going to verify this information, it
puts us in a horrible position.
And sure enough, if HCFA is, come at the beginning of next
year, not making the reimbursements to these providers in a
timely fashion because they're not Y2K-compliant and the
billing is not work-
ing, and we don't know--and I will tell you, Dr. Corlin, still
from my questioning of you, and I didn't even get the other two
witnesses, I still don't know what you're going to do for those
people that aren't compliant.
You said you're not going to paper, you're going to go to
education. But I still--I don't know. And so when the
providers, whether they're doctors or whether they're hospitals
start screaming to their Congressmen at the beginning of the
year, I don't know what I'm going to tell them. I don't know
where in the world we can go on this.
Mr. Corlin. Mr. Klink--may I respond, Mr. Chairman?
Mr. Upton. Yes.
Mr. Corlin. Mr. Klink, I would suggest if under those
circumstances any medical provider complains to you after the
first of the year that they're not being paid, I would offer to
you that you might want to first ask them a few questions; did
they read--if they're a physician, did they read AMNews, did
they read the news that the AMA sent them, did they read the
material that HCFA sent them, weren't they aware of the fact
that the problem had to be corrected, and why didn't they take
those steps within their own office to correct it?
We can't hold a gun to people's heads and force them to
become compliant with a system that, on the one hand their
ethical responsibility, on the other hand their sense of
personal desire to make some money out of their practice
indicates they should want to do.
Mr. Klink. My belief, Dr. Corlin, is if they didn't have
the time to fill in this 2-page survey, they probably didn't
have time to read all of those materials either. That's what
they will tell me.
Mr. Corlin. Well, sometimes the people have to live with
the results of their own individual behaviors.
Mr. Klink. You're a member, sir.
Mr. Upton. Mr. Bilirakis.
Mr. Bilirakis. Dr. Corlin, approximately how many of the
medical doctors out there are members of the AMA?
Mr. Corlin. Excuse me?
Mr. Bilirakis. Approximately how many of the medical
doctors out there are members of the AMA?
Mr. Corlin. About 300,000, between physicians and medical
students.
Mr. Bilirakis. Percentage, I'm sorry, percent.
Mr. Corlin. Mid-30's.
Mr. Bilirakis. Mid-30's.
Mr. Corlin. Yes.
Mr. Bilirakis. So between 60 and 70 percent of the doctors
are not members of the AMA?
Mr. Corlin. That's correct.
Mr. Bilirakis. All right. So all of your efforts, that
booklet, which you have graciously also furnished to us, that
goes out to your AMA members?
Mr. Corlin. Well, it is made available on our Website to
any physician. AMNews, which is our weekly tabloid-size
periodical, goes to most--not every, but it goes to most
physicians throughout the country, whether they're members or
not.
Mr. Bilirakis. I see. But there are plenty physicians out
there, I guess, that would not have had any direct contact with
the AMA through survey or through the booklet or anything of
that nature regarding this particular subject?
Mr. Corlin. That is possible.
Mr. Bilirakis. That is possible. That's probable.
Mr. Corlin. Yes.
Mr. Bilirakis. Okay. Mr. Margolis, you've indicated that
you have--you feel that the American Hospital Association
doesn't see any problems as far as its hospitals are concerned
regarding Y2K. I think you used the figures like 95 to 99
percent or something like that, right?
Mr. Margolis. That's correct. They said they would be
compliant by December 31.
Mr. Bilirakis. Ms. Mackin, you indicated that there would
be problems, and then you also expressed concerns that HCFA, of
course, doesn't cover all of home health care, only the
Medicare portion.
Ms. Mackin. But in most cases, the billing systems are
universal. So if we're in compliance for Medicare, we would be
in compliance for the rest of the payers.
Mr. Bilirakis. Yeah, Okay.
And, Mr. Grob, I guess it was from the other panel,
indicated that HCFA indirectly and HCFA during its work for
Medicare is also helping on Medicare. And we're very pleased
with that.
Ms. Mackin. Yes.
Mr. Bilirakis. But you expressed concerns that HCFA was not
making--I'm not putting words in your mouth, but paraphrasing--
not making available to home health care agencies adequate
information regarding Y2K?
Ms. Mackin. Well, we made a lot of references to using
Websites to download information, but there are significant
number of agencies, particularly the very small and rural and
remote areas, who don't have Website access because they
haven't had the funds to invest, or they haven't felt the
necessity to do that. So the kinds of information that those
individuals have may be quite limited.
Mr. Bilirakis. Are they all members of NAHC?
Ms. Mackin. Some; some aren't. So, again, the accessibility
of the information is limited.
Mr. Bilirakis. Do you think there's some out there--forgive
me for interrupting you. Do you think there's some of them out
there, many of them out there, who are not aware of the
potential of the Y2K problem?
Ms. Mackin. I think that just about everyone is aware of
the Y2K issue, but having the expertise or the wherewithal to
know what to do about it may not be as pervasive. Many of these
agencies are small agencies run by a nurse. They have
essentially--you know, their staff consists of caregivers, but
not too many of the support-type individuals, so they don't
have access to that level.
Mr. Bilirakis. Okay. Well, it's always pleasing to know
that there are people like yourselves who are patient enough to
wait your turn, but you sat there throughout the entire first
panel, and so you heard me and you've heard others, Ms. DeGette
and others, emphasize the--not belittling the billing area, but
emphasize the DME, the durable medical equipment. Mr. Margolis
and Dr. Corlin particularly, can you speak to that?
Mr. Margolis. Medical equipment?
Mr. Bilirakis. Yes, sir.
Mr. Margolis. The medical equipment area in our hospital
speaks very specifically--it comprises about 9,000 pieces of
equipment from patient monitoring to defib devices, all of
which contain computer microchips.
Mr. Bilirakis. Would you say that it's an indication of
most hospitals out there?
Mr. Margolis. Yes, I think so.
Mr. Bilirakis. Some more so.
Mr. Margolis. A 400-bed hospital would probably have 8- to
10,000 devices. These devices are--we have a clinical
engineering department among whose responsibility is to
determine whether or not they're Y2K-compliant. We use
resources both from the manufacturers, where they are--where
they communicate with us through a letter of direct contact;
resources that the AHA has put on line on the Web that we can
check directly by model and serial number; and resources from
the manufacturer's site.
In many cases, there is confusion in this area in that
manufacturers have not always been forthcoming or specific on
specific series of devices or model numbers. And in some cases,
they've used different internal chip component sets in the same
model number over the years of production, so there's no way
that one can rely 100 percent. So we've taken the approach of
patient safety being that highest priority.
And for devices which cannot be proven to be Y2K-compliant,
we will staff accordingly so the patient is not dependent upon
that device, nor is the nursing or the physician's staff
dependent on the data collection of that device. By that I mean
the device may have to be stopped and restarted at midnight, or
the device may have to be taken out of service.
Mr. Bilirakis. Would you do that; you say device start,
stop, stop and restart it at midnight, would you--when would
you emphasize the fact that that device is maybe not Y2K, you
know, compliant, it hasn't met the Y2K situation? You are going
to wait until December 31, or is there a time line before that?
Mr. Margolis. No. As a matter of fact, in our inventorying
process right now, we're identifying those devices by a way of
a sticker. Someone mentioned that in an earlier panel, I
believe. The sticker goes on as Y2K-inventoried when we
actually recognize where that device is assigned and located.
And after its determined, if it's determined, to be compliant,
another sticker goes atop of that that says ``Y2K-compliant.''
So it will feel substantially comfortable in using that device.
Now, for devices that are not compliant, another indication
goes on as well as the fact that it's identified in the
inventory of devices, and it will be either taken out of
service, locked away in a closet in another unit, something
like that, or if it is a critical device of which we have no
others, it will be watched closely. There will be a nurse or a
resident in attendance. In many cases, the device will simply
stop, and it will have to be restocked.
Mr. Bilirakis. Do you feel what you tell us in terms of the
safeguards that you're taking at your hospital, it would be
indicative of American Hospital Association hospitals around
the country?
Mr. Margolis. Yes, absolutely.
Mr. Bilirakis. You're satisfied with that?
Mr. Margolis. Those pieces of equipment are critical in the
operation of a hospital, but not critical in the well-being of
a patient so that it is a labor-reduction, productivity-
improvement device.
Mr. Bilirakis. But the scenario that you gave us, you feel
confident will exist in all hospitals in the country?
Mr. Margolis. Right. That is the recommendation of the
American Hospital Association, so I feel that all hospitals
will be following that template.
Mr. Bilirakis. Dr. Corlin, very quickly, are you concerned
with the durable medical equipment problem?
Mr. Corlin. Yes, I am. I am concerned because of the
comments that Mr. Margolis is making. And clearly the hospitals
have far greater resources than physician's offices. We are
educating our physician's offices; and we are trying to say, if
there is a question, take advantage of the hospital's
capability. A lot of the equipment can be brought over to the
hospital and have it tested if you cannot get direct
information from the manufacturers.
We are also concerned that some equipment that prints out
4-digit year codes may be providing a false sense of security.
The ``19'' may simply be a hard-embedded instruction to the
printer and may not be a functional part of a real 4-digit
computer year code.
The final area of concern is the area of the offsite
equipment, which impacts on direct medical equipment.
Elevators, for example, if we have an outpatient surgery center
on the fourth floor and I need a 911 call in a hurry and the
elevator stops functioning properly, that patient is in real
trouble if the paramedic is down on the first floor and cannot
get up there.
Telephone systems, not just the telephone company being
available but many of the phone systems, now have a local
computer system either in the office or in the basement of the
building. Anyone that usually works through one of the new
systems that people buy, they may have a chip in them. They
have got to be checked. Backup generators, a whole variety of
things that impact on something at the bedside that may not be
directly at the bedside. These can have just as disastrous an
effect if they are not watched properly.
Mr. Bilirakis. Ms. Mackin.
Ms. Mackin. The Visiting Nurse Service, affiliated with the
University of Rochester Medical Center and Strahn Memorial
Hospital, which is a 740-some odd bed acute care hospital, we
have participated with them in their Y2K efforts as well; and a
number of things that they are doing parallel what Mr. Margolis
is saying as well.
Mr. Bilirakis. You know, I asked the question about the
concerns with HCFA not making available to your home health
care agencies adequate information to help them?
Ms. Mackin. I believe the national association has.
Mr. Bilirakis. The gentleman behind you is nodding his
head, yes.
Thank you, Mr. Chairman. I appreciate your indulgence.
Mr. Upton. Thank you, Mr. Bilirakis.
Dr. Corlin, I have been in the Congress 12 years, and I
have been on this House subcommittee for I think 7 years, and,
consequently, I feel that I have a very good relationship with
my health community in Michigan. I represent the Kalamazoo, St.
Joe, Benton Harbor area and know the Michigan folks very well
up in Lansing. And there are some major providers, and I speak
to their groups fairly frequently. They come here, and I know
them in a pretty good way, in lots of ways.
There were some that went on our little bus trip 2 weeks
ago to one of my major hospitals that really services my home
county. And some of the AMA folks were there, some of the local
physicians were there, and they made the point that they needed
to make sure that this system worked because they would not be
in business, knowing the delays already in place between
getting reimbursement with Medicare--they haven't thought about
Medicaid yet. But, at least with Medicare, they would not be in
business if they were not compliant and if things did not work.
And I know when I meet with a good number of them in the
second week in May, my guess is that, based on your national
statistics, probably not very many responded to the relatively
simple questionnaire that you sent out, and I am going to razz
them for you if you don't do it for yourself in 2 days.
My guess is that, in the long run, they will be compliant
because they know that they need that cash-flow for the folks
that work in their operation and need to pay their bills. They
have been squabbling for a long time about how long it takes to
get reimbursed, and they can't take--even some of the long-
time-established ones, they cannot take much longer of a delay
in getting reimbursement from HCFA.
Mr. Corlin. I agree with you a hundred percent. I think
that any physician who expresses a concern about the issue now
and acts in the most reasonably appropriate way in the broadest
definition of that will be compliant because they will have had
their operating system in their office adjusted. Whether it
takes as much as Mr. Coburn said or not, I think they will
comply.
I think the only physicians--and I hope that this is a
minuscule number who may not be compliant are those who simply
ignore it or say it is not going to be a problem, and that is
not a realistic attitude. We are doing everything that we can
to see that as many physicians as possible realize that this is
a real problem. It needs to be addressed, and the solution may
be a costly one or it may be a minimal one, depending upon what
you have in your office and how you operate now.
I agree with you a hundred percent, and I do believe that
every physician who spoke to you who said that they have their
concerns and they are aware of the situation, they are going to
be ready.
Mr. Upton. Mr. Margolis, I was impressed with your
testimony, and that is perhaps why AHA asked you to come
testify before us. I have not been to New Mexico really before,
and as you went through your checklist of things that you all
did at the University Hospital, I sort of put it in context of
Michigan, so I have sort of a sense of how big it is and
certainly how important it is to the citizens of New Mexico.
And I am just wondering, as you went through your checklist
to get ready with the equipment and the stickers and phones and
power and all of the different things, did you start from
scratch on this? Were there AHA workshops that helped walk you
through all of the different hurdles that you had to face?
Mr. Margolis. We started about 15 months ago. It was prior
to some of the AHA resources that are now available. We used
not only AHA but resources within our community, the police,
fire department and mayor's office, because the University of
New Mexico Hospital, located in a geographically diverse State,
much like your own, Mr. Chairman, is the only trauma 1 center
in the State, and even in nearby regions in Colorado and
Arizona. So we have a vast repertoire or documentation of
emergency response and contingency plans.
I think we are served by more than a dozen helicopter
services so cases are flown in from far beyond the metropolitan
geographical area. So we worked with those organizations to
ensure that we had systems in place to respond to them, and
that is what brought about our early contingency planning.
But, as was pointed out earlier in the last panel,
hospitals are accustomed to having contingency plans because
one never can predict a train wreck or an equally disastrous
accident in human terms. In Y2K you can predict the accident
about to happen, but we don't know to what extent it is going
to happen because there are a lot of elements of the system
that need to be anticipated. We did a lot of the groundwork
ourselves, but we borrowed heavily from other web sites. RX
2000 is a big one today. I would be glad to get you that list.
With the electronic advantages of the Internet comes major
advantages to any organization, particularly a hospital. You
can share through your professional associations, the American
Hospital Association and through other Internet resources what
other pioneering organizations are doing, not saying that we
are a pioneering organization, but we are trying to develop a
standard, particularly with urban and rural size hospitals
which is across all hospitals within the Hospital Association.
That is, they are all looking at the same templates at this
point in time.
Mr. Upton. Did you have any help from the FDA or the device
manufacturers in terms of outreach to you or were you the first
called in? How did that relationship work?
Mr. Margolis. I think we are outreaching to them. They have
been a little hesitant in responding.
The FDA commissioner 4 months ago was head of the Health
Sciences Department, University of New Mexico, and so we have a
little closer connection and understand many of the
frustrations that the FDA is having because, again, they are
looking for voluntary responses--substantially voluntary
response from the device manufacturers, and many of them are
smaller companies. Unfortunately, many are large companies with
a reputation to protect, like GE or Siemens or other large,
well-known companies.
Mr. Upton. Stryker, my district.
Well, I thank you.
Mr. Chairman, do you have any other questions?
Mr. Bilirakis. Mr. Chairman, thank you for that.
I guess, Dr. Corlin and Ms. Mackin and Mr. Margolis, I have
asked you if you are concerned with the computer equipment
problem. If you were in our position and could do something,
whatever it might be, regarding the potential real bad problems
regarding medical equipment, what would you do, just very
quickly? Don't take advantage of the chairman's indulgence
here, but what would you do?
Mr. Corlin. I would get general information and specific
information.
The general information I would want to get is, if a given
piece of equipment fails because of Y2K, is it going to stop
working or is it going to continue to work but on the strip it
puts out have the wrong date on the bottom? If, for instance--
and I don't know which way it is going to go; I use this as an
example--a cardiac monitor on a patient in an intensive care
unit, if the time clock on the monitor--and I do not know how
the time clock works. If it is an integral part of the
functioning of the equipment and it fails, it may not act as a
monitor and set off an alarm if the patient has an arrythmia.
If the time clock is simply an event marker on the strip that
gets printed out, it will continue to function properly and
just print out that an arrythmia occurred on January 3, 1900,
rather than January 3, 2000.
The first thing I would find out is which is the category
of failure that each piece of equipment would go into, and I
would consider what are the most valuable ways and most
effective ways that all of those pieces of equipment that had
the type 1 failure, which is the serious failure, can be
assured to be off line or changed to be brought into compliance
by December 31.
Mr. Bilirakis. So FDA would be able to give us all of this
information?
Mr. Corlin. What I would want to do under those
circumstances is very, very quickly convene a panel, a meeting
of FDA with real end users of the equipment so they can--the
FDA can have the advantage of the real-world experience of the
users and then develop the criteria having that input, yes.
Mr. Bilirakis. Thank you.
Anything to add, Ms. Mackin?
Ms. Mackin. Mr. Willemssen's comments earlier were right on
the money in terms of narrowing it down to the critical and the
life support equipment and then making sure that they have been
tested and all of the results are available to everyone.
I think one thing we should keep in mind is that life
support equipment is not just in the hospitals. There are
patients at home who are on life support, and that is another
venue where we need to----
Mr. Bilirakis. Right. That is probably of even more
concern, because the hospitals seem to be on top of it.
Ms. Mackin. Who is responsible for that patient's home
environment? Is it the home health agency? Is it HCFA or the
community? We need to address that.
But after the critical equipment is identified, then we
really need strong contingency planning so we know what to do
because, as was said earlier, you can plan and plan but
something will go awry, and we need to have the plans in place.
It happens in our world now. When the sequential billing was
implemented in the Florida shared system, it was a debacle. And
if we are looking----
Mr. Bilirakis. You didn't have to bring that up. We know.
It is not funny. I am sorry, I don't mean to be making light of
it.
Ms. Mackin. It is a fact of life. There will be problems.
Mr. Bilirakis. Mr. Margolis?
Mr. Margolis. I would just comment quickly, if a mechanism
could be put in place that would require a timely response by
the equipment manufacturers, rather than leaving the hospital
or end user sort of in the dark or in some sort of in-between
spot of not knowing for certain--because much of this equipment
cannot be tested. We have tried that within our own hospital
and some of the equipment fails and is then locked up and
cannot be used again until it is returned to the manufacturer.
And so we have concluded that it will not work after January 1,
but we have lost the use of it for the next 8 months.
Mr. Bilirakis. Thank you. Thank you very much, all three of
you; and on behalf of myself and the health subcommittee
particularly, we appreciate your being here. You have been very
helpful, Mr. Chairman.
Mr. Upton. I appreciate your testimony today, and it has
been very helpful to us as we look at this very important
issue. You have helped set the stage for a future hearing. We
look forward to working with you in a meaningful way and
certainly in the years ahead.
Dr. Corlin, we welcome you to your new spot. I read with
interest your remarks a week ago about Mr. Campbell's bill and
appreciated reading that.
You are excused. Thank you very much for being with us this
afternoon.
[Whereupon, at 3:42 p.m., the joint subcommittees were
adjourned.]
[Additional material submitted for the record follows:]
Department of Health & Human Services
Health Care Financing Administration
June 28, 1999
The Honorable Michael Bilirakis, Chairman
Commerce Subcommittee on Health and Environment
2125 Rayburn House Office Building
Washington, D.C. 20515
Dear Chairman Bilirakis: Thank you for inviting me to testify at
the April 27, 1999, joint subcommittee hearing on Year 2000 (Y2K)
provider readiness. I appreciated the opportunity to update you on the
progress we at the Health Care Financing Administration (HCFA) have
made to ready our own systems for the millennium and our ongoing
efforts to educate our health care partners on their obligations to
become Y2K-ready. I also appreciate your efforts, through the hearing
and other means, to urge health care providers to meet their Y2K
obligations. I know you share our concern, which is to ensure that our
more than 70 million Medicare, Medicaid, and Children's Health
Insurance Program beneficiaries continue to receive the health care
services they need in the new millennium.
I am writing to update you, for the record, on our progress and to
amplify some of the points I addressed at the hearing. I have also
enclosed an edited transcript of the hearing and answers for the record
to questions submitted to us by Congressman Buff.
As you are aware, all of our internal systems and all of our
contractors' claims processing systems have been renovated, tested,
certified, and implemented. Because of the complexity of the Medicare
program and the numerous small changes that need to be made to systems
between now and this Fall, we will continue to check and retest our
systems and will be recertifying as to their readiness this Autumn. We
are listening to the suggestions of our Independent Verification and
Validation (IV&V) expert and the General Accounting Office (GAO) to
make our further testing efforts even more robust. I am pleased about
our progress, confident in the readiness of our systems, and committed
to do whatever it takes to make sure our systems are able to process
and pay accurate and timely claims at the turn of the millennium.
When I testified, there were still a number of providers or claims
submitters that were not yet using the appropriate 8-digit date format
to submit claims to us. I am pleased to report that the handful of
noncompliant Part A claims submitters are testing their new formats
with us now and we expect to report 100 percent compliance for Part A
and Part B claims submitters very shortly.
As I explained in my written testimony, and at the hearing during
an exchange with Congressman Coburn, the ability to submit 8-digit date
claims is, only a first step toward Y2K readiness. It does not
necessarily mean that a provider's entire billing system is Y2K
compliant, or that its office computer or practice management software
will function into the millennium. While I am encouraged that the vast
majority of providers responded responsibly to our April 5 deadline,
and can satisfy our claims input requirements, the obligation remains
on providers to make sure that any and all software used in their
practices has been made compliant and has been future-date tested. And,
as emphasized at the hearing, it is critically important that health
care providers, manufacturers, and suppliers thoroughly and
satisfactorily check all equipment and devices that go to the heart of
quality care and patient safety for Y2K readiness.
Importantly, HCFA is giving providers the opportunity to test with
our claims processing contractors' systems to determine whether
provider claims, including future-dated claims, can be successfully
generated and submitted by the providers and accepted and processed by
the contractors. This kind of testing can show providers whether their
billing systems can successfully generate appropriate claims and it
assures providers that data exchanges with HCFA do work. It helps us
refine and target our future outreach efforts to providers who may not
be making adequate progress in meeting their Y2K responsibility. We are
strongly urging providers to take advantage of this testing
opportunity. Of course, health care providers receive payment from
insurance sources other than Medicare. Providers need to work with
their other payers to verify that those payers are as ready as HCFA is
to pay claims at the turn of the millennium.
HCFA has, appropriately, gone well beyond our immediate claims
processing and financing concerns to engage the provider community to
address the totality of the Y2K problem. Our outreach effort is strong
and the provider readiness survey results highlighted at the hearing,
as well as subsequent studies, help us to focus our outreach efforts on
provider sectors of greatest concern. For example, a recent survey by
the HHS Inspector General yielded troubling results about the readiness
of managed care organizations. We are working hard to raise managed
care plans' awareness of the importance of being Y2K-ready and have
meaningful contingency plans. We are meeting regularly with managed
care industry groups. We required all Medicare managed care
organizations to submit certifications about their Year 2000 readiness.
We and our IV&V expert will be performing onsite reviews of the plans
that seem to be the least prepared. And, we are requiring managed care
organizations to provide contingency plans to us by July 15, 1999.
I want to assure you we will not let down our efforts to reach out
to the provider community. As you know, I recently sent a second letter
to every Medicare provider and I will continue to personally reach out
to providers. We hope the Congress will continue to send a strong
message to providers and health plans as well.
Finally, I am glad the hearing highlighted the importance of
contingency planning. HCFA recently completed the latest draft of our
contingency plan and my staff will be holding confidential briefings
with your staff soon to discuss some of the details. The contingency
plan is designed to guide HCFA's actions in the event of an
unanticipated failure of HCFA's systems. We are also working with our
partners--our claims processing contractors, managed care
organizations, and States--to ensure they have valid contingency plans
in place in the event they experience systems failure.
I assure you that HCFA's contingency plan provides mechanisms to
make sure that providers' claims will get processed and paid even if
parts of HCFA's systems experience unanticipated failure. In addition,
you can be sure we will have in place at the turn of the millennium, as
we do today, financial and audit controls to help protect the integrity
of the Medicare Trust Funds. Finally, as I emphasized at the hearing,
we firmly believe that no contingency plan should cause providers who
fail to prepare for Y2K to be rewarded for their lack of attention,
effort, or due diligence. Being able to submit a valid claim is the
minimal requirement that is necessary to ensure that a provider can
operate in the Year 2000 environment and is actually furnishing covered
services. That is why I have made it very clear that HCFA has no
contingency plan to make estimated payments to providers that cannot
submit a bill. Providers simply must have their own contingency plans
in place to ensure that they can get accurate and timely claims to
Medicare. We remain ready and willing to do all we can to help them
succeed.
In conclusion, I have reason to be confident about HCFA's readiness
but know we still have much work to do. We will continue to do all we
can to ready those systems that are under our control and we will
continue to rely on the counsel of our Inspector General, the GAO, and
the Congress throughout this endeavor. Providers still have much work
to do to prepare their office systems and equipment for the millennium
and we are working hard to get the message out to them. We will do all
we can to work with the provider community, our sister agencies in
federal and State governments, and the Congress to address the Y2K
problem.
Please do not hesitate to contact me if you have any questions.
Again, thank you for holding an important and timely hearing on this
important topic and HCFA's number one priority.
Sincerely,
Nancy-Ann Min DeParle
Administrator
Enclosures
cc: The Honorable Fred Upton, Chairman
The Honorable Ron Klink, Ranking Member
The Honorable Sherrod Brown, Ranking Member
The Honorable Richard Burr
Joel Willemssen, General Accounting Office (without enclosures)
George Grob, HHS-Office of the Inspector General (without
enclosures)
Richard J. Davidson, American Hospital Association (without
enclosures)
Nancy W. Dickey, M.D., American Medical Association (without
enclosures)
Val J. Halamandaris, National Association for Home Care (without
enclosures)
Questions for the Record Submitted by Congressman Richard Burr
Question 1. How many Medicare contractors are there nationwide?
Response: The Medicare program currently has 38 fiscal
intermediaries and 22 carriers. Four fiscal intermediaries (Anthem,
serving Connecticut; Hawaii Medical Services; Blue Cross of Minnesota;
and Trigon, serving Virginia and West Virginia) are in the process of
leaving the Medicare program. Their workloads will be transferred to
other fiscal intermediaries by this summer, reducing the above counts.
Question 2. My understanding of your billing practices is that when
a Medicare bill is submitted, it goes to either a fiscal intermediary
(FI) if it is a hospital or a Carrier if it is a doctor's bill for
front end processing. Basic entry data is done by that ``first layer''
Medicare contractor and then sent to a standard maintainer for
verification that the claim is for an actual Medicare beneficiary, that
the codes are correct, and that Medicare covers the billed procedure.
This appears to be the ``second layer'' of work Medicare contractors
do. Finally, the ``third layer'' of billing or back end processing is
typically done by the original FI or Carrier. This is where the medical
necessity determination is made and the bill is ultimately paid.
Have I outlined the correct billing framework? If I have not,
please adjust my description.
Response: Medicare claims flow from the physician, supplier, or
other provider, or their billing agent to one of our claims processing
contractors. The contractor's front-end software performs the initial
claims processing functions, such as date stamping and procedure code
verification. The claim then goes through the standard system software
for processing. This software verifies medical necessity and makes
other determinations necessary to conclude whether the claim should be
paid or denied. (There are presently six standard systems, which are
maintained by other contractors--the standard system maintainers.) The
claim is then sent to the Common Working File (CWF) software where
determinations are made about eligibility, additional sources of
insurance, and deductible status, among other things. The CWF then
makes the final determination to pay or deny the claim. Finally, if the
claim is payable, it is sent through the contractor's back-end
processes. These processes include the transactions that pay the claim
such as providing information to other payers for electronic funds
transfers and check writing.
Question 3. How many Medicare contractors cited in Question 1 are
front end and/or back end processors (please delineate those
contractors which do not perform both functions) and how many are
standard maintainers?
Response: All fiscal intermediaries and carriers are responsible
for the front and back-end processing of Medicare transactions. The
standard systems are maintained by certain Medicare fiscal
intermediaries and carriers and other data processing contractors. The
Medicare contractors that also act as standard systems maintainers are:
Blue Cross and Blue Shield of Arkansas (APASS system--Part A); United
Health Care (HPBSS system--Part B); and Blue Cross and Blue Shield of
Florida (Fiscal Intermediary Standard System--Part A). The data
processing contractors that act as maintainers are: VIPS (VMS system--
Part B); GTE (GTEMS system--Part B); and EDS (MCS system--Part B). Each
of the Medicare contractors that process claims have their own front-
end and back-end systems that they are responsible for maintaining.
Question 4. How many Y2K compliant front end and/or back end
processors are connected to a standard maintainer which is not Y2K
compliant?
Response: As of April 23, 1999, all six standard systems and the
CWF, having completed our rigorous testing, were deemed Y2K-compliant.
Therefore, no front and/or back-end processors are connected to a non-
compliant standard system maintainer.
Question 5. Does North Carolina fall into the circumstance
described in Question 4?
Response: No.
Question 6. GAO has significant doubts about the quality and
thoroughness of HCFA's testing methods. What is HCFA doing to correct
and improve those methods?
Response: GAO raised several concerns in its recent testimony about
our upcoming recertification testing efforts. Although we are convinced
that our testing process has been rigorous and represents the most
thorough testing ever performed on our systems, we are addressing each
of the GAO's concerns. A description of the GAO's concerns and the
activities we are undertaking to address them, are as follows:
<bullet> Recertification test coverage should be better defined.--We
are strengthening our test coverage requirements based on the
recommendations of the GAO and our independent verification and
validation contractor (IV&V), AverStar, so that our contractors
will have improved mechanisms for determining the breadth of
test coverage (systems functionality, HCFA-mandated dates, and
interface coverage). Specifically, we are requiring a
comprehensive end-to-end testing regimen, completion of
rigorous test traceability matrices, as well as the application
of test case and code coverage tools to contractor systems, and
an auditable quality assurance process. We have used a test
tool, Ready 2000, and are competing a contract for additional
testing tools. In addition, we have hired a separate
contractor, SETA, to conduct independent tests of our external
standard systems. These tools and reviews will provide further
assurance of the readiness of our external systems.
<bullet> The sequencing of recertification testing must ensure that CWF
and standard systems maintainers complete testing prior to FIs
and carriers.--We are requiring the CWF and the standard
systems maintainers to complete their functional testing before
their systems are released to the contractors and to complete
future-date testing before the claims processing contractors
finish their testing. We acknowledge that this is not the ideal
sequence for ensuring the compliance of all systems. However,
we must proceed in this manner because the ideal sequence would
have required a software freeze beginning in April--a nine-
month freeze on any change to Medicare. We believe that our
current test sequence approach provides a realistic balance
between the requirement to meet our programmatic obligations
and the need to provide appropriate assurance of Y2K
compliance. We note that all of these systems, which are
presently paying Medicare claims, have all completed extensive
testing, including future date, integrated, and end-to-end
testing. The retesting and recertification process is expected
to validate that we have not introduced any new Y2K date
handling errors in making mandated systems changes that affect
only a small portion of the system code.
<bullet> IV&V should certify the compliance of all external systems.--
We have expanded the scope of AverStar's work. They will
provide certification of compliance for all contractors,
including maintainers, during recertification.
<bullet> An integrated test schedule should be developed.--We are
developing a test schedule that will clearly illustrate the
sequence of testing times and events for each component of the
internal process, the external process, the CWF, the standard
systems maintainers, and the fiscal intermediaries and
carriers. Part of this schedule is still under development by
our carriers and fiscal intermediaries. Our goal is to complete
the schedule in June.
Question 7. I am very concerned about the Y2K readiness of medical
devices and information systems. What can we do to ensure that
hospitals and providers have checked and, if necessary, fixed their
equipment?
Response: In our outreach efforts to providers, we have
consistently stressed the important need for providers to ensure the
Y2K readiness of all medical devices, as well as clinical and patient
management systems. We refer providers to the Food and Drug
Administration's (FDA) website to obtain needed information on the
readiness of medical devices and have established links to the FDA's
site on our own website. Callers to our toll-free provider Y2K phone
line also are referred to the FDA site when questions about medical
devices arise. In addition, we have sponsored a variety of Y2K
educational conferences across the country and have arranged to have a
representative from either the FDA or the Department of Veterans
Affairs address the topic of medical device readiness. Finally, we have
referenced the importance of medical device readiness as well as the
FDA website address in the Y2K-related letters we have sent to all
providers.
Question 8. You have tested HCFA's computer codes for Y2K
compliance, but you do not know what program functions those codes
cover. A recent article in the Washington Post (Federal Page, April 26,
1999) mentioned that you requested contractors to send you a list of
the tested functions. When is the deadline for contractors' responses?
Have you received any of those responses? What are you going to do if
they do not respond?
Response: Each contractor was required to provide us with a test
traceability matrix, a crosswalk of test cases to program business
functions, detailing their plan for testing all of their business
functions and all of the required test dates. We currently are in the
process of reviewing these matrices which we have received from nearly
all of our contractors. Development of a test traceability matrix is an
iterative process between HCFA and the contractors. The contractors
have worked closely with us to ensure that their test coverage is more
than adequate. We do not expect any contractors to fail to respond to
our request and will continue to work closely with them to ensure a
rigorous recertification process.
Question 9. How many different compliance test does HCFA have to
run in the coming months to determine Y2K compliance? How many times
has HCFA had to retest systems? Is systems retesting part of an overall
strategy to address Y2K, or part of a strategy to address inadequacies
in the structures of previous tests?
Response: Y2K compliance testing is integral to our overall Y2K
strategy. We plan to continue to test and retest all our internal and
external systems throughout this year and up until January 1, 2000. We
are following the GAO's recommended guidance on compliance testing. For
initial systems certification, each Medicare contractor was required to
renovate their systems and perform several levels of testing. These
tests included:
<bullet> Systems Testing--the initial level of functional unit testing
of the individual components of the system.
<bullet> Integration Testing--the level where components of the system
are tested with each other.
<bullet> End-to-end Testing--tests all levels, components, and
functions involved in Medicare transactions from the submission
of a claim to the claims processing contractor to the CWF
processing and back to the contractor to the servicing banks to
generation of provider payment notices and the printing of
Medicare Summary Notices/Explanations of Medicare Benefits
(MSN/EOMB).
These tests were performed with current and future dates. The
recertification process is necessary to ensure that changes to our
systems made after the initial certification have not compromised the
system's overall Y2K compliance status. To provide the highest level of
assurance that all systems will function properly in the new
millennium, we are requiring Medicare claim processing contractors to
retest their systems beginning with system level testing through end-
to-end testing. This additional testing will begin in July, when all
Medicare coding changes to our systems are complete and our systems are
frozen. This testing will continue through the end of October. We will
then require all contractors to recertify their systems by November 1,
1999. We believe that the structure of the earlier tests is sound;
nevertheless, we continue to incorporate new test cases, both to
improve our test suite and to test any new functionality or changes we
have added to the programs.
Question 10. Is there an institutional hesitance to address Y2K
problems at HCFA? If so, where does it come from? Has HCFA identified
any problem areas within its organizational structure to deal with Y2K?
Response: No, there is absolutely no institutional hesitance to
address Y2K at HCFA. In fact, HCFA employees who are involved in the
Y2K effort take their jobs and responsibilities in addressing this
challenge seriously. In October 1997, after a nationwide search, HCFA
hired Dr. Gary Christoph as our first Chief Information Officer and
Director of our Office of Information Services. Dr. Christoph is
responsible for managing HCFA's Y2K compliancy efforts, our enterprise
information and Medicare claims processing systems, as well as the
modernization of our overall information systems architecture.
Y2K compliancy is our number one priority and is an Agency-wide
effort. We have closely evaluated employees' skills and workload and
redirected their work, where appropriate, toward the Y2K effort. In
many cases, this required postponing other necessary, but less urgent,
systems development work. For example, we have created a Y2K ``War
Room'' in our Baltimore headquarters where employee work is dedicated
solely to tracking Y2K efforts on a daily basis not only within our own
agency, but also with our partners. We also have established contractor
oversight teams specifically responsible for closely monitoring and
managing Y2K work for all contractors involved in processing Medicare
claims. These oversight teams include employees who are on-site
overseeing and helping contractors across the country. These teams
provide timely information on the contractors to the War Room. We also
have rehired a number of retired HCFA employees to work exclusively on
Y2K, thus providing us with immediate access to a pool of skilled
workers without costly retraining or lengthy recruiting processes.
Finally, HCFA is leading the Health Care Sector of the President's
Council on Y2K Conversion, led by John Koskinen, the President's
special advisor on Y2K. This effort includes working closely with
provider trade associations and public sector health partners to raise
awareness of the millennium issue and encourage all providers to become
Y2K compliant.
Question 11. Can HCFA meet the June 30 OMB compliance deadline?
Response: Question omitted per Representative Burr's Staff Member,
Christopher Joyner.
Question 12. Would HCFA agree that informing the health care
community about the potential problems facing the community is a
function of the agency? Has it done so on Y2K issues? Can you please
describe those efforts?
Response: We wholeheartedly agree that informing the health care
community about the Y2K challenge is an important function of our
agency. While we do not have the resources, ability, or authority to
step in and fix providers' systems for them, we have nevertheless
engaged in an unprecedented outreach effort to raise awareness of this
critical issue and to encourage providers to take the steps necessary
for ensuring their own millennium compliance.
From our own efforts, we know first hand the difficulties inherent
in achieving Y2K compliance, and we are eager to share with providers
the lessons we have learned. As a part of our outreach effort, we are
leading the health care sector of the President's Council on Y2K
Conversion. We chair twice-monthly meetings in coordination with a
number of provider trade associations and our public sector health
partners to share insights, raise millennium awareness, and encourage
all providers to become Y2K compliant.
Also, this past January, we sent a letter to each of our more than
1.3 million Medicare and Medicaid providers stressing the importance of
Y2K readiness and providing an inventory checklist of office equipment
and supplies providers need to assess for Y2K compliance. We sent a
second letter to providers during the last week in May. We have
established a website dedicated to the Y2K (www.hcfa.gov/y2k) advising
providers how to identify mission-critical hardware and software and
assess their readiness; test systems and their interfaces; and develop
contingency plans should unexpected problems arise. The website also
includes links to other pertinent sites, such as the FDA's website on
medical device readiness.
In March, we set up a Y2K toll-free phone line, 1-800-958-HCFA (1-
800-958-4232) where callers can receive up-to-date answers to Y2K
questions that relate to medical supplies, their facilities and
business operations, as well as referrals for more specific billing-
related information. The hotline also updates callers on HCFA's Y2K
policies and provides general ``how to'' assistance.
Also in March, we hosted Y2K Action Week seminars in twelve
different cities across the country, providing attendees with detailed
information about what health care providers need to do to be Y2K-
ready. And in mid-April, we began a series of provider educational
conferences which will take place over the next three months in twelve
cities. These one-day conferences are offered free-of-charge and
feature readiness strategies, as well as information about biomedical
equipment and pharmaceutical risks.
I recently held a telephone conference call with more than 75
representatives from national, state, and local medical societies to
apprise them of HCFA's Y2K readiness and to encourage them to take
responsibility to ready themselves for Y2K.
HCFA employees across the country have been actively involved in
sponsoring and participating in conferences, symposiums, and other
outreach programs through our speakers bureau. They have made literally
hundreds of presentations on Y2K issues to providers and others around
the nation.
Our outreach activities will continue throughout the year. As time
to remediate grows shorter, we will shift our focus from Y2K awareness
to alerting providers to the need for contingency and business
continuity planning.
Question 13. What steps has HCFA taken to address the concerns of
outreach to rural health care providers? How is this outreach being
conducted?
Response: We recognize the unique needs and challenges facing rural
health care providers in addressing the Y2K challenge. We are
developing smaller, more individualized Y2K educational sessions
targeted toward rural providers, in consultation with several rural
provider associations. So far, we have held conferences in Montana,
North Dakota, South Dakota, and Minnesota. We held one of our major
educational conferences in Fargo, North Dakota in late May which
attracted more than 140 providers. We also have participated in several
national conferences sponsored by the major rural health associations
in Washington, D.C., San Diego, and Denver.
In addition, we have entered into an interagency agreement with the
Health Resources Services Administration (HRSA), Office of Rural Health
Policy. Working in conjunction with HRSA and the National Association
of Rural Health Clinics we have planned outreach conferences to be held
over the next two months in Arkansas, South Dakota, Vermont, and a
fourth rural location yet to be determined. We also have scheduled
provider outreach conferences in North Carolina, Oregon, and Tennessee
that we hope will attract rural providers. We have invited a
representative of the Small Business Administration (SBA) to each of
these conferences to share information about SBA programs that may be
available to help rural providers fix or replace non-compliant systems
and medical devices. Finally, we meet periodically with representatives
of rural health trade associations to ensure that our outreach efforts
are meeting the needs of rural providers.
Question 14. Has concern in the private sector over liability
issues related to Y2K affected HCFA's ability to work with providers
and the community as a whole in addressing Y2K problems?
Response: We do not have concrete evidence that liability issues
related to Y2K are affecting our ability to work with providers in
addressing Y2K problems. There are, however, two areas where liability
may be having some impact on how forthcoming our provider partners have
been in responding to requests for information from us and others.
Relatively few providers have responded to surveys and assessments from
the Department of Health and Human Services Inspector General and
others, such as the American Hospital Association, the American Medical
Association, and Rx2000, an organization created to address Y2K
awareness in the health care industry. We also have had difficulty
collecting information about provider readiness from billing service
providers and software vendors. We suspect that liability concerns may
be contributing to their reluctance to respond as well.
Question 15. What progress has HCFA made on its Contingency
Planning since the beginning of March?
Response: We are closely following the GAO's advice on contingency
planning outlined in their August 1998 guidance, Year 2000 Business
Continuity and Contingency Planning and in their September 1998 report,
Medicare Computer Systems--Year 2000 Challenges Put Benefits and
Services in Jeopardy.
We have developed and are now validating our contingency plans.
This validation phase of our effort will run through the end of June.
On June 15, 1999, we provided the Office of Management and Budget with
a draft of our business continuity and contingency plans. Each of our
contingency plans has a designated Emergency Response Team responsible
for executing the various plans, if necessary. During the validation
phase, these teams will run practice exercises and rehearse plans in a
simulated environment.
It is important to note that contingency planning is not a static
process. We will continue to rehearse and refine our plans throughout
the coming year and up until December 31, 1999. We will make changes,
if necessary, as we learn more about the readiness status of those with
whom we interact, such as providers, pharmaceutical and medical
equipment suppliers, and States, among others.
As part of our emphasis on the contingency planning efforts of our
partners, we are conducting a review of Medicare Carrier and Fiscal
Intermediary contingency plans. In October 1998, we instructed the
Medicare contractors to undertake a contingency planning program. On
April 8, 1999, we began examining those contingency plans emphasizing
the reasonableness and completeness of the plans. We will provide
guidance and assistance to those organizations that appear to have not
adequately staffed and completed their contingency planning. In
addition, we are re-
quiring all Medicare managed care organizations to have contingency
plans and submit them to us by July 15, 1999.
Finally, we have increased our review and assistance to State
Medicaid Agencies to ensure the continuity of Medicaid payments and
continued access to care for beneficiaries. We have provided State
agencies with advice on preparing business continuity and contingency
plans and have requested that Agencies submit their plans to us. We
currently are reviewing these plans to gain an understanding of States'
particular plans to ensure the continuity of their health care programs
in the unlikely event of systems failures. In addition, we have
contracted with a Medicaid-related IV&V expert to assess the status of
the States. Site visits are now underway. We also are working on a
contract to provide technical assistance to States on contingency
planning.
Question 16. Since the bulk of payments that many rural health care
providers receive are from government-insured patients, it will be
extremely difficult for these providers to continue to operate without
a contingency payment mechanism in place should Y2K disruptions occur.
Does HCFA have any plans for a contingency payment mechanism should
disruptions occur?
Response: We are currently in the process of developing our own
contingency plans to ensure we are able to process and pay any claim
submitted. We are more concerned that providers may not have addressed
their Y2K issues and may not be able to generate a claim.
I hope you can appreciate the delicate balance that exists between
our top two contingency planning goals of paying providers promptly and
preventing payment errors. By its very nature, HCFA's contingency plan
highlights the vulnerabilities in Medicare's systems that could occur
in the event of Y2K failure. Portions of the plan could serve as a
blueprint for fraudulent activity. I can assure you that HCFA's
contingency plans provide mechanisms to ensure that providers' claims
will be processed and paid even if HCFA's systems experience
unanticipated failure. We also will have financial and audit controls
in place at the turn of the millennium, as we do today, to help protect
the integrity of the Medicare Trust Funds.
I firmly believe that no contingency plan should cause providers
who fail to prepare for Y2K to be rewarded for their lack of attention,
effort, or due diligence. Being able to submit a valid claim is the
minimal requirement that is necessary to ensure that a provider can
operate in the Y2K environment and is actually furnishing covered
services. It is quite clear that it would not fulfill our fiduciary
responsibilities to pay monies from the Medicare Trust Funds in the
absence of appropriate evidence that a covered service was delivered to
a beneficiary. HCFA has no contingency plan to make estimated payments
to providers that cannot submit a bill.
The best risk mitigation strategy is, of course, for providers to
ready their computers and systems well in advance of January 1, 2000.
To assist all providers in achieving Y2K compliance, we have engaged in
an unprecedented outreach effort, including mailings to all Medicare
and Medicaid providers, a Y2K website and toll-free line, and numerous
educational conferences, among other things. In addition, our Medicare
contractors have made millennium compliant billing software available
to all providers for free, or at minimal cost. This software allows
providers to submit Y2K compliant claims to the contractors, so long as
the software is used in conjunction with compliant computers. We also
have given providers the opportunity to test the submission of future-
dated claims with our claim processing contractors, so they can be
certain their systems are ready, and we have encouraged them to do so.