*This is an archive page. The links are no longer being updated.
1994.01.19 :  Medicare Transaction System

FOR IMMEDIATE RELEASE                 Contact: HCFA Press Office
Wednesday, Jan. 19, 1994                       (202) 690-6145

     HHS Secretary Donna E. Shalala today announced a six-year, $19
million contract for creation of a national Medicare Transaction
System that will use the most advanced computer technology to
process more than a billion Medicare claims a year by the turn of
the century.

     "This new system will bring to reality a new era of customer
service and convenience for Medicare beneficiaries," Secretary
Shalala said.  "It uses state of the art technology to replace the
forms and the hassles that have characterized Medicare in the
past."

     The MTS will allow fast retrieval of information to ensure
that beneficiaries obtain care without the worry of filling out
forms.  Data regarding eligibility, other insurance coverage and
prior claims information will be available to providers
instantaneously.

     "The new system will constitute a total overhaul of Medicare's
means for paying health care providers," Secretary Shalala said. 
"It will improve and simplify services for beneficiaries.  It will
dramatically reduce the complexity of the Medicare program.  And it
will ultimately save us more than $200 million per year in
administrative costs."

     The MTS system will prepare the groundwork that could
accommodate electronic card technology for each Medicare
beneficiary, and it would therefore be compatible with the health
security card envisioned in the health care reform plan proposed by
President Clinton, Secretary Shalala said.

     In addition, she said, the new system will provide for more
consistent payment decisions across the Medicare program and help
identify problems, including fraudulent billing, more easily.  The
system will also provide better data for researchers investigating
the effectiveness of different medical treatments.

     The contract signed today, for design and development of the
Medicare Transaction System, was awarded to GTE Goverment Systems
Corp. of Chantilly, Va.  Under the terms of the contract, the MTS 
is to become operational on a region-by-region basis starting in
1997 with completion by late 1998. The new system will be
government-owned, but operated by private companies under contract.

     By the time the MTS is fully implemented, it is expected that
all Medicare claims from providers will be submitted electronically
and paid by electronic funds transfers to providers' bank accounts.

    The Medicare Transaction System will consolidate in one system
the automated claims processing functions currently performed by 79
contractors using 14 systems to process Medicare claims at 62 sites
around the country.

     "With this advanced technology, Medicare, the nation's largest
health insurer, will be in the forefront of the health care
industry," said Bruce C. Vladeck, administrator of the Health Care
Financing Administration.  "The Medicare Transaction System will be
the model for efficient claims processing."
 
     "As a major advance toward more efficient administration of
the Medicare program, the MTS will be an important feature in the
streamlining of our work at HHS," Secretary Shalala said.

     MTS will be especially important in providing for more
consistent Medicare payment policies, Vladeck said.  "The
consolidation of Medicare claims processing in a national system
will move the program closer to achieving a longstanding goal --
more uniform application of coverage and payment policies."
Currently, those policies are subject to varying interpretations by
the existing local contractors.

     "After the MTS is implemented," Vladeck explained, "the local
contractors will continue to perform the vitally important job of
furnishing information and other services to beneficiaries and
providers."

     The MTS will provide these contractors with better and more
timely data with which to explain benefits, payment decisions and
claims status.

     In addition, beneficiaries with Medigap or other non-Medicare
coverage will no longer have to worry about coordination of 
Medicare and other benefits.  The MTS system will be designed to
provide information automatically for other payers.

     The new system will handle many types of information. For
example, the MTS will strengthen HCFA's ability to extract and
organize data on treatments and outcomes -- information sought by
medical professionals everywhere as they seek the best strategies
for care of their patients.

     The screening of Medicare claims for errors and potential
fraud will be improved by the capability of the MTS technology,
which will also enhance HCFA's ability to identify and monitor the
billing practices of providers with histories of problem claims. 

     The contract for design and development of the MTS was awarded
after a fully competitive process. The advertisement for proposals
was published Sept. 17, 1992.

     The Health Care Financing Administration administers the
Medicare and Medicaid programs that help pay the medical bills of 
67 million Americans. HCFA's estimated fiscal year 1994
expenditures will total more than $250 billion.