Medicare claims update encountering troubles

New claims system being revamped

A major Medicare initiative to speed reimbursements to hospitals and other providers is in trouble. In April, the Health Care Financing Administration (HCFA) changed the focus of the expedited claims and reimbursement project, called the Medicare Transaction System (MTS), from fee-for-service plans to Medicare managed care, which covers only about 13% of beneficiaries. Implementation of the rest of the program has been halted for 90 days for officials to consider how to proceed.

Created in 1994 the MTS was designed to be a single electronic claims process, replacing the 70 systems now in use. It offered hospitals hope for faster and easier reimbursements, while saving the government $200 million a year in administrative costs. The new system also was intended to make fraud and abuse detection easier.

The project has encountered congressional criticism because of cost overruns. GTE Government Systems Corp. was given a $19 million contract in 1994 to design software needed for the project and to set up a test site.

But in April, U.S. Rep. Bill Thomas (R-CA), chairman of the House Ways and Means subcommittee that oversees Medicare, revealed that HCFA had increased its contract with GTE to $92 million.