Y2K Contingency Plans for the Medicaid Program  
DEPARTMENT OF HEALTH & HUMAN 
SERVICES Health Care Financing Administration  
Center for Medicaid and State Operations 7500 Security Boulevard Baltimore, MD 21244-1850  
May 5, 1999  
Dear State Medicaid Director:  
The purpose of this letter is to underscore HCFA's interest and support of your Y2K efforts. Now 
that we have completed site visits to all 50 States and the District of Columbia, we are interested in 
returning to a number of States to understand their progress since our initial visit, and to spend 
more time understanding their risk mitigation and contingency planning efforts.  
To facilitate our visits, we request that a copy of your written Y2K contingency plans for the 
Medicaid Program be submitted to your HCFA Regional Office no later than June 1, 1999.  
We recognize that your contingency plans may not be complete at this point. Because of the 
importance of contingency planning, however, we need to understand where you are in this regard, 
and would appreciate receiving whatever it is that you do have at this stage. As you know, 
contingency plans and risk mitigation strategies provide preplanned approaches to compensate for 
and work around potential changes of inputs, threats from external events and/or loss of resources. 
Their focus is to provide for the continued performance of the organization's critical business 
functions under a variety of circumstances such as when:  
  Systems believed to be Y2K compliant fail;  
  Systems are not compliant by an established critical date of need; or  
  Supporting resources (such as communications, power, transportation, etc.) fail.  
 
While risk mitigation strategies traditionally focus on reducing the likelihood that failures will 
occur, contingency plans assume specific failure scenarios and describe specific steps that will be 
taken in the unlikely event of failure in order to achieve the organization's overall mission.  
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Plans for the Medicaid Program  
GAO Approach to Contingency Planning. Based on our recent Y2K site visits, we recognize that 
each State is developing Y2K contingency plans within the larger context of other State Y2K 
activities. The purpose of this letter is not to mandate a specific format nor set of requirements 
that your contingency plans must adhere to with regard to the Medicaid program. We strongly 
urge, however, that you give careful consideration to the guidance previously developed by the 
General Accounting Office on this subject (see the GAO's August 1998 report, Year 2000 
Business Continuity and Contingency Planning, available on the web at 
http://www.gao.gov/special.pubs/bcpguide.pdf). In that document, the GAO identified five  specific steps which it believed appropriate for organizations to undertake when developing their 
contingency plans:  
Page 2 - State Medicaid Director  
  Assess the costs and benefits of identified alternatives and select the best contingency 
strategy for each core business process;  
  Identify and document contingency plans and implementation modes;  
  Define and document triggers for activating contingency plans;  
  Establish a business resumption team for each core business process; and  
  Develop and document "zero day" strategy and procedures.  
 
An additional resource that you may find useful is the HCFA Year 2000 Business Continuity Plan 
(BCP) Handbook, published in January of this year, available on the web at http://www.hcfa.gov/ 
y2k/990113hc.pdf. Chapters Six and Seven on contingency planning steps, developed originally 
for the Medicare program, provide additional guidance on this subject.  
Next Steps. Our plan is to review your contingency plans in light of the GAO's guidance, and to 
provide feedback and technical assistance based on what we have learned from our visits around 
the country. We are particularly interested in your contingency plans to ensure beneficiary 
eligibility, payment to providers, and continuity of care.  
Because each State is responsible for the successful operation of its Medicaid program, including 
ensuring that its systems are Y2K compliant, the purpose of our review is not to "certify" the 
State's effectiveness but to increase our understanding of the approaches you have chosen to 
follow should you run into problems. We hope that, based on our national perspective of what 
other States are doing and have planned, we may be able to provide additional technical 
assistance, where appropriate, to make your plans even stronger.  
We look forward to receiving your plans no later than June 1, 1999. In addition to sending a 
copy to your Regional Office Medicaid Y2K Coordinator, we would appreciate a second copy 
being sent to Henry Chao at 7500 Security Blvd, Mail Stop: S3-18-13, Baltimore, Maryland 
21244.  
For additional information, please address any questions to your Regional Office Medicaid 
Y2K Coordinator.  
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Plans for the Medicaid Program  
Sincerely, 
/S/ 
Sally K. Richardson    
Director 
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cc:  
All HCFA Regional Administrators 
 
All HCFA Associate Regional Administrators for Medicaid and State Operations  
Lee Partridge Director, Health Policy Unit American Public Human Services Association  
Joy Wilson Director, Health Committee National Conference of State Legislatures  
Matt Salo Senior Health Policy Analyst National Governors' Association  
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