Department of Health and Human Services 

OFFICE OF 

INSPECTOR GENERAL 

JUNE GIBBS BROWN 

Inspector General 

OCTOBER 1999 

OEI-03-98-00253 

Y2K READINESS OF MEDICARE 

FEE-FOR-SERVICE PROVIDERS 

AS OF JULY 1999 
OFFICE OF INSPECTOR GENERAL 

The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, is to 

protect the integrity of the Department of Health and Human Services programs as well as the 

health and welfare of beneficiaries served by them. This statutory mission is carried out through a 

nationwide program of audits, investigations, inspections, sanctions, and fraud alerts. The 

Inspector General informs the Secretary of program and management problems and recommends 

legislative, regulatory, and operational approaches to correct them. 

Office of Evaluation and Inspections 

The Office of Evaluation and Inspections (OEI) is one of several components of the Office of 

Inspector General. It conducts short-term management and program evaluations (called 

inspections) that focus on issues of concern to the Department, the Congress, and the public. The 

inspection reports provide findings and recommendations on the efficiency, vulnerability, and 

effectiveness of departmental programs. 

OEI's Philadelphia Regional Office prepared this report under the direction of Robert A. Vito, 

Regional Inspector General, and Linda M. Ragone, Deputy Regional Inspector General. Principal 

OEI staff included: 

REGION 

David Tawes, Lead Analyst

Robert Katz

Cynthia Hansford

HEADQUARTERS 

Elise Stein , Program Specialist

Scott Horning, Technical Support Staff

Linda Moscoe, Technical Support Staff

Brian Ritchie, Technical Support Staff

Barbara Tedesco, Technical Support Staff

To obtain copies of this report, please call the Philadelphia Regional Office at (800) 531-9562. 

Reports are also available on the World Wide Web at our home page address: 

http://www.dhhs.gov/progorg/oei 
EXECUTIVE SUMMARY 

PURPOSE 

To provide information about the Year 2000 (Y2K) readiness of Medicare fee-for-service 

providers. 

BACKGROUND 

The Y2K problem impacts Medicare fee-for-service providers in several ways. Billing 

systems, medical records systems, and biomedical devices must be evaluated for Y2K 

problems that could cause them to malfunction. Additionally, Medicare providers must 

contact their vendors and utility suppliers to ensure that external factors will not cause 

problems that may put beneficiaries at risk. Providers should also complete contingency 

plans in preparation for possible Y2K-related problems. The Health Care Financing 

Administration (HCFA) has undertaken extensive outreach efforts to assist Medicare 

providers in preparing for Y2K. 

For this inspection, we sent anonymous surveys to 5000 randomly-selected Medicare 

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 56 percent for hospitals to a low of 20 percent for physicians. 

The Office of Inspector General released a report on the Y2K readiness of Medicare feefor-service providers in March of 1999, and a report on the Y2K readiness of Medicare 

managed-care organizations in May of 1999. An update to the latter report will be 

released in the near future. 

Recognizing the importance of provider readiness, the United States House of 

Representatives Committee on Commerce and the Senate Special Committee on the Year 

2000 Technology Problem requested that we conduct this inspection. 

FINDINGS 

Approximately two-thirds of Medicare fee-for-service providers reported that their 

billing and medical records systems were Y2K ready 

Sixty-one to 75 percent of providers who use computerized billing and medical records 

systems reported that these systems were Y2K ready. Almost all providers expected their 

billing and medical records systems to be fully ready by the end of 1999. However, at 

Y2K Readiness of Medicare Fee-for-Service OEI-03-98-00253 

Providers as of July 1999 1 
least one-third of providers reported that they had not yet tested the readiness of these 

systems. Furthermore, many providers had not tested data exchanges with vendors and 

contractors. 

Even fewer fee-for-service providers reported that their biomedical equipment 

was Y2K ready 

Less than half of providers reported that all of their biomedical equipment was Y2K ready. 

However, most providers expected their biomedical equipment to be completely ready by 

the end of the year. Hospitals were the most likely of the provider groups to report that 

they had tested their equipment. The majority of providers indicated that they are relying 

on the manufacturers of their biomedical equipment to provide Y2K information. 

Many Medicare fee-for-service providers had not completed contingency plans 

Less than 60 percent of survey respondents said they had completed contingency plans. 

Some providers reported that they did not intend to make contingency plans before the 

end of the year. In addition, uncertainty about external suppliers and utility providers was 

also a cause of concern among some Medicare providers. 

Not all providers are taking advantage of Federal outreach efforts 

Some providers were not aware that Y2K information is available on numerous Federal 

websites. However, almost all of the respondents who had visited the websites found 

them to be helpful. While approximately 70 percent of providers reported that their 

Medicare contractors had sent them information or offered assistance with Y2K, about 30 

percent were unaware of contractor efforts. 

CONCLUSION 

Many Medicare fee-for-service providers were not Y2K ready as of July 1999, and 

we have concerns that some providers may not be ready by January 1, 2000. 

In the six months between our two surveys, health care providers have generally reported 

improvements in the status of their billing systems, medical records systems, and 

biomedical equipment. Providers were also more likely to report having completed 

contingency plans than they were six months ago. However, certain provider groups are 

further along the path to Y2K readiness than others. These differences are reflected in: 

their reported readiness as of July 1999; the concrete steps they have taken in preparation 

for Y2K; and their higher response rates. 

Furthermore, some providers still report not taking the necessary steps to ensure that they 

are Y2K ready. Additionally, since a large number of providers did not respond to our 

Y2K Readiness of Medicare Fee-for-Service OEI-03-98-00253 

Providers as of July 1999 2 
survey, we have no information to measure their current Y2K status, or their prospects for 

future readiness. 

While Y2K readiness is the responsibility of individual providers, HCFA has undertaken 

numerous efforts to assist them. As HCFA, as well as the provider associations, continue 

their outreach and education initiatives, we suggest they focus on the following: 

emphasizing the need to test data exchanges as well as internal computer systems, 

stressing the importance of contingency planning, and publicizing websites where Y2K 

information is available. With only a few months left until the year 2000 arrives, it is 

increasingly important that HCFA, provider associations, and the providers themselves 

work together to ensure that beneficiaries will continue to receive uninterrupted quality 

care. 

Agency Comments 

The HCFA agreed with our conclusions, stating that our survey confirms what their own 

outreach efforts have found: providers have made progress in Y2K readiness, but there is 

still much work to be done. Additionally, HCFA provided a detailed account of their past 

outreach activities and future plans. They concluded by stating that Y2K continues to be 

the agency’s top priority. The full text of their comments is found in Appendix C. 

We commend HCFA’s attention and concern regarding Medicare fee-for-service 

providers’ readiness for Y2K, and support their plans for continued outreach activities. 

Y2K Readiness of Medicare Fee-for-Service OEI-03-98-00253 

Providers as of July 1999 3 
TABLE OF CONTENTS 

PAGE

EXECUTIVE SUMMARY .................................................... 1

INTRODUCTION .......................................................... 5

FINDINGS 

Billing and Medical Records Systems ....................................... 9

Biomedical Equipment ................................................. 10

Contingency Planning .................................................. 12

Outreach Efforts ..................................................... 12

CONCLUSION ........................................................... 14

APPENDICES

A: Provider Survey Responses ........................................... 15

B: Comparison with Previous Survey Results ................................ 29

C: Health Care Financing Administration Comments .......................... 34

Y2K Readiness of Medicare Fee-for-Service OEI-03-98-00253 

Providers as of July 1999 4 
INTRODUCTION 

PURPOSE 

To provide information about the Year 2000 (Y2K) readiness of Medicare fee-for-service 

providers. 

BACKGROUND 

Early programmers had to deal with two major constraints in the first few years of 

computer technology: limited computer memory and high data storage costs. Today’s 

Y2K problems stem directly from early programmers’ use of an “implied century.” This 

allowed them to conserve space by coding the year as a two-digit code rather than a fourdigit code in the date field. For instance, the year 1970 was entered as 70, and the year 

1980 as 80. 

Computers that do not rely on implied centuries, and are therefore capable of processing 

four-digit years after 1999, are said to be “Y2K ready” or “Y2K compliant.” Computers 

that are not Y2K compliant will malfunction when the implied century (the first two digits 

of a four-digit year) is not 19. The year 2000 in a non-Y2K compliant computer is read as 

‘00’, and thus interpreted as 1900. When this happens, computers will have problems 

processing information. 

The Impact of Y2K on Medicare 

According to the Health Care Financing Administration (HCFA), the Medicare program 

has 100 mission-critical computer systems containing almost 50 million lines of 

programming code. The HCFA has made it a top priority to ensure that these systems, 

and the systems of its contractors, are ready for the year 2000. 

HCFA must also be concerned with the compliance of individual systems used by 

Medicare fee-for-service providers. The Y2K problem impacts Medicare providers in 

several ways. Medical records systems must be readied in order to safeguard patient care. 

Biomedical devices containing embedded microchips must be evaluated for Y2K problems 

that could cause them to malfunction. Billing and financial systems must be updated so 

that electronic Medicare claims can be properly submitted and reimbursed. Furthermore, 

Medicare providers must contact their vendors and utility suppliers to ensure that external 

factors will not cause problems that may put beneficiaries at risk. Finally, providers 

should also complete contingency plans in preparation for possible Y2K-related problems. 

Y2K Readiness of Medicare Fee-for-Service OEI-03-98-00253 

Providers as of July 1999 5 
In addition to preparing its own internal and external contractor systems for Y2K, HCFA 

has conducted extensive outreach to Medicare fee-for-service providers. Its efforts are 

intended to ensure that providers are capable of submitting Y2K compliant claims to 

HCFA, and to help make providers aware they must have their individual systems 

renovated and tested. As part of this outreach initiative, HCFA mailed more than one 

million letters regarding the Y2K issue to Medicare providers in January of 1999. The 

letter stated that HCFA will be ready to process and pay all acceptable claims on January 

1, 2000, and stressed that providers must take steps to ensure their own Y2K readiness. 

A checklist was included with the letter to assist providers in assessing their Y2K 

compliance. The HCFA then sent follow-up letters to all Medicare providers in May. 

The HCFA has also used the Internet as a means to disseminate Y2K information to its 

providers. On its website, HCFA has provided extensive information on a variety of 

topics, including outreach seminars, system testing guidelines, and HCFA’s own Y2K 

status. Additionally, HCFA provides links to many other Y2K websites, including the 

Department of Veterans Affairs and the Food and Drug Administration (FDA). The 

Department of Veterans Affairs’ website provides thorough contingency planning 

guidelines, while the FDA’s website includes a comprehensive database which allows 

providers to determine the Y2K status of many pieces of biomedical equipment. 

Recognizing the importance of Medicare provider readiness, the United States House of 

Representatives Committee on Commerce and the Senate Special Committee on the Year 

2000 Technology Problem requested that we conduct this inspection. 

Related Work by the Office of Inspector General 

The Office of Inspector General released a previous report on fee-for-service provider 

readiness for Y2K in March of 1999. The original report, Y2K Readiness of Medicare 

Providers (OEI-03-98-00250), evaluated the Y2K readiness of five types of Medicare 

providers: acute-care hospitals, nursing facilities, home health agencies, durable medical 

equipment (DME) suppliers, and physicians. We found that about half of providers 

responded that their billing and medical records systems were ready. However, providers 

were less confident in the readiness of their biomedical equipment. Furthermore, less than 

half of respondents had developed contingency plans in anticipation of Y2K-related 

problems, and many respondents reported difficulty in getting Y2K guarantees from their 

external vendors. 

A companion report, Secondary Analysis of Medicare Provider Readiness for Y2K 

(OEI-03-98-00252), found that there were few differences in Y2K readiness based on 

demographic indicators such as urban or rural setting, use of a billing service, and 

affiliation with a chain. The size of the provider, however, did seem to effect Y2K 

readiness, with larger providers generally being better prepared than smaller providers. 

Y2K Readiness of Medicare Fee-for-Service OEI-03-98-00253 

Providers as of July 1999 6 
Furthermore, in May of 1999, the OIG released a report entitled Y2K Readiness of 

Managed Care Organizations (OEI-05-98-00590). We found that Medicare managed 

care organizations appear to be moving toward internal compliance. However, most 

managed care organizations are unaware of their providers’ Y2K status. An update to this 

report will be released in the near future. 

METHODOLOGY 

Using Medicare databases, we sampled the same five provider groups as we did for our 

previous survey: acute-care hospitals, nursing facilities, home health agencies, DME 

suppliers, and physicians. We selected a simple random sample of 1000 fee-for-service 

providers from each of these five provider groups. 

We sent anonymous surveys to 5000 sampled providers on June 30, 1999. We accepted 

responses through August 6, 1999. In order to increase response rates, we assured 

providers that their responses were completely anonymous, and that we had no way of 

tracking who responded to our request. We also mailed a reminder postcard to all 

providers one week after the survey was sent. We received completed surveys from 56 

percent of hospitals, 45 percent of nursing facilities, 43 percent of home health agencies, 

29 percent of DME suppliers, and 20 percent of physicians. We also received letters from 

74 providers indicating that they are aware of the Y2K problem and are actively working 

towards a solution. 

In order to maintain consistency with our previous study, this survey revisited several key 

issues: Y2K awareness, contingency planning, computer systems, biomedical equipment, 

Medicare claim filing, and external suppliers. We designed the surveys in cooperation 

with HCFA and several professional and trade associations. The following organizations 

worked with us and allowed us to highlight their cooperation in the survey instruments 

sent to providers: American Association of Homes and Services for the Aging, American 

Health Care Association, American Hospital Association, American Medical Association, 

Health Industry Distributors Association, National Association for Home Care, and 

National Association for Medical Equipment Services. 

We analyzed survey responses to each question for all provider groups. We calculated 

percentages based on the number of answers provided for each response category. We 

compared the various groups to determine if differences existed among provider types. 

Providers’ responses to individual survey questions are presented in Appendix A. 

This inspection was conducted in accordance with the Quality Standards for Inspections 

issued by the President's Council on Integrity and Efficiency. 

Y2K Readiness of Medicare Fee-for-Service OEI-03-98-00253 

Providers as of July 1999 7 
Comparison to Prior Office of Inspector General Reports 

In general, the methodology of this inspection was very similar to our previous survey of 

Medicare fee-for-service providers conducted in January of 1999. However, based on our 

experience with the initial survey, we have made improvements to our current 

methodology, some of which make comparisons with the January survey difficult. For 

example, the July survey was shortened considerably, numerous survey questions were 

changed, and our samples were no longer stratified based on an urban or rural designation. 

Furthermore, in order to provide full disclosure to HCFA, we included “not applicable” 

responses when reporting the results from the January survey. However, for this 

inspection, we have removed ‘not applicable’ responses from the analysis, which we feel 

gives a clearer picture of provider readiness. Because of these changes, the percentages 

presented in the two reports do not correspond on a one-to-one basis, and therefore, 

direct comparisons are complicated. 

However, because we believe that measuring the progress of providers during the six 

months between our two surveys is important, we have re-analyzed several key questions 

from the initial Y2K report. We did this by removing “not applicable” responses from the 

January survey data, and by combining the urban and rural strata for each provider group. 

In the conclusion, we have given general comments on the improvements made by 

providers between our initial inspection and this inspection. Additionally, Appendix B 

provides charts which directly compare the re-analyzed provider responses from January 

with the July responses for four important variables: billing system readiness, medical 

records system readiness, biomedical equipment readiness, and contingency planning. 

Limitations of Survey Data 

The data analyzed for this report were furnished by individual Medicare providers, and 

were not verified for accuracy. Additionally, the data are based solely on those providers 

who responded to the survey. We are unable to make any statements about the Y2K 

readiness of those who did not respond. Because of the low response rates among certain 

provider groups, readers should be cautious in using our data to make generalizations 

about the entire provider community. 

Y2K Readiness of Medicare Fee-for-Service OEI-03-98-00253 

Providers as of July 1999 8 
FINDINGS 

Approximately two-thirds of Medicare fee-for-service 

providers reported that their billing and medical records 

systems were Y2K ready 

Sixty-one to 75 percent of providers who use computerized billing and medical 

records systems reported that these systems were Y2K ready 

The reported readiness of computerized billing and medical records systems varied slightly 

by provider group. Responses from nursing facilities and physicians indicate that they are 

marginally behind hospitals, home health agencies, and DME suppliers in these two areas 

(see Figure 1 on page 11). 

Most providers predicted that their billing and medical records systems will be 

ready by the end of the year 

Nearly all providers responded that their billing and medical records systems will be 100 

percent ready by December 31, 1999. Less than two percent reported that these systems 

will not be fully Y2K ready on time. 

However, at least one-third of providers reported they have not yet tested the 

readiness of their systems 

Although more than 80 percent of respondents reported that they have assessed the Y2K 

readiness of their billing and medical records systems, only about 60 percent said they had 

actually tested their readiness. Hospitals were more likely to report having tested these 

systems than were the other provider groups. Additionally, less than half of all providers 

reported that an independent party had verified their systems’ Y2K status. 

Many providers had not tested data exchanges with vendors and contractors 

Approximately half of the respondents stated that they had tested data exchanges with 

their billing vendor or clearinghouse. Furthermore, less than one-quarter said they had 

tested claims submission in a future-date environment with their Medicare contractor, 

even though many reported that their contractor had encouraged them to do so. Of 

providers who had not tested data exchange, more than half plan to do so in the near 

future. 

Y2K Readiness of Medicare Fee-for-Service OEI-03-98-00253 

Providers as of July 1999 9 
Even fewer fee-for-service providers reported that their 

biomedical equipment was Y2K ready 

Less than half of providers reported that all of their biomedical equipment was 

Y2K ready 

Only 27 percent of hospitals reported that all of their biomedical equipment was Y2K 

ready. Among the other provider groups, the reported readiness was approximately 50 

percent (see Figure 1 on next page). Of those not completely ready, hospitals reported 86 

percent of their biomedical equipment was ready, while other provider groups said 

approximately 70 percent of their equipment was ready. 

Most providers expected their biomedical equipment to be completely ready by 

the end of the year 

More than 90 percent of providers reported that their biomedical equipment will be 

completely ready by December 31, 1999. In general, providers who predicted that their 

equipment will not be totally ready felt that only a small percentage of their biomedical 

equipment would not be compliant on time. 

Hospitals were significantly more likely than other providers to report that they 

had tested their biomedical equipment 

Almost 70 percent of hospitals reported that they had tested their biomedical equipment. 

Fifty percent or less of nursing facilities, home health agencies, DME suppliers, and 

physicians said that they had tested. Furthermore, only 40 percent of the hospitals and 

one-quarter of the other provider groups reported that a third party had independently 

verified the status of their biomedical equipment. 

The majority of providers reported that they are relying on the manufacturers of 

their biomedical equipment to provide Y2K information 

Over 60 percent of providers responded that they are relying on manufacturers’ statements 

regarding the Y2K readiness of their biomedical equipment. However, half of the 

hospitals reported that they had problems getting Y2K information from these 

manufacturers. More than one in five providers did not feel they had the information 

necessary to evaluate the Y2K readiness of their biomedical equipment. 

Y2K Readiness of Medicare Fee-for-Service OEI-03-98-00253 

Providers as of July 1999 10 
FIGURE 1: PROVIDER READINESS

Percent Who Reported Current Y2K Readiness

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 

Hospitals 

Nursing Facilities 

Home Health 

Agencies 

DME Suppliers 

Physicians 

74% 

61% 

72% 

75% 

66% 

72% 

66% 

74% 

70% 

65% 

27% 

50% 

48% 

54% 

56% 

Billing Systems 

Medical Records Systems 

Biomedical Equipment 

Source: Office of Evaluation and Inspections Survey - July 1999

Note: Please see Appendix B for comparison with January 1999 survey data. 

Y2K Readiness of Medicare Fee-for-Service OEI-03-98-00253 

Providers as of July 1999 11 
Many Medicare fee-for-service providers have not completed 

contingency plans 

Less than 60 percent of survey respondents stated that they had completed 

contingency plans 

Fifty-nine percent of hospitals reported that they had completed contingency plans in 

preparation for potential Y2K-related failures. The percentages were slightly lower for 

the other provider groups (see Figure 2 on next page). Furthermore, less than half of the 

respondents stated that they had tested their contingency plans. 

Some providers said that they will not make contingency plans 

Approximately one-quarter of DME suppliers and physicians who did not have 

contingency plans said they had no intention of completing them in anticipation of the 

Year 2000. However, nearly all hospitals, and most nursing facilities and home health 

agencies, reported that they will make contingency plans before the end of the year. 

Uncertainty about external suppliers and utility providers was a cause of concern 

among some Medicare providers 

Approximately one-third of DME suppliers and physicians had not identified all of their 

external suppliers (e.g. pharmaceutic suppliers, food suppliers) and utility providers. 

Additionally, only half of hospitals and nursing facilities and less than 40 percent of the 

other provider groups reported that they had received certifications of Y2K readiness from 

these external entities. 

Not all providers are taking advantage of Federal outreach 

efforts 

Approximately one-half of hospitals, nursing facilities and home health agencies reported 

visiting HCFA’s website. However, less than 20 percent of DME suppliers and physicians 

had done so. With the exception of hospitals, less than one-quarter of respondents had 

been to the FDA’s website. Less than one-third of providers were even aware of the 

Department of Veterans Affairs’ website. However, approximately 90 percent of 

providers who had been to the HCFA and FDA sites said they found them to be helpful. 

Furthermore, approximately 70 percent of providers reported that their Medicare 

contractors had sent them information or offered assistance with Y2K issues. Only 15 

percent of respondents reported that their Medicare contractor had not contacted them 

about Y2K. Another 15 percent said they did not know if they had received anything 

concerning Y2K from their contractors. 

Y2K Readiness of Medicare Fee-for-Service OEI-03-98-00253 

Providers as of July 1999 12 
FIGURE 2: CONTINGENCY PLANNING

Percent Who Reported Completing Contingency Plans

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 

Hospitals 

Nursing Facilities 

Home Health 

Agencies 

DME Suppliers 

Physicians 

59% 

55% 

56% 

52% 

49% 

Source: Office of Evaluation and Inspections Survey - July 1999

Note: Please see Appendix B for comparison with January 1999 survey data. 

Y2K Readiness of Medicare Fee-for-Service OEI-03-98-00253 

Providers as of July 1999 13 
CONCLUSION 

Many Medicare fee-for-service providers were not Y2K ready as of July 1999, and 

we have concerns that some providers may not be ready by January 1, 2000. 

In the six months between our two surveys, health care providers have generally reported 

improvements in the status of their billing systems, medical records systems, and 

biomedical equipment. Providers were also more likely to report having completed 

contingency plans than they were six months ago. However, certain provider groups are 

further along the path to Y2K readiness than others. These differences are reflected in: 

their reported readiness as of July 1999; the concrete steps they have taken in preparation 

for Y2K; and their higher response rates. 

Furthermore, some providers still report not taking the necessary steps to ensure that they 

are Y2K ready. Additionally, since a large number of providers did not respond to our 

survey, we have no information to measure their current Y2K status, or their prospects for 

future readiness. 

While Y2K readiness is the responsibility of individual providers, HCFA has undertaken 

numerous efforts to assist them. As HCFA, as well as the provider associations, continue 

their outreach and education initiatives, we suggest they focus on the following: 

emphasizing the need to test data exchanges as well as internal computer systems, 

stressing the importance of contingency planning, and publicizing websites where Y2K 

information is available. With only a few months left until the year 2000 arrives, it is 

increasingly important that HCFA, provider associations, and the providers themselves 

work together to ensure that beneficiaries will continue to receive uninterrupted quality 

care. 

Agency Comments 

The HCFA agreed with our conclusions, stating that our survey confirms what their own 

outreach efforts have found: providers have made progress in Y2K readiness, but there is 

still much work to be done. Additionally, HCFA provided a detailed account of their past 

outreach activities and future plans. They concluded by stating that Y2K continues to be 

the agency’s top priority. The full text of their comments is found in Appendix C. 

We commend HCFA’s attention and concern regarding Medicare fee-for-service 

providers’ readiness for Y2K, and support their plans for continued outreach activities. 

Y2K Readiness of Medicare Fee-for-Service OEI-03-98-00253 

Providers as of July 1999 14 
APPENDIX A 

Provider Survey Responses

In this appendix, we present the aggregated responses to our Year 2000 survey by 

provider type. 

KEY: 

n = number of responses to the question (not applicable responses excluded)

Yes = percentage of n answering “Yes”

No = percentage of n answering “No”

Don’t Know = percentage of n answering “Don’t Know”

Note: All percentages may not add to 100 due to rounding 

SURVEY RESPONSE RATES: 

Provider 

Type 

Total 

Number 

Surveys 

Mailed 

Surveys 

Returned 

Response 

Rate 

Hospitals 5,692 1,000 559 56% 

Nursing Facilities 16,749 1,000 448 45% 

Home Health Agencies 9,098 1,000 426 43% 

DME Suppliers 109,429 1,000 293 29% 

Physicians 831,091 1,000 198 20% 

Y2K Readiness of Medicare Fee-for-Service OEI-03-98-00253 

Providers as of July 1999 15 
APPENDIX A 

A. Y2K Awareness and Contingency Planning 

1. Do you feel that your ability to provide quality care 

could be compromised by Y2K? 

Provider 

Type 

n Yes No Don’t 

Know 

Hospital 550 17% 79% 4% 

Nursing Facility 442 18% 74% 8% 

Home Health Agency 419 22% 73% 5% 

DME Supplier 288 15% 74% 10% 

Physician 196 16% 78% 6% 

2. Is your corporate headquarters responsible for your 

Y2K readiness? 

Provider 

Type 

n Yes No Don’t 

Know 

Hospital 418 64% 36% 0% 

Nursing Facility 375 76% 23% 1% 

Home Health Agency 363 82% 18% 0% 

DME Supplier 223 79% 21% 0% 

Physician 144 72% 25% 3% 

3. Have you completed contingency plans in case you 

experience Y2K-related failures? 

Provider 

Type 

n Yes No Don’t 

Know 

Hospital 559 59% 40% 0% 

Nursing Facility 435 55% 38% 7% 

Home Health Agency 414 56% 39% 5% 

DME Supplier 280 52% 41% 7% 

Physician 181 49% 45% 6% 

4. If no, do you plan on completing contingency plans 

before the end of 1999? 

Provider 

Type 

n Yes No Don’t 

Know 

Hospital 224 97% 1% 2% 

Nursing Facility 163 87% 7% 7% 

Home Health Agency 161 84% 7% 8% 

DME Supplier 113 66% 23% 11% 

Physician 79 57% 30% 13% 

Y2K Readiness of Medicare Fee-for-Service OEI-03-98-00253 

Providers as of July 1999 16 
APPENDIX A 

A. Y2K Awareness and Contingency Planning (cont.) 

5. To the extent feasible, have you tested your 

contingency plans? 

Provider 

Type 

n Yes No Don’t 

Know 

Hospital 512 46% 53% 2% 

Nursing Facility 380 38% 54% 8% 

Home Health Agency 359 42% 52% 7% 

DME Supplier 238 47% 45% 8% 

Physician 150 46% 45% 9% 

B. Billing/Financial Systems 

1. Do you use computerized billing/financial systems? Provider 

Type 

n Yes No Don’t 

Know 

Hospital 556 100% 0% 0% 

Nursing Facility 445 96% 4% 1% 

Home Health Agency 423 97% 3% 0% 

DME Supplier 292 89% 11% 0% 

Physician 196 86% 13% 1% 

2. Have you made a complete inventory of your 

billing/financial systems? 

Provider 

Type 

n Yes No Don’t 

Know 

Hospital 555 98% 2% 0% 

Nursing Facility 421 87% 9% 5% 

Home Health Agency 407 84% 10% 6% 

DME Supplier 255 80% 13% 7% 

Physician 167 82% 9% 9% 

3. Have you assessed the Y2K readiness of your 

billing/financial systems? 

Provider 

Type 

n Yes No Don’t 

Know 

Hospital 555 98% 2% 1% 

Nursing Facility 421 84% 11% 5% 

Home Health Agency 408 86% 10% 4% 

DME Supplier 257 80% 14% 6% 

Physician 169 87% 7% 7% 

Y2K Readiness of Medicare Fee-for-Service OEI-03-98-00253 

Providers as of July 1999 17 
APPENDIX A 

B. Billing/Financial Systems (cont.) 

4. Have you tested your billing/financial systems to 

ensure Y2K readiness? 

Provider 

Type 

n Yes No Don’t 

Know 

Hospital 552 68% 30% 2% 

Nursing Facility 416 57% 34% 10% 

Home Health Agency 402 58% 34% 8% 

DME Supplier 254 60% 32% 7% 

Physician 167 61% 31% 8% 

5. Has an independent party verified the Y2K status of 

your billing/financial systems? 

Provider 

Type 

n Yes No Don’t 

Know 

Hospital 548 43% 52% 5% 

Nursing Facility 412 44% 40% 16% 

Home Health Agency 402 43% 45% 12% 

DME Supplier 254 51% 39% 10% 

Physician 167 56% 36% 8% 

6. Are all of your billing/financial systems currently Y2K 

ready? 

Provider 

Type 

n Yes No Don’t 

Know 

Hospital 544 74% 24% 3% 

Nursing Facility 407 61% 28% 11% 

Home Health Agency 395 72% 21% 7% 

DME Supplier 251 75% 13% 12% 

Physician 153 66% 21% 13% 

7. If no, what percentage of your billing/financial 

systems are currently Y2K ready? 

Provider 

Type 

n Mean Median Mode 

Hospital 125 65% 75% 90% 

Nursing Facility 103 47% 50% 0% 

Home Health Agency 73 53% 50% 0% 

DME Supplier 28 52% 50% 50% 

Physician 29 40% 50% 0% 

Y2K Readiness of Medicare Fee-for-Service OEI-03-98-00253 

Providers as of July 1999 18 
APPENDIX A 

B. Billing/Financial Systems (cont.) 

8. What percentage of your billing/financial systems will 

be Y2K ready on December 31, 1999? 

Provider 

Type 

n Mean Median Mode 

Hospital 543 100% 100% 100% 

Nursing Facility 376 100% 100% 100% 

Home Health Agency 374 100% 100% 100% 

DME Supplier 228 99% 100% 100% 

Physician 147 99% 100% 100% 

C. Clinical/Medical Records Systems 

1. Do you use computerized clinical/medical records 

systems? 

Provider 

Type 

n Yes No Don’t 

Know 

Hospital 554 62% 38% 0% 

Nursing Facility 446 73% 26% 0% 

Home Health Agency 423 49% 51% 0% 

DME Supplier 281 46% 54% 0% 

Physician 196 23% 76% 1% 

2. Have you made a complete inventory of your 

clinical/medical records systems? 

Provider 

Type 

n Yes No Don’t 

Know 

Hospital 341 97% 3% 1% 

Nursing Facility 324 85% 11% 4% 

Home Health Agency 205 85% 11% 4% 

DME Supplier 129 73% 19% 9% 

Physician 45 84% 7% 9% 

3. Have you assessed the Y2K readiness of your 

clinical/medical records systems? 

Provider 

Type 

n Yes No Don’t 

Know 

Hospital 341 98% 2% 1% 

Nursing Facility 325 86% 10% 4% 

Home Health Agency 207 84% 13% 3% 

DME Supplier 129 77% 14% 9% 

Physician 45 80% 9% 11% 

Y2K Readiness of Medicare Fee-for-Service OEI-03-98-00253 

Providers as of July 1999 19 
APPENDIX A 

C. Clinical/Medical Records Systems (cont.) 

4. Have you tested your clinical/medical records system 

to ensure Y2K readiness? 

Provider 

Type 

n Yes No Don’t 

Know 

Hospital 339 67% 32% 1% 

Nursing Facility 322 57% 35% 9% 

Home Health Agency 206 57% 38% 4% 

DME Supplier 129 53% 37% 10% 

Physician 45 47% 40% 13% 

5. Has an independent party verified the Y2K status of 

your clinical/medical records systems? 

Provider 

Type 

n Yes No Don’t 

Know 

Hospital 337 42% 54% 4% 

Nursing Facility 322 45% 44% 11% 

Home Health Agency 205 47% 44% 9% 

DME Supplier 129 48% 36% 16% 

Physician 46 46% 39% 15% 

6. Are all of your clinical/medical records systems 

currently Y2K ready? 

Provider 

Type 

n Yes No Don’t 

Know 

Hospital 335 72% 26% 2% 

Nursing Facility 318 66% 23% 11% 

Home Health Agency 201 74% 17% 8% 

DME Supplier 127 70% 15% 15% 

Physician 43 65% 23% 12% 

7. If no, what percentage of your clinical/medical records 

systems are currently Y2K ready? 

Provider 

Type 

n Mean Median Mode 

Hospital 87 66% 75% 50% 

Nursing Facility 69 47% 50% 0% 

Home Health Agency 29 54% 50% 50% 

DME Supplier 17 42% 35% 0% 

Physician 8 31% 25% 0% 

Y2K Readiness of Medicare Fee-for-Service OEI-03-98-00253 

Providers as of July 1999 20 
APPENDIX A 

C. Clinical/Medical Records Systems (cont.) 

8. What percentage of your clinical/medical records 

systems will be Y2K ready on December 31, 1999? 

Provider 

Type 

n Mean Median Mode 

Hospital 333 100% 100% 100% 

Nursing Facility 295 99% 100% 100% 

Home Health Agency 186 99% 100% 100% 

DME Supplier 108 99% 100% 100% 

Physician 40 100% 100% 100% 

D. Biomedical Equipment 

1. Do you use biomedical equipment? Provider 

Type 

n Yes No Don’t 

Know 

Hospital 550 100% 0% 0% 

Nursing Facility 410 59% 37% 4% 

Home Health Agency 370 47% 52% 1% 

DME Supplier 256 41% 57% 2% 

Physician 177 51% 47% 2% 

2. Have you made a complete inventory of your 

biomedical equipment? 

Provider 

Type 

n Yes No Don’t 

Know 

Hospital 548 99% 1% 0% 

Nursing Facility 242 83% 15% 2% 

Home Health Agency 173 88% 9% 3% 

DME Supplier 105 86% 13% 1% 

Physician 89 87% 11% 2% 

3. Have you had problems getting Y2K information from 

the manufacturers of your biomedical equipment? 

Provider 

Type 

n Yes No Don’t 

Know 

Hospital 547 48% 49% 3% 

Nursing Facility 236 28% 64% 8% 

Home Health Agency 170 27% 60% 13% 

DME Supplier 101 18% 74% 8% 

Physician 87 16% 67% 17% 

Y2K Readiness of Medicare Fee-for-Service OEI-03-98-00253 

Providers as of July 1999 21 
APPENDIX A 

D. Biomedical Equipment (cont.) 

4. Do you feel you now have the information necessary 

to evaluate the Y2K readiness of your equipment? 

Provider 

Type 

n Yes No Don’t 

Know 

Hospital 545 86% 12% 2% 

Nursing Facility 242 74% 17% 10% 

Home Health Agency 168 71% 20% 9% 

DME Supplier 102 75% 20% 6% 

Physician 89 72% 18% 10% 

5. Are you relying on manufacturer statements 

concerning the readiness of your biomedical 

equipment? 

Provider 

Type 

n Yes No Don’t 

Know 

Hospital 545 58% 42% 0% 

Nursing Facility 242 66% 29% 6% 

Home Health Agency 172 71% 25% 4% 

DME Supplier 101 62% 36% 2% 

Physician 87 59% 33% 8% 

6. Have you tested your biomedical equipment to ensure 

Y2K readiness? 

Provider 

Type 

n Yes No Don’t 

Know 

Hospital 546 68% 30% 1% 

Nursing Facility 232 40% 54% 6% 

Home Health Agency 164 40% 55% 4% 

DME Supplier 102 42% 57% 1% 

Physician 84 50% 44% 6% 

7. Has an independent party verified the Y2K status of 

your biomedical equipment? 

Provider 

Type 

n Yes No Don’t 

Know 

Hospital 543 40% 57% 2% 

Nursing Facility 238 25% 61% 13% 

Home Health Agency 167 25% 68% 7% 

DME Supplier 102 18% 77% 5% 

Physician 86 27% 60% 13% 

Y2K Readiness of Medicare Fee-for-Service OEI-03-98-00253 

Providers as of July 1999 22 
APPENDIX A 

D. Biomedical Equipment (cont.) 

8. Is all of your biomedical equipment currently Y2K 

ready? 

Provider 

Type 

n Yes No Don’t 

Know 

Hospital 537 27% 67% 5% 

Nursing Facility 230 50% 24% 25% 

Home Health Agency 159 48% 25% 27% 

DME Supplier 100 54% 28% 18% 

Physician 79 56% 23% 22% 

9. If no, what percentage of your biomedical equipment 

is currently Y2K ready? 

Provider 

Type 

n Mean Median Mode 

Hospital 357 86% 90% 90% 

Nursing Facility 49 75% 90% 90% 

Home Health Agency 39 69% 75% 75% 

DME Supplier 28 67% 85% 0% 

Physician 17 66% 80% 80% 

10. What percentage of your biomedical equipment will 

be Y2K ready on December 31, 1999? 

Provider 

Type 

n Mean Median Mode 

Hospital 513 99% 100% 100% 

Nursing Facility 185 99% 100% 100% 

Home Health Agency 134 99% 100% 100% 

DME Supplier 83 97% 100% 100% 

Physician 67 99% 100% 100% 

11. Do you know the FDA has Y2K information about 

biomedical equipment on its website (www.fda.gov)? 

Provider 

Type 

n Yes No Don’t 

Know 

Hospital 541 79% 18% 2% 

Nursing Facility 353 44% 48% 8% 

Home Health Agency 289 41% 52% 7% 

DME Supplier 174 27% 67% 6% 

Physician 125 26% 69% 6% 

Y2K Readiness of Medicare Fee-for-Service OEI-03-98-00253 

Providers as of July 1999 23 
APPENDIX A 

D. Biomedical Equipment (cont.) 

12. Have you visited the FDA’s website to obtain 

readiness information about biomedical equipment? 

Provider 

Type 

n Yes No Don’t 

Know 

Hospital 535 59% 37% 4% 

Nursing Facility 347 25% 70% 4% 

Home Health Agency 277 22% 77% 1% 

DME Supplier 172 11% 88% 1% 

Physician 123 8% 90% 2% 

13. Did you find the FDA’s website helpful? Provider 

Type 

n Yes No Don’t 

Know 

Hospital 316 91% 6% 3% 

Nursing Facility 87 95% 3% 1% 

Home Health Agency 54 87% 9% 4% 

DME Supplier 18 100% 0% 0% 

Physician 10 100% 0% 0% 

E. Medicare Claim Filing 

1. Do you file your Medicare claims electronically? Provider 

Type 

n Yes No Don’t 

Know 

Hospital 549 97% 1% 2% 

Nursing Facility 411 91% 8% 1% 

Home Health Agency 411 94% 6% 0% 

DME Supplier 281 66% 34% 0% 

Physician 188 61% 35% 5% 

2. Do all of your payers require the same claim format? Provider 

Type 

n Yes No Don’t 

Know 

Hospital 543 42% 45% 13% 

Nursing Facility 399 52% 34% 14% 

Home Health Agency 404 38% 57% 5% 

DME Supplier 266 44% 44% 12% 

Physician 180 50% 33% 17% 

Y2K Readiness of Medicare Fee-for-Service OEI-03-98-00253 

Providers as of July 1999 24 
APPENDIX A 

E. Medicare Claim Filing (cont.) 

3. Do you use an external vendor or clearinghouse for 

claim submission and payment activities? 

Provider 

Type 

n Yes No Don’t 

Know 

Hospital 546 72% 24% 4% 

Nursing Facility 413 36% 58% 6% 

Home Health Agency 408 29% 69% 2% 

DME Supplier 266 41% 54% 5% 

Physician 177 42% 50% 8% 

4. Do you send non-compliant dates to your vendor/ 

clearinghouse for conversion into an 8-digit format? 

Provider 

Type 

n Yes No Don’t 

Know 

Hospital 382 24% 53% 23% 

Nursing Facility 142 27% 39% 33% 

Home Health Agency 110 28% 47% 25% 

DME Supplier 102 31% 42% 26% 

Physician 69 26% 45% 29% 

5. Have you performed testing with your vendor/ 

clearinghouse in order to confirm their Y2K 

readiness? 

Provider 

Type 

n Yes No Don’t 

Know 

Hospital 392 53% 40% 6% 

Nursing Facility 145 36% 48% 16% 

Home Health Agency 114 48% 39% 12% 

DME Supplier 109 45% 40% 15% 

Physician 72 47% 42% 11% 

6. Has your Medicare contractor sent you information 

or offered assistance with Y2K issues? 

Provider 

Type 

n Yes No Don’t 

Know 

Hospital 542 77% 11% 12% 

Nursing Facility 384 64% 16% 20% 

Home Health Agency 382 78% 14% 8% 

DME Supplier 242 69% 17% 14% 

Physician 162 64% 17% 19% 

Y2K Readiness of Medicare Fee-for-Service OEI-03-98-00253 

Providers as of July 1999 25 
APPENDIX A 

E. Medicare Claim Filing (cont.) 

7. Has your Medicare contractor encouraged you to test 

claims submission in a future-date environment? 

Provider 

Type 

n Yes No Don’t 

Know 

Hospital 540 50% 26% 23% 

Nursing Facility 379 40% 33% 27% 

Home Health Agency 375 51% 35% 15% 

DME Supplier 236 45% 33% 22% 

Physician 156 40% 33% 28% 

8. Have you tested claims submission in a future-date 

environment with your Medicare contractor? 

Provider 

Type 

n Yes No Don’t 

Know 

Hospital 538 27% 54% 19% 

Nursing Facility 381 16% 61% 23% 

Home Health Agency 378 19% 67% 14% 

DME Supplier 237 17% 69% 14% 

Physician 154 18% 60% 22% 

9. If no, do you plan to test claims submission in a 

future-date environment with your Medicare 

contractor? 

Provider 

Type 

n Yes No Don’t 

Know 

Hospital 283 65% 17% 17% 

Nursing Facility 228 59% 16% 25% 

Home Health Agency 248 66% 14% 20% 

DME Supplier 154 54% 27% 19% 

Physician 88 51% 30% 19% 

10. Have you visited HCFA’s website (www.hcfa.gov) to 

obtain information about Y2K? 

Provider 

Type 

n Yes No Don’t 

Know 

Hospital 541 56% 38% 6% 

Nursing Facility 411 40% 56% 4% 

Home Health Agency 402 53% 45% 2% 

DME Supplier 259 16% 82% 2% 

Physician 172 17% 78% 5% 

Y2K Readiness of Medicare Fee-for-Service OEI-03-98-00253 

Providers as of July 1999 26 
APPENDIX A 

E. Medicare Claim Filing (cont.) 

11. Did you find HCFA’s website helpful? Provider 

Type 

n Yes No Don’t 

Know 

Hospital 295 91% 7% 2% 

Nursing Facility 166 90% 9% 1% 

Home Health Agency 208 88% 8% 3% 

DME Supplier 38 92% 8% 0% 

Physician 29 83% 17% 0% 

F. External Suppliers 

1. Have you identified all external suppliers and utility 

providers with whom you conduct business? 

Provider 

Type 

n Yes No Don’t 

Know 

Hospital 549 94% 5% 1% 

Nursing Facility 436 85% 11% 4% 

Home Health Agency 392 78% 18% 4% 

DME Supplier 270 60% 33% 7% 

Physician 171 56% 35% 9% 

2. Have you received certification from these suppliers/ 

providers that their systems will be Y2K ready? 

Provider 

Type 

n Yes No Don’t 

Know 

Hospital 545 57% 40% 3% 

Nursing Facility 436 51% 43% 6% 

Home Health Agency 388 40% 51% 8% 

DME Supplier 267 35% 54% 11% 

Physician 163 38% 48% 14% 

3. Do you anticipate problems due to disruptions 

caused by these suppliers’/providers’ Y2K 

problems? 

Provider 

Type 

n Yes No Don’t 

Know 

Hospital 547 16% 71% 13% 

Nursing Facility 439 10% 73% 17% 

Home Health Agency 396 12% 71% 17% 

DME Supplier 269 13% 71% 16% 

Physician 169 11% 70% 20% 

Y2K Readiness of Medicare Fee-for-Service OEI-03-98-00253 

Providers as of July 1999 27 
APPENDIX A 

F. External Suppliers (cont.) 

4. Are you aware that the Dept. of Veterans Affairs has 

Y2K information on its website (www.va.gov)? 

Provider 

Type 

n Yes No Don’t 

Know 

Hospital 545 37% 59% 3% 

Nursing Facility 433 18% 78% 4% 

Home Health Agency 396 15% 81% 5% 

DME Supplier 268 13% 81% 6% 

Physician 164 7% 84% 9% 

Y2K Readiness of Medicare Fee-for-Service OEI-03-98-00253 

Providers as of July 1999 28 
APPENDIX B 

Comparison with Previous Survey Results

In this appendix, we present a comparison of several key variables from this inspection to 

similar variables in our prior inspection, Y2K Readiness of Medicare Providers (OEI-03-98-

00250). These variables involve billing system readiness, medical records system readiness, 

biomedical equipment readiness, and contingency planning. Please see page 7 for an 

explanation of how these comparisons were made. 

Y2K Readiness of Medicare Fee-for-Service OEI-03-98-00253 

Providers as of July 1999 29 
APPENDIX B 

FIGURE 1: BILLING SYSTEM READINESS

Percent Who Reported Billing Systems Were Y2K Ready

0% 20% 40% 60% 80% 100% 

Hospitals 

Nursing Facilities 

Home Health 

Agencies 

DME Suppliers 

Physicians 

54% 

50% 

51% 

63% 

52% 

74% 

61% 

72% 

75% 

66% 

January 1999 

July 1999 

B 

Source: OEI Surveys - January 1999 and July 1999 

Y2K Readiness of Medicare Fee-for-Service OEI-03-98-00253 

Providers as of July 1999 30 
APPENDIX B 

FIGURE 2: MEDICAL RECORDS SYSTEMS READINESS

Percent Who Reported Medical Records Systems WereY2K Ready

0% 20% 40% 60% 80% 100% 

Hospitals 

Nursing Facilities 

Home Health 

Agencies 

DME Suppliers 

Physicians 

49% 

57% 

56% 

61% 

60% 

72% 

66% 

74% 

70% 

65% 

January 1999 

July 1999 

Source: OEI Surveys - January 1999 and July 1999 

Y2K Readiness of Medicare Fee-for-Service OEI-03-98-00253 

Providers as of July 1999 31 
APPENDIX B 

Figure 3: BIOMEDICAL EQUIPMENT READINESS

Percent Who Reported Biomedical Equipment Was Y2K Ready

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 

Hospitals 

Nursing Facilities 

Home Health 

Agencies 

DME Suppliers 

Physicians 

Source: OEI Surveys - January 1999 and July 1999 

28% 

29% 

37% 

48% 

42% 

27% 

50% 

48% 

54% 

56% 

January 1999 

July 1999 

B 

Y2K Readiness of Medicare Fee-for-Service OEI-03-98-00253 

Providers as of July 1999 32 
APPENDIX B 

FIGURE 4: CONTINGENCY PLANNING

Percent Who Reported Completing Contingency Plans

0% 20% 40% 60% 80% 100% 

Hospitals 

Nursing Facilities 

Home Health 

Agencies 

DME Suppliers 

Physicians 

48% 

34% 

40% 

33% 

33% 

59% 

55% 

56% 

52% 

49% 

January 1999 

July 1999 

B 

Source: OEI Surveys - January 1999 and July 1999 

Y2K Readiness of Medicare Fee-for-Service OEI-03-98-00253 

Providers as of July 1999 33 
APPENDIX C 

Health Care Financing Administration Comments

In this appendix, we present, in full, comments from the Health Care Financing 

Administration. 

Y2K Readiness of Medicare Fee-for-Service OEI-03-98-00253 

Providers as of July 1999 34 
APPENDIX C 

Y2K Readiness of Medicare Fee-for-Service OEI-03-98-00253 

Providers as of July 1999 35 
APPENDIX C 

Y2K Readiness of Medicare Fee-for-Service OEI-03-98-00253 

Providers as of July 1999 36 
APPENDIX C 

Y2K Readiness of Medicare Fee-for-Service OEI-03-98-00253 

Providers as of July 1999 37 
APPENDIX C 

Y2K Readiness of Medicare Fee-for-Service OEI-03-98-00253 

Providers as of July 1999 38 
APPENDIX C 

Y2K Readiness of Medicare Fee-for-Service OEI-03-98-00253 

Providers as of July 1999 39 
APPENDIX C 

Y2K Readiness of Medicare Fee-for-Service OEI-03-98-00253 

Providers as of July 1999 40 
APPENDIX C 

Y2K Readiness of Medicare Fee-for-Service OEI-03-98-00253 

Providers as of July 1999 41