U.S. GOVERNMENT PRINTING OFFICE

61–209 CC WASHINGTON : 1999

YEAR 2000 AND MEDICARE: IS HEALTH SERVICE

DELIVERY AT RISK?

HEARING

BEFORE THE

SUBCOMMITTEE ON GOVERNMENT MANAGEMENT,

INFORMATION, AND TECHNOLOGY

OF THE

COMMITTEE ON

GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED SIXTH CONGRESS

FIRST SESSION

SEPTEMBER 27, 1999

Serial No. 106–55

Printed for the use of the Committee on Government Reform

(

Available via the World Wide Web: http://www.house.gov/reform

(II)

COMMITTEE ON GOVERNMENT REFORM

DAN BURTON, Indiana, Chairman

BENJAMIN A. GILMAN, New York

CONSTANCE A. MORELLA, Maryland

CHRISTOPHER SHAYS, Connecticut

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

STEPHEN HORN, California

JOHN L. MICA, Florida

THOMAS M. DAVIS, Virginia

DAVID M. MCINTOSH, Indiana

MARK E. SOUDER, Indiana

JOE SCARBOROUGH, Florida

STEVEN C. LATOURETTE, Ohio

MARSHALL ‘‘MARK’’ SANFORD, South

Carolina

BOB BARR, Georgia

DAN MILLER, Florida

ASA HUTCHINSON, Arkansas

LEE TERRY, Nebraska

JUDY BIGGERT, Illinois

GREG WALDEN, Oregon

DOUG OSE, California

PAUL RYAN, Wisconsin

HELEN CHENOWETH, Idaho

DAVID VITTER, Louisiana

HENRY A. WAXMAN, California

TOM LANTOS, California

ROBERT E. WISE, JR., West Virginia

MAJOR R. OWENS, New York

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

PATSY T. MINK, Hawaii

CAROLYN B. MALONEY, New York

ELEANOR HOLMES NORTON, Washington,

DC

CHAKA FATTAH, Pennsylvania

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

ROD R. BLAGOJEVICH, Illinois

DANNY K. DAVIS, Illinois

JOHN F. TIERNEY, Massachusetts

JIM TURNER, Texas

THOMAS H. ALLEN, Maine

HAROLD E. FORD, JR., Tennessee

JANICE D. SCHAKOWSKY, Illinois

———

BERNARD SANDERS, Vermont

(Independent)

KEVIN BINGER, Staff Director

DANIEL R. MOLL, Deputy Staff Director

DAVID A. KASS, Deputy Counsel and Parliamentarian

CARLA J. MARTIN, Chief Clerk

PHIL SCHILIRO, Minority Staff Director

SUBCOMMITTEE ON GOVERNMENT MANAGEMENT, INFORMATION, AND TECHNOLOGY

STEPHEN HORN, California, Chairman

JUDY BIGGERT, Illinois

THOMAS M. DAVIS, Virginia

GREG WALDEN, Oregon

DOUG OSE, California

PAUL RYAN, Wisconsin

JIM TURNER, Texas

PAUL E. KANJORSKI, Pennsylvania

MAJOR R. OWENS, New York

PATSY T. MINK, Hawaii

CAROLYN B. MALONEY, New York

EX OFFICIO

DAN BURTON, Indiana HENRY A. WAXMAN, California

J. RUSSELL GEORGE, Staff Director and Chief Counsel

MATT RYAN, Senior Policy Director

BONNIE HEALD, Communications Director/Professional Staff Member

CHIP AHLSWEDE, Clerk

TREY HENDERSON, Minority Counsel

(III)

C O N T E N T S

Page

Hearing held on Septmber 27, 1999 ....................................................................... 1

Statement of:

Addington, Whitney W., M.D., president, American College of Physicians,

American Society of Internal Medicine ....................................................... 55

Baker, Joe, executive vice president, Medicare Rights Center ..................... 212

Brown, Fred, vice chairman, BJC Health Systems, Senior Advisor, President’s Council of Y2K Conversion, and chairman, Board of Trustees,

American Hospital Association .................................................................... 181

Christoph, Gary, Ph.D., Chief Information Officer, Health Care Financing

Administration .............................................................................................. 43

Wilkey, Elizabeth, electronic data interchange coordinator, Blue Cross

and Blue Shield of Georgia .......................................................................... 195

Willemssen, Joel, Director, Civil Agencies Information Systems, U.S. General Accounting Office .................................................................................. 12

Letters, statements, etc., submitted for the record by:

Addington, Whitney W., M.D., president, American College of Physicians,

American Society of Internal Medicine:

Prepared statement of ............................................................................... 179

Y2K tool kit ................................................................................................ 56

Baker, Joe, executive vice president, Medicare Rights Center, prepared

statement of ................................................................................................... 215

Brown, Fred, vice chairman, BJC Health Systems, Senior Advisor, President’s Council of Y2K Conversion, and chairman, Board of Trustees,

American Hospital Association, prepared statement of ............................. 183

Christoph, Gary, Ph.D., Chief Information Officer, Health Care Financing

Administration, prepared statement of ....................................................... 45

Horn, Hon. Stephen, a Representative in Congress from the State of

California, prepared statement of ................................................................ 3

Morella, Hon. Constace A., a Representative in Congress from the State

of Maryland, prepared statement of ............................................................ 6

Turner, Hon. Jim, a Representative in Congress from the State of Texas,

prepared statement of ................................................................................... 10

Wilkey, Elizabeth, electronic data interchange coordinator, Blue Cross

and Blue Shield of Georgia, prepared statement of ................................... 197

Willemssen, Joel, Director, Civil Agencies Information Systems, U.S. General Accounting Office, prepared statement of ........................................... 14

(1)

YEAR 2000 AND MEDICARE: IS HEALTH

SERVICE DELIVERY AT RISK?

MONDAY, SEPTEMBER 27, 1999

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON GOVERNMENT MANAGEMENT, INFORMATION, AND TECHNOLOGY, COMMITTEE ON GOVERNMENT REFORM, Washington, DC.

The subcommittee met, pursuant to notice, at 2 p.m., in room

2154, Rayburn House Office Building, Hon. Stephen Horn (chairman of the subcommittee) presiding.

Present from the Subcommittee on Government Management, Information, and Technology: Representatives Horn and Turner.

Present from the Subcommittee on Technology, Committee on

Science: Representative Morella.

Staff present: J. Russell George, staff director/chief counsel; Matthew Ryan, senior policy director; Bonnie Heald, director of communications/professional staff member; Chip Ahlswede, clerk; P.J.

Caceres, intern; Trey Henderson, minority counsel; and Jean Gosa,

minority staff assistant.

Mr. HORN. The hearing of the House Subcommittee on Government Management, Information, and Technology, in participation

with the Subcommittee on Technology of House Science Committee

will come to order.

Today, we will hear testimony about the year 2000 preparations

needed to guarantee the seamless delivery of health care financing

by the Nation’s largest health insurer, the Federal Government.

Through the Medicare program, the government provides health insurance to more than 39 million senior citizens.

Unfortunately, this massive health insurance program has severe

weakness in its year 2000 readiness. Medicare has been identified

by the President’s Office of Management and Budget as one of the

43 essential Federal programs. Yet, 2 weeks ago, we reported that

it is unknown when large portions of the Medicare program will be

year 2000 ready.

The outlook did seem alarming, and we hope to hear what the

situation is today. As of last week, less than 2 percent of the

230,000 hospitals, nursing homes, doctors and other health care

providers who submit claims to Medicare had tested their computer

systems with Medicare contractors.

Of the nearly 4,000 health care providers who had begun this

testing, many experienced significant failures. Worse, some health

providers report that they are just not ready for the January 1st

deadline.

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We are not here today to be alarmists, but we do want to provide

an accurate portrayal of Medicare’s Y2K landscape.

In February, we held a hearing to review the Health Care Financing Administration’s year 2000 preparations. At the time, the

agency’s systems were not ready. Since then, however, HCFA has

made substantial progress in fixing and testing its systems. We

commend them for this very hard work. Yet, equally strenuous

work remains.

HCFA has stated that if Medicare providers cannot submit proper claims, health care providers will not get paid. Furthermore, according to HCFA, providers who do not test their claims submissions are not exercising due diligence and, therefore, must be prepared to accept any cash-flow consequences that might arise from

this lack of preparation.

We will examine four key areas in the Medicare program today:

First, whether the Health Care Financing Administration has completed its final year 2000 computer tests; second, how some Medicare contractors and providers are testing their computer systems;

third, the year 2000 preparations of managed care organizations;

and, finally, whether the Health Care Financing Administration,

Medicare contractors and managed care organizations have developed and tested their business continuity and contingency plans.

Health Care Financing Administration, its contractors and

health care providers have only 95 days to find an antidote to

strengthen the Nation’s health care financing system. They must

meet that deadline, because 39 million American seniors are depending on it.

I welcome today’s panel of witnesses and look forward to their

testimony.

I’ll now yield to the co-chairman representing the Subcommittee

on Technology of the House Committee on Science for an opening

statement, and then I’ll yield to the ranking member on the Government Management, Information, and Technology Subcommittee.

[The prepared statement of Hon. Stephen Horn follows:]

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Mrs. MORELLA. Thank you, Mr. Chairman.

Mr. Chairman, this past February we held a hearing that examined the status of the efforts of the Department of Health and

Human Services focusing on the Health Care Financing Administration to prepare for the technical challenges associated with the

year 2000 problem, and at that hearing the GAO, General Accounting Office, reported the severe difficulties HCFA has experienced

with Y2K, stating that, ‘‘HCFA and its contractors were severely

behind schedule,’’ in preparing, testing and implementing the mission-critical systems that support Medicare.

Faced with this stark finding, there was little or no confidence

from the approximately one-quarter of our Nation’s population who receive over $170 billion annually of Medicare and Medicaid assistance that their elderly, disabled or indigent benefits would continue uninterrupted after January 1st, 2000. Subsequent to the

hearing, we’ve seen the agency undertake dramatic actions in management, resources, personnel and funding to correct the Y2K problem. Are these refocused efforts, however, enough to overcome

HCFA’s auspiciously horrendous start? HCFA says yes, but others

and I are not quite so certain.

You have to be concerned when HCFA just last week tells us

that only 2 percent of their physicians and hospitals that submit

claims to them have tested their computer systems with Medicare

contractors, and of those that have tested their systems, 10 to 20

percent have experienced significant failures. These startling facts

are obviously not very comforting.

I know that HCFA disputes some of the GAO’s conclusions, and

I know that both HHS and HCFA have demonstrated a great deal

of progress in the last quarter. So I look forward to hearing from

our distinguished panel today and especially to hear our witnesses

representing other Medicare partners to determine exactly where

the agency stands in their Y2K remediation and validation efforts.

No less than a successful continuation of our Nation’s health and

welfare is at stake, especially for those who can least afford a disruption in their health benefits. If there are to be any disruptions,

the American people need to know that there should be adequate

contingency plans to cover any failures related to Y2K.

So, Mr. Chairman, I look forward to hearing from our witnesses

on this critical problem.

[The prepared statement of Hon. Constance A. Morella follows:]

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Mr. HORN. I thank my colleague and now would yield time for

an opening statement to the ranking member of the Subcommittee

on Government Management, Information, and Technology, Mr.

Turner of Texas.

Mr. TURNER. Thank you, Mr. Chairman.

It’s good to have all of our witnesses here today to talk about this

very important issue. I’ve always held the opinion that some of the

greatest risks facing us with regard to Y2K problems was in the

health care industry and HCFA, which relates primarily to the

prompt payment of claims and ensuring the system works. We

know that that is a critical part.

There are many hospitals today that a short disruption in payments could represent financial destruction for them. So I think it’s

very important that we continue to pay attention to this issue, as

we have done through several meetings of this committee held

jointly with Chairwoman Morella and her subcommittee.

I do believe that in February we found that there were problems

remaining at HCFA. I do understand that much progress has been

made in the last few months; and, of course, the purpose of our

hearing today is to address the remaining areas of concern that we

have at the committee.

I thank the Chair for continuing to stay on top of this very important matter because, after all, HCFA is the largest health insurer in the entire Nation and pays out $288 billion a year. It’s a

very important agency to the many billions of Americans who depend upon Medicare for their health care.

Thank you, Mr. Chairman.

[The prepared statement of Hon. Jim Turner follows:]

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Mr. HORN. Thank you very much.

Let me explain how this subcommittee functions. We would

like—because we do have your statements, we’d like it if you could

summarize between 5 and 10 minutes each of your statements.

That will give us more of an opportunity for dialog among the

panel, as well as dialog with the members and the panel, but don’t

feel bad if you worry about the 5 to 10. Just take the time you need

to tell the story, and if we can tell it succinctly, that helps.

The other thing is that we do submit all of our witnesses and

their staff that might tell them what the answer is on questions,

we are really down to, as an investigative committee, to giving the

oath. So if you don’t mind standing and putting up your right

hands, with the people that will advise you also taking the oath,

then I don’t have to have 18 baptisms here.

[Witnesses sworn.]

Mr. HORN. I have six witnesses, and I have six helpers, all of

which are important. So let us just go down the way we have it

on the agenda.

That’s Mr. Willemssen, the Director of Civil Agencies Information Systems, U.S. General Accounting Office. He’s been our principal witness at every system I think this last year, be it in the

States or overseas or here, wherever. So he has a lot of knowledge,

and we’d appreciate his summary of what the GAO has done in

terms of their studies on Medicare in particular.

Mr. Willemssen.

STATEMENT OF JOEL WILLEMSSEN, DIRECTOR, CIVIL AGENCIES INFORMATION SYSTEMS, U.S. GENERAL ACCOUNTING

OFFICE

Mr. WILLEMSSEN. Thank you, Chairman Horn, Chairwoman

Morella, Ranking Member Turner. Thank you for inviting GAO to

testify today. As requested, I will briefly summarize our statement

on the readiness of Medicare and Y2K.

HCFA continues to make progress in its efforts to address numerous Medicare Y2K issues. For example, HCFA is more effectively identifying and managing risks. It also is more effectively

managing its electronic data exchanges and has improved its testing program.

HCFA has also shown progress in the development of its business continuity and contingency plans and has taken comprehensive measures in conducting numerous Y2K outreach activities.

Even with this progress, however, HCFA still faces a considerable amount of work and challenges over the next few months. For

example, HCFA is using a less than ideal approach of having key

claims processing systems tested concurrently. Because of the limited time remaining, HCFA, though, has little choice but to test in

this manner. This approach invites additional risk because resolving one system’s testing errors can lead to problems in another system that’s being tested at the same time. Therefore, HCFA must

aggressively manage these risks through an integrated testing

schedule that defines interdependencies and a critical path, establishing the sequence in which tasks must be completed.

In addition to these system interdependencies, ongoing testing of

contractors’ systems continues to identify errors, some of which

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would result in Y2K failures. HCFA’s use of system quality assurance tools also continues to find system problems that will need to

be resolved in the short time remaining.

HCFA also will need to carefully manage contractor transitions

to a new data center that is planned between now and early November and will have to implement its policy of minimizing system

changes during the rollover period.

HCFA faces challenges in several other areas. For example, as

noted earlier by you, Chairwoman Morella, contractor progress and

testing with providers has been disappointing. The most recent

available HCFA information shows that more than half of HCFA’s

contractors have tested with less than 1 percent of their providers,

and for the testing that has been done an error rate of 10 to 20

percent is being reported.

In addition to fee-for-service contractors, many of Medicare’s

beneficiaries are enrolled in managed care organizations. The available data on the Y2K status of these organizations also raise concerns. In June, only 4 of 425 of these organizations were reporting

that they were fully compliant. Further, HCFA’s Y2K risk assessments of managed care organizations showed that 94 of them were

considered high risk.

To ensure that managed care organizations are adequately addressing Y2K, HCFA is conducting site visits covering 184 of these

organizations; and as part of our ongoing work for the Senate Special Committee on Aging, we plan to followup on HCFA’s actions

in this area.

Given the magnitude of the challenges that HCFA faces, the development of business continuity and contingency plans is crucial.

HCFA has completed its agency-wide business continuity and contingency plan that includes 29 internal plans. However, essential

validation activities still remain.

Regarding contractor business continuity and contingency plans,

their status is essentially unknown. Our assessment of available

plans revealed that most contractors did not have specified detailed

procedures that are required for executing and testing the plans.

The status of contingency plans for managed care organizations

is also not encouraging. By early September HCFA had received

plans from over 300 of these managed care organizations. However,

its review concluded that about 69 percent of them needed major

improvement.

In conclusion, it’s clear that HCFA has made substantial

progress on Y2K over the last several months. Nevertheless, the

agency still faces a considerable amount of work and challenges

over the next few months to ensure that Medicare providers will

be made paid and beneficiaries will continue to receive care.

Thank you.

Mr. HORN. Thank you very much.

[The prepared statement of Mr. Willemssen follows:]

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Mr. HORN. We now go to the principal witness from the Health

Care Financing Administration, which is the Chief Information Officer Gary Christoph. Dr. Christoph.

STATEMENT OF GARY CHRISTOPH, PH.D., CHIEF INFORMATION OFFICER, HEALTH CARE FINANCING ADMINISTRATION

Dr. CHRISTOPH. Chairman Horn, Chairwoman Morella and Congressman Turner, thank you for inviting me here today to discuss

the Health Care Financing Administration progress on meeting the

year 2000 challenge. I’m happy to report to you that we continue

to make solid progress.

We have continued our aggressive Y2K activities since we last

came before Chairman Horn’s committee this past April, and we

are on track toward meeting this challenge successfully. All of our

internal systems have been renovated, fully tested, certified compliant and implemented. All of our external claims processing systems, those at our contractors, have been fully tested, including future date testing and integrated testing and certified as compliant;

and all of these systems are in production and are processing Medicare claims today.

We’ve taken the advice of Congress to heart and have worked

diligently with the GAO to achieve our mutual goal that Medicare

function into the new millennium with minimal disruption due to

Y2K. For all of us in the health care industry, the year 2000 challenge is more than a business and technical issue. It is a patient

care issue. As the GAO has reported, provider readiness surveys

have had very low response rates and consist of self-reported status

information that we suspect of being overly optimistic.

We continue to have serious concerns about the readiness of

Medicare providers. We have made extraordinary efforts to reach

out to providers and to raise awareness about what they must do

to meet their responsibility. We are sponsoring hundreds of conferences, learning sessions, and lectures throughout the country,

and we meet regularly with the health care sector trade groups to

raise awareness.

We have established a Y2K website, a toll-free line to provide upto-date information on a wide range of issues, and we have made

other steps to help readiness.

We are encouraging providers to test future-dated claims with

our claims processing contractors.

Despite these unprecedented efforts, too few providers are taking

advantage of the opportunity we’ve created for them to test with

us. We’re doing all we can to ensure that our systems will work

and that providers will get paid. That’s the best way to ensure that

beneficiaries continue to get care, and we’ve pulled out all the stops

to encourage providers to get ready, too, but it is frustrating that

they are still not willing or able to test with us.

In fact, less than 2 percent of claim submitters have tested with

our contractors. Of those that have tested, 10 to 20 percent have

found errors. Those that have found problems have been able to

correct them. That’s the purpose of the testing. That’s the good

news.

We remain deeply concerned, however, about those who have not

tested at all. If they have not tested, it is unlikely if they know

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whether or not their systems will work. We are doing all we can

to raise providers awareness, and we are very open to your advice

and suggestions on how best to reach them in the limited time that

remains.

We at HCFA have and continue to do a great deal of testing and

retesting to ensure that our own systems will continue operating

come January 1st, 2000. We continue to refine and validate our

contingency plans which were developed using GAO guidance to

prepare for any unforeseen glitches. We’ve actually exercised some

parts of our plans successfully during Hurricane Floyd several

weeks ago. We have also required our claim processing contractors

to have appropriate and validated contingency plans, and we’re

carefully reviewing those plans, as GAO has recommended. And we

continue to help health care, managed care organizations and State

Medicaid plans and the health community at large to develop and

refine their contingency plans.

We have had a lot of help with our Y2K effort. We appreciate

and have greatly benefited from the advice of our independent validation and verification contractor, AverStar, as well as advice from

the Health and Human Services Inspector General and the General

Accounting Office. And we certainly would not have made the

progress we have without the support and funding that has been

provided to us by you, Congress. I am confident that our systems

will be ready to process and pay claims at the turn of the century.

We will continue to do all we can to reach out to providers and to

share information and assistance.

Again, I thank you for your attention to this essential issue.

Thank you, Mr. Chairman.

Mr. HORN. Thank you very much.

[The prepared statement of Dr. Christoph follows:]

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Mr. HORN. We now have the president of the American College

of Physicians and the American Society of Internal Medicine, Dr.

Whitney W. Addington. Dr. Addington.

STATEMENT OF WHITNEY W. ADDINGTON, M.D., PRESIDENT,

AMERICAN COLLEGE OF PHYSICIANS, AMERICAN SOCIETY

OF INTERNAL MEDICINE

Dr. ADDINGTON. Thank you and good afternoon.

I am Dr. Whitney Addington. I am an internist and

pulmonologist in Chicago and president of the American College of

Physicians American Society of Internal Medicine. The college is

the Nation’s largest medical specialty organization. Many of the

more than 115,000 members of the college are involved in internal

medicine practices in which they constantly rely on computer technology which provides invaluable assistance in the provision of patient care, as well as in the administrative aspects of running their

medical practice. You are to be commended for the subcommittee’s

ongoing focus on the serious challenges posed by Y2K readiness

issues.

ACP–ASIM was quick to recognize the threat posed by Y2K. Unless our members addressed it, we knew it could disrupt their practice operations and thereby impede delivery of vital health care

services to their patients. As early as March 1998, our monthly

newsletter ran a full-length article posing the question, ‘‘Is your

practice prepared for the millennium bug?’’

Early in 1999, the college mobilized a college-wide information

campaign to alert, inform and assist our membership in addressing

the Y2K threat. Articles appeared in most of this year’s issues. The

topic has been further publicized through our State chapters.

ACP–ASIM’s Center for a Competitive Advantage created a special Y2K webpage on our own website, www.acponline.org, and

published a Y2K Tool Kit to give members detailed, practical information and guidance on how to address the issue.

This is the Y2K Tool Kit that has been given to our members,

and I have included a copy, together with my testimony, and would

respectfully request that it be included in the record of this hearing.

Mr. HORN. Without objection, it is so ordered at this point in the

hearing.

Dr. ADDINGTON. Thank you.

[The Y2K Tool Kit follows:]

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Dr. ADDINGTON. The college staff also is available to respond directly by telephone to inquiries regarding this issue. At our April

annual meeting, which was attended by 10,000 physicians, special

Y2K educational sessions were repeatedly conducted by the college’s Medical Informatics Department. A press conference was also

held, and the Y2K Tool Kit was widely distributed.

Nor are we finished with this campaign. The Y2K webpage continues to be updated to reflect more recent information, the growing number of physicians who have initiated corrective steps and

the evolving nature of Y2K-related problems.

We have not attempted to monitor the number of physicians who

have evaluated or corrected their practice computer systems. That

number changes constantly. Various government and other surveys

indicate that a fairly high level of physician awareness now exists

regarding Y2K and that most physician practices have undertaken

some corrective measures. Time, however, is running out for those

who have not, and the available options are rapidly declining.

Later this week, we meet with all the Governors, which is our

grassroots organization, and I will be stressing that their systems

need to be tested.

As the year-end deadline swiftly approaches, our attention is

shifting to problems potentially faced by those practices that have

undertaken corrective measures but not yet tested to be sure those

measures will actually work. Nationwide Insurance, which processes Medicare Part B claims for 7,500 physicians and other electronic claims submitters, recently indicated that fewer than 10 percent of its clients had completed testing as of September 13th. Of

those who had tested, 56 percent proved unsuccessful on the first

try. Only 6 percent of those with critical date failures have been

able to resolve the errors and complete the testing. They may or

may not have to replace their supposedly Y2K compliant systems.

The college is very concerned, therefore, that too many physicians may be relying on vendor certifications that the vendor’s software is Y2K compliant without requiring testing that all parts of

the system are, in fact, compliant. While we think it risky for nonexperts to try rolling forward the dates on computer systems to determine their Y2K readiness, it is imperative that even new systems, as well as those supposedly corrected for Y2K, be tested by

experts to confirm the operational success of the corrective measures. Such requisite testing must include all individual software

and hardware components of a system.

In matters like electronic claims, problems can arise in the interface between two organizations’ supposedly Y2K corrected systems.

Even when such problems are correctable, the first test may fail in

a high percentage of cases, thus requiring some debugging of a

physician’s system. Only a finite number of computer technicians

are able to help with this debugging process. Therefore, we are concerned that delayed testing by medical practices might lead to a

last minute debugging demand that could overwhelm available resources.

We will be doing everything we can to make our members aware

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of the need for testing and the importance of performing that testing now.

I’ll be pleased to respond to your questions. Thank you.

Mr. HORN. Thank you very much, Dr. Addington.

[The prepared statement of Dr. Addington follows:]

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Mr. HORN. Our next witness is Fred Brown, The vice chairman

of BJC Health Systems, senior advisor on the President’s Council

of Y2K Conversion. He’s also chairman of the Board of Trustees of

the American Hospital Association.

Thank you for coming.

STATEMENT OF FRED BROWN, VICE CHAIRMAN, BJC HEALTH

SYSTEMS, SENIOR ADVISOR, PRESIDENT’S COUNCIL OF Y2K

CONVERSION, AND CHAIRMAN, BOARD OF TRUSTEES, AMERICAN HOSPITAL ASSOCIATION

Mr. BROWN. Thank you very much, Chairman Horn, Chairwoman Morella and Congressman Turner.

As we approach the Y2K period, January 1st, just 95 days away,

the American Hospital Association and its members are continuing

to be committed to ensure smooth delivery of high-quality health

care, because the bottom line is patient safety and patient care.

Hospitals of all kinds in every community across America have

been diligently preparing all aspects of their operations for Y2K.

The focus has been on medical devices and equipment, information

systems and infrastructure, and there’s every indication as we have

coordinated our activities through our State hospital associations

and hospitals across the country that the hospital sector will be

ready for Y2K, and our own survey information makes that clear.

So does the report issued earlier this year by the HHS Inspector

General’s office; and the Healthcare Year 2000 Readiness Assessment #2, conducted for HCFA, identified hospitals as the health

care sector that is among the most aggressive in meeting the Y2K

deadlines.

And as hospitals continue to perform this inside preparation, we

are also deeply involved in efforts to communicate with our communities. We’re helping to support and be very active in the community conversations being conducted across the country, and we’ve

encouraged every hospital in every part of this country to get involved with their communities in terms of communication. The hospitals are working with their local agencies, their police, fire, utilities and, most recently, there was a recent drill in California. 372

hospitals took part. This drill was for the purpose of Statewide coordination of communications systems, the transmission of data

about available hospital beds and the hospital’s own contingency

plans for Y2K, and all of these test were completed successfully.

These extensive preparations that the hospitals are undergoing

cost money, and we expect to spend somewhere around $8 billion

to become Y2K compliant, and this huge sum is made even more

daunting because it comes on top of the Balanced Budget Act’s $71

billion in Medicare hospital payment cuts.

We commend HCFA for announcing that the fiscal year 2000

PPS update would not have to be delayed while the agency’s computer systems are prepared for Y2K. HCFA has tackled this problem in a way that will prevent nearly $300 million in payment updates from being held back from hospitals who badly need them.

We do remain concerned, however, that HCFA has not disclosed

its contingency plan to prevent a systematic failure in claims processing as a result of Y2K, and it is imperative that HCFA establish

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ment mechanisms fail at the turn of the century. And such a plan

also would provide payment to facilities which, for reasons beyond

their control, are not able to follow routine procedures in getting

claims to their fiscal intermediaries.

A system of advance payments based on past payment levels is

one way to prevent this from happening and would ensure that

hospitals have the resources necessary to care for Medicare patients, and we’d urge Congress to enact legislation, if needed, to authorize such a system.

As hospitals, we are cooperating with HCFA as we have with the

Food and Drug Administration; and as this issue of future date

testing comes about, we are, through our communications with our

State hospital associations and all of our hospitals across the country, encouraging them to do the necessary testing to be assured

that they are Y2K compliant.

In conclusion, Mr. Chairman, Y2K will obviously affect every aspect of America’s life. However, few, if any, are as important as

health care, and American hospitals and their health systems, their

State associations and the AHA are partners in the effort to prepare for Y2K, and we encourage Congress and the various agencies

to continue working with us as well, and we pledge our cooperation

during these last 95 days and in the future together to assure a

smooth and healthy transition to the new millennium.

Thank you very much for the opportunity to testify.

Mr. HORN. Thank you very much.

[The prepared statement of Mr. Brown follows:]

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Mr. HORN. Our next witness is Elizabeth Wilkey. She’s the electronic data interchange coordinator for Blue Cross and Blue Shield

of Georgia.

Thank you for coming.

STATEMENT OF ELIZABETH WILKEY, ELECTRONIC DATA

INTERCHANGE COORDINATOR, BLUE CROSS AND BLUE

SHIELD OF GEORGIA

Ms. WILKEY. Thank you.

Chairman Horn, Chairwoman Morella, Congressman Turner and

distinguished subcommittee members, thank you for the invitation

and the opportunity to speak with you today on the Georgia Part

A intermediary community outreach and testing progress for the

millennium.

For the past 18 months, I’ve been referred to in the State of

Georgia as the Georgia blues Y2K evangelist. I’ve traveled throughout the State preaching a Y2K get ready sermon to vendors, clearinghouses, providers, billing services, the Georgia Hospital Association, the Health Care Finance Administration, anybody and everybody that would listen to me.

In Georgia, we have conducted seminars and conferences which

include but are not limited to what you need to do to prepare institutional providers, claims, products and systems for the millennium. I would like to extend a special thanks to HCFA Central for

their participation, encouragement and support in our first Y2K

vendor clearinghouse conference that was held in Atlanta, Georgia,

on June 2nd, 1999. It sent a message to our vendors, clearinghouses and billings services, and that message was we need your

help. Let us test this monster known as the millennium, Y2K, before the year 2000, and that’s just what we’ve been doing.

I want to thank the vendors and the clearinghouses and the billing services and the providers for participating in testing and future date testing. As a result of our testing efforts, we were able

to test with customers representing 98.25 percent of our vendor

provider community, and we are now pursuing the remaining 1.75

percent.

There are certain advantages to this Y2K testing monster. If you

would test and vendors get into the swing of testing with their providers, it will eliminate the element of surprise.

It allows contractors, vendors, clearinghouses, providers, billing

services to test their hardware and software in a future-dated environment.

It assures and shows assurance to the vendors and providers

that they have the ability to submit electronic claims into the year

2000.

It gives the vendors and providers a comfort level of the contractor’s ability to accept year 2000 claims.

It gives the vendors and providers assurance that the contractors

edits will work properly into the year 2000.

It will create a proactive—not reactive, but proactive approach to

resolving any issues before the millennium is here because you will

have time to correct your systems before you go into the millennium.

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It will enable the contractors and the vendors and the billing

service to create a log of Y2K issues, and in that log not only would

they have the issues but they would have the resolution to those

issues, what should happen if, and how to resolve if we see this

into the year 2000.

It will aid providers in testing and contractors in meeting their

Y2K certification efforts.

Now, in our testing environment and testing for the year 2000,

there were certain findings that we had great concern about. There

were problems that we experienced with future-date testers, that

most of them were very common errors that we see on a day-today basis.

However, there was one that we had great concern with, and

that’s where we uncovered that one of our vendors’ front-end system had a problem when it came to a windowing technique, and

that windowing technique did not populate our electronic format

properly to show month/month, day/day, century/century, year/year

dates of service properly in those fields, but it really showed 99/99/

99 as the dates of service. Now, you’ve got to understand that this

was one of those vendors that truly did not want to test with us,

and the provider and I had to convince them and persuade them

that they needed to do this testing. Today, that vendor is very

happy that they did because now they can say I’m being proactive

in resolving this Y2K issue before the year 2000.

Now, I don’t know about other States but I can truly tell you that

I believe the State of Georgia is ready for the millennium. We’re

ready to proceed with our testing and getting those providers that

have not tested tested; and, again, I thank you for the opportunity

to share with you the Y2K testing experiences we’ve had in the

State of Georgia.

Mr. HORN. Thank you very much. I hear you’ve done a terrific

job throughout Georgia. So thank you for coming and sharing some

of those experiences with us.

[The prepared statement of Ms. Wilkey follows:]

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Mr. HORN. We now have our last witness, and it’s Mr. Baker. Mr.

Baker heads the New York-based Medicare Rights Center as their

executive vice president. I’m curious, Mr. Baker, was that funded

by Medicare or was it funded by a foundation? It’s a good idea. You

don’t lack for customers.

Mr. BAKER. No. We certainly do not. You’re right. We’re funded

in part by a grant from the Health Care Financing Administration

that’s administered by the New York State Office for the Aging and

then we fund-raise through foundations, through individuals and

through others, but all of our services are provided free of charge

to people on Medicare and their families.

Mr. HORN. Now, is that limited to New York or is it regionwide?

Mr. BAKER. We do have a contract in New York State to take

calls. However, we take calls from across the country on various

toll-free hotlines.

Mr. HORN. There is a toll-free line?

Mr. BAKER. Yes, there is.

Mr. HORN. What is the number?

Mr. BAKER. 1–800.

Mr. HORN. 1–800.

Mr. BAKER. 333.

Mr. HORN. 333.

Mr. BAKER. 4114.

Mr. HORN. 4114. The reason I ask is, there’s 435 members of the

House whose caseworkers might like to call you.

Mr. BAKER. Yes. I hope they all don’t decide to call tomorrow. I’ll

get in trouble.

Mr. HORN. You’ve got 50,435, and if the Senate gets in on it,

you’ve got another hundred.

Well, thank you. Go right ahead.

STATEMENT OF JOE BAKER, EXECUTIVE VICE PRESIDENT,

MEDICARE RIGHTS CENTER

Mr. BAKER. Sure. Thank you for inviting me today, Chairman

Horn, Chairwoman Morella and Congressman Turner. I am the executive vice president of the Medicare Rights Center. We’re a national not-for-profit organization based in New York. We help seniors and people with disabilities and their families who are on

Medicare through telephone counseling, through education efforts

and through our public policy work. Last year, we fielded more

than 50,000 calls, as you had mentioned, from people on Medicare

and their families, and we handled or directly intervened in over

10,000 of those cases.

In February, we also testified with regard to the Y2K issue and

Medicare, and today, 6 months later and 95 days to the millennium, we still have many of the same concerns.

Our foremost concern is that the 40 million people on Medicare,

seniors and people with disabilities, have access to ongoing health

care services through the Medicare program. We note that the

Medicare and year 2000 booklet that was put out by HCFA just recently in its mailing to all 40 million Medicare beneficiaries does

have information on Y2K. We understand that they will not, and

they are told in that booklet, that they will be not be responsible

for health care costs that may be caused by Y2K computer glitches.

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However, there’s no mention of how this advice might help them

if they cannot get that care in the first place, and that’s our major

concern.

They’re given a phone number, 1–800–MEDICARE, to call if they

have trouble regarding Y2K issues. I note that, right now, with 1– 800–MEDICARE and the Medicare Plus Choice program, frequently our organization is receiving inappropriate referrals and a

lot of referrals from that particular number. So I question the ability of 1–800–MEDICARE counselors to handle these calls, and if

they do refer them on to our organization, whether or not we have

the resources or the training, frankly, with Y2K to handle those

kinds of issues.

We’re particularly concerned about the Medicare managed care

program, or the Medicare HMOs. Unlike original Medicare, Medicare HMOs, as you know, require preauthorization for specialty

care or other types of care, and we’re most concerned about those

6 million beneficiaries who are enrolled in Medicare HMOs. Unless

Medicare HMOs are Y2K compliant, and we heard earlier that

many are not, we could see a significant increase in the number

of people on Medicare who, because of system failures, can’t get authorization for the care they need with potentially devastating consequences.

To consider a potential scenario, in February 2000, a woman on

Medicare and in a Medicare HMO goes to the hospital with stomach pains. The doctor calls the HMO requesting approval to perform a Medicare covered procedure to alleviate that pain. The

HMO does not have the systems in place to find the patient’s name

on its data base or can’t use its system to determine whether the

service is covered and, therefore, may not or does not authorize

care. As a result, this particular individual would not get the care

that she needed and which was Medicare—and which is Medicare

covered.

We’re also concerned about what kind of tools HCFA is going to

use to hold Medicare HMOs accountable and to make sure that

people on Medicare get the care they need. As we know, HCFA has

asked all of its contractors to submit Y2K compliance forms, but,

as you know, these statements are not admissible in a court of law,

and in the past HCFA has lacked the staff and resources to properly oversee its contracting agents. The Y2K issue highlights the

Federal Government’s and HCFA’s, in this case, limited ability to

ensure that people on Medicare get the health care they need from

the private health plans that contract with HCFA.

Second, we’re also concerned about those programs that primarily help people with low incomes on Medicare, and these are

the QMB, SLMB, QI1 and QI2 programs. We are already seeing a

lot of access problems in those programs and particularly with regard to the interaction of State and Federal computer systems because these are programs that are administered by the States. The

application process is already very slow and difficult, and so we feel

that system failures may even further deny access to these important programs for people who are most vulnerable in the Medicare

population.

Finally, I don’t—in the Medicare population, we see a lot of questions from seniors on our hotline about prescription drugs and medVerDate 11-MAY-2000 08:20 Apr 06, 2001 Jkt 010199 PO 00000 Frm 00217 Fmt 6633 Sfmt 6602 E:\HEARINGS\61209.TXT pfrm01 PsN: 61209
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ical equipment, and I don’t know and I don’t think that there has

been the appropriate kind of outreach to them about how they

should handle the prescription drug and medical equipment issues

that might come up because of Y2K. I know this may be outside

of HCFA’s purview to a certain degree, but we do think that, as

the major financer of health care in this country and particularly,

of course, with the Medicare program, that HCFA should be taking

some proactive steps to give consumers tips or other information

about how to deal with prescription drugs or medical equipment

contingencies or issues that may arise because of Y2K.

As you know, people on Medicare have already lived through

many changes and hardships. Most do not own a computer. They’re

probably not overconcerned with the ability of computer systems to

transition smoothly into the year 2000. We don’t want to instill

fear in them, but it’s our job as professionals who work closely with

them to educate our clients on how they can get the care they need

and when they need it. We are telling our clients to ask their doctors, pharmacists and medical suppliers if they are Y2K. We hope

that Congress and HCFA will do whatever possible to make sure

that people on Medicare keep getting the care they need in the new

millennium.

Thank you very much.

Mr. HORN. We thank you. That’s a very helpful statement.

[The prepared statement of Mr. Baker follows:]

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Mr. HORN. We’re now going to go to questions, and we’re going

to treat ourselves the way we treated you. Each person will have

questions for 5 minutes. We’ll have another round. And I’m going

to start with yielding my 5 minutes to the co-chairwoman, Mrs.

Morella of Maryland, and then we’ll have it to Mr. Turner for 5

minutes, and if they haven’t covered it all, I will take 5 minutes.

So that’s the way it will work.

Mrs. MORELLA. Thank you, Mr. Chairman. You’re very fair about

that.

And I must commend the panelists. You all stayed within the

time limit. You all presented your statements very succinctly, and

I applaud that.

My question will be basically to GAO and HCFA to begin with.

The 425 managed care organizations serving 6.9 million Medicare

beneficiaries of the 39 million Medicare beneficiaries were never

deemed mission-critical by HCFA, and the latest HCFA reports

show that few of these managed care organizations are Y2K compliant. My question is, why weren’t the managed care organizations

deemed mission-critical if they’re serving 6.9 million Medicare

beneficiaries? In other words, why are they deemed different from

the fee-for-service contractors?

Dr. CHRISTOPH. That’s a complex question, Congresswoman

Morella.

The managed care organizations are different from the Medicare

contractors in that the managed care organizations contract to provide a service. They contract to provide care. The Medicare contractors are contracted to provide processing of claims. What we have

asked the managed care organizations to certify to is not only that

they will make their systems ready by January 1st, 2000, but that

they continue to provide operations and continue to provide care to

the beneficiaries enrolled. In a sense, it doesn’t matter what systems they’re using to back up their operations. What they have

contracted to do is to have providers provide care, and that’s fundamentally different from how the Medicare claims processing contractors operate.

Mrs. MORELLA. You also changed your mind, too. I mean, at one

point weren’t they going to have to report, you know, later on in

1999 and then you rescinded it?

Dr. CHRISTOPH. I am sorry, can you repeat the question?

Mrs. MORELLA. Yes. My understanding is that HCFA originally

requested that the managed care organizations recertify in 1999

and then later rescinded that.

Dr. CHRISTOPH. No, we have not rescinded it. We have—because

events overtook that original statement that we were going to have

them recertify, we subsequently decided we needed to watch them

more carefully. So we demanded of them their contingency plans.

We, subsequent to that original determination, have gone out and

visited the plans that we thought had the highest impact. So we

were rethinking whether or not recertification was necessary.

They’d already certified, they’d already testified that they would be

operational come January 1st. However, we just revisited that and,

in fact, today have—are issuing the letter requiring that recertification statement of the managed care organizations.

Mrs. MORELLA. You just did it today?

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Dr. CHRISTOPH. Yes, ma’am.

Mrs. MORELLA. Great timing. That’s great.

Mr. Willemssen, would you comment on that?

Mr. WILLEMSSEN. Yes, couple of points. We’re very encouraged to

hear that HCFA has decided to go out with that certification statement on managed care organizations. We think that that can go a

long way toward giving further assurance that these organizations

are indeed ready. I think before any organization wants to submit

a certification they will want some extent of evidence internally

that they are ready. So I think that’s a step in the right direction,

and this is the first we’ve heard of it, so I’m very glad to hear that.

In terms of your prior question on why the systems supporting

MCOs were not mission-critical, in retrospect there should have

been some, in my opinion, designation of mission-criticality. Probably not identifying 425 or 383 systems but—and it’s easy to sit

here now and say that, in retrospect having some designation in

the quarterly reports that these also are fairly important organizations serving almost 7 million beneficiaries. I think now that the

level of attention has been brought to bear on managed care organizations that that will assist in making sure that whatever can be

done in the next few months is done.

Mrs. MORELLA. Very good. I guess looking at the lights I have

a little more time, and maybe I’ll try to also get into the ACP– AISM question with HCFA, also.

Based on data that was presented I understand last week at

HCFA’s Y2K electronics submission summit, 60 percent of the part

B providers, which is equivalent to about 500,000 physicians, are

not prepared to submit Y2K compliant electronic submissions.

What actions is HCFA taking to remedy that situation, and, you

know, what recourse might they have?

And I am going to ask you if you would comment on that also,

Dr. Addington.

Dr. CHRISTOPH. I think you’ve made a very important point

there, Congresswoman.

We have endeavored in all of our outreach to encourage providers

to get ready, and we have told all of our contractors that they must

be ready and able to test with submitters. The response has been

very disappointing. As we testified, the difficulty is, in all of our

outreach, as GAO has noted, we aren’t reaching all of the providers. The ones that show up to our conferences, to our presentations are probably the ones who are most aware and most worried. It’s the others that—who aren’t getting our message—that

concern us.

We’ve been trying to be more focused. Last week, in Washington,

we had a conference with organizations that submit claims and

clearinghouses, and we discussed with them ways to encourage

more testing with us. Our goal was to make available to providers

as many resources as we can so they could test, but while bringing

the horse to water, we haven’t succeeded in making them drink

yet. So that’s where we’re trying to focus our outreach efforts, is

convincing them to make use of what we’ve been able to provide

to help them.

Mr. HORN. Thank you very much, and we now yield 5 minutes

to the gentleman from Texas, Mr. Turner.

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Mrs. MORELLA. Mr. Chairman, Dr. Addington can later fill in on

that, please?

Mr. HORN. Sure.

Mrs. MORELLA. Find out what he’s going to do to whip these physicians into shape.

Mr. TURNER. Thank you, Mr. Chairman.

It seems to me our discussion on Y2K compliance by managed

care organizations probably gives us an opportunity to shed a little

light on the relationship between the government and managed

care and the beneficiaries, and I might ask Mr. Baker, first, to

comment on this.

I was noticing in your statement you made the comment that

HCFA cannot guarantee that Medicare HMOs will be Y2K compliant, and a few paragraphs later you asked the question, what tools

does HCFA have at its disposal to ensure that HMOs provide people on Medicare with the care they need? I’d like for you to perhaps

comment a little bit on that, and maybe Mr. Christoph can add a

perspective from the agency point of view. I am not sure what control HCFA has over these managed care organizations, and we’re

talking about the GAO’s request that they demand a certification

after the agency seems to be somewhat reluctant to do so.

Now they announce they’re going to require it again. I am not

even sure what legal rights HCFA has to demand such from these

managed care organizations. Is there something inherent here with

regard to the relationship between HCFA and managed care organizations that makes it a little difficult to secure compliance in the

Y2K area or in other areas relating to care?

Mr. BAKER. Well, I think that there has been issues, as I think

all of us are aware through GAO reports and others, around

HCFA’s ability to oversee the Medicare managed care program and

to make sure that Medicare HMOs are providing the care to people

on Medicare that they deserve and are eligible for under the program.

As I said in my testimony, I think the Y2K issue highlights the

inability in many instances of HCFA to appropriately oversee the

managed care organizations. I think that HCFA has made great

strides in recent months and in recent years in oversight of the

managed care organizations, but I think, you know, in our hotline,

time and time again, and while this information is anecdotal, I

think it’s still that we can see these trends arise where managed

care organizations and Medicare HMOs just don’t seem to know or

are literally, you know, unconsciously not following Medicare coverage guidelines but instead putting their own coverage guidelines

or their own ideas about what Medicare should and should not

cover into the mix, whereas that really isn’t appropriate or allowed

under Medicare regulations.

There is a real flaunting of the rules in many instances, and in

other instances just an ignorance of the rules, which is just as bad

when it means that people are not getting the care that they are

entitled to and need.

Mr. TURNER. Dr. Christoph, do you see the managed care and

Medicare HMO organizations flaunting the rules, as Mr. Baker is

referring to?

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Dr. CHRISTOPH. That sounds more like a policy issue, and I am

not prepared to talk about how the rules are enforced. I don’t personally see that. I am preoccupied with the systems kind of issues.

Mr. TURNER. What is your legal authority specifically to the Y2K

compliance issue to tell a managed care organization or a Medicare

HMO that you have to give us a certification statement of Y2K

compliance? Do you have that authority?

Dr. CHRISTOPH. We have very few levers to exert on the managed

care organizations. We have required that they submit documents.

We don’t have much legal authority about how a private business

that is contracted with us carries out that business. So other than

getting them to certify that their systems will work or that they

will deliver a quality of service, we have relatively few rules or levers to exert on them.

Mr. TURNER. Mr. Willemssen, do you believe that we need greater legal authority to require managed care organizations to certify

or maybe in other areas other than Y2K certification?

Mr. WILLEMSSEN. I think, with the limited time remaining, an

approach that has worked in other sectors is, whether the legal authority is there or not, HCFA can request the information and then

publicize the results by organization and say we asked 383 MCOs

for certification information and here is what we got back by organization. If certain MCOs don’t want to provide the information,

that fact can also be published.

My concern is that, in the limited amount of time available, I

don’t know that a full accounting of the legal intricacies can be

done, and we may have to take more of the approach which has

been done in the biomedical device area where the publicity of individual organizations and what they have reported ended up dramatically increasing the response rate.

Mr. TURNER. Has Y2K compliance been a factor in any of the 52

HMOs that have dropped out of providing Medicare managed care?

Dr. CHRISTOPH. I am not aware of why they chose not to stay in

the program. It possibly is, but I can’t answer that with certainty.

Mr. TURNER. Mr. Baker, it seems to me that it is difficult to

know whether HCFA can ensure that HMOs are providing Medicare beneficiaries with the care that they are entitled to.

I think I have always held the view that we inadequately reimburse our providers now under the Medicare program. Many of our

rural hospitals that I represent are having difficulty keeping the

doors open, and yet somehow we think that a managed care company can provide that same care cheaper and make a profit while

they are doing it. It seems like a difficult thing, but I guess you

would concur that we do need to have some tightening up in terms

of the control that HCFA has over managed care organizations?

Mr. BAKER. That is right. I think we need more control and oversight. At this stage of the game, we need more information to go

out directly to consumers about what they can do, what are—for

lack of a better term—advocacy steps or survival skills. I don’t

know what kind of social marketing campaign we want to use but

something that will give them some information about how to deal

with this crisis if it becomes a crisis and how to get the care that

they need should they keep hearing no. What organization will be

there for them should they need care and can’t get it. I think we

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need to give some of those answers so they can start preparing for

it. Not scare them with that information but at least start to train

them about how they might have to meet this situation.

Mr. TURNER. Thank you.

Mr. HORN. We will have another round on this.

I yield myself 5 minutes, but first Chairman Morella wanted I

think Dr. Addington’s answer to the question that was asked of Mr.

Christoph, so let’s get it on the record.

Dr. ADDINGTON. Thank you, Congressman.

First, let me say that, responding to Chairwoman Morella’s suggestion to whip them into shape, I am reminded of the old saw that

‘‘whipping physicians into shape’’ is sort of like herding cats.

I would like to think that our members whose systems have not

been tested will respond. Many of our members are part of huge

organizations. I would say 50 percent of our 115,000 physician

members are part of large organizations that have considerable expertise. I personally am a faculty member of such an institution,

and we have been thoroughly checked and tested.

It is the 50 percent that do not have the expertise in-house. In

a two- or three-physician practice, clearly the person who sends out

the bills is probably the most sophisticated member of the office.

Nonetheless, we are confident that we will get our college approach

to this and insist that every member avail themselves of our Tool

Kit and of our capacity and expertise in identifying for them those

individuals in their community that should be contacted to actually

do the testing.

So I think the prognosis is excellent for internists. I think there

will be some problems, but I trust that those will be straightened

out rapidly.

Mr. HORN. Well, thank you for that very full answer and optimistic answer.

The first time I ever heard the expression you used, herding cats,

was my first year here in 1993; and my wife, looking up in the gallery, concluded after one evening of voting was that the Members

of the House of Representatives are like herding cats. You are looking at a tenured professor, and they act more like herding cats

than anybody. Nobody can touch them.

Dr. ADDINGTON. Well, we are in good company then.

Mr. HORN. You are in very good company. The cats might get

upset if they are listening here.

On the recertification testing, HCFA, their mission-critical systems, are their systems now compliant, the internal ones?

Dr. CHRISTOPH. We went through a thorough round of testing

and certification last year. All of our internal systems, including

the systems that send money to managed care organizations, were

certified as compliant by December 31st last year.

We made changes to those systems. Any computer system

evolves. We have had to incorporate some changes because of congressional mandates and maintenance. GAO has recommended

that we freeze those systems and make sure that any changes that

have been made haven’t influenced their Y2K certification.

A lot of folks in industry will only test the changes that they

have made. What we have done is to put a program in place during

this freeze period of retesting everything. We are putting them

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through all of the rigor and the tests that we did before, including

future day testing. That round of testing should be done in November.

So I guess the short answer is, I believe our systems are ready,

but we are going after double assurance, and that is why we are

doing such an intensive retesting, recertification, plus the addition

of quality assurance tools like Mr. Willemssen mentioned.

Mr. HORN. The recertification done by outside verifiers, how have

you handled that?

Dr. CHRISTOPH. The testing itself is done by internal staff and

contractors that are basically providing staff support, but we have

an IV&V contractor that is looking over our shoulder every step of

the way, validating our procedures and looking at the test results

and, in fact, signing off on the certification statements. So we are

having independent evaluation to keep us honest.

Mr. HORN. When you went through this testing and the certification, what was the magnitude of Y2K errors? Did it seem to be

a very important thing where you had more than one aspect of it

and you might have had 10 times that it would cause mischief?

What did you get out of that testing and recertification?

Dr. CHRISTOPH. Well, the original round revealed that we did

have some issues, and that is the whole point of testing, is to show

you what works and what doesn’t. Yes, we found issues, and we

fixed them. I don’t think that we had any more Y2K bugs than are

common in codes of this magnitude. Some of our systems are over

a million lines of code on the internal side.

After renovation, we have been using quality assurance tools,

and we find in looking at them that the things that were missed

were the things that these tools point up. Actually, far fewer than

what I read in the trade press about the frequency of errors in renovated code.

Mr. HORN. Mrs. Wilkey, I commend you for your hard work to

assure that Blue Cross Blue Shield of Georgia is year 2000 ready.

What have been the critical success factors for you?

Ms. WILKEY. I think the critical success factors would be getting

out in the vendor world and getting their attention, first of all.

That was a big chore for us.

Providers have a tendency to leave things when it comes to their

billing up to vendors, and you have to work very closely with the

vendors and the clearinghouses in order to get the providers to do

what you need them to do.

The 98 percent test factor that we have now we feel good about.

We have gone through DDE tests, direct data entry system testing.

We have gone through electronic remits. We have come through

electronic funds transfer, and it is good. If we can get the remaining 1.75 percent going——

Mr. HORN. What do you see as your biggest remaining problems

and concerns? After all of this outreach that you have had, what

worries you the most, if anything?

Ms. WILKEY. That 1.75 percent that has not tested, that I have

to knock on their door and do surveys and say why are you not

testing? Are you going to pay the providers if you cannot send me

a claim? That worries me.

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Mr. HORN. It sounds like you are keeping after them, and that

is the only way that it is going to get done.

I now yield 5 minutes to my colleague from Texas, Mr. Turner.

Mr. TURNER. I don’t have any other questions.

Mr. HORN. Mr. Brown, there has been some question that the

biomedical equipment could fall victim to year 2000 failures. What

equipment is still at risk due to your year 2000 problems?

Mr. BROWN. I think in the scheme of things, Chairman Horn,

medical devices and equipment was really the first priority, along

with the information systems and infrastructure, and I think hospitals are working with the FDA and working with our vendors

and doing the testing. And I know in my own organization, which

consists of 14 hospitals in metropolitan St. Louis and medical centers in urban and suburban areas, we went through an extensive

testing program.

As I have traveled the country and talked to different hospitals

and as we have had the dialog, the equipment piece of it is No. 1.

We have worked very closely with the vendors. We have done the

testing and worked with FDA. We changed a lot of equipment.

The other thing is to be assured that equipment has overrides on

it, and that we have adequate staffing to be able to make that transition. So I feel that the hospitals—in working with HCFA and the

FDA and others on equipment issues—that we really have done a

significant job in terms of working on a cooperative basis to be sure

that the equipment will be functional and that there is adequate

staffing to support that equipment come January 1st and during

the transition.

Mr. HORN. When we were in Cleveland about a year ago we had

testimony from the representative of the Cleveland clinic as to how

they were going about looking at the various pieces of equipment

to make sure that they are year 2000 compliant. Apparently, there

was and maybe still is a website nationally where hospitals can

plug into that by getting into the web and you can describe the

name for the piece of equipment, what the model number is. We

were worried about the chips, that a lot of people don’t even know

where they are in the equipment. What is going on on that?

Mr. BROWN. A couple of things. We have been working closely

with HHS, with the FDA, with HCFA. We have worked with the

vendors. There are websites that the FDA has put up. We have our

own websites on which we can convey information to our members

across the country. We have set up communication devices between

the American Hospital Association and each of our 50 State associations working with their members. So we are continually

dialoguing and making available to them information where they

can access the websites.

Mr. HORN. For the manufacturers of some of the equipment

years before we ever knew there was a problem here, have you

found that they have been cooperative?

Mr. BROWN. Over the last 6 to 9 months they have been. We

have had several manufacturers who through our publications and

periodicals, through communications indicated that they are Y2K

ready. So we found good cooperation.

Mr. HORN. One of the things that we have looked at in about 10

different field hearings is the backup power. This is particularly

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true of hospitals. What is the estimate of what a minimum is that

a hospital should have in order to have generators that are run on

diesel or whatever it is?

Mr. BROWN. You should have the ability to run for a period of

time and have access to additional fuel, and I think hospitals really

have focused over the years on disaster recovery. And I think as

we have gone through the issues with the hurricanes and the natural disasters, the flood in Missouri in 1993, hospitals have been

working with their fuel suppliers and utilities in terms of backup.

You have contingency plans with other institutions in your metro

area. In St. Louis, for example, we have 35 different hospitals that

communicate with each other in terms of availability of beds and

ability to transfer in emergencies. So this is routine for disaster

planning.

Mr. HORN. How many days do they need to get through a blackout or brownout?

Mr. BROWN. We have the capability of normally 3 to 5 days to

be able to get through the blackout.

Mr. HORN. Let’s hope it does.

On the provider testing with contractors, we know it has been

limited, and until these data exchanges between the providers and

contractors are future-date tested, the ability of these entities to

process Medicare claims in a future-date environment is unknown.

Why doesn’t HCFA do the end-to-end testing program to include

providers? Is it too late to include them or what? Or are they just

ornery?

Dr. CHRISTOPH. Well, they are certainly not ornery, sir.

We have done end-to-end testing. As you know, the claims processing systems are batch systems. They don’t operate in the same

sense that credit card transactions occur, but claims are batched up

at the beginning, whether they are submitted electronically or on

paper and, that point, defines the one end of the claims processing

system. They then go through the system and are adjudicated. It

is on the back end of the process that the instructions for payment

or printing of notices, such as beneficiary notices, come out. That

is the other end.

We have engaged in end-to-end testing, everything in between,

including a connection to our common working file that is tested

in a future-date environment.

We have tried to cover the front end where claims come in by requiring submitters to submit claims in the proper 8-digit year format. April 5th of this year we set a hard date, and by and large

now everyone is using that.

So that means that once a claim hits us and if it is in the proper

format, we can process it.

Now the difficulty is in determining whether or not providers or

submitters can actually get us a bill. It is possible to take existing

systems that a submitter has and put bridge software in place and

translate the dates so that it is in the proper format, but that does

not tell us anything about the submitter’s system, its readiness or

the provider’s systems or readiness, and that is why we have engaged in this outreach effort to reach them and encourage them to

test. We have made available to them the opportunity to test with

our contractor’s front ends.

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Again, we have made that available to them, but getting them

to come in and test, there is some reluctance there to test. Perhaps

they are not ready. Perhaps they just don’t feel that it is necessary.

We think that it is, and that is why we have been strongly encouraging them to do so.

Mr. HORN. Well, as I understand it, the General Accounting Office has informed us that the status of contractor business continuity plans is unknown because the HCFA never requested detailed plans from these contractors. Is that true or have we

changed that now?

Dr. CHRISTOPH. We changed that. Some time—and I can’t tell

you exactly when, but it was fairly recently, we did send a requirement to the contractors to make that information available, to have

those documents onsite available, and we are going to be checking

and reviewing those on our next round of visits. We have had onsite staff looking at them. We have had the IV&V folks going with

us for all of our oversight on the contractors. As we go out and review their status and progress, we will be reviewing that documentation, and we have invited GAO to participate on some of

those visits with us. So we are trying to get that paper documentation.

I might add that the fact that we came through Hurricane Floyd

so well, quickly making up for the 2 days that the processing centers were shut down there testifies to the quality of our contingency readiness. The Florida data center handles the claims from

6 States worth of fiscal intermediaries. They didn’t have power for

2 days. They came up again after the hurricane passed through

and made up all of that backlog. One of the contractors transferred

its operations to a hot site in Connecticut and maintained operation.

So we believe that those contingency plans are real because we

have exercised them, but without being able to present GAO with

a documentation to back that up, of course, they came out with

their conclusion. But I believe it is there because we have demonstrated, as in the hurricane, that we can operate through that.

Mr. HORN. Since this is a paper processing operation, what is the

typical contingency plan? How would you boil it down?

Dr. CHRISTOPH. I am not sure that there is a typical contingency

plan. The contingency plans look at the impact of whatever the

event is. In the case of Hurricane Floyd, it was a power outage. We

are required to pay claims—electronic claims after the 14th day.

We look at the duration—the possible duration of the event and decide on that basis how we are going to deal with it. In this case,

the duration was relatively short, and we dealt with the contingency of not being able to process claims those 2 days by adding

time in the evening in order to make up that processing. That, in

effect, took care of the problem transparently to the submitters.

Mr. HORN. Assuming that, given modern medicine and all of the

replacement parts that we get, that we might be around in the

third millennium, if you could start over what would you do differently to solve the year 2000 computer program?

Dr. CHRISTOPH. As a systems programmer who has cut code, I

would certainly do a better job at the front end of writing code, anticipating these problems. I think 20, 30 years ago when we were

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writing such code, no one believed that the software would be

around this long, and I think if we are more careful about how we

develop and write software up front and anticipate these problems,

the problems won’t be there.

Mr. HORN. Was this mostly COBOL at Medicare?

Dr. CHRISTOPH. Yes, 80, 90 percent of the code is COBOL. There

is a significant portion of assembler language, though.

Mr. HORN. Interesting.

Do any more questions come to mind?

Mr. TURNER. No.

Mr. HORN. We are going to ask that the record be held open for

10 days. We understand that some managed care organizations

would like to add their statements, and that is fine. We will give

them to you and if you wouldn’t mind responding to their statements so we can get a complete record. All of the witnesses actually can do that.

I thank you for your testimony. I am especially pleased to learn

that the Health Care Financing Administration decided to require

year 2000 certifications from the managed care organizations that

currently provide managed care to 6.9 million seniors in the country. We have encouraged these Americans to enter managed care

programs as a way to curb rising health care costs. The very least

that we can do for those who have joined these programs is to ensure that their medical care will continue, whether the date is

December 31, 1999, or January 1, 2000.

Obviously, much work remains in all segments of the Medicare

program. Time is running out. That combination of events demands

that, at a minimum, HCFA and its vendors and contractors need

to immediately begin coordinating a thorough end-to-end business

continuity plan.

That said, and thanking the staff here, we will adjourn.

J. Russell George, the staff director and chief counsel, is back

against the wall; and Matt Ryan is right next to me. Bonnie Heald,

professional staff member/communications director, against the

wall. Chip Ahlswede is the clerk, and P.J. Caceres is an intern.

With the Technology Subcommittee on Science, we have Jeff

Grove, staff director; Ben Wu, who has been with us, professional

staff member; Joe Sullivan.

And from Mr. Turner’s staff on the minority we have Trey Henderson, minority counsel, Jean Gosa, staff assistant.

And the Technology Committee ranking people are Michael

Quear, the professional staff member, Marty Ralston, staff assistant.

And your testimony was so fascinating we had to have three

court reporters, so Melinda Walker, Doreen Dotzler and Cindy

Sebo.

With that, we thank all of you for coming and spending your

time and advice with us. Thank you.

We are adjourned.

[Whereupon, at 3:31 p.m., the subcommittee adjourned.]

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