Health Information Technology: CMS Took Steps to Improve Its Beneficiary Eligibility Verification System
Published: 2012-09-12T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Medicare is a federal program that pays for health care services for individuals 65 years and older and certain individuals with disabilities. In 2011, Medicare covered about 48.4 million of these individuals, and total expenditures for this coverage were approximately $565 billion. CMS, the agency within the Department of Health and Human Services that administers Medicare, is responsible for ensuring that proper payments are made on behalf of the program's beneficiaries. In response to HIPAA requirements, CMS developed and implemented an information technology system to help providers determine beneficiaries' eligibility for Medicare coverage. In May 2005 CMS began offering automated services through HETS, a query and response system that provides data to users about Medicare beneficiaries and their eligibility to receive payment for health care services and supplies.
Because of the important role that HETS plays in providers having access to timely and accurate data to determine eligibility, GAO was asked to (1) identify the operational status of HETS, (2) identify any steps CMS has taken to ensure users' satisfaction and plans to take to ensure the system supports future requirements, and (3) describe CMS's policies, processes, and procedures for protecting the privacy of data provided by HETS.
To do so, GAO collected and analyzed documentation from program officials, such as reports on transaction volume and response times, agreements with users, and CMS's privacy impact and risk assessments of HETS. GAO also interviewed program officials and system users.
section_title: What GAO Found
paragraphs: The Centers for Medicare and Medicaid Services (CMS) currently offers to Medicare providers and Medicare Administrative Contractors the use of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Eligibility Transaction System (HETS) in a real-time data processing environment. HETS is operational 24 hours a day, 7 days a week, except during regularly scheduled maintenance Monday mornings, from midnight until 5:00 a.m., and when CMS announces other maintenance periods during one or two weekends each month. According to program officials, 244 entities were using HETS in 2012, including about 130 providers, 104 clearinghouses that provide data exchange services to about 400,000 health care providers, and 10 Medicare contractors that help CMS process claims for services. From January through June 2012, HETS processed each month an average of 1.7 million to 2.2 million queries per day with most of the queries submitted between the hours of 8:00 a.m. and 4:00 p.m. eastern time. The users with whom we spoke confirmed that operational problems they experienced with the system in 2010 and the first few months of 2011 were resolved in spring 2011 after CMS implemented several hardware and software replacements and upgrades. System performance reports for the first 6 months of 2012 showed that the average response time per transaction was less than 3 seconds. Users described experiences with the system that were consistent with these data. They told us that they are currently satisfied with the operational status of HETS and that the system provides more complete information and reliable service than other systems that they use to verify eligibility with commercial health insurers.
CMS took steps to ensure users remain satisfied with the system's performance, including notifying users in advance of system downtime, providing help desk support, and monitoring contractors' performance. The agency had also planned several technical improvements intended to increase HETS' capacity to process a growing number of transactions, which the agency projected to increase at a rate of about 40 percent each year. These plans include a redesign of the system and migration to a new database environment that is scalable to accommodate the projected increase in transaction volume. According to HETS program officials, near-term plans also include the implementation of tools to enable proactive monitoring of system components and additional services intended to enhance production capacity until the planned redesign of the system is complete.
To help protect the privacy of beneficiary eligibility data provided by HETS, CMS established policies, processes, and procedures that are intended to address principals reflected by the HIPAA Privacy Rule. For example, in its efforts to ensure proper uses and disclosures of the data, CMS documented in user agreements the authorized and unauthorized purposes for requesting Medicare beneficiary eligibility data. Additionally, the agency conducted privacy impact and risk assessments of HETS as required by the E-Government Act of 2002. Officials from the Department of Health and Human Services' Office for Civil Rights stated that no privacy violations had been reported regarding the use of the protected health data provided by HETS since its implementation in 2005.

section_title: Letter
paragraphs: Medicare is a federal program that pays for health care services for  individuals 65 years and older, certain individuals with disabilities, and  those with end-stage renal disease. It is funded by general revenues;  payroll taxes paid by most employees; employers and individuals who are  self employed; and beneficiary premiums. In 2011, Medicare covered  about 48.4 million of these individuals with a total expenditure of  approximately $565 billion. The Centers for Medicare and Medicaid  Services (CMS), the agency within the Department of Health and Human  Services (HHS) that administers Medicare, is responsible for ensuring  that proper payments are made on behalf of its beneficiaries to the  doctors, hospitals, visiting nurses, and others who provide health care  services and treatment, along with entities that supply medical equipment  such as wheelchairs, walkers, and hospital beds to their patients.
To avoid risks that they may not be reimbursed for services, these health  care providers take steps to determine whether patients and services are  covered by entities that pay for health care expenses, such as Medicare.  Toward this end, CMS developed and implemented an information  technology system to help providers determine Medicare beneficiaries’  eligibility for health care services and supplies in response to  requirements under the Health Insurance Portability and Accountability  Act of 1996, or HIPAA. CMS officials stated that, in accordance with the  act, on May 31, 2005, the agency began offering automated services for  determining Medicare eligibility for certain beneficiaries through the use of  an information technology system called the HIPAA Eligibility Transaction  System, or HETS. Five years after its implementation, however,  problems with the performance of the system were noted by CMS and its  users.
Because of the important role that HETS plays in assuring that providers  have timely and accurate data to determine Medicare beneficiaries’  eligibility, you requested that we undertake a review of the system. Our  specific objectives were to (1) identify the operational status of HETS, (2)  identify any steps CMS has taken to ensure users’ satisfaction and plans  to take to ensure the performance of the system supports future  requirements, and (3) describe CMS’s policies, processes, and  procedures for protecting the privacy of beneficiary eligibility data  provided by the system.
To identify the operational status of HETS, we collected and analyzed  documentation from program officials that described daily operations of  the system, such as reports on incoming transaction volume, response  time, and downtime, along with documents that describe outcomes of the  system, including reported problems. We also determined the level of  service provided to HETS users by comparing the information we  collected to business requirements defined in program and system plans  and strategies, and by obtaining users’ views of the extent to which the  current implementation of HETS met their needs. To do this, we selected  and interviewed representatives of the six highest volume users  throughout the United States. These users were identified as those  having submitted approximately 35 percent of the total HETS information  requests during a week in March 2012, the week selected for our study.
To identify the steps that CMS has taken to ensure HETS users are  satisfied with the performance of the system, and that the agency plans to  take to ensure the system provides the level of service needed to support  future requirements, we reviewed agency documents, interviewed  business and system owners knowledgeable of the management of the  program, and identified steps CMS took to assess contractors’  performance toward providing efficient and quality service to users of  HETS. We also collected and analyzed program planning documentation  that described long-term plans for the system and assessed those plans  against projections of future requirements and recommendations from  independent studies of CMS’s implementation of the system.
Finally, to describe the policies, processes, and procedures established  by CMS to protect the privacy of beneficiary eligibility data, we evaluated  agency documentation such as agreements with users regarding the use  of the system and requirements for handling data, and the system’s  privacy impact and risk assessments. We compared information  discussed in these documents to requirements and practices derived from  relevant privacy laws, including the HIPAA Privacy Rule and the Privacy  Act of 1974. In conducting our work, we did not review or test controls  implemented by the agency to secure the data processed by HETS. More  detailed information about our objectives, scope, and methodology is  discussed in appendix I.
We conducted this performance audit from February 2012 to August 2012  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: Medicare consists of four parts—A, B, C, and D. Medicare Part A  provides payment for inpatient hospital, skilled nursing facility, some  home health, and hospice services, while Part B pays for hospital  outpatient, physician, some home health, durable medical equipment, and  preventive services. In addition, Medicare beneficiaries have an option to  participate in Medicare Advantage, also known as Part C, which pays  private health plans to provide the services covered by Medicare Parts A  and B. Further, all Medicare beneficiaries may purchase coverage for  outpatient prescription drugs under Medicare Part D, and some Medicare  Advantage plans also include Part D coverage. The fee-for-service  portion of the Medicare program (Parts A and B) processes approximately  a billion claims each year from about 1.5 million providers who deliver and  bill Medicare for health care services and supplies.
In delivering patient care, providers need to not only ensure that claims  for services covered by Medicare and other health care insurers are  submitted correctly, but to also ensure that beneficiaries receive benefits  to which they are entitled. To do this, these providers need access to  accurate and timely eligibility information to help them determine whether  and how to properly submit claims for payment to Medicare and other  insurers on behalf of their patients. Many health care insurers have  implemented information technology systems to help providers make this  determination at the time services are being delivered—that is, at the  point of care—by providing electronic data on a real-time basis regarding  patients’ benefits covered by their insurance plans.
subsections: section_title: CMS’s Implementation of HETS to Assist Providers
paragraphs: To assist providers with verifying beneficiaries’ eligibility for services  under Medicare, and in response to HIPAA requirements, CMS provided  an electronic mechanism that allowed providers to access real-time data  at the point care is scheduled or delivered. To meet this requirement,  CMS officials stated that they implemented the initial version of HETS in  May 2005.
CMS’s Business Applications Management Group and the Provider  Communications Group are the system and business owners of HETS.  As such, these groups are responsible for the development,  implementation, maintenance, and support of the system, as well as  establishing business rules regarding the use of the system application,  such as agreements regarding the use and protection of the data  provided by HETS. CMS awarded cost-plus-award-fee contracts to two  contractors to assist the agency with developing and maintaining HETS,  performing independent testing, production support, help desk, and  project integration services.
HETS operates from CMS’s data center in Baltimore, Maryland, and is  accessed by users via the CMS extranet. The system is comprised of  software that processes query and response transactions, along with  hardware, such as servers that support connections with users’ facilities  and the internet, and devices that store the data provided by the system.  The system software is designed to process transactions according to  standards and formats defined by HIPAA. It was designed to allow the  release of patients’ data to Medicare providers, or their authorized billing  agents, to support their efforts to complete accurate Medicare claims  when determining beneficiaries’ liability and eligibility for specific  services. CMS officials stated that the agency does not receive any  payments for the use of HETS, nor does the agency require Medicare  providers to use HETS to verify eligibility prior to filing claims  CMS intended for HETS to be used by health care providers; health care  clearinghouses, which are entities that provide electronic data exchange  services for their customers;  and Medicare Administrative Contractors (MACs) that assist CMS in processing claims. Health care providers  may request beneficiary eligibility data from HETS directly via CMS’s  extranet or by utilizing the services of clearinghouses. According to  clearinghouse officials with whom we spoke, many providers use  clearinghouses to conduct transactions with HETS because they may not  have the technical capability to connect directly to CMS’s extranet, or they  may chose to employ the services of clearinghouses for financial or other  reasons. For example, these providers may use clearinghouses to  conduct electronic transactions with CMS and other different payers’  systems, and avoid expenses associated with establishing and  maintaining the in-house technology and expertise needed to connect  with multiple systems. Rather, they can conduct these transactions by  establishing one connection with a clearinghouse. However, the MACs  access HETS via CMS’s extranet. In all cases, users gain access to the  extranet through a vendor-supplied network service.
According to documented system descriptions, when requesting  information from HETS, a user initiates a transaction by entering data into  its workstation using software systems installed within its facility. The end- users’ systems may be developed in-house by individual providers,  clearinghouses, or MACs, or by commercial software vendors. The data  entered into the workstation identify the provider, beneficiary, and  services for which eligibility is to be verified. The data are translated by  the end-user software into the standard HIPAA transaction format, then  transmitted from the user’s workstation to the HETS system via either the  agency’s extranet, or the vendor-supplied network service which connects  to the CMS extranet. The system validates the incoming data and, if the  request is valid, returns response data back to the user’s workstation. If  the request data are not valid, the system responds with error codes that  indicate the type of error detected in the request data. Responses are  transmitted from HETS in the HIPAA format and translated by the users’  software before being presented.
According to reports provided by program officials, the number of HETS  transactions has grown each year since its initial implementation in May  2005. The business and system owners with whom we spoke attributed  the growth primarily to increases in the number of new users of HETS,  particularly during the first 2 years of implementation, and the growth in  the number of Medicare beneficiaries. Nonetheless, while the number of  transactions has continued to increase, the annual rate of increase in  transaction volume has declined since the system’s initial implementation.  Table 1 shows HETS utilization, measured by the number of incoming  transactions processed each fiscal year, from its initial implementation in  May 2005 through fiscal year 2011.
CMS’s internal operational requirements for HETS established a goal for  the system to respond to query transactions in 5 seconds or less.  According to program officials, from 2005 to 2010, HETS responded to  transaction inquiries well within this goal. However, reports of the  system’s performance showed that beginning in January 2010, response  times began to exceed 5 seconds and progressively worsened throughout  most of the year. CMS attributed this performance degradation to  outdated software and increases in the number of eligibility verification  transactions submitted to the extent that the volume exceeded the  hardware capacity.
The business and system owners with whom we spoke stated that in July  2010 they began to implement a series of major improvements to the  HETS operating environment and system, including hardware and  software upgrades. However, users continued to experience lengthy  response and system down times. Program officials stated that in January  2011 they took additional steps to address the slow response and system  availability problems. In this case, they doubled the hardware capacity,  replaced the operating system, and upgraded the system’s software.  According to these officials, the revisions, upgrades, and replacements  were more complex than expected and were not fully implemented until  April 2011. Subsequently, from mid April 2011 to May 2011, CMS  conducted a phased migration of HETS users to the upgraded system.
section_title: Federal Requirements for Protecting Individually Identifiable Health Information
paragraphs: Because HETS processes and transmits personal information related to  individuals’ Medicare program eligibility, the system is subject to federal  requirements for protecting the personally identifiable health information.  In this regard, the Privacy Act of 1974 regulates the collection,  maintenance, use, and dissemination of personal information by federal  government agencies. It also prohibits disclosure of records held by a  federal agency or its contractors in a system of records without the  consent or request of the individual to whom the information pertains  unless the disclosure is permitted by the Privacy Act. The Privacy Act  includes medical history in its definition of a record.
Other federal laws and regulations further define acceptable use and  disclosure activities that can be performed with individually identifiable  health information, known as protected health information.  These  activities include—provided certain conditions are met— treatment,  payment, health care operations, and public health or research purposes.  For example, HIPAA and its implementing regulations allow the entities  they cover to use or disclose protected health information for providing  clinical care to a patient.associates, such as medical professionals, pharmacies, health   These covered entities and their business  information networks, and pharmacy benefit managers, work together to  gather and confirm patients’ electronic health information that is needed  to provide treatment, such as a beneficiary’s eligibility, benefits, and  medical history. Key privacy and security protections associated with  individually identifiable health information, including information needed  by providers to verify patients’ eligibility for coverage by Medicare or  private health plans, are established under HIPAA.
Key privacy principles associated with individually identifiable health  information, including information needed by providers to verify patients’  eligibility for coverage by Medicare of private health plans, are reflected in   HIPAA’s Administrative Simplification Provisions provided for  HIPAA.the establishment of national privacy and security standards, as well as  the establishment of civil money and criminal penalties for HIPAA  violations. HHS promulgated regulations implementing the act’s  provisions through its issuance of the HIPAA rules. Specifically, the  HIPAA Privacy Rule regulates covered entities’ use and disclosure of  protected health information. Under the Privacy Rule, a covered entity  may not use or disclose an individual’s protected health information  without the individual’s written authorization, except in certain  circumstance expressly permitted by the Privacy Rule. These  circumstances include certain treatment, payment, and other health care  operations. As such, the disclosure of beneficiary eligibility information by  HETS is permitted in accordance with the rule since it is used in making  treatment and payment decisions.
The HIPAA Privacy Rule reflects basic privacy principles for ensuring the  protection of personal health information, such as limiting uses and  disclosures to intended purposes, notification of privacy practices,  allowing individuals to access their protected health information, securing  information from improper use or disclosure, and allowing individuals to  request changes to inaccurate or incomplete information. The Privacy  Rule generally requires that a covered entity make reasonable efforts to  use, disclose, or request only the minimum necessary protected health  information to accomplish the intended purpose.
In addition to the Privacy Act and the HIPAA Privacy Rule, the E- Government Act of 2002 includes provisions to enhance the protection of  personal information in government information systems. the act requires federal agencies to conduct privacy impact assessments  to determine the impact of their information systems on individuals’  privacy. The act also states that the assessment should be completed to  analyze how information is to be handled and to evaluate needed  protections and alternative processes for handling information in order to  mitigate potential privacy risks.
section_title: HETS Is Operational and Provides Responses to Users’ Requests in Real Time
paragraphs: After experiencing performance problems throughout 2010, HETS is  currently operating on a real-time basis and with few user concerns being  noted. As of June 2012, CMS reported that 244 entities were using the  system; these included 130 providers, 10 Medicare Administrative  Contractors, and 104 clearinghouses that conduct query and response   The agency further reported  transactions for about 400,000 providers.that, during the first 6 months of 2012, the system processed more than  380 million transactions from these users.
System performance data showed that, since May 2011, HETS has been  consistently providing service to its users 24 hours a day, 7 days a week,  except during regularly scheduled maintenance periods, which occur on  Monday mornings from midnight until 5:00 a.m. (CMS sometimes  schedules additional outages for system maintenance and upgrades,  usually during one or two weekends each month.)
E-Government Act of 2002, Pub L. No. 107-347, Dec. 17, 2002, codified at 44 U.S.C. §  3501 note. occurring between 8:00 a.m. and 4:00 p.m. eastern time, Monday through  Friday. About 90 percent of these transactions were initiated by the  clearinghouses. Daily reports of system performance that were generated  by the system showed that the average response time for 99 percent of  the transactions was less than 3 seconds during the first 6 months of  2012. Appendix II provides our detailed analysis of the system’s  transaction volumes and response times from January 2010 through June  2012.
Users of the system told us that since CMS completed hardware and  software improvements in spring 2011, they have been satisfied with its  operational status. They stated that they are not currently experiencing  operational or communication issues. Records of contacts with CMS’s  help desk regarding the operational status of HETS show that the number  of calls by users declined from an average of 133 calls per week during  the first quarter of 2011 to an average of 64 per week during the second  quarter of 2012.
The users also stated that health care insurers in the commercial sector  conduct electronic eligibility verifications in a manner similar to that of  CMS. They told us that, based on their experiences with using those  insurers’ systems, HETS provides faster response times as well as more  complete information and reliable service than the other beneficiary  eligibility verification systems they use.
section_title: CMS Has Taken Steps to Ensure Users’ Satisfaction and Is Making Plans to Implement Improvements to Meet Future Requirements
paragraphs: CMS’s efforts to correct operational problems experienced with HETS in  2010 and early 2011 led to improved performance and overall user  satisfaction with the system. To ensure that the agency is able to maintain  performance that satisfies users and meets goals for response and  system availability times, HETS program officials have taken steps to  provide ongoing support for users through help desk procedures, system  status notifications, and management of contractors based on incentive  awards for performance that exceeds contractual requirements.  Additionally, these officials have begun to plan for improvements and  enhancements to the system in efforts to position themselves to meet  future demands on the system as they projected transaction volume to  increase at a rate of about 40 percent a year. Among other  improvements, the officials described plans to redesign the system and  upgrade hardware, and to establish service level agreements with HETS  users.
subsections: section_title: CMS Has Taken Steps to Ensure Users Remain Satisfied
paragraphs: CMS has taken various steps to improve the operational status of HETS  and to ensure user satisfaction with its performance. With regard to  ensuring the availability of the system, CMS notifies users of the status of  operations on a daily basis and whenever a change in status occurs. For  example, CMS contractors perform daily health checks each morning to  determine the status of HETS. If system performance or availability  issues are identified, help desk contractors post messages to that effect  on the system website and a trouble ticket is opened. The appropriate  staff is assigned to troubleshoot and resolve the issues.
Additionally, when users have complaints or issues related to the  system’s operations, they are instructed to contact the help desk. Upon  receipt of the problem, the help desk staff are to triage the problem and  generate a ticket if the problem cannot be resolved at the help desk level.  For example, if a user is unable to access the system and contacts the  help desk, staff are to determine if the problem is an operational issue or  is an issue with the user or another component of the system, such as the  network services provided by a vendor. They are to then track the issue  until the problem is resolved. According to HETS program officials,  problems are generally reported when the system response time begins  to slow down.
CMS’s help desk contractors who support HETS post announcements on  the agency’s website and send e-mails to notify users when the system is  to be brought down to allow corrections to system operation problems, or  to perform upgrades or maintenance. The contractors post a second  announcement and send e-mails to notify users when the system  becomes available after an outage.
The past 6 months’ help desk announcements on the HETS website  showed that additional maintenance or system upgrades were performed  outside the scheduled maintenance period. Specifically, during this time  CMS notified users that maintenance would be performed one to two  times per month on weekends, with the system down from as few as 6  hours to as many as 3 days. In most cases, CMS sent a notice to its  HETS users 2 weeks in advance of the outages.
In discussions with provider, clearinghouse, and MAC users, two of the  users expressed concerns with the frequency that CMS conducts  maintenance outside the scheduled maintenance time. These users  stated that they do not have access to the system for 1 day three to four  weekends per month. However, one of these users, a provider, told us  that during these times the system was accessible via an alternate portal,  which indicated that HETS was operational and likely not a cause of the  problem. A clearinghouse user stated that, while these outages are  inconvenient, CMS notifies users well in advance of the outages and that  there are some times during the announced outages when transactions  can be processed. All the users with whom we spoke told us that the  CMS help desk notified them in advance of any unscheduled system  outages that were planned in addition to the regularly scheduled  maintenance downtime.
CMS has also taken steps to ensure that its contractors meet quality and  service requirements related to the development, maintenance, and  support of HETS. Program officials told us that the contractors’  performance is reviewed and evaluated every 6 months in addition to  annual evaluations, based on measures for overall technical performance  and management. The evaluations identify strengths and weaknesses  noted during the evaluation periods. The contractors may be awarded  financial incentives for exceeding performance expectations in certain  categories, such as software maintenance and support for the system’s  operations. For example, a May 2012 report on the results of the most  recent 6-month evaluation of the help desk contractor’s performance  documented its strengths and weaknesses. The report showed that  program officials were satisfied with the contractor’s efforts to meet  measures in technical performance and, therefore, provided the full  financial incentive. However, they noted weaknesses in one category for  which the contractor did not receive the full incentive amount. In this case,  the contractor failed to deliver required reports and identify infrastructure  changes that impacted the implementation of HETS. Additionally, a  November 2011 report on the development contractor’s performance  showed similar results. In both reports, program officials stated overall  satisfaction with the contractors’ performance and noted areas of needed  improvements.
section_title: CMS Is Making Plans to Ensure the System Supports Future Requirements
paragraphs: To help ensure the current level of service is sustained during projected  increases in transaction volumes, the system owners have initiated  various activities aimed at helping to prevent operational problems similar  to those experienced with the system in 2010 and early 2011. In this  regard, CMS projected the increase in transaction volume to continue at a  rate of about 40 percent for the next several years. This increase is  expected in part because of the discontinuance of some providers’ use of  other means to obtain eligibility information from CMS and the migration  of that user population to HETS by the end of March 2013. Program  officials also anticipate that more Medicare Administrative Contractors will  begin to offer beneficiary eligibility verification services to the providers  they support and will use HETS to conduct these verifications.
The system and business owners described steps they took in 2011 and  2012 that were intended to help plan for future increases in the number of  transactions.
In March 2011, CMS tasked its HETS development contractor to  prepare a plan and process for long-term improvements to the system  and its operating environment. The agency tasked an additional  contractor to evaluate the existing architecture, monitoring tools, and  the extent to which the existing system platform could be scaled to  meet future requirements. This contractor was also tasked to propose  and analyze alternatives for future system implementation and  recommend future service levels, monitoring tools, and practices for  managing the application.
In July 2011, CMS released a Request for Information to obtain  knowledge and information of current marketplace solutions that may  meet future needs. As stated in the request, this action was intended  to compile information that would assist CMS in the identification of  potential options for creating an enterprise-level health care eligibility  inquiry system that would support both real-time and batch transaction  exchanges. In August 2011, 12 companies responded to the request  and provided information on how their existing products could address  CMS requirements. CMS analyzed the responses to the Request for  Information and concluded that while 3 of the companies provided  information that was not useful, others offered a range of products  that CMS could consider when they begin to survey the marketplace  for viable products and solutions for a future implementation of HETS.
In January 2012, the two contractors completed the evaluations that were  initiated in March 2011 and submitted reports that included  recommendations regarding steps needed to accommodate projected  eligibility transaction volumes while maintaining appropriate availability,  security, and costs of HETS operations. The first report stated the existing  architecture is sufficient to handle current transaction volumes and, with  minor changes, should be able to handle transaction volumes anticipated  for the next 2 years.
The report also included recommendations to address the increases in  transaction volume projected beyond the next 2 years. For example, the  contractor who conducted the evaluation recommended that CMS  reassess and change the architecture as transaction volumes grow, and  automate routine processes, including troubleshooting practices and  application start-up and shutdown procedures. This contractor also  recommended that CMS establish service level agreements with its users  to define and agree upon service parameters for HETS, including system  availability and performance. The second contractor’s report provided  technical evaluations of six commercial-off-the-shelf products that were  capable of meeting future estimated transaction volumes and presented  recommendations for three alternate solutions, spelling out the strengths  and weaknesses of each.
Program officials stated that they agree with the recommendations  identified in the contractors’ reports and are making plans to address  many of them in the near term. Specifically, they are planning to automate  some processes, such as the application start-up and shutdown  procedures. Additionally, HETS business owners stated that they are  currently working to establish and document service level agreements  with users, as recommended by one of the evaluation contractors. They  plan to complete this activity and have agreements in place by January  2013.
The officials we spoke with also described several technical  improvements they intend to take to increase the system’s capacity to  handle growing numbers of transactions, including some consistent with  the contractors’ evaluations. For example, according to CMS’s plans for  modifying and improving the system through 2015, in fiscal year 2011  CMS began to plan for development of a redesigned system to be  completed by the end of June 2014. The agency awarded a contract for  defining and writing requirements for the redesigned system in June  2012. Among other capabilities, as part of the system redesign CMS  plans to implement batch processing of transactions in addition to the   According to HETS business owners, this  current real-time process.capability is needed to support users’ needs since some clearinghouses  receive batch files from providers and have to convert them for real-time  submission. The implementation of batch processing capabilities within  the system will remove the need for clearinghouses to take this extra  step.
Among several other initiatives to be conducted are plans to procure a  contract for maintenance of the current system until the redesign is  complete. This activity is necessary because the terms of the current  contract expire at the end of September 2013 and the system redesign is  not planned to be complete until the end of June 2014. CMS’s plans also  identified a step to, by the end of August 2012, migrate the current HETS  database to a new operating platform that is scalable to accommodate  the expected increase in transaction volume.
Further, agency officials stated that while they plan to make these  improvements to the system over the next 3 years, their ability to conduct  the activities they have planned is dependent on the agency’s budget.
These officials stated that, to mitigate risks associated with the level of  funding the program receives in the future, they prioritized improvements  planned for the existing system and began to implement those that they  determined to be the most cost-effective during this and early next fiscal  year. Among other things, these include activities to support the current  system until the redesigned system is implemented, including  development of tools that enable the HETS contractors to proactively  monitor system components, additional services to enhance production  capacity, and automated processes for starting up and shutting down the  application. Program officials stated that they will review and prioritize  other activities for improving the system as part of the HETS redesign  project.
section_title: CMS Established Policies and Procedures Intended to Address Privacy Principles and Assessed Impact and Risks of Sharing Data
paragraphs: The Privacy Act of 1974 and the HIPAA Privacy Rule protect personally  identifiable health information, such as Medicare beneficiary information,  to ensure that it is disclosed only under specified conditions and used  only for its intended purpose. In accordance with these privacy  protections, the information provided by HETS is to be used only for  confirming eligibility of patients to receive benefits for services provided  under the Medicare fee-for-service program. CMS is governed by the  Privacy Act and all covered entities that use HETS—health care  providers, clearinghouses, and Medicare contractors—are required to  comply with the HIPAA Privacy Rule.
In accordance with provisions of the Privacy Rule, the protected health  information provided by HETS is to be disclosed and used only for certain  activities. Among other activities, these include treatment of patients and  payment for services—the activities supported by the use of HETS.
CMS has taken actions intended to ensure that the personal health  information sent to and from the system is protected from misuse and  improper disclosure. For example, CMS documented in the HETS Rules  of Behavior that users must adhere to the authorized purposes for  requesting Medicare beneficiary eligibility data. Specifically, the rules  state that users are authorized to request information to determine  whether patients who were determined to be Medicare eligible are  covered for specific services that are to be provided at the point of care.  However, users are not authorized to request information for the sole  purpose of determining whether patients are eligible to receive Medicare  benefits.
According to program officials, CMS enforces its rules of behavior by  monitoring inquiries to identify behaviors that may indicate intentional  misuse of the data. For example, inquiries from one user that result in  high rates of errors or a high ratio of inquiries compared to the number of  claims submitted may indicate that a user is searching the system to  identify Medicare beneficiaries rather than using HETS for its intended  purpose. Users engaging in these types of behavior may be contacted or,  when appropriate, referred for investigation for inappropriate use of the  data, such as health care identity theft or fraudulent billing practices.
Additionally, system documentation described mechanisms that were  implemented to prevent access by requesters with invalid provider  identifications or certain providers who have been excluded or suspended  from participating in the Medicare program. For example, CMS maintains  databases of National Provider Identifiers, another HIPAA standard. The  eligibility request transactions submitted by HETS users include these  identifiers, and, before providing beneficiary data in response to requests,  the system validates the identifiers against data stored in an agency  database. Additionally, according to the HETS business owners,  providers who have been identified by HHS’s Office of Inspector General  and the General Services Administration as ones conducting activities   In  intended to defraud Medicare may be included on a “do not pay” list.this case, providers excluded from the program would not “need to know”  information about patients’ personal health, including whether or not they  are eligible for Medicare benefits. According to HETS officials, these data  are also incorporated into the National Provider Identifier database that is  used to validate identifiers submitted to HETS and, as a result, these  excluded providers are also not allowed to receive information from the  system.
HETS system documentation also described mechanisms for securing  the data transmitted to and from HETS. For example, access to the  system is only allowed through CMS’s secured extranet. To gain access,  the providers and clearinghouses must first submit a Trading Partner  Agreement. In addition to including information needed to enable CMS  and its trading partners, or users, to establish connectivity and define data  exchange requirements, the agreement defines responsibilities for  securing the data of the entities receiving beneficiary eligibility information  from CMS. After users submit the agreement, CMS contacts them to  authenticate their identity and, once authentication has been determined,  CMS help desk staff provide the requester with a submitter ID that is  required to be included on all transactions. Users then may request  access to the CMS extranet from one of four network service vendors  which establish a secure software connection to the system.
The table below summarizes these and other actions CMS described that  address key HIPAA privacy principles relevant to the implementation of  HETS.
Further, the E-Government Act of 2002 requires federal agencies to  conduct privacy impact assessments, and the Office of Management and  Budget (OMB) provides guidance to agencies conducting these  assessments. The act and OMB’s implementing guidance require that  these assessments address: (1) what information is to be collected; (2)  why the information is being collected; (3) the intended use of the  information; (4) with whom the information will be shared ; (5) what  opportunities individuals have to decline to provide the information or to  consent to particular uses of the information, and how individuals can  grant consent; (6) how the information will be secured ; and (7) whether a  system of records is being created under the Privacy Act.
According to the OMB guidance, agencies should conduct a privacy  impact assessment before developing or procuring IT systems or projects  that collect, maintain, or disseminate information in identifiable form from  or about members of the public. Agencies are required to perform an  update as necessary when a system change creates new privacy risks.  Additionally, in a previous report, we identified the assessment of privacy risks as an important element of the privacy impact assessment  process to help officials determine appropriate privacy protection policies  and techniques to implement those policies. We noted that a privacy risk  analysis should be performed to determine the nature of privacy risks and  the resulting impact if corrective actions are not in place to mitigate those  risks.
CMS conducted a privacy impact assessment of HETS as called for by  the E-Government Act, and updated the assessment in April 2011. The  assessment addressed the seven OMB requirements for implementing  privacy provisions. For example, in addressing how HETS information  would be secured, it stated that the system is accessible only via the  CMS private network to authorized users. The assessment also stated  that the intended use of the system is to allow providers to confirm  patients’ enrollment in the Medicare program and provide information that  is needed to correctly bill for payment of claims. Additionally, as part of a  security risk assessment, program officials also completed a privacy risk  analysis of the system that addressed several privacy risks. For example,  CMS assessed privacy risks related to improper disclosure of the  protected health information processed by HETS and determined that the  risk level was low to moderate.
By establishing practices and procedures intended to protect the privacy  of Medicare beneficiaries’ personal health information, and assessing the  impact and risks associated with the use of HETS, CMS took required  steps to address privacy principles reflected by HIPAA, the HIPAA rules,  and the Privacy Act and has acted in accordance with OMB’s guidance  for protecting personally identifiable information. According to officials in  HHS’s Office for Civil Rights, no violations of the HIPAA Privacy Rule  resulting from the use and disclosure of data provided by HETS have  been reported since the system was implemented.
section_title: Agency Comments and Our Evaluation
paragraphs: In written comments on a draft of this report, signed by HHS’s Assistant  Secretary for Legislation (and reprinted in appendix III), the department  stated that it appreciated the opportunity to review the report prior to its  publication. The department added that it regretted the poor service that  resulted from operational problems in 2010 and early 2011 and that it is  continuing to take steps to maintain and improve the performance of the  system. The department also provided technical comments, which we  incorporated as appropriate.
As agreed with your offices, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will send copies to interested congressional  committees, the Secretary of HHS, the Administrator of CMS, and other  interested parties. In addition, the report will be available at no charge on  the GAO website at http://www.gao.gov. If you or your staff have any  questions about this report, please contact me at (202) 512-6304 or by   e-mail at melvinv@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this report. GAO staff who made key contributions to this report are  listed in appendix IV.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: Our objectives were to (1) identify the operational status of HETS, (2)  identify any steps CMS has taken to ensure users’ satisfaction and plans  to take to ensure the performance of the system supports future  requirements, and (3) describe CMS’s policies, processes, and  procedures for protecting the privacy of beneficiary eligibility data  provided by the system.
To identify the operational status of HETS, we collected and analyzed  documentation from program officials that described the use and daily  operations of the system, such as reports on incoming transaction  volume, response time, and downtime, along with documents that  describe outcomes of the system, such as reported problems. To  determine whether CMS provided the level of service agreed upon with  HETS users, we compared the information we collected to business  requirements defined in program and system plans, and to any  agreements with users. Additionally, we obtained users’ views of the  extent to which the current implementation of HETS satisfied their needs  for timely information by holding structured interviews with selected  representatives of providers; clearinghouses, which provide services for  about 90 percent of Medicare providers; and a Medicare Administrative  Contractor who used the system.
The selected HETS users included three clearinghouses; two fee-for- service providers, including a visiting nurse agency and a medical  equipment supplier; and one Medicare Administrative Contractor. Based  on data provided by system performance reports for the week of March  12th through the 18th 2012, we selected the highest volume users among  each user type throughout the United States. The selected users  submitted about 44 percent of the 14.5 million total transactions  processed during the selected period of time. Specifically, the  clearinghouses submitted a total of about 40 percent of the transactions,  the Medicare contractor submitted about 2 percent, and the provider and  supplier submitted less than 1 percent of the transactions, respectively.
We discussed with the users their experiences and satisfaction with the  level of service the system has provided over the last 2 years, and the  results of CMS’s efforts to resolve any problems or system-related issues.  In addition, we interviewed program officials knowledgeable of the  management of the program to gain additional understanding of the  agency’s practices for defining performance requirements for HETS  contractors, and for managing and assessing their performance relevant  to ensuring efficient operations of HETS. We also discussed with the  users their experiences with other automated eligibility verification  systems provided by commercial health insurers. We held these  discussions to determine whether these officials could share any lessons  that could be beneficial to CMS in operating HETS.
To identify the steps that CMS has taken to ensure that HETS users  remain satisfied with the performance of the system and that the agency  plans to take to ensure the system provides the level of service needed to  support future requirements, we reviewed agency documents, such as  project timelines and system release notes, and reports of users’ calls to  the help desk. These documents described steps taken to address  problems reported by users, identified systems modifications to correct  problems, and showed patterns in the numbers of help desk calls over the  past 2 years. We also identified steps the agency initiated to help alleviate  problems introduced by increasing transaction volume as the number of  Medicare beneficiaries has increased over the past 2 years. Further,  through our review of relevant agency documents, contractors’  performance reports, and discussions with program officials, we identified  steps CMS took to assess contractors’ performance toward providing  efficient and quality service to users of HETS, and any necessary  corrective actions.
Additionally, we identified steps the agency plans to take toward defining  and addressing future requirements of the system that may be introduced  by increasing numbers of verification inquiries, and collected and  reviewed documentation that provided information about projected growth  in transaction volume as providers were faced with the need to conduct  HETS queries of more patients filing Medicare claims. We also collected  available program planning documentation that described long-term plans  for the system and assessed these plans against projections of future  requirements and recommendations from independent studies of CMS’s  implementation of HETS.
Finally, to describe the policies, processes, and procedures established  by CMS to ensure that the privacy of beneficiary eligibility data is  protected, we evaluated agency documentation such as HETS privacy  impact and risk assessments, and agreements with users that describe  CMS’s and users’ responsibilities and requirements for protecting the  data processed and provided by the system. We compared the  information from these documents to requirements and privacy practices  derived from provisions of the Privacy Act and the HIPAA Privacy Rule.  We also held a discussion with an official with HHS’s Office for Civil  Rights to determine whether any complaints related to the use of HETS  had been noted. In conducting our work, we did not review or test controls  implemented by the agency to secure the data processed by HETS.
We supplemented data collection for all objectives with interviews of  agency officials, including system and business owners, who were  knowledgeable of the system’s operations and improvements, contract  management and oversight, and requirements and practices for  protecting the privacy of personal health information. Among these  officials, we held discussions with directors in CMS’s Provider  Communications Group and the Business Applications Management  Group, Office of Information Services. We used computer-maintained  data provided by CMS program officials when addressing our first  objective, and we determined the reliability of these data by obtaining  corroborating evidence through interviews with agency officials who are  knowledgeable of the operations of the system and its user population.  We also conducted a reliability assessment of the data provided by CMS.  We found the data sufficiently reliable for the purposes of this review.
section_title: Appendix II: HETS Transaction Volumes and Response Times
paragraphs: HETS program officials provided system-generated data that reflected the  performance of the system in terms of the numbers of transactions  processed each month and the response time in four categories. The  data were provided for the time period beginning in January 2010, when  the operational problems began to occur, through June 2012. Table 1  shows the percentage of transactions that received responses from HETS  in less than 3 seconds increased from 60.8 percent to 99.9 percent during  this time period.
section_title: Appendix III: Comments from the Department of Health & Human Services
section_title: Appendix IV: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contacts
section_title: Staff Acknowledgments
paragraphs: In addition to the contacts named above, Teresa F. Tucker, Assistant  Director; Tonia D. Brown; LaSherri Bush; Sharhonda Deloach; Rebecca  Eyler; and Monica Perez-Nelson made key contributions to this report.