Health Information Technology: CMS Took Steps to Improve Its Beneficiary Eligibility Verification System
Released: 2012-10-05T00:00:00

Letter

Background

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.

CMS’s Implementation of HETS to Assist Providers

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.

Federal Requirements for Protecting Individually Identifiable Health Information

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.

HETS Is Operational and Provides Responses to Users’ Requests in Real Time

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.

CMS Has Taken Steps to Ensure Users’ Satisfaction and Is Making Plans to Implement Improvements to Meet Future Requirements

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.

CMS Has Taken Steps to Ensure Users Remain Satisfied

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.

CMS Is Making Plans to Ensure the System Supports Future Requirements

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.

CMS Established Policies and Procedures Intended to Address Privacy Principles and Assessed Impact and Risks of Sharing Data

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.

Agency Comments and Our Evaluation

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.

Appendix I: Objectives, Scope, and Methodology

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.

Appendix II: HETS Transaction Volumes and Response Times

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.

Appendix III: Comments from the Department of Health & Human Services

Appendix IV: GAO Contacts and Staff Acknowledgments

GAO Contacts

Staff Acknowledgments

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.