[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]




 
      YEAR 2000 AND MEDICARE: IS HEALTH SERVICE DELIVERY AT RISK?

=======================================================================

                                HEARING

                               before the

                 SUBCOMMITTEE ON GOVERNMENT MANAGEMENT,
                      INFORMATION, AND TECHNOLOGY

                                 of the

                              COMMITTEE ON
                           GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS

                             FIRST SESSION

                               __________

                           SEPTEMBER 27, 1999

                               __________

                           Serial No. 106-55

                               __________

       Printed for the use of the Committee on Government Reform


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

                                 ______

                    U.S. GOVERNMENT PRINTING OFFICE
61-209 CC                   WASHINGTON : 1999




                     COMMITTEE ON GOVERNMENT REFORM

                     DAN BURTON, Indiana, Chairman
BENJAMIN A. GILMAN, New York         HENRY A. WAXMAN, California
CONSTANCE A. MORELLA, Maryland       TOM LANTOS, California
CHRISTOPHER SHAYS, Connecticut       ROBERT E. WISE, Jr., West Virginia
ILEANA ROS-LEHTINEN, Florida         MAJOR R. OWENS, New York
JOHN M. McHUGH, New York             EDOLPHUS TOWNS, New York
STEPHEN HORN, California             PAUL E. KANJORSKI, Pennsylvania
JOHN L. MICA, Florida                PATSY T. MINK, Hawaii
THOMAS M. DAVIS, Virginia            CAROLYN B. MALONEY, New York
DAVID M. McINTOSH, Indiana           ELEANOR HOLMES NORTON, Washington, 
MARK E. SOUDER, Indiana                  DC
JOE SCARBOROUGH, Florida             CHAKA FATTAH, Pennsylvania
STEVEN C. LaTOURETTE, Ohio           ELIJAH E. CUMMINGS, Maryland
MARSHALL ``MARK'' SANFORD, South     DENNIS J. KUCINICH, Ohio
    Carolina                         ROD R. BLAGOJEVICH, Illinois
BOB BARR, Georgia                    DANNY K. DAVIS, Illinois
DAN MILLER, Florida                  JOHN F. TIERNEY, Massachusetts
ASA HUTCHINSON, Arkansas             JIM TURNER, Texas
LEE TERRY, Nebraska                  THOMAS H. ALLEN, Maine
JUDY BIGGERT, Illinois               HAROLD E. FORD, Jr., Tennessee
GREG WALDEN, Oregon                  JANICE D. SCHAKOWSKY, Illinois
DOUG OSE, California                             ------
PAUL RYAN, Wisconsin                 BERNARD SANDERS, Vermont 
HELEN CHENOWETH, Idaho                   (Independent)
DAVID VITTER, Louisiana


                      Kevin Binger, Staff Director
                 Daniel R. Moll, Deputy Staff Director
           David A. Kass, Deputy Counsel and Parliamentarian
                      Carla J. Martin, Chief Clerk
                 Phil Schiliro, Minority Staff Director
                                 ------                                

   Subcommittee on Government Management, Information, and Technology

                   STEPHEN HORN, California, Chairman
JUDY BIGGERT, Illinois               JIM TURNER, Texas
THOMAS M. DAVIS, Virginia            PAUL E. KANJORSKI, Pennsylvania
GREG WALDEN, Oregon                  MAJOR R. OWENS, New York
DOUG OSE, California                 PATSY T. MINK, Hawaii
PAUL RYAN, Wisconsin                 CAROLYN B. MALONEY, New York

                               Ex Officio

DAN BURTON, Indiana                  HENRY A. WAXMAN, California
          J. Russell George, Staff Director and Chief Counsel
                   Matt Ryan, Senior Policy Director
    Bonnie Heald, Communications Director/Professional Staff Member
                          Chip Ahlswede, Clerk
                    Trey Henderson, Minority Counsel




                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on Septmber 27, 1999................................     1
Statement of:
    Addington, Whitney W., M.D., president, American College of 
      Physicians, American Society of Internal Medicine..........    55
    Baker, Joe, executive vice president, Medicare Rights Center.   212
    Brown, Fred, vice chairman, BJC Health Systems, Senior 
      Advisor, President's Council of Y2K Conversion, and 
      chairman, Board of Trustees, American Hospital Association.   181
    Christoph, Gary, Ph.D., Chief Information Officer, Health 
      Care Financing Administration..............................    43
    Wilkey, Elizabeth, electronic data interchange coordinator, 
      Blue Cross and Blue Shield of Georgia......................   195
    Willemssen, Joel, Director, Civil Agencies Information 
      Systems, U.S. General Accounting Office....................    12
Letters, statements, etc., submitted for the record by:
    Addington, Whitney W., M.D., president, American College of 
      Physicians, American Society of Internal Medicine:
        Prepared statement of....................................   179
        Y2K tool kit.............................................    56
    Baker, Joe, executive vice president, Medicare Rights Center, 
      prepared statement of......................................   215
    Brown, Fred, vice chairman, BJC Health Systems, Senior 
      Advisor, President's Council of Y2K Conversion, and 
      chairman, Board of Trustees, American Hospital Association, 
      prepared statement of......................................   183
    Christoph, Gary, Ph.D., Chief Information Officer, Health 
      Care Financing Administration, prepared statement of.......    45
    Horn, Hon. Stephen, a Representative in Congress from the 
      State of California, prepared statement of.................     3
    Morella, Hon. Constace A., a Representative in Congress from 
      the State of Maryland, prepared statement of...............     6
    Turner, Hon. Jim, a Representative in Congress from the State 
      of Texas, prepared statement of............................    10
    Wilkey, Elizabeth, electronic data interchange coordinator, 
      Blue Cross and Blue Shield of Georgia, prepared statement 
      of.........................................................   197
    Willemssen, Joel, Director, Civil Agencies Information 
      Systems, U.S. General Accounting Office, prepared statement 
      of.........................................................    14


      YEAR 2000 AND MEDICARE: IS HEALTH SERVICE DELIVERY AT RISK?

                              ----------                              


                       MONDAY, SEPTEMBER 27, 1999

                  House of Representatives,
Subcommittee on Government Management, Information, 
                                    and Technology,
                            Committee on Government Reform,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 2 p.m., in 
room 2154, Rayburn House Office Building, Hon. Stephen Horn 
(chairman of the subcommittee) presiding.
    Present from the Subcommittee on Government Management, 
Information, and Technology: Representatives Horn and Turner.
    Present from the Subcommittee on Technology, Committee on 
Science: Representative Morella.
    Staff present: J. Russell George, staff director/chief 
counsel; Matthew Ryan, senior policy director; Bonnie Heald, 
director of communications/professional staff member; Chip 
Ahlswede, clerk; P.J. Caceres, intern; Trey Henderson, minority 
counsel; and Jean Gosa, minority staff assistant.
    Mr. Horn. The hearing of the House Subcommittee on 
Government Management, Information, and Technology, in 
participation with the Subcommittee on Technology of House 
Science Committee will come to order.
    Today, we will hear testimony about the year 2000 
preparations needed to guarantee the seamless delivery of 
health care financing by the Nation's largest health insurer, 
the Federal Government. Through the Medicare program, the 
government provides health insurance to more than 39 million 
senior citizens.
    Unfortunately, this massive health insurance program has 
severe weakness in its year 2000 readiness. Medicare has been 
identified by the President's Office of Management and Budget 
as one of the 43 essential Federal programs. Yet, 2 weeks ago, 
we reported that it is unknown when large portions of the 
Medicare program will be year 2000 ready.
    The outlook did seem alarming, and we hope to hear what the 
situation is today. As of last week, less than 2 percent of the 
230,000 hospitals, nursing homes, doctors and other health care 
providers who submit claims to Medicare had tested their 
computer systems with Medicare contractors.
    Of the nearly 4,000 health care providers who had begun 
this testing, many experienced significant failures. Worse, 
some health providers report that they are just not ready for 
the January 1st deadline.
    We are not here today to be alarmists, but we do want to 
provide an accurate portrayal of Medicare's Y2K landscape.
    In February, we held a hearing to review the Health Care 
Financing Administration's year 2000 preparations. At the time, 
the agency's systems were not ready. Since then, however, HCFA 
has made substantial progress in fixing and testing its 
systems. We commend them for this very hard work. Yet, equally 
strenuous work remains.
    HCFA has stated that if Medicare providers cannot submit 
proper claims, health care providers will not get paid. 
Furthermore, according to HCFA, providers who do not test their 
claims submissions are not exercising due diligence and, 
therefore, must be prepared to accept any cash-flow 
consequences that might arise from this lack of preparation.
    We will examine four key areas in the Medicare program 
today: First, whether the Health Care Financing Administration 
has completed its final year 2000 computer tests; second, how 
some Medicare contractors and providers are testing their 
computer systems; third, the year 2000 preparations of managed 
care organizations; and, finally, whether the Health Care 
Financing Administration, Medicare contractors and managed care 
organizations have developed and tested their business 
continuity and contingency plans.
    Health Care Financing Administration, its contractors and 
health care providers have only 95 days to find an antidote to 
strengthen the Nation's health care financing system. They must 
meet that deadline, because 39 million American seniors are 
depending on it.
    I welcome today's panel of witnesses and look forward to 
their testimony.
    I'll now yield to the co-chairman representing the 
Subcommittee on Technology of the House Committee on Science 
for an opening statement, and then I'll yield to the ranking 
member on the Government Management, Information, and 
Technology Subcommittee.
    [The prepared statement of Hon. Stephen Horn follows:]
    [GRAPHIC] [TIFF OMITTED] T1209.001
    
    [GRAPHIC] [TIFF OMITTED] T1209.002
    
    Mrs. Morella. Thank you, Mr. Chairman.
    Mr. Chairman, this past February we held a hearing that 
examined the status of the efforts of the Department of Health 
and Human Services focusing on the Health Care Financing 
Administration to prepare for the technical challenges 
associated with the year 2000 problem, and at that hearing the 
GAO, General Accounting Office, reported the severe 
difficulties HCFA has experienced with Y2K, stating that, 
``HCFA and its contractors were severely behind schedule,'' in 
preparing, testing and implementing the mission-critical 
systems that support Medicare.
    Faced with this stark finding, there was little or no 
confidence from the approximately one-quarter of our Nation's 
population who receive over $170 billion annually of Medicare 
and Medicaid assistance that their elderly, disabled or 
indigent benefits would continue uninterrupted after January 
1st, 2000. Subsequent to the hearing, we've seen the agency 
undertake dramatic actions in management, resources, personnel 
and funding to correct the Y2K problem. Are these refocused 
efforts, however, enough to overcome HCFA's auspiciously 
horrendous start? HCFA says yes, but others and I are not quite 
so certain.
    You have to be concerned when HCFA just last week tells us 
that only 2 percent of their physicians and hospitals that 
submit claims to them have tested their computer systems with 
Medicare contractors, and of those that have tested their 
systems, 10 to 20 percent have experienced significant 
failures. These startling facts are obviously not very 
comforting.
    I know that HCFA disputes some of the GAO's conclusions, 
and I know that both HHS and HCFA have demonstrated a great 
deal of progress in the last quarter. So I look forward to 
hearing from our distinguished panel today and especially to 
hear our witnesses representing other Medicare partners to 
determine exactly where the agency stands in their Y2K 
remediation and validation efforts. No less than a successful 
continuation of our Nation's health and welfare is at stake, 
especially for those who can least afford a disruption in their 
health benefits. If there are to be any disruptions, the 
American people need to know that there should be adequate 
contingency plans to cover any failures related to Y2K.
    So, Mr. Chairman, I look forward to hearing from our 
witnesses on this critical problem.
    [The prepared statement of Hon. Constance A. Morella 
follows:]
[GRAPHIC] [TIFF OMITTED] T1209.003

[GRAPHIC] [TIFF OMITTED] T1209.004

[GRAPHIC] [TIFF OMITTED] T1209.005

    Mr. Horn. I thank my colleague and now would yield time for 
an opening statement to the ranking member of the Subcommittee 
on Government Management, Information, and Technology, Mr. 
Turner of Texas.
    Mr. Turner. Thank you, Mr. Chairman.
    It's good to have all of our witnesses here today to talk 
about this very important issue. I've always held the opinion 
that some of the greatest risks facing us with regard to Y2K 
problems was in the health care industry and HCFA, which 
relates primarily to the prompt payment of claims and ensuring 
the system works. We know that that is a critical part.
    There are many hospitals today that a short disruption in 
payments could represent financial destruction for them. So I 
think it's very important that we continue to pay attention to 
this issue, as we have done through several meetings of this 
committee held jointly with Chairwoman Morella and her 
subcommittee.
    I do believe that in February we found that there were 
problems remaining at HCFA. I do understand that much progress 
has been made in the last few months; and, of course, the 
purpose of our hearing today is to address the remaining areas 
of concern that we have at the committee.
    I thank the Chair for continuing to stay on top of this 
very important matter because, after all, HCFA is the largest 
health insurer in the entire Nation and pays out $288 billion a 
year. It's a very important agency to the many billions of 
Americans who depend upon Medicare for their health care.
    Thank you, Mr. Chairman.
    [The prepared statement of Hon. Jim Turner follows:]
    [GRAPHIC] [TIFF OMITTED] T1209.006
    
    [GRAPHIC] [TIFF OMITTED] T1209.007
    
    Mr. Horn. Thank you very much.
    Let me explain how this subcommittee functions. We would 
like--because we do have your statements, we'd like it if you 
could summarize between 5 and 10 minutes each of your 
statements. That will give us more of an opportunity for dialog 
among the panel, as well as dialog with the members and the 
panel, but don't feel bad if you worry about the 5 to 10. Just 
take the time you need to tell the story, and if we can tell it 
succinctly, that helps.
    The other thing is that we do submit all of our witnesses 
and their staff that might tell them what the answer is on 
questions, we are really down to, as an investigative 
committee, to giving the oath. So if you don't mind standing 
and putting up your right hands, with the people that will 
advise you also taking the oath, then I don't have to have 18 
baptisms here.
    [Witnesses sworn.]
    Mr. Horn. I have six witnesses, and I have six helpers, all 
of which are important. So let us just go down the way we have 
it on the agenda.
    That's Mr. Willemssen, the Director of Civil Agencies 
Information Systems, U.S. General Accounting Office. He's been 
our principal witness at every system I think this last year, 
be it in the States or overseas or here, wherever. So he has a 
lot of knowledge, and we'd appreciate his summary of what the 
GAO has done in terms of their studies on Medicare in 
particular.
    Mr. Willemssen.

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

    Mr. Willemssen. Thank you, Chairman Horn, Chairwoman 
Morella, Ranking Member Turner. Thank you for inviting GAO to 
testify today. As requested, I will briefly summarize our 
statement on the readiness of Medicare and Y2K.
    HCFA continues to make progress in its efforts to address 
numerous Medicare Y2K issues. For example, HCFA is more 
effectively identifying and managing risks. It also is more 
effectively managing its electronic data exchanges and has 
improved its testing program.
    HCFA has also shown progress in the development of its 
business continuity and contingency plans and has taken 
comprehensive measures in conducting numerous Y2K outreach 
activities.
    Even with this progress, however, HCFA still faces a 
considerable amount of work and challenges over the next few 
months. For example, HCFA is using a less than ideal approach 
of having key claims processing systems tested concurrently. 
Because of the limited time remaining, HCFA, though, has little 
choice but to test in this manner. This approach invites 
additional risk because resolving one system's testing errors 
can lead to problems in another system that's being tested at 
the same time. Therefore, HCFA must aggressively manage these 
risks through an integrated testing schedule that defines 
interdependencies and a critical path, establishing the 
sequence in which tasks must be completed.
    In addition to these system interdependencies, ongoing 
testing of contractors' systems continues to identify errors, 
some of which would result in Y2K failures. HCFA's use of 
system quality assurance tools also continues to find system 
problems that will need to be resolved in the short time 
remaining.
    HCFA also will need to carefully manage contractor 
transitions to a new data center that is planned between now 
and early November and will have to implement its policy of 
minimizing system changes during the rollover period.
    HCFA faces challenges in several other areas. For example, 
as noted earlier by you, Chairwoman Morella, contractor 
progress and testing with providers has been disappointing. The 
most recent available HCFA information shows that more than 
half of HCFA's contractors have tested with less than 1 percent 
of their providers, and for the testing that has been done an 
error rate of 10 to 20 percent is being reported.
    In addition to fee-for-service contractors, many of 
Medicare's beneficiaries are enrolled in managed care 
organizations. The available data on the Y2K status of these 
organizations also raise concerns. In June, only 4 of 425 of 
these organizations were reporting that they were fully 
compliant. Further, HCFA's Y2K risk assessments of managed care 
organizations showed that 94 of them were considered high risk.
    To ensure that managed care organizations are adequately 
addressing Y2K, HCFA is conducting site visits covering 184 of 
these organizations; and as part of our ongoing work for the 
Senate Special Committee on Aging, we plan to followup on 
HCFA's actions in this area.
    Given the magnitude of the challenges that HCFA faces, the 
development of business continuity and contingency plans is 
crucial. HCFA has completed its agency-wide business continuity 
and contingency plan that includes 29 internal plans. However, 
essential validation activities still remain.
    Regarding contractor business continuity and contingency 
plans, their status is essentially unknown. Our assessment of 
available plans revealed that most contractors did not have 
specified detailed procedures that are required for executing 
and testing the plans.
    The status of contingency plans for managed care 
organizations is also not encouraging. By early September HCFA 
had received plans from over 300 of these managed care 
organizations. However, its review concluded that about 69 
percent of them needed major improvement.
    In conclusion, it's clear that HCFA has made substantial 
progress on Y2K over the last several months. Nevertheless, the 
agency still faces a considerable amount of work and challenges 
over the next few months to ensure that Medicare providers will 
be made paid and beneficiaries will continue to receive care.
    Thank you.
    Mr. Horn. Thank you very much.
    [The prepared statement of Mr. Willemssen follows:]
    [GRAPHIC] [TIFF OMITTED] T1209.008
    
    [GRAPHIC] [TIFF OMITTED] T1209.009
    
    [GRAPHIC] [TIFF OMITTED] T1209.010
    
    [GRAPHIC] [TIFF OMITTED] T1209.011
    
    [GRAPHIC] [TIFF OMITTED] T1209.012
    
    [GRAPHIC] [TIFF OMITTED] T1209.013
    
    [GRAPHIC] [TIFF OMITTED] T1209.014
    
    [GRAPHIC] [TIFF OMITTED] T1209.015
    
    [GRAPHIC] [TIFF OMITTED] T1209.016
    
    [GRAPHIC] [TIFF OMITTED] T1209.017
    
    [GRAPHIC] [TIFF OMITTED] T1209.018
    
    [GRAPHIC] [TIFF OMITTED] T1209.019
    
    [GRAPHIC] [TIFF OMITTED] T1209.020
    
    [GRAPHIC] [TIFF OMITTED] T1209.021
    
    [GRAPHIC] [TIFF OMITTED] T1209.022
    
    [GRAPHIC] [TIFF OMITTED] T1209.023
    
    [GRAPHIC] [TIFF OMITTED] T1209.024
    
    [GRAPHIC] [TIFF OMITTED] T1209.025
    
    [GRAPHIC] [TIFF OMITTED] T1209.026
    
    [GRAPHIC] [TIFF OMITTED] T1209.027
    
    [GRAPHIC] [TIFF OMITTED] T1209.028
    
    [GRAPHIC] [TIFF OMITTED] T1209.029
    
    [GRAPHIC] [TIFF OMITTED] T1209.030
    
    [GRAPHIC] [TIFF OMITTED] T1209.031
    
    [GRAPHIC] [TIFF OMITTED] T1209.032
    
    [GRAPHIC] [TIFF OMITTED] T1209.033
    
    [GRAPHIC] [TIFF OMITTED] T1209.034
    
    [GRAPHIC] [TIFF OMITTED] T1209.035
    
    [GRAPHIC] [TIFF OMITTED] T1209.036
    
    Mr. Horn. We now go to the principal witness from the 
Health Care Financing Administration, which is the Chief 
Information Officer Gary Christoph. Dr. Christoph.

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

    Dr. Christoph. Chairman Horn, Chairwoman Morella and 
Congressman Turner, thank you for inviting me here today to 
discuss the Health Care Financing Administration progress on 
meeting the year 2000 challenge. I'm happy to report to you 
that we continue to make solid progress.
    We have continued our aggressive Y2K activities since we 
last came before Chairman Horn's committee this past April, and 
we are on track toward meeting this challenge successfully. All 
of our internal systems have been renovated, fully tested, 
certified compliant and implemented. All of our external claims 
processing systems, those at our contractors, have been fully 
tested, including future date testing and integrated testing 
and certified as compliant; and all of these systems are in 
production and are processing Medicare claims today.
    We've taken the advice of Congress to heart and have worked 
diligently with the GAO to achieve our mutual goal that 
Medicare function into the new millennium with minimal 
disruption due to Y2K. For all of us in the health care 
industry, the year 2000 challenge is more than a business and 
technical issue. It is a patient care issue. As the GAO has 
reported, provider readiness surveys have had very low response 
rates and consist of self-reported status information that we 
suspect of being overly optimistic.
    We continue to have serious concerns about the readiness of 
Medicare providers. We have made extraordinary efforts to reach 
out to providers and to raise awareness about what they must do 
to meet their responsibility. We are sponsoring hundreds of 
conferences, learning sessions, and lectures throughout the 
country, and we meet regularly with the health care sector 
trade groups to raise awareness.
    We have established a Y2K website, a toll-free line to 
provide up-to-date information on a wide range of issues, and 
we have made other steps to help readiness.
    We are encouraging providers to test future-dated claims 
with our claims processing contractors.
    Despite these unprecedented efforts, too few providers are 
taking advantage of the opportunity we've created for them to 
test with us. We're doing all we can to ensure that our systems 
will work and that providers will get paid. That's the best way 
to ensure that beneficiaries continue to get care, and we've 
pulled out all the stops to encourage providers to get ready, 
too, but it is frustrating that they are still not willing or 
able to test with us.
    In fact, less than 2 percent of claim submitters have 
tested with our contractors. Of those that have tested, 10 to 
20 percent have found errors. Those that have found problems 
have been able to correct them. That's the purpose of the 
testing. That's the good news.
    We remain deeply concerned, however, about those who have 
not tested at all. If they have not tested, it is unlikely if 
they know whether or not their systems will work. We are doing 
all we can to raise providers awareness, and we are very open 
to your advice and suggestions on how best to reach them in the 
limited time that remains.
    We at HCFA have and continue to do a great deal of testing 
and retesting to ensure that our own systems will continue 
operating come January 1st, 2000. We continue to refine and 
validate our contingency plans which were developed using GAO 
guidance to prepare for any unforeseen glitches. We've actually 
exercised some parts of our plans successfully during Hurricane 
Floyd several weeks ago. We have also required our claim 
processing contractors to have appropriate and validated 
contingency plans, and we're carefully reviewing those plans, 
as GAO has recommended. And we continue to help health care, 
managed care organizations and State Medicaid plans and the 
health community at large to develop and refine their 
contingency plans.
    We have had a lot of help with our Y2K effort. We 
appreciate and have greatly benefited from the advice of our 
independent validation and verification contractor, AverStar, 
as well as advice from the Health and Human Services Inspector 
General and the General Accounting Office. And we certainly 
would not have made the progress we have without the support 
and funding that has been provided to us by you, Congress. I am 
confident that our systems will be ready to process and pay 
claims at the turn of the century. We will continue to do all 
we can to reach out to providers and to share information and 
assistance.
    Again, I thank you for your attention to this essential 
issue. Thank you, Mr. Chairman.
    Mr. Horn. Thank you very much.
    [The prepared statement of Dr. Christoph follows:]
    [GRAPHIC] [TIFF OMITTED] T1209.037
    
    [GRAPHIC] [TIFF OMITTED] T1209.038
    
    [GRAPHIC] [TIFF OMITTED] T1209.039
    
    [GRAPHIC] [TIFF OMITTED] T1209.040
    
    [GRAPHIC] [TIFF OMITTED] T1209.041
    
    [GRAPHIC] [TIFF OMITTED] T1209.042
    
    [GRAPHIC] [TIFF OMITTED] T1209.043
    
    [GRAPHIC] [TIFF OMITTED] T1209.044
    
    [GRAPHIC] [TIFF OMITTED] T1209.045
    
    [GRAPHIC] [TIFF OMITTED] T1209.046
    
    Mr. Horn. We now have the president of the American College 
of Physicians and the American Society of Internal Medicine, 
Dr. Whitney W. Addington. Dr. Addington.

 STATEMENT OF WHITNEY W. ADDINGTON, M.D., PRESIDENT, AMERICAN 
  COLLEGE OF PHYSICIANS, AMERICAN SOCIETY OF INTERNAL MEDICINE

    Dr. Addington. Thank you and good afternoon.
    I am Dr. Whitney Addington. I am an internist and 
pulmonologist in Chicago and president of the American College 
of Physicians American Society of Internal Medicine. The 
college is the Nation's largest medical specialty organization. 
Many of the more than 115,000 members of the college are 
involved in internal medicine practices in which they 
constantly rely on computer technology which provides 
invaluable assistance in the provision of patient care, as well 
as in the administrative aspects of running their medical 
practice. You are to be commended for the subcommittee's 
ongoing focus on the serious challenges posed by Y2K readiness 
issues.
    ACP-ASIM was quick to recognize the threat posed by Y2K. 
Unless our members addressed it, we knew it could disrupt their 
practice operations and thereby impede delivery of vital health 
care services to their patients. As early as March 1998, our 
monthly newsletter ran a full-length article posing the 
question, ``Is your practice prepared for the millennium bug?''
    Early in 1999, the college mobilized a college-wide 
information campaign to alert, inform and assist our membership 
in addressing the Y2K threat. Articles appeared in most of this 
year's issues. The topic has been further publicized through 
our State chapters.
    ACP-ASIM's Center for a Competitive Advantage created a 
special Y2K webpage on our own website, www.acponline.org, and 
published a Y2K Tool Kit to give members detailed, practical 
information and guidance on how to address the issue.
    This is the Y2K Tool Kit that has been given to our 
members, and I have included a copy, together with my 
testimony, and would respectfully request that it be included 
in the record of this hearing.
    Mr. Horn. Without objection, it is so ordered at this point 
in the hearing.
    Dr. Addington. Thank you.
    [The Y2K Tool Kit follows:]
    [GRAPHIC] [TIFF OMITTED] T1209.047
    
    [GRAPHIC] [TIFF OMITTED] T1209.048
    
    [GRAPHIC] [TIFF OMITTED] T1209.049
    
    [GRAPHIC] [TIFF OMITTED] T1209.050
    
    [GRAPHIC] [TIFF OMITTED] T1209.051
    
    [GRAPHIC] [TIFF OMITTED] T1209.052
    
    [GRAPHIC] [TIFF OMITTED] T1209.053
    
    [GRAPHIC] [TIFF OMITTED] T1209.054
    
    [GRAPHIC] [TIFF OMITTED] T1209.055
    
    [GRAPHIC] [TIFF OMITTED] T1209.056
    
    [GRAPHIC] [TIFF OMITTED] T1209.057
    
    [GRAPHIC] [TIFF OMITTED] T1209.058
    
    [GRAPHIC] [TIFF OMITTED] T1209.059
    
    [GRAPHIC] [TIFF OMITTED] T1209.060
    
    [GRAPHIC] [TIFF OMITTED] T1209.061
    
    [GRAPHIC] [TIFF OMITTED] T1209.062
    
    [GRAPHIC] [TIFF OMITTED] T1209.063
    
    [GRAPHIC] [TIFF OMITTED] T1209.064
    
    [GRAPHIC] [TIFF OMITTED] T1209.065
    
    [GRAPHIC] [TIFF OMITTED] T1209.066
    
    [GRAPHIC] [TIFF OMITTED] T1209.067
    
    [GRAPHIC] [TIFF OMITTED] T1209.068
    
    [GRAPHIC] [TIFF OMITTED] T1209.069
    
    [GRAPHIC] [TIFF OMITTED] T1209.070
    
    [GRAPHIC] [TIFF OMITTED] T1209.071
    
    [GRAPHIC] [TIFF OMITTED] T1209.072
    
    [GRAPHIC] [TIFF OMITTED] T1209.073
    
    [GRAPHIC] [TIFF OMITTED] T1209.074
    
    [GRAPHIC] [TIFF OMITTED] T1209.075
    
    [GRAPHIC] [TIFF OMITTED] T1209.076
    
    [GRAPHIC] [TIFF OMITTED] T1209.077
    
    [GRAPHIC] [TIFF OMITTED] T1209.078
    
    [GRAPHIC] [TIFF OMITTED] T1209.079
    
    [GRAPHIC] [TIFF OMITTED] T1209.080
    
    [GRAPHIC] [TIFF OMITTED] T1209.081
    
    [GRAPHIC] [TIFF OMITTED] T1209.082
    
    [GRAPHIC] [TIFF OMITTED] T1209.083
    
    [GRAPHIC] [TIFF OMITTED] T1209.084
    
    [GRAPHIC] [TIFF OMITTED] T1209.085
    
    [GRAPHIC] [TIFF OMITTED] T1209.086
    
    [GRAPHIC] [TIFF OMITTED] T1209.087
    
    [GRAPHIC] [TIFF OMITTED] T1209.088
    
    [GRAPHIC] [TIFF OMITTED] T1209.089
    
    [GRAPHIC] [TIFF OMITTED] T1209.090
    
    [GRAPHIC] [TIFF OMITTED] T1209.091
    
    [GRAPHIC] [TIFF OMITTED] T1209.092
    
    [GRAPHIC] [TIFF OMITTED] T1209.093
    
    [GRAPHIC] [TIFF OMITTED] T1209.094
    
    [GRAPHIC] [TIFF OMITTED] T1209.095
    
    [GRAPHIC] [TIFF OMITTED] T1209.096
    
    [GRAPHIC] [TIFF OMITTED] T1209.097
    
    [GRAPHIC] [TIFF OMITTED] T1209.098
    
    [GRAPHIC] [TIFF OMITTED] T1209.099
    
    [GRAPHIC] [TIFF OMITTED] T1209.100
    
    [GRAPHIC] [TIFF OMITTED] T1209.101
    
    [GRAPHIC] [TIFF OMITTED] T1209.102
    
    [GRAPHIC] [TIFF OMITTED] T1209.103
    
    [GRAPHIC] [TIFF OMITTED] T1209.104
    
    [GRAPHIC] [TIFF OMITTED] T1209.105
    
    [GRAPHIC] [TIFF OMITTED] T1209.106
    
    [GRAPHIC] [TIFF OMITTED] T1209.107
    
    [GRAPHIC] [TIFF OMITTED] T1209.108
    
    [GRAPHIC] [TIFF OMITTED] T1209.109
    
    [GRAPHIC] [TIFF OMITTED] T1209.110
    
    [GRAPHIC] [TIFF OMITTED] T1209.111
    
    [GRAPHIC] [TIFF OMITTED] T1209.112
    
    [GRAPHIC] [TIFF OMITTED] T1209.113
    
    [GRAPHIC] [TIFF OMITTED] T1209.114
    
    [GRAPHIC] [TIFF OMITTED] T1209.115
    
    [GRAPHIC] [TIFF OMITTED] T1209.116
    
    [GRAPHIC] [TIFF OMITTED] T1209.117
    
    [GRAPHIC] [TIFF OMITTED] T1209.118
    
    [GRAPHIC] [TIFF OMITTED] T1209.119
    
    [GRAPHIC] [TIFF OMITTED] T1209.120
    
    [GRAPHIC] [TIFF OMITTED] T1209.201
    
    [GRAPHIC] [TIFF OMITTED] T1209.121
    
    [GRAPHIC] [TIFF OMITTED] T1209.122
    
    [GRAPHIC] [TIFF OMITTED] T1209.123
    
    [GRAPHIC] [TIFF OMITTED] T1209.124
    
    [GRAPHIC] [TIFF OMITTED] T1209.125
    
    [GRAPHIC] [TIFF OMITTED] T1209.126
    
    [GRAPHIC] [TIFF OMITTED] T1209.127
    
    [GRAPHIC] [TIFF OMITTED] T1209.128
    
    [GRAPHIC] [TIFF OMITTED] T1209.129
    
    [GRAPHIC] [TIFF OMITTED] T1209.130
    
    [GRAPHIC] [TIFF OMITTED] T1209.131
    
    [GRAPHIC] [TIFF OMITTED] T1209.132
    
    [GRAPHIC] [TIFF OMITTED] T1209.133
    
    [GRAPHIC] [TIFF OMITTED] T1209.134
    
    [GRAPHIC] [TIFF OMITTED] T1209.135
    
    [GRAPHIC] [TIFF OMITTED] T1209.136
    
    [GRAPHIC] [TIFF OMITTED] T1209.137
    
    [GRAPHIC] [TIFF OMITTED] T1209.138
    
    [GRAPHIC] [TIFF OMITTED] T1209.139
    
    [GRAPHIC] [TIFF OMITTED] T1209.140
    
    [GRAPHIC] [TIFF OMITTED] T1209.141
    
    [GRAPHIC] [TIFF OMITTED] T1209.142
    
    [GRAPHIC] [TIFF OMITTED] T1209.143
    
    [GRAPHIC] [TIFF OMITTED] T1209.144
    
    [GRAPHIC] [TIFF OMITTED] T1209.145
    
    [GRAPHIC] [TIFF OMITTED] T1209.146
    
    [GRAPHIC] [TIFF OMITTED] T1209.147
    
    [GRAPHIC] [TIFF OMITTED] T1209.148
    
    [GRAPHIC] [TIFF OMITTED] T1209.149
    
    [GRAPHIC] [TIFF OMITTED] T1209.150
    
    [GRAPHIC] [TIFF OMITTED] T1209.151
    
    [GRAPHIC] [TIFF OMITTED] T1209.152
    
    [GRAPHIC] [TIFF OMITTED] T1209.153
    
    [GRAPHIC] [TIFF OMITTED] T1209.154
    
    [GRAPHIC] [TIFF OMITTED] T1209.155
    
    [GRAPHIC] [TIFF OMITTED] T1209.156
    
    [GRAPHIC] [TIFF OMITTED] T1209.157
    
    [GRAPHIC] [TIFF OMITTED] T1209.158
    
    [GRAPHIC] [TIFF OMITTED] T1209.159
    
    [GRAPHIC] [TIFF OMITTED] T1209.160
    
    [GRAPHIC] [TIFF OMITTED] T1209.161
    
    [GRAPHIC] [TIFF OMITTED] T1209.162
    
    [GRAPHIC] [TIFF OMITTED] T1209.163
    
    [GRAPHIC] [TIFF OMITTED] T1209.164
    
    [GRAPHIC] [TIFF OMITTED] T1209.165
    
    [GRAPHIC] [TIFF OMITTED] T1209.166
    
    Dr. Addington. The college staff also is available to 
respond directly by telephone to inquiries regarding this 
issue. At our April annual meeting, which was attended by 
10,000 physicians, special Y2K educational sessions were 
repeatedly conducted by the college's Medical Informatics 
Department. A press conference was also held, and the Y2K Tool 
Kit was widely distributed.
    Nor are we finished with this campaign. The Y2K webpage 
continues to be updated to reflect more recent information, the 
growing number of physicians who have initiated corrective 
steps and the evolving nature of Y2K-related problems.
    We have not attempted to monitor the number of physicians 
who have evaluated or corrected their practice computer 
systems. That number changes constantly. Various government and 
other surveys indicate that a fairly high level of physician 
awareness now exists regarding Y2K and that most physician 
practices have undertaken some corrective measures. Time, 
however, is running out for those who have not, and the 
available options are rapidly declining.
    Later this week, we meet with all the Governors, which is 
our grassroots organization, and I will be stressing that their 
systems need to be tested.
    As the year-end deadline swiftly approaches, our attention 
is shifting to problems potentially faced by those practices 
that have undertaken corrective measures but not yet tested to 
be sure those measures will actually work. Nationwide 
Insurance, which processes Medicare Part B claims for 7,500 
physicians and other electronic claims submitters, recently 
indicated that fewer than 10 percent of its clients had 
completed testing as of September 13th. Of those who had 
tested, 56 percent proved unsuccessful on the first try. Only 6 
percent of those with critical date failures have been able to 
resolve the errors and complete the testing. They may or may 
not have to replace their supposedly Y2K compliant systems.
    The college is very concerned, therefore, that too many 
physicians may be relying on vendor certifications that the 
vendor's software is Y2K compliant without requiring testing 
that all parts of the system are, in fact, compliant. While we 
think it risky for nonexperts to try rolling forward the dates 
on computer systems to determine their Y2K readiness, it is 
imperative that even new systems, as well as those supposedly 
corrected for Y2K, be tested by experts to confirm the 
operational success of the corrective measures. Such requisite 
testing must include all individual software and hardware 
components of a system.
    In matters like electronic claims, problems can arise in 
the interface between two organizations' supposedly Y2K 
corrected systems. Even when such problems are correctable, the 
first test may fail in a high percentage of cases, thus 
requiring some debugging of a physician's system. Only a finite 
number of computer technicians are able to help with this 
debugging process. Therefore, we are concerned that delayed 
testing by medical practices might lead to a last minute 
debugging demand that could overwhelm available resources.
    We will be doing everything we can to make our members 
aware
of the need for testing and the importance of performing that 
testing now.
    I'll be pleased to respond to your questions. Thank you.
    Mr. Horn. Thank you very much, Dr. Addington.
    [The prepared statement of Dr. Addington follows:]
    [GRAPHIC] [TIFF OMITTED] T1209.167
    
    [GRAPHIC] [TIFF OMITTED] T1209.168
    
    Mr. Horn. Our next witness is Fred Brown, The vice chairman 
of BJC Health Systems, senior advisor on the President's 
Council of Y2K Conversion. He's also chairman of the Board of 
Trustees of the American Hospital Association.
    Thank you for coming.

  STATEMENT OF FRED BROWN, VICE CHAIRMAN, BJC HEALTH SYSTEMS, 
  SENIOR ADVISOR, PRESIDENT'S COUNCIL OF Y2K CONVERSION, AND 
   CHAIRMAN, BOARD OF TRUSTEES, AMERICAN HOSPITAL ASSOCIATION

    Mr. Brown. Thank you very much, Chairman Horn, Chairwoman 
Morella and Congressman Turner.
    As we approach the Y2K period, January 1st, just 95 days 
away, the American Hospital Association and its members are 
continuing to be committed to ensure smooth delivery of high-
quality health care, because the bottom line is patient safety 
and patient care.
    Hospitals of all kinds in every community across America 
have been diligently preparing all aspects of their operations 
for Y2K. The focus has been on medical devices and equipment, 
information systems and infrastructure, and there's every 
indication as we have coordinated our activities through our 
State hospital associations and hospitals across the country 
that the hospital sector will be ready for Y2K, and our own 
survey information makes that clear.
    So does the report issued earlier this year by the HHS 
Inspector General's office; and the Healthcare Year 2000 
Readiness Assessment #2, conducted for HCFA, identified 
hospitals as the health care sector that is among the most 
aggressive in meeting the Y2K deadlines.
    And as hospitals continue to perform this inside 
preparation, we are also deeply involved in efforts to 
communicate with our communities. We're helping to support and 
be very active in the community conversations being conducted 
across the country, and we've encouraged every hospital in 
every part of this country to get involved with their 
communities in terms of communication. The hospitals are 
working with their local agencies, their police, fire, 
utilities and, most recently, there was a recent drill in 
California. 372 hospitals took part. This drill was for the 
purpose of Statewide coordination of communications systems, 
the transmission of data about available hospital beds and the 
hospital's own contingency plans for Y2K, and all of these test 
were completed successfully.
    These extensive preparations that the hospitals are 
undergoing cost money, and we expect to spend somewhere around 
$8 billion to become Y2K compliant, and this huge sum is made 
even more daunting because it comes on top of the Balanced 
Budget Act's $71 billion in Medicare hospital payment cuts.
    We commend HCFA for announcing that the fiscal year 2000 
PPS update would not have to be delayed while the agency's 
computer systems are prepared for Y2K. HCFA has tackled this 
problem in a way that will prevent nearly $300 million in 
payment updates from being held back from hospitals who badly 
need them.
    We do remain concerned, however, that HCFA has not 
disclosed its contingency plan to prevent a systematic failure 
in claims processing as a result of Y2K, and it is imperative 
that HCFA establish a fail-safe contingency plan in case HCFA 
or its contractors' payment mechanisms fail at the turn of the 
century. And such a plan also would provide payment to 
facilities which, for reasons beyond their control, are not 
able to follow routine procedures in getting claims to their 
fiscal intermediaries.
    A system of advance payments based on past payment levels 
is one way to prevent this from happening and would ensure that 
hospitals have the resources necessary to care for Medicare 
patients, and we'd urge Congress to enact legislation, if 
needed, to authorize such a system.
    As hospitals, we are cooperating with HCFA as we have with 
the Food and Drug Administration; and as this issue of future 
date testing comes about, we are, through our communications 
with our State hospital associations and all of our hospitals 
across the country, encouraging them to do the necessary 
testing to be assured that they are Y2K compliant.
    In conclusion, Mr. Chairman, Y2K will obviously affect 
every aspect of America's life. However, few, if any, are as 
important as health care, and American hospitals and their 
health systems, their State associations and the AHA are 
partners in the effort to prepare for Y2K, and we encourage 
Congress and the various agencies to continue working with us 
as well, and we pledge our cooperation during these last 95 
days and in the future together to assure a smooth and healthy 
transition to the new millennium.
    Thank you very much for the opportunity to testify.
    Mr. Horn. Thank you very much.
    [The prepared statement of Mr. Brown follows:]
    [GRAPHIC] [TIFF OMITTED] T1209.169
    
    [GRAPHIC] [TIFF OMITTED] T1209.170
    
    [GRAPHIC] [TIFF OMITTED] T1209.171
    
    [GRAPHIC] [TIFF OMITTED] T1209.172
    
    [GRAPHIC] [TIFF OMITTED] T1209.173
    
    [GRAPHIC] [TIFF OMITTED] T1209.174
    
    [GRAPHIC] [TIFF OMITTED] T1209.175
    
    [GRAPHIC] [TIFF OMITTED] T1209.176
    
    [GRAPHIC] [TIFF OMITTED] T1209.177
    
    [GRAPHIC] [TIFF OMITTED] T1209.178
    
    [GRAPHIC] [TIFF OMITTED] T1209.179
    
    [GRAPHIC] [TIFF OMITTED] T1209.180
    
    Mr. Horn. Our next witness is Elizabeth Wilkey. She's the 
electronic data interchange coordinator for Blue Cross and Blue 
Shield of Georgia.
    Thank you for coming.

  STATEMENT OF ELIZABETH WILKEY, ELECTRONIC DATA INTERCHANGE 
       COORDINATOR, BLUE CROSS AND BLUE SHIELD OF GEORGIA

    Ms. Wilkey. Thank you.
    Chairman Horn, Chairwoman Morella, Congressman Turner and 
distinguished subcommittee members, thank you for the 
invitation and the opportunity to speak with you today on the 
Georgia Part A intermediary community outreach and testing 
progress for the millennium.
    For the past 18 months, I've been referred to in the State 
of Georgia as the Georgia blues Y2K evangelist. I've traveled 
throughout the State preaching a Y2K get ready sermon to 
vendors, clearinghouses, providers, billing services, the 
Georgia Hospital Association, the Health Care Finance 
Administration, anybody and everybody that would listen to me.
    In Georgia, we have conducted seminars and conferences 
which include but are not limited to what you need to do to 
prepare institutional providers, claims, products and systems 
for the millennium. I would like to extend a special thanks to 
HCFA Central for their participation, encouragement and support 
in our first Y2K vendor clearinghouse conference that was held 
in Atlanta, Georgia, on June 2nd, 1999. It sent a message to 
our vendors, clearinghouses and billings services, and that 
message was we need your help. Let us test this monster known 
as the millennium, Y2K, before the year 2000, and that's just 
what we've been doing.
    I want to thank the vendors and the clearinghouses and the 
billing services and the providers for participating in testing 
and future date testing. As a result of our testing efforts, we 
were able to test with customers representing 98.25 percent of 
our vendor provider community, and we are now pursuing the 
remaining 1.75 percent.
    There are certain advantages to this Y2K testing monster. 
If you would test and vendors get into the swing of testing 
with their providers, it will eliminate the element of 
surprise.
    It allows contractors, vendors, clearinghouses, providers, 
billing services to test their hardware and software in a 
future-dated environment.
    It assures and shows assurance to the vendors and providers 
that they have the ability to submit electronic claims into the 
year 2000.
    It gives the vendors and providers a comfort level of the 
contractor's ability to accept year 2000 claims.
    It gives the vendors and providers assurance that the 
contractors edits will work properly into the year 2000.
    It will create a proactive--not reactive, but proactive 
approach to resolving any issues before the millennium is here 
because you will have time to correct your systems before you 
go into the millennium.
    It will enable the contractors and the vendors and the 
billing service to create a log of Y2K issues, and in that log 
not only would they have the issues but they would have the 
resolution to those issues, what should happen if, and how to 
resolve if we see this into the year 2000.
    It will aid providers in testing and contractors in meeting 
their Y2K certification efforts.
    Now, in our testing environment and testing for the year 
2000, there were certain findings that we had great concern 
about. There were problems that we experienced with future-date 
testers, that most of them were very common errors that we see 
on a day-to-day basis.
    However, there was one that we had great concern with, and 
that's where we uncovered that one of our vendors' front-end 
system had a problem when it came to a windowing technique, and 
that windowing technique did not populate our electronic format 
properly to show month/month, day/day, century/century, year/
year dates of service properly in those fields, but it really 
showed 99/99/99 as the dates of service. Now, you've got to 
understand that this was one of those vendors that truly did 
not want to test with us, and the provider and I had to 
convince them and persuade them that they needed to do this 
testing. Today, that vendor is very happy that they did because 
now they can say I'm being proactive in resolving this Y2K 
issue before the year 2000.
    Now, I don't know about other States but I can truly tell 
you that I believe the State of Georgia is ready for the 
millennium. We're ready to proceed with our testing and getting 
those providers that have not tested tested; and, again, I 
thank you for the opportunity to share with you the Y2K testing 
experiences we've had in the State of Georgia.
    Mr. Horn. Thank you very much. I hear you've done a 
terrific job throughout Georgia. So thank you for coming and 
sharing some of those experiences with us.
    [The prepared statement of Ms. Wilkey follows:]
    [GRAPHIC] [TIFF OMITTED] T1209.181
    
    [GRAPHIC] [TIFF OMITTED] T1209.182
    
    [GRAPHIC] [TIFF OMITTED] T1209.183
    
    [GRAPHIC] [TIFF OMITTED] T1209.184
    
    [GRAPHIC] [TIFF OMITTED] T1209.185
    
    [GRAPHIC] [TIFF OMITTED] T1209.186
    
    [GRAPHIC] [TIFF OMITTED] T1209.187
    
    [GRAPHIC] [TIFF OMITTED] T1209.188
    
    [GRAPHIC] [TIFF OMITTED] T1209.189
    
    [GRAPHIC] [TIFF OMITTED] T1209.190
    
    [GRAPHIC] [TIFF OMITTED] T1209.191
    
    [GRAPHIC] [TIFF OMITTED] T1209.192
    
    [GRAPHIC] [TIFF OMITTED] T1209.193
    
    [GRAPHIC] [TIFF OMITTED] T1209.194
    
    [GRAPHIC] [TIFF OMITTED] T1209.195
    
    Mr. Horn. We now have our last witness, and it's Mr. Baker. 
Mr. Baker heads the New York-based Medicare Rights Center as 
their executive vice president. I'm curious, Mr. Baker, was 
that funded by Medicare or was it funded by a foundation? It's 
a good idea. You don't lack for customers.
    Mr. Baker. No. We certainly do not. You're right. We're 
funded in part by a grant from the Health Care Financing 
Administration that's administered by the New York State Office 
for the Aging and then we fund-raise through foundations, 
through individuals and through others, but all of our services 
are provided free of charge to people on Medicare and their 
families.
    Mr. Horn. Now, is that limited to New York or is it 
regionwide?
    Mr. Baker. We do have a contract in New York State to take 
calls. However, we take calls from across the country on 
various toll-free hotlines.
    Mr. Horn. There is a toll-free line?
    Mr. Baker. Yes, there is.
    Mr. Horn. What is the number?
    Mr. Baker. 1-800.
    Mr. Horn. 1-800.
    Mr. Baker. 333.
    Mr. Horn. 333.
    Mr. Baker. 4114.
    Mr. Horn. 4114. The reason I ask is, there's 435 members of 
the House whose caseworkers might like to call you.
    Mr. Baker. Yes. I hope they all don't decide to call 
tomorrow. I'll get in trouble.
    Mr. Horn. You've got 50,435, and if the Senate gets in on 
it, you've got another hundred.
    Well, thank you. Go right ahead.

  STATEMENT OF JOE BAKER, EXECUTIVE VICE PRESIDENT, MEDICARE 
                         RIGHTS CENTER

    Mr. Baker. Sure. Thank you for inviting me today, Chairman 
Horn, Chairwoman Morella and Congressman Turner. I am the 
executive vice president of the Medicare Rights Center. We're a 
national not-for-profit organization based in New York. We help 
seniors and people with disabilities and their families who are 
on Medicare through telephone counseling, through education 
efforts and through our public policy work. Last year, we 
fielded more than 50,000 calls, as you had mentioned, from 
people on Medicare and their families, and we handled or 
directly intervened in over 10,000 of those cases.
    In February, we also testified with regard to the Y2K issue 
and Medicare, and today, 6 months later and 95 days to the 
millennium, we still have many of the same concerns.
    Our foremost concern is that the 40 million people on 
Medicare, seniors and people with disabilities, have access to 
ongoing health care services through the Medicare program. We 
note that the Medicare and year 2000 booklet that was put out 
by HCFA just recently in its mailing to all 40 million Medicare 
beneficiaries does have information on Y2K. We understand that 
they will not, and they are told in that booklet, that they 
will be not be responsible for health care costs that may be 
caused by Y2K computer glitches. However, there's no mention of 
how this advice might help them if they cannot get that care in 
the first place, and that's our major concern.
    They're given a phone number, 1-800-MEDICARE, to call if 
they have trouble regarding Y2K issues. I note that, right now, 
with 1-800-MEDICARE and the Medicare Plus Choice program, 
frequently our organization is receiving inappropriate 
referrals and a lot of referrals from that particular number. 
So I question the ability of 1-800-MEDICARE counselors to 
handle these calls, and if they do refer them on to our 
organization, whether or not we have the resources or the 
training, frankly, with Y2K to handle those kinds of issues.
    We're particularly concerned about the Medicare managed 
care program, or the Medicare HMOs. Unlike original Medicare, 
Medicare HMOs, as you know, require preauthorization for 
specialty care or other types of care, and we're most concerned 
about those 6 million beneficiaries who are enrolled in 
Medicare HMOs. Unless Medicare HMOs are Y2K compliant, and we 
heard earlier that many are not, we could see a significant 
increase in the number of people on Medicare who, because of 
system failures, can't get authorization for the care they need 
with potentially devastating consequences.
    To consider a potential scenario, in February 2000, a woman 
on Medicare and in a Medicare HMO goes to the hospital with 
stomach pains. The doctor calls the HMO requesting approval to 
perform a Medicare covered procedure to alleviate that pain. 
The HMO does not have the systems in place to find the 
patient's name on its data base or can't use its system to 
determine whether the service is covered and, therefore, may 
not or does not authorize care. As a result, this particular 
individual would not get the care that she needed and which was 
Medicare--and which is Medicare covered.
    We're also concerned about what kind of tools HCFA is going 
to use to hold Medicare HMOs accountable and to make sure that 
people on Medicare get the care they need. As we know, HCFA has 
asked all of its contractors to submit Y2K compliance forms, 
but, as you know, these statements are not admissible in a 
court of law, and in the past HCFA has lacked the staff and 
resources to properly oversee its contracting agents. The Y2K 
issue highlights the Federal Government's and HCFA's, in this 
case, limited ability to ensure that people on Medicare get the 
health care they need from the private health plans that 
contract with HCFA.
    Second, we're also concerned about those programs that 
primarily help people with low incomes on Medicare, and these 
are the QMB, SLMB, QI1 and QI2 programs. We are already seeing 
a lot of access problems in those programs and particularly 
with regard to the interaction of State and Federal computer 
systems because these are programs that are administered by the 
States. The application process is already very slow and 
difficult, and so we feel that system failures may even further 
deny access to these important programs for people who are most 
vulnerable in the Medicare population.
    Finally, I don't--in the Medicare population, we see a lot 
of questions from seniors on our hotline about prescription 
drugs and medical equipment, and I don't know and I don't think 
that there has been the appropriate kind of outreach to them 
about how they should handle the prescription drug and medical 
equipment issues that might come up because of Y2K. I know this 
may be outside of HCFA's purview to a certain degree, but we do 
think that, as the major financer of health care in this 
country and particularly, of course, with the Medicare program, 
that HCFA should be taking some proactive steps to give 
consumers tips or other information about how to deal with 
prescription drugs or medical equipment contingencies or issues 
that may arise because of Y2K.
    As you know, people on Medicare have already lived through 
many changes and hardships. Most do not own a computer. They're 
probably not overconcerned with the ability of computer systems 
to transition smoothly into the year 2000. We don't want to 
instill fear in them, but it's our job as professionals who 
work closely with them to educate our clients on how they can 
get the care they need and when they need it. We are telling 
our clients to ask their doctors, pharmacists and medical 
suppliers if they are Y2K. We hope that Congress and HCFA will 
do whatever possible to make sure that people on Medicare keep 
getting the care they need in the new millennium.
    Thank you very much.
    Mr. Horn. We thank you. That's a very helpful statement.
    [The prepared statement of Mr. Baker follows:]
    [GRAPHIC] [TIFF OMITTED] T1209.196
    
    [GRAPHIC] [TIFF OMITTED] T1209.197
    
    [GRAPHIC] [TIFF OMITTED] T1209.198
    
    [GRAPHIC] [TIFF OMITTED] T1209.199
    
    [GRAPHIC] [TIFF OMITTED] T1209.200
    
    Mr. Horn. We're now going to go to questions, and we're 
going to treat ourselves the way we treated you. Each person 
will have questions for 5 minutes. We'll have another round. 
And I'm going to start with yielding my 5 minutes to the co-
chairwoman, Mrs. Morella of Maryland, and then we'll have it to 
Mr. Turner for 5 minutes, and if they haven't covered it all, I 
will take 5 minutes. So that's the way it will work.
    Mrs. Morella. Thank you, Mr. Chairman. You're very fair 
about that.
    And I must commend the panelists. You all stayed within the 
time limit. You all presented your statements very succinctly, 
and I applaud that.
    My question will be basically to GAO and HCFA to begin 
with. The 425 managed care organizations serving 6.9 million 
Medicare beneficiaries of the 39 million Medicare beneficiaries 
were never deemed mission-critical by HCFA, and the latest HCFA 
reports show that few of these managed care organizations are 
Y2K compliant. My question is, why weren't the managed care 
organizations deemed mission-critical if they're serving 6.9 
million Medicare beneficiaries? In other words, why are they 
deemed different from the fee-for-service contractors?
    Dr. Christoph. That's a complex question, Congresswoman 
Morella.
    The managed care organizations are different from the 
Medicare contractors in that the managed care organizations 
contract to provide a service. They contract to provide care. 
The Medicare contractors are contracted to provide processing 
of claims. What we have asked the managed care organizations to 
certify to is not only that they will make their systems ready 
by January 1st, 2000, but that they continue to provide 
operations and continue to provide care to the beneficiaries 
enrolled. In a sense, it doesn't matter what systems they're 
using to back up their operations. What they have contracted to 
do is to have providers provide care, and that's fundamentally 
different from how the Medicare claims processing contractors 
operate.
    Mrs. Morella. You also changed your mind, too. I mean, at 
one point weren't they going to have to report, you know, later 
on in 1999 and then you rescinded it?
    Dr. Christoph. I am sorry, can you repeat the question?
    Mrs. Morella. Yes. My understanding is that HCFA originally 
requested that the managed care organizations recertify in 1999 
and then later rescinded that.
    Dr. Christoph. No, we have not rescinded it. We have--
because events overtook that original statement that we were 
going to have them recertify, we subsequently decided we needed 
to watch them more carefully. So we demanded of them their 
contingency plans. We, subsequent to that original 
determination, have gone out and visited the plans that we 
thought had the highest impact. So we were rethinking whether 
or not recertification was necessary. They'd already certified, 
they'd already testified that they would be operational come 
January 1st. However, we just revisited that and, in fact, 
today have--are issuing the letter requiring that 
recertification statement of the managed care organizations.
    Mrs. Morella. You just did it today?
    Dr. Christoph. Yes, ma'am.
    Mrs. Morella. Great timing. That's great.
    Mr. Willemssen, would you comment on that?
    Mr. Willemssen. Yes, couple of points. We're very 
encouraged to hear that HCFA has decided to go out with that 
certification statement on managed care organizations. We think 
that that can go a long way toward giving further assurance 
that these organizations are indeed ready. I think before any 
organization wants to submit a certification they will want 
some extent of evidence internally that they are ready. So I 
think that's a step in the right direction, and this is the 
first we've heard of it, so I'm very glad to hear that.
    In terms of your prior question on why the systems 
supporting MCOs were not mission-critical, in retrospect there 
should have been some, in my opinion, designation of mission-
criticality. Probably not identifying 425 or 383 systems but--
and it's easy to sit here now and say that, in retrospect 
having some designation in the quarterly reports that these 
also are fairly important organizations serving almost 7 
million beneficiaries. I think now that the level of attention 
has been brought to bear on managed care organizations that 
that will assist in making sure that whatever can be done in 
the next few months is done.
    Mrs. Morella. Very good. I guess looking at the lights I 
have a little more time, and maybe I'll try to also get into 
the ACP-AISM question with HCFA, also.
    Based on data that was presented I understand last week at 
HCFA's Y2K electronics submission summit, 60 percent of the 
part B providers, which is equivalent to about 500,000 
physicians, are not prepared to submit Y2K compliant electronic 
submissions. What actions is HCFA taking to remedy that 
situation, and, you know, what recourse might they have?
    And I am going to ask you if you would comment on that 
also, Dr. Addington.
    Dr. Christoph. I think you've made a very important point 
there, Congresswoman.
    We have endeavored in all of our outreach to encourage 
providers to get ready, and we have told all of our contractors 
that they must be ready and able to test with submitters. The 
response has been very disappointing. As we testified, the 
difficulty is, in all of our outreach, as GAO has noted, we 
aren't reaching all of the providers. The ones that show up to 
our conferences, to our presentations are probably the ones who 
are most aware and most worried. It's the others that--who 
aren't getting our message--that concern us.
    We've been trying to be more focused. Last week, in 
Washington, we had a conference with organizations that submit 
claims and clearinghouses, and we discussed with them ways to 
encourage more testing with us. Our goal was to make available 
to providers as many resources as we can so they could test, 
but while bringing the horse to water, we haven't succeeded in 
making them drink yet. So that's where we're trying to focus 
our outreach efforts, is convincing them to make use of what 
we've been able to provide to help them.
    Mr. Horn. Thank you very much, and we now yield 5 minutes 
to the gentleman from Texas, Mr. Turner.
    Mrs. Morella. Mr. Chairman, Dr. Addington can later fill in 
on that, please?
    Mr. Horn. Sure.
    Mrs. Morella. Find out what he's going to do to whip these 
physicians into shape.
    Mr. Turner. Thank you, Mr. Chairman.
    It seems to me our discussion on Y2K compliance by managed 
care organizations probably gives us an opportunity to shed a 
little light on the relationship between the government and 
managed care and the beneficiaries, and I might ask Mr. Baker, 
first, to comment on this.
    I was noticing in your statement you made the comment that 
HCFA cannot guarantee that Medicare HMOs will be Y2K compliant, 
and a few paragraphs later you asked the question, what tools 
does HCFA have at its disposal to ensure that HMOs provide 
people on Medicare with the care they need? I'd like for you to 
perhaps comment a little bit on that, and maybe Mr. Christoph 
can add a perspective from the agency point of view. I am not 
sure what control HCFA has over these managed care 
organizations, and we're talking about the GAO's request that 
they demand a certification after the agency seems to be 
somewhat reluctant to do so.
    Now they announce they're going to require it again. I am 
not even sure what legal rights HCFA has to demand such from 
these managed care organizations. Is there something inherent 
here with regard to the relationship between HCFA and managed 
care organizations that makes it a little difficult to secure 
compliance in the Y2K area or in other areas relating to care?
    Mr. Baker. Well, I think that there has been issues, as I 
think all of us are aware through GAO reports and others, 
around HCFA's ability to oversee the Medicare managed care 
program and to make sure that Medicare HMOs are providing the 
care to people on Medicare that they deserve and are eligible 
for under the program.
    As I said in my testimony, I think the Y2K issue highlights 
the inability in many instances of HCFA to appropriately 
oversee the managed care organizations. I think that HCFA has 
made great strides in recent months and in recent years in 
oversight of the managed care organizations, but I think, you 
know, in our hotline, time and time again, and while this 
information is anecdotal, I think it's still that we can see 
these trends arise where managed care organizations and 
Medicare HMOs just don't seem to know or are literally, you 
know, unconsciously not following Medicare coverage guidelines 
but instead putting their own coverage guidelines or their own 
ideas about what Medicare should and should not cover into the 
mix, whereas that really isn't appropriate or allowed under 
Medicare regulations.
    There is a real flaunting of the rules in many instances, 
and in other instances just an ignorance of the rules, which is 
just as bad when it means that people are not getting the care 
that they are entitled to and need.
    Mr. Turner. Dr. Christoph, do you see the managed care and 
Medicare HMO organizations flaunting the rules, as Mr. Baker is 
referring to?
    Dr. Christoph. That sounds more like a policy issue, and I 
am not prepared to talk about how the rules are enforced. I 
don't personally see that. I am preoccupied with the systems 
kind of issues.
    Mr. Turner. What is your legal authority specifically to 
the Y2K compliance issue to tell a managed care organization or 
a Medicare HMO that you have to give us a certification 
statement of Y2K compliance? Do you have that authority?
    Dr. Christoph. We have very few levers to exert on the 
managed care organizations. We have required that they submit 
documents. We don't have much legal authority about how a 
private business that is contracted with us carries out that 
business. So other than getting them to certify that their 
systems will work or that they will deliver a quality of 
service, we have relatively few rules or levers to exert on 
them.
    Mr. Turner. Mr. Willemssen, do you believe that we need 
greater legal authority to require managed care organizations 
to certify or maybe in other areas other than Y2K 
certification?
    Mr. Willemssen. I think, with the limited time remaining, 
an approach that has worked in other sectors is, whether the 
legal authority is there or not, HCFA can request the 
information and then publicize the results by organization and 
say we asked 383 MCOs for certification information and here is 
what we got back by organization. If certain MCOs don't want to 
provide the information, that fact can also be published.
    My concern is that, in the limited amount of time 
available, I don't know that a full accounting of the legal 
intricacies can be done, and we may have to take more of the 
approach which has been done in the biomedical device area 
where the publicity of individual organizations and what they 
have reported ended up dramatically increasing the response 
rate.
    Mr. Turner. Has Y2K compliance been a factor in any of the 
52 HMOs that have dropped out of providing Medicare managed 
care?
    Dr. Christoph. I am not aware of why they chose not to stay 
in the program. It possibly is, but I can't answer that with 
certainty.
    Mr. Turner. Mr. Baker, it seems to me that it is difficult 
to know whether HCFA can ensure that HMOs are providing 
Medicare beneficiaries with the care that they are entitled to.
    I think I have always held the view that we inadequately 
reimburse our providers now under the Medicare program. Many of 
our rural hospitals that I represent are having difficulty 
keeping the doors open, and yet somehow we think that a managed 
care company can provide that same care cheaper and make a 
profit while they are doing it. It seems like a difficult 
thing, but I guess you would concur that we do need to have 
some tightening up in terms of the control that HCFA has over 
managed care organizations?
    Mr. Baker. That is right. I think we need more control and 
oversight. At this stage of the game, we need more information 
to go out directly to consumers about what they can do, what 
are--for lack of a better term--advocacy steps or survival 
skills. I don't know what kind of social marketing campaign we 
want to use but something that will give them some information 
about how to deal with this crisis if it becomes a crisis and 
how to get the care that they need should they keep hearing no. 
What organization will be there for them should they need care 
and can't get it. I think we need to give some of those answers 
so they can start preparing for it. Not scare them with that 
information but at least start to train them about how they 
might have to meet this situation.
    Mr. Turner. Thank you.
    Mr. Horn. We will have another round on this.
    I yield myself 5 minutes, but first Chairman Morella wanted 
I think Dr. Addington's answer to the question that was asked 
of Mr. Christoph, so let's get it on the record.
    Dr. Addington. Thank you, Congressman.
    First, let me say that, responding to Chairwoman Morella's 
suggestion to whip them into shape, I am reminded of the old 
saw that ``whipping physicians into shape'' is sort of like 
herding cats.
    I would like to think that our members whose systems have 
not been tested will respond. Many of our members are part of 
huge organizations. I would say 50 percent of our 115,000 
physician members are part of large organizations that have 
considerable expertise. I personally am a faculty member of 
such an institution, and we have been thoroughly checked and 
tested.
    It is the 50 percent that do not have the expertise in-
house. In a two- or three-physician practice, clearly the 
person who sends out the bills is probably the most 
sophisticated member of the office. Nonetheless, we are 
confident that we will get our college approach to this and 
insist that every member avail themselves of our Tool Kit and 
of our capacity and expertise in identifying for them those 
individuals in their community that should be contacted to 
actually do the testing.
    So I think the prognosis is excellent for internists. I 
think there will be some problems, but I trust that those will 
be straightened out rapidly.
    Mr. Horn. Well, thank you for that very full answer and 
optimistic answer.
    The first time I ever heard the expression you used, 
herding cats, was my first year here in 1993; and my wife, 
looking up in the gallery, concluded after one evening of 
voting was that the Members of the House of Representatives are 
like herding cats. You are looking at a tenured professor, and 
they act more like herding cats than anybody. Nobody can touch 
them.
    Dr. Addington. Well, we are in good company then.
    Mr. Horn. You are in very good company. The cats might get 
upset if they are listening here.
    On the recertification testing, HCFA, their mission-
critical systems, are their systems now compliant, the internal 
ones?
    Dr. Christoph. We went through a thorough round of testing 
and certification last year. All of our internal systems, 
including the systems that send money to managed care 
organizations, were certified as compliant by December 31st 
last year.
    We made changes to those systems. Any computer system 
evolves. We have had to incorporate some changes because of 
congressional mandates and maintenance. GAO has recommended 
that we freeze those systems and make sure that any changes 
that have been made haven't influenced their Y2K certification.
    A lot of folks in industry will only test the changes that 
they have made. What we have done is to put a program in place 
during this freeze period of retesting everything. We are 
putting them through all of the rigor and the tests that we did 
before, including future day testing. That round of testing 
should be done in November.
    So I guess the short answer is, I believe our systems are 
ready, but we are going after double assurance, and that is why 
we are doing such an intensive retesting, recertification, plus 
the addition of quality assurance tools like Mr. Willemssen 
mentioned.
    Mr. Horn. The recertification done by outside verifiers, 
how have you handled that?
    Dr. Christoph. The testing itself is done by internal staff 
and contractors that are basically providing staff support, but 
we have an IV&V contractor that is looking over our shoulder 
every step of the way, validating our procedures and looking at 
the test results and, in fact, signing off on the certification 
statements. So we are having independent evaluation to keep us 
honest.
    Mr. Horn. When you went through this testing and the 
certification, what was the magnitude of Y2K errors? Did it 
seem to be a very important thing where you had more than one 
aspect of it and you might have had 10 times that it would 
cause mischief? What did you get out of that testing and 
recertification?
    Dr. Christoph. Well, the original round revealed that we 
did have some issues, and that is the whole point of testing, 
is to show you what works and what doesn't. Yes, we found 
issues, and we fixed them. I don't think that we had any more 
Y2K bugs than are common in codes of this magnitude. Some of 
our systems are over a million lines of code on the internal 
side.
    After renovation, we have been using quality assurance 
tools, and we find in looking at them that the things that were 
missed were the things that these tools point up. Actually, far 
fewer than what I read in the trade press about the frequency 
of errors in renovated code.
    Mr. Horn. Mrs. Wilkey, I commend you for your hard work to 
assure that Blue Cross Blue Shield of Georgia is year 2000 
ready. What have been the critical success factors for you?
    Ms. Wilkey. I think the critical success factors would be 
getting out in the vendor world and getting their attention, 
first of all. That was a big chore for us.
    Providers have a tendency to leave things when it comes to 
their billing up to vendors, and you have to work very closely 
with the vendors and the clearinghouses in order to get the 
providers to do what you need them to do.
    The 98 percent test factor that we have now we feel good 
about. We have gone through DDE tests, direct data entry system 
testing. We have gone through electronic remits. We have come 
through electronic funds transfer, and it is good. If we can 
get the remaining 1.75 percent going----
    Mr. Horn. What do you see as your biggest remaining 
problems and concerns? After all of this outreach that you have 
had, what worries you the most, if anything?
    Ms. Wilkey. That 1.75 percent that has not tested, that I 
have to knock on their door and do surveys and say why are you 
not testing? Are you going to pay the providers if you cannot 
send me a claim? That worries me.
    Mr. Horn. It sounds like you are keeping after them, and 
that is the only way that it is going to get done.
    I now yield 5 minutes to my colleague from Texas, Mr. 
Turner.
    Mr. Turner. I don't have any other questions.
    Mr. Horn. Mr. Brown, there has been some question that the 
biomedical equipment could fall victim to year 2000 failures. 
What equipment is still at risk due to your year 2000 problems?
    Mr. Brown. I think in the scheme of things, Chairman Horn, 
medical devices and equipment was really the first priority, 
along with the information systems and infrastructure, and I 
think hospitals are working with the FDA and working with our 
vendors and doing the testing. And I know in my own 
organization, which consists of 14 hospitals in metropolitan 
St. Louis and medical centers in urban and suburban areas, we 
went through an extensive testing program.
    As I have traveled the country and talked to different 
hospitals and as we have had the dialog, the equipment piece of 
it is No. 1. We have worked very closely with the vendors. We 
have done the testing and worked with FDA. We changed a lot of 
equipment.
    The other thing is to be assured that equipment has 
overrides on it, and that we have adequate staffing to be able 
to make that transition. So I feel that the hospitals--in 
working with HCFA and the FDA and others on equipment issues--
that we really have done a significant job in terms of working 
on a cooperative basis to be sure that the equipment will be 
functional and that there is adequate staffing to support that 
equipment come January 1st and during the transition.
    Mr. Horn. When we were in Cleveland about a year ago we had 
testimony from the representative of the Cleveland clinic as to 
how they were going about looking at the various pieces of 
equipment to make sure that they are year 2000 compliant. 
Apparently, there was and maybe still is a website nationally 
where hospitals can plug into that by getting into the web and 
you can describe the name for the piece of equipment, what the 
model number is. We were worried about the chips, that a lot of 
people don't even know where they are in the equipment. What is 
going on on that?
    Mr. Brown. A couple of things. We have been working closely 
with HHS, with the FDA, with HCFA. We have worked with the 
vendors. There are websites that the FDA has put up. We have 
our own websites on which we can convey information to our 
members across the country. We have set up communication 
devices between the American Hospital Association and each of 
our 50 State associations working with their members. So we are 
continually dialoguing and making available to them information 
where they can access the websites.
    Mr. Horn. For the manufacturers of some of the equipment 
years before we ever knew there was a problem here, have you 
found that they have been cooperative?
    Mr. Brown. Over the last 6 to 9 months they have been. We 
have had several manufacturers who through our publications and 
periodicals, through communications indicated that they are Y2K 
ready. So we found good cooperation.
    Mr. Horn. One of the things that we have looked at in about 
10 different field hearings is the backup power. This is 
particularly true of hospitals. What is the estimate of what a 
minimum is that a hospital should have in order to have 
generators that are run on diesel or whatever it is?
    Mr. Brown. You should have the ability to run for a period 
of time and have access to additional fuel, and I think 
hospitals really have focused over the years on disaster 
recovery. And I think as we have gone through the issues with 
the hurricanes and the natural disasters, the flood in Missouri 
in 1993, hospitals have been working with their fuel suppliers 
and utilities in terms of backup.
    You have contingency plans with other institutions in your 
metro area. In St. Louis, for example, we have 35 different 
hospitals that communicate with each other in terms of 
availability of beds and ability to transfer in emergencies. So 
this is routine for disaster planning.
    Mr. Horn. How many days do they need to get through a 
blackout or brownout?
    Mr. Brown. We have the capability of normally 3 to 5 days 
to be able to get through the blackout.
    Mr. Horn. Let's hope it does.
    On the provider testing with contractors, we know it has 
been limited, and until these data exchanges between the 
providers and contractors are future-date tested, the ability 
of these entities to process Medicare claims in a future-date 
environment is unknown. Why doesn't HCFA do the end-to-end 
testing program to include providers? Is it too late to include 
them or what? Or are they just ornery?
    Dr. Christoph. Well, they are certainly not ornery, sir.
    We have done end-to-end testing. As you know, the claims 
processing systems are batch systems. They don't operate in the 
same sense that credit card transactions occur, but claims are 
batched up at the beginning, whether they are submitted 
electronically or on paper and, that point, defines the one end 
of the claims processing system. They then go through the 
system and are adjudicated. It is on the back end of the 
process that the instructions for payment or printing of 
notices, such as beneficiary notices, come out. That is the 
other end.
    We have engaged in end-to-end testing, everything in 
between, including a connection to our common working file that 
is tested in a future-date environment.
    We have tried to cover the front end where claims come in 
by requiring submitters to submit claims in the proper 8-digit 
year format. April 5th of this year we set a hard date, and by 
and large now everyone is using that.
    So that means that once a claim hits us and if it is in the 
proper format, we can process it.
    Now the difficulty is in determining whether or not 
providers or submitters can actually get us a bill. It is 
possible to take existing systems that a submitter has and put 
bridge software in place and translate the dates so that it is 
in the proper format, but that does not tell us anything about 
the submitter's system, its readiness or the provider's systems 
or readiness, and that is why we have engaged in this outreach 
effort to reach them and encourage them to test. We have made 
available to them the opportunity to test with our contractor's 
front ends.
    Again, we have made that available to them, but getting 
them to come in and test, there is some reluctance there to 
test. Perhaps they are not ready. Perhaps they just don't feel 
that it is necessary. We think that it is, and that is why we 
have been strongly encouraging them to do so.
    Mr. Horn. Well, as I understand it, the General Accounting 
Office has informed us that the status of contractor business 
continuity plans is unknown because the HCFA never requested 
detailed plans from these contractors. Is that true or have we 
changed that now?
    Dr. Christoph. We changed that. Some time--and I can't tell 
you exactly when, but it was fairly recently, we did send a 
requirement to the contractors to make that information 
available, to have those documents onsite available, and we are 
going to be checking and reviewing those on our next round of 
visits. We have had onsite staff looking at them. We have had 
the IV&V folks going with us for all of our oversight on the 
contractors. As we go out and review their status and progress, 
we will be reviewing that documentation, and we have invited 
GAO to participate on some of those visits with us. So we are 
trying to get that paper documentation.
    I might add that the fact that we came through Hurricane 
Floyd so well, quickly making up for the 2 days that the 
processing centers were shut down there testifies to the 
quality of our contingency readiness. The Florida data center 
handles the claims from 6 States worth of fiscal 
intermediaries. They didn't have power for 2 days. They came up 
again after the hurricane passed through and made up all of 
that backlog. One of the contractors transferred its operations 
to a hot site in Connecticut and maintained operation.
    So we believe that those contingency plans are real because 
we have exercised them, but without being able to present GAO 
with a documentation to back that up, of course, they came out 
with their conclusion. But I believe it is there because we 
have demonstrated, as in the hurricane, that we can operate 
through that.
    Mr. Horn. Since this is a paper processing operation, what 
is the typical contingency plan? How would you boil it down?
    Dr. Christoph. I am not sure that there is a typical 
contingency plan. The contingency plans look at the impact of 
whatever the event is. In the case of Hurricane Floyd, it was a 
power outage. We are required to pay claims--electronic claims 
after the 14th day. We look at the duration--the possible 
duration of the event and decide on that basis how we are going 
to deal with it. In this case, the duration was relatively 
short, and we dealt with the contingency of not being able to 
process claims those 2 days by adding time in the evening in 
order to make up that processing. That, in effect, took care of 
the problem transparently to the submitters.
    Mr. Horn. Assuming that, given modern medicine and all of 
the replacement parts that we get, that we might be around in 
the third millennium, if you could start over what would you do 
differently to solve the year 2000 computer program?
    Dr. Christoph. As a systems programmer who has cut code, I 
would certainly do a better job at the front end of writing 
code, anticipating these problems. I think 20, 30 years ago 
when we were writing such code, no one believed that the 
software would be around this long, and I think if we are more 
careful about how we develop and write software up front and 
anticipate these problems, the problems won't be there.
    Mr. Horn. Was this mostly COBOL at Medicare?
    Dr. Christoph. Yes, 80, 90 percent of the code is COBOL. 
There is a significant portion of assembler language, though.
    Mr. Horn. Interesting.
    Do any more questions come to mind?
    Mr. Turner. No.
    Mr. Horn. We are going to ask that the record be held open 
for 10 days. We understand that some managed care organizations 
would like to add their statements, and that is fine. We will 
give them to you and if you wouldn't mind responding to their 
statements so we can get a complete record. All of the 
witnesses actually can do that.
    I thank you for your testimony. I am especially pleased to 
learn that the Health Care Financing Administration decided to 
require year 2000 certifications from the managed care 
organizations that currently provide managed care to 6.9 
million seniors in the country. We have encouraged these 
Americans to enter managed care programs as a way to curb 
rising health care costs. The very least that we can do for 
those who have joined these programs is to ensure that their 
medical care will continue, whether the date is December 31, 
1999, or January 1, 2000.
    Obviously, much work remains in all segments of the 
Medicare program. Time is running out. That combination of 
events demands that, at a minimum, HCFA and its vendors and 
contractors need to immediately begin coordinating a thorough 
end-to-end business continuity plan.
    That said, and thanking the staff here, we will adjourn.
    J. Russell George, the staff director and chief counsel, is 
back against the wall; and Matt Ryan is right next to me. 
Bonnie Heald, professional staff member/communications 
director, against the wall. Chip Ahlswede is the clerk, and 
P.J. Caceres is an intern.
    With the Technology Subcommittee on Science, we have Jeff 
Grove, staff director; Ben Wu, who has been with us, 
professional staff member; Joe Sullivan.
    And from Mr. Turner's staff on the minority we have Trey 
Henderson, minority counsel, Jean Gosa, staff assistant.
    And the Technology Committee ranking people are Michael 
Quear, the professional staff member, Marty Ralston, staff 
assistant.
    And your testimony was so fascinating we had to have three 
court reporters, so Melinda Walker, Doreen Dotzler and Cindy 
Sebo.
    With that, we thank all of you for coming and spending your 
time and advice with us. Thank you.
    We are adjourned.
    [Whereupon, at 3:31 p.m., the subcommittee adjourned.]

 -