Budget crunch forces HCFA to trim IT system

The Health Care Financing Administration last week disclosed that because of budgetary problems it has scaled back its plans for a massive computer system that will give the agency tighter control over the huge Medicare health program for the elderly.

HCFA officials declined to comment on how they have changed the Medicare Transaction System a $100 million project that will reduce the number of centers from nine to as few as three to process claims and eligibility for the $200 billion Medicare program. The agency is expected next month to release to vendors changes in the system's requirements and the project's approach. HCFA began to evaluate ways to change MTS after receiving a preliminary copy of President Clinton's fiscal 1998 budget request last December.

Although informed sources indicated that the White House's $89 million request for MTS was less than what the agency had expected HCFA officials would not say how much less.

To meet the lower budget a HCFA official said the agency's options included scaling back the number of processing centers delaying opening the centers or a number of different alternatives. "It won't substantially alter the initiative " a HCFA official said.

Officials with companies that have bid on MTS said they did not know what the changes might be. However the changes have caused HCFA to delay the MTS award from next month to September to give vendors a chance to re-evaluate their bids.

The shift in the strategy for MTS which has received intense congressional scrutiny and criticism from the General Accounting Office caused vendors to speculate that the system may be canceled. But HCFA officials insist the system will be built. "The commitment is there from the highest levels to continue with MTS it's not in jeopardy " a HCFA official said.