Federal drug benefit inspires integration work

The soon-to-arrive Medicare prescription drug benefit has sparked business for systems integrators.

A number of companies are working on projects or anticipate new business associated with the Jan. 1, 2006, launch of the program. The program, authorized under the Medicare Modernization Act of 2003, is intended to reduce seniors’ out-of-pocket expenses for subscription drugs.

Integrators are building or expanding systems to handle the drug benefit’s data processing workload. CGI-AMS, for example, has a number of projects associated with the drug benefit. Earlier this summer, the integrator won a $14.5 million contract to develop a payment reconciliation system for the Department of Health and Human Service’s Centers for Medicare & Medicaid Services (CMS). The system aims to help CMS provide accurate payments to prescription drug plans.

CGI-AMS also is developing tools for the Health Plan Management System that will help prescription drug plans determine what drugs they will offer under the new benefit program. And the company is expanding the Medicare Appeals System to account for the prescription drug benefit.

Since the new functionality will need to be in place early next year, integrators like CGI-AMS are entering a period of intense activity. “Fall will be a busy time,” said Amy King, a vice president at CGI-AMS responsible for the company’s public sector health care account group.

CGI-AMS isn’t alone in the business uptick. Unisys last month said part of a $90 million contract extension with the New Jersey Department of Human Services will involve supporting the drug benefit, since the project involves the interface of Medicaid and Medicare records.

Other service providers are gearing up for increased activity. Warren Edwards, chief financial officer of Affiliated Computer Services, told investors in a recent conference call that he expects more business to stem from the implementation of the Medicare prescription drug benefit. ACS is an outsourcing vendor that specializes in benefits processing.

Infocrossing, another outsourcing vendor, earlier this month announced that its health care subsidiary will expand its Medicare Managed Care Services offering to support the prescription drug benefit.

King said the drug benefit-related business will continue into next year, as CMS pursues additional functionality. “I think once everything gets going in January, probably by the end of March CMS will have a whole slew of additional requirements,” King said.