Medicare's new accounting system is good for the bottom line

Cash flow improvements from a new financial management system at the Centers for Medicare and Medicaid Services have generated $9 million in interest for the Medicare trust fund in just seven months of partial operation.

CMS officials said the system has other benefits as well, including more accurate reimbursements and faster reporting to agency officials. Although CMS is not yet claiming that the system has speeded payments to health care providers, agency Administrator Mark McClellan said that that might occur in the future.

“In the next couple of years, as we fully implement [the system] we should be better able to ensure that we are paying Medicare claims more efficiently,” McClellan said in a statement.

The agency is moving from its old, mainframe-based system to the new, Web-based system gradually. It has implemented the new system in six of the 40 health plans that administer Medicare claims. On Feb. 28, the largest transition so far occurred when Mutual of Omaha began using the system to pay an average 128,000 claims per day.

The new system, known as the Healthcare Integrated General Ledger Accounting System or HIGLAS, is based on Oracle Federal Financials, a commercial product. It is part of the Unified Financial Management System being installed in Health and Human Services Department agencies.

A new Recovery Management and Accounting System reconciles claims and payments to providers and beneficiaries when Medicare is the secondary payer, further increasing accuracy.

The old systems took several weeks to produce monthly reports from the Medicare contractors, but now the reports are generated within four business days, agency officials said.