PWC Wins Medicare Accounting System Deal

PricewaterhouseCoopers has been awarded a 10-year contract worth up to $328.4 million to develop and test a single, unified system that will combine Medicare's many accounting operations, the Department of Health and Human Services announced Sept. 27.

The Arlington, Va., consulting unit of New York-based PricewaterhouseCoopers will handle systems integration for the project. Oracle Corp. of Redwood Shores, Calif., will provide the financial accounting software, and Electronic Data Systems Corp. of Plano, Texas, will provide application hosting services in support of the Oracle software.

Twelve other software and hardware firms are participating, including FreeBalance Inc. of Arlington, Va., which will provide grants management software.

The project will ensure that the program pays correctly for the care needed by Medicare beneficiaries, saving about $1.2 billion through fiscal 2010 by allowing the Centers for Medicare and Medicaid Services to better record, track and collect receivables, HHS said.

In fiscal 2002, Medicare will pay an estimated $252 billion on behalf of its 40 million beneficiaries.

"For too long, Medicare has relied on outdated systems to track the nearly 1 billion health insurance claims it pays each year," HHS Secretary Tommy Thompson said. "This project will make it far easier for Medicare to track and pay claims quickly and accurately."

The new Healthcare Integrated General Ledger Accounting System will eventually replace 53 systems in use by the private insurance companies that process and pay nearly 3 million Medicare claims every day.

The new system will be integrated with Medicare's three standard computer systems and replace the mainframe-based financial system with a modern, Web-based accounting system, according to HHS.

The project will begin with a pilot program with two Medicare contractors: Palmetto Government Benefit Administrators, which processes hospital and other institutional claims; and Empire Blue Cross & Blue Shield, which processes physician and supplier claims. The pilot phase will re-engineer the accounting business process of the contractors to support the accounting software.

Before a final decision is made to install the accounting system for Medicare and all its contractors, the system will be tested to ensure it works correctly and can handle the large volume of financial transactions generated by the Medicare program. Full implementation is projected for the end of fiscal 2006, HHS said.

Thompson has made modernizing Medicare's accounting systems a priority in order to improve the program's fiscal accountability to beneficiaries and taxpayers. Independent audit findings conducted by the General Accounting Office and HHS' Office of Inspector General have revealed weaknesses in the accounting of Medicare claims.

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