Bug of the Month

Your Tax Dollars at Work

Many of us can lose or throw away a software user's manual and still be able to work without it. However, when a government agency has no user's manual, the price can be enormous.

In an effort to cut Medicare fraud and waste, the Health Care Financing Administration (the HCFA is the federal agency that administers the U.S. Medicare and Medicaid programs) contracted GTE to build a single, integrated claims-processing system. Millions of dollars later, the job has been terminated. In a speech before the House Committee on Commerce, Bruce Merlin Fried, director of the HCFA's Center for Health Plans and Providers, said the job has so far proven to be impossible due to a "lack of documentation" of the current system. The current claims-processing system involves 80 contractors using unique, propriet ary, or idiosyncratic software to process 800 million claims annually, querying eight operational systems at 34 data centers.

The job had an unstable history from its beginning in 1994. GTE won the bid to reengineer the system for $19.4 million, but it quickly realized that it hadn't fully fathomed the complexity of the task and renegotiated the contract for $92 million in September 1996. The HCFA expected the system to be finished in May 2000 for a total of $102 million. As of September 9, 1997, the HCFA estimated it had spent $41 million until the contract was terminated on August 15, 1997.

The most positive result of the fiasco is that, for $41 million, the HCFA now has "gained a detailed set of specifications for a managed health-care process," according to a spokesman for Medicare. So, the next time someone tries the same job, they might actually know what lies ahead.

Send yours to jkrause@mgh.com