Medicare’s New Accounting System Improving Agency Performance

The Centers for Medicare and Medicaid Services (CMS) have a new financial management system that has generated $9 million in interest for the Medicare trust fund in just seven months. Mark McClellan, CMS administrator told Government Health IT, the new system also allows for more accurate reimbursements and faster reporting. Reports are now generated within four business days, where it took several weeks using the older system.


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The new web-based system has so far replaced its older, mainframe-based system in six of the 40 health plans that administer Medicare claims. Mutual of Omaha began using the new system on February 28 to pay an average of 128,000 claims per day, according to Government Health IT. United Press International reports these payments are being distributed to approximately 7,000 service providers in 49 states.

The new financial system is called the Healthcare Integrated General Ledger Accounting System (HIGLAS). Government Health IT reports that HIGLAS is part of the Unified Financial Management System currently being installed in Health and Human Services Department agencies. HIGLAS is based on a commercial product named Oracle Federal Financials.

In a prepared statement, McClellan said, “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,” according to Government Health IT.

HIGLAS is improving the tracking of Medicare Part A and B payments sent to hospitals, physicians, and other healthcare providers. This dual entry system is already common in the private sector, according to United Press International. More accurate payments have also been generated, in addition to reducing overpayments to providers.

In other government news, CFO.com reports for the ninth year, the Government Accountability Office (GAO) is reporting that it continues to be unable to determine whether the consolidated financial statements of the US Government are fairly stated and conform to generally accepted accounting principles. This opinion is based on material weaknesses found in internal controls and selected accounting and financial reporting practices.

Three major impediments stopping the GAO from giving a more complete opinion were the Department of Defense’s serious financial management problems; an inability for the federal government to adequately account for, and reconcile, intragovernmental activity and balances among federal agencies; and the ineffective process for preparing consolidated financial statements used by the federal government. CFO.com reports the report was issued March 1. It can be reviewed at http://www.gao.gov/financial/fy2005financialreport.html.

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