October 06,1999

Roth, Moynihan Release GAO Study on Medicaid Y2K Compliance

States in Danger of Systems Failure are Urged to Make Immediate Changes

WASHINGTON -- Senate Finance Committee Chairman William V. Roth, Jr. (R-DE) and ranking Democratic member Daniel Patrick Moynihan (D-NY) today released a GAO report on Medicaid's Y2K preparations.

"As Chairman and ranking member of the Senate Committee on Finance, we have been particularly concerned with monitoring the Y2K preparedness of the major social programs under our committee's jurisdiction," Roth and Moynihan stated. "While on the whole we are confident that our systems are ready, we are concerned about possible disruptions in the Medicaid program. Y2K experts tell us several states' programs are at risk.

"Preparing the Medicaid program for Y2K has been a complicated project from the beginning, because of the nature of the program. Medicaid does not rely on one system, or even on one governmental agency. Medicaid uses separate systems for eligibility determinations and for payment of claims. In addition, federal, state, and local branches of government all assume responsibilities for different aspects of program operations, although the states are responsible for overall program administration. To complicate matters still further, Medicaid contracts with private sector providers for many important program functions. A systems breakdown in any one of these levels of administration could result in disruption in the Medicaid program.

"For the past year, Congress's watchdog agency, the General Accounting Office (GAO), has been monitoring Medicaid's Y2K preparations in response to our request. This request was prompted by our basic oversight responsibility for the program. GAO's findings have shown real and steady progress over the last several months to meet the testing and verification standards developed by computer experts to test Y2K readiness.

"According to the GAO,'it is essential that states successfully address the Year 2000 computing problem. Unless they do, beneficiaries could be denied critical medical services, incorrect eligibility decisions could be made, and payments could be made for the wrong amounts--or not at all.'

"However, with three months remaining before the New Year, GAO has concluded that several states have not done all that can be done to prepare for Y2K. GAO has placed states in risk categories based on whether Y2K conversion problems had been identified and corrected, whether systems had been tested, and on the development of contingency plans to prepare for any problems.

"Delaware, New Hampshire, New Mexico, Ohio, Oklahoma, Tennessee, and Vermont have been identified by the General Accounting Office as "at significant risk" because of a failure to have adequately prepared Medicaid's systems and to have developed an emergency backup plan in the event of a system failure.

"This risk has to be taken seriously, because disruptions in Medicaid's computer systems will stand in the way of providing health care to some of our most vulnerable citizens--low-income pregnant women, children, individuals with disabilities, and senior citizens. An eligibility systems failure would cause a barrier to enrollment and services. Medicaid eligible individuals may not be able to enroll, and those already enrolled may have difficulty obtaining services because they cannot be verified as Medicaid eligible.

"These states still have time to redouble their efforts and complete necessary work in time for the New Year. In fact, beginning in September officials of the federal Health Care Financing Administration (HCFA) began a final round of technical assistance reviews for states most at risk. These reviews include a careful analysis of state contingency plans. Suggestions for improvement will be provided, calling upon the best practices identified in the states that are further along in their Y2K preparations.

"If the vulnerable states use the next 3 months wisely, there is every reason to expect that January 1 will be just another day on the calendar. However, unless changes are made, it is likely that more than one of the group of seven states will experience real disruptions in either their Medicaid payment or eligibility systems.

"As Finance Committee Chairman and ranking Democratic member, we will be asking GAO and HCFA for regular updates on state progress toward ensuring a smooth Y2K conversion. In the meantime, we call on the states to step up to the plate to get the job done."