Year 2000 could jeopardize Medicare payments.

The Year 2000 computer glitch is getting a lot of attention lately and rightly so. The issue is important to lab operators because computer snafus could affect cash flow if Medicare payments are incorrectly delayed or denied.

Cash flow interruption is a serious problem for labs, says Mark Birenbaum, administrator for the American Association of Bioanalysts. Many could be forced out of business if they're unable to meet payroll obligations and pay lenders and suppliers. Service problems for beneficiaries could then result if labs are forced to shut their doors.

While the Health Care Financing Administration says it is attempting to make sure its computer systems are year 2000 compliant, analysts warn it may not have all computers ready in time.

Joel C. Willemssen of the General Accounting Office recently told the House Ways and Means oversight committee that debilitating consequences could result if Medicare and its contractors aren't adequately prepared.

GAO has been evaluating the problem on a government-wide basis and recommending corrective steps. In addition, President Clinton established the President's Council on Year 2000 Conversion to oversee federal agency year 2000 efforts.

The computer problem has been looming for some time. It was planted in the middle of this century when computers first arrived on the scene. To keep costs down and conserve memory, technicians programmed computers by expressing the year portion of dates as only two digits rather than four.

As a result, computer systems, including many of those the government operates, are not ready to handle the year 2000 and the years that follow. Unless reprogrammed to recognize the year 2000 properly, computers assume the two-digit year is taking place in the 1900s. For example, the computer will read "00" as the year 1900, not the year 2000.

The issue has wide-ranging implications. On insurance forms, for example, it will affect data such as the dates of enrollment, birth, and hospitalization. Computer experts say that if a computer system is not year 2000 compliant by the turn of the century, the system will either shut down each time it encounters a date, or it will process erroneous information.

Taking action

The GAO is prodding HCFA to move faster to reach compliance. But the Administration is bogged down in its efforts to implement a host of Congressionally mandated payment changes.

The GAO's Willemssen, for example, said HCFA has not done an assessment of its contractors' claims processing systems. The agency contracts with Blue Cross and Blue Shield plans to handle much of the day-to-day work of paying Medicare claims.

Currently, the Blue plans process 85% of Medicare Part A claims from hospitals, nursing homes, and other institutional providers, and about two-thirds of all Part B claims from labs, physicians, and other practitioners. If the Medicare system fails, the agency doesn't know at this point the number of providers who would be paid late, in incorrect amounts, or not paid at all, said Willemssen.

To be year 2000 compliant, HCFA must make sure its insurance contractors and subcontractors have made the necessary adjustments. While Blue Cross and Blue Shield affiliates say they are working toward becoming compliant on a timetable that will meet the agency's deadline of December 31, 1998, they can't assure the agency that their subcontractors or vendors will be in full compliance by then.

What's likely to happen if HCFA and its contractors aren't fully compliant? The agency is still working out the details of a contingency plan. One possible strategy under consideration is to issue advance payments to providers at the end of next year. HCFA has used such a strategy before with success, says Birenbaum.

Labs also are encouraged to get their own computer systems ready to cover any glitches that may occur. Birenbaum says it's important to stay well ahead of this issue. He recommends checking with software vendors to be sure you receive and implement a year 2000 upgrade for your system in time for the new millennium.