Summary: The Health Care Financing Administration (HCFA) is developing a critical new claims-processing system, the Medicare Transaction System (MTS), to replace the nine systems now used by Medicare. MTS' goal is to better protect program funds from waste, fraud, and abuse; allow better oversight of Medicare contractor operations; improve service to beneficiaries and providers; and cut administrative expenses. The weaknesses in HCFA's development of MTS stem from a lack of a disciplined management process that has as its hallmark managing information systems and technology as investments. Not managing MTS in this way has led to system design and development proceeding despite (1) difficulties in defining requirements, (2) a compressed scheduled containing significant overlap of system-development phases, and (3) a lack of reliable information on costs and benefits. These risks in the development of MTS can be substantially reduced if HCFA adopts some of the "best practices" that have proven effective in other organizations: managing systems as investment, changing information management practices, creating line manager ownership, better managing resources, and measuring performance.
