EDS, IBM to Help Revamp Medicare Claims Centers

The Washington area operations of EDS Corp. and International Business Machines Corp. were two of three contractors picked to revamp data centers used in Medicare claims processing.

The two companies and Companion Data Services LLC, a subsidiary of BlueCross BlueShield of South Carolina, will compete for work under a contract worth up to $1.9 billion over the next 10 years. The contract is part of a modernization effort by the Centers for Medicare and Medicaid Services, also known as CMS.

CMS plans to consolidate its 22 data centers into four enterprise data centers. Most of the existing centers handle specific applications or business processes or are not under CMS's direct control.

All software applications and hosting operations for Medicare, Medicaid and the state children's health insurance program will move to the new data centers over the next five years, CMS said.

The contracts are about more than consolidating multiple data centers into a few, said Anne K. Altman, managing director of IBM's federal unit, based in Bethesda.

"This is actually a bold approach CMS is taking," Altman said. "CMS is really taking a close look at how their infrastructure -- [both information technology] and physical -- can be better aligned directly to their business."

The enterprise data centers are intended to help CMS handle mounting health care processing workloads. The centers also are supposed to standardize how policy changes are carried out, establish better control of information technology processes and reduce security risks. CMS estimates that the four enterprise data centers will reduce costs by more than $45 million annually.

The three contractors already provide services for CMS:

· EDS is CMS's largest provider of data center operations and claims processing. EDS, whose government operations are based in Herndon, maintains the Medicare Part B Standard System, used to process more than 800 million outpatient claims annually. EDS also provides fraud, waste and abuse detection services for the Medicare program in every state.

· IBM holds contracts for CMS's Healthcare Integrated General Ledger Accounting System, Medicare Claims Data Center 1, Common Working File redesign, Medicare Statistical Information System/National Medicare Utilization Database, and Risk Adjustment System projects.

· Companion Data Services' parent provides Medicare claims processing for outpatient, hospital, medical equipment, rural health clinic, home health and hospice services.

Mary Mosquera is a staff writer with Government Computer News. For news on this and other contracts, go tohttp://www.gcn.com.