The Centers for Medicare and Medicaid Services, the largest healthcare payer in the country, has released a plan for upgrading its computer and data systems with the aim of providing better care. The Patient Protection and Affordable Care Act mandates the overhaul.

The Centers for Medicare & Medicaid Services (CMS) provides healthcare services to approximately 100 million beneficiaries and pays benefits totaling approximately $800 billion a year.

The law calls for a modernized computer system that makes data available "in a reliable and timely manner to providers of services and suppliers to support their efforts to better manage and coordinate care furnished to beneficiaries of Medicare programs" and supports "consistent evaluations of payment and the delivery system reforms under CMS programs."

Details of the planned CMS upgrade are laid out in Modernizing CMS Computer and Data Systems to Support Improvements in Care Delivery, dated Dec. 23.

The computer and data systems upgrades will be informed by the goal of a changed focus for CMS from paying providers for volume of services rendered rather than outcomes – a pay-for-performance model. The vision the plan puts forth is "better care for individuals, better health for populations, and lower costs (through improvement and without any harm whatsoever to individuals, families, or communities)."

"For years, federal healthcare programs have paid physicians, hospitals, and other healthcare providers based on the volume rather than the quality of care provided their patients," states the plan's executive summary. "The result has been an inefficient healthcare marketplace that has rewarded quantity over quality."

To achieve the goal of ensuring effective, high-quality healthcare for beneficiaries, CMS must establish an enterprise-level capability to capture and analyze data on resource utilization, health outcomes and cost, even as the volume and scale of its programs and data rapidly increase, according to the plan.

For example, the plan notes, CMS currently holds various pieces of information about providers in at least 25 different databases used for different program purposes. Multiple databases hamper care coordination efforts and obscure opportunities to improve efficiency and quality, the plan states.

The plan lists CMS expectations from an upgraded computer system based on new models of care and payment.

According to CMS, IT modernization will result in:

• Improved business operations – CMS must transition to flexible payment methods that integrate administrative claim, encounter, clinical, payment, and outcome data while maintaining its Fee-for-Service (FFS) and Medicare Advantage and Prescription Drug (MAPD) operations.
• Effective performance measurement and oversight – CMS oversees a wide range of quality management activities and payment systems for the Medicaid, Medicare and CHIP programs. Improved data will facilitate a more robust performance management program and enhanced oversight.
• Enhanced public accountability – CMS must streamline its program, billing, and eligibility information to make these systems and processes as informative as possible while reducing burdensome procedures, such as enrollment and claim processing, for providers. In addition, improving health outcomes involves promoting a patient-centered focus on prevention and wellness, chronic care management, and individual health responsibility. All three depend on the beneficiary and provider's timely access to critical information about coverage, eligibility, and quality of care.
• Innovation – To accomplish the goals of the Affordable Care Act and modernize its computer and data systems, CMS must offer modern, analytical IT capabilities for cost and quality, supported by reliable storage systems and fully integrated enterprise-level databases.

Cost savings
CMS expects that its data governance and enterprise data management policies will generate significant program savings and lower CMS' administrative costs by simplifying application development, reducing complexity in the enterprise information infrastructure, and minimizing overall information management costs and risks.

CMS has identified the following general areas of potential administrative cost savings/cost avoidance:

• Reduced risk of systemic failure due to overly complex, customized systems;
• Simplified infrastructure through the retirement of hardware, applications and databases;
• Sunset or retirement of systems will reduce the burden of maintaining product licenses and support costs (monitoring, upgrades, and patches) of retired systems;
• Reduced labor activities related to the legacy hardware, applications, and databases (acquisition, storage, analysis, enhancement, maintenance, troubleshooting, archival, and distribution);
• Negotiation of better rates for resources that do not require special domain knowledge or expertise, which is presently required for complicated infrastructure or legacy assets;
• SIignificant administrative savings beyond FY 2015 once the core infrastructure capabilities are established. As the enterprise technology systems are integrated and the data services mature during the initial phases, the agency will realize modest savings.