Belated Y2k bug stalls medicare payments (at least eight states) : LUSENET : TimeBomb 2000 (Y2000) : One Thread

Belated Y2K bug bite stalls Medicare payments

The software glitch at a Chicago bank delays electronic transfers to hospitals in Oregon, Washington and other states

Thursday, January 6, 2000

By Steve Woodward of The Oregonian staff

A Y2K problem at a small Chicago bank has snagged electronic Medicare payments to hospitals and other health care providers in at least eight states, including Oregon, Washington and California.

The glitch, which occurred this week at Highland Community Bank, is causing payment delays of up to a day and leaving some Oregon hospitals temporarily unable to access their newly deposited funds.

Federal regulators in December had declared nearly 100 percent of the nation's banks, including Highland Community Bank, to be Y2K-compliant. The bank's problem unfolded the same day regulators declared that "no significant disruptions resulting from the century date change have been detected."

Regulators from the Federal Deposit Insurance Corp. were reported Wednesday to be meeting with bank officials to determine why the problem occurred. An FDIC spokesman said no information was available Wednesday, and bank officials did not return phone calls.

"The difficulty only affects electronic funds payments," said Gary Christoph, chief information officer for the U.S. Health Care Financing Administration, which operates the Medicare program.

Hospitals also are affected in Idaho, Alaska, Arizona and North Carolina, as are doctors in Queens County, N.Y. Hospitals and doctors that are paid by paper check continue to be paid as usual, Christoph said.

Highland Community Bank is part of the financial network that transfers Medicare funds from the government to hospitals that treat patients. The computer glitch affects Highland's ability to receive electronic payment instructions from eight companies that process reimbursement claims from hospitals, Christoph said. One of those companies is Medicare Northwest, a branch of Regence BlueCross BlueShield of Oregon that processes hospital claims in Oregon, Idaho and Clark County, Wash.

As of Wednesday, the bank was able to transfer funds only if it received payment instructions on a computer floppy diskette hand-delivered by courier. That arrangement was creating payment delays of fours hours to a day, Christoph said.

As a practical matter, a delay of that duration has little effect on large hospitals' cash flow. The four hospitals of Legacy Health System, for example, are involved in the payment slowdown, but Legacy's Medicare reimbursement specialists weren't even aware of the problem as of Wednesday, said spokesman Henry Sessions. That's because the Medicare program makes direct deposits to Legacy's account only every two weeks.

The problem stems from Highland Community Bank's failure to install a Y2K-compliant version of communications software called Network Data Mover. According to information from a Seattle Medicare spokeswoman and a Highland bank source, the bank's old version expired at midnight Dec. 31, while an updated version had sat for weeks inside the bank, uninstalled.

A technician from the software vendor installed the updated version in six hours Tuesday. By Tuesday afternoon, the bank was able to accept electronic payment instructions and transmit direct deposits via the Federal Reserve. Tests are continuing.

Other than the current glitch, the Health Care Financing Administration and its contractors have experienced no significant Y2K-related troubles.

"By and large, things have been going smoothly," Christoph said.

You can reach Steve Woodward at 503-294-5134 or by e-mail at

-- Homer Beanfang (, January 06, 2000


Thanks, Homer and Steve. Mr. Woodward, you are getting better at this :-) Happy New Year !!!!!

-- Ashton & Leska in Cascadia (, January 06, 2000.

Good "real" example of the interconnectedness issue.

-- Lisa (, January 06, 2000.

This would seem a very serious issue. I'm rather surprised at how calm and appeased the masses are.

-- cin (, January 06, 2000.

Interesting that this reporter was allowed to connect a couple of dots.

--Federal regulators in December had declared nearly 100 percent of the nation's banks, including Highland Community Bank, to be Y2K- compliant. The bank's problem unfolded the same day regulators declared that "no significant disruptions resulting from the century date change have been detected." --

I wonder if the media senses the "disconnect" that we complained about here.

I wouldn't want to be the FDIC examiner who signed off on this bank's Y2K certification.

-- Margaret J (, January 06, 2000.

"The difficulty only affects electronic funds transfers..."

Drat it! I get paid through electronic funds transfer...

-- Mad Monk (, January 06, 2000.

Oregon Benefits Delayed: It Was Y2K

Food Stamps, Medicare Systems Affected

SALEM, Ore., Posted 6:40 p.m. PST January 7, 2000 -- Food stamps and other benefits were delayed in processing for one day by the first major Y2K glitch found in a Oregon State government system , which is using a computer program so obsolete that only two remain in operation nationally.

State Department of Human Services spokesman Mac Prichard said the problem was fixed on Friday.

The agency had planned to replace the old program on Jan. 22, but the same delay in benefit payments would have occurred on that date with or without Y2K problems, said John Cuddy, who oversees the agency's computer systems.

Officials had chosen not to replace the system before 2000 because it didn't want additional disruptions in the midst of intense Y2K preparations.

"We believed that this system would work acceptably, and second, we wanted to have our whole environment as stable as we could," Cuddy said.

Aside from Human Services, Ohio State University is the only place in the nation that still uses the old program that keeps track of more than 80,000 tapes of computer data at the Oregon agency. The tapes contain everything from addresses of child support recipients to data on Medicare.

The old program keeps track of each tape's date, location and content. The system also tells administrators when a tape contains old data and can be erased and reused. The data on all the tapes is backed up elsewhere.

The Department of Human Services consulted the author of the computer program and, at his direction, used a series of remedies.

Tests in 1999 showed the program would work, Cuddy said, but after New Year's, the department noticed the system was getting dates of some tapes mixed up.

The department stopped erasing old data tapes until the new program could be installed.

Cuddy said one-day delays are fairly routine even when the system is working normally because some jobs often take longer than expected.

-- "different" explanation (LOL@creative.excuses), January 07, 2000.

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