Fact Sheets

NEW ACCOUNTING SYSTEM HELPS MEDICARE ACCOUNTABILITY

The Centers for Medicare & Medicaid Services began implementation of the Healthcare Integrated General Ledger Accounting System (HIGLAS), a component of the UFMS and part of CMS' total financial management system to enhance its financial structure, improve internal controls and ensure reliable data. The new system will help Medicare meet the federal requirements calling for a dual entry accounting system.  A dual entry system, common in the private sector, will improve CMS’ ability to track payments, ultimately improving Medicare’s fiscal accountability to beneficiaries and American taxpayers.

In the first phase of CMS’ implementation, Medicare claims for most hospital inpatient services in South Carolina, and home health services in 17 states, will be paid more accurately and promptly, as well as improve Medicare’s fiscal accountability to beneficiaries and American taxpayers.

When HIGLAS is fully implemented, it will strengthen the management of Medicare accounts receivable and allow the agency to collect outstanding debts more timely and effectively. 

Background:  On May 4, CMS’ Healthcare Integrated General Ledger Accounting System (HIGLAS) began processing approximately 158 million dollars worth of claim payments per day to more than 8,000 providers – most hospital inpatient services in South Carolina and home health services in the 17 states served by Palmetto Government Benefits Administrator.  CMS will fully integrate Medicare’s 52 different accounting systems into HIGLAS over the next 4 years.  The second Medicare contactor to implement the new system will be Empire Blue Cross and Blue Shield on July 11.  Providers should not expect to see any problems with their payments when the system begins to be implemented in May.

The HIGLAS project was launched in 2001 and extensive testing has been conducted with contractors to ensure that integration of the system would have no impact on providers who submit Medicare claims.  Currently, most Medicare contractors do not use double entry accounting methods or have general ledger capabilities, which means the accuracy of reported activities must be verified manually. Despite these weaknesses, CMS has maintained clean audit opinions in recent years. 

These improvements in financial reporting are necessary to safeguard the Medicare trust funds.  In addition, the new system will interface with the new Recovery Management and Accounting System (ReMAS) that has been implemented to reconcile claims and payments to providers and beneficiaries, further ensuring that claims are paid appropriately.  It is projected the HIGLAS system will also enable the return of approximately $155 million annually in benefit dollars to the Medicare Trust Fund. 

The HIGLAS system is built on a commercial-off-the-shelf product, Oracle Federal Financials, and will be the largest transaction-based Oracle solution anywhere in the world.   The new system will interface with Medicare’s two shared claims processing computer systems and will replace the current mainframe-based financial system with a web-based accounting system.  HIGLAS is a component of the Unified Financial Management System (UFMS), a system initiative to streamline budget and accounting activities across the Department of Health and Human Services.  CMS has received clean audit opinions from the HHS Office of the Inspector General for the past five years and the implementation of HIGLAS will help to assure that continues.

In addition, the new  Medicare Administrative Contractors will use HIGLAS in their own financial operations and will be integrated into the transition schedule planned for the new contractors, further improving Medicare’s ability to track claims and payments.