Exhibit 300 (BY2010) for CMS ICD-10 Initiative

PART ONE

OVERVIEW

1. Date of Submission:: 2008-09-08

2. Agency:: 009

3. Bureau:: 38

4. Name of this Capital Asset:: CMS ICD-10 Initiative

5. Unique Project Identifier:: 009-38-01-02-01-2110-00

6. What kind of investment will this be in FY2010?: Planning

7. What was the first budget year this investment was submitted to OMB?: FY2009

8. Provide a brief summary and justification for this investment, including a brief description of how this closes in part or in whole an identified agency performance gap.: The coding system for payment of claims used in the US is ICD-9; ICD codes are used to classify diagnoses across all providers, however ICD procedure codes are used in inpatient settings only. Developed 30 years ago, the code set has changed to keep pace with new diseases as well as medical technologies and innovations used to treat, screen, test for or diagnose disease. The code set has a structure that limits the number of physical codes that may be assigned, both overall and by chapter. CMS predicts that at the current rate of adding new medical procedures, the healthcare industry will run out of ICD-9 procedure codes by 2009. Once this occurs new procedures won't be assigned new codes, but instead be forced to use existing inpatient procedure codes for payment. This poses a great risk to proper and accurate payments, and could have a significant impact on health care financing. This project is dependent upon the 5010 project. 5010 is an update to the HIPAA suite of transactions, which provides for a standardized electronic format for data exchange; ICD-10 will be the first standard to use 5010 enhancements. CMS' current systems won't accept ICD-10 structure; thus unless CMS systems are changed for 5010, implementation of ICD-10 will not be possible. ICD codes exist where diagnosis and inpatient procedure information is required, processed and reported by CMS systems; thus, CMS is modifying existing systems, not building new ones. Once code conversion is completed this investment will end and maintaining the codes will resume within the respective shared systems investments responsible for Medicare Part A, B and Durable Medical Equipment (DME) claims processing operations according to the current O&M schedule/process. This project will identify where ICD codes are used within CMS processes and systems, assess the impact of transitioning to ICD-10, develop an implementation strategy and implement the transition to ICD-10. Although, 5010 will address the changes needed to accommodate the ICD-10 physical structure (which is very different from ICD-9), it will not address the numerous instances of algorithmic computations and analyses performed on data containing ICD codes, and used for quality, reporting, fraud and abuse detection. This project supports the PMA initiative of improper payments; an ICD-10 implementation will improve CMS' ability to accurately compensate Medicare providers, and reduce the incidence of improper payments.

9. Did the Agency's Executive/Investment Committee approve this request?: yes

9.a. If "yes," what was the date of this approval?: 2008-04-10

10. Did the Project Manager review this Exhibit?: yes

11.a. What is the current FAC-P/PM certification level of the project/program manager?: Waiver Issued

11.b. When was the Program/Project Manager Assigned?: 2008-01-04

11.c. What date did the Program/Project Manager receive the FACP/PM certification? If the certification has not been issued, what is the anticipated date for certification?: 2009-07-31

12. Has the agency developed and/or promoted cost effective, energy-efficient and environmentally sustainable techniques or practices for this project.: no

12.a. Will this investment include electronic assets (including computers)?: yes

12.b. Is this investment for new construction or major retrofit of a Federal building or facility? (answer applicable to non-IT assets only): no

13. Does this investment directly support one of the PMA initiatives?: yes

If yes, select the initiatives that apply:

Initiative Name
Eliminating Improper Payments

13.a. Briefly and specifically describe for each selected how this asset directly supports the identified initiative(s)? (e.g. If E-Gov is selected, is it an approved shared service provider or the managing partner?): ICD-10 provides a more robust, granular, modern, and accurate code set, and because of its increased specificity it will improve the accuracy of information reported on claims. ICD-10 will also improve quality monitoring, coverage, risk adjustment, research, and statistical reporting, all of which feed back into payment policy and operations. The benefits of ICD-10 will not be apparent for at least a couple of years post implementation due to the volume of data required for such an analysis.

14. Does this investment support a program assessed using the Program Assessment Rating Tool (PART)?: yes

14.a. If yes, does this investment address a weakness found during the PART review?: yes

14.b. If yes, what is the name of the PARTed program?: 10000470 - Medicare Integrity Program

14.c. If yes, what rating did the PART receive?: Effective

15. Is this investment for information technology?: yes

16. What is the level of the IT Project (per CIO Council's PM Guidance)?: Level 3

17. What project management qualifications does the Project Manager have? (per CIO Council's PM Guidance): (2) Project manager qualification is under review for this investment

18. Is this investment identified as high risk on the Q4 - FY 2007 agency high risk report (per OMB memorandum M-05-23)?: yes

19. Is this a financial management system?: no

20. What is the percentage breakout for the total FY2009 funding request for the following? (This should total 100%)

Area	Percentage
Hardware	0
Software	0
Services	100
Other	0

21. If this project produces information dissemination products for the public, are these products published to the Internet in conformance with OMB Memorandum 05-04 and included in your agency inventory, schedules and priorities?: n/a

22. Contact information of individual responsible for privacy related questions.

Name	Maribel Franey
Phone Number	410-786-0757
Title	Privacy Officer
Email	maribel.franey@cms.hhs.gov

23. Are the records produced by this investment appropriately scheduled with the National Archives and Records Administration's approval?: yes

24. Does this investment directly support one of the GAO High Risk Areas?: yes

SUMMARY OF SPEND

1. Provide the total estimated life-cycle cost for this investment by completing the following table. All amounts represent budget authority in millions, and are rounded to three decimal places. Federal personnel costs should be included only in the row designated Government FTE Cost, and should be excluded from the amounts shown for Planning, Full Acquisition, and Operation/Maintenance. The total estimated annual cost of the investment is the sum of costs for Planning, Full Acquisition, and Operation/Maintenance. For Federal buildings and facilities, life-cycle costs should include long term energy, environmental, decommissioning, and/or restoration costs. The costs associated with the entire life-cycle of the investment should be included in this report. All amounts represent Budget Authority Note: For the cross-agency investments, this table should include all funding (both managing partner and partner agencies). Government FTE Costs should not be included as part of the TOTAL represented.

Cost Type	Py-1 & Earlier -2007	PY 2008	CY 2009	BY 2010
Planning Budgetary Resources	3.200	0.000	1.000	0.750
Acquisition Budgetary Resources	0.000	0.000	15.600	18.000
Maintenance Budgetary Resources	0.000	0.000	0.000	0.000
Government FTE Cost	0.310	0.310	2.200	2.200
# of FTEs	3	3	22	22

2. Will this project require the agency to hire additional FTE's?: no

3. If the summary of spending has changed from the FY2008 President's budget request, briefly explain those changes.: The costs in this chart reflect the IT cost estimates associated with this project assuming an implementation date of October 1, 2011.

PERFORMANCE

In order to successfully address this area of the exhibit 300, performance goals must be provided for the agency and be linked to the annual performance plan. The investment must discuss the agency's mission and strategic goals, and performance measures (indicators) must be provided. These goals need to map to the gap in the agency's strategic goals and objectives this investment is designed to fill. They are the internal and external performance benefits this investment is expected to deliver to the agency (e.g., improve efficiency by 60 percent, increase citizen participation by 300 percent a year to achieve an overall citizen participation rate of 75 percent by FY 2xxx, etc.). The goals must be clearly measurable investment outcomes, and if applicable, investment outputs. They do not include the completion date of the module, milestones, or investment, or general goals, such as, significant, better, improved that do not have a quantitative measure.

Agencies must use the following table to report performance goals and measures for the major investment and use the Federal Enterprise Architecture (FEA) Performance Reference Model (PRM). Map all Measurement Indicators to the corresponding Measurement Area and Measurement Grouping identified in the PRM. There should be at least one Measurement Indicator for each of the four different Measurement Areas (for each fiscal year). The PRM is available at www.egov.gov. The table can be extended to include performance measures for years beyond FY 2009.

Row	Fiscal Year	Strategic Goal Supported	Measurement Area	Measurement Grouping	Measurement Indicator	Baseline	Planned Improvement to the Baseline	Actual Results
1	2008	Effective Management of Human Capital/Information Technology/Resources	Mission and Business Results	Higher Education	% of CMS components assessed for business process impacts	10%	100%	80%
2	2008	Effective Management of Human Capital/Information Technology/Resources	Customer Results	Customer Training	% of CMS components identified for training	10%	100%	80%
3	2008	Effective Management of Human Capital/Information Technology/Resources	Processes and Activities	Costs	% of CMS components assessed for cost implications of transitioning to ICD-10	10%	100%	50%
4	2008	Effective Management of Human Capital/Information Technology/Resources	Technology	Data Standardization or Tagging	% of CMS systems assessed for an impact of transitioning to ICD-10	10%	100%	80%
5	2009	Effective Management of Human Capital/Information Technology/Resources	Mission and Business Results	Health Care Administration	% of impacted CMS contracts that inlcude language or tasks that scope out work needed to transition to ICD-10	0%	100%	TBD
6	2009	Effective Management of Human Capital/Information Technology/Resources	Customer Results	Customer Impact or Burden	% of outreach and education materials available to MACs/FIs/Carriers on the differences between ICD-9 and ICD-10	10%	50%	TBD
7	2009	Effective Management of Human Capital/Information Technology/Resources	Processes and Activities	Risk	% of impacted CMS components that initiated Business Process Redesign activities to plan changes needed due to the transition to ICD-10	10%	60%	TBD
8	2009	Effective Management of Human Capital/Information Technology/Resources	Technology	Data Standardization or Tagging	% of impacted CMS systems that initiated requirements gathering activities	10%	100%	TBD
9	2010	Effective Management of Human Capital/Information Technology/Resources	Mission and Business Results	Health Care Administration	% of impacted CMS components implementing changes to business processes and systems to accomodate ICD-10	30%	75%	TBD
10	2010	Effective Management of Human Capital/Information Technology/Resources	Customer Results	Customer Training	% of impacted CMS components trained on the differences between ICD-9 and ICD-10	15%	100%	TBD
11	2010	Effective Management of Human Capital/Information Technology/Resources	Processes and Activities	Knowledge Management	% of coordination across CMS shared system maintainers	0%	50%	TBD
12	2010	Effective Management of Human Capital/Information Technology/Resources	Technology	Data Standardization or Tagging	% of impacted CMS systems that initiated system testing	0%	75%	TBD
13	2011	Effective Management of Human Capital/Information Technology/Resources	Mission and Business Results	Health Care Administration	% of impacted CMS components monitoring issues encountered	0%	75%	TBD
14	2011	Effective Management of Human Capital/Information Technology/Resources	Customer Results	Customer Training	% of ICD-10 outreach and educational materials available on the CMS website	50%	95%	TBD
15	2011	Effective Management of Human Capital/Information Technology/Resources	Processes and Activities	Compliance	% of impacted CMS Business Partners ready to submit ICD-10 codes	0%	75%	TBD
16	2011	Effective Management of Human Capital/Information Technology/Resources	Technology	Data Standardization or Tagging	% of CMS systems ready to accept ICD-10 codes	35%	95%	TBD
17	2012	Effective Management of Human Capital/Information Technology/Resources	Mission and Business Results	Help Desk Services	% of provider inquiries due to coding questions	75%	25%	TBD
18	2012	Effective Management of Human Capital/Information Technology/Resources	Customer Results	Customer Impact or Burden	% of unpaid claims based on insufficient provider systems	75%	25%	TBD
19	2012	Effective Management of Human Capital/Information Technology/Resources	Processes and Activities	Errors	% of improper claims	75%	25%	TBD
20	2012	Effective Management of Human Capital/Information Technology/Resources	Technology	Internal Data Sharing	% of reports or file extracts to facilitate data sharing and quality across CMS	50%	80%	TBD
21	2013	Effective Management of Human Capital/Information Technology/Resources	Mission and Business Results	Population Health Management and Consumer Safety	% of claims data used in quality monitoring and reporting	20%	50%	TBD
22	2013	Effective Management of Human Capital/Information Technology/Resources	Customer Results	Customer Complaints	% of complaints directed at CMS resulting from unpaid claims	60%	40%	TBD
23	2013	Effective Management of Human Capital/Information Technology/Resources	Processes and Activities	Errors	% of errors in internal processing of claims and payments utilizing ICD-10 codes	40%	25%	TBD
24	2013	Effective Management of Human Capital/Information Technology/Resources	Technology	Standards Compliance and Deviations	% of CMS Business Partners in compliance with ICD-10 standards	60%	75%	TBD
25	2014	Effective Management of Human Capital/Information Technology/Resources	Mission and Business Results	Population Health Management and Consumer Safety	% of claims data used in quality monitoring and reporting	50%	80%	TBD
26	2014	Effective Management of Human Capital/Information Technology/Resources	Customer Results	Customer Complaints	% of complaints directed at CMS resulting from unpaid claims	40%	20%	TBD
27	2014	Effective Management of Human Capital/Information Technology/Resources	Processes and Activities	Errors	% of errors in internal processing of claims and payments utilizing ICD-10 codes	25%	10%	TBD
28	2014	Effective Management of Human Capital/Information Technology/Resources	Technology	Standards Compliance and Deviations	% of CMS Business Partners in compliance with ICD-10 standards	75%	100%	TBD

Enterprise Architecture

In order to successfully address this area of the business case and capital asset plan you must ensure the investment is included in the agency's EA and Capital Planning and Investment Control (CPIC) process, and is mapped to and supports the FEA. You must also ensure the business case demonstrates the relationship between the investment and the business, performance, data, services, application, and technology layers of the agency's EA.

1. Is this investment included in your agency's target enterprise architecture?: yes

2. Is this investment included in the agency's EA Transition Strategy?: no

2.b. If no, please explain why?: Investment identified after the most recent transition plan and will be included in the next release

3. Is this investment identified in a completed (contains a target architecture) and approved segment architecture?: no

4. Identify the service components funded by this major IT investment (e.g., knowledge management, content management, customer relationship management, etc.). Provide this information in the format of the following table. For detailed guidance regarding components, please refer to http://www.whitehouse.gov/omb/egov/. Component: Use existing SRM Components or identify as NEW. A NEW component is one not already identified as a service component in the FEA SRM. Reused Name and UPI: A reused component is one being funded by another investment, but being used by this investment. Rather than answer yes or no, identify the reused service component funded by the other investment and identify the other investment using the Unique Project Identifier (UPI) code from the OMB Ex 300 or Ex 53 submission. Internal or External Reuse?: Internal reuse is within an agency. For example, one agency within a department is reusing a service component provided by another agency within the same department. External reuse is one agency within a department reusing a service component provided by another agency in another department. A good example of this is an E-Gov initiative service being reused by multiple organizations across the federal government. Funding Percentage: Please provide the percentage of the BY requested funding amount used for each service component listed in the table. If external, provide the funding level transferred to another agency to pay for the service.

Row	Agency Component Name	Agency Component Description	Service Type	Component	Internal or External Reuse?	Funding %
1	ICD-10 Project Record Linking / Association Services	Defines the set of capabilities that support the correlation between logical data and information sets.	Records Management	Record Linking / Association	No Reuse	25
2	ICD-10 Project Data Exchange Services	Defines the set of capabilities that support the interchange of information between multiple systems or applications; includes verification that transmitted data was received unaltered.	Data Management	Data Exchange	No Reuse	25
3	ICD-10 Project Information Sharing Services	Defines the set of capabilities that support the use of documents and data in a multi-user environment for use by an organization and its stakeholders.	Knowledge Management	Information Sharing	No Reuse	15
4	ICD-10 Project Information Retrieval Services	Defines the set of capabilities that allow access to data and information for use by an organization and its stakeholders.	Knowledge Management	Information Retrieval	No Reuse	20

5. To demonstrate how this major IT investment aligns with the FEA Technical Reference Model (TRM), please list the Service Areas, Categories, Standards, and Service Specifications supporting this IT investment. FEA SRM Component: Service Components identified in the previous question should be entered in this column. Please enter multiple rows for FEA SRM Components supported by multiple TRM Service Specifications. Service Specification: In the Service Specification field, Agencies should provide information on the specified technical standard or vendor product mapped to the FEA TRM Service Standard, including model or version numbers, as appropriate.

Row	SRM Component	>Service Area	Service Category	Service Standard	Service Specification (i.e., vendor and product name)
1	Record Linking / Association	Component Framework	Data Management	Database Connectivity	Connect:Direct by: Sterling Commerce
2	Data Exchange	Component Framework	Data Interchange	Data Exchange	File Transfer Protocol (FTP) by: The Internet Engineering Task Force
3	Data Exchange	Component Framework	Data Interchange	Data Exchange	Connect:Direct by: Sterling Commerce
4	Information Sharing	Component Framework	Data Interchange	Data Exchange	File Transfer Protocol (FTP) by: The Internet Engineering Task Force
5	Information Sharing	Component Framework	Data Interchange	Data Exchange	Connect:Direct by: Sterling Commerce
6	Information Retrieval	Component Framework	Data Interchange	Data Exchange	File Transfer Protocol (FTP) by: The Internet Engineering Task Force
7	Information Retrieval	Component Framework	Data Interchange	Data Exchange	Connect:Direct by: Sterling Commerce

6. Will the application leverage existing components and/or applications across the Government (i.e., FirstGov, Pay.Gov, etc)?: no

PART TWO

RISK

You should perform a risk assessment during the early planning and initial concept phase of the investment's life-cycle, develop a risk-adjusted life-cycle cost estimate and a plan to eliminate, mitigate or manage risk, and be actively managing risk throughout the investment's life-cycle.

Answer the following questions to describe how you are managing investment risks.

1. Does the investment have a Risk Management Plan?: yes

1.a. If yes, what is the date of the plan?: 2008-08-06

1.b. Has the Risk Management Plan been significantly changed since last year's submission to OMB?: no

3. Briefly describe how investment risks are reflected in the life cycle cost estimate and investment schedule:: While this investment is still in the planning stages, the cost estimates were developed based on input from experienced project managers whose areas will be affected by the implementation of ICD-10 codes. The project managers assumed low funding risks and applied inflationary factors to develop out year costs. A full risk analysis is under way which may impact cost estimates. Costs will be revisited once we have the complete results of the impact analysis.

COST & SCHEDULE

1. Does the earned value management system meet the criteria in ANSI/EIA Standard 748?: yes

2. Is the CV% or SV% greater than ± 10%?: yes

2.a. If yes, was it the?: CV

2.b. If yes, explain the variance.: Based on project delays and contractor performance, on February 25, 2008, a contract modification was signed essentially reducing the scope of work to be performed in the base year. Milestones 6, 7 and 10 were removed and milestones 8 and 9 were reduced in scope. The planned costs for milestones 6, 7 and 10 were reallocated to milestones 2-5 in a recent re-baseline. Thus, actual costs exceed planned costs for milestones 2-5. The actual end date of 2/25/08 for milestones 6, 7, and 10 represents the date when the modification was signed and these tasks were removed from the scope of the project; they were never initiated. Milestones 8 and 9 have been modified sufficiently due to issues around contractor conflict of interest, but their planned costs remain unchanged.

2.c. If yes, what corrective actions are being taken?: Milestones 6 and 7 will be completed by another entity that will deliver on milestones 25 and 26. What is remaining on milestones 8-10 will not be executed; CMS will provide training to external entities within its normal protocol around rule making. Milestones 11-14 will not be executed.

3. Has the investment re-baselined during the past fiscal year?: yes

3.a. If yes, when was it approved by the agency head?: 2008-07-23