[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]
REDUCING REGULATORY AND PAPERWORK BURDENS ON SMALL HEALTHCARE
PROVIDERS: PROPOSALS FROM THE EXECUTIVE BRANCH
=======================================================================
HEARING
Before the
COMMITTEE ON SMALL BUSINESS
HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTH CONGRESS
FIRST SESSION
__________
WASHINGTON, DC, JULY 25, 2001
__________
Serial No. 107-23
__________
Printed for the use of the Committee on Small Business
U.S. GOVERNMENT PRINTING OFFICE
75-058-PS WASHINGTON : 2001
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpr.gov Phone (202) 512�091800 Fax: (202) 512�092250
Mail: Stop SSOP, Washington, DC 20402�090001
COMMITTEE ON SMALL BUSINESS
DONALD MANZULLO, Illinois, Chairman
LARRY COMBEST, Texas NYDIA M. VELAZQUEZ, New York
JOEL HEFLEY, Colorado JUANITA MILLENDER-McDONALD,
ROSCOE G. BARTLETT, Maryland California
FRANK A. LoBIONDO, New Jersey DANNY K. DAVIS, Illinois
SUE W. KELLY, New York BILL PASCRELL, Jr., New Jersey
STEVE CHABOT, Ohio DONNA M. CHRISTENSEN, Virgin
PATRICK J. TOOMEY, Pennsylvania Islands
JIM DeMINT, South Carolina ROBERT A. BRADY, Pennsylvania
JOHN R. THUNE, South Dakota TOM UDALL, New Mexico
MIKE PENCE, Indiana STEPHANIE TUBBS JONES, Ohio
MICHAEL FERGUSON, New Jersey CHARLES A. GONZALEZ, Texas
DARRELL E. ISSA, California DAVID D. PHELPS, Illinois
SAM GRAVES, Missouri GRACE F. NAPOLITANO, California
EDWARD L. SCHROCK, Virginia BRIAN BAIRD, Washington
FELIX J. GRUCCI, Jr., New York MARK UDALL, Colorado
TODD W. AKIN, Missouri JAMES R. LANGEVIN, Rhode Island
SHELLEY MOORE CAPITO, West Virginia MIKE ROSS, Arkansas
BILL SHUSTER, Pennsylvania BRAD CARSON, Oklahoma
ANIBAL ACEVEDO-VILA, Puerto Rico
Doug Thomas, Staff Director
Phil Eskeland, Deputy Staff Director
Michael Day, Minority Staff Director
C O N T E N T S
----------
Page
Hearing held on July 25, 2001.................................... 1
WITNESSES
Scully, Hon. Thomas, Administrator, Department of Health & Human
Services....................................................... 3
Graham, Hon. John, Administrator, Office of Management and Budget 7
Grob, George, Deputy Inspector General, Department of Health and
Human Services................................................. 9
APPENDIX
Opening statements:
Manzullo, Hon. Donald........................................ 44
Velazquez, Hon. Nydia........................................ 48
Tubbs Jones, Hon. Stephanie.................................. 51
Ross, Hon. Mike.............................................. 54
Millender-McDonald, Hon. Juanita............................. 56
Prepared statements:
Scully, Hon. Thomas.......................................... 58
Graham, Hon. John............................................ 73
Grob, George................................................. 78
REDUCING REGULATORY AND PAPERWORK BURDENS ON SMALL HEALTHCARE
PROVIDERS: PROPOSALS FROM THE EXECUTIVE BRANCH
----------
WEDNESDAY, JULY 25, 2001
House of Representatives,
Committee on Small Business,
Washington, DC.
The Committee met, pursuant to call, at 10:05 a.m. in Room
2360, Rayburn House Office Building, Hon. Donald Manzullo
(chairman of the Committee) presiding.
Chairman Manzullo. The Committee will come to order.
This is the Committee's third hearing to examine the
regulatory problems at HCFA, which is now known as the Centers
for Medicare and Medicaid Services (CMS). However, a new name
does not make a new organization.
While I appreciate that Secretary Thompson and
Administrator Scully are trying to bring a new attitude to the
agency, personally I am not going to recognize the new name
until such time as I am convinced that it has truly been
transformed into a new organization that puts the interests of
patients and healthcare providers before those of bureaucratic
bean counters.
At the previous hearings, all the participants agreed that
the regulatory burdens are distracting from their primary
business--delivering healthcare services. Today's hearing asks
the decision makers from HCFA and the Office of Management and
Budget what administrative actions they can take to eliminate
burdensome and unnecessary regulatory requirements. My
objective is to work cooperatively with HCFA, and I will put a
slash in there, slash CMS, and OMB to reduce and even eliminate
these regulatory burdens.
It appears that the recordkeeping and reporting
requirements provide little in the way of information and in
fact may inhibit the practice of good medicine. Similarly, the
burden of regulation would make sense if those covered by
Medicare or the providers benefited from the regulations. That
does not appear to be the case.
Rather, the regulatory scheme appears to burden those who
have the fewest resources to wend their way through the
Department's administrative maze, the small businesses.
Regulations and record keeping requirements appear to frustrate
Medicare beneficiaries and participating providers.
A regulatory morass exists at HCFA. Congress and the
Executive Branch need to work together to reduce the regulatory
burdens on small healthcare providers so they will stay in the
Medicare program. If the Executive Branch cannot solve the
problem by administrative action alone, then we are certainly
willing to do whatever is necessary for remedial legislation.
I would like to thank my colleagues, Mr. Toomey and Mrs.
Berkley, for their leadership on this issue. I expect this
hearing will be the foundation of a fruitful partnership that
will bring accountability to a system that for too long appears
to have been accountable to no one.
I will now recognize the Ranking Member of the full
Committee, the distinguished gentlelady from New York, for her
opening statement.
[Chairman Manzullo's statement may be found in appendix.]
Ms. Velazquez. Thank you, Mr. Chairman.
Today's hearing is the third in a series on the Center for
Medicare and Medicaid Services, the successor agency to the
Health Care Financing Administration. If these hearings have
shown us anything, it is that it will take more than a name
change to reform how HCFA operates.
To that end, the purpose of these hearings is to work with
the Administration to find solutions to the problems of a
complicated and growing system. Today's hearing will focus on
the role of OMB, specifically the Office of Information and
Regulatory Affairs, in enforcing the Paperwork Reduction Act.
In addition, we will look at how effectively OMB has
monitored and enforced federal agencies' compliance with the
Regulatory Flexibility Act. As we know, reporting and
regulatory burdens fall disproportionately on small business.
One of this Committee's goals is to level the regulatory
playing field for our country's entrepreneurs.
In our last two hearings, we heard about problems facing
the public healthcare financing system and small health service
providers. In 1999, Congress tightened enforcement in order to
cut down on waste, fraud and abuse. That goal is close to being
met, but it has had unanticipated complications.
We learned about the burdensome and often contradictory CMS
paperwork endured by doctors simply to receive payment for
their services. Often complying with CMS paperwork takes more
time than the time they spend with their patients. The
reporting requirements are complicated, often contradictory and
prone to unintended errors. Then doctors must worry about
unannounced audits for the errors they did not mean to make.
Such a confusing and adversarial system is very
discouraging and has real consequences. When doctors are
treated as suspects instead of caring professionals, often the
result is an avoidance of Medicare and Medicaid patients, many
of whom have the greatest need for medical assistance.
Mr. Chairman, this burden of paperwork and scrutiny falls
hardest on the small healthcare provider. Doctors in private
solo practice or partnership want to serve the poor and
elderly, but they worry about complex reporting requirements
that could just as easily result in an expensive audit as it
could be a missed payment.
Today we continue to focus on solutions to problems that
face small healthcare providers, and we will hear then from the
agencies responsible for running that system, CMS and OMB. I
hope they provide this Committee with useful and constructive
proposals that result in a solvent Medicare system providing
quality services to the poor and elderly, reduce waste and
fraud and protects the needs and interests of small healthcare
providers.
In closing, Mr. Chairman, let me say that I look forward to
hearing the agencies' proposals for a fair and effective
alternative to the current way of doing business with the
government.
Thank you.
[Ms. Velazquez's statement may be found in appendix.]
Chairman Manzullo. Thank you very much.
We have a time clock here that is five minutes more or
less, just an idea to help us run along. Our first witness, Tom
Scully, is the administrator. His title is Administrator of the
Centers for Medicare and Medicaid Services. That is his
official title. We will recognize you by your official title.
Mr. Scully, we look forward to your testimony. I appreciate
your stopping by the office yesterday and informally going over
some of the many onerous burdens that you are facing.
Iappreciate the fact that you had the courage to accept the
appointment.
Please?
STATEMENT OF THOMAS SCULLY, ADMINISTRATOR, CENTERS FOR MEDICARE
AND MEDICAID SERVICES, DEPARTMENT OF HEALTH AND HUMAN SERVICES
Mr. Scully. Thank you, Mr. Chairman and Mrs. Velazquez and
other Members. I would be happy to go through all the wonders
of the former HCFA, and hopefully in the next few months I can
convince you that we have changed enough to start calling it
CMS.
There are a lot of challenges obviously with the Medicare
and Medicaid programs. As a first step, you talked of a change
in the name. We changed the name for a variety of reasons.
Secretary Thompson, before I even got confirmed, spent a week
on what was then called HCFA with me. One day on the way up to
Baltimore he said look, everybody hates HCFA. No senior knows
what HCFA is. HCFA has a lot of baggage. As the governor of
Wisconsin, he probably may have been tied with the Chairman for
being the biggest HCFA hater.
What he found when he got up there, though, and I had
already known from a variety of roles, is that HCFA/CMS
actually is filled with a lot of people that actually do care
about the programs, do a pretty good job. They tend to be very
insular and do not really talk to the outside world enough,
which I am committed to changing, but they really do a good
job. But, people really, really did not like HCFA.
It was his idea to change it to CMS. We spent a lot of time
talking to employees and had an employee contest and focus
groups. We changed the name to CMS, even though some people
have given us a little bit of a hard time about it.
Our view is if you try to change attitudes and change the
way people look at you and change the way the employees think
about themselves and their own agency, changing the name at
least gives you a little bit of a new breath of fresh air to
change attitudes, and it is all about changing attitudes.
I can tell you, having overseen HCFA in a prior life--I was
at OMB and in various jobs in the White House for the first day
and the last day of the first Bush Administration. I was the
person responsible for HCFA's budget back then and for the
Medicare and Medicaid programs for four years, both as the
Associate Director of OMB and Deputy Domestic Policy Advisor in
the first Bush Administration.
It is an unbelievably huge job. HCFA's combined or CMS'
combined budget this year, if you look at Medicare and Medicaid
together, is $467 billion. The Medicare program alone is $240
billion. They are the biggest program in the federal
government.
C.M.S. is a very complicated place, as we will probably get
into today. The Medicare program is run by CMS and managed by
CMS, but it is really run by 51 contractors around the county
largely by the Blue Cross plans, Mutual of Omaha and some other
contractors. We have about 5,000 employees.
I am not complaining about my budget. I would never
question what OMB gives us because I used to be there, but we
do have 4,800 employees and a $2.5 billion roughly
administrative budget for $467 billion of spending, so it is a
very, very large, very complex program and very difficult to
run.
There is no question there is need for changes in the rules
and need for changes in updating the way CMS does its job.
Secretary Thompson and I are planning to methodically and
aggressively change it. Changing the name was the first step.
We have done a lot of other things, which I will get into
today.
You mentioned in your testimony--not in your oral
testimony, but in your written testimony, which I just saw this
morning--the 855 enrollment form that was 30 pages long for new
providers. Totally unrelated to your testimony, I think you are
going to find Secretary Thompson will have an announcement
about that tomorrow that will hopefully be looked at as a first
step towards convincing you we were serious about change. I
just saw that in your testimony. He has a number of changes
tomorrow, one of which will be that.
I have done a lot of things personally since I have been
there in seven weeks. Three things we announced on Thursday.
One is, and I will get into these more in a little bit. One is
that we announced that we are forming under the Secretary's
regulatory reform initiative three different things that we are
going to do to initially try to make CMS a more open and
responsive place.
One is that we will have seven different groups. One, which
they first met for the first time on Thursday, is a group to
deal with the physician community, a group for hospitals and
rural health, a group for nursing homes, a group for health
plans, a group for nurses and allied health professionals, a
group for home health and hospice and a group for ESRD and
dialysis centers.
Each of these groups, and I am chairing personally the
long-term care group with the executive director of the
National Governors Association, Ray Chapok, because the
governors obviously spend more money and the states spend more
money on Medicaid and long-term care than we do.
Each of these groups will be focused on getting everyone in
the community--unions, hospitals, in my case unions, nursing
homes, the governors, the AARP, who all came to the first
meeting, but every group in these areas--together once a month
to talk about our problems.
You can imagine the nursing home world. The nursing homes
and the unions are not always going to agree on the fixes, but
I found that there are a lot of common problems in nursing
homes we can fix, and we want to methodically get together with
these people once a month, identify the problems and fix them.
Until I took this job after I was tossed out of the
government eight years ago, my most recent job was running a
hospital association. I know the hospitals sat around, and we
talked regularly about what needed to be fixed. Then someone
would courageously go approach HCFA about it.
What I am trying to do is get the CMS staff involved in
every one of these groups around the industry with consumers,
with unions, with hospitals, with nursing homes, with
physicians, and find out what their problems are, have them
have a forum to come tell us what their problems are and have
the people who focus on this every day inside the beltway
focused on fixing problems day to day. Not necessarily
everything has to be a big healthcare forum. There are a lot of
day-to-day problems we can fix.
A second step is that I am going to go around the country,
and the Secretary will come on some of these as well, and have
public listening forums. I assume that some of those will
happen to be in congressional districts as well, so hopefully
with some of you. I already have eight of them scheduled in the
next two months. I think the first one is with Montana with
Chairman Baucus.
To the extent I can still keep my family, I spend a lot of
time traveling around the country trying to get outside the
beltway and find out what people's problems are dealing with
the Medicare program, Medicaid program and CMS.
The third step is that internally we have a lot of very
smart people who have spent a lot of time working on Medicare
and Medicaid. The Secretary directed me to put together an
internal work group of all the smartest, most creative people
in CMS to fix our program. Since that probablycomes across as,
you know, we are from the government and we are here to help you,
people will not believe we will actually do that.
I recruited a fellow who the Chairman met yesterday, Bill
Rodgers, who actually ran an emergency room, a doctor, a
practicing physician, ran the emergency room at Alexandria
Hospital for years, patched up my kids for years. He is now
over at the emergency room in Winchester, Virginia. He is going
to spend four days a month coming in to chair this internal
work group to actually push our employees to come up with ideas
that are actually going to fix real problems for real people.
The reason I did that is he actually has to go back to the
hospital every day and deal with the other doctors and the
other physicians and the other nurses, and he has to deal with
the real problems. Sometimes I think it is helpful to have
somebody who is operating in the real healthcare world to help
you fix those problems, so he is going to chair that third
group.
We are very focused on streamlining burden and paperwork.
One of the other things we announced with probably a little
fanfare, and hopefully it will make the lawyers' jobs more easy
too, is that we announced--I used to be a healthcare lawyer in
another life, and I got paid outrageous fees to read the
Federal Register and identify regs that were coming out when I
was at Patton Boggs and Aiken Gump, two big law firms in town.
We announced a few weeks ago that we are going to have a
compendium of all regulations coming out of the Medicare/
Medicaid programs once a quarter. We are going to publish it
once a quarter, and if it is not on that list of the menu of
what we are going to put out that quarter it will not come out.
In addition to that, when we put out regs once a quarter we
are going to put them in the Federal Register--assuming we can
get them to agree to this; I am working on that--only one day a
month. The reason for that is to give people in the healthcare
world the notice of what is coming. If we do not tell them that
it is coming in the fourth quarter of the year it is not going
to be issued in the fourth quarter of the year.
The regs will only come out one day a month so that not
everybody has to hire a lawyer at a couple hundred bucks an
hour to go down and read the Federal Register so that they know
what is coming if you are a physician or a nursing home or home
health aid in hospice.
We are trying to make the regulations less burdensome, more
predictable and give people a lot more heads up of when they
are coming because I think the perception in the healthcare
world, fair or unfair, is that the HCFA regulatory process, CMS
regulatory process, tends to be just random strafing runs, and
you have to watch for these regulations to come out. I think
you will find that will make life a little simpler as well.
Another step that we are taking, which is important that I
talked to the Chairman about yesterday, is contract reform. As
I mentioned, when I was at OMB ten years ago we had 72
contractors, and we announced that we were going to get it down
to ten contractors. I came back ten years later, and we still
have 51 contractors.
Our goal, and the Secretary has said this, is to get the
number of Medicare contractors down from 51 to about 18 to 20,
and we believe by finding the best contractors who can work
with us cooperatively and run the program most efficiently,
come up with common systems, that we can run the program more
like an efficient business.
The program was designed as a contractor structure in 1965,
and very little has changed. We are determined to fix that and
make it work better. We are already working voluntarily. We
need legislative changes. We are working voluntarily with Blue
Cross, who represent most of the contractors, to fix that now.
Finally, since I know I have gone over, I will just tell
you that one of the other efforts that you will see this fall,
and this is probably my personal biggest agenda item as I
already went to the Appropriations Committees, and we have had
$35 million reprogrammed for this fall. We are going to have a
Medicare education campaign because my view when I came in is
that seniors do not understand their own program. They do not
understand where to get nursing homes. They do not understand
where to go to dialysis clinics.
I picked $35 million because that is what a Presidential
campaign spends in two months, and that was the level of
information and education effort that we wanted. We are going
to spend $35 million between October 15 and December 15
educating seniors about where to get information, where to get
choices, where to get more information about a nursing home
where they want to put their parents or their spouse, how to
pick a health plan, how to pick a dialysis center, just to get
them to ask more questions and answer more questions.
We know that is going to generate more questions, so our
Medicare 1-800 number, which currently operates eight hours a
day, five days a week, as of October 1 will be running 24 hours
a day, seven days a week. We are going to triple the budget for
it. We are going to have people available to answer very
specific questions.
If you are in New York City right now and you call up with
a specific question about New York City, you cannot get an
answer about New York City. You are referred to the state. We
are going to fix that, and hopefully as of this fall when
seniors have questions, whether it is about the Medicare
prescription drug card which we announced last week or whether
it is about picking a nursing home, they will be able to get
very specific answers about their area and their town and where
they should go for help.
We are going to make a very big effort not just to fix HCFA
on a regulatory basis and make it CMS so you can call it that
in the future, Mr. Chairman, but to also make seniors--they
love Medicare. They are happy with the program. Most of the
states generally like Medicaid, but to make people more aware
of what their options are and get better services through the
program.
Thank you for having me. Sorry I went over my few minutes.
[Mr. Scully's statement may be found in appendix.]
Chairman Manzullo. That is okay. I appreciate it very much.
Our next witness is John Graham. He is the Administrator of
the Office of Information and Regulatory Affairs, OIRA, at OMB.
I look forward to your testimony, Mr. Graham.
STATEMENT OF JOHN GRAHAM, PH.D., ADMINISTRATOR, OFFICE OF
INFORMATION AND REGULATORY AFFAIRS, OFFICE OF MANAGEMENT AND
BUDGET
Mr. Graham. Good morning, Mr. Chairman, Ranking Member and
Members of the Committee. Thank you for the invitation to
testify. You invited me to speak about OMB's role in reviewing
information collection requirements pursuant to the Paperwork
Reduction Act, as well as our review of regulations governing
Medicare and Medicaid programs.
I was confirmed by the Senate last Thursday night. Prior to
that I was a professor at the Harvard School of Public Health,
and I am pleased that I have the opportunity to testify as the
OIRA Administrator this morning.
I hope to leave this hearing today with a better
understanding of the issues that this hearing is addressing, of
your concerns and ideas for further action that may be taken by
my office inconcert with Mr. Scully and the Centers for
Medicare and Medicaid Services, which I also know as HCFA.
I have appreciated the opportunity to read the testimony
from the May 9 and July 11 hearings which constitutes a
substantial part of my knowledge base on this issue.
In your letter of invitation, you requested my views on the
following issues: (1) administrative changes that OMB can make
in ensuring that it properly understands the impact of
reporting and record keeping requirements on small businesses;
(2) the adequacy of OMB's review of reporting and record
keeping requirements imposed by CMS contractors on small
healthcare providers; (3) recommendations on necessary
legislative changes in the Paperwork Reduction Act; and (4) our
opinion on OMB's review of CMS regulations.
These are important questions, and I look forward to
working with the Committee and CMS to address the concerns that
have been raised about the paperwork burdens that are placed on
small healthcare providers. However, because I assumed the
position at OIRA less than a week ago, I am not in a position
at the present time to discuss what has happened in the past
with respect to the relationship between CMS contractors and
small healthcare providers, nor can I offer at the present time
any views or recommendations regarding what deficiencies may or
may not exist or how they can be remedied.
However, I can assure you that one of my priorities as OIRA
Administrator is to reinvigorate the Executive Branch's
implementation of the Paperwork Reduction Act, and I am
committed to working with OIRA staff and CMS and this Committee
to look into this matter in detail and to identify actions that
need to be taken.
I would, however, like to briefly summarize the public and
OIRA review that must occur before an agency can receive OIRA
approval to collect information from the public. The 1995
Paperwork Reduction Act amendments mandate an extensive agency
review process and provide significant opportunity for public
participation in both the agency and OMB processes.
In accordance with the goals of the Paperwork Reduction
Act, the Act requires agencies to plan well in advance when
they develop new collections of information and they consider
extending ongoing collections of information. This advanced
planning is necessary because agencies need to estimate
potential burdens on respondents and prepare to disclose
certain additional information to the public.
Only after doing this and considering changes based on
comments received do agencies submit their paperwork clearance
packages to OMB for review and approval. OIRA then reviews each
agency information collection requirement before the agency can
collect it and reevaluates the collections for their continued
use at least once every three years. In cases where outstanding
concerns remain, OIRA may call meetings with CMS staff, other
affected agencies and other commentators.
Our objectives throughout this process are to: (1)
determine whether the agency's collection is necessary for the
proper performance of the functions of the agency; (2) assure
that the collection has practical utility; and (3) assess
whether these benefits justify the burden imposed on the
public. If the agency cannot demonstrate to OIRA's satisfaction
that the collection's need and practical utility justifies this
burden, OIRA disapproves the collection, and the agency may not
go forward with the collection until it is revised.
Through the PRA, OIRA must help agencies meet their
obligations to the public by striking the proper balance. The
Paperwork Reduction Act should not be used as grounds for
denying the government the ability to collect from the public
what is necessary to fulfill the mission that Congress has
established. On the other hand, collection of unnecessary and
duplicative information imposes unjustified costs on the
businesses or individuals, in this case physicians, on the
taxpayer and on the economy as a whole.
O.I.R.A. is continuing to make efforts in this area
reviewing individual paperwork collection proposals and
producing an annual information collection budget that
identifies agency by agency the initiatives underway to reduce
paperwork burden and improve the quality of federal data
collection. I plan to place renewed emphasis on a coordinated
effort to produce better results in this regard, and I am happy
to hear from Mr. Scully that efforts are being made promptly to
work in this area at the present time.
Thank you for this opportunity to testify. I look forward
to working with you in the future.
[Mr. Graham's statement may be found in appendix]
Chairman Manzullo. Thank you very much.
Our third witness is George is it Grob?
Mr. Grob. Grob.
Chairman Manzullo. Grob. Thank you. Where is the E?
Mr. Grob. It is missing.
Chairman Manzullo. I think it should be on there.
Mr. Grob. Maybe the government could add an E, and it would
sound right.
Chairman Manzullo. Mr. Grob is the Deputy Inspector General
for Evaluations and Inspections for the Department of Health
and Human Services. We look forward to your testimony.
I believe there is something a little bit unusual, Mr.
Grob. When I read your testimony last night, I was nothing less
than--my breath was taken away when I read on page 4 of your
testimony, the middle paragraph, where it says we recommend
that Medicare contractors and Administrative Law Judges apply
the same standards.
Mr. Grob. Yes.
Chairman Manzullo. You might want to mention that in your
regular testimony. I think that could be the rub of most of the
problems going on with the doctors that are having difficulty.
I appreciate your being here.
STATEMENT OF GEORGE GROB, DEPUTY INSPECTOR GENERAL FOR
EVALUATIONS AND INSPECTIONS, DEPARTMENT OF HEALTH AND HUMAN
SERVICES
Mr. Grob. Thank you very much. I appreciate being here,
too. I was actually excited when I saw the invitation letter
with the words that asked us to please come up with ideas on
how to streamline the administration of the program without
compromising program integrity.
The first thought that crossed my mind was that this is
going to be complicated. Now, I knew it would be complicated
long before we got the invitation from you because we work on
this all the time, and we are constantly thinking and doing
studies about things like the appeals system and the contractor
system and all those details of the programs that we work our
way through day after day and year after year.
If there were any doubt about it at all, when I reviewed in
detail the testimony in the two previous hearings that you held
on this subject it would remove all doubts that we are dealing
with a very complicated matter. It may be because the program
is big. Medicare is the biggest insurance program in the world.
That may have something to do with it, but the fee for service
parts and the Medicare Plus charts are essentially very
complicated because of all the people that are involved in
this.
Now, I think you knew that when you asked us to answer the
question, and I am going to try to deal with this complexity by
dealing at several different levels; from a very general level
and then trying to get down to more and more specifics as we
go. Five minutes will not be enough to do it, but I will look
for other opportunities to discuss things with you and your
staff.
In one way, the question that you asked is actually the
beginning of the answer. I think it might be worthwhile for us
to pause to lay out a principle that we can use in dealing with
these, and the principle that I would like to articulate is the
principle of balance.
Because the subject is so complicated, we need to get our
bearing from time to time. I think the correct bearing is this.
I think anything we do has to balance the needs first of the
beneficiaries, the healthcare providers, and then the financial
and program integrity of the program.
A statement I think that on the surface sounds trite, but
those of us who have worked in the field know how hard it is,
and every once in a while when we get lost it is good to have
something we can grab back onto that sort of tells us where we
should go. So I think if we start with that we can always get
our bearing when we need to do it.
Now let me descend one level of generality here, and let me
look at the infrastructure. I think that nothing will help the
healthcare providers if the fundamental infrastructure of the
program is not there. There are lots of aspects to it, but I
would like to single out two. One is the Medicare contractors,
and the other is the appeals system that you mentioned earlier.
Now, Medicare has these 51 contractors that Mr. Scully
referred to, and we have actually found problems with the way
these contractors work even with their own integrity. We have
had 15 settlements with contractors for false representation of
the work that they do, for turning off the codes that they use
to detect integrity problems and a number of things like this
amounting to $350 million ever since 1993. We have also had
some problems with the effectiveness of their fraud units.
But there remain very fundamental problems with the
contractors simply with accounting. The contractors to date do
not have integrated dual entry accounting systems, which is a
fundamental aspect of any large business in this country, as I
am sure that you know.
Above and beyond these procedural weaknesses, there are
very fundamental weaknesses in the way the contractors are
chosen. Only insurance companies can serve as carriers. As far
as intermediaries are concerned, these are basically nominated
by the National Blue Cross/Blue Shield Association, which
chooses which ones to nominate, and they do that by consulting
with the various provider groups. Only cost based reimbursement
is possible, and no specialization is allowed except for the
anti-fraud contractors.
There is no business in this country that could possibly
function if its hands were tied with the same rules that
Medicare has tied the hands of its contractors. Now, when this
started it made perfect sense because we had to quickly muster
the resources of large insurance companies to manage these
programs. But right now the CMS has very little flexibility in
how to choose its contractors.
Secretary Thompson has announced that he is going to reform
this, as well as the reductions in the number of contractors
that Mr. Scully mentioned earlier. We completely support these
reforms. We think they are common sense, and they should be
made as soon as possible.
The second one is the appeals system. It is fundamentally
broke. Right now, for example, in Part B there are four levels
of appeals. At the first level, a carrier reconsideration takes
45 days on average. At the second level of a hearing it takes
120 days. At the ALJ level it takes about a year, and then at
the Departmental Appeals Board it takes up to two years on
average to handle these appeals. It takes too long.
There is a very high reversal rate, which we believe is due
to discordant standards at the different review levels, which
is what you had referred to earlier. There is, we believe,
somewhat of a breakdown in the communication and understanding
at all these levels, and there is a very dysfunctional
administrative system. If someone is worried about paperwork
reduction, they ought to try to follow the files of an appeal
as they work their way through the system and even across the
country from office to office as they try to resolve these
matters.
We believe that the solution to this is first to provide
enough resources for the system to work. If it is taking too
much time, it may be due to procedures, but it may be due to
overload. If people would like their appeals addressed, there
should be enough people involved in hearing the cases so that
it can be resolved quickly.
We think the ALJs should be moved to the Department of
Health and Human Services. Right now they function out of the
Social Security Administration. In a sense they focus a
residual of their activities on Medicare after trying to
satisfy the needs of social security. Now, there is a cadre of
Judges which do specialize in Medicare, although they do not
hear all the Medicare appeals. We believe that these should be
moved to HHS.
Communication should be approved at every level. The system
should be subject to regulation. There should be a case
precedent system. There should be reasonable time frames set
out for the various levels of appeal, and there should be
representation of the Department at some of the appeals levels,
where they are not currently represented.
Moving now to something more specific, which is the actual
dealings with the providers and the beneficiaries of our
program, I think that we strongly endorse what everyone has
been saying, which is the need for outreach and education for
the provider community.
Now, the primary responsibility for this lies with CMS. The
Inspector General's Office has gone out of its way, though, to
try to provide as much guidance as we can to the industry to
respond to needs that they have brought forward to us. I think
many of you are familiar with our voluntary compliance
guidelines program, which we have issued for nine segments of
the healthcare industry, including hospitals, home health,
medical equipment, prosthetics, hospices, Medicare Plus Choice,
nursing facilities and more recently for the physician
community.
We also issue by statute, which required it in the most
recent legislation, advisory opinions when questions are raised
to our office to give an answer as to whether a particular
service is allowed. We issue fraud alerts, safe harbor
guidelines, and our website contains every audit we perform.
Every evaluation which my office performs is on there. Our work
plan is on there. Our hearing information is on there. Anyone
who wants to know what we are doing and what we are saying,
they can go to our website, and they can find it there.
Of course, CMS has also been aggressive in conducting
education and plans to do even more. This really works. In
1996, we conducted our first payment error reduction study, and
we found that the error in Medicare at that time was 14
percent, costing the government $23.3 billion. Last year, for
the year 2000, it dropped in half. It is 6.8 percent. It is
about $12 billion right now, so it is half of what it used to
be, but it is still too high.
To show you that success is really possible here, I would
tell you initially in the hospital community $1 billion worth
of their error was due to documentation problems. In the last
several years, not a penny of their error that we detected was
due to documentation problems. I think this demonstrates that
the education and the effort to deal with problems once
identified can be very successful.
My time is now over, and there will be plenty of
opportunities I think in dealing with your staffto answer other
questions that you may have. I would really look forward to the
opportunity to do that. I have gone through all of the material, and
any way that we can meet with you or your staff to go over those
problems one by one until we figure out how to do that would be most
welcome to me.
I will just end by saying obviously Medicare should not
just be the biggest healthcare program in the world. It should
be the best.
Thanks.
[Mr. Grob's statement may be found in appendix.]
Chairman Manzullo. Thank you for that testimony.
I have a couple of questions here. Mr. Grob, I would refer
to page 4 of your testimony.
You know, I practiced law for 22 years. I did a lot of
social security disability. We had guidelines. We had a hearing
here a couple weeks ago with Dr. Michael Hulsebus, who was
terrorized, along with his brothers, by Wisconsin's Physician
Services, WPS. We found out that that group does not know the
difference between an x-ray and the X files. The only way that
you can qualitatively state whether or not somebody needs an
adjustment by a chiropractor is to take a look at x-rays. They
did not even look at x-rays.
As far as I am concerned, performance contracts are nothing
more than the same thing as telling a state trooper that he has
a quota of tickets that he has to write. The terrorizing that
has gone on by these contractors has got to come to an end.
What I do not understand is why? There is a local medical
review policy and a contractor manual, which is what the so-
called carrier hearing officers are. They are a joke. The ALJs
are bound by statute, regulations and national coverage
determination.
In fact, Dr. Hulsebus, after he was fined $250,000 and we
beat it down to zero, then they came back with $40,000. We beat
it down to $1,500. Then they decided to appeal the $1,500 after
the Administrative Law Judge threw it out on its face. Again,
they got three more letters.
The latest from Wisconsin's Physician Service, and I will
mention names and names of people on the record and publicly to
bring about accountability. They said well, here is your
appeal. You can send a letter, and somebody may or may not
respond to it.
My question both to you and Mr. Scully would be, you know,
why are the contractors not bound by statute, regulation and
national coverage determination?
Before you answer that, I am also concerned over the fact
that the contractors are insurance companies. This is what
answers the questions of why the insurance companies in non-
Medicare situations are trying to pay the same rate of Medicare
reimbursement. I just think it is a very cozy arrangement and
that there should be an end to that. This is an administrative
function.
I would like your comments on that, but if you could first
comment on the first, both you and Mr. Scully. Well, whoever
wants to comment on that.
Mr. Grob. On the first one I would say I think your point
about the performance contracting is very valid. I think there
is a good solution to that, and I think it is implied by what
Secretary Thompson has announced, which is you can change the
basis upon which you measure the performance of a contractor.
If the contractor is supposed to have timely appeals then
their performance can be based on how timely those appeals are.
If the contractor is supposed to handle appeals that are
accurate and in which people are treated with dignity then that
can be what the performance is based on.
I think that is a very good way to do it, which would be to
structure those contracts so that there is a strong performance
element to it.
Mr. Scully. Maybe I will switch to a couple of the other
subjects you mentioned. The national versus regional coverage
decisions. That is an ongoing policy dilemma. Obviously with a
$240 billion insurance company, people can get coverage
decisions that they do not like regionally and want national
coverage decisions and vice versa. It is kind of like forum
shopping as a lawyer.
Probably 80 percent of the coverage decisions about what
Medicare covers are made locally by the carriers. Most people
like that. Most physicians like it. Most hospitals like it
because it leaves a lot of flexibility for local practice
patterns and local decisions. There has been a lot of pressure
to push more of that to the local areas.
On the other hand, big decisions like PT scanners, things
like that, MRIs, which I was involved in ten years ago, how
much you are going to cover on that, the bigger decisions tend
to be in the multi-billion dollar range and tend to get pushed
up to the national level and be national coverage decisions,
but that is always going to be a problem because when a local
carrier and a local contractor turn somebody down for coverage
obviously those people are very unhappy.
On the other hand, in many cases they prefer the local
coverage because they are more likely to get a more flexible
decision locally than they would if they pushed it up to
Baltimore and had the decision made nationally on a national
coverage decisions. That is probably a pressure that is not
going to go away, the balance between national and local
coverage decisions. I have already spent quite a bit of time on
it.
I am not sure which other ones you wanted me to cover, but
as far as the fraud and abuse we discussed yesterday my views
on fraud and abuse have probably been shaped as much by my
experience the last ten years out of government as they have
been in government. I was the co-chair of the Fraud Task Force
in the first Bush Administration with the Deputy Attorney
General when I was at OMB and spent a lot of time on it. There
were a lot of great strides made in the last ten years on I
think more aggressive Medicare fraud enforcement.
On the other hand, having been the chairman of the
compliance committee of two large public corporations, Oxford
Health Plans in New York City and Davida, as I mentioned to you
yesterday, in having to put together compliance programs and
trying to push large corporations to be compliant I think you
could argue that there was maybe not enough done ten years ago,
and maybe the last couple years the government has been
arguably overzealous in some areas, which you have focused on.
I think finding a happy balance where we find people that
are bad that are not partners that are big contractors and bad
providers and go after them more aggressively while being more
responsive to the people that are actually being good public
partners with us as contractors for Medicare is a tough balance
to hit. I hope working with the IG and the Justice Department
in the next four years we can pull that off.
Chairman Manzullo. My time has expired. My point was simply
that the carriers should follow the laws, statutes and
regulations. The problem with HCFA is the fact that it is not
predictable, and that is why it is all screwed up.
Mrs. Velazquez.
Ms. Velazquez. Thank you, Mr. Chairman.
Mr. Scully, on July 16 the Administration published a
notice of publication in the Federal Register outlining their
requirements for participation in the President's new Medicare
prescription drug card program. Is the Administration following
the requirements under the Administrative Procedures Act during
this rule making?
Mr. Scully. We have, but it is not a rule making. Actually
we are not really making a rule. What we are effectively doing
is putting together a consortium or cooperative and giving
theMedicare seal of approval to drug discount cards. They are going to
use it to hopefully draw more seniors, but that proposal is something
that was largely mine. If you want to spend a lot of time having me
explaining it I can, but it was around in the last Administration. I
think there are a number of bills in the House and Senate.
Our view on that package was that no matter which Medicare
prescription drug reform proposal you look at, getting people
into organized purchasing cooperatives is from anywhere from
one-third to two-third of every reform bill savings, whether
Democrat or Republican.
Ms. Velazquez. But are you not setting up a new program?
Mr. Scully. No. We are setting up a cooperative where the
government is going to be a partner with private companies, and
we have the ability under current law to allow people--only
CMS, the Secretary of Health and Human Services, is allowed to
give people the ability to use the Medicare name, such as
Medicare Select, Medicare Plus Choice.
All we are basically doing is allowing our name to be used
under certain circumstances to market these cards. We are also
putting together a private cooperative to market them and then
make sure that the enrollment is coordinated, but it is not a
new federal program by design.
Ms. Velazquez. Mr. Grob, many of the problems healthcare
providers are facing is between themselves and the private
sector Medicare contractors. Now the President wants to
implement a prescription drug card program administered by the
private sector.
Are we creating more new problems ahead where these
contractors are out of control?
Mr. Grob. My office has not seen the specifications of the
new proposal, simply the general announcements that were made
of it, so at this time I am not prepared to talk about the
ramifications of the specifications of it.
Certainly there will be a new administrative arm here
through the private sector, and I think concerns like that need
to be looked at.
Ms. Velazquez. Mr. Grob, will you look at this new program
and get back to me with an answer?
Mr. Grob. I certainly will.
Ms. Velazquez. Mr. Scully, often times regulations that
were considered burdensome by a regulated community were not
only required by statute, but required within a certain time
frame.
Do you believe that the growing amount of CMS paperwork
requirements are the result of recent Congressional mandates?
Mr. Scully. Well, they probably are. I was pretty involved
in I think the 1990 bill, the 1993 bill, the 1997 bill, the
1999 bill. Every time you update and try to improve the
program, obviously you get much more guidelines both in
Medicare and Medicaid.
I would say that one of the problems of CMS in the last few
years, in fairness to Nancy Min-Pearle, my predecessor, who
happened to also be my successor at OMB and is a good friend,
is that through the 1997, 1998 and 1999 bills the agency was
largely overwhelmed with work. I think I have had the good
fortune of I would not say it is a quiet time, but as a post-
legislative period a relatively quiet time to come in and try
to fix some things.
I think it is fair to say that the paperwork burden was
overwhelming as a result of the legislation.
Ms. Velazquez. What is the difference between the BPA
provisions that apply to the appeals and coverage process and
the provisions contained in MERFA?
Mr. Scully. I am sorry. What?
Ms. Velazquez. Is there any difference between the BPA
provisions that apply to the appeals and coverage process and
the provisions contained in MERFA? This is the legislation that
we just held some hearings about.
Mr. Scully. I am not sure where they conflict. We have
spent a lot of time. I actually have not talked to them in two
months, but spent a fair amount of time talking to Mr. Toomey
and other sponsors about MERFA. There are some things in there
that we support and some we do not.
Ms. Velazquez. Mr. Grob.
Mr. Grob. A quick reaction is that they generally do not
conflict with one another, but rather they deal with different
aspects of the problem.
The BPA provisions on the appeal system are primarily
intended to constrain the amount of time that is taken at each
level of the appeal system so that things can move rapidly
through it, whereas the provisions in MERFA tend to deal with
appeals that relate either to the status of the provider in the
program, or they try to provide a more rapid hearing of matters
that are related either to constitutional issues or to issues
related to the authority of CMS.
Ms. Velazquez. Should we be giving the agency time to
promulgate the BPA regs before we start reforming the system
again?
Mr. Grob. It is my opinion, and I do not know that everyone
shares it, that with respect to the appeal system we really
need to look the whole thing over from top to bottom.
As you know, we have recommended that the ALJs be moved
into the Department, and I think if that should happen, and we
believe that it ought to happen, that at the same time all the
other things should be considered.
I would agree with you that these things need to be looked
at together. We are very much in favor of a much more rapid
handling of the appeals, but we do have some misgivings about
the automatic raising of them to the next level because we are
afraid that if that is done either too soon or without adequate
attention it could actually have the opposite effect of
basically encumbering the higher levels of the appeal system
with issues that have not been fully reviewed yet, and it may
not only move the backlog to a different place, but it may be
more difficult then to deal with that backlog at the place.
Having said that, I do not want anyone to misconstrue my
remarks as saying that we do not want it to move faster. I just
think we need to look at it very carefully and make sure that
it works right.
Ms. Velazquez. Thank you.
Chairman Manzullo. Thank you, Ms. Velazquez.
I am going to go a little bit out of order here to
accommodate Congressman Christian-Christensen, who is an M.D. I
want to make sure her testimony gets in.
Mrs. Christensen. Thank you, Mr. Chairman. I also might
have to leave to vote in another Committee.
I want to welcome you here. It is great to have you. You
can imagine as a physician of 20 odd years and having worked
with HCFA that this is a day that, you know, most physicians
would relish having HCFA in front of me. I started to come
here, you know, in an attack mode to try to get even for all of
the problems that I have had, but maybe it is because I got
stuck in an elevator this morning. I have kind of changed my
mode.
You know, we are having serious problems in my district. I
used to think it was just my district, but I see it is all
over. We are pretty much facing a crisis in that physicians are
opting out of the system. There have always been those
physicians who have never charged Medicare beneficiaries
because it was just too horrendous to go through the process,
but now, becausethere is an option to opt out, they are opting
out. That is going to have a very terrible effect on beneficiaries
being able to get service in a small community as ours.
I am hoping that as we go through this morning through the
question and answer period you will help me to develop some
confidence in the changes that are going to be taking place so
that I can go back and find some way to encourage my physicians
not to opt out, but to stay in the system. I am still looking
for some of that. In answering the questions I am going to
pose, I hope you will help me to develop that confidence so
that I can go back and encourage my physicians and other
providers.
I have gotten many complaints, and actually all of my
providers want to change the carriers, whether it is Part A or
Part B. They just want those carriers out of their lives. I met
with providers before I came back this week, and nothing has
changed in ten, 15, 20 years with our providers.
Could you, Mr. Scully, explain? You talked in your written
testimony about flexibility and specialization and how that
would improve the contractor relations with providers. Could
you explain how that is going to improve the relationship with
the providers?
Mr. Scully. Well, I think the biggest thing that will
improve the relations with providers is incentivizing the
contractors. I personally, and this is my own personal opinion,
and I actually agree with the IG on most of what they said
about contract reform. Virtually everything. I hate to start
agreeing with the IG too early. That could be dangerous.
We really do need to fix the program. There is no place in
the Medicare system we have had cost based programs that have
worked. I mean, basically with these contractors we pay them on
cost, which, as I said to some of my staff, anybody that thinks
the people are making money on a cost based program is silly.
They are charging their plant and equipment and their systems
and other things, but their incentives are not appropriate, so
this is the backwater of most Blue Cross plans.
Just even in my personal experience, when I was a lawyer I
represented Blue Cross of California, which is chaired by
Leonard Schaefer a former HCFA administrator and friend of
mine. They had disastrous problems. One of the best run
insurance companies on the private side in the country, and
maybe at that point--they have gotten out of the Medicare
contracting system. Maybe at that point one of the worst run.
The reason was it was not profitable for the company
because they were non-incentivized. It was a cost based
contract. It was a way for them to cross subsidize their
computer systems and their building and equipment, but they had
the worst people in the company running the Medicare program,
at least at that time. It got a little better. Blue Cross is
not out of the Medicare program.
I believe, as with any other contractor system of the
federal government, we have to incentivize them right. Part of
the Secretary's contract reform proposal, and the IG supports
this, is to start paying these people as other government
contracts and incentivize them appropriately and allow them to
make a predictable government contractor profit so that they
start looking at this as a good business opportunity because
they are not incentivized appropriately.
As a result, the Blue Cross plans and Mutual of Omaha and
EDS and the other people that run this program do not have
appropriate incentives to focus their best people in the
company in the long term on running this program efficiently.
We do have our hands tied.
Mrs. Christensen. Okay. Mr. Scully, you talked also about
looking at the different areas, whether it is home healthcare,
hospitals and so forth. Are providers involved in that process
on an ongoing basis in looking at the reforms that are going to
be taking place----
Mr. Scully. Yes.
Mrs. Christensen [continuing]. Of groups that are looking
at hospitals and other providers and home healthcare? Are the
providers involved in that discussion?
Mr. Scully. That was the whole point of the groups that I
announced on Thursday, as I obviously used to run a provider
association, so I tend to be focused on that. In the nursing
home area, for instance, the group that I am chairing is the
unions, the major nursing home groups, the AARP, the other
patient advocacy groups.
The whole point is to get out to those groups and find
things they want to fix. Hopefully we will fix them fast enough
that we can get the Chairman to start calling us CMS sooner or
later.
Mrs. Christensen. If I could just throw in one last
question? I guess I would ask this of Mr. Grob, who talked
about balance. We are really looking forward to balance because
from a provider point of view we have shared most of the burden
and the suffering in the system, so we are looking forward to
some balance.
Everybody acknowledges that the carriers are a big part of
the problem. You also acknowledge that when physicians are
investigated or audited you do not find really fraud and abuse.
You find honest mistakes.
While you are reforming the system, while you are changing
the carrier, the way that the contractors are contracted with,
would it not be a good idea to put a moratorium on some of
those investigations of the providers? We are really not
involving ourselves in criminal activity. They are honest
mistakes. The system is so bad that I am sure that it is
responsible for a lot of the reasons why they are audited,
investigated, et cetera.
Mr. Grob. Okay. Let me address this one. I think I am going
to pick up the principle of complexity to answer this one
because it is very complex.
We have always said, and I will emphasize it now. I will
say it again a dozen times if we have to. Most providers are
honest. They are hard working. They are very concerned about
their patients. They come through for them all the time. There
is a handful that are not, and they besmirch the name of all
the rest that do.
Having said that, however, I do not think that I could
agree that all the problems that we are having are simply due
to mistakes. On the other hand, I do not know that it is all
due to fraud either.
What I really think is that there is a spectrum in there.
It runs from someone who made an innocent mistake to someone
makes a lot of innocent mistakes, to someone who does not care
very much, to someone who might just want to press it and just
see what they can get out of this program without crossing the
fraud line, all the way up to people who systematically sit
down and say ``let us see if we can take this thing for all it
is worth.'' It really runs the gamut like that.
Now, the error rate study that we produce every year is not
capable of detecting what the underlying reason is. It can only
detect whether or not a payment was not made correctly. We are
not able to look underneath that to see whether it was due to
fraud.
There is something about the statements that go around,
and, as I said, I would really like to take this opportunity to
put it on the table. I think that part of the reason for the
fear that physicians and others have about being investigated
is that they do not understand that not all that many are. The
number of physicians who have been criminally convicted or for
whom fines and administrative remedies have been taken is very
small. For example, it has averaged about 25 a year. Most
people think it amounts to much more than that.
I believe that there are several ways to handle the
question of the fear that people have of being criminalized, if
you will. One is to make sure that the systems do not do that
wrong. We havealways said we try to be very professional about
this. We do not want to cross that line. We are very open. As we have
always said, if anyone knows a specific case, anything they want to
bring to us where this has not worked right, let us know.
I think that another way to deal with the problem, though,
is to deal with the fear. I think part of the education and
understanding that we have to bring about is for everyone to
gain an understanding as to what the limits of those
authorities are and how they are practiced, so that if there
are any fears that are not justified we can take care of those.
Chairman Manzullo. I appreciate your testimony.
Mr. Pence.
Mrs. Christensen. Thank you.
Mr. Pence. Thank you, Mr. Chairman. I want to thank Mr.
Scully for being with us, as well as our other distinguished
guests today in the Small Business Committee.
I would compliment you, Mr. Scully, already by saying that
on the House Floor yesterday, following your meeting with our
Chairman of this Committee, you were responsible for the first
reference to HCFA that I have ever heard the Chairman make
where I did not feel that he was restraining himself from using
expletives. I congratulate you for that, for good first
impressions, and I am confident that they will go forward with
good actions.
My question more has to do with a process that has come to
my attention. I serve as Chairman of the Subcommittee of the
Small Business Committee on Regulatory Reform and Oversight,
and I am very encouraged to hear that the Centers for Medicare
and Medicaid Services recently announced the formation of in-
house expert teams across its program areas to think
innovatively about new ways of doing business that will reduce
the administrative burdens and simplify rules and regulations,
very much a goal I know of the Chairman of this full Committee
and very much part of our vision for the Subcommittee that I
chair.
I would like to congratulate you in this effort and
encourage you strongly as you pursue this process of innovation
and reform. I would also suggest, though, as you go forward
that you establish a team to investigate specifically the
survey process for skilled nursing facilities. I serve an east
central Indiana district that is home to many of these
facilities that you have I think accurately spoken well of
today.
What I hear from the folks in east central Indiana is that
in effect this system is broken, and the current survey process
does not really measure quality; that in fact they tell me that
it only really provides a snapshot of compliance on that
particular day.
I would like to encourage you and just simply invite your
comments, Mr. Scully, in particular on this recommendation. I
want to encourage you to review the process, including the
frequency of surveys, and take a hard look at the shortcomings
of the survey process itself.
I would also invite you beyond today's hearing to share
with me in our Subcommittee capacity any of your thoughts going
forward. I would just invite you to comment in any way about
this new process and specifically in the area of skilled
nursing facilities.
Mr. Scully. Well, as I mentioned earlier, there are seven
outreach groups, and I not by accident picked the long-term
care and nursing home group to chair myself. One, as a former
hospital person I think I should do the hospital one.
The executive director of the National Governors
Association, Ray Chapok, one of the chief people at the AARP, a
senior person at the SCIU, the biggest union in the nursing
home business, and I met last Thursday to start working on this
working group. It is going to be expanded to virtually anybody
in the nursing home business that wants to be involved. And
Chip Rodman--I am sorry--the president of the American
Association of Health Care Associates, which is the largest
nursing home group. We are going to look at everything from top
to bottom in the nursing homes.
I have already started working on the survey and cert
process. We are pretty much tied by statute. I personally think
it is nutty that every nursing home in the country is surveyed
and certified every 12 to 15 months, the best to the worst. My
view is the really bad ones we should be in every three or four
months, and the really good ones we should be in every three
years. It is not tied to quality.
When I came in, at one of my first staff briefings I said
are you telling me we survey every nursing home. I picked one
company's nursing homes with the exact same frequency as the
bad ones? The answer was yes. That is a statutory requirement.
I am hoping that we can convince Congress to change that
based on a quality initiative. I do not want to preempt the
Secretary, but we are working very, very, very aggressively and
cooperatively with a lot of different parts of the nursing home
business on a nursing home quality initiative that I think will
be done this fall, and I think it will significantly change the
way we work with nursing homes for the better.
I think you will find that hopefully we will come back to
you pretty quickly with an entire approach to refocus and
restructure the review and surveys and certification and
overall regulation of nursing homes. I mean, the good thing in
a strange way about the nursing homes--they have masked their
problems in the last three or four years. As you know, five of
the top six chains are in bankruptcy. It has been a tough
couple of years for nursing homes.
They are willing to look at a lot of the things, which has
been good for me, that they probably would not have talked
about three or four years ago. They have been very cooperative
partners so far in trying to get things changed. I hope to work
with them and the unions and others to get some significant
regulatory forum for nursing homes.
Mr. Pence. Very good. Thank you. I will just reiterate my
desire in my Subcommittee chairmanship role to ask your
forbearance in keeping us informed as that goes forward----
Mr. Scully. Sure. Absolutely.
Mr. Pence [continuing]. In how we can be helpful on this
side of the process. Thank you.
Mr. Toomey [presiding]. I think we have time for one more
questioner before we return for the vote, so the gentleman from
New Jersey, Mr. Pascrell.
Mr. Pascrell. Thank you, Mr. Chairman.
Mr. Grob, what part does the bureaucracy play in
precipitating fraud? We noticed a reduction in what we know of
in fraud. What part does the bureaucracy play in this? You
started to touch upon that.
Mr. Grob. I am not quite sure I understand your question,
sir.
Mr. Pascrell. Well, the fraud in Medicare. We talked about
$25 billion reduced to about $12.5 billion.
Mr. Grob. Right.
Mr. Pascrell. The $12.5 billion that still remains that we
know about, you know.
Mr. Grob. Yes.
Mr. Pascrell. We are conjecturing here.
Mr. Grob. Yes.
Mr. Pascrell. What leads to that fraud? Is it because we
have set up a system that is unmanageable, or is it because we
just have crooks out there?
Mr. Grob. Okay. I see what you are saying. Okay. Thank you.
I think if I could mention, this is a further extension of the
answer to the question previouslyraised about this. Again I
would like to emphasize that our error rate study does not measure
fraud. In other words, we do not have a six or seven percent fraud
rate, but it is an improper payment rate. I think that goes a long way
to answering your question.
There is no doubt in my mind that a good part of that is
that people may have trouble understanding the rules in some
cases, or maybe their own management is just not tight enough,
you know. In other words, I believe that the weaknesses run the
gamut from something that is purely innocent, but also includes
some things like some management that may not be as tight as it
should be.
That certainly would be exacerbated by complex program
rules. The frequency of change of program rules I think is
something that contributes to that as well.
Mr. Pascrell. Much of it precipitated by us on this side of
the table.
Mr. Grob. Yes. It is interesting at several hearings that I
have participated in how readily various Members of Congress
initiate the discussion about the changes that have been due to
the legislation that can make program management more
difficult. I think there is an overall general awareness of the
fact that the frequency of change does contribute to that.
Mr. Pascrell. Do you think that all the agencies are in
this room to redesign a new delivery system for Medicare and
Medicaid?
Mr. Grob. Well, I think going to remarks made earlier that
certainly the provider community has to play a big role in
that. I do not think it would work very well if CMS, for
example, were to design all the rules. I think it would get
bogged down.
I actually think that a big step here is this listening
process that Mr. Scully has put into effect. I think that in
looking at the questions that were raised in the testimony in
the previous sessions, I find that a lot of them go to the
structure of the program they were trying to manage, as well as
to the structure of accounting and hearings and things of this
nature.
There really are underlying questions about who is eligible
for the benefit, how do you enroll in the program, what
benefits are covered, how well people know that, and so I
really think a process of continuous improvement or continuous
engineering is what is called for, and I think the idea of
forming the groups with the different provider groups is
probably a very critical and essential element of that.
Mr. Pascrell. Would you, Mr. Scully, believe that in one
year if we put all those agencies and providers together, the
representatives in a room, we could devise a system that was
less bureaucratic and much more to our liking with a reflection
to the questions that are being asked today and the last two
times we have met?
Could you envision a new system, a delivery system being
put together that you could recommend to the Congress? I mean,
otherwise we are spinning our wheels here.
Mr. Scully. Well, not to be a cynic, Congressman, but I
have been involved in every major health reform since 1986 I
think. RBRBS, which was the biggest, in 1989 was something I
was negotiating on behalf of the first Administration.
I think it is a big program. Everything you do is
politically controversial. Believe me, I am hopefully a big
change agent, but I also think that big change in Medicare
comes slowly. We are very hopeful we get significant reform in
Medicare. We are totally committed, the President is, to
prescription drugs and Medicare reform this year, but I also
think that you have to look back a long ways to find
significant change in the healthcare system. Politically it
just does not happen.
I like to think that rather than give up, I try to go for
small changes. One of the reasons for taking this job was to
get Medicare reform and prescription drugs this year, and I am
going to spend a lot of time on it, but I also think smaller
changes like RBRBS, small changes like some of the things we
did in 1993 and 1997, do help. It is a big ship to turn. We are
committed to doing whatever we can to make small changes.
Mr. Pascrell. I want to commend the Chair for offering
legislation to begin that process. I think that is a very
serious kind of thing because part of the fallout is fraud.
Part of the fallout is a system where nobody really understands
who is participating.
We do have to start someplace. It would seem to me that if
we had a full year of concentration that we could put a
delivery system together. I do not believe you are really a
cynic at heart. I think you have had enough experience perhaps,
maybe too much. The same thing for the folks on this side of
the table. We can do something about this if we put our minds
to it.
Thank you, Mr. Chairman.
Mr. Toomey. Thank you. We have probably six or seven
minutes left in this vote, so we will adjourn for the vote.
There are three votes. We will reconvene immediately following
the last vote.
[Recess.]
Chairman Manzullo [presiding]. We are going to proceed. If
we are suspended, it happens again.
I would recognize Congresswoman Millender-McDonald.
Ms. Millender-McDonald. Thank you, Mr. Chairman.
I apologize for not being here through most of your opening
statements, but I certainly got the feel of the rhythm of this
hearing with the questions that were raised by my colleagues.
The one thing that I guess I want to touch on is the
education outreach. Mr. Scully, in your presentation you spoke
of wanting to hear from local seniors and large and small
providers, state workers and the people who really deal with
Medicare and Medicaid in the real world.
My question to you is what are you doing for an education
outreach to those because those are the ones that we get a
myriad of complaints and concerns with and from with reference
to the horrendous paperwork and regulatory processes that go
along with Medicare and Medicaid.
What is your education outreach, for a beginning question
to you, on trying to hear from these folks, you know, albeit
through AARP, older seniors or whatever? What are some of your
outreach efforts?
Mr. Scully. Well, I mentioned in my statement there are
three basic things we are going to do, and we are certainly
happy to do more.
One is that I am going to, to the extent I can still stay
married and have a family, I am going to be traveling around
the country this year to do personal hearings probably with
Members of Congress.
Ms. Millender-McDonald. Starting with me, of course.
Mr. Scully. Well, I hate to say that I already have eight
scheduled I think through the end of September as of this
morning in my staff meeting, almost one a week, with
alternating Members of each party in the House and Senate. I am
getting somewhat booked up, but we are planning to do a lot of
those around the country. The Secretary directed me to do
those.
We also created last Thursday seven industry outreach
groups so that inside the--the hearings are basically intended
to get input from people around the country outside the
beltway. We also created seven working groups which represent
basically every sector of healthcare.
I am chairing the one on long-term care and nursing homes
with the executive director of the National Governors
Association, but in that case we will have the unions, all the
nursing home groups and basically anybody that wants to come
in. We are going to meet with them once a month to try to
methodically go through all the issues that can be resolved and
try to fix them all.One of them is hopefully survey and
certification of nursing homes is the first one.
In the hospital sector, the first thing the Secretary
committed to doing the other day when we created these is to
fix cost reports, which if you know about hospitals we are
determined to I do not know if we can eliminate cost reports,
but we are certainly determined to size them down to the
absolute bare bones needed for us to get information about
managing hospital reimbursement.
We announced the other day that we are recalling and
reconsidering the whole ENM payment guidelines for physicians,
and we are trying to go through and focus in every area of the
health professions where we have serious problems and fix them.
The third effort that we are making is really an outreach
effort. The Secretary announced that he is putting together
sector work groups within my own agency to come up with new
ideas to fix the place and to make it work better. To make sure
that we do not end up being captives of our own agency, I
appointed a fellow who actually runs an emergency room at a
Winchester, Virginia, hospital. He is going to work with us
four days a month to come in and chair this to actually make
sure that the ideas my current staff come up with actually work
in the real world because he has to actually go back and run an
emergency room every day.
Those are the first steps, the hearings around the country,
an effort within the beltway and an effort within the agency to
try to shake things up and change things.
Ms. Millender-McDonald. Well, I do appreciate those
outlines that you have articulated to us, but I would certainly
like to encourage you to put any education outreach information
inside of journals that are endemic to these respective groups
because that is important and is key to providing the type of
education and information. Communication is the key.
Information to those groups.
The home healthcare folks came to see me last week, and
part of their problem were these over burdensome regulations
with reference to Medicare and Medicaid. They are not really
understanding a lot of its processes, so there lies one group
that is critical for you to engage in.
Your sector work groups that you have outlined. Who do they
comprise? What is the composition of those groups and the
persons who work within the groups?
Mr. Scully. Well, they are chaired by senior people at
CMS----
Ms. Millender-McDonald. Right.
Mr. Scully [continuing]. Which is me in the nursing home
case, my deputy, Reuben Kinshaw, in the physician case and down
the line.
We are going to stagger those so that hopefully I can go to
a lot of them, but basically anybody that wants to participate.
For instance, in the nursing home area I had an organizational
meeting last week, and it was the senior representative from
the SCIU, which is the biggest union of nursing homes, the head
of the American Health Care Association, the biggest nursing
home trade association, the executive director of the National
Governors Association, one of the senior people at AARP and me.
Ms. Millender-McDonald. So it is a plethora of folks?
Mr. Scully. We are trying to get everybody involved----
Ms. Millender-McDonald. Absolutely.
Mr. Scully [continuing]. On all sides of politics, you
know, in every issue. I mean, we are not trying to--I have
found, and I ran a hospital association until seven weeks ago.
I found that, you know, 90 percent of the day-to-day
operational problems are not political.
There are a lot of common problems we can fix. I think
getting people to identify those is a good first step. There
are plenty of political things to fight over, but there are a
lot of operational things we can fix right away.
Ms. Millender-McDonald. I think so, and I think it is
critical that we do that. Leave the politics to us, but try to
fix the operational aspects of it.
You said you want to hear from rural offices and inner
cities. I do represent Watts and Willowbrook, Compton, some of
the most impoverished areas, as well as some of the suburban
areas. I am from the most impoverished to the affluent.
Given that stretch, we still have problems irrespective. I
think as you begin to schedule your time across this nation I
certainly would like for you to think of Watts. I would be more
than happy to receive you there to talk with persons from that
region to come in.
Mr. Scully. I am certain we will have a hearing at some
point in Los Angeles.
Ms. Millender-McDonald. Okay. Fine.
Mr. Scully. I think I had 180 hospitals in California in my
former trade association, so I spent a lot of time there over
the years.
Ms. Millender-McDonald. I understand. The cooperatives that
you talked about. You said that it is not a new culture. It is
not a new concept, but it is a complement to that that you have
already been engaged in. Can you explain that more to me?
Mr. Scully. I am not sure. Do you mean on the prescription
drug card or on the----
Ms. Millender-McDonald. I think the Ranking Member spoke
about you are changing a whole new system, and you said no, you
are just integrating the existing system with some
cooperatives.
Mr. Scully. I think I was talking about the Medicare
prescription drug card.
Ms. Millender-McDonald. Yes. That is right. It was that.
Mr. Scully. This is something that is not a new concept.
Actually the way that developed, and I have said this publicly
before, is when I came in before I was confirmed by the Senate
I asked the staff at CMS why do you not give me the 20 crazy
ideas that have been sitting around here for years that nobody
wanted to do. They did it. Probably 19 of them were not things
that I thought were viable.
The one that I thought was a great idea that somebody
should have done years ago was the prescription drug discount
card. Senator Hagel had a bill similar to this last year in the
Senate. There have been other people that have done it. I
brought it to Secretary Thompson, who also liked it. We brought
it to the White House, and the President liked it and so the
President announced it.
For whatever reason, it seemed to get more press than our
Medicare forums, which in some ways is unfortunate, but it
seemed to me to be an intuitively smart thing to do even if you
look at Senator Graham's bill, the leading Democratic bill for
Medicare prescription drugs.
Thirty-five to 70 percent of those savings to seniors over
the next ten years come from organizing seniors into
prescription purchasing cooperatives. The only people in the
country right now that walk into a pharmacy and pay over-the-
counter costs for drugs are the uninsured and seniors. I
thought that was crazy.
We do not have the ability to subsidize seniors' drug
purchases, though we will hopefully negotiate that with
Congress this fall. We do have the ability to do what most
people, including all Members of Congress and me do, which is
belong to a pharmaceutical benefits manager who is going to
negotiate prices for you and save you a little money.
This is not the fix for all seniors, but we believe it is
going to save them between 15 and 25 percent on average on
their prescriptions, and that will help.
Ms. Millender-McDonald. But not all seniors have bought
into this concept, so we are still guarded to some extent.
Mr. Scully. We have not even started yet. It will not even
be in place until January 1.
Ms. Millender-McDonald. I understand, but in even talking
about it I think there is a lot of concerns about this.
Mr. Scully. I really think it is not intended to be
political. I happen to live in Jim Moran's district. He is my
Congressman from Alexandria. I have lived there for 20 some
years. I went over and explained to a group of his seniors at
his town hall meeting last week how this worked. He is an old
friend. He came in a little late and started beating up the
cook.
Ms. Millender-McDonald. Again, it is an education.
Mr. Scully. I said that is my idea. Once I explained it to
him and his seniors and how it was going to work, I think
generally--it is not intended to be political. I think it is
going to help people. I do not think it is going to be the be
all and end all for all seniors. I think it is going to be of
marginal help. It is going to save them money.
It is not a substitute for prescription drug reform. We are
committed to doing that. It is going to save seniors money, and
it is going to work. I think that if you actually look at the
details of how we structured it it is a good idea, and it is
kind of unfortunate it has become political because I had hoped
it would not.
Ms. Millender-McDonald. The operative word is it is not a
substitute.
Mr. Scully. It is not a substitute.
Ms. Millender-McDonald. That is the operative word. Again,
you have educated portions of the masses who are still guarded
on this whole concept. Then I think education is the key to all
of this.
Mr. Chairman, I have just one more. I just have one more
question, if I may.
Chairman Manzullo. You have gone ten minutes. If you would
not mind?
Ms. Millender-McDonald. Okay. Fine. I thank you.
Chairman Manzullo. Thank you.
Ms. Millender-McDonald. I have a statement for the record,
Mr. Chairman.
Chairman Manzullo. All the statements will be put into the
record without objection.
Ms. Millender-McDonald. Thank you.
Chairman Manzullo. Mr. Shuster.
Mr. Shuster. Thank you, Mr. Chairman. I would like to thank
the panel for being here today. I appreciate your testimony.
My question is to Mr. Scully. There is a crisis in rural
healthcare, and that is due in large part to the reimbursement
of Medicare. It has been decreased, and I know that is a
legislative correction we need to make, as well as costs going
up, those types of things. I applaud your efforts to streamline
the paperwork and to make a change to make it more user
friendly, your organization.
The question I have is another problem that is being
caused, my administrators are telling me, is, of course, the
paperwork. The nurses are saying for every hour of care they
have about a half an hour of paperwork. What I need to get from
you is what is the goal of I want to say HCFA? I have not got
myself changed over yet.
What is the goal to reducing that amount of paperwork and
streamlining it, and what are the measurements we are going to
use? This measurement here, that hour and half hour that I have
put out to you. I do not know if you think that is accurate,
but it seems to me a measurement like that is something that we
can put out there that we can all see. Nurses can see. People
on the ground can use that as a measurement of how much you are
going to decrease the paperwork from that half hour down to 25
minutes, down to 15 minutes, something like that.
Mr. Scully. It is a complex program. I think the
measurement is balance. I think the issue is we have a gigantic
program, $240 billion. The last time I was in the government
eight or nine years ago we had 15 percent a year Medicare
inflation. There were a lot of factors behind that, but I do
not have any desire, as I consistently tell my staff, to be
back in the system of providing double digit Medicare/Medicaid
inflation.
A piece, and I do not think it is the biggest piece, but I
think a piece of getting that inflation, is Medicare inflation
went from 15 percent in I think 1992 down to negative one
percent in 1999. A piece of that was more aggressive anti-fraud
efforts to make sure that people were not abusing the program.
I do not think that is the biggest piece. The biggest piece was
the 1997 BBA, which probably took a little bit more out of the
system than people expected.
My goal is to find the right balance between having not
enough regulation and having enough regulation where the
program treats taxpayer dollars responsibly, but not so much
regulation that we torture people in the outside world. We have
seen instances where there was clearly rampant fraud going on
in the home health area. There were a lot of people sending in
home health bills that were wrong. If you do not have
appropriate billing rules and appropriate structures, you have
a disaster on your hands.
On the other hand, between 1997 and 2000 home health
spending went from $18 billion to $9 billion, so we racheted
down on them so fast that that was one of the reasons that home
health has become a huge political issue. We wiped out a lot of
home health providers, probably some good ones along with the
bad ones.
My goal is to have a more gentle policy, a more rational
progression in home health spending from $3 billion to $9
billion without the $18 billion in between. My goal is to find
a rational policy balance where we spend taxpayer dollars
wisely and have enough regulation and enough structure to make
sure people do not cheat and do not over bill the program, but
to the point where nurses do not want to get out of the
profession and doctors do not want to get out of the profession
because they feel tortured by Medicare and Medicaid
regulations.
That is a tough balance to have in a gigantic public
program, but I think that is the goal.
Mr. Shuster. No number figure on that? Ten percent? Fifteen
percent?
Mr. Scully. It is hard.
Mr. Shuster. Can you quantify?
Mr. Scully. We are trying in home health. Believe me, I was
on the provider side for years, so I am highly sensitive to the
regulations.
You know, cost reports in hospitals are largely a creature
of the past that needed reform. The OASIS guidelines for home
health we are trying to streamline. The regulatory burdens for
nursing home filings, which I think we are going to have an
announcement on soon so that nursing homes will file less
information.
The goal is to collect enough information to make sure that
we can make sure that people are being paid correctly and to
make sure that we can track patient quality, which is a big
focus of mine as measuring and putting out information about
patient quality, without just correcting enough so that in a
lot of cases you will find, you know, like in hospital cost
reports why did we require 25 percent of the information?
Because somebody would like the data.
That is not to me a good reason to collect it because it is
a convenient source of data for an academic. I mean, there are
a lot of ways to do it. It is an incredibly torturous process
to go through every area sector by sector and come up with this
balance.
Mr. Shuster. I am a small businessman myself. Going about
trying to make the organization more user friendly, it is a
cultural change. Do you have the ability, and this maysound
cold-hearted, but you can educate some people, and some people just do
not want to change.
Do you have the ability to remove those people so that the
people who are not going to be user friendly, and I see
government agencies that do not have the will or do not have
the ability to remove people who just are not doing the job.
Again, somebody would be in there for 20 years. Some of them
just do not want to change.
Mr. Scully. There are limits, and that probably calls for
another set of hearings, but there are limits of what you can
do in the federal government. You know, in general I think, and
Secretary Thompson found this, the people at CMS are actually
very good. I have known that for years.
I guess my major goal is I was a hospital lobbyist for a
number of years when I was out of the government, and I spent a
lot of time going to Baltimore. I knew all the hospital people,
and I thought they were great. If you had asked me during that
period was CMS/HCFA responsive, they were, but it was because I
knew how to go up there and talk to the people. That was my
job.
The average administrator in Harrisburg or Pittsburgh or
Philadelphia thinks the place is a big black box. I think part
of that is because the agency got pummeled over the years by
Congress and people in the outside. The people tend to be I
think very hard working, very well intentioned, but very
insular. They did not talk to the outside world.
Part of what I have been trying to do is convince people in
the agency, and I think they are starting to do it. They should
talk to the outside world more. They should explain what they
are doing. My view is, and part of this comes from being a
mean-spirited OMB guy for all those years. Just joking. I
firmly believe that if you have the substantively correct
answer it may not be popular, but if you give it to people
straight they are generally happier than if they get yanked
around.
My goal is, you know, you cannot run a $240 billion
Medicare program and a Medicaid program and tell everybody what
they want to hear all the time because we would have 50 percent
inflation. You have to say no a lot. My preference is to push
people to give people a straight answer and give them a
straight no if that is the case because I think the perception
is in the past that the answer at CMS and HCFA has generally
been to yank people around as long as possible and not give
them an answer because they might get mad at you.
Chairman Manzullo. Thank you.
Mr. Baird.
Mr. Baird. Thank you, Mr. Chairman.
Mr. Scully, I applaud your efforts. This is like cleaning
the proverbial stables I am afraid. One of the biggest problems
we have in Washington state where I represent is the inequity
in compensation formulas, both in fee-for-service compensation,
but particularly Medicare Plus Choice.
What thoughts have you got about ways we might remedy that?
It is a terrible problem for our hospitals actually in terms of
how it affects cost shifting, et cetera, and impacts small
business as well.
Mr. Scully. Well, Congressman, you may not know that I
worked for a Senator from Washington state for five years, so I
am pretty familiar with Washington state. It has been a long
time. I left in 1985. That shows how old I am.
I think it is a problem, and I think you are going to find
a shifting of that with a shifting in Congress. I do not mean
to cause any political controversies, but in the hospital
business if you sat down purely on a public policy basis and
looked at the formulas for how hospital money is spent, it is
not totally based on policy. A lot of it is based on historical
positioning and who was chairman of what committee and what
states were they from. I think you would find there are certain
parts of the country--Washington state was not one of them--
that probably did not benefit from that.
I do think it is an incredibly complicated program. There
are new chairmen, for instance, in the Senate that are from
Montana and Iowa, as opposed to where they used to be for years
from other parts of the country. I think you will see some of
that policy be more rationally redistributed.
Hopefully it will not be so irrationally redistributed that
all the urban areas will get hit and the rural areas will be
overcompensated, but clearly there are a lot of different
issues out there from the hospital wage index, which is
probably what you are referring to, back to many, many, many
other formulas in Medicare that I think need to be reassessed
on the merits. I think the IG has made suggestions about that
over the years. I think GAO has made suggestions about that
over the years.
One of the surprising things to me in Medicare over the
years is that even though most Congressional districts probably
get at least as much financing for their people out of
Medicare/Medicaid as they do out of the Appropriations
Committee is because the programs are so complicated rarely
does Congress actually focus on how they are delivered, but I
hope to help restore some equity over the years.
Mr. Baird. I applaud that. We were part of the Fairness
Caucus last Congress and worked hard to raise the floor, et
cetera. Anything we can do to help on that we would surely
pitch in on.
Let me ask kind of a theoretical question. I was looking at
page 6 of some of the commentary for today. One of my questions
was, and I am not sure whose testimony it was. It may be just
background. The tremendous amount of fraud that we have from
these contractors.
You know, the Administration and the Majority party spends
an awful lot of time bashing big government bureaucrats and
talking about contracting out, yet here we have private
enterprise screwing the people. I do not think that is very
good. I just wonder what your thoughts are on that and how we
can correct that. Does it teach us anything about whether
contracting out is necessarily the panacea it is often proposed
to be?
Finally, when contractors do not make enough money, be they
these contractors here or HMOs, we say well, we have to throw
more federal money at it and incentivize them. When public
employees are deemed to be not doing their job, we attack them
as faceless bureaucrats who do not want to serve the public.
Could you comment on that?
Mr. Scully. That is a tough one to comment on. I think
realistically Medicare has a lot of problems. I mean,
philosophically and fundamentally I think Medicare is a
wonderful program and seniors love it. I do not think that any
person, Republican and Democrat, would have sat down today and
said let us spend $240 billion a year on 40 million seniors and
design the program the way it works.
I do not like price fixing any place. The federal
government sets prices in Medicare/Medicaid for every physician
and for every hospital across the board. That is the only place
in the economy we do it. For 13 or 14 percent of the economy, I
think if you sat down and redid it again that is probably not
the best way to start.
On the other hand, I think the contracting system, even
though I think it needs to be drastically reformed, has served
pretty well considering the fact that it is a giant program,
$240 billion, and we spend $2.5 billion a year administering
it, including the contractors and including my budget. It is
kind of miraculous that it holds together. I think it barely
holds together some days, but it holds together.
Generally the biggest response I get from Congressmen who
visit Baltimore, and even Secretary Thompson has said it, is
where are the people paying the claims? There are not any
people paying the claims. I do not think the government could
possibly do it. I mean, it is basically the Blue Cross plans
that do it. I think they are incentivized inappropriately, but
I think generally the contracting out system has worked
reasonably well. For 35 years it has paid a lot of Medicare
claims.
Even though there are a lot of problems and a lot of angry
docs and a lot of angry hospitals and a lot of angry people out
there, generally they are angry at the appeals process, which
tends to be the ALJs and sometimes the fiscal intermediaries
and the carriers rather than the payers. I mean, if you talk to
insurance companies every day like I do--I have been trying to
keep a lot of the Medicare Plus Choice plans from bailing out--
and you talk to hospitals, generally Medicare is one of their
quickest and best payers.
The program clearly has problems, and fundamentally I am
not a big fan of the government price fixing anything. Given
the system we have, I think it works okay. There is certainly a
lot of things we can fix, but I think the contracting out
system actually works all right.
Mr. Baird. I appreciate that. I guess my fundamental
question was why is it that when there is a private enterprise
that is found to be not necessarily treating the public fairly
and the solution to that seems to be throw more money at them,
but when government workers are criticized the solution to that
is lay off government workers? It just seems paradoxal.
Mr. Scully. Well, I hope I have been supportive of my
workers at CMS. Everybody hates them, but I think generally
most of them are pretty dedicated.
Chairman Manzullo. I have not been supportive of the people
at Wisconsin Physician Services because of the very
unprofessional way that they have handled working with my
Medicare Part B providers in Illinois and Wisconsin.
I would hope that by mentioning Wisconsin Provider Services
or Wisconsin Physician Services that they would get their act
in order because they may be the next witnesses at a hearing.
That hearing is not going to be as gentle as this one.
They need a warning that when they send a letter to a
doctor with a carbon copy going to the patient accusing the
doctor of fraud and that doctor sends back a letter saying I
would like an explanation and those clowns say well, you my or
may not get an explanation, that has to stop.
Mr. Scully, I would like to have you personally contact
those people at Wisconsin Physician Services and tell them to
treat my constituents humanely.
Mr. Scully. I talked to them yesterday, and I will talk to
them a little more.
Chairman Manzullo. Thank you.
Mr. Scully. Believe it or not, Secretary Thompson years ago
worked at that company, so I talked to him about it last night
as well.
Chairman Manzullo. Mr. Toomey.
Mr. Toomey. Thank you, Mr. Chairman.
Let me start by saying, Mr. Scully, I am delighted you are
in the position that you are in. You have the exact kind of
background and perspective that we need at that agency that was
formerly known as HCFA.
As a very quick point, I would just like to also thank you
for working with us on the bill that I have co-authored with
Shelley Berkley. We call it MERFA, H.R. 868, which, as you
know, attempted to make some modest but I think very important
reforms to the way HCFA does business.
I think you have indicated that there are some things about
our bill that you can probably support, some things that I know
you would like to do differently. I would like to touch on a
couple of those briefly, and if we could do it briefly because
I have some questions I would like to ask Mr. Grob also.
One, you mentioned improving education, and you emphasize a
program of improving education for seniors. I support that
effort, but I think it is also important, and I think you
agree, that part of this effort has to be improving physician
and provider education. Our bill does make an effort to do
that, to require that there be a greater effort to educate
providers in the arcane rules and regulations of HCFA.
I think what is more important, frankly, is providing some
due process rights to healthcare providers and balancing what
is now an extremely unleveled playing field in which HCFA is
enormously powerful, enormously intimidating, and providers are
often deemed guilty before they are proven guilty and not given
really the fair hearing that they ought to have.
Specifically, I was hoping you would reflect on a couple of
the provisions in this bill, in my bill, that try to address
this perceived imbalance perceived on my part and certainly on
the part of most healthcare providers. One is that my bill
would allow repayment plans for overpayments, not require that
physicians who make an honest mistake and acknowledge that,
that they not be required to pay all the money at once, but
rather could pay in a series of installments.
A second provision would prevent HCFA from unilaterally
recouping alleged overpayments while the appeals process is
still underway. That is something I want to discuss further
with Mr. Grob also, but the fact is that appeals very, very
often go in favor of the provider. It seems to me fundamentally
unfair for HCFA to keep the money when in fact most of the time
HCFA is wrong when a claim is in the appeals process.
Lastly, if you could comment on providing some kind of safe
harbor for physicians who honestly discover that they have made
a mistake, and they want to pay the full amount of their
mistake? They would I think in that case deserve immunity from,
you know, punishment.
If you could comment on those three things? There are other
features in the bill, but I think those are three of the most
important features.
Mr. Scully. Well, one thing I learned over the years is I
cannot take administrative positions with OMB, so subject to me
not taking administrative positions I think as we discussed I
guess a month ago or so we are sympathetic to some of the ideas
in MERFA and certainly the concept, what you are trying to do
with MERFA.
The more specific details of what we do with repayment
plans. I have talked to Chairman Thomas, and Senator Grassley
and Senator Baucus and others are working on taking your bill
and looking at it and overall reform bills about some other
approaches that I think, for instance, there are various issues
about repayment plans. Repayment plans can be troublesome I
think if we stretch them out too much. We have a history that
we have allowed some providers with bad histories to escape
repaying the government.
On the other hand, I think we should treat people the same
way the IRS does. The IRS does it the other way around.
Basically if you lose you repay the government with interest. I
think that is something that we are going to look at. Right now
what happens is, as you say, you pay up front. If you end up
being right later we pay you back. That is it. You lose the
time value of the money.
I think that we have looked at, and this is not the
Administration's position, but I have discussed with the other
Committees who are looking at kind of taking a lot of your
provisions, as you know, and trying to fold them into their
bills, some middle ground ideas that hopefully will be more
workable. That is one of them.
I think the IRS basically allows you to withhold payment to
tax penalties, and if you lose you pay it with interest. I
think that is something we should look at. We require providers
to pay things up front immediately. Again, it is not the
Administration's position, but it is discussions I know that
are going on.
As far as safe harbors, as I said, I was a provider until
recently. I totally see the sense in creating some safe
harbors, and there are safe harbors in the law now. We want to
make sure that we create the appropriate safe harbors without
creating safe harbors that are going to allow people who really
are not the two percent of bad providers to find ways to avoid
any kind of FI carrier, IG or CMS enforcement activities. That
is a concern. We are totally sensitive.
What you are trying to do in MERFA is absolutely right. I
think some of the provisions are overreaching, and we would
look forward to trying to work with you this summer and this
fall to get the pieces of MERFA that we can work with the IG on
and with you and make sure that we make the system
significantly more friendly to the providers.
Mr. Toomey. Thank you.
Mr. Chairman, do I have time for one other question?
Chairman Manzullo. Let me go first to Mr. Thune. I want to
make sure everyone gets in. Then perhaps we may have some more
time.
Mr. Thune.
Mr. Thune. Thank you, Mr. Chairman. Thank you for holding
this hearing. I think it is important. This does have an impact
on a lot of people across the country.
I think if there is one thing I hear that is just uniform
from providers across South Dakota it is we need to enact
MERFA, so I congratulate Mr. Toomey and Ms. Berkley for
introducing this. I think it is high time that we look at what
we can do to improve the function, the way that this work is
done, the process that is used, because it is clear at least
right now that there are just serious problems out there.
I am glad you changed your name the agency formerly known
as HCFA. I think it will buy a little time. When people figure
out the new acronym it might buy us a little bit of time, but
then it will be that blankety-blank whatever the next iteration
is in terms of an acronym because there is just a tremendous
amount of, at least in my state, maybe disgust is the right
word in the way things operate.
The question I would have for you is how do you go about
getting at the bad actors without penalizing the good guys? I
mean, we have in South Dakota, partly because as a result of
our ethic in our state, we just do not have people who are
trying to circumvent, with rare exceptions. This is not
something that is a common practice. We do not have people who
are trying to beat the system. We have people who want to play
by the rules.
I am just curious to know in sort of a general
philosophical way what your thoughts are about being able to
get at those people that are chronic rule breakers and not at
the same time penalize and inordinately put burdens upon people
who are trying to do things by the book.
Mr. Scully. Well, I guess you want me to answer that one.
That is probably one of my I could not agree with you more on
that----
Mr. Thune. If you must.
Mr. Scully [continuing]. Having been on the other side of
it seven weeks ago and seeing some people I consider to be
extremely honest, decent providers be repeatedly pounded and
some of them run out of business for what I thought was not
particularly legitimate reasons.
I think one of my frustrations, and I do not have any
announcement to make today, but I have talked to the Secretary
a lot about it. The new Inspector General I hope will be
confirmed soon. Janet Rehnquist was here--I do not know if she
is still here--who I have known for quite a long time, since
college actually, and the Justice Department. Those are really
the three prongs of making this thing work better. We hope to
work much more efficiently to find some ways to fix these
things.
My own frustration is that I think we need to come up with
a mechanism, and we are talking about a variety of them, where
we can basically find people who are doing the right things. I
can give you two examples. I spent $25 million when I was on
the board of Oxford Health Plans as the chairman of the board
of the compliance committee, another $30 million at Davida
Healthcare Dialysis Company when I was chairman of the board of
the compliance committee putting together very expensive
compliance plans. Those companies I think are about as
compliant as you can possibly get right now. Their shareholders
made a big investment in it, but they get nothing for it. I
mean, they find out they have a problem.
In my view, when you find people who are trying to do the
right thing, whether it is a small hospital in South Dakota or
a big HMO or a physician practice group, there ought to be a
way for them to put together the appropriate compliance
guidelines to make the IG and to make the Justice Department
and to make CMS show that they are serious about it or they
have some self-policing where they get somewhat different
treatment. That is a big structural challenge to come up with
something like that. I personally feel strongly about it. As I
said, I cannot do that alone.
The IG. I went in, and again I had a good relation with the
IG. I went in with Mack Thornton, who is the chief counsel at
the IG's office. I brought the CEO of Oxford in. I brought the
CEO of Davida in. I said we are trying to do all the right
things. They said congratulations. You are doing the right
things. That is great.
They do not have the staff to go through and certify
compliance plans or to go through and regulate everybody across
the country, so we need to come up with some hybrid way of
telling people that are trying to do the right thing that you
are going to get some credit for doing the right thing so that
we can focus our enforcement actions on the bad actors that are
out there.
Mr. Thune. I appreciate your comments and also in looking
through your testimony the sort of user friendly, responsive
tact that you are taking in terms of the relationship with the
provider community.
I guess one follow up question would be, you know, as you
look at the way that we do things today the enormous amount of
paperwork, the enormous amount of red tape which is always
alluded to irrespective of who you talk to, which provider
group. It is the same message over and over again, and that is
that we cannot provide quality care for our patients because we
spend all of our time filling out forms and paperwork.
Is there a way that we can construct a different model in
the computer age--you talk about figuring out ways to comply
where it just literally is not consuming in terms of the time
requirement and commitment that is imposed upon providers who
are just trying to do a good job, so it is sort of I guess
again maybe of a more general, philosophical question.
Mr. Scully. I think the biggest gain to me in fraud abuse
activities, aside from the increased enforcement activities
addressed in the IG, is capitation. I mean, the thing that
moves us forward the most is moving towards capitated systems
because in the past when you have a government run fee-for-
service system, let me just tell you in the hospital business
that when you come in a lot of the ``fraud'', and you can
either call it fraud or people adjusting to dumb rules. When
you are in the hospital business and the government comes in
and capitates your hospitals in 1993 with DRGs, what do you do?
You start building a nursing home on a cost basis next door or
a rehab hospital.
It is kind of wack-them-all system, or it has been over the
years, with finance. A lot of the stuff that was ``fraud'' was
based on crazy, poorly structured reimbursement systems. Part
of this was the government chasing people around for doing what
was marginally, you know, probably unethical stuff, but was
arguably legal.
Personally, the biggest advance in Medicare is going to a
capitated payment strategy where you do not have to oversee as
much, and there is not as much opportunity for abuse. For
instance, we are putting out a reg shortly on capitating rehab
hospitals, which I think will help in that area. We have one in
the works for long-term acute care hospitals.
We went to skilled nursing facility prospective payment
last year, which I think will do a lot to reduce fraud. It just
provides people with the right incentives, and I think the more
you can get towards capitated systems where you get the
government out of the micro managing of business and you give
people prospective payment systems, you are moving in a big way
towards incentivizing rational behavior and getting the
government out of micro managing and micro enforcing.
Mr. Thune. I appreciate you comments.
Mr. Scully. Thank you.
Mr. Thune. I obviously want to work with you. My time is
expired, but we all want to try and solve some of these
problems.
Thank you.
Chairman Manzullo. Mrs. Kelly.
Mrs. Kelly. Thank you very much, Mr. Chairman. Thanks for
holding this hearing.
Mr. Scully, I found your testimony very interesting
reading. On page 5 you say you want input from folks like group
practice managers, physician assistants and nurses and so on,
and then you say also CMS is going to conduct public listening
sessions across the country.
I invite you into the 19th Congressional District. I
represent a medical school plus an enormous amount of people
who are practicing medicine north of New York City and have a
lot to say on this subject because they have been saying it to
me. I hope that you will come.
I really am very hopeful that you are going to try to do
something to reduce this enormous paperwork load that every
doctor has to bear. My father was a doctor. One of the reasons
he quit being a doctor was the government was finally demanding
just too much. He was having to charge too much.
I lived in a town where he dealt with farmers and people
who were generally blue collar workers in factories. He could
not charge a great deal. He had to constantly be cutting back
on services he wanted to offer his patients because of the
government demands. He had to put his time into filling out
forms. I think that is wrong. I think doctors need to practice
medicine and not worry about these forms.
I agree with my colleague, Mr. Thune, that in the
environment we have today with the ability to electronically do
things there certainly ought to be a way that we can construct
some models that are rather permanent and do not need to
constantly be refilled out. I would hope that would be
something you would look at.
There are a couple of other things. I have had some serious
concerns about the authority that the HCFA people have used
with regard to declaring doctors to be fraudulent in their
claims. It seems to me to be an attitude of aha, gotcha,
instead of working with the doctors to find out what happened
and to help them do whatever they have done to take a look at
it and see whether in fact it is fraud or it is somehow a
mistake on papers that have been filed because sometimes that
is what happens. It is reclassifications. It is different kinds
of things. I really hope that you will do something to try to
restructure the attitude in that particular department of the
new CMS.
One other thing that I am concerned about. There was a
decision that would allow the nurse anesthesia givers to be
able to give anesthesia without medical support, without
somebody standing there, an M.D., overseeing what they are
doing. These people have been doing it for years. I do not
understand why the HCFA anesthesia care final rule was not
implemented.
I wonder if you would be willing to get back to me on that
because I think that the idea was to remove a lot of
restrictions and reduce a lot of the regulatory burdens on the
hospitals. The other thing is it allows nurses to perform that
function in greatly under served areas where there is no
anesthesiologist available. Nurse anesthesiologists are very
good at what they do. I would like, if you do not mind, for you
to get back to me on that.
Mr. Scully. I am extremely familiar with that issue. It is
hard to miss. It is kind of like watching Joe Frazier and
Muhammad Ali go after----
I was in the hospital business for the prior six years, and
we have obviously a lot of anesthesiologists and nurse
anesthetists. I think we wisely stayed out of that one, but
that was obviously controversial. It was a change to the
regulations to allow nurse anesthetists to do that. It was in
the proposed rule.
In the final rule, which that came out with I think an
appropriate compromise, basically obviously, you know, we are
federalists. We believe in states' rights. We basically pushed
it back to the governors and said if a governor wants to
certify that in his state nurse anesthesiologists can
appropriately provide the care the governor can effectively
apply for a waiver.
I believe that is the final rule. I am not sure. I am
pretty sure that is what it is.
Mrs. Kelly. The governor can issue a waiver?
Mr. Scully. Can apply to us for a waiver. Yes.
Mrs. Kelly. And you would approve those waivers, I take it
then, from what you have just said?
Mr. Scully. I think they are under the reg all virtually
presumptively approved. Yes.
Mrs. Kelly. Okay.
Mr. Scully. Obviously this was a hotly debated issue over
many years in the Medicare program. It was more interesting to
be in the hospital business watching it than it is to be at CMS
having to work it out.
Mrs. Kelly. Well, I would hope that this will all work out,
and I am just greatly relieved that you are there at the head
of the helm and going to make some changes. We need those
changes desperately, the sooner the better.
Mr. Scully. And I apologize because I have looked into your
other hospital issue. I will call you about that later today.
Mrs. Kelly. Thank you very much.
Mr. Toomey [presiding]. Thank you.
I appreciate the cooperation of the witnesses. We would
like to have one more very brief round of questions, which will
consist of a question from Ms. Velazquez, myself and Ms.
Christian-Christensen, and then we will be finished for this
hearing, which has gone on some time.
Ms. Velazquez.
Ms. Velazquez. Thank you.
Mr. Scully, we may disagree on whether or not the
prescription drug card initiative is a program, but are you
willing to go back and perform an impact assessment on the
effect this program is going to have on small businesses; for
example, community pharmacists?
Mr. Scully. You know, to be honest with you, Congresswoman,
under the rules it is not a federal government program.
Certainly we are very sensitive to the concerns the
community pharmacists have. I have obviously been hearing from
them virtually every day. The small pharmacists are very
concerned. The chain drugstores--my former boss in my former
campaign life, Craig Fuller, runs that. We are very sensitive
to the concerns that the chain drugstores and the small
pharmacies have because they are concerned the discounts are
going to come out of them.
We hope and believe that we structured this so that the
discounts--the entire intent of this program was to structure
it to give enough market clout to these purchasing negotiators
that the discounts would come out of the manufacturers and not
out of the chain drugstores.
It is certainly within the ability of CMS to do it because
it is not a government program. We are certainly happy to go
back and look at it. We are highly sensitized to it. I am
certainly happy to go back and do a study on the impact of it.
Ms. Velazquez. I take very seriously the fact that you say
we want to hear from a broad range of providers, including----
Mr. Scully. We do.
Ms. Velazquez [continuing]. Community pharmacists. If there
are concerns that this is going to have an impact on them, I
think it would be sensitive for you to go and to listen to
their concerns.
Mr. Scully. I am happy to meet with them. I have tried to
talk to as many as I can. I am happy to talk to them any time.
I will say that in a system where the only people in the
world paying over-the-counter pharmaceutical prices are
seniors, the Administration's number one concern is saving
seniors money. Number two would be helping to make sure we do
not hurt community pharmacists. Number three, probably way,
way, way down the line, would be worrying about manufacturers
appropriately making sure everybody pays a reasonable price.
Clearly the goal here is to save seniors money. A number of
people said this will not work. To be honest with you, it will
not work. It is going to work. If it does not work, there will
probably be people mad at us, but we are clearly, clearly
intending to do everything we can to make sure that the impact
is not on the pharmacist.
Ms. Velazquez. Thank you.
Mr. Toomey. Thank you.
Mr. Grob, I would like to ask a couple of questions and
actually take issue with a statement that you made in your
written testimony and ask a question in another area if I
could.
In the area of immunity from investigation, you addressed
that on page 8 of your testimony. This has to do, of course,
with the safe harbor that we would provide a physician or
another healthcare provider who discovers an honest mistake and
wants to correct it.
Mr. Grob. Yes.
Mr. Toomey. Your statement here on page 8, and I will
quote, says, ``There is no need for such immunization.
Physicians and other healthcare providers are not subject to
civil or criminal penalties for honest mistakes, errors or even
negligence.''
It seems to me the fact is that absent this immunity
providers face other tactics--audits, the use of extrapolation,
a terrible appeals process--all of which can drive providers
right out of Medicare, sometimes even out of their practice.
These kinds of very onerous outcomes strike me as every bit as
severe as civilian penalties.
I would cite a case--there are so many, but just one in
particular--of AIDS patients in San Francisco whose clinic was
closed because the HCFA carrier refused to allow the alleged
overpayments to be repaid in installments, or the Pittsburgh
physician whose carrier decided after the fact that the care he
provided to critically ill patients was not medically necessary
and demanded that he pay $339,000 within 30 days.
Now, neither of these medical practitioners were accused of
fraud. They were not convicted of any crimes, yet their
practices and their lives were torn apart. These are not
rumors. These are facts that happened to real people, and I
believe it is because HCFA's practices lack sufficient due
process and fairness.
I think the immunization we are talking about, first of
all, would only occur on the first audit. There is nothing to
stop HCFA from doing a subsequent audit. We did not amend the
False Claims Act. Any kind of fraud that is suspected or has
been committed would still be prosecuted.
Frankly, your suggestion that some doctors will use this
provision to actually decide to commit fraud, risk losing their
practice, risk going to jail by deciding to systematically over
bill Medicare, knowing they are doing this, and then repay
their over billing within a year, and also that they can
collect interest from HCFA in the meantime, strikes me as
extremely implausible.
At the end of the day, I do not think this is a vehicle
that is going to facilitate or allow or encourage physicians or
other providers to commit fraud. I think it is a measure of
fairness for honest providers that discover a mistake.
My question for you actually is related to this, but it
goes more directly to the appeals process. In light of the fact
that such a huge percentage of appeals go in favor of the
provider and in light of the fact that it takes such a long
process, do you not think it is reasonable and do you not think
it is only fair that healthcare providers be able to keep the
alleged overpayment until the appeals process is finished?
Mr. Grob. Okay. I would recommend against going all the way
to the end of the appeals process as a general matter of
practice, but I do think there are some good options that can
be considered.
For example, we find that the longer the time period that
you take in trying to get the money back, if you will, where an
overpayment is due, the more your ability to get the money back
drops off. I think some tradeoff needs to be taken with regard
to the time frame.
I think one of the things that could be considered, for
example, would be how far down that process do you want to go?
Perhaps, for example, having the money not paid back, say,
until after the first reconsideration--which results in
agreement with about 70 percent, for example, of the appeals
that occur at that time might be a move in the right direction.
I also think that a remark that Mr. Scully made earlier is
also germane. I think the interest might even things out
because right now the interest is kind of a one-way street. So
I think if the interest were paid back the other way that would
tend to mitigate that somewhat as well.
Mr. Toomey. Well, I think that would help, but I do not
think it is enough. I would cite the fact that in the carrier
fair hearing stage of the appeal process in fiscal year 2000 my
figures show that 42 percent of cases appealed at that level
were decided in the physicians' favor.
At the final step in the process, the ALJ level, which
occurs over a year on average after that process begins----
Mr. Grob. That is correct.
Mr. Toomey [continuing]. Which is way too long----
Mr. Grob. Yes.
Mr. Toomey [continuing]. Sixty percent of those cases are
decided in favor of the healthcare provider.
Mr. Grob. That is correct.
Mr. Toomey. I just do not understand how HCFA can justify
holding onto the money when 60 percent of the time they are
wrong.
Mr. Grob. Okay. Again, my remark would be that it has to do
with the numbers that we are talking about. There are actually
very few cases that go that far. Most of them are resolved at a
much earlier stage.
I think a concern that we would have, for example, is if
holding onto the money were an option all the way to the very
end of the process that that might in fact incentivize some
additional appeals.
Mr. Toomey. But maybe they are justified when the providers
are winning 60 percent of them.
Mr. Grob. On the other hand, if a person could hold onto
the money longer, there may be more frivolous appeals.
Mr. Toomey. I think the evidence suggests so far that given
the outcomes they are obviously justifiable appeals.
I will yield the balance of my time and recognize Ms.
Christian-Christensen.
Mrs. Christensen. Thank you. If I could just follow up
somewhat on your question? I would like to go to page 9 where I
think in H.R. 868 there is a provision whereby a payment plan
could be instituted. I think you are also opposed to that in
the bill. Is that correct?
Mr. Grob. We have been working with the staff on this bill
for quite a bit of time, and we have really appreciated the
opportunity to go back and forth on that.
In the bill, the part we had a problem with was the
automatic entitlement to a payment plan for a particular period
of time no matter what the circumstance, but I think that very
much the idea that a repayment plan could be developed for
providers is certainly very viable, and we think some attention
ought to be paid to that.
Mrs. Christensen. To me, the agency is trying to go in the
direction of cooperation and working together. I think we
should go a little more to the side of really doing that and
allowing for a payment plan and really to compare trying to get
your money back from an HMO, which has a lot of resources, or
from a telephone company is not the correct comparison when you
are talking about a physician's office or a provider that does
not have that kind of money readily available.
Mr. Scully. The problem, Congresswoman, just to defend and
to help him out a little bit maybe because we have had even
differences, and we are working together with Congress and the
IG to try to work out some of our views on MERFA.
I think repayment plans in a lot of cases may be
appropriate, but there are also cases, and not to pick on any
one group, but there are a lot of home health providers that
had a lot of not particularly legitimate claims four or five
years ago that disappeared from the face of the earth pretty
quickly.
Part of the problem we have is a lot of bankruptcies. In a
lot of cases if you give people a repayment option where you
know they are not going to be around to repay it, they will
have 15 different shells, and they will go bankrupt.
There are a lot of really functional problems with giving
everybody a guaranteed repayment option. There are certainly
appropriate places that will happen, but there are an awful lot
of cases, and I am sure the IG has 1,000 more examples than I
will have where providers have provided numbers, over billed
this, we went after them, and then all of a sudden they have
disappeared never to be found again. We have hundreds and
hundreds of millions of dollars of outstanding claims like
that.
I am totally supportive of what you are saying, but I think
we have to balance.
Mrs. Christensen. And I appreciate the fact that you are
working with the Congress on the bill and that we will be able
to work out something, but it just seems unfair.
I was trying to figure out where I saw the statistic about
most of the claims being accurate. Actually, Mr. Grob it was in
your testimony----
Mr. Grob. Yes.
Mrs. Christensen [continuing]. In one of the other----
Mr. Grob. That is right.
Mrs. Christensen. In the Senate, I believe. It talked
mainly about the payment, the request for payment, being free
of error.
Mr. Grob. Yes.
Mrs. Christensen. To go back to our previous conversation,
I would really like to see what the record really is on
investigations and audits and if we could get a more specific
breakdown on those and how many actually end up going to
criminal prosecution----
Mr. Grob. Right.
Mrs. Christensen [continuing]. Or some kind of a sanction.
Mr. Grob. Yes.
Mrs. Christensen. I wanted to talk a bit about I am glad
that there is going to be an educational process for the
beneficiaries because in my experience and in the experience of
my providers a lot of the information that goes out to the
beneficiaries is just unintelligible to most beneficiaries, and
in the case where there may be a question of payment it almost
makes the provider look like a criminal.
It really sets up a bad situation in the case of a
physician that has a more personal relationship with their
patient that the physician has done something wrong. It is
really an interference with the patient/physician relationship.
Mr. Scully. Can I put in my two cents on that?
Mrs. Christensen. Sure.
Mr. Scully. Having lived through the last 15 years in
Washington doing health policy, part of that is, and the IG is
responding to the pressure that is largely from the Hill, as
was the former HCFA, now CMS, as was the Justice Department,
for most of the late 1980s and early 1990s the perception on
the Hill was that all Medicare problems and reform problems
could be solved if you wiped out Medicare fraud, which I think
was an overly simplified view, so you had this clamoring to
crack down on Medicare fraud, Medicare fraud, Medicare fraud,
and everybody in the agency has responded to that.
Now you are getting a little bit of a push back with
Congress to find a balance. I think that is appropriate, but
all the provider notifications that go out to my mom and dad to
tell them every time there is a problem, those are all
statutorily required. I think there are an awful lot of things
that Congress has pushed us to do that may have been
overcompensating.
I think again, as I said earlier, there probably was not
enough being done ten years ago. Arguably, there are a few
things we might rein back in a teeny bit now, and I think that
is part of what the MERFA process is all about.
Mrs. Christensen. Thanks. I am very much interested in
having a listening session. I see that my time is up. A
listening session in my district.
Mr. Scully. Well, Congresswoman, if I have the choice of
going to a lot of other district or the Virgin Islands----
Mrs. Christensen. I think you need to come back and see the
safer hospitals where your daughter was treated.
Mr. Scully. I have been there with my daughters. Yes, I
have.
Mrs. Christensen. Right.
Mr. Scully. They did a great job. Thanks.
Mrs. Christensen. Thank you.
Mr. Toomey. I would like to thank the witnesses for their
patience and their cooperation.
The hearing is adjourned.
[Whereupon, at 12:15 p.m. the Committee was adjourned.]
[GRAPHIC] [TIFF OMITTED] T5058A.001
[GRAPHIC] [TIFF OMITTED] T5058A.002
[GRAPHIC] [TIFF OMITTED] T5058A.003
[GRAPHIC] [TIFF OMITTED] T5058A.004
[GRAPHIC] [TIFF OMITTED] T5058A.005
[GRAPHIC] [TIFF OMITTED] T5058A.006
[GRAPHIC] [TIFF OMITTED] T5058A.007
[GRAPHIC] [TIFF OMITTED] T5058A.008
[GRAPHIC] [TIFF OMITTED] T5058A.009
[GRAPHIC] [TIFF OMITTED] T5058A.010
[GRAPHIC] [TIFF OMITTED] T5058A.011
[GRAPHIC] [TIFF OMITTED] T5058A.012
[GRAPHIC] [TIFF OMITTED] T5058A.013
[GRAPHIC] [TIFF OMITTED] T5058A.014
[GRAPHIC] [TIFF OMITTED] T5058A.015
[GRAPHIC] [TIFF OMITTED] T5058A.016
[GRAPHIC] [TIFF OMITTED] T5058A.017
[GRAPHIC] [TIFF OMITTED] T5058A.018
[GRAPHIC] [TIFF OMITTED] T5058A.019
[GRAPHIC] [TIFF OMITTED] T5058A.020
[GRAPHIC] [TIFF OMITTED] T5058A.021
[GRAPHIC] [TIFF OMITTED] T5058A.022
[GRAPHIC] [TIFF OMITTED] T5058A.023
[GRAPHIC] [TIFF OMITTED] T5058A.024
[GRAPHIC] [TIFF OMITTED] T5058A.025
[GRAPHIC] [TIFF OMITTED] T5058A.026
[GRAPHIC] [TIFF OMITTED] T5058A.027
[GRAPHIC] [TIFF OMITTED] T5058A.028
[GRAPHIC] [TIFF OMITTED] T5058A.029
[GRAPHIC] [TIFF OMITTED] T5058A.030
[GRAPHIC] [TIFF OMITTED] T5058A.031
[GRAPHIC] [TIFF OMITTED] T5058A.032
[GRAPHIC] [TIFF OMITTED] T5058A.033
[GRAPHIC] [TIFF OMITTED] T5058A.034
[GRAPHIC] [TIFF OMITTED] T5058A.035
[GRAPHIC] [TIFF OMITTED] T5058A.036
[GRAPHIC] [TIFF OMITTED] T5058A.037
[GRAPHIC] [TIFF OMITTED] T5058A.038
[GRAPHIC] [TIFF OMITTED] T5058A.039
[GRAPHIC] [TIFF OMITTED] T5058A.040
[GRAPHIC] [TIFF OMITTED] T5058A.041
[GRAPHIC] [TIFF OMITTED] T5058A.042
[GRAPHIC] [TIFF OMITTED] T5058A.043
[GRAPHIC] [TIFF OMITTED] T5058A.044