[House Hearing, 105 Congress] [From the U.S. Government Publishing Office]DEPARTMENTS OF LABOR, HEALTH AND HUMAN SERVICES, EDUCATION, AND RELATED AGENCIES APPROPRIATIONS FOR 1998 _______________________________________________________________________ HEARINGS BEFORE A SUBCOMMITTEE OF THE COMMITTEE ON APPROPRIATIONS HOUSE OF REPRESENTATIVES ONE HUNDRED FIFTH CONGRESS FIRST SESSION ________ SUBCOMMITTEE ON THE DEPARTMENTS OF LABOR, HEALTH AND HUMAN SERVICES, EDUCATION, AND RELATED AGENCIES JOHN EDWARD PORTER, Illinois, Chairman C. W. BILL YOUNG, Florida HENRY BONILLA, Texas ERNEST J. ISTOOK, Jr., Oklahoma DAN MILLER, Florida JAY DICKEY, Arkansas ROGER F. WICKER, Mississippi ANNE M. NORTHUP, Kentucky DAVID R. OBEY, Wisconsin LOUIS STOKES, Ohio STENY H. HOYER, Maryland NANCY PELOSI, California NITA M. LOWEY, New York ROSA L. DeLAURO, Connecticut NOTE: Under Committee Rules, Mr. Livingston, as Chairman of the Full Committee, and Mr. Obey, as Ranking Minority Member of the Full Committee, are authorized to sit as Members of all Subcommittees. S. Anthony McCann, Robert L. Knisely, Susan E. Quantius, Michael K. Myers, and Francine Mack, Subcommittee Staff ________ PART 2 DEPARTMENT OF HEALTH AND HUMAN SERVICES Page Secretary of Health and Human Services........................... 1 Office of Inspector General...................................... 293 Health Care Financing Administration............................. 391 Administration for Children and Families......................... 643 Administration on Aging.......................................... 1257 Special Tables................................................... 1367 ________ U.S. GOVERNMENT PRINTING OFFICE 40-444 O WASHINGTON : 1997 COMMITTEE ON APPROPRIATIONS BOB LIVINGSTON, Louisiana, Chairman JOSEPH M. McDADE, Pennsylvania C. W. BILL YOUNG, Florida RALPH REGULA, Ohio JERRY LEWIS, California JOHN EDWARD PORTER, Illinois HAROLD ROGERS, Kentucky JOE SKEEN, New Mexico FRANK R. WOLF, Virginia TOM DeLAY, Texas JIM KOLBE, Arizona RON PACKARD, California SONNY CALLAHAN, Alabama JAMES T. WALSH, New York CHARLES H. TAYLOR, North Carolina DAVID L. HOBSON, Ohio ERNEST J. ISTOOK, Jr., Oklahoma HENRY BONILLA, Texas JOE KNOLLENBERG, Michigan DAN MILLER, Florida JAY DICKEY, Arkansas JACK KINGSTON, Georgia MIKE PARKER, Mississippi RODNEY P. FRELINGHUYSEN, New Jersey ROGER F. WICKER, Mississippi MICHAEL P. FORBES, New York GEORGE R. NETHERCUTT, Jr., Washington MARK W. NEUMANN, Wisconsin RANDY ``DUKE'' CUNNINGHAM, California TODD TIAHRT, Kansas ZACH WAMP, Tennessee TOM LATHAM, Iowa ANNE M. NORTHUP, Kentucky ROBERT B. ADERHOLT, Alabama DAVID R. OBEY, Wisconsin SIDNEY R. YATES, Illinois LOUIS STOKES, Ohio JOHN P. MURTHA, Pennsylvania NORMAN D. DICKS, Washington MARTIN OLAV SABO, Minnesota JULIAN C. DIXON, California VIC FAZIO, California W. G. (BILL) HEFNER, North Carolina STENY H. HOYER, Maryland ALAN B. MOLLOHAN, West Virginia MARCY KAPTUR, Ohio DAVID E. SKAGGS, Colorado NANCY PELOSI, California PETER J. VISCLOSKY, Indiana THOMAS M. FOGLIETTA, Pennsylvania ESTEBAN EDWARD TORRES, California NITA M. LOWEY, New York JOSE E. SERRANO, New York ROSA L. DeLAURO, Connecticut JAMES P. MORAN, Virginia JOHN W. OLVER, Massachusetts ED PASTOR, Arizona CARRIE P. MEEK, Florida DAVID E. PRICE, North Carolina CHET EDWARDS, Texas James W. Dyer, Clerk and Staff Director DEPARTMENTS OF LABOR, HEALTH AND HUMAN SERVICES, EDUCATION, AND RELATED AGENCIES APPROPRIATIONS FOR 1998 ---------- Tuesday, February 11, 1997. SECRETARY OF HEALTH AND HUMAN SERVICES WITNESS HON. DONNA E. SHALALA, U.S. SECRETARY OF HEALTH AND HUMAN SERVICES Introductory Remarks Mr. Porter. Good morning. I want to begin by welcoming back the members of our subcommittee. Many of them are not here because there are no scheduled votes on the floor of the House today; we regret that, but there is nothing we can do about it. We do want to welcome you and your staff and the members of the public who are here today. This is the beginning of our fiscal year 1998 appropriations process and our first hearing. Let me begin by expressing our condolences upon the death of the wife of our colleague, Steny Hoyer. I think it would be appropriate, if I may do so, to ask us to observe a moment of silence. [Moment of silence.] Mr. Porter. Thank you all very much. Steny, of course, is not here today, and we will express our condolences to him personally when he returns. We also are missing our ranking minority member, Mr. Obey, who has recently had an operation. We are pleased to welcome back Lou Stokes, who is on the mend and getting better all the time, although his voice is still weak. And we welcome back to the subcommittee, after a short absence--two years is a short time on this subcommittee--Rosa DeLauro of Connecticut, who returns to the subcommittee. We also want to welcome our newest member, freshman member, Anne Northup of Kentucky, who joins us. Anne, we are delighted to have you aboard. Mrs. Northup. Thank you. Mr. Porter. As I have indicated previously and want to emphasize, ours has been a difficult bill to pass in the House of Representatives. The Senate has not been able to pass a bill in this area in the last two years. I want to state publicly that I intend to work very closely with all the members of the subcommittee, with Mr. Obey, our ranking member, with Chairman Arlen Specter on the Senate side, and with the Budget Committees, to do our best to assure that a 602(b) allocation made to the subcommittee is such that we have a reasonable chance to pass the bill in the House, pass it in the Senate, to go to conference in a timely fashion, and produce a signable bill. I know that returning to a more normal process will allow our members to participate more fully in the process. Unfortunately, in the last two years it has been very, very difficult for everyone, without the Senate being able to pass a bill at all. I also want to say that this subcommittee has many senior Members of the House serving on it. They, and all the Members, have other responsibilities with other subcommittees; some of our senior members chair other subcommittees or are ranking on them, and as a result I will continue my practice of recognizing members for questions during a hearing in the order in which they arrive for the hearing. However, there will be times when it is necessary to accommodate senior members who have other obligations, and I hope that members will understand that. Members will normally be allocated 10 minutes for questions, as previously. Secretary Shalala, I want to welcome you to what I believe is your sixth appearance before this subcommittee. In early January, you passed a milestone of being the longest serving Secretary of HHS in history. And we certainly congratulate you on that. You have our great admiration for your service to our country. And while we don't always agree, we can only observe that you and your fine team represent the best of those who enter public service, and we thank you for your service to the United States. Madam Secretary, I also want to specifically thank you, your Assistant Secretary John Callahan and Dennis Williams of your staff for providing the subcommittee with all of the justifications by the end of last week. That's truly a remarkable achievement, and we very, very much appreciate it. I know that the budget you present us today has been the result of difficult negotiations with OMB, and I gather somedirect discussions with the President as well. While there are a number of commendable proposals in the budget, I particularly want to highlight the President's emphasis on infectious diseases, fighting infectious diseases. These newly drug-resistant diseases represent as much of a threat to our Nation in a sense as any national security issue. And I want to say right now, I will do my very best to provide at least the President's level for this activity. There are several concerns with the President's proposals for Medicare and Medicaid. I'll pass on these issues for now, as they are not the direct concern of the subcommittee. But I will leave them for discussion later when we get to the question and answer period. I cannot pass over, however, the wholly unsatisfactory funding level for the National Institutes of Health. I know that often we play a game of underfunding some accounts, knowing that others in the Congress, the Senate, others will take care of them. However, with NIH, I believe that this is a very short-sighted policy recommendation which endangers the funding for this premier institution, one that the President himself has cited for its critical role in the Nation's overall research agenda, and its contribution to the growth of our economy. Madam Secretary, I would ask that you please communicate my disappointment to the President, and indicate that I feel that this institution is much too important to provide a funding level as low as the one suggested in his budget. I'm also concerned that the budget in general, and your budget in particular, turns away from the emphasis on local decision making to solve locally-identified problems, and I believe returns to the error of categorical programs with strings and rules attached from distant bureaucracies in Washington. Your budget cuts the Social Services block grant, the Community Service block grant, and the Preventive Health block grant, and it freezes the Maternal and Child Health block grant. At the same time, narrow categorical grants are increased, some of them very substantially. In an era in which, throughout our economy and society, we are moving decision making closer to the people and to the problems that they face, this trend in your budget seems antiquated, and I must say, wrong. Finally, Madam Secretary, as I indicated in my recent letter to you, I am concerned that there is little evidence about the effectiveness of the programs that we fund contained in the justification. I'm particularly concerned that the consultations required by the Government Performance and Results Act have not occurred. This is the single most sustained program to begin to measure the performance of programs, and with only two to three months left before HHS begins to formulate the 1999 budget, I fail to see how Congress can have meaningful input to this process. The reports I've seen so far indicate that the agencies either are having trouble implementing the Act or are ignoring it. Madam Secretary, this subcommittee takes this legislation very seriously, and we want to work closely with you and your staff and the administrators of each program to develop measures that will help us and the American people evaluate programs we fund and that they pay for. With that, Madam Secretary, I want to turn to our ranking minority member, and that under present circumstances, would be Ms. Pelosi of California. Ms. Pelosi. Ms. Pelosi. Thank you very much, Mr. Chairman. I have this great honor because of the reasons that you spelled out earlier. I believe it is an honor to speak for the Democrats on this very, very important panel, when we are receiving our Secretary of HHS. It is an opportunity for which I'm grateful. First of all, Mr. Chairman, I want to thank you for the kindness you extended to Steny Hoyer, our colleague, at the start of this hearing. I want to join you in welcoming back Rosa DeLauro and join in welcoming Congresswoman Northup to the panel. We would be pleased in any event to have the great State of Kentucky once again so well represented on this panel. The fact that Mrs. Northup is part of the women membership of the House of Representatives is also noted. [Laughter.] Ever since Helen Bentley left, we've been hoping. In any event, Mr. Chairman, I thank you again for your opening remarks and your expression of proceeding in a bipartisan fashion to approach the important work of the subcommittee. The departments and agencies under the jurisdiction of the subcommittee are fortunate indeed to have you as our Chairman. You are a leader on health and education concerns, and in particular, your leadership in advancing biomedical research will make an historical contribution to the future health of the American people. I was particularly pleased at your comment about the funding, at least at the President's level, for infectious diseases, and agree with your characterization of the threat they pose to our country. Again, it is a pleasure to welcome Secretary Shalala here today. As we are fortunate to have Mr. Porter as our Chairman, and we are blessed to have your distinguished service as HHS Secretary, for reasons that go well beyond longevity. But that's important, too. Let me also commend President Clinton, as well as you, Secretary Shalala, for the budget request before us today. In the context of a balanced budget within five years, the budget includes important new initiatives, including the expansion of health care coverage for children and unemployed workers. I'm also pleased that it includes important new initiatives for preventing teen pregnancy, reducing tobacco and drug use by children, and responding to public health threats to the American people. Also, I'm pleased it proposes to fix serious problems caused by the passage of the welfare legislation in the last Congress. This budget request is a good place to begin our work. Again, Mr. Chairman, the members on our side look forward to working with you in a bipartisan fashion. We also look forward to working in a bicameral fashion, Senator Specter was helpful to us last year, to produce the best possible bill for the future of the American people. Thank you, Mr. Chairman. Mr. Porter. Thank you, Ms. Pelosi. After all those very nice comments, I hate to start off with major criticism. Ms. Pelosi. Well, don't. [Laughter.] Mr. Porter. But when we come to the questioning portion, I will want to address some of the issues that I addressed in my opening statement. Madam Secretary, we're delighted to have you before us once again. The microphone is yours. Opening Statement Secretary Shalala. Thank you very much, Mr. Chairman, Congresswoman Pelosi, members of the subcommittee. I am pleased to appear before you today to discuss the President's fiscal year 1998 budget for the Department of Health and Human Services. Theodore Roosevelt once said that nine-tenths of wisdom consists of being wise on time. This country remains the world's oldest and finest democracy, not because we always agree, but because we know when it's time to agree. These are the moments that have always defined generations. Mr. Chairman, we have reached one of those moments. Leaders on both sides of the aisle agree. We must balance the budget. The question is, how. At a time when our population is rapidly aging, and our health delivery system is rapidly changing, a time when advances in technology and medical research offer new hope and new ethical dilemmas, how can we put our budget in the black and meet our health care challenges for the 21st century. We believe the President's plan will allow us to do just that. It puts us on a straight path to balance the budget by the year 2002. And this Department is playing a leading role in that effort. Overall, the President's 1998 budget for the Department totals $376 billion in outlays, of which $34.7 billion is discretionary. Make no mistake: we believe this is a smart budget for a new century. It acknowledges that we live in a time of scarce Federal resources, and that Government cannot do it all. But it makes it clear that when we target our resources responsible and innovatively, when we team up with our private and our public partners, when we act as tough, savvy managers, the Federal Government can help lead the way to create a stronger and healthier nation, a nation capable of meeting challenges both old and new. Our first challenge is to preserve our Medicare and Medicaid lifeline by modernizing, by reforming, and by strengthening them. The President's plan would reduce projected Medicare spending by a net of $100 billion over five years and guarantee the solvency of the Part A Trust Fund until the year 2007, a full 10 years. The independent HCFA actuary has actually written a letter confirming these numbers, and I will submit it for the record. [The information follows:] Offset Folios 015 Insert here We are able to achieve these savings with real reform, not with gimmicks, and without imposing new financial burdens on older Americans and people with disabilities. How? By modernizing Medicare so it fits the needs of older and disabled Americans, both today and tomorrow, which is why we're expanding choices among private plans, which is why we're making sure the Government is a more prudent purchaser of health care services, which is why we're tightening reimbursement roles, moving towards new payment systems, and investing in prevention benefits like mammograms and vaccines and colon screening, benefits that we know prevent illness and save lives. Medicaid, too, needs a new look, but we believe, not a new soul. We keep Medicaid's historic promise of health care for our most vulnerable Americans. At the same time, the President's budget includes net Medicaid savings of $9 billion over five years. Overall, we are saving $22 billion over five years. We are able to propose less savings than last year in part because of the great progress we've already made in reducing the Medicaid baseline, progress that couldn't have happened without strong management, without new legislation, and without increased State flexibility. Progress that must continue, which is why we're giving the States even more flexibility within Medicaid. We're throwing away mountains of red tape and regulations by eliminating the managed care waivers. We're also repealing the Boren Amendments so States have more freedom to set provider payment rates. And we're dropping archaic payment rules. And we're eliminating regulations that tie States' hands on staffing and other matters. Our second goal is to live up the lives of our children. And here the President's plan makes a firm, passionate commitment, by first and foremost tackling one of our Nation's most pressing health care challenges, a challenge I know that members on both sides of the aisle want to meet. Today, there are more than 10 million American children, 1 in 7, who go to bed every night without the security of health insurance. Most of these children are in families where parents work hard and play by the rules. That must end. Our Administration's proposal is designed to cut the number of uninsured children by up to 5 million over the next 4 years. Let me outline how we're going to do that. First, we'll offer a hand up to workers between jobs who need health insurance for their families while they get back on their feet. Our budget dedicates $1.7 billion this year to help these families get up to six months of health care coverage. This will help to insure 700,000 children. Second, we're proposing $750 million a year for a new partnership with the States, so that we can insure childrenwho fall between the cracks because their families earn too much to be eligible for Medicaid, but not enough to afford private insurance. And third, we're taking important steps to expand Medicaid coverage to reach more children. How? By allowing States to provide a full year of continuous Medicaid coverage for the $1.2 million children who qualify each year. Fourth, by adding 1 million adolescents to Medicaid by the year 2000. And fifth, by working with the States and private health care providers in an extraordinary private-public partnership to help find the 3 million children who are now eligible for Medicaid but not currently enrolled. We expect to enroll 1.6 million of those children by the year 2000. One of the President's highest priorities this year will be to move forward on the promise of welfare reform by changing our welfare program to a jobs program, so that everyone who can work has the opportunity to work. But real welfare reform does not mean punishing people who can't work. And that's why my Department's budget also includes $5.2 billion to restore Medicaid benefits to disabled children and to legal immigrants for either children or disabled adults, people who cannot be expected to work. These are important steps; steps that we can take together. But this budget's commitment to children and families does not end there. If you look at the increase in our discretionary budget, what you will see is an intense focus on our children, a focus on the early foundation they need to get a right start in life, and the guidance they need as adolescents to make the right choices with their lives. We cannot live in Washington for more than a day without noticing that people tend to disagree about everything. But people do agree that the early years of a child's life are critical to success in school and beyond. And to enrich those years, they do agree that Head Start works. It's part of a solution. Our goal is to expand Head Start to reach more of the children who need it but don't now get it. To do that, we're proposing a $324 million increase at Head Start, which will allow us to reach 36,000 more children, to continue to improve quality and to stay right on track to serve 1 million children by the year 2002. Today, we have almost half a million children in foster care, and 100,000 of them have no chance of returning back home. That's 100,000 children who want what every child deserves: a home and security and love. The President has issued this country a difficult but critical challenge. By the year 2002, we must double the number of children in foster care who are adopted or permanently placed every year. To reach this goal, the budget includes $21 million for a new adoption initiative, to help States remove the barriers that keep kids from finding love and permanent homes. Too often in the past, policy makers group children of all ages together. We're taking a more sophisticated approach by tackling the unique land mines that keep many of our adolescents from making smart choices with the only lives they'll ever have. After years of increases, there is some indication that teenage birth rates are finally going down, but not nearly enough. Every year, 200,000 teenagers 17 and younger have children. That hurts these children, it hurts their parents, and it hurts our entire nation. And that's why are part of a new welfare law, we are implementing a new $50 million initiative to send our children one clear and consistent message that they must abstain from sex. There's been a lot of talk lately about rising drug use rates among teens. But when you peel away the rhetoric and take a cold look at the hard facts, what you see is that our teenage drug problem is for the most part a marijuana problem. The fact is that we have too many parents who don't feel comfortable talking to their kids about marijuana and sending them clear no-use messages. And we have a generation of children who are using marijuana earlier and earlier, and are more and more likely to be armed with the dangerous misconception that it will do them no harm. As part of the President's overall drug strategy, our 1998 budget makes a $98 million commitment to fight these dangerous trends. By countering pro-use messages, especially among 9 to 14 year olds, by leveraging State resources, by gathering State by State data on substance abuse, this committee and the Nation's Governors will know where we're succeeding and where we're not. And by dedicating an additional $30 million to expand research on drug treatment and prevention. There are a lot of different perspectives on the issue of tobacco. But there is one thing that we can all agree on. Our children should never smoke. Every year, tobacco-related illnesses claim the lives of 400,000 Americans, the vast majority of whom began smoking before their 18th birthday. And that's why the President stood up to the special interests and proposed the boldest initiative ever to kick Joe Camel and the Marlboro Man out of our children's lives. We made that promise to our children and to their parents. And in this budget, we include $34 million to implement the regulation and make that promise a reality. We're also requesting $36 million for CDC and $22 million for NIH to help States prevent cancer and encourage Americans, especially kids, to put down their cigarettes and pick up their health. The fact is, that when we work to cut teen smoking by half over seven years, we're focusing on a huge public health challenge that if successful, could save countless lives and dollars. That is our approach in this budget. As we move ahead to meet our third challenge, to build a public health agenda for the 21st century, parents shouldn't have to worry that the food or juice they give their children will make them sick. They shouldn't have to worry that their families or communities will fall victim to deadly outbreaks of infectious diseases. Today, too many do. The CDC estimates that there are as many as 33 million cases of food-borne illnesses every year in this country, and up to 9,000 deaths because of them. And emerging and re-emerging infectious diseases like Ebola are increasingly crossing oceans and continents to threaten all of us. In both of these areas, we know that it pays to be smart on the front end, to find innovative ways to prevent these tragedies, instead of just responding to them after they've occurred. And that's why the President has proposed a sophisticated $43 million early warning system, so that we can stop food-borne illnesses before they stop us. And that's why in this budget we're increasing funding by $15 million to improve training, research and the ability of States to prevent and respond to deadly outbreaks of infectious diseases. Another cornerstone of our public health agenda is and always will be medical research. To make sure that theUnited States remains preeminent in research, we propose a $13.1 billion for the NIH, as well as a second year of funding for NIH's new cutting edge clinical research center. Past NIH research has already led to remarkable breakthroughs in the treatment and prevention of HIV/AIDS. And now in this budget, NIH proposes to invest $1.5 billion in additional HIV/AIDS research, including a substantial increase in funding for AIDS vaccine research, so we can use the light of science to finally reach the end of this dark tunnel. But until we do, our first priority must be prevention. Our budget increases our prevention activities at the CDC by $20 million to help prevent HIV among drug users, one of the groups at highest risk. And we continue our strong commitment to Ryan White activities by proposing $1 billion, $40 million more than last year, to empower those communities hardest hit to fight back. Preserving and modernizing Medicare and Medicaid, investing in the lives of children and families, creating a strong public health agenda for the 21st century. We have been able to make these commitments because of the strong management that we have brought to the Department. We have reduced our FTEs by 7,600 since 1993. We have cut the bureaucracy, we have consolidated services, we have increased flexibility. And now we view the Government Performance and Results Act as an opportunity to continue along that path, to measure our activities with the only yardstick that matters: results. That's what the American people deserve. And that's what they will get. Barbara Jordan once said, what the people want is very simple. They want an America that is as good as its promise, an America as good as its promise. That's the future we've tried to create with this budget, a budget that makes some very tough choices, a budget that shows tough management, a budget that cuts costs and invests in lives, especially the lives of children and adolescents. And that is the America of the future that all of us can create if we seize this great opportunity, and as we have done in the past, if we move forward together. Once again, Mr. Chairman and members of the subcommittee, I want to thank you for giving me this opportunity to testify. I'd be happy to answer any of your questions. [The prepared statement follows:] Offset Folios 025 to 030 Insert here Mr. Porter. Madam Secretary, thank you for your excellent statement. I might say that it is time to agree, and there is a great deal in the President's budget in your Department that I think we can agree on, particularly the emphasis on children, whether it's expanded coverage under Medicaid or commitment to Head Start and to the early years. I've had the opportunity recently to talk to Rob Reiner of Castle Rock Productions who has, I think, a wonderful initiative that will fit in perfectly with the commitment that all of us make to early childhood development. This emphasis is, I think, a very, very good one. I would also say that we are definitely singing out of the same hymnal. On your management of the Department, you've done a tremendous job there to make the Department managed efficiently. And certainly on the question of looking for results in the programs that we fund. Having said that, I have to say that I personally was tremendously disappointed in the President's unwillingness in his State of the Union Address, and to a large extent also in the budget that I've seen, to come to grips with, I think, the issue that all of us must come to grips with, and that is the rate of increase in the major entitlement programs. And while you have suggested some improvements in Medicare and Medicaid, I don't think that we can provide the funding in many of the areas that the President himself indicates as priorities in his budget without sitting down and coming to agreement and doing major substantive changes to get control over the future rate of increase in the two entitlement programs. Simply to cap Medicaid and Medicare and shift the costs to other sectors I think is a non-starter in this Congress. Also to cut back on the commitment we've made to block grants and giving greater discretion at the local level is also, in my judgment, a non-starter. I'd like to begin the questions by referring to NIH funding, and again, I'm going to be critical. I am, obviously, very disappointed in the President's budget. I think particularly so, because the American people got a chance to see, at the Democratic convention, Christopher Reeve make a very elegant statement about the importance to people of biomedical research. The President emphasized this subject in his acceptance address. During the campaign, the President said, ``Cutting back on research at the dawn of a new century where research is more important than it has ever been for the last 50 years would be like cutting our defense budget at the height of the Cold War. We must not do it, and we will not do it.'' The President came into my district, Madam Secretary, two weeks ago, and made a very, very eloquent statement about the importance of the human genome project, and how it would make a difference in the lives of children going to be born in this country in the next century. We in the subcommittee, while contributing hugely to deficit reduction, nevertheless placed NIH as a high priority in increased funding two years ago by 5.7 percent and last year by 6.9 percent. The President's budget comes in for the next fiscal year at 2.6 percent, below the rate of inflation. And of that, $90 million has to be allocated to the new clinical center, as you mentioned, meaning that funding for operations or largely for grants would be, under the President's budget, less than 2 percent of an increase, again, way below the rate of inflation in this area. Even more disturbing is the fact that in the out-year projections, there is assumed the increase of one half of 1 percent after the year 1998 in the President's budget. So for four straight years, the funding for NIH under the President's budget would be going in reverse, given the rate of inflation we have had. So I guess my first question would be, how does your NIH proposal in the budget match the President's rhetoric on the importance of biomedical research, and what can we do together to address this problem? Secretary Shalala. First of all, we agree that we need a strong NIH. There's no disagreement between the Administration and this committee. At the same time, we needed to respond to a wide variety of demands that were important to the Department and across the Government. Given the competing priorities and the existence of the discretionary spending cap, the best we could do within this budget was 2.6 percent. If more could be provided to NIH, without damaging the key priorities that we have laid out, we would welcome it. And we look forward to working with this committee, as we have in previous years, to see what we could do for NIH within the kind of constraints and priorities we have. On the out years, let me simply respond the way I did last year, and that is, we do this budget year by year, within the context of a balanced budget. And the priorities that we have are made year by year. So one should expect us to have a priority on NIH next year. But again, the path and the competing demands will require that we cut some things to be able to increase the NIH budget. Mr. Porter. Well, I think your heart and the President's rhetoric is in the right place. But that doesn't necessarily get us to where we need to go. I don't think we can put biomedical research funding on hold in this country. And I don't think that there is, perhaps, any higher priority for the American people than the commitment we make in this area, where the possibilities are so great, and where momentum is so necessary. So I look forward to working with you. I know that you made a personal appeal to the President, who was originally going to have in his budget, I understand, a cut for NIH, an absolute cut. And we hope to do much better than the President's budget indicates. AIDS Funding Madam Secretary, there is substantial disagreement within the AIDS community about whether to put Ryan White resources into services for those who are already ill, or into drug purchases so that patients may stay healthy longer. Are you confident that your budget reflects the correct allocation of these resources, anticipating the circumstances a year from now when funding will be actually distributed? Secretary Shalala. We're in a difficult period in terms of the scientific breakthroughs that have taken place. We have a new set of drugs that are clearly having an effect on many people who are very sick and extending life. But what combinations of those drugs, what the dosage is, we're less sure. And the medical community is less sure. There was recently a conference at the NIH to try to develop standards of treatment. We have made an allocation to help the States and communities, based on what our current knowledge is. If that information changes during the course of the budgetary deliberations, I will be back to the committee with more accurate numbers. I know the communities are concerned about whether they're going to have to take some resources out of Title II of Ryan White. We have put a $15 million increase there. Most of the expenditures actually will come out of Medicaid, because such a high percentage of people who are ill are Medicaid eligible. But in terms of the precision of this particular number, we did our best based on what knowledge we have, and we simply have to work with the committee and fine tune this as we're going along. Government Performance and Results Act (GPRA) Mr. Porter. Because we are so far ahead of when the money would be spent, we would welcome from your Department some suggestions as to how we could put flexibility into the budget beyond reprogramming, perhaps, that would help us address this need as we proceed through the next fiscal year. Madam Secretary, when will your staff begin to discuss program performance levels with the subcommittee, and will you give us your plan to assure that the measures the subcommittee wishes to consider will be included in the plan to implement the Government Performance and Results Act in part of your 1999 budget? Secretary Shalala. Yes. And we intend to keep our commitments to this committee, and I really deeply appreciate your desires to see that the GPRA legislation helps us in our efforts in budgeting and managing in the Department. Let me cite a few things about our efforts in this area. The Department pilot tested GPRA at each one of our operating divisions in the 1998 budget. We will fully comply with the GPRA requirements for the 1999 budget and will fully consult with this subcommittee as we engage in this process. Ultimately, GPRA will help us find better ways to spend taxpayers' dollars and obviously manage our programs. But it won't be done overnight. We'll need very good data, and we have requests in this budget for this. We've reorganized our data sets, so that we can assess our programs. We'll need patience to find the best ways to deliver the services of the Department to our citizens. Every one of our operating divisions is developing strategic plans and the performance measures that they need to analyze strengths and weaknesses of these programs. As we enter our 1999 budget process, I want to personally assure you that we will be examining their efforts to ensure that they comply with the GPRA Act, and that we will continue to present to this committee the most effective and cost conscious budget possible. So I believe we're on track. Even though there clearly is a transition between first term and second term, we will not allow that to be an excuse, as well put this system in place. Mr. Porter. Thank you, Madam Secretary. Mr. Stokes, I yield to you. Mr. Stokes. I yield. Ms. Pelosi. Mr. Chairman, Mr. Stokes does have some questions. The gentleman indicated to me that he would submit them for the record. Mr. Porter. There's one question he would like us to address. Secretary Shalala. I must say, with the amount of illness on this committee, if you'd like me to detail a practicing physician. [Laughter.] pulmonary hemorrhage Mr. Porter. Mr. Stokes asks, 90 cases of chronic pulmonary hemorrhage have been reported in the United States, a third of these have been in Cleveland. Cleveland also has had nine deaths from the disease. What is the Department doing to address this health problem? Secretary Shalala. I don't actually know the answer to that question, but I'll find out for you right away, Congressman Stokes, and get the answer to you. [The information follows:] Pulmonary Hemorrhage In November 1994, CDC was notified of a cluster of 8 cases of pulmonary hemorrhage, a rare disease, in Cleveland, Ohio. The call came from Rainbow Babies and Children Hospital, a referral hospital. CDC immediately sent two epidemiologists to Cleveland to assist in an investigation. The investigation was conducted between 11/94-12/94. All cases reported were African- American, seven were male, age range was 4 weeks to 16 weeks. One child died. Symptoms included pulmonary hemorrhage, limpness, and lethargy. Cultures of blood, urine, and stool were negative for bacterial, mycotic, and viral pathogens. A MMWR article in 12/94 described the investigation and requested physicians to report possible pulmonary hemorrhage cases to CDC. A second cluster of 6 cases of pulmonary hemorrhage was reported to CDC in December 1994, in Chicago, Illinois. A team of three CDC investigators was immediately dispatched to assist with the investigation. The infants aged ranged from 3 weeks to 8 months. Six were African-American, 4 were male. At the time of admission all infants were afebrile but had anemia and histories consistent with either hemoptysis, epistaxis, or blood from the endotracheal tube. Cultures of blood, urine were negative for bacterial, mycotic, and viral pathogens. A MMWR article in 7/95 described the investigation and requested physicians to report possible pulmonary hemorrhage cases to CDC. Visual inspections of the homes of children affected led investigators to suspecting molds as a possible factor in the clusters. In August 1995, CDC convened a panel of experts to review the data collected during the two investigations as well as data collected subsequently. The purpose of this meeting was to review the evidence for an association between exposure to fungi in indoor air and disease among infants. As a result of the preliminary results of these two cluster investigations and the meeting, CDC prepared and distributed Home Clean-up Recommendations for fungus. The mold being investigated requires both water and cellulose to grow, and could occur from water damage secondary to flooding of homes (such as occurred in the summer of 1994) or from local plumbing/maintenance problems. The mold can be removed by washing walls and other items in a bleach solution, and correcting the source of the water damage to prevent reoccurrences of the problems. A case-control study to determine the risk factors for acute pulmonary hemorrhage among the cluster infants was conducted by Rainbow Babies and Children's Hospital, the Cuyahoga County Board of Health, the Cleveland Department of Public Health, with technical assistance from NCEH. This study, described in the January 17, 1997 MMWR, reported that all of the case-babies and 23% of the control-babies resided in homes where major water damage had occurred during the previous 6 months. This finding prompted quantitative air sampling for and microscopic identification of fungi in the study homes. The quantity of fungi, including the toxigenic fungus Stachybotys atra was higher in the homes of case-infants than in those of controls. In collaboration with Emory University and selected medical examiners throughout the country, CDC is reviewing and studying infant lung tissue autopsy material to help determine the extent to which pulmonary hemorrhage is present among infants who die. We continue to provide technical consultation to the Cleveland medical center that first identified this problem, as well as area health departments. To date, CDC surveillance efforts have discovered seventy- eight cases of pulmonary hemorrhage occurring from 1988 through 1996. Twenty-three states have reported cases. Ohio has reported the most cases, 32. Epidemiology of Pulmonary Hemorrhage Case Distribution across the U.S.: Alabama: 1 Arizona: 1 California: 1 Florida: 4 Idaho: 1 Illinois: 10 Iowa: 1 Louisiana: 2 Maryland: 2 Massachusetts: 1 Michigan: 2 Mississippi: 2 Missouri: 3 Nevada: 1 North Carolina: 4 Ohio: 32 Oregon: 1 South Carolina: 1 Tennessee: 1 Texas: 4 West Virginia: 1 Wisconsin: 1 Wyoming: 1 Annual Distribution: 1988, 1; 1989, 0; 1990, 0; 1991, 3; 1992, 4; 1993, 16; 1994, 22; 1995, 12; 1996, 20. Gender Distribution: Male, 48 (61.5%); Female, 30 (38.5%). Survival Distribution: Survivors, 66 (84.6%); Non- Survivors, 12 (15.4%) Racial Distribution: White, 19 (24.4%); Black, 56 (71.8%); American Indian 1 (1.3%); Hispanic, 2 (2.6%). Mr. Porter. I don't think we'll charge the Democratic side with that. Ms. Pelosi. nih budget Ms. Pelosi. Thank you, Mr. Chairman. I certainly want to associate myself with your concern about the NIH budget, but do appreciate the comments of the Secretary. I also appreciate, as I mentioned, your interest in funding the infectious diseases initiative, at least at the level the President suggests, and your comments, complimenting the Secretary on some other initiatives relating to children in the budget. And it becomes clear that if these initiatives are going to be protected, that we need a bigger allocation. And I would hope that, again, your remarks at the beginning of the hearing, that you would work with Senator Specter and others in the leadership to get a bigger allocation for our committee. Because while we all support increased spending for the NIH and that it should be at least on par with biomedical inflation, that we can't have it all, if we have the constraint of the allocation that we've had in the past. And I know that you will fight very hard for that allocation. But I think that's the battle ground for us, rather than again, as I said in the past, this lamb eat lamb committee that we have, where everything in here is a priority, an important priority. And it's hard to find significant increases in funding without taking it out of some other good initiative. aids drug assistance program I'd like to follow up your question, Mr. Chairman, about ADAP. Do I understand from your answer, Madam Secretary, that depending on the report of the committee chaired by Dr. Fauci, developing guidelines for standard of care for people with HIV/ AIDS, that the Administration is willing to look at a revised budget request for ADAP that would respond to the recommendations of the Fauci Committee? Secretary Shalala. Well, you'll remember that last year, we came back with a new request to pay for the protease inhibitors. What I have said is two things. Number one, I want to see what the recommendations are there. And second, I want to call around to the States and see what their situation is in terms of their ability to pay for the drugs. What we don't want to do is to shift huge costs on the States. But this is, we're all making a guess on this number, because we don't know enough about the treatment now to do much more than make a guess in terms of the amount of money we'll need and the number of people for whom the drugs will be affected. So I'm saying that we're willing to stand by this number now. We're going to be checking throughout the spring before this committee makes some decisions. We'll be coming back to you if we have an additions that we want to make. Ms. Pelosi. And if we go beyond the markup, would you be willing to look at an emergency supplement? Secretary Shalala. Well, we certainly did that before, and we certainly would consider that. I would hope that we'll be able to agree on a number in time for the appropriation. job training Ms. Pelosi. I hope so, because I appreciate the Chairman's suggestion about flexibility in the budget beyond reprogramming. Last year, we were, at the end of the game, able, with Chairman Specter's cooperation, to put $100 million more for acquisition and administering of the drugs. So we want to get as close to the need as possible. In light of the new welfare law, I share with Mr. Stokes a concern. Many of us are concerned about how we can successfully help poor mothers overcome the obstacles they face every day to get job training and lasting employment; obstacles like transportation, lack of adequate child care, health insurance, problems with drug addiction, illiteracy and domestic violence. Almost half the women receiving Government assistance cite domestic violence as a factor for need, in the need for welfare. Will HHS clarify that victims of domestic violence will be made exempt from work requirements separate from the 20 percent hardship exemption? Secretary Shalala. Well, let me say that we're working very closely with the States now. And they are just starting to implement their plan. And we want to make sure that, particularly for the hardest to work with cases, often victims of domestic violence who need intensive services, or people with disabilities, but who can go to work, or people who have multiple issues that need to be dealt with, that the States do provide those kinds of intensive services, and don't simply use the exemption to put the toughest cases aside and not work with those cases. We're anxious that women who are victims of domestic violence get services, have an opportunity to work, aren't just simply categorized as exempt. We're also anxious that States not believe that taking a little bit more time with some cases and providing those services is to their detriment. So what we're going to do initially is work with the bill. No one is anywhere near their exemption at this point, because they're just starting down the road. We will see if there are special problems that it created. We have sent out some guidance to the States specifically on the issue of domestic violence. It is the one area where we have sent out what I think is very clear guidance to the States as part of the welfare bill in terms of working with victims of domestic violence about the kinds of services that ought to be available. So I think that my answer is imprecise because we're at the beginning stages of the welfare bill. Ms. Pelosi. If I may, then, in light of the welfare bill, many of us have had meetings with our constituents who are on public assistance, and they have some pretty good ideas. If I just may briefly convey some of them to you. Many of the teen moms that we're trying to help have a problem with literacy. So if you could wed the literacy issue to welfare reform and teen moms and welfare to work. Secondly, some have a substance problem. And the time line, the 18 months that they need for that, they think shouldn't count against some other time table for them. And these are people fully intending to abide by the law, but need some deferral of the start of the two year period. And lastly, well, lastly for right now, some of the grandmothers who had been on public assistance have been called in to go to work fare. Many people would like to see care for grandchildren by some of the welfare grandmothers to be considered work. It would cost a great deal of money to have full time child care for the children, the grandchildren of these grandmothers, who would then have to go to work instead of taking care of those children as work. I have a question on legal immigrants, but how am I doing with time, Mr. Chairman? Mr. Porter. You have about two minutes. immigrants Ms. Pelosi. Okay. Let me commend the Administration for attempting to restore assistance to legal immigrants who may be unable to complete citizenship proceedings. As you know, SSI benefits and food stamps for legal immigrants are scheduled to end by the end of this summer. Madam Secretary, could you share with us your time line for enacting legislation which would restore funding for these elderly and disabled legal immigrants? How does the Administration propose to proceed from here? Secretary Shalala. Let me try to answer both questions quickly. Question number one, the way to answer that question is that we do not intend to reopen the welfare debate. The rules have been set out, the States have flexibility. This committee and every other committee has given the States substantial resources for child care. They've given them the flexibility. We need an opportunity to work with the States. And the States need an opportunity to establish their programs. The Administration does not want to reopen the bill, start conversations about this group should be exempted, this group should be exempted, this group should have a little more time. We believe the flexibility is there, and certainly the resources are there. Almost every State which has a reduction in the number of welfare recipients has extra money because of the nature of the block grant. They were given money based on an earlier number. So the States really do have some resources to work with. We don't think that the fundamental rules about the welfare bill should be brought up or re-debated. But within that discussion, there are some people who cannot work. There is no one in this country that believes that a disabled immigrant sitting in a nursing home in the United States of America can go to work. There is no one that thinks that a little child can go to work. And we have argued that for people that were already here in this country, not for the new people that are coming in under which we have agreed to a new set of rules that deem the income of the sponsor, but to people that are currently here, we should not cut them off their Medicaid. That's the money that's in our budget. Otherwise, we'll be shifting costs to the States. We'll be creating tremendous hardship. And we have suggested that the money should be restored for those people who are not part of the welfare reform debate, but who have been affected. We believe that we ought to restore the Medicaid money for that population. We're talking about disabled legal immigrants and children. Mr. Porter. Thank you, Ms. Pelosi. Ms. Pelosi. Thank you, Mr. Chairman. Mr. Porter. I notice that Mr. Bonilla has on cuff links that look like the Superman shield. And I don't know whether that indicates the questions are going to be tough. Mr. Bonilla of Texas. Mr. Bonilla. Thank you, Mr. Chairman. My eight year old son gave me these for Christmas. Welcome back, Madam Secretary. Nice to see you again. Secretary Shalala. Thank you. nih funding Mr. Bonilla. I think it's remarkable on this subcommittee to hear this morning, in this town where you often see too many headlines about political bickering, that we all seem to be in agreement that we're concerned, as you are, about the funding level at the National Institutes of Health. And I'd just like to, for the record, say that I am also concerned about that, as is the Chairman and my colleagues on both sides of the aisle here, that we're going to try to do everything that we can to maintain a higher level of funding than the President is asking for. We've had this struggle before. You and I came in at the same time working on these issues. And we've always managed to give the National Institutes of Health at least close to what they wanted, if not what they needed. And we'll continue to do that. diabetes prevention My first question this morning is about something that Mr. Stokes and I worked on over the years, and that is diabetes. Because it's a problem that has disproportionately afflicted minorities in this country. I'm delighted that the Administration is, talking about promoting preventive health care for diabetes. It's something that we've supported in Congress for years, and we're delighted that the White House and you are concerned about this as well. One in seven Hispanics suffers from diabetes. And as the population of my Congressional district is more than 60 percent Hispanic, finding a cure and promoting diabetes education are top priorities, and have been for me for some time. It amazes me that expenditures on people with diabetes accounts for a staggering 27 percent of the Medicare budget. This is something that the Speaker is starting to talk about as well, in terms of addressing the costs included in the Medicare budget. Each Congressional district includes, on the average, 32,000 people with diabetes. By simply providing Medicare coverage for blood glucose monitors and associated testing strips, the CBO estimates savings a first for any preventive health care measure. Madam Secretary, I'd like to ask, what is your office planning to do to promote education and preventive care for diabetes, aside from what the CDC and NIH are currently doing? Secretary Shalala. Actually, within this budget is a strategy for diabetes that includes a research component. In 1994, as you probably know, the NIH initiated an eight-year trial on type two diabetes which is the adult diabetes. We increased NIH funding in this budget. We are going to have a State-based control program to encourage screening and improve techniques to increase education. And we've asked for money for the CDC as part of this overall strategy. And HCFA, the Health Care Financing Administration, has a new benefit as part of our recommendations of modernizing the Medicare system, which is an expansion to improve outpatient self management and training, and coverage of glucose monitoring strips--the kind of thing that you just talked about. There actually is a major new initiative within our budget. While we reduce the growth in the Medicare programs substantially, $100 billion, we also add some new benefits that we believe in the long run will affect costs. We add, in addition to the diabetes benefit, we add flu shots and other kinds of things. The Medicare program was originally designed without prevention benefits. And what we do in the new budget is move to modernize the program. There are some direct things that actually will save money initially, and there are some other things that will save money in the long run. The management of diabetes, the research on diabetes, the education of people so they can manage their own cases, is very much a part of the integrated strategy in this budget. Mr. Bonilla. I've heard from some executives at one of the hospital conglomerates in this country. They're also concerned about this, and see this as a way of driving down costs, by educating people about diabetes at an early age. I come from a neighborhood where it seems like every, a person at every other house on the block was afflicted by diabetes. This seems to be true simply because they didn't know, they were not educated, and had no idea that if they just changed their diet and exercised a little bit, they could prevent something that causes great complications down the road. Have you heard the private sector getting more involved in this? Secretary Shalala. I have. And it is clearly one of those diseases where more education, more self management and more research in this area will help us bring down costs. Wehave tremendous costs for diabetes in this country. We spend a lot of our resources on juvenile diabetes, and we need to move on, continue expenditures in that area, but to move on and deal with diabetes, particularly that kind that could be managed better. surgeon general Mr. Bonilla. I have a question now, Madam Secretary, about the Surgeon General. Since your last visit, the President still has not nominated a Surgeon General. Although we've had this discussion in past years, it still baffles me as to why this office shouldn't be eliminated, when you and other HHS officials are carrying out the role just fine. I've talked about this on this subcommittee before, about how CDC is a great advocate, and can carry the water on health advocacy. Every day that's gone by is evidence that the Government and the American people can function without this office. The money could be better spent on additional funding to find cures for diseases and even to provide additional health care for children. Do you still believe that this office is necessary, and is the President going to nominate a Surgeon General, now that the elections are long over and political consequences are few? Secretary Shalala. The answer is that we do believe that the office is still necessary. We do believe that this country needs a clear public health spokesperson, a physician who takes leadership on a wide variety of issues. And the President will make a nomination this spring. Mr. Bonilla. I come from the private sector, without the long 20 years of legislative experience before running for Congress. One of the things that baffles me is that in the private sector, when you have a position that's been open for that long, you begin to ask these kinds of questions. if you could exist without this position for this long, why can't you just do without it permanently. And that's why I just want to let you know where my rationale originates. Secretary Shalala. I appreciate that, Congressman. american stop smoking intervention study (assist) Mr. Bonilla. The question now, the Office of the Inspector General is conducting an audit on the ASSIST program, the American Stop Smoking Intervention Study. The main concern, as you know, is that various State ASSIST programs appear to have been involved in lobbying activities at the Federal, State and local levels, and that Federal funds may be being used improperly. Could you update us on the status of this investigation? And before you answer, I'd like to say that I don't think there's a member of this subcommittee that advocates smoking for children or in any way for anyone to break the law in providing cigarettes to minors. Secretary Shalala. I think we've provided extensive information to you about the activities of the ASSIST contracts. We've informed all of our contractors and all of our grantees that they are not to engage in lobbying activities which are prohibited under the Federal Acquisition and Streamlining Act. We have made it very clear that violations of the Act will not be tolerated by the Department. If allegations of violations of the Act are serious enough, we will turn them over to the Inspector General. The Inspector General is conducting an investigation. We have thus far found no lobbying violations in the course of our internal inquiry. And as you indicate, no one on this committee, and I don't know anyone in this country, that's in favor of smoking by children. It's a major public health problem. But we intend to obey the law and to make sure our contractors obey the law. And thus far, we have not found any violations. But we have made it very clear to the contractors that they are not to violate the law. Mr. Bonilla. Mr. Chairman, do I have time remaining for one more question? Mr. Porter. Yes. health professions Mr. Bonilla. Madam Secretary, the last question I have is about HRSA. The Administration has chosen to significantly cut health professions, and this is a battle that I've been involved in the past years. I think it's so critical that we provide physicians and nurses, especially for underprivileged areas. I have talked to one of my hometown colleagues, Dr. Ciro Sumaya, last year, and he assured me that he would take my message back to you. Yet in the budget, there were only three significant cuts, and health professions topped the list with the largest cut. I'm wondering why there is an apparent lack of understanding on the dire needs of health professions in rural districts like mine. In some cases, especially in poor areas dentists' offices have actually closed. I am referring to a migrant health care in Crystal City, where they can't get anybody to come work there. They need funding like this to help them get a doctor in that office. Secretary Shalala. Thank you, Congressman. I'm going to be giving the same answer to the same series of questions. And that is, within the context of a balanced budget, we had to pick some priorities. In this case, what we did was protect the minority and the disadvantaged cluster to make sure we continued our investment in that area. And we cut some of the other areas. But we had to cut in some places or do level funding to meet our balanced budget targets. But we were careful to go through with a scalpel and to make sure that we protected our investments in minority and disadvantaged health profession areas. Mr. Bonilla. I thank you for being here again this morning, and look forward to continuing working with you. Secretary Shalala. Thank you very much. Mr. Porter. Thank you, Mr. Bonilla. Mrs. Lowey. breast cancer detection Mrs. Lowey. Thank you very much, Mr. Chairman. And once again, I want to welcome you, Madam Secretary, and tell you how proud of you we are. Particularly as a New Yorker, I am especially proud. You have shown extraordinary leadership and I look forward to a very productive year. However, I do want to share the view of our Chairman that although the NIH did receive the biggest dollar increase in the HHS budget, $331 million or a 2.6 percent increase, we are in agreement on this panel that investment in the National Institutes of Health, which I know you share, is a top priority. And I hope that we can work together to increase our overall budget as well, as my colleague Ms. Pelosi stated, so that we can see a greater increase. One of the most difficult things on this committee is having to make choices. Because everything we fund is so vital to our communities and this Nation. So I do hope we can work together in a bipartisan, cooperative spirit. Madam Secretary, like many, I too was disappointed that scientists participating in the recent Consensus Conference organized by the National Cancer Institute were unable to agree that the benefit of regular mammograms for women in their 40s outweighed the risk. While the scientific community is divided in their interpretation of the data, and organizations such as the American Cancer Society continue to recommend regular mammograms for women in their 40s, we know that the mammography technology for women in their 40s is much less effective. And that's really the key. We're all adults. And if the scientific community is not all in agreement, we can accept that. But we cannot accept the fact that we are not pursuing as aggressively as we possibly could some answer to this difficult question. So I just feel, and I know you share our concern, that it is absolutely imperative that we improve the detection of breast cancer in younger women. To me, that is the goal, not that we should say to the scientific community, you have to agree. But that we should improve the detection. And perhaps you can share with us what you are doing in that regard. Secretary Shalala. We actually are doing a number of things, and have some investments, including the imaging research that's going on jointly with the CIA, for example, where they have a technology used for other purposes that possibly could be useful. And a grant has been given to, I think the University of Pennsylvania, to pursue this research. But you're right, we need to upgrade the technology. We need to get some scientific breakthroughs so we can be more precise. But we also need to make sure we get our act together in terms of giving women very clear information when we have that information. The National Cancer Institute Board will be reviewing the advice of that panel that was set up by the National Institutes of Health. We will continue to be consistent in our advice to women over 40, and that is, if there's any health history at all, they ought to be in touch with their doctor. And their doctor will make the appropriate recommendation for them. And while I realize there's mixed information, until we can get some consensus here, we will not probably go beyond that. Though as you well know, the Director of the National Cancer Institute read the data differently than the NIH panel. And he needs to take up that issue with the Cancer Advisory Board. And we'll wait for their comments. Mrs. Lowey. I'm pleased to hear that. Because just in fact last evening I was with a group of physicians who are specialists in that area. And they strongly disagree as well. So I'm very pleased that we're going to be pursuing new means of detection, and secondly, I'm pleased that the data will be reviewed. Because I would think the problem is, in many of our communities, it is very difficult for women, as independent as they would like to be, to understand all the information and make the right decisions. So I thank you. Secretary Shalala. Congresswoman Lowey, we also have improved the quality of the current mammogram machines and the people who both read them and use the machines through the FDA certification process. And as you well know, all the mammogram machines in the country now have gone through that certification process. That itself, plus a safe system for notification, has helped to improve detection for those that have gone to get mammograms. So there has been progress over the last four years. teen pregnancy Mrs. Lowey. In fact, my colleague, our recently returned member, was very involved as many of us were in assisting Dr. Kessler and the FDA in getting the resources they needed. It was an insult to all of us that, what were the statistics, one in three mammograms were faulty. And this was an amazing statistic. So I'm glad we have some progress, and I thank you. I was also very pleased to see the Administration's budget, with its continuing emphasis on preventing teen pregnancy. As you know, we've organized in the Congress an advisory committee to the National Committee on Teen Pregnancy. Because we realized that this is such a critical issue in our communities. Can you tell us about the CDC's role in teen pregnancy prevention? How will it use the $13.7 million which you have requested? Secretary Shalala. Well, these are basically grants to local community organizations. Bringing down teenage pregnancy rates requires community based organizations. And the community is coming together--parents first, schools, and religious organizations. There is all of our evidence of areas in this country where teenage pregnancy rates have been brought down-- from rural areas to large communities. The communities themselves have organized to send clear and consistent messages to their young people and to organize other kinds of activities for young people. What we're looking for is innovative coalition and partnerships in communities because that's what seems to work. It's not just a single program but a whole community coming together with parental leadership and religious leadership and community leaders and the school leaders coming together at the same time. We're beginning to learn some things. As you know, there is some evidence that teenage pregnancy rates are starting to come down a bit. That does not mean that we shouldn't continue these investments and try to test some interventions and give local communities as much information as we can about what needs to be done. That's the first part. The second part is the abstinence based programs that are being expanded also under this budget. Some of it is part of the welfare reform. But it's an integral part of these overall efforts in communities. Mrs. Lowey. I've looked at and talked with people who are involved with the Best Friends program. And we've seen some real successes. But what we've seen over and over again is that it seems to be very difficult to replicate the successful programs. And one of the things that I did in the last session, and I hope to get it passed in this session and work with you, is to provide some additional money to evaluate the program, so we can really understand what works and what doesn't work. For those of us who have been on this committee, what we see over and over again is good things happening out there. And yet we can't seem to replicate them adequately so we can make a dent in the problem. And because this is such a serious national problem, even though it may be going down a little bit, I do hope we can have adequate evaluation and expand and fund the programs that really do work. And I look forward to working with you. Is that it? food safety Mr. Porter. You have another minute. Mrs. Lowey. One of the areas that I have worked on, on another subcommittee, with food safety, and I was glad you referred to that. I was very pleased to note that you emphasized the budget area, where you are working to improve the safety of our Nation's food supply. Better coordination between the agencies in the area of food safety on many occasions has truly been our goal. Because as you know, the responsibilities are divided. Can you tell us what food safety role you envision for the CDC? What can the CDC uniquely contribute to making our Nation's food supply safer? Secretary Shalala. Well, the CDC puts in place the early warning system, and the tracking system, working with public health officials around the country. And what you need is an infrastructure across the country, and a paperless system for early warning, so that you can actually work with an appropriate State, if they need the CDC's help. So the CDC is actually responsible for putting that early warning system in place. What the President's food safety initiative does is modernize our system. Some States are very, very good. In fact, one of the reasons we haven't had wider outbreaks is, some of the places where we've had outbreaks, California, Washington State, have pretty sophisticated systems now in place. What we need is to have that nationally. But it's not only the CDC. It's the CDC, the FDA, the NIH, the Department of Agriculture, and the EPA. And what this system does is put these agencies together in a very smooth system. We were able to do that using the Assistant Secretary of Health, when we had to respond to questions about the mad cow disease issue in England. And one of the things that you saw here that wasn't as consistent abroad is that all of our spokespeople worked together, sent the same message to the American people about what we had in place, what we were going to put in place. And we had none of the same problems. And that had to do with public health officials working very close together, and them all speaking in English very clearly, and putting scientists in front of us to be the spokespeople on these issues. Because those are the people that are trusted by the American people. So we learned a lot from that experience. But we need to modernize the system, and that's what this process is all about. It's not necessarily under the jurisdiction of this committee, because some of the requests are in other pots. But I'm certain that everybody will work together to make sure we get this done. There's great enthusiasm out there in the States, as you can imagine, to make sure we get the system. This money is basically for them to put that infrastructure in place. Mrs. Lowey. Thank you, Madam Secretary. And thank you, Mr. Chairman. Mr. Porter. Thank you, Mrs. Lowey. Mr. Istook. american stop smoking intervention study (assist) Mr. Istook. Thank you, Mr. Chairman. Madam Secretary, I'd like to go back to something that Mr. Bonilla asked about. I want to make sure there are no misunderstandings, and that we try to get correct information. Mr. Bonilla asked you in regard to the ASSIST programs in particular about his concern that no taxpayers' money be used to lobby, whether it be at the Federal level, the State level, or the local level. You responded to him that no money is being used to lobby illegally. Now, I noticed the same distinction in your testimony last year, Madam Secretary, and I've written you about this topic about three weeks ago, seeking further information. Mr. Bonilla asked you last year, ``is it still your policy that Federal funds shall not be used for lobbying at the State and local levels.'' You responded, ``it is the law''. He presented you with a copy of a memo from HHS, in particular the National Cancer Institute, and a letter from the New York State Health Department, seeming to contradict claims that money was not being used to lobby. You stated on the record you would be happy to take appropriate actions if it furnished you with information, which you did. Then in your response to the subcommittee, your written response later last year, you say that people concur with you that Federal funds will not be used for lobbying, and here's the careful distinction, it will not be used for lobbying at the Federal, State and local levels in any manner which would violate Federal laws. In other words, rather than responding that money is not being used to lobby, you responded, money is not being used to lobby illegally. And I'm aware that your Department has taken the position that any contract which was awarded before October 1st, 1995, even though it may be a multi-year contract, and still had years to run, is not covered by the Federal law saying that public money should not be used for lobbying State and local levels, or any level. My question therefore is, have you inquired as to whether our taxpayers' money is being used, through the ASSIST program or otherwise, to lobby at any level? Whether you consider it legal or illegal, have you made that inquiry, and is it being used? Secretary Shalala. Let me repeat again, we have taken the position that once the law was passed, any contract after the law was passed cannot use Federal money for lobbying. We also are taking the position that if there is a renewal of any existing contract, it ought to be covered by the law that was passed. So that we would catch, as there are any extensions or renewals of contract, any new people coming up. As to whether before the law was passed, which was October 1st, 1995, whether we have actually gone back to see whether anyone continues to lobby because they had a contract before that, I'm not sure I know the answer to that question. Mr. Istook. Madam Secretary, you were asked that a year ago. And now you're saying you didn't even check. Secretary Shalala. I think that we must not have understood the question at the time. We've been consistent in our interpretation of the law, and that is, any contract that was awarded after October 1st, and any extension of a contract after October 1st is covered by that law. But apparently we have not gone back to look whether we have sent notification to everyone who is on our contracts, or they've signed an affidavit saying that they understand what the rules are. But apparently, we have not gone back to see whether, even though it's a legal activity under our interpretation of the law. Mr. Istook. Madam Secretary, all those words amount to the fact that you didn't do a year ago what you were asked about and said you were doing. And you began your statement by saying, repeating, your words were to the effect of, repeating what I said earlier, that was not what you said earlier. Earlier, you gave Mr. Bonilla an answer designed to make him think that lobbying was not going on with taxpayers' money. You did not give the details that you gave now that said you've taken the contrary position that you believe some contracts are grandfathered in. I want to know how much of the American peoples' money, through the ASSIST program or anything else in HHS, is being used for lobbying expenses. And I might add that I'm also aware that in your contract documents, you try to avoid use of the term lobbying. You will usually use the term public policy. And a change of laws that is being advocated with our Federal money is lumped into a category of ``public policy,'' as though it was just some other aspect of policy, rather than lobbying efforts. So you said a year ago that you would check and take appropriate actions. Why didn't you do it then, Madam Secretary? Is it so unimportant to you? Secretary Shalala. Well, first of all, a year ago was 1996, and a year ago was the year after, some time after the law had been passed. Our responsibility is to enforce the laws once they're passed. And what I've indicated to you is that as of October 1st, 1995, any contract or any renewal of contracts by our lawyers' interpretations, are covered by this law, and we will enforce that. Mr. Istook. But you take the position that if you want to renew a contract, whether it was originally renewable by its original terms or not, if you have a contract which predated October 1st, 1995, it is your position that our Federal taxpayers money can be used to lobby, including lobbying at the State and local level. That is your position, correct? Secretary Shalala. Mr. Istook, I am interpreting the law as passed by the Congress. The law as passed by Congress, my understanding of that law is that it was not retroactive. Now, if there is a different interpretation of that law, and if---- Mr. Istook. If you had an interest in stopping lobbying with taxpayers' money, you could do it, couldn't you? Secretary Shalala. I probably couldn't, under the law. I'd have to ask my counsel. Mr. Istook. You wouldn't have to renew contracts that predated that, would you? Secretary Shalala. You know, all I could do is obey the law as the law is passed. I can't talk to a contractor that was contracted in the previous Administration about a new law that was passed that doesn't apply to them. So I could do my best and enforce the new law. And that's what you should hold me accountable for. Mr. Istook. Well, Madam Secretary, I will repeat, whether it's the ASSIST program or any other program that comes through HHS, we've been strung out long enough. I think it's time that we be told exactly how much of our Federal taxpayers' money, through ASSIST or any other program, is going for lobbying expenses. And I would like to have that provided in full detail immediately. [The information follows:] Offset Folios 072 to 108 Insert here Thank you, Mr. Chairman. Mr. Porter. Thank you, Mr. Istook. Ms. DeLauro. health insurance Ms. DeLauro. Thank you, Mr. Chairman, and thank you for your kind remarks at the outset of the hearing. I am delighted to be back. Madam Secretary, I am delighted that you are back. Thank you for your commitment to the children and families in this country. I also would thank the President for his initiatives in his budget and his continued commitment in this area. Let me also say to the Chair that I heartily endorse your comments and those of my colleagues, Ms. Pelosi and Mrs. Lowey, about negotiating the toughest and hardest 602(b) allocation. I want to see biomedical research increased. I am a direct recipient of that research, having survived ovarian cancer--so I know what research can provide. Also, this is a committee that directly affects the lives of working men and women in this country, whether it's their wages and their economics, whether it's getting their kids to school, whether it's ensuring their secure retirement, so we have a lot of different portfolios. And we need to address that. I think the 602(b) is going to be critical in our getting to where we need to be. A couple of areas that I wanted to address, if I can, Madam Secretary. I strongly endorse the President in terms of the initiative to promote health insurance for coverage of uninsured children in this country. I think this is critical in terms of prevention, and what we need to do at an early age to deal with the costs at the other end of this system. I am concerned, however, that while the initiative aimed at providing insurance for up to 5 million children, there's an estimated 10 million uninsured kids in this country. What happens to the other half under the President's plan? Secretary Shalala. Well, I think that you're to see this as a first step. What everybody would like to do is to make sure that every American child has access to good health insurance. And what we've laid out is a first step to get a system in place for doing this. For example, the 10 million American children, most of them are in working families. They are low income workers who don't have access to health insurance because their employer either doesn't provide it or it's too expensive for them to pay for it for their children. They may be in a situation in which their employer provides health insurance for them but not for their children. What we have done is gone back and looked at who these children are, and a little bit about where they're located, and said, of the 10 million, 3 million are actually eligible for Medicaid. But they're lost somewhere in the system. So we haven't asked for any money for those 3 million children. We actually, what we want to do is go out and find them, working with the States, working with private providers. In a number of States now where they've gone to full Medicaid managed care, the managed care industry is in fact out trying to find the children. You can look at a number of the States where we have these full managed care plans. So they're trying to find the children and get them registered. In another case, we know that we lose, some children lose their health insurance when their parents take a job. There are in fact a number of children who are enrolled in Medicaid, their parents are very low income. And suddenly, their mother gets a job, and they're above the eligibility limit, which may be above, just below what a minimum wage or just above what a minimum wage may be in that State. They need to be dropped from the Medicaid system. What the HMOs have said to us is, hey, let us keep these children on for a full year, they won't get lost in the system, and then we'll work with the States and try to find a way to keep them on that insurance, or to find a private sector way of keeping them on the insurance system. So there are another million children that we can take care of that way. We're talking about a grant program to the States, a decentralized program, Mr. Chairman, $750 million, in which the Governors, and many of them are already starting to think about what they would do, would work with the private sector. This money wouldn't be substitutional for employers, but perhaps help small employers, employers that have large numbers of low income workers, find a way to get a good health insurance plan for their children. They may just go out and buy an HMO package for those children. This is not a single expansion of an existing program. It's a way of finding children that are now lost in the system, of working with private employers and with the Governors to find the 10 million children and figure out a way. They are the most inexpensive group to find, to insure, and to make sure that every child in this country has insurance. We've done some of it through welfare reform. Many people would be interested to know that over half the States are going to extend their Medicaid beyond the one year requirement in the welfare bill. But the other half haven't even started to think about that, but they'd like to. So this is really a State-based program working with the private sector, or the insurance companies and the HMOs to try to get the kids covered. It's very modest, and some people have complained that we're only doing 5 million. We may end up doing more, if the insurance companies are as good as they tell me they're going to be in terms of identifying the children that are now out there that are eligible for programs. But this is a huge public-private partnership that will get us a huge gain by the end of this century, making sure that every single one of our children has good health insurance. Ms. DeLauro. That's what the point is, Madam Secretary, and I applaud it. I applaud these steps. My hope is that what we can do, through this committee and this Congress is to make sure that what we are doing reaches 10 million children. Let's find these kids. It is the least expensive way to move, toward healthcare coverage. And that ought to be what our goal is. And I know that that is the goal, your goal and the Administration's goal. And I think we ought to be committed to trying to help do that. Secretary Shalala. And I think my point is, this is really hard to do. This is not an easy step for us. This is a huge leadership and management job. head start Ms. DeLauro. With enormous ultimate payoff, to these youngsters and to costs in the health care system. I'm particularly pleased to see that the largest percentage increase in the budget is for Head Start. I think that that's great, and I support the goal of serving a million children by the year 2000. Can you tell us, Madam Secretary, what percentage of eligible children will be served in 1998? Secretary Shalala. I don't have the percentage. The money that we are requesting adds another 36,000 children, and keeps us on a path to the year 2002, where we'll have a million children in Head Start. As you know, this is also an investment in quality Head Start. Congressman Hoyer was a leader, as all of you were, in this. This is not just an investment in expanding the number of children. This is an investment in changing the program so it fits better with working parents, so it improves, so that we have serious quality improvement. I've reported to this committee before that for the first time in history, we have closed Head Start programs that don't meet our quality standards. More than 40 programs have been closed. No programs were closed ever in the history of the program. But we set the standards, we have a hundred or so that are on some kind of probation that need to come up to our standards. So this is an investment, as much in quality, as it is in expansion in terms of the number of children. Ms. DeLauro. Just to follow-up on that---- Secretary Shalala. It's 50 percent, by 1998. early start Ms. DeLauro. I think that this is the critical piece here-- what we know about Head Start, through and the comments that you made, and Congressman Hoyer's work in terms of the quality of the Head Start program now with three and four year olds. And I go back to something that I first said, if we've got youngsters who are prepared to learn when they get to school, we can begin to build their education so that they become some of the scientists at the NIH, where we want to increase the dollars as well. Let me get to the Zero to Three initiative, my final question, Mr. Chairman. How many infants and toddlers are going to be served in 1998 under the President's proposal, and what are the steps that are being taken to ensure the same kind of quality as in other Head Start Initiatives. This is a critical stage, and there are a whole lot of studies. Time Magazine, in the last couple of weeks, talked about the zero to three years, zero to five, the prime period of time when youngsters, minds are at their keenest to be able to learn. Secretary Shalala. In fiscal year 1998, we expect to serve 35,000 children in the zero to three category. In addition to that, as you well know, we have substantial investments in child care at the same time. We hope that Head Start will work with the child care providers to try to bring up quality in that area, too, so that we have a more seamless entry system. Ms. DeLauro. Thank you, Madam Secretary. Thank you, Mr. Chairman. Mr. Porter. Thank you, Ms. DeLauro. Mr. Miller. balancing the budget Mr. Miller. This is my third year on this Appropriation Subcommittee, and it seems we have a lot more agreement on some of the major goals like balancing the budget than we've started off with in the past two years. So we can work toward that common goal. The problem is, the goal is there, but the devil's in the details, and this is the committee where the details are. There is disappointment in the President's budget. I mean, the media hasn't been really kind in many ways, and the Washington Post called it a ``loser,'' David Broder said ``you haven't made the tough choices.'' The article yesterday in the Washington Post was very correct, you didn't make the tough choices. This committee is going to make the tough choices, we're going to increase NIH funding. There's a lot of support here on the Democratic side and Republican side for NIH funding. And yet the increase that you all provide for in your budget is below inflation. And so you want to put money in other programs, which is a cop-out. And I know you support, and the President supports NIH. But it's a game you're playing, you're going to let us make that tough choice so you can put more money in other programs. That's part of the problem about, the budget. But we still have the common goal and we will move in that direction, and we will increase NIH and you all will be happy with us, and we'll be happy about doing it. Let me ask a couple of questions specifically. First, how many specific programs, new programs, are being created in this budget, and how many programs are being eliminated? Secretary Shalala. Are we talking about the discretionary budget? Mr. Miller. No, the total budget, which includes the mandatory part, too. Because there are new ones, of course. Secretary Shalala. I would be happy to provide it for the record. [The information follows:] Newly Established and Recently Eliminated HHS Programs The FY 1998 Budget Request includes the following new programs: ------------------------------------------------------------------------ ------------------------------------------------------------------------ Mandatory: HCFA: Health Insurance for Unemployed $9.8 billion over five years Workers. Voluntary Purchasing Cooperatives. $125 billion over five years Expand Health Insurance for $3.75 billion over five Children. years HRSA: MCH--Abstinence Education............. $50 million for FY 1998 Discretionary: SAMHSA: State Data Collection Initiative.. $28 million for FY 1998 ACF: White House Adoption Initiative... $21 million for FY 1998 ------------------------------------------------------------------------ The following programs, funded in FY 1997, are eliminated from the FY 1998 Budget: [In millions of dollars] ------------------------------------------------------------------------ 1997 1998 enacted request Decrease ------------------------------------------------------------------------ ACF: Community Economic Development..... 27.3 0.0 -27.2 National Youth Sports.............. 12.0 0.0 -12.5 Rural Community Facilities......... 3.5 0.0 -3.5 Community Food and Nutrition....... 4.0 0.0 -0.8 -------------------------------- Total Programs Eliminated........ 46.8 0.0 -46.8 ------------------------------------------------------------------------ Mr. Miller. Are there any programs being eliminated or close to elimination? Secretary Shalala. Well, we, as you heard from the questioning on health professions, we certainly are, I have alist of programs that are not getting cost of living increase that we're beginning to phase down. As you know, the LIHEAP program is getting a billion dollars. That's a reduction from four years ago. There are a number of programs that we could lay out for you that are going down. The overall increase in this budget is below the rate of inflation. It's 1.4 percent, the discretionary budget. So you can imagine within that, we have to accommodate the National Institutes of Health, that has a substantial increase. So there is a whole list of programs that do not get an inflationary increase. Mr. Miller. Are there any proposed for elimination, or any that you expect to be eliminated over the next couple of years, or consolidated into other programs? Secretary Shalala. We did a number of those things in our last budget. I think that what I have is a list of programs that are reduced below the 1997 appropriations. We also have done, as you know, consolidations of a number of these programs. I could give you a list of little ones that were consolidated into a larger one, but that's not a fair test. A fair test is, have we reduced the number below the appropriation levels, and if you look at that list, we've made some very tough choices. medicare Mr. Miller. There are a lot of good, or nice programs you're offering, the problem is balancing the budget. This is not under discretionary, but let me ask one question about the mandatory side of Medicare. And this goes back to the tough choices that President Clinton, when he spoke off his prepared text for the State of the Union address, said he wants to help us make tough choices. One is means testing Medicare Part B. You had it in your proposal back in 1993 or 1994. But we've had it in our plan since. I don't know why you don't, or aren't willing to include that. Secretary Shalala. Well, first of all, we already means test Medicare. Medicare is means tested at the lower end, because Medicare pays the premium for low income beneficiaries. Second, on the issue of high income beneficiaries, we did indeed have means testing in our original health care plan. That health care plan also had coverage for everyone in the country. And the President has indicated that that's one of the things that he's prepared to discuss if it's put on the table as part of the negotiations. So we have not said no to that proposal. Mr. Miller. Yes, because you all didn't include it before, and we've included it in ours, and I don't know why you didn't include it. Secretary Shalala. We have some different things than you included. We have $100 billion in savings, in our proposal, $138 billion over six years. We reduce reimbursement rates, we modernize the program by cutting out a lot of overspending. We turn it into a much more businesslike operation, where we get good prices, so that we stop paying more for things than the private sector is paying, including everything from those glucose strips to walkers. I mean, there are a number of very strong steps we take in terms of modernizing the program. Mr. Miller. But you do not include means testing Part B. I can understand the argument of Part A, but the Part B, you know, somebody making $100,000 a year, I've got more seniors than anybody in the country. I talk about it in front of my wealthy seniors. I think we need means testing of Medicare Part B. Secretary Shalala. And Congressman Miller, all I can say is, the President has not said an absolute no on that issue. It's one of the things that you'll have in your proposal. We have some other things in our proposals that you may well not like. official time Mr. Miller. It's a tough choice that we're willing to take. Let me switch to another subject, and that's the question of official time. Official time is authorized paid time off from assigned duties to engage in union activities. Refining that, there's been a dramatic increase, such as in the Social Security Administration, there's over a 100 percent increase in the last three or four years. And it's up to different agencies to arrange their own policies and such. Could you tell me your policies on official time and has it dramatically increased in your agency or Department by how much. What are the conditions that people can use official time, and where does that stand? Because it is, as I say, in some agencies of the Federal Government, it's doubled in three years. And there's a problem there, I think. Secretary Shalala. Yes. I'd be happy to provide that for the record. I don't have those numbers with me. But we'd be happy to go back and take a look. [The information follows:] Offset Folios 124 to 134 Insert here welfare reform Mr. Miller. Welfare. In January I was in my district and spent time at welfare offices. In Florida, as you know, the legislature passed welfare reform in May, then it realized we would pass it in August. All of a sudden, they've got to implement their plan quickly, so there's a little disorganization right now in Florida. But I found cautious optimism by the people working in the system. I sat through interviews with people applying for food stamps. And I find that people within the system are really excited. They've been frustrated just dealing with paperwork and welfare, that they can't really help people get ahead. One of the questions that came up in my main two counties, Sarasota and Manatee Counties, was day care. One of the things we included in the plan was a lot more money for day care, which was a real positive, we all agreed. But I'm confused exactly where that, and I don't know if you know the answer right now, all that day care money went. It was almost a billion dollars a year of additional day care money that was going to the States. And the local communities haven't seen it yet. And they're frustrated, because they have all these people applying. Secretary Shalala. Right. The State of Florida has drawn down all their money, so they should call Tallahassee. Mr. Miller. Tallahassee hasn't responded. So I guess we just---- Secretary Shalala. There's only one State that hasn't drawn down their entire child care allotment, and that's not Florida. So they really need to call their State. And again on child care money, we made an assumption about how much would be needed. And that's another issue that we may need to revisit, but probably not this year. Again, we need to let this welfare reform bill roll out. We need to work with the States. But it's much too early to come to firm judgments about there's not enough of this or there's not enough of this or we need to do this, from our point of view. Mr. Miller. Well, I appreciate your saying you don't want to reopen the whole thing. But you're adding a lot more money. One of the areas, for example, you mentioned, one you stressed, are the seniors that are in nursing homes. Actually, the original welfare plan had an exemption for people over age 75 or something like that. And somehow or other that got dropped as it went through the process. And you know, I think we all agree that you can't send somebody back to their native country if they're in a nursing home right now. But---- Secretary Shalala. Or shift the costs onto the States, which I think is a much more fundamental problem. But this is only for people who are already here. Again, there are different rules for people that are coming in. Mr. Miller. Of the total amount of money, you're trying to add back to welfare, how much of it is in that program, about? Most of it's in other areas than that. Secretary Shalala. Well, there's a food stamp piece. Let us look that up for you. The Medicaid for children and disabled--it's $4.89 billion. Mr. Miller. Out of the $21 billion. Secretary Shalala. Out of the $21 billion. That's the Medicaid piece. Mr. Miller. One of the problems with the Medicaid, you talk about shifting elderly expenses onto the States, but then your budget has a lot of other shifts of expenses onto the States by mandates in Medicaid. In your budget proposal with children, for example, it's a shift in adding mandates. You say, well, we don't want to add one mandate, but then you're adding other mandates. So it's contradictory. Secretary Shalala. No, in this case, I think one way to look at the issue of elderly disabled people in nursing homes and these kids that were here before is, this is a transition amount of money. It's not, the new rules, you would have to have become severely disabled after you arrived in the United States, that we're proposing. These are people that were here under a different set of rules, under a different set of assumptions. And it really is a transitional period. The States are going to have a tough time absorbing this amount of money while they're doing everything else. So I think that once we sit down at the table and everybody sees that these aren't people that can go to work that we could work through this issue. Mr. Miller. Thank you. Secretary Shalala. And again, we don't want to shift people out of the hospitals, either. Hospitals in Florida clearly don't want to take on responsibility for people that don't have health insurance. Mr. Porter. Thank you, Mr. Miller. Mr. Dickey. budget priorities Mr. Dickey. Madam Secretary, you probably know that this subcommittee almost has an addiction to NIH. You know that. Secretary Shalala. I share it. Mr. Dickey. All right. Some $500 million is what we're going to have to add to what the President and you have recommended. Can you tell us where you think the cuts should be to support that increase? Secretary Shalala. No, sir. I'm here to present the President's budget. The President has made his choices. Mr. Porter. I said I don't think the Secretary will answer that, because she's supporting the President's budget. Mr. Dickey. Would you ask the President, then? [Laughter.] Are you saying by this that the cuts that would have to be put into place would endanger programs that you think are more important than NIH? Secretary Shalala. Well, the answer is that we laid out our priorities. And the discretionary fund had a 1.4 percent increase. Within that budget mark, we laid out and negotiated the Departmental priorities. And within that 1.4 percent, we were able to do 2.6 percent for NIH. There were, clearly, the Centers for Disease Control and Prevention, the Office of Children and Families, the Social Service block grant, I mean, there are a whole series of programs here which States and local communities have relied on. Most of them are not getting increases many of them are getting decreases. This country's commitment to substance abuse treatment, I mean, there are a whole range of programs here that we had to make choices about. And we chose to give the largest dollar increase to the National Institutes of Health, which is an indication of our priority for it. When considering a balanced budget, we're going to maintain some of this country's commitments, everybody's not going to be able to get the increase that we think they ought to get. medicare Mr. Dickey. I believe my staff has provided you with a copy of a recent editorial from the Wall Street Journal, entitled How To Avoid Medicare's Implosion. If I may summarize, the article promotes moving to an investment-based system instead of the current pay-go system. The article claims that 22 year olds today would use just 1.3 percent of their wages to purchase a policy to provide health coverage when they reach 65, compared with 2.9 percent that they are currently paying in Medicare taxes, without any assurance that they'll have coverage when they reach the time. In order to make the transition, a $2.59 trillion debt would be incurred to phase out those who are over 40 years of age or older. However, by keeping the tax rate of 2.9 percent through the transition period, the debt would be paid over a period of just over 50 years. Although I'm sure I'm leaving out quite a few details, the general concept seems logical to me, Madam Secretary. Could you comment on the investment based system approach? Secretary Shalala. Well, it may not be logical to young people who may end up paying twice in that system. Let me simply say that that article, like many other thoughtful articles, are options for the long term discussion of thefuture of the Medicare system. And there have been similar articles on Social Security, which is the subject of another discussion. And what the President has laid out in this budget is a 10-year program for Medicare solvency. What he has not laid out, though he has indicated that we should set up a bipartisan process, is a set of options for consideration for the long-term financing of Medicare. So Mr. Dickey, I actually would love to get into a longer term discussion about what I think the options are for the longer term. But we haven't even begun that discussion, either with Congress or within the Administration. What we are doing here is making sure that the Medicare system is solvent for 10 years within the context of a balanced budget. And recommending that we are ready to participate in a process for the longer term discussion, which I'm certain will include both that suggestion and many others. departmental contracts Mr. Dickey. Thank you, ma'am. Sometimes it's very difficult for appropriators to know exactly where all the money goes. I realize you will not have this with you today, but for the record, could you provide the subcommittee with a list of all of your contracts and subcontracts? Secretary Shalala. All of them? Mr. Dickey. Is it possible? Secretary Shalala. Yes. Yes, sir. Mr. Dickey. How long a list would that be? Secretary Shalala. Well, you're talking about all the NIH grants, you know, it's thousands of individual contracts. Because we basically are a contractor. Unlike the Social Security Administration, we don't sit there with people and sign checks. So we basically are in the contract business. We fund universities, we fund community-based organizations, we send money to States. And I'd be happy to do it, or to provide you with a description of the kinds of contracts. But either one, whatever you want. Mr. Dickey. I'd like the description first. Secretary Shalala. Okay. Mr. Dickey. Have you, you've never done this before? Secretary Shalala. Oh, I'm sure we have. I mean, we haven't actually, I'm not sure we've gone out and actually counted the numbers, but we certainly have that information. Because we know how many contracts NIH gave out, we know how many contracts CDC has awarded. What we could do is go through the programs and simply tell you whether we contract out and the number of contractors we currently have in that program. We'll do it. But remember, the Department was set up as a contractor. And that is to give the money out, in some cases there's a formula transfer to a State and local, to a State government. In other cases, it's a competitive contract that's peer- reviewed, substance abuse demonstration grants, the NIH grants. But that's the way we're organized. [The information follows:] Offset Folios 144 Insert here needle exchange program Mr. Dickey. The needle exchange research project endorsed by NIH has me very concerned. While I understand the purpose of the study is to try and prevent the spread of infectious disease, it does so at the expense of promoting illegal drug use. It seems to me the Department is assuming that people cannot change behavior, and it's creating policy to fit the lowest common denominator. Would you please comment on the Department's view on needle exchange projects, and whether NIH plans to proceed with the Anchorage research projects? Secretary Shalala. NIH did make a decision to go forward with the Anchorage project, as a result of an external review that the director of NIH commissioned. We have not yet come to a public conclusion on whether needle exchange programs are an effective way to prevent the spread of HIV infections. We do have some research out there, some demonstration programs that we're evaluating. We do have a report that will be coming to this committee some time this month, summarizing what research is out there. The Congress has set a very high standard before Government, other than these research projects, before the Public Health block grant, for instance, could be used for the purpose of needle exchange. It's a very controversial issue. It's our intention to lay out the research, what we know and what we don't know, for this committee. hiv vaccine funding Mr. Dickey. One last question. How much money are you budgeting for the development of microbicides and an HIV vaccine? Secretary Shalala. For microbicides, our commitment is $100 million over the next four years. That is an effort to develop something that women actually, this is the foams and gels, basic research in this area, that will help us to reduce the amount of sexually transmitted diseases, as well as HIV/AIDS. At the same time, the Department will launch an effort for an AIDS vaccine, which will be led by Dr. David Baltimore and-- let me see if I've got an exact number on what NIH is saying they're going to spend on vaccines. It's $148 million is the 1998 number. And that again will be part of the NIH researcher, investigator-driven competitive grant program as well as the research that will be done within the NIH. Mr. Dickey. Thank you for your time and your answers. Secretary Shalala. You're welcome. Thank you. Mr. Porter. Thank you, Mr. Dickey. I have to say, the gentleman from Mississippi, it's good to see you have moved to the second seat from the end seat. Mr. Wicker. fy 1998 president's budget Mr. Wicker. Thank you, Mr. Chairman. It's good to move up, and also it's good to have this particular capable member to my left, here. Madam Secretary, I just want to join the other members, first of all, and thank you for being here, and to say that your testimony today has reinforced my already held position that the President has a very effective and articulate spokesman. And we do have a lot of things that we've always been bipartisan about on this committee, and that we will be bipartisan about this year. We're after the same thing, better health for all Americans, and a better life for American families. In that regard, I would simply state that an honest balanced budget, with all of the benefits that that would entail, and at least the amount of tax relief for American families that the President has proposed, if not more, is also an integral part of the balanced budget and prescription for what we need in this country. Let me just take one more stab at the question about honesty in budgeting, in particular, with regard to NIH. I think what I heard you say is that you've got to make the budget come out right on paper. And I think everyone in this town that has really looked at this budget believes that the President has lowballed NIH, in expectation that this committee will come in and do the right thing and increase that funding. That enables the Administration to put money elsewhere and force this committee and this Congress to perhaps make tougher decisions. Particularly, did I understand you to say that in the out years, you fully expect those numbers to change? Secretary Shalala. Congressman, I think I was asked that question last year. I'd have to go back and look. And what I said was that, each year we would go through the same process. And that is, I would get an allocation from OMB and then we would go back and forth in terms of what our priorities are within that allocation. And while I'm well aware that the out years for NIH make it look like we would not come in with a 2.6 percent or even anywhere near that, in the out years, we don't intend to do that. Now, I have to do all this within the context of a balanced budget. So I'm not suggesting to you that we intend to create a deficit for the President within that, but that we will lay out our priorities year by year and hit those budget targets, the overall budget targets. Because that's exactly what we have to do with the balanced budget. Mr. Wicker. Well, I would just suggest to you, Madam Secretary, that the President's budget, as well as the Congressional budget, should be real. And when the President comes in, and when you come in and admit that what you projected, would get us there on paper by the year 2002, when those figures are not real, then there's no wonder that even the Washington Post, even David Broder and other commentators in this town are saying that this budget is a loser. Secretary Shalala. Congressman, we're not saying that at all. Whatever the President has laid out as his budget targets and we intend to go on this path towards a balanced budget. All I'm saying is within that number, we may have different priorities year by year. That's to be expected. I can't anticipate whether we're going to have a major breakthrough in AIDS, for example, that would change the dimensions of the NIH budget, or whether we're going to be successful at getting more kids health insurance, and that will change the dimensions of some other part of our budget, or whether the economy is going to stay up and we're going to move so many people so fast to work that we won't need as much child care money as we've projected. So we are committed to meeting our budget targets. We will do it every year. But there may be some variation, is my only point, within NIH and CDC and FDA and all the other parts of my budget. But let there be no question in your mind, this is not a sham, for any of us that had to go through the budget process this year. Each year, it will get tougher and tougher as we meet these budget targets. But the details, I just can't tell you three years from now what the exact number will be on NIH. We've laid out a path, and all I'm suggesting to you is that we've got to meet the overall number. But within that, we may have some differences. health insurance for the temporary unemployed workers Mr. Wicker. Let me move to the President's proposal to spend $9.8 billion over the next four years to subsidize health insurance for unemployed workers. The proposed spending in 1998 is $1.7 billion. It goes up to $2.5 billion in 1999, $2.7 billion in the year 2000, $2.9 billion by the year 2001. And then it's zeroed out in the year 2002, the year that we hope to obtain a balanced budget. And that mix is part of the President's so-called balanced budget by the year 2002. Now, I know that this is given to us as a four-year pilot program. But what do you anticipate the actual expenditure will be in the year 2002, if we go up incrementally each year, and then have to put in some number there in the year 2002? It certainly won't be a zero. Secretary Shalala. Well, first of all, that is not a permanent program. It's laid out as a demonstration for four years, with evaluation at the end of it. So somewhere in the third or fourth year hopefully we'll have some information, and we're going to have to have that conversation. This is the working family proposal for temporary unemployed workers. We'd like to try out this approach. And after that four year period is over, we will need to make a decision. Now, if we want to continue that program, we will have to accommodate it within our balanced budget numbers, in the same way that if we want to increase the NIH budget next year, it's going to have to be accommodated within their numbers. You can't gimmick this. Once you make a decision, as we have, to do a balanced budget, any changes we want to make, or any additional spending, has to be accommodated within the context of the balanced budget. We've laid it out very clearly, as a demonstration with an valuation. consolidated omnibus budget reconciliation act of 1986 (cobra) Mr. Wicker. One follow-up on that, and then I'll relinquish my questioning. How does that program interplay with COBRA, which is already a program which is in place to extend health insurance for individuals who have lost their jobs? Secretary Shalala. As you know, not everyone is covered by the COBRA program, particularly low income workers are not necessarily covered by COBRA. What this does is give the States flexibility to administer their own programs. They can administer this through Medicaid, through COBRA, or through an independent program. And remember, it's just, it's a short-term transition benefit. So it's not like someone will have this for four years. It's up to six months to help people be able to be on health insurance while they're between jobs. So it's a very specific way of trying to shore up our health insurance system, so we don't have a large number of people who don't have health insurance and add dependency onto our hospital system and onto our emergency health care system. This bill also conforms to changes in the Kennedy-Kassebaum bill in which the dollars could pay for COBRA costs. What I think they're going to be able to do is continue the COBRA coverage, so that the States can actually use the money to pay the COBRA costs. Remember, under COBRA, you can tap into the COBRA system to subsidize some low income workers so they can actually cover their COBRA costs. And that's the way the States can use the money. And again, the States would work out this program. But we're not going to have a bunch of people at the end of four years who have been on this program for four years, that suddenly are going to be left hanging. It's a short term program to help the States, again, fill this gap. Our overall health care strategy here is an incremental one. To get the kids who are now left out of the health insurance system because their parents are low wage workers, to find the workers who lose their jobs and are going to get another job, but are low income workers, again, and have lost their health insurance. We're trying to make sure that there aren't gaps in the health insurance system in this country, so that we can make certain that we're not putting extra burdens onto hospitals and other health care providers, that there's a seamless system of health insurance. So we're incrementally trying to fill these gaps. Mr. Porter. Thank you, Mr. Wicker. Madam Secretary, the State of Kentucky, as you know, has a rich heritage of leadership on this subcommittee, with Mr. Natcher, who has served on the subcommittee for 28 years, and the last 15 as our Chairman. And we are delighted to have another Kentuckian join us. And I might say, we are also delighted that she's on our side of the aisle. Mrs. Northup. adoption Mrs. Northup. I'll try to live up to your expectations, Mr. Chairman. Madam Secretary, I'd like to ask you about the adoption program. You said you hoped to work with the States. I'm very interested in that issue. Do you support efforts, or do you tend to involve the Cabinet in making children available for adoption earlier by ending parental rights? This is a debate that's gone on for some time. The longer those parental rights are not terminated, the older the children get, the longer it takes then to place them, the higher risk that they are emotionally and educationally behind. And the problems are just quadrupled, the longer it lasts. Secretary Shalala. First of all, I think we have to be careful of the Federal role here. Because many of these laws are State laws, and this is a matter of working with the States. We're trying out, with the States, some new ideas. Let me give you an example. In Delaware and Illinois, getting older children adopted has been an issue that they've been working on for a long time. So what they're trying now is permanent placement, a guardianship concept, so that the older child is not absolutely cut off their ties to their blood family. In fact, they may have some younger siblings. But they clearly, for a variety of reasons, can't live with that family. They go to another family that has legal responsibility for them, and grow up in that family, but they're able to visit their original family. That concept of guardianship gets them in a permanent placement in a secure place. I met a young man, with the Governor of Delaware, who's on his way to the Army, that had that experience where, for three years, it made all the difference in his life. But he said the best thing about the guardianship was that he had two families, one that really disciplined him and took responsibility. So we will be working with the States. But the decision of when to cut off and to move that child to adoption is a decision for the States. They have full authority to make that decision. In our judgment, there are too many children bouncing around from foster care to foster care for too long a period of time. And someone, some caring adult, within the context of a fairer judicial system, needs to make a decision so that that child is protected. Mrs. Northup. Well, I agree with you. But the fact is, the States, really people from both sides of the political spectrum, are on both sides of this issue. But the fact is that the responsibility and the numbers that you quote are higher. Because the States that take the longest time to terminate those rights create children that fall into that category of unadoptable. I'd also like to ask you, as the mother of two of these children, who are of another race, whether there are still policies in your Cabinet that make it difficult to adopt children across racial lines? Secretary Shalala. There are not, and the Federal laws are very clear in this area. And this again is an issue of State implementation. Like the adoption issue, what we're going to do with our initiatives is help judges create more magistrates to hear cases. They need some relief. Add social service case workers, so that they can get the documentation done and move children more quickly to adoption. But on the issue of interracial adoptions, the laws are clear. We sent out very clear directives, States need to implement those laws and to move children, no matter what their race or what their disability, more quickly into a permanent setting, whether it's with their original family or with an adopted family or with some kind of a permanency decision like a guardianship. These children deserve what every child deserves, and that is a loving family and a home. youth and tobacco Mrs. Northup. Let me ask you about tobacco. I may be the only person on this side of the table that's worked very closely with the groups that are curbing youth access to tobacco. I've been very interested in the Synar Amendment and the dynamics that it created in Kentucky. The dynamics for a State that was totally opposed to youth access laws and to implementation of any kind actually has become very involved in it. The Synar amendment is exactly what you said you supported, it measures success of programs, rather than deciding on the specifics of the program. Now that your agency has gone to FDA regulation, much to my dismay, I wondered if the Synar provisions have been just eliminated completely, or if you're still working so that States and local communities will become sort of the engaged community in discouraging kids from purchasing tobacco products? Secretary Shalala. No. The Synar Amendment has been implemented. Every State has complied with the requirements except for two, and we're working with them. There have been improvements. Coordination, I think, within the States, is getting better. But the States are required, in their applications for the Substance Abuse Performance Partnership block grants, to tell us what methodology they were using in conducting random unannounced inspections in 1996 and the results of those inspections. And I don't have Kentucky's results. But in Arizona, for example, they had 55 percent successful buys. In Louisiana 72 percent. This gives you some sense of how much out of compliance we have. Mrs. Northup. Madam Secretary, those are the baselines. Secretary Shalala. Right, exactly. Mrs. Northup. Nobody's in compliance with the final regulations, because we haven't reached those years. Secretary Shalala. That's exactly right. Mrs. Northup. They started with the baseline, and then they had three, four years where they could begin to work with their local communities and their State legislatures. When you said they're in compliance, all they've done is pass an original youth access law that complies with Synar. So the point is that FDA is stepping in and involving itself in youth access. However, we don't know whether what we had that was actually at the local level, that heretofore has always been seen as the most effective way to keep cigarettes out of the hands of children, we're not even waiting to see if this program would be effective. Secretary Shalala. Well, I think that the FDA regulations go beyond the compliance, these particular compliance issues, and move into advertising, for example, and other kinds of campaigns. So the FDA regulations are broader. We will be implementing both. As you know, the FDA regulations are currently before the court in North Carolina. So we will be hopefully moving forward with both of these. But the States have moved initially on the Synar Amendment. And as I indicated, there are only two that haven't filed with us. And we expect them to be in compliance right away. Mrs. Northup. Well, it took Kentucky a long time to get ``religion.'' Secretary Shalala. My understanding is it took your leadership in Kentucky to do that. uninsured children Mrs. Northup. Let me ask you one more thing. And that's about uninsured children. Do you have any breakdown on how many children actually have families who work, who have access to health care but have not decided to take advantage of those group policies? And what their actual wage rates are? I know we keep saying that some of them have low income jobs. Some of them don't. I'm aware of people that have reasonable jobs. It's always difficult to make that decision to transition in to buy the health care policy. Or like you said, the companies pay for the individual rate. They do not pay for the family rate, and the parents don't take advantage of that opportunity. Before we go launching a new program and become responsible for 10 million children, don't you think we ought to have a breakdown of how many of those parents could actually purchase and afford to purchase a policy for their children? Secretary Shalala. Yes. We know a lot of things about the kids that don't have health insurance. We know, for example, that 3 million of them are actually eligible for Medicaid, but are lost somewhere in the system. And we know that the vast majority of them, 9 out of 10, come from working families and that those families are low income working families. Some of them have seasonal employment, or work two or three part-time jobs at the same time. A variety of States have had experience in this area. So there's some experience out there. And what the States have done is, different things in different States. In Tennessee, for example, they decided just to cover all their kids and do it as part of the matching program with the Federal Government. In other States, what they've done is go out and actually buy an HMO for very low-income working families. So what we have suggested is, number one, without any additional money, we go out and find the kids that are eligible for existing programs and get them in. And number two, that we give the States some resources to help them design programs with the private sector to make sure that people have access. Now, we're not talking necessarily about free health care. It may be that what the States will do is put together a pool of low cost health care for low-income workers, so everybody is paid something as part of that. But what we have said is we shouldn't design a cookie cutter program for the whole country. What we should do is give some resources to the States, make sure the programs that are in place are maxed out so that they really do cover who they're supposed to cover, and then fit all these pieces together to get everybody covered. Mr. Porter. Thank you, Mrs. Northup. Madam Secretary, we very much thank you for your testimony this morning. You've been very candid and forthright with us. We particularly appreciate your staying beyond the appointed time to handle all the questions. There will be a number of additional questions for the record that we will ask you to answer. And the subcommittee will stand in recess until 2:00 p.m. this afternoon. [The following questions were submitted and answered for the record:] Offset Folios 163 to 354 Insert here Wednesday, February 12, 1997. OFFICE OF INSPECTOR GENERAL WITNESSES JUNE GIBBS BROWN, INSPECTOR GENERAL MICHAEL F. MANGANO, PRINCIPAL DEPUTY INSPECTOR GENERAL Introduction of Witness Mrs. Northup [assuming chair]. Good morning. We have at this hour the Office of the Inspector General, Ms. June Gibbs Brown, here with us to testify today. Good morning, and we'll let you begin. Opening Statement Ms. Brown. Thank you, Madam Chairman. I'm the Inspector General of the Department of Health and Human Services, and the primary mission of my office is to protect and recommend improvements to the programs and management of the Department. Let me give you some examples of our recent work. recent oig work We're nearing completion of a three-year investigation initiative called LabScam. LabScam is targeted at abusive marketing and billing practices at the Nation's largest independent clinical laboratories, involving the practice of running specimens through a single piece of automated multi- channeled laboratory equipment, and then billing separately for each component test. Working with other law enforcement agencies, our LabScam investigation has generated almost $500 million returned to the Government. We expect this amount will increase shortly to $823.6 million. Our office involvement in the Health Care Education Assistance Loan, or HEAL program, is another example of how we enforce program rules and return tax dollars. Through HEAL, HHS provides money to students seeking an education in a health- related field of study. Unfortunately, some loan recipients ignore their indebtedness. When this happens, we propose to exclude the individual from participating in Medicare, Medicaid or other Federal programs and negotiate repayment. Our involvement has brought back so far $39 million to the program. Our program inspection activity continuously produces recommendations that improve program efficiency and effectiveness and save taxpayer dollars. A report on Medicare prescription drug allowances is an example of this. Based on 1995 expenditures for prescription drugs, we found that Medicare pays approximately $450 million more than Medicaid for comparable drugs. better ways of doing business Since the beginning of my tenure in November of 1993 as the Department's third Inspector General, I have aggressively sought new and better ways to stretch our resources and maximize our impact. Among these initiatives was the establishment of the executive level health care fraud policy group, through which we and the Department of Justice have jointly managed the development of our investigative cases. We also work with States to conduct joint audits of the Medicaid program. Another example is Operation Restore Trust. This is an interdisciplinary project in which Federal and State agencies join to fight fraud, waste and abuse in home health agencies, nursing homes and the medical equipment and supply industry. The two-year demonstration project, which ends this spring, targeted five States which account for about 40 percent of the Nation's Medicare and Medicaid beneficiaries. One example of the success of Operation Restore Trust was demonstrated in virtually eliminating more than $100 million per year in inappropriate payments for incontinence supplies. We have a chart here which shows that, as you can see, in 1994 we reached a peak in payments. We analyzed that $104 million in annual savings could result from getting rid of these inappropriate payments. The problem was detected, and we alerted HCFA and the Congress to this problem. We did a nationwide investigation. There were 20 investigations that took place. We also did a program inspection, and new Medicare carrier guidelines were produced by HCFA. There was also a payment review crackdown. The result was, the problem was contained. My office is encouraging the health care industry to voluntarily institute internal controls by implementing Medicare and Medicaid compliance programs based on model compliance programs that we are developing. We recently developed a model for clinical laboratories, and we plan to develop additional models for other health provider industries. We will make them available through the internet. We're also developing review protocols. This is a method that provides an alternative to having my office conduct all the reviews of provider billing practices and leverages our audit impact. To cite one example, we found substantial widespread billing problems at teaching hospitals. We then established a review protocol that a hospital or a physician group can use to conduct an independent review at their own expense. A number of voluntary settlements are expected from these reviews. The first settlement using this protocol resulted in an agreement to pay $11.9 million back to the Government. work underway and planned We also have a full schedule of work planned or underway this year and for fiscal year 1998. For example, in Medicare and Medicaid, we will continue our high priority work in the areas of home health, hospice, medical equipment and supplies, and nursing homes. And we'll strengthen our work regarding reimbursement for hospitals and physicians. Regarding Administration for Children and Family programs, we plan to evaluate various options and methods to improve child support collection. For the Public Health Service, we intend to assess the adequacy of the Food and Drug Administration's controls over investigation of new drugs, review FDA regulation of institutional review boards, and evaluate FDA device safety alerts. Further, we're going to step up investigations of Public Health Service fraud. These and other projects will contribute to our continuing oversight of the Department's programs. Mr. Chairman, we appreciate the opportunity to discuss our accomplishments and planned work. There's much more in my written testimony, and I'd be happy to answer any questions. [The prepared statement follows:] Offset Folios 362 to 369 insert here Mr. Porter [assuming chair]. Ms. Brown, thank you for your good statement. I have to apologize to you, I do have other subcommittee assignments, one of which is Foreign Operations. And Secretary Madeleine Albright is next door, and I had to get through my questions before I came here. I have to say, you provided the opportunity for our very newest member of the subcommittee to chair already, which is probably unprecedented. And I'm delighted that Mrs. Northup could take the chair. In accordance with our rules, I would call on Mr. Miller. Mr. Miller. Thank you, Mr. Chairman. You have a tough job. I was just looking at your resume, how you've been in such a wide range from Pearl Harbor to the Defense Department, now to HHS. I guess there is a commonality there, too. Ms. Brown. Yes, there is. teaching hospitals Mr. Miller. An issue that I just mentioned to you that I would like to have you discuss and explain is the whole issue of IL-372 and the medical school issue, especially the retroactivity. Would you explain the logic of this? The medical schools in Florida, I guess all over the country, are really concerned, especially about the retroactivity. You know, the logic and where it's going and why it was created, so give me the background of it, please. Ms. Brown. Okay. My Deputy, Mike Mangano, is here. He has headed some of this effort, and I'll let him explain it. Mr. Mangano. Thank you very much, Congressman. What we're doing in this particular study is taking a look at two issues at teaching hospitals. The first issue is what we call upcoding; that is, when a hospital has billed for a service that is more expensive than the service they actually delivered. The second one gets to the issue that you're raising, and that is the IL-372. What we're doing there is taking a look at how we reimburse physicians when residents at the teaching facilities deliver those services. Back at the development of IL-372, which goes back over 20 years ago, that individual provision made clear that for a physician to be reimbursed for a service at a teaching hospital, that physician either had to deliver the services themselves or be present when the resident was delivering the services, to guide the resident and teach the resident how to perform the diagnosis or the treatment. Over the years, there have been a number of questions that have come back to the Health Care Financing Administration challenging the issue about presence of the physician. The Health Care Financing Administration has been continuous and resolute on their policy that to actually get paid for services, you actually have to deliver a service. There have been a number of questions that have come in from the industry groups. Every time those questions come in, the response back from HCFA, and our longstanding policy, is you must be present. Now, those individual physicians themselves are paid through the graduate medical education program that the Department administers. So they're paid through that and other sources. But when their residents actually deliver that service, they must either be present or deliver it themselves. Mr. Miller. Is this part of Operation Restore Trust? Mr. Mangano. No, it is not. Mr. Miller. But they have to be present. I mean, I don't disagree with the policy, I guess I'm more concerned with this retroactivity, and also the issue of fraud. I guess there have been two medical schools in Philadelphia that have already been assessed a significant amount of money, and then when it gets to the fraud issue, it doubles or triples the costs. And so you've obviously got all the medical schools' attention very quickly on this issue. But has the interpretation of HCFA always been that you had to be present? That just started as of last year, correct. It may have been in writing, but that's not been the widespread acceptance of it, right? Mr. Mangano. My understanding is that that was the policy when they created IL-372, and it has been the consistent policy every year thereafter. The question about retroactivity has been a question that has been raised only in this last year. HCFA revised its regulations that deal with attending physicians just recently, in 1996. At that point, some of the industry groups claimed, ``Well, okay. Now you've clarified the policy for us, but don't go and apply the penalties retroactively.'' But that individual regulation did not change one iota the presence issue. That presence issue has always been in existence. Ms. Brown. The thing that changed, Congressman Miller, was the fact that the physician had to be the attending physician. HCFA has actually expanded their interpretation. They now realize, in medicine, that there may be several attending specialists, and not just one attending physician for a particular patient. So they've expanded that interpretation to make more people eligible as attending physicians. But they haven't changed the policy that the person has to be there. Mr. Mangano. May I add one other thing, too, Congressman, which I think will help this issue. HCFA and the Medicare program pay their bills through a series of contractors located all across the country. They process the bills. It is possible over time that an individual contractor may have given incorrect information to a teaching hospital indicating that presence was not required. One of the first things we do when we begin a study like this is (and we have gone to the industry groups and told them) that we will go to the hospital and we will look exactly at the kind of guidance that was given to you by the carrier. We'll also look at your own internal procedures in the hospital to determine what you really did know. And if you honestly had incorrect information and an incorrect understanding of that, that will all be taken into account. So that gives an added protection to those hospitals. In the two reviews that were completed to date, one was a review done by our office. The other was a review done, as Ms. Brown talked about, under this new initiative we have, where hospitals can actually do the audit themselves, as long as they use our protocol. And if they come up with findings that are negative towards them, they need to repay that money. In both of those instances, there was no doubt that the carrier had given them very correct information, and that their internal policy guidelines within the hospitals recognized that presence element. There was no doubt inthose first two cases. civil false claim act Mr. Miller. The dean of the medical schools talked to me, as you can imagine. So it raises the issue. I don't even have a medical school in my district, and I'm not a lawyer and I'm not a doctor. I'm just sharing their concerns. One of the concerns is, that HCFA has acknowledged, this is a vague issue. They show me that back in the Federal regulation it was vague, perhaps necessarily, on the presence of a physician during outpatient services. This was issued in 1995. And they don't disagree with the basic idea. I see this all the time, such as the whole Superfund program, the whole fight over Superfund is retroactivity. And it drives you crazy. It drove me crazy my first year, when they passed estate tax, they made it retroactive back to dead people. And I just said, well, that's not fair, the fairness issue. Tell me about the fraud issue. These are not doctors that are going to intentionally going to get wealthy on cheating, because normally it's not lucrative. I'm not sure exactly how they get reimbursed, but they're all concerned because it doubles or triples damages. So why are we going after the fraud issue? Ms. Brown. That is the Civil False Claim Act. And it is a civil action. It is not a criminal action which might be implied when we say fraud. However, there is a penalty if they knowingly violated the rule. And so there are penalties assessed. We have a couple of instances, I believe there's 20 going on at the current time, where there is reason to believe that somebody had some misinformation. Of course, we will temper, possibly even have just a single repayment, where somebody honestly misunderstood the problem. So we are trying to take that into consideration. The hospital groups have visited me on a regular basis with notebooks full of quotes. We have checked those out extensively, and we have responses for them. So I would be glad to discuss this at any level you like. Mr. Miller. So you're saying that this has always been the law and that there is no vagueness in the interpretation over five years. I mean, were doctors reimbursed back in 1990, have medical schools always been this way? Mr. Mangano. This is the policy that's been in existence since IL-372 was issued in 1969. So it is a longstanding policy. Mr. Miller. Well, why was HCFA reimbursing the medical schools all this time, and why are there tens of millions of dollars in individual hospitals? Mr. Mangano. They had not caught the problem, and it was only recently brought to our attention. We went out and did the review. That was the first review that we did. We discovered the problem there, and then we looked at another hospital and said, wait a minute, this is widespread. HCFA would really have a very limited opportunity to discover this problem. I would add one other thing that may be helpful. The primary organization that represents the teaching hospitals, the American Association of Medical Colleges, has been questioning the retroactivity for a long, long period of time and has raised this issue a couple of times with HCFA. And I can show you letters back from HCFA that absolutely clarify this to them. The most important one in my mind was a letter in 1993, which said, absolutely, you must be present. When we go out and take a look at the hospital, we don't even look at the prior years; 1994 is the first year that we'll even take a look at when we do our review. So that even if a teaching facility had incorrectly asked for reimbursement for their teaching physicians up through 1993 when they did get the absolute clear documentation, if they cleaned it up, and there was no problem in the following year, we won't find anything. Ms. Brown. And it's only if we find something subsequent to 1993 that we then go back and look at prior years. Mr. Miller. What took effect on July 1 of 1996? Is that a new ruling of IL-372? Mr. Mangano. No. I believe what that is, is a new regulation that the Health Care Financing Administration put out, that generally dealt with the issue of attending physicians. And that went into effect. Mr. Miller. So there's no question about it after July 1 of 1996, that's clear. The question is, since 1969, the generally accepted practice within medical schools is, as long as the doctor signed a note covering that intern, that qualified then you were reimbursing them for the past 15 years that way. And then you said, well, wait a minute, we're not going to do this anymore. Mr. Mangano. That may be the case, but HCFA would have no way of knowing that a physician at a teaching hospital had submitted a bill for a patient unless they went out and audited those records and checked back. Mr. Miller. It's hard to understand that. If it's a generally accepted practice within the entire teaching hospital throughout the country, I'm assuming that's the case, that HCFA couldn't understand, there have been enough physicians that have been through the medical schools. Mr. Mangano. It may have been the practice, but HCFA over the years has continually said it's an incorrect practice, and has issued guidelines on any number of occasions. There are indications in the internal documents that we found at the hospitals themselves, the two reviews that we have completed, indicating to us that the hospital staff knew they were violating the law. Mr. Miller. Yes, okay. Explain to me one more time and clarify the issue of why it's fraud, I mean, why are you going after these double, triple damages. Ms. Brown. That's provided for under the Civil False Claim Act. So it isn't being treated as criminal. But if a hospital knowingly overcharged, we can collect not only the amount overcharged, but either double or treble damages. Mr. Miller. So the hospitals in Philadelphia, one was $20 million and one was $30 million. Mr. Mangano. University of Pennsylvania was $30 million. Mr. Miller. I mean, this could bankrupt some hospitals, medical school hospitals in the country. So I need some more information to understand why, if it was generally accepted principles before last year, why wasn't it stopped before. I'm concerned about the retroactive issue. Mr. Porter. Thank you, Mr. Miller. Mrs. Northup. prescription drug costs Mrs. Northup. You talked about the study that you did comparing the cost of prescription drugs from Medicare to Medicaid. I presume your difference in prices was comparing the price of the same prescriptions? Ms. Brown. Yes. Mrs. Northup. And one program was obviously paying a higher price for those prescriptions. Did you do any comparison with how those compare to the costs of drugs used in the private sector? Ms. Brown. Yes, that was included. This study is being done; we aren't trying to collect money back or anything. We're trying to show whether or not Medicare is overpaying for the prescription drugs. They're limited on the number of prescription drugs Medicare pays for, for example some cancer drugs, some used in connection with certain therapies, and there are a few others. But Medicare really has very limited coverage for that. And what coverage is available is usually under Part B of Medicare. We looked at what was being paid for those drugs, not only under Medicaid, but also in some cases, we were able to see what was paid on the retail market. And there were substantially greater amounts being paid by Medicare. Mrs. Northup. Can't Medicare negotiate for prices for those drugs at the same level that insurance companies negotiate, and lower it not just to the Medicaid level, but to the private pay amount? Ms. Brown. No, Medicare does not have the authority under the law to negotiate for these prices, or to bid for anything like durable medical equipment or others. Mrs. Northup. Well, if Medicare can't negotiate, why would we compare them to Medicaid? Ms. Brown. Well, we weren't being critical of what Medicare had done. We're providing this information to the agency and to the Congress to see whether or not they, knowing what is happening out there, feel it's appropriate to change policy in this way. Mrs. Northup. Okay. So, if we were going to change policy, we might change the policy to pay the price that they pay at the retail market. Ms. Brown. That's possible. There is an average retail price that's associated with these drugs. However, that average retail price is not some kind of a derived price based on what people are paying. It's very much like the sticker on a new car. It is a price that the drug company put on that particular drug. Mrs. Northup. Right. Ms. Brown. So it doesn't really have any meaning. And in reliance on that, we have been paying more than the rest of the market. Mrs. Northup. In fact, it's possible that if you looked at it, that the drug companies have been willing to sell it via insurance companies. In other words, if I have a private plan, it might be that they actually are willing to sell the drug for considerably less, because my insurance company will only pay them so much. Ms. Brown. Yes, that's possible. heal loans Mrs. Northup. Let me ask you also about the repayment of HEAL loans, the student loans that you said people were reneging on. You said you have moved to make sure recipients of HEAL who default didn't then have access to Medicare or Medicaid benefits. Ms. Brown. No, if I said that, it's slightly different from that. They will be excluded, if they are billing now as graduate medical people. They cannot bill a Federal program for any medical care given, unless they either repay their loans or negotiate some kind of a payment schedule to repay the loan. Mrs. Northup. Can you just move to collect the money? I mean, what if they aren't in a position where that's relative? Ms. Brown. Well, they can negotiate. We provide the information to HCFA. And we, of course, send out the notices that we will move on the exclusion action, unless they repay the loans or negotiate in order to repay. Now, somebody who might be taking care of low income people or something and not making much money can certainly negotiate to pay so much a month. We do not exclude them, as long as they keep up those payments. If they renege on that payment schedule, then they're excluded until the entire amount is repaid. Mrs. Northup. Do you have any idea what the total default amount is? Mr. Mangano. No, we don't. What we can tell you is that each year when there are defaults, the Public Health Service will give those loans to us and we'll work those cases. To date, we've had over 600 individual health care providers enter into repayments. And the total amount that has either been repaid already or is on schedule to be repaid is almost $39 million. Mrs. Northup. I would appreciate the information on what the total amount of default is, and how many students are defaulted and paying. Are there 6,000 that are not, or are there 1,000 that are not? What is the total amount that is owed? This information will tell us if we can judge whether or not we ought to be more aggressive than just excluding them from enjoying the benefits of those programs. types of OIG audits And lastly, I'm interested in knowing when you do an audit, whether your audit is strictly financial and making sure of the best accounting practices, or whether you actually do a management audit? Ms. Brown. We actually do thousands of audits every year, and there's a full range of audits. We do a lot of management or operational audits that look at specific programs and how they're operating, and analyze that data. Financial statement audits are required of under the Chief Financial Officers Act. We're doing those now. HCFA will probably be the largest one that's ever been done in the world, because there are so many entities that are being audited. And it's costing about $9 million this year. We also do all kinds of other financial audits. I have a staff of people in Kansas City who analyze all the audits that are contracted out. So the Single Audit Act audits and so on are all sent there for analysis. We make sure that the collections take place that are the result of those audits. Mrs. Northup. Then some of your audits do show, for example, that priority goals and the most essential needs aren't where the money is going? Ms. Brown. Yes, those are very typical of the types we do. Mrs. Northup. Have you ever done audits in the area of mental health centers? As we provide more and more grants to community health for children's needs and so forth, many of those needs are easier to document, making it easier to reach out and touch the population they're directed to. But the most profound needs, the homeless, are not met. So we're pouring millions and millions more dollars into these community health centers. And in Kentucky I see ours focusing on stress management, weight reduction, and those sorts of issues. I'm not saying they aren't important. But the more critical, the more profound needs, the needs that are sort of harder to reach out and touch and bill for, are not being met. Ms. Brown. That is the type of thing that is subjected to audit, or we also have an inspection and evaluation group that does a lot of work in this area. The mental health area is one that has been identified as a priority. Because we know there are many problems in that area, we will be doing a lot of work in that area this year. Mrs. Northup. Okay. Ms. Brown. There are other kinds of problems as well, such as, we had one complaint where an individual had placed his mother in a home. She was able and mentally alert, and it was more of a residence type facility. There was a bulletin board item that said, come to a get acquainted coffee, and he urged her to go to that coffee. Later he found and turned the information over to us, that for everybody who attended that get acquainted coffee, Medicare was billed for mental health services for group therapy. So there's a range of abuses going on in this program. And we will be looking at that. We will be trying to identify that the highest priority work is done, turn that information over to management and, of course, make it available to the Congress in case they need to make any changes in the way it operates. teaching hospitals Mr. Porter. Thank you, Mrs. Northup. Ms. Brown and Mr. Mangano, we have had brought to our attention the question that Mr. Miller raised with you about audits of academic health centers. And I want to suggest that this is a very sensitive matter, that academic health centers, from my perspective, are already under great siege in our health care system. Because as HMOs have taken over more and more of the private sector, and to some degree the public sector as well, the flow of funds to these vital teaching institutions has diminished greatly. And the Congress, because the President vetoed the bill, and because no other legislation was forthcoming, the Congress has done nothing to try to protect them and assure that they survive in the future. So they are very, very vulnerable at this point in time, and also critical to future health care in this country. This is where our physicians and other health care professionals are trained. And without the existence of these facilities, this country and our health care system is just in deep, deep trouble. So first, I find it troubling that the audits are occurring at the time they are, not that it isn't your job. Obviously, it is your job to enforce the law and make certain that it is obeyed. But it is, I think, a very difficult time for these facilities, and one where if we are going to be collecting $30 million from one and $40 million from another, we may find them closing their doors and unable to function. This worries me, to start with. Second, I'm very concerned with information that we have that has pushed at least one of the institutions towards settlement, with threats of criminal prosecution and the collection of double and treble damages, which I understand are in your discretion and not mandated by the law. This, to me, is exactly where the IRS has got itself into trouble with the American people. And I do not want to see our Inspector General system being accused of heavy-handedness and threats that, in order to get a settlement in any situation, that may redound to your disadvantage and the disadvantage of the system. Yes, you have great independence, and yes, you have great power. But it seems to me that has to be exercised with a great deal of discretion and subtlety, I might add. And the word that we have coming back is that that has not been the case, and that concerns me very greatly. Please respond at any time. Ms. Brown. It is not our choice, this is the law. And we are limited to the enforcement of the existing law. There's a qui tam suit here by an individual, and the Department of Justice is in it. And we just look at the circumstances. We have gone a long way into looking at notes and records of the hospital and so on to see whether or not they were aware, whether there was any deliberateness about billing, whether they had received some information that might have misled them into thinking this was legal to bill when the physician actually didn't appear or perform a service. We have to enforce it as it is. And we enforce the damage level provided for by law, based on the amount of knowledge they had of what was going on. Mr. Porter. Well, one would have to assume that if this was widespread, where all the teaching hospitals were doing virtually the same thing, and we're talking about scientists here who are intelligent people, and who generally try to do what is expected of them in terms of meeting their legal requirements, if it's as widespread as it seems to be, it immediately raises the question as to whether anybody understood what the standard was and whether there was sufficient notice in the system that people were doing something they shouldn't be doing. I don't think there is any doubt--let me read you a statement that you might want to respond to in a general way, and then I have some specific questions. The statement is in a document recently published by certain of the academic teaching facilities. It states that, ``In short, as currently implemented, the PATH initiative amounts to an IG program to coerce medical schools and teaching physicians into forfeiting millions of dollars of fees billed in good faith by threatening punitive damages if they do not settle audits based on the retroactive application of HCFA regulations. This process is fundamentally unfair. In no event should teaching physicians be subject to punitive financial or criminal penalties based on the IG's retroactive application of HCFA regulations.'' That seems to me to be a fairly strong reaction to what is happening here from a group that has a great deal of credibility in our society, and isn't generally known as lawbreakers. And I would like you to respond to that, then I have a series of particular questions to get at the issue itself, the retroactivity. Ms. Brown. Well, I feel that's very strongly worded and not a totally accurate statement. I would be happy to have someone meet with whichever members of your subcommittee would care to have it done, where we could show some of the reasoning, where we could actually show books and records of knowledge of this prior to the billing. I think that is an irresponsible statement. Mr. Porter. All right. Let me continue. If I understand correctly, the billing by teaching physicians, what you're reviewing are two things, the documentation supporting the physical presence of teaching physicians, and secondly, documentation supporting the level of a physician visit, the evaluation and management services that have been billed. Is that a good statement? Mr. Mangano. That's correct. Mr. Porter. With respect to the physician visit issue, can you describe what standards you're applying in these audits to determine whether the documentation in the medical record supports the level of physician visit billed? And in describing the standard, could you discuss, and I'm going to mention them all and then I'll go back and do them, what standard was HCFA employing during the period that you're auditing? Is it true that HCFA had instructed all its Medicare carrier subcontracts to severely limit their audits of physician visit coding from the period January 1, 1992, until HCFA issued documentation guidelines in November, 1994? Is it also true that after HCFA issued these guidelines in November of 1994 until August 1, 1995, that the carriers were instructed again not to audit physician visit coding for the purposes of recoupment, but rather for educational purposes, so that physicians could be trained as to the new documentation requirements? And finally, prior to 1992, was there a completely different coding system in place for physician visit services? And if so, how did the documentation requirements for the pre- 1992 codes differ from the post-1992 codes? Let's go back to the first of those. What standard was HCFA employing during the period that you're auditing? Mr. Mangano. My understanding is that HCFA has always required documentation of services. Their simple philosophy is that we pay for services when they're delivered. And they were looking for documentation that would show that a physician delivered the service or was there when the resident actually performed that individual service. That hasn't changed over time. That has been the policy of HCFA back to the 1960s. Mr. Porter. Well, is it true that HCFA had instructed all its Medicare carrier subcontractors to severely limit their audits of physician visit coding from the period January 1, 1992, until HCFA issued documentation guidelines in November of 1994? Mr. Mangano. The one thing that I can think of that would relate to that was a request that was sent in from one of the contractors to HCFA, saying that they wanted guidance from HCFA as to how to implement this. If my memory is correct, that individual contractor had not been applying any audits against the teaching facilities, and had not been interpreting this policy in the correct way. The HCFA response back to them was, ``Well, don't do anything different now. Wait until we get the regulations out.'' But that was directed, if it's the same one I'm thinking of, to only one of the contractors. We've only completed two reviews, so we only know that the problem exists in those two cases. We've invited other hospitals to come in and join this process. We're doing two more audits, and 15 hospitals have volunteered to do the audit themselves. They are already into the program. So once we have a better idea of what the other hospitals are doing, we'll know how pervasive this issue is. teaching physicians Mr. Porter. You know, you've got academic teaching physicians who are very, very important people in our society scared to death they're going to go to jail. This is not, to my way of thinking, a good thing for our country. Yes, it's a good thing to find out whether there's outright fraud. But it seems to me there's a large question as to whether doctors knew what they were supposed to do and what documentation was supposed to be provided. Mr. Mangano. Mr. Chairman, you're absolutely right. And that's exactly why, when we start every one of these audits, we go into the institution and ask, ``What are your internal policies; did you make it clear to your physicians that they needed to be present?'' And it's only in those instances where the Justice Department does the negotiation with the hospitals to determine whether any fines are to be levied in that case. But we found, for example, one of the contractors in one of the reviews that we're looking at that did not give correct information to the hospital. And that is, they said that the only thing that was required was that the physician initial off on the resident's visit. And in that case, that is going to be sufficient for us, because that's the information they gave to them. So when we look at them, we are going to consider that. In the two cases that we have completed, we have internal documents that said they knew what the policy was, and they directed people to do otherwise. Mr. Porter. Well, that would of course be a different matter. Mr. Mangano. Right. And it's sort of interesting, because at least in one of the hospitals, they brought in an outside, independent consultant to review their records and they said, ``You know, you've got a big problem here.'' Eighty percent of these claims for physician services are incorrect. So that's the kind of documentation we've seen in the two hospitals that we've been at so far. upcoding Mr. Porter. All right, let me go on with the next question. And this is again about the physician visit issue. Is it also true that after HCFA issued these guidelines in November of 1994, and you are auditing prior to that time as well, it's my understanding, until August 1, 1995, that the carriers were instructed again not to audit physician visit coding for the purpose of recoupment, but rather for educational purposes, so that physicians could be trained as to the new documentation requirement? Mr. Mangano. I'm not aware of that. It's possible that it went out, but I'm not aware of that particular document. Mr. Porter. Prior to 1992, was there a completely different coding system in place for physician visit services? Mr. Mangano. If you're referring to how they individually code the documents, I'm not sure of that. But when we go in there, we look at the policy that was existing at the time, and we determine whether the codes are correct. That's how we determine whether there's been an upcoding going on, as opposed to a correct billing. There have been physician visit codes that have changed over the time. But we only look at the codes that were in existence at the time we do the review. Mr. Porter. Because you're telling me you're not sure on a lot of these things, I'm going to ask you to respond in writing to each of these questions, in detail. Mr. Mangano. Sure. Mr. Porter. Because I think that there are--the whole tenor of this raises some questions that are very disturbing to me. And I think we have to get to the bottom of whether there is retroactive application and whether, in fact, the physician out there who was performing the services knew what was expected of him. Because only then, it seems to me, can you find fault with them. If you have people that were doing what they thought was right and performed the services, then obviously, when you talk about a facility telling their physicians to do something they know is wrong, it's a different question. teaching hospitals--physician presence Let's go to the physician presence issue. Can you describe how your office interprets the standard set forth in 42 C.F.R. 405.2521(b), the regulations in place during the period being audited under PATH, and can you address these issues? What significance, if any, does your office place on the wording of the physical presence requirements being different for major surgical procedures and other complex and dangerous procedures in paragraph (b)(2) than it is for all other procedures in paragraph (b)(1)? Mr. Mangano. Well, not having the document in front of me, I'd have to look at it. But I can tell you that the physician must document. Whether it was for a major surgical procedure or any other procedure that the physician is going to bill for, physicians must document that they were present at the time that the resident delivered the service or they delivered it themselves. We would look for notations in the medical records. Hospitals base everything on medical records, good medical records. So we look at the medical records to determine whether there was any indication, either by the physician or the resident, noting that the physician delivered the service or was present to assist the resident. Mr. Porter. But the question is, aren't there significant differences between major surgical procedures and other complex procedures and an average physician action under paragraph (b)(1), which provides different regulations when you have a lesser procedure, apparently? Mr. Mangano. My recollection of that instruction is that it goes on to state, and gives examples in which the physician is required to have that presence or to deliver the service itself. It does lead off with the major operations itself. But in terms of documenting whether the physician delivered the service or was present, it's the same for both. They must note that that has happened. Mr. Porter. What significance, if any, do you place on the language in paragraph (b)(4) that the attending physician should personally examine a patient ``within a reasonable period after admission''? Mr. Mangano. I believe that is a policy of HCFA. Mr. Porter. And are you looking at the reasonableness of the period? What are you looking for there? Mr. Mangano. I believe that provision deals with establishing the notion of an attending physician for the individual patient. Mr. Porter. Right. Mr. Mangano. That would be important to establish the attending physician, but would not have any importance, in my mind, in terms of whether a physician actually delivered the service. The physician would be able to bill for something like that. Mr. Porter. What documentation must be provided for an attending physician to bill a ``personal and identifiable'' service? What sort of documentation do you need then? Mr. Mangano. They would have to note in the medical record that they had done that service. Mr. Porter. And? Mr. Mangano. And we give wide flexibility to that. Mr. Porter. What requires them to do that? Mr. Mangano. HCFA regulations. Mr. Porter. HCFA regulations. And which regulations are we referring to, the ones adopted in November of 1994, or other HCFA regulations? Mr. Mangano. These regulations would go back to the beginning of the Medicare program, where they do require documentation of any services that are delivered. Mr. Porter. If a Medicare carrier instituted physical presence or documentation requirements over and beyond the requirements in duly promulgated regulations, would your office enforce those standards, and if so, under what authority? Mr. Mangano. If the individual contractor went beyond what HCFA policy was, and I would think that if an individual contractor went out of its way to change the policies, we would go with the HCFA policy nationally. Mr. Porter. Okay. Mr. Mangano. There are some instances, though, where local contractors do have some flexibility to require additional documentation if they think in their local community that somebody has been abusing the program. And that's certainly acceptable, as far as the Medicare program. Mr. Porter. Okay. I have some questions along those lines. What if a local carrier--I think you just answered that. What if the local carrier rules were disavowed in a HCFA letter by Tom Ault in April, 1995? What if Tom Ault's letter said, you can ignore local carrier rules? Mr. Mangano. Well, Tom Ault is a high level HCFA official, and he is in a key position to establish policy for the office. If HCFA were to change their national policy through Tom Ault, then that would of course change our job. Mr. Porter. What if HCFA acknowledged that IL-372 was ambiguous with respect to its requirements? Mr. Mangano. I think we'd have to get a little bit more specific than that. If they said the whole thing was ambiguous, then this project would end, because they would be changing their policy positions on that. With regard to that individual statement though, in the new regulations that were issued in 1995-1996, they had a phrase in there that talked about ambiguousness, but they were only talking about the attending physician relationship. It didn't have anything to do with physician presence. Ms. Brown. This is where they expanded the definition of attending physician, so that more people could qualify, since there are a number of specialists who might be handling a particular case. Mr. Porter. Okay. What if following local contractor rules would lead you to recover a large amount from one institution in one State, and nothing from another institution in another State, even though the teaching physicians in both institutions had exactly the same documentation in the medical record? Mr. Mangano. One of the things that I mentioned early on was, when we begin any one of these studies, we go out and we look at the instructions that were given from the contractors to the local institutions. And if a contractor deviated from what the policy was at HCFA, if they said, for example, we're not going to require the attending physician to actually note in the medical records that they were present, then we take that clearly into consideration. So in a community where the contractor has said, you must absolutely be present, you must document the medical record and indicate that you were present, as was the case in the Pennsylvania ones. That's a different story. Mr. Porter. Well, let me submit to you these questions for written response. I'd like you to do it as quickly as is reasonably possible. teaching hospitals--enforcement of rule And let me say that I am personally going to look into this much more closely, because there is obviously a great deal at stake here in both respects, enforcing the law on one hand and the future of teaching hospitals on the other. I certainly would counsel that, and I've counseled with the Department of Justice as well, as they're involved in this, that using threats and intimidation and threats of double or treble damages is not the way you want to go in this. I think you will run into serious problems and reactions here in the Congress if that's the word coming back to members from their teaching hospitals. And I would caution that the law should certainly be enforced, but that you've got to be very careful in the way you go about enforcing it and the message that you send to the academic health community. I think we've got to be very sensitive. We're dealing with very well-trained, educated people who generally are very careful about obeying the law. Ms. Brown. Sir, if anyone on my staff used threats or intimidation, I would certainly take action on that matter. However, just letting people know what the risk is or how we would handle it, that's factual information they need. So it depends upon how it's done, and I certainly don't want people to use any kind of intimidation tactics. Mr. Porter. I would also like you to tell me if this is not information that should not be divulged, your plan on proceeding with audits, what you're looking into currently and what time table you have and the like. Ms. Brown. We'll include that in our answer. Mr. Porter. Fine. Mr. Miller, any further questions? teaching hospitals--retroactivity issue Mr. Miller. Yes, I have a couple of clarifying questions. I'm sorry to keep dwelling on this issue. You all have a tough job. And you do good work. There's so much waste and fraud, and I've got more seniors in my Congressional district than anybody in the country, and especially with the Medicare, you always hear the problems. We don't mean to pick on you, I didn't know the Chairman was going to raise the same issue. Because you all do good work. But I am concerned about retroactivity, for one thing. Explain to me something, clarify it in my mind. Again, I'm not the accountant, I'm not the lawyer. If a doctor, if a resident and then the teaching physician goes around, sees a patient, and I don't know what they say, but the resident says, this patient has a sore throat. And the teaching doctor just initials it. That's not enough. And he may have walked in the room with the doctor. But that's not enough, right? Mr. Mangano. Yes. Mr. Miller. But if the auditor said it was okay in 1990, and accepted it in 1990 with just his initials and signature, now, if he would write that down, I went in the room and I agree, this patient has a sore throat, is that what it takes? Ms. Brown. Well, we look at procedures, not just noting a condition. But aside from that, I doubt if there was anybody doing this kind of audit in 1990. I was not IG here at that time, I was with Defense. But I don't think anybody was doing this type of review. When it came to our attention, of course, we looked into it. And trying to decide whether or not we should look into it, whether this was a widespread problem or not, there was a memo which absolutely clarified the policy that HCFA took in 1994. And so we took a time subsequent to that, 1995, and looked at whether this was occurring. Only where we saw it was occurring after there was supposedly good knowledge of what the policy was, then we looked back to see if this was going on for a long period of time. Was this something new, or had this hospital been charging this way for a longer period of time. If so, we went back. Even if somebody had billed incorrectly up until this 1994 period, if they had changed after this HCFA clarification, we are not going back in those cases. This is a way of trying to have a manageable job here and making the scope definable. So it would be for someone who was recently committing this offense that we would look back and see if there had been a long period of time over which they were doing it. coding Mr. Miller. Well, let me ask one more question along that line. The issue of over-coding. With IRS, if you make a mistake, the mistake's in your favor, you get the money. But I guess you all don't, maybe that's in the law, that if there's an under-coding issue that you catch in an audit, they don't get credit for that. Ms. Brown. We've issued some specific guidance, in fact, in these PATH reviews, they're paying for the review, of course, that should they want to look for instances where there's under-coding as well as over-coding, we gave them information about the way they could recover monies that were identified. Mr. Miller. Oh, so you will allow that? Ms. Brown. Yes, we certainly encourage anyone. And if an entity is really making honest mistakes, there usually are under as well as over-coding mistakes. They should be able to identify and recover some of that. Mr. Miller. Thank you. Thank you, Mr. Chairman. savings generated by oig Mr. Porter. Thank you, Mr. Miller. I have just a few more questions, if I may ask them. We note that in your budget justification this year you do not cite an overall dollar amount of savings that are generated by the activities of your office. In prior years, I believe you have always cited such a figure to show how effective you were. Why have you decided not to include any overall savings amount in this year's budget document? Ms. Brown. I have some charts on that. We will put those up. As you can see, we have savings amounts for each year. And there are totals. We've broken that down further, because there were a lot of questions in the past about what is the makeup of those savings. And in a very general way, I can say the black areas are from investigation, through fines, penalties and recoveries due to investigative matters. The white is mostly through audits. And these are things, whether it's a pre-award audit, post-award audit or this group that looks at CPA audits that come to our office, those are actual dollars saved because of audit activity. The shaded areas, by far the largest, are because of actions that have been taken that are policy changes. Those could be changes created by Congress; it might be from regulatory changes, or other types of policy changes. And for that, we use the Congressional Budget Office figures as to what the savings amount was. There are very few instances where they don't have figures. For the most part, it is made up that way. Last year, as you can see, there was a big dip. That was due to several things: two furloughs, where we couldn't send people around, and then not having a budget for most of the year. And we were working on continuing resolutions. Wehad to severely curtail the travel of our auditors and investigators, so we weren't able to accomplish nearly as much last year as we had in the past. Mr. Porter. Ms. Brown, the question was, why wasn't it included in your budget justification? Why wasn't this information, as it always has been in the past, included in the budget justification? Ms. Brown. We had a very different budget this year, because of the Kassebaum-Kennedy legislation. We are getting the majority of our money from the Trust Fund. That money is no longer part of our budget justification. In the past, we had Social Security, but that is no longer part of the Department. Because of these changes, there are a lot of computations we'd have to make to be sure that we're using comparable data. Mr. Porter. Well, in your latest semi-annual report to Congress, you cited a dollar amount of savings to the Government of $4.7 billion for the last fiscal year, which is I believe the figure you have in the shaded area. Ms. Brown. Yes. Mr. Porter. And you've told us that that is policy changes rather than audits or collections, is that correct? Mr. Mangano. Yes. There are a number of reasons for it. The shaded area, which is usually the largest category that we have here, relates to policy changes, as enacted through legislation and regulations instituted by agencies of our Department. Mr. Porter. So this would not actually represent money that comes in the door to the Federal Treasury, the white and the black areas would, but the shaded area would not? Mr. Mangano. That's correct. Mr. Porter. So it's simply money you didn't spend? Mr. Mangano. Yes, largely in the shaded area here would be legislative or regulatory changes. Over the last year or so, because of the problems with having a Medicare reconciliation package in, there haven't been many new legislative proposals that have been adopted by the Congress and the Administration. We think this year is going to be a far better year, as you begin to tackle the very difficult problems. Mr. Porter. Let's hope. So---- Ms. Brown. But there would be things such as the incontinence supplies, the other chart, where we were paying about $104 million for items that really weren't qualified. We can show that that amount had been going up at a very sharp angle, and then with the clarification and enforcement efforts, it went down. We can really show almost a zero for billing for things that weren't qualified to be paid for under incontinence supplies. oig budget Mr. Porter. Your total budget proposal for fiscal year 1998 is $112.4 million. Over 70 percent of this is now classified as mandatory spending and is outside of the annual appropriations process. How does this come about? Mr. Mangano. With the Health Insurance Portability and Accountability Act of 1996, the Congress established a separate account to deal with health care fraud and abuse. For 1997, that amount was set aside at $104 million, of which $70 million was given to us to operate the activities that we do in the Medicare and Medicaid program. That money is considered a mandatory account. We can only spend that money on Medicare and Medicaid. Mr. Porter. So these PATH audits, for example, are part of that mandatory spending? Mr. Mangano. No, they are not. Mr. Porter. They're not? Mr. Mangano. That's correct. Oh, I'm sorry. They are. They would be part of the mandatory side because they're dealing with the Medicare program. report on actual revenue Mr. Porter. All right. The committee, as you know, has asked you to submit a semi-annual report on actual revenues collected relating to this new mandatory part of your budget as well as your base budget. The initial report that you submitted on January 31st was not terribly informative concerning the period ending September 30th, 1996. What steps are you taking to improve future versions of this semi-annual report to the committee? Mr. Mangano. The semi-annual report was a retroactive report of the prior six months. It was asking for information related to recoveries that would come into the Medicare Trust Fund. After the Health Insurance Portability and Accountability Act is in place, all health care settlements at the Federal level will go into the Medicare Trust Fund, whether their settlement is related to Medicare, Medicaid, the CHAMPUS program in Defense, the Veterans Administration programs, etc. So to create the six month backlog, we had to go to the Health Care Financing Administration and ask them, over the prior six months, how much was received as a result of investigative activities. They gave us a figure of $67 million. After this bill was passed, we set about developing information that we could provide you on a quarterly basis. We are now tagging every individual health case at the Federal level. The Department of Justice is keeping these records. Every time a case is opened in our office or in one of the other Federal Inspector General's Office or the FBI, etc., it will be given a number. We will be able to track that number through the system, so we'll know how much money in the future is collected. In the first quarter of this fiscal year, I'm happy to report that out of our office alone, the amount of money that has been collected through investigations is $185 million. That money is now in the Trust Fund. Ms. Brown. A lot of records have to be changed for this, because I believe the question was, whether the dollars reported were receivables. That was the case at the point at which we reported it. Now we're asked to report whether or not that payment was actually made and deposited in some Federal account. So we have to go a lot further. We have to involve all of the other IGs who have health care responsibilities, the FBI, and the Department of Justice. And all of them have to modify the system and have a reporting mechanism to get that information to us. teaching hospitals--justice role Mr. Porter. Let me ask, this gets me back to a PATH question. At what point in your audit process does the Department of Justice have a role? Where do they come in when you're doing one of these audits? Mr. Mangano. Well, actually, in most audits they have no role or responsibility. If we suspect there is an intent to defraud or a fraudulent activity going on, we do an audit or an investigation and turn the information over to the Department of Justice. The Department of Justice actually makes the determination as to whether they'll prosecute the case or not. If they decide to prosecute, either criminally or civilly, they do the negotiations with the offending party. Mr. Porter. So in this case where you have a settlement of $30 million, is that Philadelphia? Mr. Mangano. That's correct. Mr. Porter. Was the Department of Justice involved in that one? Mr. Mangano. They did the negotiation. Mr. Porter. So you found what you felt was evidence of fraud? Mr. Mangano. That's correct. Mr. Porter. Okay. Is there a target amount for recoveries in regard to the PATH audit program? Mr. Mangano. There is not, no. Mr. Porter. Okay. I think we've covered a lot of ground here. I appreciate your answering all of the questions. If you would, please follow up with the questions we provided to you. And we thank you for your good work and appreciate your candid answers. Thank you very much. The subcommittee will stand in recess until 2:00 p.m. [The following questions were submitted to be answered for the record:] Offset Folios 414 to 482/800 Insert Here Tuesday, February 11, 1997. HEALTH CARE FINANCING ADMINISTRATION WITNESSES BRUCE C. VLADECK, ADMINISTRATOR, HEALTH CARE FINANCING ADMINISTRATION CARL SWANSON, DIRECTOR, DIVISION OF BUDGET, OFFICE OF FINANCIAL MANAGEMENT DENNIS P. WILLIAMS, DEPUTY ASSISTANT SECRETARY, BUDGET, DEPARTMENT OF HEALTH AND HUMAN SERVICES Mr. Porter. The subcommittee will come to order. This afternoon we continue the Departmental hearings for Health and Human Services, with the Health Care Financing Administration, Dr. Vladeck. Dr. Vladeck, we're delighted to welcome you today to present your testimony. You always do that with a great deal of skill, which we appreciate, as does the Secretary. Chairman's Remarks But let me begin by making a short statement. And I have to say, Dr. Vladeck, I'm very disappointed in the President's budget in the sense that I think he has failed to come to grips with what is to me the most important issue before us, and that is the rate of increase in the major entitlement programs that you administer. And without doing so, I believe that the very priorities that the President mentioned in his State of the Union Address, particularly education, are going to be squeezed in such a way that we can't provide adequate funding to address those needs. I believe that Head Start and biomedical research and others simply will suffer unless we have the courage to do this. And I hope very frankly, and I'm lobbying you on this, but I hope very frankly that the Congressional leadership and representatives from the White House, including yourself, will sit down quietly, very early, and find the common ground that we need to address the rate of increase, in a very real sense, in both Medicare and Medicaid, and put this issue on a bipartisan basis, tell the American people what must be told to them, that we can't sustain programs at the rate that we have in the past, but that we can do it, and maintain quality, if we will work together to find that solution. And I have to say that also, that I consider moving the home health care costs for Medicare Part A to be funded under Part B, which comes under general revenues, I don't see that as a solution. It may be a kind of band-aid that we pull funds from another source when the program is not living up to the parameters that we drew for it. But I don't think that's a solution. I think it's a gimmick, really. I'm sorry to say it, but I think it is. And I don't think that's going to be something that will fly in the Congress, and I think we'll have to sit down and work these things out. I just hope that the Administration and the Congressional leadership is willing to do that. We have to come to grips with this problem. This is the only time to do it. Next year we will be politicized, as you know. And I just would urge everyone to quietly begin negotiations to get this job done. That's my sermonette for this afternoon. Please proceed with your statement. budget opportunities Mr. Vladeck. Mr. Chairman, I appreciate your comments. If I may beg your indulgence, let me proceed, perhaps, with the statement we had prepared, which is not entirely on point with your comments, but obviously, I'm happy to answer any questions or respond to any concerns you might have. And let me also say that we are very hopeful that circumstances will permit us the opportunity in the very near future for the representatives to the Administration and Congressional leaders to come to a comprehensive set of arrangements that will produce a balanced budget, that will put our programs on a more solid, long-term footing, and that we'll really break some of the log jams that have occurred around these issues in the last several years. I think we are very much committed to it. And again, I'd be happy to respond to specific questions or concerns. But we have already very early in this Congress perceived a kind of change in the character of the conversations that I think bodes very well for the opportunities this year. And we very much look forward to the opportunity to work with you and your colleagues and the leadership of both parties to get the job done. Mr. Porter. And I appreciate that sentiment. Introduction of Witnesses Mr. Vladeck. Let me be just a little bit more parochial about the part of the budget closest to my heart, and then obviously we can address some of these other issues as well. It would be inappropriate if I didn't begin by introducing my colleagues. I think you know Dennis Williams, the Deputy Assistant Secretary of the Department for Budget. I think he has a permanent chair here, actually. Mr. Porter. He's been longer on this subcommittee than any of us. [Laughter.] Mr. Vladeck. You may not be familiar with Carl Swanson, who is the Director of the Budget at HCFA, and who is largely responsible for preparing the Administrator for this hearing. Thus, any shortcomings or failures in my presentation today can be attributed to him. [Laughter.] Opening Statement Mr. Vladeck. We're really very proud of the President's budget request for the Health Care Financing Administrating for fiscal year 1998, because we do think it represents an important step in reflecting a commitment which is part, we believe, of the long-term answers for the Medicare and Medicaid programs, of transforming the Health Care Financing Administration from a passive payer of bills to a more aggressive, beneficiary-focused and quality-focused, value- focused purchaser of health care. We do this within an environment of consistent constraint. I believe you've seen charts such as the one that's on the left in the past. But operating under the kind of budgetary constraints to which the Chairman was referring, I believe that at least for the last five years, even in nominal dollars, we have been running very close to level on program management. We had a significant reduction in our staff at the beginning of that period, but kept constant throughout, while the workload continued to increase. And while our [4,000] people and our Federal administrative budget of about [$350] million supports, as you know, the largest health care purchasing programs in the world, the total budget for the agency, including the benefit programs, is requested at $334 billion in 1998. The chart to your right is our favorite depiction of the extent to which administrative expenses to actually operate the program are less than one percent of the total benefits we're paying. [Clerk's note.--Later changed to 4,085 people and $359 million.] The pie chart in the lower right hand corner explains this better. Throughout our history, we have leveraged the appropriated dollars through a series of partnerships with private organizations and with the States who do much of the work of operating the Medicare and Medicaid programs. Almost 70 percent of our entire Federal administrative budget represents the funds we pay to the Medicare contractors, the private insurance companies who pay the claims, communicate with providers and beneficiaries, do program integrity review and things of that sort. Another share goes to the States, both for their quality activity and for their administration of the Medicaid program. medicare transaction system This budget includes a number of initiatives to assist in our transformation from a passive bill payer to a more focused and effective purchaser of care. In many ways, the most important is the continued investment in the Medicare Transaction System, or the MTS, which when completed, will give Medicare, for the first time in its history, a single, integrated state-of-the-art data system. The MTS will standardize claims processing, but, perhaps more importantly, give us the opportunity to do a substantially better job of preventing fraud and abuse and overpayment before claims are paid, rather than having to pay and chase afterwards, provide a significantly higher level of service to all our customers at lower administrative costs, and respond much more quickly and responsively to requirements put on us by new legislation or by changes in the marketplace. medicare handbook I am proud to say that this year's budget also includes continued funding for annual distribution to all of our beneficiaries of the Medicare handbook, the closest thing the Medicare program has to the annual summary of plan benefits that all of us with private health insurance or Federal employees health insurance expect as a matter of course and a matter of right. But that's only one piece of the very substantially expanded provision of information and educational services to all our customers, but particularly our beneficiaries that are contained in this proposal. quality activities We are also substantially redirecting and rethinking all of our quality activities, including those funded through the peer review organizations, the PROs, through an entitlement account. We have gotten away from this sort of cops and robbers mentality of trying to find the one or two percent of egregiously poor performers, and moved to efforts to increase the average quality of care available to our beneficiaries, both in the fee-for-service and in the managed care programs. And within the next few months, we will be publishing in the professional literature a couple of reports: one on changes in the quality of care for Medicare beneficiaries who have recently experienced a heart attack, and another report on changes in quality of care for Medicare dialysis patients, showing that these initiatives are really beginning to pay off and really beginning to make a difference in peoples' lives. hcfa reorganization Just a couple of additional points, if I may. As many HCFA watchers are aware, we are in the midst of a process I announced in November to substantially reorganize the entire agency. This is the most systematic reorganization since the agency was created 20 years ago. I'm often asked by my colleagues and by many of our staff, why, with all the other things you have to do in the midst of all this ferment about Medicare and Medicaid, are you going to the considerable time and trouble of this kind of effort. And it's precisely because we see continuing new challenges in an era of constrained resources, certainly constrained personnel ceilings and constrained budgets, that we have to use the resources we have much more efficiently. Let me just give one or two examples, if I may, in that regard. First, the continued growth in the size of the Medicare managed care program, which grew by approximately one million enrollees in calendar year 1996 alone, obviously significantly expands our responsibilities to monitor the performance of those HMOs and to ensure that they're providing high quality care to our beneficiaries. In order to do that, we have to redeploy people from other functions or other activities. By re-engineering the ways in which we do business or otherwise rethinking the ways in which we're organized, we can perhaps become more efficient. Similarly, and perhaps even more immediately, the Health Insurance Portability and Accountability Act of 1996 is very important legislation that was achieved on a bipartisan basis with marvelous cooperation. It gives us a number of considerable responsibilities, including some oversight of Stateregulation of private health insurance and administrative simplification without any associated increase in resources. We have about 10 people working full time on implementation of the insurance provisions of that legislation, and probably 30 or 40 working full time on the administrative simplification provisions. If we're going to continue to do our other work, we need to significantly redeploy our resources. And those are again just brief illustrations of what this reorganization effort is all about. With that effort, with the kind of talents and commitment we have among our folks, and with the kind of support, frankly, that this organization has received from folks in both parties who understand what it is we do and the importance of it to making the programs work, we are optimistic about our ability to cope with continuing growth of demands in the future, and about our ability within the levels of support to get the job done. Obviously, we expect this will be a busy and significant year on the programmatic and entitlement side, as well as on the operating side. We're happy to answer questions about any of those issues, if we can. I thank you for the opportunity to be here. [The prepared statement follows:] offset folios 811 to 819 insert here enrollee increase in medicare hmos Mr. Porter. Mr. Vladeck, thank you for your statement. Let me ask first, you said that enrollees in HMOs under Medicare grew by one million in the last year, is that correct? Mr. Vladeck. Yes. Mr. Porter. What has caused that increase? Mr. Vladeck. I think there are two things that go on. The most important, frankly, is the increase in the number of plans, and particularly the increased availability of Medicare HMOs in communities in which, in the past, there were none or only a very small number. Even in some communities in which for a long time there were one or two HMOs providing services to Medicare beneficiaries, it has been our experience that new entrants can change the competitive dynamics of those markets very substantially. They tend to create a competition to improve benefits and reduce premiums. That has a very positive effect on enrollment. But if you look from community to community, what you find is that communities in which managed care really took off in the private sector over the last five or seven years, sometime in the last two or three years, the plans turned their attention to the Medicare market, in which they had never participated before, or in which they had never before been very active. And that's where a large share of our growth has occurred. Let me give you just one or two examples. In both metropolitan Boston and metropolitan Philadelphia, we have gone from single digit proportions of Medicare beneficiaries enrolled in HMOs to approximately a third over just a three-year period. It's sort of a takeoff phenomenon in the market. And there are still a number of major metropolitan areas, particularly in the southeast and some parts of the midwest, where we are just beginning to see the sort of taking off that has occurred in some of the northeastern cities in the last few years. Mr. Porter. Well, I would simply say that the plan, the balanced budget plan of 1995 that the President vetoed would have created some choices for Medicare beneficiaries of this type, and given them some incentives to choose the lower cost alternative, including managed care plans, among others. Preferred providers, the individual medical savings accounts, and the like. And it seems to me that if you are here testifying that people are moving to managed care plans without any particular financial incentive, simply because they've become more credible in the areas in which they are providing services, and are beginning to compete for beneficiaries' business, I think this ought to be the kind of common ground that we could find to structure Medicare in such a way that gives consumers greater choices and does restrain the rate of increase in the growth of the program, and preserves quality of care. I think this is exactly the kind of common ground we ought to look to. Mr. Vladeck. Well, again, Mr. Chairman, the President's budget does call for making available to Medicare beneficiaries, not only traditional HMOs, but preferred provider organizations and provider-sponsored networks. It also calls for a substantially expanded effort in beneficiary education and informational services. It does not, however, call for creating any greater financial risk to beneficiaries based on the choice they undertake of the kind that we objected to in earlier legislation. But I do think there is an opportunity to find a lot of common ground here. Mr. Porter. My recollection of the bill that was vetoed is that it gave people no Part B premium in return for choosing one of four options that they might think were best for themselves. I don't call that an additional financial risk. I think it's quite the opposite, it gives them a financial incentive and allows them to save some money that they're spending now for choices in the marketplace. home health care legislation Let me ask you, let me go back to the Part B Trust Fund question. I mentioned in my opening remarks your proposal to shift some of the home health care costs from Medicare Part A Trust Fund to Part B. From the appropriations perspective, by how much would this proposal increase the mandatory payment coming from our bill to the Part B program? Mr. Vladeck. Over the five year period, Mr. Chairman, I don't have the year by year figures, but I suspect Carl does, we estimate the gross transfer, and I'll explain that in a second, would be approximately $80 billion. Of that $80 billion, approximately a quarter of it would not appear in payments to home health agencies. It would appear in payments to managed care plans, because the rates of capitated plans are tied to fee-for-service and because projections that we're going from about 14 percent to 22 or 23 percent enrollment in managed care over the budget window, then roughly 18 percent or so of these costs end up in Part B payments to managed care plans rather than in payments to home health agencies. So it's about $80 billion gross, of which $60 billion is payments to home health [Clerk's note: ``$60 billion'' later changed to $65 billion]. Mr. Porter. All right. You propose to exempt the Part B premium paid by beneficiaries from this added cost. What is the rationale for the Administration's proposal? Won't beneficiaries end up ultimately paying for this transfer anyway, either through taxes that support the mandatory Part B payment in our bill? Mr. Vladeck. Well, there is clearly an issue of the incidence of the costs associated with the inclusion of home health care benefits in Part B. Our view is that beneficiarieswhose average income is $13,000 or $14,000 a year, three quarters of whom live in households with incomes below $25,000 a year, should not be expected to bear that additional cost. Mr. Porter. Correct me if I'm wrong, that the method of payment won't really change the fact that home health care is reimbursed at cost. Am I correct? Mr. Vladeck. Well, we have separate proposals in the President's budget to change the way we pay for home health care, and to effect a number of other changes in the home health care program. Among these changes, quite apart from this allocation, of course, between Part A and Part B, would be a savings of approximately $15 billion [Clerk's note: Later changed to $14 billion] over the five years of the budget. Mr. Porter. This will require legislation in both respects, am I correct? Mr. Vladeck. Of course. Mr. Porter. And do you want to give us a percentage of how likely you think this legislation is to be adopted? Mr. Vladeck. Well, I've been hearing all kinds of optimistic reports about the prospects for a comprehensive balanced budget agreement. I think the fact is that if you don't address the impact of the growth in home health costs on the Hospital Insurance Trust Fund, and you're concerned about the well-being of the Trust Fund, there aren't a whole lot of other tools that are available. I'm optimistic about the big picture solution, and so I assume we'll have to find how to do the necessary pieces within it. Mr. Porter. Well, I hope we get both of them done. Ms. DeLauro. civil rights compliance Ms. DeLauro. Mr. Stokes is just recovering. My own voice is under siege, I've got an inner ear infection. So we all apologize. Mr. Vladeck. I wish I were the kind of doctor who could help you with that. I'm sorry. [Laughter.] Ms. DeLauro. I just have two questions for my colleague. Mr. Porter. We won't even charge you for those. Ms. DeLauro. Thank you so much, Mr. Chairman. Is that because this is the first meeting back for me, or---- Mr. Porter. Yes, that's about it. [Laughter.] Ms. DeLauro. Thank you. The question is, is the agency, Dr. Vladeck, prepared to publicly remind managed care organizations serving Medicare and Medicaid beneficiaries that health plans are expected to comply with Title VI of the 1964 Civil Rights Law and other civil rights laws? Mr. Vladeck. That point is extremely well made and well taken. And the answer is yes, we have been in conversations with the Department's Office of Civil Rights and other groups. In fact, I think I'm meeting tomorrow to discuss some work we've been doing with the National Medical Association. And we have some remediation to do on that score. But the answer is, absolutely, we need to be much more forthright about that. Ms. DeLauro. Will you be requiring States to monitor and enforce these laws, as well? Mr. Vladeck. Frankly, I will plead ignorance on some of the issues involved in the appropriate mechanisms for enforcement on issues of this kind within the context of the Medicaid program. But we will do what needs to be done to make sure these requirements are enforced. Ms. DeLauro. Thank you. Mr. Porter. Is that all the questions you have for Mr. Stokes? Now we're looking at the clock. medicare transaction system Ms. DeLauro. Thank you. Thank you very much. I apologize for being late to the hearing. I have two or three questions, one on the Medicare Transaction System, which has been discussed in terms of reducing paperwork and improving cost efficiency. It has been under development for some time. What is the status of the program right now? Mr. Vladeck. Because of the continued complexities of budgeting a multi-year development effort of this kind on an annual appropriations, we are in the process of examining a number of different scenarios. We are well along in the development of the software for the MTS system. We agreed about a year ago on the basic, what the systems people like to call architecture of the system, how many machines and where they ought to be. So we have a basic architecture. We are moving along with the software development. We would hope, sometime within the next year, approximately, to begin identifying the first physical sites at which some of the activities would be housed. And then the rate at which we phase in both the new software and physical facilities is something we're looking at in terms both of budgetary constraints and in terms of everyone's quite legitimate concerns about minimizing the amount of risk to the budget and to the program from trying to jump forward in steps that are a little bit too large. But we are on a phased in implementation process that's underway, and that extends for somewhere from the next three to five years. Ms. DeLauro. So within the next three to five years? Mr. Vladeck. Again, there are pieces to this phased-in implementation. The first part is the total redesign of our system for paying Medicare managed care plans. And we would expect to have that up and running in Federal fiscal year 1998. The last parts of the system, which are a replacement of our existing processing for Part A, for basic hospital claims, is probably at the tail end of that five year horizon, with a number of intervening steps in between. medicare integrity program Ms. DeLauro. I'm supportive of the Medicare integrity program. How does this differ from the Operation Restore Trust that you talked about before the subcommittee last year? What savings have you found from your efforts and what additional savings do you anticipate from this effort? Mr. Vladeck. Let me make the distinction, if I may. What we now call the Medicare Integrity Program was essentially, from HCFA's point of view, that part of our contractor budget in the past that we called payment safeguards consisting of the activities of coordination of benefits or Medicare secondary payers, fraud and abuse work by the contractors, audit activity and medical and utilization review. Those activities, as you know, were pulled out of the discretionary part of the budget under the provisions of HIPAA last year and established with a separate funding stream. There is some overlap between those activities and the activities of Operation Restore Trust, which was begun as ademonstration project by Secretary Shalala and the President in 1994 on a very small scale. With the expanded funding made available under HIPAA to the Inspector General and to the Department of Justice and to our General Counsel, the demonstration project is now being substantially expanded. Operation Restore Trust, which had a total budget, I think, of something in the range of $3 million a year, has already returned 20 million dollars in actual [Clerk's note: Later changed to ``potential''] recoveries and repayments. And there's an awful lot of activity still pending in litigation or elsewhere in the legal system. And it will be expanded under the authorities provided to the relevant agencies in HIPAA. We are continuing to talk about a rate of return on the entire program integrity effort, including not only Operation Restore Trust, but the Medicare Integrity Program, in the range of 12 to one. The 1997 budget for those activities is $440 million. Ms. DeLauro. For the two programs? Mr. Vladeck. For the Medicare Integrity Program and for HCFA's part of Operation Restore Trust, although most of the dollars for the expanded ORT will be expended by the Inspector General and by the Department of Justice. But we are still talking about rates of return in the range of 10 or 12 to one from all of those activities. medicare handbook Ms. DeLauro. On both of those activities. Okay. I was interested in your comment about the Medicare handbook, and how it's been put on the internet. Please don't misunderstand this, because I truly do applaud your outreach efforts. But how many seniors use this new kind of technology? Do you have any idea of how many hits you're getting on a typical day? Mr. Vladeck. I don't have that specific information with me. The answer is five percent of our beneficiaries, which is a number I've just pulled out of the air. But just to give you an example of the level of activity, we're talking about almost two million people. I remember hearing something of the number in the order of plus or minus 10 percent of our beneficiaries have some kind of access to electronic communications. I think it's also important to emphasize that major consumers of this information are not just beneficiaries themselves, but their family members and particularly folks in insurance counseling agencies, other volunteer programs and so forth, who may be much more likely to be comfortable accessing this material electronically. I myself don't have the software to pull it down along with the nice graphics, although I can get the text copy. Ms. DeLauro. Do I have time? Mr. Porter. I'm looking at the time, we have two agencies this afternoon, and I didn't think we were going to have as many members as we have now. I was about to say we can allow maybe seven minutes each. Why don't you go ahead and ask your last question. And here's Nita, well, there goes the seven minute rule. [Laughter.] clinical research Ms. DeLauro. I'm interested in promoting clinical research, and was a co-sponsor in the last Congress of the Clinical Research Bill. But recently I understand that the military health care system has negotiated an agreement with NIH to cover the routine costs of clinical research. These are costs that would be incurred anyway if the patient was not participating in research that is covered by the military health care system. This offers, obviously, the patient the opportunity to participate in cutting edge research to which they would otherwise not have access. Have you examined the possibilities of a similar type of agreement between NIH and Medicare? Mr. Vladeck. Though we've had very extensive discussions with the NIH, actually, when I first talked to Dr. Varmus about this, he suggested that we first focus on seeing if we could come to an agreement with the National Cancer Institute, because so large a proportion of clinical trials are there. Ms. DeLauro. Exactly. Mr. Vladeck. We undertook a range of discussions then. Senators Mack and Rockefeller introduced legislation in the Senate which overlapped, to a considerable extent, what we had been talking about. And at the very end of the last Congress, we met with them and with their staffs to see if we could all come together around a set of agreements. I think we were making progress when everybody went into recess. But we will gear up those discussions again. And we will proceed simultaneously on the administrative front and the legislative front and do whichever comes first. Ms. DeLauro. Thank you very much. Thank you, Mr. Chairman. Mr. Porter. Thank you, Ms. DeLauro. Mr. Bonilla. medicare subvention demonstration Mr. Bonilla. Thank you, Mr. Chairman. Hello again, Dr. Vladeck. I have a question about Medicare subvention. As you may or may not know, in the South Texas, San Antonio area, we've got a lot of military retirees. And they're very concerned about medicare subvention. I understand that HCFA has or will shortly be submitting language for legislation to the House Ways and Means, Subcommittee of Ways and Means, implementing a Medicare subvention demonstration project. Could you tell me if this is true? Do you plan, or are you getting together a bill now? Mr. Vladeck. The Administration submitted proposed legislation to this effect last year. We are going to be submitting essentially the same legislation at the beginning of this Congress rather than the end. It will be an administration proposal jointly by us and the Department of Defense to our committees of respective jurisdiction. And given the much better timing this year relative to the Congressional session, we are hopeful we can move such legislation through. Mr. Bonilla. How high up is the subvention issue, on your radar screen? Because it's something that a lot of us around the country hear about quite a bit. Mr. Vladeck. We're very much aware of it. And in fact, as you know, the several million of our beneficiaries who are also military retirees are not the shyest or most retiring of our beneficiaries. So we have had a lot of communications from them. And we think, frankly, that there are a number of communities in the United States, San Antonio may well be a good example, where we have the potential for a win-win situation through this subvention. So we are eager to move this process forward. regulatory burden Mr. Bonilla. I know you get an earful about the many regulations HCFA turns out all the time, and also paperwork.I was looking at an article in the Medical Herald recently that states Texans spend at least $500 million too much on their health care bills, blaming Federal Government regulations and administrative red tape. According to a Texas Medical Association study of 20 office-based physicians in various specialties in settings across the State, administrative hassles with Government-sponsored programs like Medicare, combined with other entities, costs Texas residents $360 million each year. I've heard a lot of stories from my constituents of the problems they face in complying with every requirement from HCFA. I'm sure you're hearing about this as well, and if so, my question is what is HCFA doing to ease the administrative burden so that providers can spend more time actually taking care of health care needs versus regulation and paperwork? Mr. Vladeck. Well, Mr. Bonilla, we believe that much of the burden on providers arises from the different requirements placed on them by different payers. And as the health care market has become more fragmented and more decentralized, that problem has gotten worse. That's why we were pleased with the direction again contained in the administrative simplification title of HIPAA as enacted last year, which calls for the Secretary, working primarily from materials developed by the private sector, to adopt a set of standards over the next several years for standardizing all the sorts of information that is employed by payers and providers of service in the billing and quality assurance processes. And we believe, as clearly was the intent of the legislation, that implementation of those provisions will make life simpler and more economical for everyone. Mr. Bonilla. Do you think that this figure of $360 million a year is accurate, just based on your expertise, I know you haven't looked at Texas specifically, that this figure is accurate? Mr. Vladeck. I really would have no particular way of knowing that. I would say that again, we believe that because of our very, very heavy reliance on electronic billing that, as compared to other health insurers who pay providers directly, and as opposed to those which operate on a basis in which the provider has no billing expense because he just bills the patient, and the costs of being reimbursed are incurred by the patient. We believe that our costs for providers as well as for ourselves are lower than most other direct payers for health providers, again, because we are so heavily electronic, and because we do benefit from considerable economies of scale in those transactions. Mr. Bonilla. We'll be working with you more on that in the future, I'm sure. And I appreciate you answering our letters whenever we have an inquiry that we send to your office. telemedicine I want to turn now to telemedicine. This is something very important in my area, but not just because I've got a district that is 58,000 square miles and is larger than any State east of the Mississippi. It's a rural area, of course, but I know sometimes telemedicine can be very significant from urban area to urban area, because certain specialists may not be available. Nonetheless, I do have some areas where people have to travel 100 miles to get to the nearest doctor. I'm encouraged that HCFA has responded to language the committee inserted in last year's report, instructing HCFA to use telecommunications technologies to increase access to medical specialty care in these rural underserved areas. My understanding is that HCFA is administering a three year experiment in which Medicare will pay for telemedicine service at 57 Medicare certified facilities. Are any of those facilities in the State of Texas? Mr. Vladeck. I'm afraid, I believe the answer to that is no. Mr. Bonilla. I believe, my colleague is whispering to me, he's going to ask about Oklahoma next. [Laughter.] Mr. Vladeck. I actually had the pleasure of visiting the hub of the telemedicine program at the University of Oklahoma several years ago and was enormously impressed. But that is not one of our demonstration sites either. These were selected by national competition. And the sites are primarily, I believe, in the midwest and in the southeast, as having been the places that were most developed earliest. I might also say that our colleagues at the Health Resources and Services Administration, Office of Rural Health, have funded a number of additional telemedicine demonstrations as well. But I honestly can't tell you where those are. Mr. Bonilla. Well, that's something that I'm going to continue to push for in my area. Because at the South Texas Medical Center, it's important at the military hospitals there that link up with our private sector researchers. It's extremely important to the future health care needs of our area. Do I have remaining time, Mr. Chairman? Mr. Porter. No. Mr. Bonilla. Thank you, Dr. Vladeck. Thank you, Mr. Chairman. Mr. Porter. Thank you, Mr. Bonilla. Mr. Wicker. survey and certification Mr. Wicker. Let me ask you about certification of survey process, Mr. Vladeck. I understand that there has been a problem with the survey process for hospitals and nursing homes, and that as a result, there is a backlog of certain cases. Would you comment about what your suggestions are for this? Mr. Vladeck. Yes, sir. There was, as of a year ago, a very significant backlog of certifications for new facilities in those parts of the country where we had the largest number of facilities seeking to enter the Medicare program. Thanks to a considerable extent to the work of this subcommittee, an additional appropriation was made available for these survey and certification activities in the current fiscal year. And we expect as a result that by the end of this fiscal year that backlog will be pretty much eliminated. Now, I'm going to sound probably somewhat predictable to you. The President's budget for fiscal year 1998 proposes a new means of financing the initial surveys, through a fee charged to the applicants. And the budget reflects not maintenance of the 1997 level, but an assumption that the fee would be enacted so that the appropriation request returns to the earlier year level. And if we can't, through whatever the sources, maintain the current level of funding, we are concerned that the backlog would begin to re-emerge as facilities continue to seek to enter the program. But we do believe that for this fiscal year, at least, the additional appropriation will make it possible for us to pretty much wipe out that backlog. Mr. Wicker. Without the fee? Mr. Vladeck. Without the fee, but with the additional $12 million, or $10 million in the appropriation, like this year's. deeming Mr. Wicker. Well, as an alternative to the President's fee proposal, let me ask you how much consideration has been given to another suggestion. That is more or less the privatizing of some of this function. Are you aware, the Joint Commission on the Accreditation of Health Care Organizations has proposed to contract with the Federal Government for this purpose. Have you looked into estimates about how much money could be saved by moving into this methodology? Mr. Vladeck. Well, we already do have a relationship with the Joint Commission, sir. Under the statute, the Joint Commission is deemed. The Joint Commission on Accreditation for General Hospitals is deemed to qualify Medicare certification. And we have also deemed the Joint Commission as an accreditor of home health agencies. And I believe if we haven't already, then we will, for ambulatory surgical facilities as well. The 1996 appropriations act substantially broadened our deeming authority. And we had expected it would give impetus to additional efforts on the part of private accrediting bodies to seek status where they could be deemed to qualify for Medicare approval. Since that time, we have identified a couple of private organizations in the area of ambulatory surgical facilities. But frankly, I have been somewhat surprised by the relative paucity of applications from private accrediting organizations for deemed status for additional kinds of facilities. Mr. Wicker. Do you know what percentage of this function is being performed by private accrediting organizations now? Mr. Vladeck. In the hospital sector, about 80 percent of all hospitals participating in the Medicare program are certified on the basis of Joint Commission deeming rather than on the basis of our own survey. On the home health care agency side, where the Joint Commission and one other organization have been deemed for a number of years, I think the number is perhaps 200 of the 10,000 home health agencies participating in the Medicare program that are certified by virtue of such deemed status. Mr. Wicker. And nursing homes? Mr. Vladeck. We do not permit deeming of nursing homes. Mr. Wicker. Has your agency looked into allowing this procedure with regard to nursing homes? Mr. Vladeck. Because of the particular history of the issue of nursing home quality, the 1996 appropriations bill requires us to report to the Congress by July 1, 1997, on the desirability and practicality of deeming for nursing homes. And we will have that report to you in keeping with that schedule. disproportionate share hospital payments Mr. Wicker. Okay. Let's move to the disproportionate share hospital payment issue. I think you and I have probably had some discussion about this last year. But in this year's Administration budget, the President's proposing to reduce the DSH payments by 26 percent. Now, this is a substantial decrease to those hospitals which serve the lowest income Medicaid patients. And I'm just wondering what your thoughts were in making that recommendation. Mr. Vladeck. Sir, we've been very much influenced by a study performed by the Urban Institute several years ago, which is consistent with our own less systematic analysis of the issue. That study has suggested that approximately a third of all dollars that flow through State disproportionate share hospital programs left the health system altogether, and perhaps another third of those dollars were basically a recycling of dollars contributed to the DSH program by health care providers themselves. In our conversations with organizations representing the safety net hospitals and safety net providers such as the National Association of Public Hospitals or the Association of Children's Hospitals and Related Institutions, we found that they believe that only about two-thirds of the DSH dollars currently in the system are in fact going to subsidize services in institutions which really do serve a disproportionate share of low-income folks. And so we believe that with better targeting of DSH dollars you could reduce total expenditures by 25 or 30 percent and still get at least as many dollars to the institutions that most need them. Mr. Wicker. Well, I appreciate that. And I would just simply point out that DSH outlays have grown only at a rate of 2.4 percent annually for the last several years, actually since 1992. And it would just seem to me that we ought to look at the area of the Medicaid program that is growing at a much higher rate, and that corrections can be made through the disproportionate share program without disadvantaging the hospitals that really, really need it. payments to rural hospitals I want to ask you about one issue in particular, and that is, the action by HCFA on October 1 of last year, concerning the ability of rural hospitals to be reclassified as other urban, for purposes of determining the Medicare payment reimbursements. I was one of the Congressmen who vigorously protested this new regulation by your agency. The effect of it was to disadvantage 28 hospitals and to cut their disproportionate share revenue by some 10 percent, while readjusting funds for over 5,000 other hospitals by an absolutely insignificant sum. Why in the world would we take such an action, that would have that traumatic of an effect on these 28 small hospitals, when the reallocation could not possibly have helped the other 5,000 to 5,100 hospitals? Mr. Vladeck. I think the answer needs to be understood in the terms of the history and in the rationale for the reclassification process in the first place, and what occurred on October 1 of last year. The whole problem of geographic reclassification of hospitals participating in the prospective payment system arose because in the initial years of prospective payment system, the standardized amounts or basic rates for rural institutions were lower than they were for urban institutions. And for those institutions that, either because they actually shared a labor market with urban institutions or for other reasons experienced some of the same cost pressures as urban institutions, receiving the lower rate created an inequity. Therefore, Congress created the geographic reclassification, as a way of addressing, on a case-by-case basis, the instances in which treatment as a rural institution, with the consequent lower rate, seemed to produce an inequity. What happened on October 1, 1995, was theelimination of the differential between rural and urban hospitals in the standardized amount, except for the hospitals in urban areas with more than a million population, the so-called ``large urbans''. And it seemed to us that once the original reason to have a reclassification process was made moot by the raising of rural standardized amounts to the urban level, the rationale for such a reclassification had been eliminated. This despite the glitch that remained in the law under the much proportionately smaller issue of disproportionate share hospitals. Mr. Wicker. Let me just follow up on that question. I think this did happen on October 1st, 1996. So we're just half a year into it. But you're not contending that you were mandated by law to make this change. You will concede that this was discretionary on the part of your agency. Mr. Vladeck. Yes, sir. But I think we felt the action we took was consistent with the direction of the law that called for the elimination of the urban-rural distinction, and therefore, much of the initial rationale for the reclassification process. Mr. Wicker. Thank you, Mr. Chairman. Mr. Porter. Thank you, Mr. Wicker. Mr. Istook. intergovernmental cooperation Mr. Istook. Thank you, Mr. Chairman. I have to depart momentarily, so I'm not going to be able to get into anything with you, as much as I'm sure you'd love to take that time together. I do want to express appreciation for the cooperation and courtesy that your office has given. You've helped on a couple of waivers that involve Oklahoma, and helped us get some information through computer runs and so forth. That's very much appreciated. And although most of it will have to be, of course, followed up by correspondence, the essence of what I did want to go into with you comes down to this. When we in Congress, of course, debate something that has very large economic impact, involves a lot of money, it's a process, of course, that's out in the open, you hear all sorts of things, Congressman A thinks this, Congressman B thinks that, Congressman C thinks something different. And a variety of views are fully aired. When an initiative or a program comes to us, such as the President's budget and the President's proposals, I recognize, as other witnesses have said, everyone in the Administration is asked to be a team player and an advocate and present the ultimate approach that has been directed by the President. But in so doing, that sometimes hinders us, because we get the company line, rather than the details and the information that we often need to be able to make a decision. Now, with that in mind, I hope, one, you'll keep that in mind with the information we want to request of your office. Secondly, I did want to ask specifically on the so-called kids care initiative, and just looking at, in a highlight fashion, what has been the role of HCFA in developing the plan and the intended role in actually administering it? And I say developing it, because it certainly is my understanding that this is, these are ideas that were elsewhere and were perhaps run through HCFA as opposed to implemented. But I would like to know, since your agency is in such a critical position, what really was the role of HCFA in developing it, as opposed to being asked to endorse it. child health initiative Mr. Vladeck. I think it's not giving away any deep, dark executive branch secrets to say that a team was convened within the Department of Health and Human Services some time last fall to look at the issue of what came to be called the Child Health Initiative. That included our representatives as well as representatives from other agencies within the Department, both operating agencies and representatives of the Office of the Secretary. We were not the chair of that initiative, but we were very active participants. I would say that you then have to start parsing the pieces to talk about roles and involvement. The part of the Child Health Initiative that is the least specific and that speaks to working with the States on eligibility outreach for kids who are currently legally eligible for Medicaid but not enrolled in fact was something of a personal hobby horse of mine, and was a part of this process. My interest in this grew out of our work and our concerns with the implementation of the welfare reform legislation and the recognition that eligibility determination systems on the income maintenance side would be changing as a result of welfare reform. We are concerned about what that might mean for kids and families who previously might have been receiving cash assistance, or who would now be receiving, or who would be working or under other arrangements. So that was my personal thing. But I think it's fair to say this really was a team process. Again, to say more than one ordinarily would in these circumstances, the proposal to permit States the one year of continuous eligibility for kids on Medicaid, which is a major part of this proposal, and is obviously a very central Medicaid issue. And one which is very much at the heart of our operational responsibilities, is one which my colleague Dr. Jo Buford from the Office of the Assistant Secretary of Health first proposed to this work group, as we were going through various processes. We immediately seized on it as a valuable idea. But we were somewhat internally embarrassed, and now more publicly so that she thought of it first, from some of her experiences as a pediatrician. So I think the various pieces came from various places. But this has been around and we've been very much involved in the formulation of the entire package. Mr. Istook. Since my time is limited here, I would be interested to receive, and would ask you for, because I know in doing the evaluation process, even if you're for something, you try to make a critical and straightforward analysis of it. There's great concern, for example, that usually goes back to talking about programs during the LBJ Administration, where projections were only 1,000 percent off and so forth. I would certainly like to receive whatever documents were prepared within HCFA trying to analyze the possibilities that the financial projections, which we now have, might not be accurate, where the assumptions are, where the potential difficulties are. I'm certain that your agency looked into those. It may not be the bottom line of what is your opinion. But I think looking at those and receiving those from you would be very important to the efforts that we have underway. Mr. Vladeck. I would be happy to provide that information. John Klemm, who is our chief actuary for the Medicaid program, is probably as professional and as distinguished an estimater of Medicaid expenses as there is to be found. AndI think he himself would be the first to acknowledge that there is an element of art as well as science in all Medicaid budget estimating. But we'd be happy to share with you some of Mr. Klemm's professional work on trying to figure out the numbers on the subject. [The information follows:] Offset Folios 850-853 Insert here Mr. Istook. I appreciate that. We hope it doesn't come back. We're only a couple of years removed from having 20 some odd percent growth rates of that. Mr. Vladeck. Oh, understood. And we'd be happy to give you a lot more information about the estimating process. Mr. Istook. Thank you very much. Thank you, Mr. Chairman. Mr. Porter. Thank you, Mr. Istook. We have lost several of our members who had to attend the Rules Committee. I have one more question that I'd like to ask, and then I'll yield to either Mr. Wicker or Ms. DeLauro or both for any further questions. graduate medical education Dr. Vladeck, we have had in our country for a long time a system of training in terms of residence, through teaching hospitals, that in the present context of the growth of managed care, seems to be under great siege. We also now have the IOG who is conducting audits on some questionable standards that we will get into tomorrow. And I understand that you are proposing changes in the way you reimburse graduate medical education as well. What are we going to do to ensure that we have teaching hospitals in this country in the future, and aren't we going in the wrong direction here? Mr. Vladeck. Well, Mr. Chairman, I hope you will find, without prejudging the comments of my friends and colleagues in the academic medical community, that while they will not applaud everything we're proposing, they will respond in kind to our budget proposals about graduate medical education. We have in the President's budget responded to what they have identified as their principal priority relative to the changes in the health care system. And that is finding a way to protect Medicare payments for direct and indirect graduate medical education payments, as more and more of the Medicare program moves into managed care. And we have proposed to, in effect, remove those payments from the capitation payments to HMOs and pay them directly to the academic institutions. And I think again, that responds directly to their principal concern. We have proposed a number of frankly relatively modest additional changes to some of the ways in which we calculate payments for graduate medical education that try to tilt the incentives in that system in the direction in which everyone seems to believe we should be going: towards more investment and training of primary care professionals and towards more training outside the walls of the hospital in freestanding primary care settings of one sort or another. We are proposing some reductions over the course of the budget period in the size of the indirect medical education adjustment. We think those are substantially below the reductions that have been proposed by others. But they do speak to the broader question, which you quite appropriately introduced, and which, if I may, I'll spend one minute on. Increasingly, when we talk about Medicare's payments to academic medical centers, we are talking about the only formal payments remaining in the system specifically to support that enterprise. It was one of the reasons why we had some concerns about the financing mechanisms. The majority's notion in the 1995 legislation of some more broadly-based trust fund is something that has considerable appeal. I've talked to Mr. Thomas and others on the Ways and Means Committee about this whole issue. I do think we need a more broadly-based mechanism for eliciting broader participation from those who pay for health services in the support of academic medicine. In the meantime, we have this ambivalence of being the only guy in town and wanting to hold up our end and maintain our responsibility. But we're starting to feel a little bit like the Maytag repairman in that regard. We would very much like to work with you and others concerned about these issues to begin to explore a way to more broadly share support of this vitally important national objective. Mr. Porter. We understand that the overall effect of the changes you're proposing, however, is to provide less reimbursement than you are now. Is that correct? Mr. Vladeck. It would really depend on what one believes is happening with the growth of managed care and where those dollars are going. To the extent that the growth of Medicare HMOs is in fact diverting a significant amount of money from those institutions, I believe the net payments to academic medical centers would actually go up. In very small communities in which there is very little managed care penetration at the moment, it would be a reduction. Mr. Porter. Again, I think this is an issue that we have to address now. And I hope that it will also be on the table when negotiations go on between the White House and the Congress on these issues. Mr. Vladeck. I don't know how it can be avoided. I know of the concern for these institutions. I don't know if you had a chance to discuss this issue earlier today with Secretary Shalala, but I know there are few things she feels more strongly about. It has to be part of the agenda. Mr. Porter. Thank you. Mr. Wicker. private health insurance for families Mr. Wicker. Yes, Mr. Chairman. During your testimony in 1995, Mr. Vladeck, you mentioned the rate of growth of Medicaid as the number of people covered by private insurance has fallen dramatically.'' Along those lines, I'd like to ask you to comment about some proposals other than the Administration's which would help families purchase their private health insurance. A Senate task force will soon introduce legislation to make the cost of health insurance fully tax deductible for families with children, where those families have adjusted gross income of less than 300 percent of the poverty level. The Administration, in attempts to increase the number of families covered by private insurance, considered this proposal. Id' be happy to hear your comments on that sort of suggestion. Mr. Vladeck. Mr. Wicker, when you start talking about the Internal Revenue Code, you get out of my depth, both substantively as well as jurisdictionally. But I do know the Administration has supported the increase in the deductibility of health insurance premiums for self-employed persons in conjunction with the Congress over the last several years. And in general, my personal belief would be that it's a sensible thing to do. But the tradeoff between the revenue lost and the number of folks who would then be able to get insurance is really an area in which I can't claim any expertise. medicare fraud Mr. Wicker. Thank you. And just one quick thing. How much time does your agency spend investigating Medicare fraud? Mr. Vladeck. Well, it's a very interesting way you put the question, sir. Because in principal, the actual investigative authorities lie with the Inspector General and the law enforcement agencies such as the FBI and the State law enforcement agencies. We spend a very large amount of time and effort seeking to prevent and detect potential frauds through a variety of both manual and automated mechanisms. We have lots of computer edits we run on claims. We have lots of manual reviews we do. We do lots of audits, or our contractors do lots of audits, of health care performers. I'm probably over-reacting to your particular choice of words. Forgive me, because of the sensitivities of this. Once it becomes an investigation, in the legal sense, and since we don't have subpoena power, we turn over these matters or, increasingly, we're already working in conjunction with either folks from the Inspector General or folks from the FBI or other law enforcement authorities. So we spend a lot of time on these issues, but we try to be careful to say that we're not investigating them in the legal sense. Mr. Wicker. Thank you very much. closure Mr. Porter. Thank you, Mr. Wicker. Dr. Vladeck, there's a rumor that you might be leaving HCFA. Is there any truth to this rumor? Mr. Vladeck. Sir, I will definitely be leaving HCFA. The charter of appointment that I keep over my desk that I received from the President reminds me every day that I serve not only at the pleasure of the President, whom I knew when I got the appointment, but it then goes on to say ``for the time being.'' [Laughter.] In a job like this, the day you arrive you start leaving. I've said publicly that for family reasons, I think 1997 is likely to be my last year in this job. But I have no plans more specific than that. Mr. Porter. Well, if you're not back here at the desk next year, we'd like to say what a wonderful job you have been doing and are doing at HCFA, and we appreciate yourexcellent testimony today. You've been very forthcoming with our questions, and we look forward to working closely with you for the remainder of your term, however long it may be. Mr. Vladeck. Well, I appreciate that, although with that comment, I'd probably better not come back next year. [Laughter.] Mr. Porter. I just didn't want to miss the opportunity. Mr. Vladeck. I really do appreciate it, Mr. Chairman. Thank you. Mr. Porter. Thank you. The subcommittee will stand in recess for five minutes. [The following questions were submitted to be answered for the record:] Offset Folios 862 to 1078 Insert Here Thursday, February 13, 1997. ADMINISTRATION FOR CHILDREN AND FAMILIES WITNESSES OLIVIA GOLDEN DENNIS P. WILLIAMS, DEPUTY ASSISTANT SECRETARY FOR BUDGET, DEPARTMENT OF HEALTH AND HUMAN SERVICES Mr. Porter. The subcommittee will come to order. I want to apologize, Ms. Golden, and Dennis, and everyone in the room. There just aren't enough hours in the day. I'm sorry to come in late. We will proceed with the hearings on the Administration for Children and Families. Before we do, Ms. Golden, let me yield to Dennis Williams, who wanted to make a correction on the record of something from this morning's hearing. Mr. Williams. Yes, Mr. Chairman. You asked me this morning about a proposal in the budget to exempt CDC from the vaccine excise tax. And you asked me whether we were asking you to take this action or the Ways and Means Committee. I said this committee, but I was inaccurate about that--oh, I'm sorry. I said Ways and Means, and I was inaccurate. We are asking, through appropriation language, we are asking this committee to take action. And the reason we're doing this, the Vaccine Compensation Trust Fund, these revenues go into that Trust Fund, the Trust Fund is in surplus at the moment. There's more than adequate revenues to meet its obligations in 1998. Therefore, we're asking that the vaccine for children program and the immunization program at CDC be exempt from this for the year, because the revenue is not required. By asking this committee to take that action, it actually provides some additional revenues and outlays actually available to us to spend for other purposes. That's why we've asked this committee to take that action. Mr. Porter. And Dennis, you're aware that we cannot do that without Ways and Means sign-off. Mr. Williams. Yes. I understand you'd have to consult with them. Mr. Porter. Thank you. Mr. Williams. But it does have a benefit to this committee if both parties agree. Mr. Porter. Absolutely. Introduction of Witness Now, Olivia Golden, the Administration for Children and Families, please proceed. Ms. Golden. Thank you. Mr. Chairman, Congressman Miller, members of the subcommittee, I'm pleased to present the President's budget request for the Administration for Children and Families for fiscal year 1998. I'm accompanied, as you know, by Dennis Williams, Deputy Assistant Secretary for Budget for the Department. President Clinton has presented to Congress a budget which addresses the concerns of Americans, serves their interest and creates opportunity, a budget that keeps faith with the longstanding commitments of this Department. In keeping with the Administration's policy to increase support for programs that promote economic security and independence, and healthy development for our children, while working toward more efficient government, our budget is targeted in areas that have produced significant payoffs. The fiscal year 1998 budget for the Administration for Children and Families is $37 billion, of which $15 billion comes from new requested budget authority. The remaining amount is available through the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, which appropriated $19 billion, plus $3 billion of available carry-over balances in entitlement programs. This budget meets the challenge of continuing investments which will lead to future service improvements, cost savings and ultimately citizens who are more independent. At a time of very tight resources, we are seeking increases for Head Start, for the Child Care and Development block grant, and for the Violent Crime Reduction programs. In addition, we are requesting funds to address the urgent need to find permanent homes for children who too often remain in the foster care system for many years, with a goal of 54,000 children to be adopted or placed in other permanent settings in the year 2002. The fiscal year 1998 budget request includes approximately $8 billion for ACF discretionary programs. To create a positive future, we must build on peoples' strengths, hopes and successes, and act together to ensure appropriate and full opportunities to grow, learn and thrive for all our children and youth. At the same time, we must create stability and economic security for our families and communities. While the Administration for Children and Families funds a wide range of discretionary programs, including Low Income Home Energy Assistance, community services, programs for the developmentally disabled, for Native Americans, for refugees, over 65 percent of ACF's discretionary spending supports programs serving young children through the Head Start and Child Care and Development block grant programs. I would like to take this opportunity to highlight just a few of our key programmatic initiatives. head start The Head Start program gives Head Start children who are the most at risk a better chance at learning and of success in life. In fiscal year 1998, we are requesting $4.3 billion, a $324 million increase. This level will support an additional 36,000 children, for a total enrollment of 836,000 children and their families. This increase continues to move us towards the President's goal of providing services to 1 million children by the year 2002. Because early investment in children gives them the best chance of continued success, our fiscal year 1998 request also continues our commitment to the early Head Start program, increasing 1997 enrollment by 8,000 infants and toddlers to 35,000 in fiscal year 1998. In addition, this investment in Head Start builds on our success over the past few years in ensuring quality throughout the program. The performance of Head Start grantees continues to be closely assessed. Funds continue to be targeted to provide training and technical assistance to poorly performing grantees. And if grantees are found to have deficiencies which are not corrected within agreed-upon time frames, HHS terminates their Head Start grant and appoints a replacement agency to provide quality services to that community. child care and development block grant The best safety net for our children is and always will be strong families. Whether they are struggling to get jobs or to keep them, we know that families need quality child care to keep their children safe. In fiscal year 1997, Congress appropriated $937 million of discretionary funds for the Child Care and Development Block Grant for fiscal year 1998. We are requesting an additional $63 million for fiscal year 1998, the amount needed to bring the block grant to its authorized discretionary level of $1 billion. Public Law 104-193 consolidated the Child Care and Development Block Grant discretionary funds, and the former Title IV(a) Child Care Entitlement program into a single, integrated child care program. In fiscal year 1998, a total of $3 billion will be available for child care services. Nevertheless, as welfare reform is implemented, States will face increased pressures to provide child care to support the new work participation requirements. Additional child care dollars will help provide critical support to States' efforts to expand services, while continuing their commitment to providing quality child care. Approximately 660,000 children are currently served with the Child Care and Development block grant. The need for additional child care is expected to continue to increase as a result of welfare reform. Child care funds currently available for the working poor reach only a small percentage of the estimated 9 million children in families with a single working parent or dual working parents that could be eligible for Child Care and Development block grant funds. On average, poor families pay 18 percent of their income on child care. In December, 1994, the General Accounting Office reported that the availability of affordable child care is a decisive factor in allowing low income mothers to work. So the Administration's fiscal year 1998 request will allow States to serve more families, keeping families off welfare and giving parents peace of mind, knowing that their children are safe and healthy in child care. We must continue to expand child care opportunities to those working parents who are struggling to remain out of the welfare system. We must continue to build the quality of those opportunities, so that children are in care that is safe and supportive of their development. And as we see welfare reform efforts successfully moving more and more parents to work, we must work to help them in their efforts to provide care for their children. child welfare and child protection In addition, this budget reflects a strong Administration commitment to the safety, the permanence and the well being of children who have been abused and neglected or are in danger of abuse and neglect. Each year, millions of children are the subjects of a report of abuse and neglect. About 40 percent of thosereports are substantiated, affecting nearly 1 million children a year. At the end of 1995, over 450,000 children were in foster care, an increase of almost 42 percent since 1988. While many of these children will return home, nearly 100,000 will not. These are large numbers, and the children behind these numbers are our most vulnerable children, children whose safety, well being and healthy development depend on how well our services respond to these families. The Administration seeks to improve this situation through a major adoption initiative whose goal is to double the number of children who are adopted from the foster care system or placed in other permanent settings in the year 2002. This will increase the number of children adopted or placed from 27,000 in 1996 to our goal of 54,000 in 2002. In partnership with the States, we will identify barriers to permanent placement, set individual State goals for each year, and reward successful performance and raise public awareness. violent crime reduction In addition, the fiscal year 1998 request includes $99 million to reduce the unacceptable violence that threatens all of us and cuts short too many lives. These funds include $13 million for the Community Schools Youth Services and Supervision Grant Program. It provides communities with resources to develop, coordinate and deliver academic enrichment and job training and employment activities for youth, to provide links to caring adults, and develop family and community support in communities beset by crime and violence. It also includes $70 million for the Family Violence program, including battered women's shelters, which provide immediate assistance to victims of violence and their dependents, and $1 million will continue the activities of the National Domestic Violence hotline. This national, 24-hour toll-free hotline was first funded in fiscal year 1995, and began providing crisis assistance, counseling and local shelter referrals across the country on February 21st, 1996. Over 72,000 calls have been received since the hotline became operational. Our budget fully funds Violence Against Women Act programs in fiscal year 1998. entitlement programs Entitlement programs represent approximately $27 billion of the $37 billion budget of the Administration for Children and Families. As part of welfare reform, Congress pre-appropriated $19 billion of the $27 billion needed in fiscal year 1998. New fiscal year 1998 budget authority requested for entitlement programs is approximately $8 billion. Last summer, we made a new beginning on one of our Nation's most vexing problems, the welfare system. We have begun to help many people in our national community to help themselves. The children of welfare are more likely to drop out of school, to run afoul of the law, to become teen parents, to raise their own children on welfare. Our goal is for the system no longer to fail these children and families, trapping many of them in a cycle of dependency. The system should help people to move from welfare to work, and it will do so by requiring work of every able-bodied person, by protecting children, by providing child care, and by promoting parental responsibility through tougher child support enforcement. We have been working closely with States and territories as they tailor reform plans to meet the needs of their communities. As of February 5th, we have certified new welfare reform plans for 35 of the 41 States and one territory that had submitted plans. Thank you, Mr. Chairman. I would be happy to answer any questions you may have. [The prepared statement follows:] Offset Folios 1090 to 1093 Insert here head start--increase Mr. Porter. Ms. Golden, thank you for that excellent statement. Let's begin with Head Start. And I'll proceed through different segments. I'm going to yield to Mr. Miller in 10 minutes and we'll go back and forth and include others that might come in. Ms. Golden, appropriations for the Head Start program have increased dramatically over the past several years, starting in 1990 and continuing through the current fiscal year. In 1990, the appropriation was $1.5 billion, and we are now at $4 billion for fiscal year 1997. Your request for fiscal year 1998 is $4.3 billion, an 8 percent increase. Can you tell the committee how you have used the increased appropriations in recent years, and how you plan to spend the increase that you are requesting for fiscal year 1998? Ms. Golden. Yes, and thank you, Mr. Chairman, for highlighting Head Start, which I know has been both a bipartisan priority of the committee and of the Congress, and a key priority for the President. The increase over recent years, which has been about $2.1 billion since fiscal year 1992, has gone for several purposes. One critical purpose has been to increase the number of children enrolled which in fiscal year 1997, is up to 800,000 children. The President has aimed to reach 1 million children, or about half of those eligible, by the year 2002. Enabling the most needy children to be ready for school is critical for all the rest of our education goals. A second use of the resources has been to invest in quality. One of the priorities of the Congress and the Administration in the bipartisan 1994 reauthorization was to assure that every Head Start program across the country works by making sure that the level of quality in every program is what it ought to be. And so the Congress set aside resources to invest in the quality of programs. And we've been doing that. A third key area of investment has been investment in the new early Head Start program, to assure that among the increase in children, we reached some families with babies and toddlers, because of the compelling evidence that reaching children early is particularly effective at giving them a head start. Mr. Porter. In your funding guidance document that you sent to grantees in December, you indicated that you had not yet decided how to spend the approximately $227 million that you had set aside in fiscal year 1997 for program expansion. Is that still under consideration, or can you tell us how those expansion funds will be spent? Ms. Golden. We're in the final stages of internal clearance, so we don't have a final document at this time. Expansion funds will be spent to reach 50,000 children nationwide. And we're still working out the final details. Mr. Porter. Do you foresee expanding all Head Start programs into full day programs, and if so, why? What would be the cost of making such a change? Ms. Golden. Our expectation is that there will always be a mix of needs among Head Start children. There will always be some children who need part day services. But there are an increasing number of children who need full day services, because their parents are working. About 50 percent of Head Start children, for example, have a parent on welfare. And as we move towards welfare reform, more and more of those parents will be working. What we find as we look around the country is that there is an enormous amount of creativity in terms of Head Start and child care partnerships which bring resources together to benefit children with full day services. So our expectation is that local grantees are probably going to need to provide a mix of services, and that creative partnerships will probably be an important part of that. What we need to do is make sure that a parent doesn't have to choose between moving to work and behaving responsibly under welfare reform and having a Head Start spot for their child. So that's the general direction that we see ahead of us. Mr. Porter. According to the guidance document, about 55 percent of the 1997 funding increase will be spent for program expansion. Can you tell us--well, I think you just answered that. Tell us how the rest of the funds are being spent. Ms. Golden. There are a variety of setasides in the statute in terms of quality, cost of living, and technical assistance. head start--cost per child Mr. Porter. Have you traced the per pupil, per child expenditure under Head Start, and how much more it is costing per child today than it did not very long ago? Ms. Golden. I don't have the exact figure in front of me. I can tell you that when the Congress passed the 1994 Reauthorization, there were two setasides that were meant to ensure that the cost per child was high enough to provide quality. One is the cost of living setaside. So the cost per child has risen with the cost of living. The second was a setaside to provide for quality investment, because of a concern that in the previous few years, the increase in number of children had been too rapid and had eroded quality. So the Congress committed to that investment in quality. So we've had an increase to account for the cost of living, plus some additional investment to ensure quality. I can provide you with the exact numbers. [The information follows:] Ms. Golden. In FY 1992 the average Head Start cost per child was $3,415; in FY 1993 it was $3,758; in FY 1994 it was $4,343; in FY 1995 it was $4,534; in FY 1996 it was $4,571; and in FY 1997 it is estimated at $4,977. Mr. Porter. Tell me what you mean when you say investment to improve quality. I don't quite understand that. Ms. Golden. What the Congress did was set aside 25 percent of the increased funds for a range of quality purposes. And the statute gives a variety of examples. One example would be a program where the playground is falling apart, and they've never had the resources to invest in it. Mr. Porter. I see. Ms. Golden. Another example would be a program where the teacher salaries have eroded over time, and they just can't fill the positions and there's turnover. So they're not able to meet the children's needs. Those would be the kinds of things that would be appropriate quality expenditures. head start--eligible population Mr. Porter. Okay. What percentage of the potentially eligible preschool children is currently being served by Head Start, and does the Administration have a goal in terms of what percentage of eligibles the program should eventually serve? Ms. Golden. The goal that we're working toward at this point is to reach 1 million children in the year 2002. That's about half of the eligible three and four year olds. That represents a real commitment to the program as well as the strongest growth we can sustain in the context of the overall balanced budget. head start--research Mr. Porter. Despite Head Start's long history and popularity, definitive research seems to be somewhat lacking concerning the program's effectiveness. Is the Department currently carrying out any longitudinal research studies that focus specifically on Head Start participants? Ms. Golden. Yes. Let me highlight for you, Congressman, both what I think the research says now and what we're doing to add to that. Because I think that's enormously important. The research is clear that Head Start enables children to reach school more ready to learn. That's something the bipartisan advisory committee highlighted, and that reviews of the research show. Children who have been in Head Start are academically and in health terms more ready to learn. A recent review by the Packard Foundation looks at about 150 studies and highlights the effectiveness of Head Start and of other early childhood programs in ensuring longer term effects. We don't believe we should stop with that. I think you're absolutely right to highlight the need for additional research. In the longitudinal arena, we're making quite a number of investments. We're investing in partnership with other agencies, on a number of studies--NICHD, which is doing a child care study, the Department of Education, and NIMH. We're also investing in a major research study of early Head Start, which is particularly important. That's the part of the program that begins with infants and toddlers. This study is a major random assignment study that both has a national researcher and a set of distinguished local researchers engaged with the program. head start--early childhood initiative Mr. Porter. I'm certain, this is not on the subject directly, but I'm certain you have been talking with Rob Reiner of Castle Rock Productions about their early childhood initiative. Ms. Golden. Not personally, but I am aware of it. Mr. Porter. I wondered what interface, if you haven't talked to him, I'm sure he's going to talk to you, what interface you would have with that initiative, which seems to be really going to increase the awareness of the American people of the importance of nurturing during the first three years of childhood and providing the kinds of love and care and even instruction that can change the future course of many of the lives of young children. I was very impressed, I spent maybe 45 minutes or longer talking to him, and felt that this really had the potential. Because he's going to hit so many different bases of really having some impact. And I would think that the Government, particularly your administration, would have a great deal of interest in this. And perhaps have a very definite role to play, as well as what he's doing in the private sector. Ms. Golden. We're very excited, and the Administration has been working with him. I haven't had the opportunity yet myself. But I share everything you've said, it's enormously important. I think the Congress was absolutely right in 1994 to see ahead to the importance of those early years of life and invest in Early Head Start. Because I think that the new research is confirming what I think people in the field believe, but it's taking a little while for the science to catch up of how enormously important those years are. So thank you for the suggestion. Mr. Porter. Thank you. Mr. Miller. Mr. Miller. Thank you, Mr. Chairman. elimination of programs I'm very pleased with what I'm seeing here today, and I have a couple questions about your having to make some tough choices and priorities obviously, all these great programs and how do you allocate money and scarce resources. I know you went through some tough choice. Do you know how many programs within your area do not exist in this budget that were here two years ago? A lot of them were small ones. And how many new ones are being created? Ms. Golden. I can tell you some of the examples. I'm not sure I have a total. This budget, for example, does not fund four discretionary programs within the community services arena providing those resources through a block grant instead. This budget proposes to consolidate a set of small programs providing services to runaway and homeless youth, and not to provide those in separate programs, in order to provide for more coordinated services. An initiative, the youth gang prevention initiative, one that was, we think it's important to invest in youth, but what we had here was one investment in community schools. There are certain ways, probably at least half a dozen, I don't think I can give you an exact number. Mr. Miller. Consolidation makes lots of sense, so I'm glad to see us moving in that direction. The overall funding of the discretionary part of it, I'm glad to see you establishing certain priorities, for example, the summary page I'm looking at is page 66. It just lists the $8 billion of discretionary spending. It's the overview, I guess, that has that list. When Secretary Shalala was here the other day, and we look at the entire budget of things within this committee, there are some items that we support very highly on the committee. For example, NIH. An article in the Washington Post Sunday or Monday talked about how the President, I'm using this as an illustration, that the Administration gave a low inflationary increase to NIH, and it's an area that, on this committee, wide bipartisan support, and we'll all give NIH as much as we feel we can afford. The Administration knows we're going to do that, they're not opposed to it. But we're going to make that tough choice. So I kind of want to go through here, Head Start, wide bipartisan support. Your total amount of money is increased only $210 million, but $324 million goes to Head Start. And I'm trying to see where the minuses are and what the problems are you're going to create by that, in order to hold your increase as low as you have, and what impact, that is, Refugee Entry and Assistance is down $31 million, I see. Community Services Block Grant, down $74 million. What impact will those losses mean? Ms. Golden. Let me speak to each of those. In the Refugee and Entrance Assistance example, that's not a change in services. That's better forecasting. So that one should not have an impact. We anticipate the same level of refugee entrance this year, and that's the dollar amount we anticipate will be needed. In the case of the Community Services Block Grant, we are proposing a level that's higher than fiscal year 1996 and higher than the Administration proposed last year. It isunder the constraints of an overall balanced budget, less than the Congress provided last year. I think that was a hard choice. Our hope is that many of those are important activities that States may be able to fund in other ways. They now have more flexibility under the welfare block grants. They may be able to do some of the work-focused activities in other ways. That was a difficult choice. Mr. Miller. That was a discretionary, the community services discretionary activities is down $47 million? Ms. Golden. That's the example I gave you where again, as a difficult choice, we're not funding individual discretionary programs. They would need to be supported by States through the overall Community Services Block Grant or other flexible resources. Mr. Porter. Mr. Miller, if I could interrupt just a moment. I'm going to go ahead and vote and leave you in the Chair. If I can get back before you have to go, otherwise please just recess. head start--quality Mr. Miller [assuming Chair]. Right. Great, thank you. Let me go back to Head Start. I have visited the Head Starts in my area, my two main counties in Florida are Sarasota and Manatee Counties. We also have a migrant Head Start in southern Hillsboro County which I visited a couple of years ago. I guess that's in the total Head Start program. Ms. Golden. It is. Mr. Miller. And certainly there's widespread support for it, in fact, I am chairing a fund raiser for the program coming up some time in April, I think, or something like that. My wife and I are, which I'm glad to see a program like that going outside of just relying on Federal funding for a program. I'm delighted to see that, and I'm delighted to see, this is the one in Sarasota where they have a board that is a good cross section of the community, the business community and all providing for it. Ms. Golden. Terrific. Mr. Miller. So it's a good program. But at any rate, there were real concerns about quality, I remember, back in 1994. And previously, Head Start had never terminated a program. Now, I think you have started saying hey, we're getting tough. Can you talk about what's happened over the past few years because of putting the pressure on those that are not delivering the quality that we expect? Ms. Golden. We're very proud of what we've been able to accomplish. We've terminated about 65 programs since October of 1993. And have many more that we have turned around. Because of course, what you hope is not to get to the point of termination. You hope by identifying the needs, creating a corrective action plan and working with the program, you're able to deliver the kind of quality you intended. There are a couple of things I'm particularly proud of. One is that we've had extraordinary support from the overall Head Start community. I think the example you give from Sarasota, in most cases, people who provide Head Start programs, who work in Head Start programs, care about quality. And they don't want other programs to be out there that aren't meeting those standards. So we've had extraordinary support. And I believe that what it's meant is that we are now delivering high quality services to children and that we've increased the standards everywhere. We've also been able to do some other things that contribute to that goal. We were able, in November to publish a revision of the Head Start performance standards that the Congress had asked us to in the reauthorization. This was the first major revision of the standards since they were published in 1978, and provide some, again going back to Chairman Porter's comments about very young children, provide for the first time the key standards for quality all the way from birth to four or five years old, so that we've got it all in one place for grantees to work from. I believe that it's been an important accomplishment that we can all be proud of. head start--cost per child compared to child care Mr. Miller. What is the cost of Head Start per person, per child, compared, especially if you have the comparable hours, about, to a day care program? Ms. Golden. Well, our data on child care are not very good because the Federal Government provides resources to States, which match them and combine them with other sources and spend them in lots of ways. It's clear that the cost of Head Start is more like a kindergarten or preschool program than it is like a child care program, because it focuses on providing quality services and health care services. It is hard to figure out the child care data. Because what you have is a Federal share that will be combined in a variety of ways to serve a child. Mr. Miller. With this large amount of additional money flowing into child care, and we're all delighted that it ended up flowing in there, is there going to be a better way to track that? Ms. Golden. I believe tracking is enormously important. We are working on a couple of things. The welfare reform legislation includes some data requirements. And in addition, we're trying to set up some research studies. In some cases, we want partnerships where we will work with an academic partner and a state agency partner to be able to track the child care information better. I believe that is important. child care funds Mr. Miller. When I was home a couple weeks ago, I spent time actually in the welfare offices going through interviews with applicants. It was interesting. But one of the questions that kept coming up was child care money. I know there's child care money. And the money is somewhere. I'm assuming it's in Tallahassee in my State. But they don't have it, or have access to it yet. Where does that stand? The money is apparently at the State capitals, is that right? Ms. Golden. That's where it should be. I think they should talk with Tallahassee. We can certainly try to track down if there's been a specific issue in Florida. Essentially, all the States came in October 1st, which is when the child care provisions of the new law became effective, with their requests. All but one State asked for everything that they could have, and we do expect that one State to come back and ask for the rest. The actual process of getting the money out to States should be moving smoothly. I don't know of a specific problem. Mr. Miller. It's a very large amount of money. I mean, it's a big increase over last year. Is there going to be a problem with too much money hitting the system at one time, or are they going to be able to absorb that money quickly? Ms. Golden. What we know right now is that there's a huge demand for child care. We're hearing that from everyone. Andthat there---- Mr. Miller. But are the providers there to deliver? Ms. Golden. So far as we know. The States have said they want and expect to spend all the money, except one State, which we think will come back for the rest when its legislature meets. So we expect them all to be asking for it. We intend to work with the States around any administrative obstacles that they may have, and we can certainly come back to you later in the year. Many State legislatures are meeting for the first time since the welfare reform legislation was passed. So we'll know a lot more about the specifics in a few weeks. head start--increase Mr. Miller. Head Start had a big increase two years in a row, assuming this increase goes through this time, it will be big increases several times in a row, and can it absorb it without throwing too much at the system? Ms. Golden. Well, I guess I do have the sense that in the case of Head Start, we've really built the ability of the programs, and there are waiting lists and there are needs out there. I think it's important to be thinking about that, but I believe the capacity also is out there. Mr. Miller. We're having a vote on a rule, I think. Can we recess and come right back? Mr. Hoyer. Whatever you want to do. I'm going to come back. Mr. Miller. Yes, why don't we take a recess. [Recess.] Mr. Porter [resuming Chair]. The subcommittee will come to order. Mrs. Northup of Kentucky. head start--partnerships Mrs. Northup. I had another subcommittee meeting, so I missed some of your remarks, but I have a summary here. I do want to ask you about the Head Start program. As local communities begin to address welfare reform and the challenges, there is a need for early childhood education. What are the availability of waivers so that they can integrate money, Head Start money with, say, private tuition money and other monies that maybe come from other places? Ms. Golden. That's an enormously important issue, how communities can put together programs that build on the quality of Head Start and provide or leverage other resources. I haven't yet had any experience where a community needed a waiver to do that. There's a lot of creativity and flexibility going on out there right now. There are examples right now all over the country. And what we'd like to do is provide technical assistance and share experiences, so that communities can see how to do that. It's particularly important, you mentioned welfare reform, and Head Start programs need to be able to respond to the needs of children who need full day services in a partnership way. That's enormously important. Mrs. Northup. Well, actually, I'd like to bring to your attention to Louisville, Kentucky. They have found you all fairly inflexible. And have proposed a program that would combine funding sources and federal money with private money, and feel very discouraged. It's possible that you would find that the law doesn't allow it, and if that's true, I'd like to know, so that we can maybe look at changing the law. But the complaint that they have right now is the inflexibility coming from your Department. Ms. Golden. I'd be happy to follow up with Louisville. I know we had some conversations where we provided information, and I will be glad to follow up. Mrs. Northup. And you know, I'd like to also encourage you, separate from appropriations, to be as flexible as you can. Because I know our State is probably like many States trying to combine scarce resources at the State, local and Federal level for Head Start. And to give them the ability to include as many children in as comprehensive a way as possible is obviously the goal. Ms. Golden. Yes. I believe that's right. The goal is really to ensure that the Head Start quality and the parent involvement and the effectiveness can really reach children through this range of funding sources. adoption initiative Mrs. Northup. I understand that the adoption initiative is under your office. And I'd like to ask you, since I realize the adoption laws in each State are the product of each State, but if children are not available for adoption, then it becomes a Federal problem, if then we have those children in this stream longer than they need be. Ms. Golden. Absolutely. Mrs. Northup. It's been debated, it's been strongly debated, that terminating parental rights of children earlier would make a tremendous difference. That children develop more emotional, educational challenges the longer they are in foster homes, back in their natural homes and removed again, all of these things complicate the problems. So are you doing anything with States to encourage the speedup of termination of parental rights, when consistently the parents do not go through the program they need to, do not complete it, and then the child is returned to State care? Ms. Golden. Let me give you an overview of what we're doing to work with the States to speed up adoptions, and then focus on the termination of parental rights issue. The President, in December, announced a commitment to double the number of children placed into adoption or other permanent placements from the public child welfare system by the year 2002, from 27,000 to 54,000. And he asked the Secretary of Health and Human Services to report back to him in 60 days on the specific recommendations. That report is due tomorrow. We will be presenting it to the President tomorrow and have much more detail. We've been consulting with approximately 600 people over that period, through focus groups. And you're absolutely right to highlight the wide array of barriers. We've heard a lot about a whole lot of reasons why State agencies and courts, even with the best will in the world, aren't moving the system effectively. There's been an enormous amount of Congressional leadership on that issue, and we are very eager to work with you and others in Congress who are committed to that issue. We'll have more details after we give the report to the President tomorrow. But I would highlight the things for which we seek budget authority. Two things that are probably relevant. One is technical assistance to States. We need to get the best expertise out there. And we need to share information across States. There have been States that have implemented some excellent reforms in termination of parental rights State laws and other States need to know about them. We're also asking for authority for grants to States to do some intensive work in removing some of the barriers to adoption within each State. Again, with the hope that you could get a model which could be disseminated. And we're also intending, for the first time, to do performance based funding in child welfare. We're going to be proposing an adoption incentive that rewards States for successfully increasing the number of adoptions. I would really look forward to working with you in that arena. Mrs. Northup. I understood from the Secretary that there was no prohibitions or obstacles to adopting across racial lines. That is not what I have heard locally. But she assured me there were no reluctances there. Ms. Golden. I can tell you a little bit about the status. As you know, the Congress passed the Multi-Ethnic Placement Act and then amended it to strengthen it. We've provided information to the States, and we're in the process of providing guidance that would include penalties. I believe that Kentucky may be one of the States that is not completely in compliance, but I could check that and provide you with information if that would be helpful. Mrs. Northup. Thank you, yes. [The information follows:] Ms. Golden. Currently, Kentucky is one of two States not fully in compliance with the requirements of the Multiethnic Placement Act. Kentucky, however, has been cooperative throughout this process and the State is currently working with the Office of Civil Rights to complete the changes necessary to come into compliance. Mr. Porter. Thank you, Ms. Northup. Mr. Wicker. Mr. Wicker. Mr. Chairman, in light of the hour, I have some questions which I will submit for the record. But I will not ask them at this particular time. Mr. Porter. All right, thank you, Mr. Wicker. funds for refugees Ms. Golden, your request includes a $17 million reduction in funding for transitional and medical services. The request also indicates that the refugee and entrance ceiling will remain level with 90,000 as compared to 1997. Why are you requesting a decrease in TAMS if the ceiling remains the same, and is the request sufficient to continue the current policy of providing eight months of assistance? Ms. Golden. Staff assures me that the request is sufficient, that it isn't a change in services, but improved forecasting, as well, I believe, as some carry-over money. head start--performance standards Mr. Porter. Okay, thank you. Last November the Department issued new Head Start program performance standards. I think I'm going to pass on this question at this point in time and ask you to answer that for the record. community services block grant Congress provided a substantial appropriation increase for the Community Services block grant in fiscal year 1997. We increased it from $389 million in fiscal year 1996 to $489 million in fiscal year 1997. Now we see that you're proposing to cut it back to $414 million in fiscal year 1998, a reduction of $75 million or 15 percent. The budget documents don't appear to indicate why you're cutting back on this block grant. Can you tell us why? And wouldn't it be a hardship on the States and local community action agencies to increase this program substantially in one year, and then cut it substantially in the next? How does that make sense? Ms. Golden. This was of course a difficult set of choices. In the context of a balanced budget, we had to make some difficult choices. The request for the Community Services Block Grant is greater than the Administration's request last year and greater than the 1996 level. You're right, that it doesn't reach the one time increase in funding that Congress provided in 1997. I think that our hope is, that part of it is just about a year with difficult choices. The other is that it is a year where States have more flexibility for some of the kinds of welfare to work community action, community services kinds of activities within their welfare reform block grant authority. So we are hoping that the key needs will be met. Mr. Porter. Thank you. Mr. Hoyer. programs for the developmentally disabled Mr. Hoyer. Ms. Golden, welcome to the committee. I apologize for not being here; we had another committee meeting, and I'm the ranking member and had to be there. As you know, I'm very interested in Head Start and other early childhood programs. But let me ask you another question that Ms. Pelosi wanted to ask. She could not be here. She was very interested in the developmental disabilities program, as you know, and noted their level funding. She wanted to ask you about that, and what impact that would have. Ms. Golden. Thank you, Congressman. And by the way, I want to thank you for your commitment to early childhood programs as well. The developmental disabilities programs are enormously important. We're finding that they are particularly important in a year like this one where we're trying to provide support and assistance to the States as they implement welfare reform and move families to work in cases where many families have members who are developmentally disabled. So the expertise we've developed is particularly important. The choice to level fund those programs was again a difficult choice in a year of tight budgets. We believe that it would be a considerable mistake to make any further cuts in them. We really believe that they are important and high priority and that we need to sustain at least level funding in a year of very tight budgets. Mr. Hoyer. Let me do a follow-up for Ms. Pelosi. Assuming level funding, what would be the reduction in services? Ms. Golden. I don't have a specific number for that. I think we are hoping to work as hard as we can with the developmental disability community and with a variety of sources of funding to see how much of services we can maintain. head start Mr. Hoyer. Regarding Head Start, you have a significant increase, which I was pleased to see. And I know that a portion of that is to add 36,000 new children? Ms. Golden. Yes. Mr. Hoyer. Okay, 36,000 new infants and toddlers. Ms. Golden. A total increase of 36,000 children, an increase of 8,000 infants and toddlers. Mr. Hoyer. Let me ask you something in terms of the Head Start performance. As you know, I've been very interested in that and I'm a very strong supporter. But I believe that, as you know, from 1966 through 1993, none were canceled. You indicated that 65 programs were terminated as of, I suppose, today, although the Secretary mentioned 40, and another 100 on the list. But that was probably a round figure. Ms. Golden. It was probably the number from the previous testimony, last year. Mr. Hoyer. Okay. Sixty-five programs terminated; do you know how many are on probation? Ms. Golden. I don't know that number, but I could get it for you. Mr. Hoyer. Okay. Do you know the number who were put on probation and who have gotten off probation and are still operating? That is to say, did we had a successful interventions? Ms. Golden. Well over 100. And it may be getting close to 200 at this point. One of the things we've found, and I think we owe you and many others in the Congress a great deal of gratitude for this, is that when you have the kinds of tough tools that the 1994 reauthorization provided and you set a deadline, you often really wake up a program's board and really get a commitment to turning that program around. And it makes it possible to improve the quality in a way that was harder to do before. Mr. Hoyer. Okay. Again, one of the things that I've been very interested in and I think is going to be a very big issue, is coordinated services. Senator Hatfield is no longer a member of the Senate, but as you know, he had a variation of the coordinated services that I've been talking about for some period of time, with waivers and a consolidation of money into single programs. Can you tell me what you're doing with reference to the Department's role, and then the Department's role as it relates to the Department of Education and the Department of Labor? Ms. Golden. Yes, there are quite a variety of different activities. And what we need to do is really link all of them together effectively. We've been doing a number of things across Head Start and child care to build those links more effectively. An example would be, this is actually linked to the quality issue you were describing a moment ago, I was out in Denver a year ago where we needed to close a program that wasn't effective. One of the concerns in that community was that it wasn't effectively linked to child care. We're expecting to get investment in the replacement grantee that will be a unique and creative partnership across early childhood programs, Head Start and child care. There are examples across the country, and we need to be disseminating that information. We've also been trying to do joint research investments across Head Start, child care and education, as well as joint technical assistance. We're going to try to make sure that's provided more collaboratively. With the Department of Education, I think we have several areas where there's some history and experience. An example would be the Head Start performance standards that we published in November in response to the reauthorization. We worked on those very closely with the Department of Education, because the early childhood education portions of them also had implications for the Department of Education's early childhood programs. And so we worked together every step of the way. We need to develop some new links, though, because welfare reform will push us into the new partnerships around education and training and work focus programs for adults. So I guess I would say, I believe we've made progress, but I would not say to you that we're all the way there yet. Mr. Hoyer. I've been, as Mr. Williams will tell you, interested in this for a long, long time. Ms. Golden. Absolutely. head start--capital expenditures Mr. Hoyer. We did, as you know, appropriate some money three years ago and we had a study done. I'm going to pursue that this year and look forward to working with you on that. On Head Start, you may not have this, but I was very concerned and I discussed it with the Chairman and others on the capital expenditures of Head Start funds. As you know, historically they could not utilize funds for capital expenditures. We took that off prohibition. I'm very concerned about it because I'm not so sure that that'swhere I think the most productive use of funds is. Can you tell me, of the fiscal year 1996 funds, what amount, if any, was authorized for capital expenditures to construct? Ms. Golden. We can get you the specific number for the record. Mr. Hoyer. Could you get me that? Ms. Golden. I would guess it's very small. Because we have been focusing particularly on reaching children and on some of the investments in people. I'm sure there are particular programs where a facility was just not acceptable any more, where they spent some money to rehabilitate it. We should get you a number, I don't have that available. Mr. Hoyer. I'd appreciate your getting that. [The information follows:] Ms. Golden. In FY 1996, an estimated $30 million was committed by Head Start grantees to purchase or undertake a major renovation of a Head Start facility. Mr. Hoyer. And I have some other questions, but I can do it on the next round. Thank you, Mr. Chairman. Mr. Porter. Thank you, Mr. Hoyer. Mrs. Lowey. Mrs. Lowey. Thank you very much. And welcome. Ms. Golden. Thank you. child care Mrs. Lowey. My first question is concerning child care. It seems we've been working on the issue of standards and what kind of appropriate standards you can put in place as long as I've been in Congress. And we know that standards for child care facilities vary greatly across the country. Perhaps you can help me by explaining what role does the child care development block grant currently play in ensuring quality standards for child care facilities, and what I'm really interested in knowing is, can it play a bigger role? There is real inconsistency in child care standards from State to State. Ms. Golden. Let me highlight both the important role it has had, and then see if I can address your question about the future. The block grant had an important role in a number of ways. As you know, for many years, it has been the source of child care funding that provided resources earmarked for quality. And therefore, it's been the place where States were able to fund licensing or monitoring activities, support, and technical assistance. Much of what States have done to improve quality has been funded through the Child Care and Development Block Grant. When the Personal Responsibility Act passed, what that did was bring together all the child care funding streams, the Child Care and Development Block Grant and the funding streams that were formerly on the AFDC side, and put all of them under the provisions of the Child Care and Development Block Grant. So in some sense, the importance of the Block Grant and of the work you and others have done in your leadership on it has grown, because it now sets the framework for all of the funding streams. And as you know, the provisions regarding standards essentially require States to have their own standards, sort of a balancing act to not have Federal standards. I guess my own sense is that there are a lot of opportunities for leadership. I think the direction for next steps is not the direction of Federal specification, but of sharing information, of dissemination, of technical assistance. One of the things that we've been emphasizing to States, for example, is that under the new welfare reform legislation, a State planning process needs to occur on child care. We're hoping it will occur at the community level, and that there will be many opportunities for community members to speak to the issue of quality. And I'd be happy to think about additional roles, but I do think that the leadership, dissemination, technical assistance and research roles are very important ways of simulating progress on quality. Mrs. Lowey. Clearly, we know there can't be mandatory standards at this point. But to what extent has the agency put in place national standards as a recommendation, as the goal to which one should work? In other words, you're leaving it to the States, but you're there to provide technical assistance. I don't think there is a national standard in place. Ms. Golden. There is not a national standard. There are a couple of things that may be helpful. I do believe that one of the reasons it was so important that we publish the Head Start performance standards in November, and that it covered ages from infants and toddlers up, is that States that choose, and particularly States that would like to do partnerships, have an opportunity should they choose to take, to use, to draw on, those quality standards. And I think as Chairman Porter said earlier, with the new evidence about the earliest years of life, and the critical development that occurs in the infant and toddler years, I'm very hopeful that at least some States would choose to build on those quality standards. Another thing we've done is try to connect child care and health to prompt a healthy child care campaign across the country. And that at least gives the opportunity for the medical community to be focused on at least what's healthy and safe child care, and how we get that to happen. We haven't done everything you've suggested. I think we've made some early steps, and I would be very happy to hear your ideas for additional ones. Mrs. Lowey. I would like to pursue this with you, because I believe the welfare bill had $4.5 billion in child care. That's the number that we have been hoping for and working on a long time. And it's still not enough. And in giving the money to the States, hoping that they will provide the kind of standards that we expect, I would hope that we can look nationally and perhaps based on evaluations see what we can do on a Federal level to improve the quality of child care. child support enforcement On another area, child support enforcement, I would be interested if you could provide us with an overview of the implementation of the child support enforcement provisions in the new welfare law. We know that these provisions will greatly enhance our ability to put billions in child support payments into the hands of women and their children where I feel these payments belong. Could you discuss with us where you are in the implementation of these provisions? Will there be additional funds made available to states to help them implement andimprove their enforcement systems? And could you alert us as to when the funding will be available? Ms. Golden. Sure. Let me highlight first the overall implementation. I share your sense that the child support provisions in the Personal Responsibility Act are enormously important and that they will provide critical resources for children and for families. It's a very ambitious set of provisions on which we have to move fast in order to do this. One category is statutory changes States need to make. For example, license revocation provisions, in case a parent is not providing child support. For most of the statutory changes, we're in a position where something like half the States already have those statutes in place. The other half need to do them. There are usually staggered deadlines in a law, giving State legislatures time to meet. And State legislatures are meeting now, so we will be providing them with information. A second critical category is computer systems. At the Federal level the statute requires work on expanding the Federal parent locator service. We're moving ahead and expect to meet the deadlines. And at the State level, the law requires systems development. We're working very hard with the States that are having problems in order to get them certified by the deadline. Most of the resources are provided in a matching mechanism. I guess the additional resources I would highlight is that the Congress did make technical assistance resources available for us to work with the States. And we've moved ahead on some of that, but we need to plan for the whole of it and move ahead on the rest over the upcoming weeks and months. Mrs. Lowey. Mr. Chairman, shall I go on? What are our limitations? Mr. Porter. We have a few minutes. You may proceed if you wish. Mrs. Lowey. First of all, before I get to the next question, following up on your comments about computers, it seems to me, Mr. Chairman, no matter who testifies, we're working to improve our computer systems. One of the things that has been truly amazing to me since I'm on this committee is that the computers don't talk to each other. And whether it's child support or another kind of program which is administered within HHS, and there are many, it seems to me there should be some kind of interaction. And when you talk about improving the computers system, is this connected to the overall effort to have a computer system whereby one could really track the various forms of income support and other programs that the Government contributes to? Ms. Golden. Those are very important questions. And I think a couple of, parts of the answer, this isn't going to be comprehensive, because I think the comprehensive answer is probably pretty technical. We actually have some good news on the Federal part, on the Federal parent locator service that Congress asked us to do. We've built a partnership with the Social Security Administration, which has lots of experience in handling large data bases of that kind. And so we're actually going to be able to work with them and not have to reinvent it, which we're very pleased with and believe will be an efficient way of meeting the goal. At the State level, I think there is considerable variation in how linked the systems are. It is an area in which, as far as I understand it, there are often privacy and confidentiality issues, but there are also big advantages to ensuring connections. And my sense is that different States are in different places as far as being able to accomplish that. Mrs. Lowey. That's probably another area where we should continue to talk. Because if we're really going to go after the deadbeat dads, I think it would be important to have some real computer linkages. I don't know how you can do it otherwise. Ms. Golden. Well, there are currently a variety of matching activities. We do, for example, match with IRS and collect child support collections that are owed from tax refunds. So there are a variety of activities going on. But we could provide you with fuller information if that would be useful. [The information follows:] Offset Folios 1134 to Insert here child welfare Mrs. Lowey. That would be helpful. Thank you. Last year, especially in New York, the death of Alicia Scuerzo brought attention to a child welfare system which is under a great deal of stress. And it's not just in New York City, I believe, but it's in many communities throughout the country. Can you give us some idea of how your agency does work with local child welfare agencies? How do you follow through? How do you provide assistance to help children not fall through the cracks? Ms. Golden. Let me provide you with an overall answer to that question, and then perhaps say a little bit about the adoption initiative for which additional resources are requested in this budget. Overall, we have been trying to reform the way we work with State agencies because we believe that the monitoring and review that Federal agencies did around foster care, adoption, and child protection was too focused on paper, on what was in the case folders. We have tried to refocus to look at results, at children's safety, at permanence and at well-being. And we have also refocused to ensure that we're able to provide much stronger technical assistance. As you know, most of the key statutes that govern the decisions made in child abuse and neglect cases are State, so that States have a great deal of autonomy. But it's criticalfor us to be both providing a focus on whether this is really working or not, and to be providing the support. adoption initiative This budget requests, an additional $21 million in discretionary resources for a new and ambitious adoption initiative which the President kicked off in December. He emphasized that too many children in the child welfare system linger over an extended period of time in foster care, because an overburdened child welfare system, we're not necessarily is not able to respond promptly. The President directed Secretary Shalala to report back in 60 days on specific recommendations. Sixty days is tomorrow. We will be delivering that report on time. People are right now writing and copying. And we'll be able to provide additional details at that point. I want to highlight what I said earlier, to the Congresswoman from Kentucky. We've encountered enormous excitement from States and communities about actually working on these issues together, with leadership from the Congress and the President. We expect to have an agenda that's both legislative and administrative, and we'd eagerly like to work with the Congress. I believe that there's nothing more important than this set of issues. Mrs. Lowey. Thank you, Mr. Chairman. Mr. Porter. Thank you, Mrs. Lowey. Ms. Golden, thank you very much for your very forthright testimony. We appreciate it. And we apologize for all the interruptions, but there isn't much we can do about the votes. Thank you very much for the fine job that you're doing. Ms. Golden. Thank you. Mr. Porter. The subcommittee will stand in recess for two minutes. [The following questions were submitted to be answered for the record:] Offset Folios 1138 to 1724 Insert here Thursday, February 13, 1997. ADMINISTRATION ON AGING WITNESSES ROBYN I. STONE, ACTING ASSISTANT SECRETARY FOR AGING WILLIAM F. BENSON, DEPUTY ASSISTANT SECRETARY, OFFICE OF GOVERNMENTAL AFFAIRS AND ELDER RIGHTS EDWIN L. WALKER, DIRECTOR, OFFICE OF PROGRAM OPERATIONS AND DEVELOPMENT DENNIS P. WILLIAMS, DEPUTY ASSISTANT SECRETARY FOR BUDGET, DEPARTMENT OF HEALTH AND HUMAN SERVICES Mr. Porter. The subcommittee will come to order. We're very pleased to welcome next the Acting Assistant Secretary for Aging, Robyn I. Stone. And Dr. Stone, why don't you introduce the people that you brought with you and then proceed with your statement. Introduction and Opening Statement Ms. Stone. Thank you, Mr. Chairman. I'd like to introduce Bill Benson, who is one of my deputy assistant secretaries at the Administration on Aging, and Edwin Walker, who is the Director of the Office of Program Operations and Development. I'm assuming you all already know Dennis Williams. Thank you, and good afternoon, Mr. Chairman and members of the subcommittee. I appreciate this opportunity to discuss with you today the President's fiscal year 1998 budget request for the Administration on Aging. Our fiscal year 1998 budget request totals $838 million, essentially the same level as fiscal year 1997. At a time of fiscal moderation, this amount reflects the Administration's commitment to programs that improve the quality of life of older Americans, especially those with physical and cognitive impairments that put them at risk of institutionalization. The programs administered by AOA are designed to help older people remain independent and productive as long as possible. The budget request also reflects the Administration's intent to make Government more efficient by consolidating the management of programs that serve the elderly. We propose two transfers in this budget. The Health Resources and Services Administration will transfer to AOA the Alzheimer's Disease Demonstration Grants, and the Employment and Training Administration of the Department of Labor will transfer the Community Service Employment for Older Americans program. Fiscal restraint and the need for cost-efficient management, along with the requirements of the Government Performance and Results Act, or GPRA, are driving us to focus our budget request on activities with proven effectiveness, while we scale back those we can no longer afford. At the same time, we are making progress on better use of new information technology. In short, I come before you today not only to report on the results our programs are achieving throughout the country, but also about how AOA is doing more with less. AOA serves older persons and their families within the framework of the Older Americans Act. The service delivery levels funded by AOA will be maintained in fiscal year 1998, and targeted to the needs of socially and economically disadvantaged older persons, particularly the low income and minority elderly. Briefly summarized, our fiscal year 1998 budget request will provide funding for: Nutrition services, which are currently providing over 240 million congregate and home-delivered meals annually, and which this year celebrates its 25th anniversary in serving older Americans. A major Congressionally-mandated evaluation completed last year found this to be one of the most efficient and effective of all Federal programs. It is targeted on those most in need: about half of meal recipients are low income and 17 percent of these recipients are minorities. And, nutrition services have proven to be the core of a comprehensive and coordinated system of community based services, which is a major focus for our GPRA activities this year. Supportive services, which include over 40 million rides for doctor and pharmacy visits, nutrition and related activities, over 12 million responses for information and referrals, and access to vital services for seniors and their families, nearly 10 million personal care services to elderly in need, and 1 million legal counseling sessions. Support services for the frail elderly, which include an additional 1.3 million personal care services and almost a million reassuring visits and telephone calls. Protection of vulnerable older Americans, which includes State long-term care ombudsman programs, prevention of elder abuse, State elder rights and legal assistance programs, and outreach counseling and assistance. These programs are central to the advocacy role that is mandated by the Older Americans Act. Alzheimer's Disease demonstration grants, the majority of which are currently administered by State Offices on Aging, and which support new and innovative ways to help people and their families who confront this very tragic disease. A modest increase in funding is due for this program, which has proved successful in such areas as building linkages between families, doctors, and community supports, and outreach for low income and minority groups, and those who live in rural areas. Modest funding for aging training, research and discretionary programs. This limited request will provide viable and critical support for a number of our activities, including the Eldercare Locator and aging resource centers. These services are the cornerstone for effective local systems of community-based services, and provide the leverage for coordinating service funding throughout the States, localities and other Federal services. As a major portion of our GPRA efforts, we are strengthening partnerships with States, tribal organizations and communities to build and expand these systems. Affordable and accessible home and community-based care is preferred by elderly and disabled Americans. Home and community-based care is, however, complex, and must be tailored to personal needs. The national network of State, tribal and area agencies and their service providers contribute the flexibility and responsiveness that make community-based services so effective. Another focus for our efforts in fiscal year 1998 is information, both information collection and dissemination. States, area agencies on aging, and tribal organizations say they need us to provide current and accurate information on the practices in the field that work best. Older people and their families tell us they need information about the services available in their communities. We are working hard to meet the challenges of being the Federal focal point, provider, broker and disseminator of information related to the field of aging, serving consumers, researchers, practitioners and the formal aging network. Our World Wide Web site is a good case in point. Started on a shoestring as an employee initiative, it has developed, through rich content on our own site and links to other aging related sites, into something very close to ``one-stop information shopping'' in the aging field. This information resources, which serves up to 500 different users every day, was featured in a story in Reader's Digest last year. Another example of our priority focus on information dissemination is our support for the Eldercare Locator, a nationwide 800-number directory and referral service for older people and their families to find out about services available in communities across America. This service, which has fielded more than 10 million calls--mostly from women, who are the primary caregivers for elderly people--was described recently in a story in Parade magazine, and was featured on ABC News. We are getting tremendous feedback about the Eldercare Locator. Another agency focus is on older people as consumers, promoting their participation in planning, managing and delivering the services they need, enhancing the ability of older people to safeguard themselves, their rights and their property, and helping older consumers to make informed choices for themselves, their families and their communities. Our request for Federal administrative funds will support 150 full time equivalent positions and related expenses. The small staff of AOA is responsible for overseeing the vast network of 57 State units, 222 Indian tribal organizations serving more than 300 tribes, area agencies on aging, and more than 27,000 service providers throughout the country. In keeping with the Department's down-sizing efforts, we have reduced our staff by more than 20 percent over the last several years, and are committed to keeping our staffing requirements at a minimum level. Our staff is also responsible for implementing a new Congressionally-mandated National Aging Program Information System, overseeing the data collection efforts by States and validating the figures. This NAPIS system is an important piece of our effort to meet the requirements of GPRA. We have a strategic plan in place and are concentrating on building strong ties to State and localities, many of which are quite advanced in such areas as performance-based planning, budgeting and measurement. The vision of AOA is to ensure that present and future older Americans have an independent, productive, healthy and secure life. This budget request will greatly support the cornerstone of comprehensive and coordinated home and community-based services, which are needed to make the improvements and the provisions of the Older Americans Act a reality in local communities across the country. Our request will also continue to build on the foundation of enhancing AOA's ability to meet its vision and to continue to be responsive and effective in serving our consumers. Thank you, Mr. Chairman. My colleagues and I will be happy to answer any questions which you and the members of the subcommittee may have. [The prepared statement follows:] Offset Folios 1734 to 1737 Insert here reauthorization of the older americans act Mr. Porter. Thank you, Dr. Stone. Let me begin by asking about your authorization, which expired at the end of fiscal year 1995, well over a year ago. You're currently operating on the basis of the expired law, I assume? Dr. Stone. Yes, we are. Mr. Porter. And when is the Administration going to submit a bill to Congress for reauthorization? Dr. Stone. We are currently working on the reauthorization. I don't know, Edwin, whether you have any comments on that. Mr. Walker. Yes. In the last Congress, we submitted a bill quite early in the process, and this year we're working on a letter to come to the Congress, which will restate our principles and identify areas that we think need to continue to be enhanced this year. So we are looking forward to again working with the Congress on the reauthorization and would hope for an early passage. Mr. Porter. And if it isn't reauthorized by the time we mark up, I assume we are going to mark up on the basis of existing law? Mr. Walker. That is correct. effectiveness of aging programs Mr. Porter. How does the Department measure effectiveness in the Older Americans Act programs? Do you have specific outcome measures for these programs that everyone knows they have to meet? Dr. Stone. Yes, we do. As I mentioned in the opening testimony, there are a number of GPRA items that we have been working on, actually fairly vigorously. In the nutrition services area, which is one of our largest programs, we are using the performance measures that were established in the formal nutrition program evaluation. And as I said, this baseline evaluation has demonstrated that we are effective in providing nutrition to a whole range of elders, and in targeting low income and minority elders as well. We have also established performance based outcomes in the area of elder abuse, and I am currently working with my staff on a whole range of outcome measures that we will use with States and area agencies in the area of home and community- based services. program consolidation Mr. Porter. You administer a number of small, categorical programs that seem to serve very narrow purposes. Wouldn't it be more efficient if most of these smaller programs were consolidated into the large Title III service program? Dr. Stone. In fact, Mr. Chairman, we are focusing on some levels of consolidation. In the area of Title VII, for example, we have been focusing on consolidating all of those programs together. We are also focusing on the transfer of a program from another part of the Department, as well as one from the Department of Labor, to consolidate the aging programs in one place through an agency that is really dealing with a whole range of services, meeting the needs of elderly in the communities. Mr. Porter. In the fiscal year 1997 appropriations bill enacted last fall, some of us frankly thought that two of these programs had not been separately funded, the ombudsman and the elder abuse program. We see now from your budget materials that the agency decided to go ahead and fund these two programs separately. Both the House and Senate bills had zeroed them out, and there was no earmarking for them in the bill under the larger program, as had been done in the fiscal year 1996 bill. Under the circumstances, will you explain to the committee how you arrived at the decision to fund them separately once again? Dr. Stone. Actually, we funded those programs through the supportive services and centers program in fiscal year 1997 similar to the way that they were funded in fiscal year 1996. We have been made aware of this issue and, in fact, my staff was up on the Hill on February 10th meeting with some of your staff to address these concerns. Bill, I don't know whether you want to highlight some of the outcomes of that visit. Mr. Benson. Mr. Chairman, we recognize that there is some confusion and misunderstanding over this issue, with regard to the funding of the ombudsman program and elder abuse activities within the Title III-B supportive services account. We just became aware of this as an issue this past Friday during the Department's budget briefing up here on the Hill. As a result, several of our staff met with Mr. Knisely and Mr. McCann. Hopefully, we've begun a process in which we can be sure that there aren't these kinds of misunderstandings between us in the future. Mr. Porter. I think that the consultation ought to come before rather than after. And we should know what your plans are where there's a question of interpretation that might be seen one way by Congress and another by the Administration. preventive health services Another small program that you want to fund is preventive health services. Why couldn't the States address these health concerns through the larger Title III program? Is it simply a matter of not trusting the States to do what's right? And what are the funds actually spent on in this program? Dr. Stone. Good question. It is true that this is a small program. We do believe, however, that it is very critical to ensure that there is an explicit focus on health promotion and disease prevention, particularly because we know that the effects are significant, not just for younger people, but for older people as well. This program actually supports a whole range of services, ranging from screenings, to education about self care, to issues about secondary and tertiary prevention which are so critical for the elderly, particularly those who are disabled. In addition, I think it is important to understand the leveraging nature of these dollars. With these dollars, States and local communities can go to their local health departments, to the non-profit communities, and to the private sector and leverage other health promotion and disease prevention dollars. And the States and area agencies have been able to put together extremely innovative programs, using these preventive dollars as ``seed'' or leveraging dollars. So we believe it is important, and I don't think it really is a question of not trusting the States. I think it is more a question of making sure that we have an explicit acknowledgement of the importance of disease prevention and health promotion in all States and all local communities. community service employment for older americans Mr. Porter. Let me focus for a moment on the senior employment program. As you mentioned, the President's budget proposes to transfer the Older Workers program under Title V of the Older Americans Act to your agency from the Department of Labor. Dr. Stone. Right. Mr. Porter. First, you said this, but why would that transfer take place? And secondly, if all the community service employment funds were allocated to the States, what administrative cost savings would you expect as compared to the current situation where 10 national organizations, as well as the States, receive funds? Dr. Stone. Well, let me try to take these in order. With respect to the first question, this goes back to the issue that you raised about consolidation of programs. And one of the important aspects with regard to this employment program is that senior employment programs should not be separate from the whole range of community-based services that are being provided to elderly folks in the community. Consequently, we felt it was critical to begin to consolidate these programs under the aegis of the Administration on Aging, which has the responsibility for most of the Federal aging policy. So it was a natural progression to transfer that program over to the Administration on Aging. With respect to a difference in administrative costs, the levels for the States and the national sponsors are currently the same. But I think the more important thing to understand is how effective and efficient the national program offices, the national sponsors, have been in terms of reaching their targets for employment placement. They actually were 70 percent successful in reaching their targets, as opposed to only 50 percent for the States. So in fact, these national sponsors, which have historically tremendous expertise and background in doing these kinds of placements, are very efficient and very effective. And that is one of the reasons why it is important to keep responsibility, for the most part, with these national sponsors, while recognizing the importance of using the States in this program as well. Mr. Porter. What if these programs were operated by the States and the current national grantees had to compete for the funds at the State level? Wouldn't that work just as well as what we're doing now? Or better? Dr. Stone. Clearly, that is somewhat of an empirical question. I think that we have seen the effectiveness of these national sponsors. And your suggestion is certainly something that we could consider. However, we believe at this point that as we transfer the program over to the Administration on Aging, because we have seen the effectiveness of these national sponsors, that we would maintain the program as it was administered through the Department of Labor. Mr. Porter. You probably realize that you may be the designated spear catcher here. Dr. Stone. Yes, I know. Mr. Porter. This is an area where many members of the subcommittee have had great concerns. And I imagine those concerns will continue in this Congress. Mrs. Lowey. Mrs. Lowey. Thank you, Mr. Chairman. Thank you for appearing before us. Dr. Stone. Thank you. funding for nutrition services programs Mrs. Lowey. I have always been a great advocate of congregate meals and meals on wheels. And in fact, I think that as so many of us visit those senior centers, and you see that it's not just nutrition, it's a lifeline to civilization for these seniors. In looking through your budget justification, however, I was particularly interested in the extraordinary increase in the meals on wheels program, the home delivered program, relative to the congregate meals program. In fact, there seems to be a transfer from the congregate meals to the meals on wheels. In fact, I see that the waiting list for the meals on wheels program is really surprisingly high. Now, you requested a $5 million increase for meals on wheels. So my first question is, what kind of an impact will this have on the waiting list. But I also want to know, was this transfer made because of tough choices, or because the congregate meals programs were not needing these funds, or did you just have to say, okay, how do we do this? Secondly, one of the things that I was amazed at recently in talking to one of my local supervisors, that if a town decides to raise the cost on the attendance from $1 to $2, to improve or to supplement their program, that extra $1 they charge gets deducted from the Federal payment, is that correct? They were sure it was. I didn't know that. Dr. Stone. No, they cannot charge for these meals. So---- Mrs. Lowey. No, no, it's a voluntary contribution. In other words, they do. I mean, most senior centers have a voluntary contribution. Dr. Stone. Yes. Mrs. Lowey. Now, say their voluntary contribution is $2. If they decide to enrich the program because of inflation, and they may not feel that you're keeping up with it adequately, and they raise the suggested contribution to $3 (now all of these, if the people can't afford to pay, they don't pay anything), that extra $1 gets deducted from the Federal funds that we're giving them? Dr. Stone. I am told it goes into the expansion of the program. Mrs. Lowey. Will you look into that? Dr. Stone. Yes, I will look into that. Mrs. Lowey. I questioned the supervisor, and he was absolutely sure. If you could look into that and get back to me, I would appreciate it. [The information supplied for the record follows:] Voluntary Contributions for Nutrition Services The Older Americans Act requires that voluntary contributions received from senior citizens for Nutrition Services programs be used to expand those programs. The Administration on Aging has recently become aware of some confusion in the field regarding this matter and the handling of program income at the local level. Therefore, AoA is now in the process of developing guidance to be issued to AoA Regional Offices and to State and local agencies to clarify this issue. Mr. Walker. We will look into it. But the guidelines are that any contribution, any voluntary contribution, has to be used to expand the program. It goes back into additional service delivery. That's one of the components of the program that has made it very popular over the past 25 years, and made it a real success--because seniors have a sense of ownership in this program and see the immediate results of their contributions. Mrs. Lowey. However, they said, and I won't pursue this if we're not sure, they said that extra dollar gets deducted from their Federal share, which didn't make sense to me. Dr. Stone. I can't imagine. Mr. Walker. No. Mrs. Lowey. I think he was wrong. But he insisted, and so does his staff. So we'll check that out. Mr. Benson. In fact, I believe in fiscal year 1994, the amount of voluntary contributions nationwide was about $170 million, which went directly back into the program. So that directly relates to an increased number of meals served by the programs who raised those donations. Mrs. Lowey. But it doesn't decrease? Mr. Benson. Absolutely not. No, it absolutely expands the services. Mrs. Lowey. I had a feeling he was wrong, but he insisted he was right. Dr. Stone. Now, with respect to your first question, yes, I would say that unequivocally, the decision was made through tough choices. We did not reduce the level of funding for the nutrition services program as a whole. But within the total, we did make a decision--because we have seen a tremendous increase in the demand for home-delivered meals--that we would make this shift, a small transfer, from congregate to home-delivered meals. And in fact, this really mirrors the trends that have already been occurring in the States. We have seen these trends over the years, in the States themselves shifting some of their dollars to home-delivered meals programs. It is also true, however, that if a State believed this was not an adequate shift, they could then transfer the money back. So, this really gives a lot of flexibility to the States. And we have really been trying to respond. While recognizing that there are waiting lists on the congregate side, there are also a heck of a lot of people living at home who really need these home-delivered meals. And this is part of the tough choices that we are making. Mrs. Lowey. Well, I just am one who feels that both are so vital. Dr. Stone. Yes, we believe that too. Mrs. Lowey. We'll look at our numbers again and perhaps request some additional numbers from you. I would not want to deny the additional funds, in fact, I would like to increase it for the home delivered program. Dr. Stone. Yes. Mrs. Lowey. But I would also like to see if perhaps we can get additional funds for the congregate meals program. One of the difficult things, as my colleagues know, we have on this committee, is every decision is a tough choice. Dr. Stone. Yes. Mrs. Lowey. Because these programs are so very worthwhile. There are some other subcommittees I'd like to invade, I'm sure we'd like to do it together. Dr. Stone. We would like to help you with that. [Laughter.] Mrs. Lowey. But for our seniors, I truly believe, I believe these congregate meals and these home delivered meals save us money in health expenses, frankly. I feel they're so vital. in-home respite care One of the other areas where I noticed you requested funding, was for a respite care benefit. I have always been a real fan of respite care programs. I think they save us a lot of money in the long run in long term care. You have had experience with respite care programs through your Alzheimer's program. And I know we have some in our district which have proved life savers to families. Perhaps you can just discuss with us what you think the benefits are, what are the cost savings, what have you learned from your experience with the Alzheimer's program? Dr. Stone. Well, a couple of things. First, as you know, in the President's budget, we have made a request for a very marginal, but I think very important, respite care benefit for families, families that are dealing with an individual who has Alzheimer's and related dementias. I have spent 20 years looking at caregivers. That is my area of expertise, and I can tell you that women--daughters and spouses, wives in particular--are between 80 and 90 percent of all long-term informal caregivers. We will never see that replaced, regardless of what we do. The family is still the mainstay of all of long-term care, despite the myths about family abandonment. It just has not happened. We see the same level of family care now that we saw 10, 15 years ago. What respite care does is provide support and, frankly, a break for the caregiver. A little bit of a time to get away, to go to the store, to take a weekend vacation. This is clearly something that for some of these caregivers, gives them the break they need to be able to come back and then provide untold more hours of care. If we monetized the amount of informal care that is provided in this country, it would blow us all out of the water. In fact, I could get you the figures if you'd like to see them. It's pretty phenomenal. So a small investment in respite, particularly one that allows family members to take some time off and get away, is well worth the money that it costs, in terms of what we get back in return. Along the same lines in our Alzheimer's initiative we will be building on the demonstrations that were conducted through HRSA and which we are proposing to transfer to AOA. We are asking for a very modest increase to continue to look at ways in which we can support family caregivers, and ways in which we can link family caregivers to physicians and other health providers in the community, so that they understand better the needs of people with cognitive impairment. Also, so that we can really support and reinforce our long-term care system, which is basically wives and daughters, and sometimes men. If there's no daughter and there's no wife, frankly, a man does step up to the plate. That is the good news. Mrs. Lowey. Well, I also think with regard to that, I have long been interested, I'm not even sure of the status, whether we ever got it passed, but credits and deductions, there are many women, rarely men, many women as you said so well, that have had to give up their jobs---- Dr. Stone. Yes. Mrs. Lowey [continuing]. To stay at home and be a caregiver. And really, we should look at both sides of the life cycle. Dr. Stone. I agree. Mrs. Lowey. Child care and adult care. And in fact, if a woman or a man chooses rather than to pay a caregiver to stay home and provide that care, that's a job. Dr. Stone. Yes. Mrs. Lowey. And it should be treated as a job. Dr. Stone. It is a job. Many, many women are actually working a fulltime job and also doing the caregiving simultaneously. So, many of them are actually pulling double duty. Mrs. Lowey. Well, thank you very much. Thank you, Mr. Chairman. I look forward to working with you. tax credits and leave provisions for elder care Mr. Miller [assuming Chair]. Thank you. I just have a few questions. I think by the way we did pass something in our tax bill last year giving tax credits for taking care of elderly parents. Dr. Stone. Yes. Mr. Miller. I mean, it's not under your--there was a provision. Dr. Stone. That is true. And actually, the Family and Medical Leave Act also has provisions for elder care. So we have been moving in the direction of paying attention to this issue. funding for nutrition services Mr. Miller. Let me cover one thing that Mrs. Lowey was asking. This is about your senior centers and the meals on wheels. If they get a contribution, they get to keep that within their organization, but only for use for expansion of a program. The meals on wheels doesn't break even in my community, they need money to support it. This is not a means tested program, right? Dr. Stone. That is correct. Mr. Miller. Is there an incentive for them to try this? I know wealthy people have used the services and have been generous in contributing in the local community. But is there an incentive to try to solicit that type of support, since they get the benefit from it? Dr. Stone. Yes. But I should say that the majority of these folks are actually low income or near-poor. In fact, the nutrition evaluation indicated that a substantial proportion of even the very low income elderly are making voluntary contributions. These are folks who absolutely don't have many dollars to put forward. Mr. Miller. This past fall, or sometime this past year, I delivered meals for a day. It was an interesting experience. I think everybody on this committee, since we're so close to it, should do that. I'm serious. Ask the local meals on wheels to invite them. Because a lot of times, you don't think about it, you've got a busy schedule. Unless you get invited, and they invited me to do that. It was great. Some woman from the local program, in Manatee County delivered the meals on wheels. I rode around with her, and I'd go up and knock on the door and somebody would recognize me and say, I see you on TV or something like that. It was kind of a shock. They had no idea who that guy was. [Laughter.] But they said, a real Congressman here? I think you should try to specifically find out where each of us represent and ask them to send a letter and make a phone call. Dr. Stone. I think it's a great idea. Mr. Miller. You learn a great deal about that program by that I'm not sure what kind of a cross section I saw, but I think it was worthwhile. title vii program consolidation A couple of questions about the title VII consolidation. We're talking about the grants, and maybe you were talking about it with Mr. Porter, but consolidating these smaller programs for the vulnerable elderly. The programs still exist, but in block grants, is that the way it's structured? You're still going to have the requirements but it's in a block grant? I'm confused. Mr. Benson. Currently there are four distinct programs within Title VII, each with a line item, although several of them have had zero funding in the last couple of years. What wepropose to do is collapse that into one account, one line. Within that amount, we specify that we would continue level funding for one of the four programs, the ombudsman program. Currently, the entire Title VII request is roughly $9.2 million, of which $4.4 million goes to the ombudsman program. So we would specify in our proposal that it stays with the ombudsman program. But the States would then have the flexibility to decide in those other three programs where they would direct the rest of that pot of money. grants for native americans Mr. Miller. You mentioned the programs for, the Indian, tribal program and then you have the Native Alaskan and Hawaiian. Why do Native Hawaiians need a separate program? Aren't they covered by the regular program? I'm new on the Interior Appropriations subcommittee this year, so I'll find out a little bit more about Indian issues later. But why wouldn't that program be transferred to interior? I'm not that knowledgeable of the Bureau of Indian Affairs. Address both the Hawaiian and Alaskan programs, why do we need separate programs for that, why can't it be covered by the regular program? And then the Indian program, why wouldn't that be shifted? It's not a big program, I know. Dr. Stone. Let me just say, there are clearly some very different issues between States and tribes. I think this is one of the reasons we have to really focus on specific Native American issues, versus thinking about it as just one large program. Bill, you can elaborate on that. Mr. Miller. Why can't that be handled within, the Bureau of Indian Affairs? They handle all the other Indian issues. Mr. Benson. I think there are two reasons that that is the way it is in the older Americans Act, Mr. Miller. First of all, with regard to the Hawaiian issue, Title VI is directed to Native Americans. And several years ago, the Congress began specifying, within a number of programs for Native Americans, a separate category for Native Hawaiians. That is why Title VI ended up with two parts: Part A for Indians and Alaska Natives, and Part B for Native Hawaiians. Secondly, the reason it's in the Older Americans Act is because the services that are anticipated to be provided under Title VI, which are the direct grants to tribal organizations, in large part mirror the services that are provided under the Title III grants to States. An awful lot of that goes into the nutrition program. As the Administration on Aging, we have the expertise in administering the meals program under Title III. The presumption was that we could provide that same kind of expertise and support to tribal organizations under Title VI. Secondly, the tribes have the opportunity to benefit from Title IIIB services in their communities as well. So there is tremendous overlap, and the programs are intended to be the same. To move it to the Bureau of Indian Affairs, and this is something that was looked at internally in the Department a couple of years ago as part of the ``Reinventing Government'', initiative would have segregated out and made a tremendous gap between serving Indian elders and non-Indian communities, as well as serving urban Indians. I believe roughly half the Indian elder population in this country resides in urban areas. So Title VI was intended to try to make sure Indians get the same kind of service with the same kind of expertise and support backing them up. Mr. Miller. Indians in urban areas live in residential areas just like non-Indian Native Americans. Do they get special types of meals or are they covered by a different meals on wheels program? Mr. Benson. No. Usually what happens for urban Indian elders is that they are entitled to services under Title IIIB, which is what supports other people age 60 and over in particular communities. For example, in a city like Miami, if there were any Indians living in the urban area, they would go to the area agency on aging for services. However, some cities have elected to create special community centers for urban Indian elders. For example, Seattle has an urban Indian center, as does Los Angeles and other communities, where they try to be very specific in meeting their particular cultural needs. But those funds still come out of Title IIIB. Mr. Miller. So my area is Sarasota. Sarasota finds they have 75 Native American elders, do they have to apply separately for those 75 elders? Mr. Benson. No, absolutely not. They would be part of the general older population that's served by the Older Americans Act in that community. It is possible if they all lived in the same area that a meals program might want to create a meal site that caters, if you will, to the Indian elder population--if there were enough of them to provide culturally sensitive meals, for example. That's a possibility. And that is happening in some of the very large cities. Mr. Miller. Well, I commend you, these are tough choices. You are holding yourself at a flat budget, which means based on inflation that's less income, with programs that are popular. But moving towards consolidation is something that we support. With the fiscal problems we have, it's tough choices, cancer research versus Head Start versus meals on wheels. So I appreciate the work you've done in holding the line on your budget, and thank you and I've enjoyed it. And we'll stand adjourned. [Questions and answers for the record follow:] Offset Folios 1761 to 1851 insert here Offset Folios 1852 to 1895/2100 Insert here W I T N E S S E S ---------- Page Benson, W. F..................................................... 1257 Brown, J. G...................................................... 293 Golden, Olivia................................................... 643 Mangano, M. F.................................................... 293 Shalala, Hon. D. E............................................... 1 Stone, R. I...................................................... 1257 Swanson, Carl.................................................... 391 Vladeck, B. C.................................................... 391 Walker, E. L..................................................... 1257 Williams, D. P...........................................391, 643, 1257 I N D E X ---------- Secretary of Health and Human Services Page Secretary of Health and Human Services........................... 1 Acquired Immunodeficiency Syndrome: African Americans, in.................................... 228 Drug assistance program.................................. 21 Funding.................................................. 18 HIV vaccine funding...................................... 93 Actuary, Letter from......................................... 6 Adoption: Assistance............................................... 147 Program.................................................. 96 Budget: Balancing................................................ 74, 137................................................ National Institutes of Health............................ 21, 24................................................. President's FY 1998...................................... 93 Priorities............................................... 89 Cancer: Breast cancer detection.................................. 28 Consolidated Omnibus Budget Reconciliation Act............... 95 Contracts: Departmental............................................. 90 Downsizing, Effects on Black Workers......................... 244 Early Start: Quality.................................................. 288 Strengthening of......................................... 73 Environmental Health: Children's............................................... 106 Food Safety.................................................. 30 Full Time Equivalent: Ceiling--FY 1993-2000.................................... 106 NCFA FTE................................................. 141 Governing Council on Children and Youth...................... 290 Government Performance and Results Act (GPRA)...............19, 101 Head Start: Investment............................................... 73 Program standards........................................ 289 Quality and expansion.................................... 245, 287............................................... Health Care Affordability & Accountability Legislation....... 246 Health Insurance: Children, for............................................ 71 Healthy workers.......................................... 140 Temporary unemployed workers............................. 94, 145................................................ Uninsured children....................................... 99, 142, 211, 220...................................... Health Professions..........................................27, 242 Healthy Start................................................ 216 Health Safety Net............................................ 217 Immigrants................................................... 23 JOBS: AFDC recipients participating in......................... 188 Legislative Measures......................................... 246 Medicaid: Disproportionate share hospital payments................. 144 Entitlement spending..................................... 138 Impact of funding proposals.............................. 139 Medicare: Investment-based system approach......................... 90 Part B................................................... 75 Proposal................................................. 120 Mammogram Consensus.......................................... 242 Managed Care: Provided preferences..................................... 240 Training centers......................................... 240 Needle Exchange Program...................................... 93 Official Time...............................................76, 122 Opening Statement.............................................4, 11 Operation Restore Trust (Medicare)........................... 286 Prevention: Diabetes................................................. 25 Proposals, President's FY 1998............................... 151 Pulmonary Hemorrhage........................................20, 226 Research: National Institutes of Health............................ 121 Status of Beneficiaries...................................... 186 Status of Programs........................................... 150 Substance Abuse.............................................. 213 Surgeon General.............................................. 26 Teen Pregnancy............................................... 29 Tobacco: American Stop Smoking Intervention (ASSIST).............. 26, 31, 120............................................ Youth and................................................ 98 Tuskegee Study Participants Apology.......................... 241 User Fee: Proposals................................................ 212 Vaccine: HIV, funding of.......................................... 93 Violence..................................................... 213 Welfare Reform: Federal role in idea sharing............................. 290 Job Training............................................. 22 State Allotments......................................... 88 Waivers.................................................. 140 Work Opportunity Reconciliation Act of 1996.............. 215 Department of Health and Human Services, Office of Inspector General Ambiguity of Instructions........................................ 345 Ambiguity of Rules............................................... 324 Adult Resolution Process......................................... 333 Better Ways of Doing Business..................................294, 297 Budget for Audit Contracts....................................... 342 Change in Documentation Requirements............................. 326 Child Support--IRS Link.......................................... 348 Civil False Claim Act............................................ 306 Coding........................................................... 318 Compliance Programs.............................................. 349 Composition of Implemented Savings Excluding SSA................. 303 Coordination with Office of Research Integrity................... 339 Departmental Cooperation......................................... 347 Documenting Savings from Mandatory Funding....................... 332 Forfeiture of Property........................................... 342 Government Performance and Results Act........................... 333 Head Start Program............................................... 340 Health Education Assistance Loans..............................309, 347 Home Health, Hospice, and Nursing Homes.......................... 352 Impact of Welfare Reform on OIG.................................. 351 Incontinence Supplies............................................ 302 Issues Related to Universities................................... 355 LabScam Investigation............................................ 329 Legal Standard of OIG PATH Audits................................ 344 Legislative Changes.............................................. 337 Limitation on Audits............................................. 326 Local Carrier Rules.............................................. 323 Managed Care Systems............................................. 355 Management Decisions on Recommendations.......................... 332 Mandatory Funding................................................ 331 Many Factors Considered.......................................... 324 Medicaid Audit Partnerships...................................... 353 Medicare Program Changes......................................... 348 Medicare Transaction System...................................... 338 Medicare and Market Forces....................................... 351 Most Significant OIG Reports..................................... 334 National Institutes of Health Investigations..................... 355 OIG Budget....................................................... 320 OIG Financial and Staffing Resources............................. 347 OIG Funding Sources.............................................. 299 OIG Justification................................................ 357 OIG Legal Staff.................................................. 343 OIG Staffing Level............................................... 341 OIG Strategic Plan............................................... 334 Opening Statement................................................ 293 Operation Restore Trust.......................................... 354 Outstanding Debts to HHS......................................... 333 Physical Presence Issue.......................................... 327 Physician Liability for Overpayments............................. 328 Physician Visits and Level of Service............................ 325 Physicians at Teaching Hospitals................................. 322 Prescription Drug Costs.......................................... 308 Prescription Drug Payments....................................... 351 Public Awareness................................................. 353 Quarterly Reporting.............................................. 330 Recent OIG Work.................................................. 293 Report on Actual Revenue......................................... 320 Research Fraud................................................... 339 Resources for Collections........................................ 332 Retroactivity Issue.............................................. 346 Role of Department of Justice.................................... 329 Ryan White Act................................................... 339 Savings Generated by OIG......................................... 318 Teaching Hospitals.............................................304, 310 Teaching Hospitals--Enforcement of Rule.......................... 317 Teaching Hospitals--Justice Role................................. 321 Teaching Hospitals--Physician Presence........................... 314 Teaching Hospitals--Retroactivity Issue.......................... 317 Teaching Physicians.............................................. 313 Types of OIG Audits.............................................. 309 Upcoding......................................................... 314 Upcoding of Physician Visit Codes................................ 324 Witnesses........................................................ 293 Work Underway and Planned......................................294, 299 Health Care Financing Administration Beneficiary-Centered Purchaser................................... 396 Emphasis on Results and Outcomes............................. 399 Key Operational Roles........................................ 398 Civil Rights Compliance.........................................407-408 Clinical Laboratory Improvement Amendments: Alternate Quality Assessment Survey (AQAS)................... 561 Authorizing Legislation...................................... 557 Budget: By Object................................................ 617-618................................................ Rationale................................................ 561 Facility Inspections..................................448, 559, 581 Methods of Correction.......................................559-560 User Fees.................................................... 562 Clinical Research With NIH......................................409-410 Federal Administrative Costs: Authorizing Legislation...................................... 573 Beneficiary Services.......................................577, 587 Electronic Information Support..................................578-579 Market Research.................................................. 580 Payments to States............................................... 585 Provider and Beneficiary Outreach...............................579-580 Prudent Management............................................... 583 Budget: Account Summary.......................................... 573 Funding Summary.......................................... 591 Rationale................................................ 468, 574............................................... Claims Payment............................................... 576 FTE...............................................422, 442-443, 621 New Workload................................................. 481 CFO Audits............................................... 574 Initial Enrollment Packages.............................. 569 Millennium Computer Change............................... 574 Partnership with States.....................................589-590 Positions By Grade........................................... 622 Quality Assurance..........................................581, 588 Significant Items............................................ 632 Foundation for Accountability (Facct)............................ 582 HCFA On-Line..................................................... 579 HCFA Reorganization.............................................. 399 Health Advisory Services..............................398, 453-454, 472 Health Care Quality Improvement Program..........399, 475, 544, 581-582 Health Care Fraud and Abuse Control (HCFAC) Account.............. 516 Health Care Trust Funds, Payments to: Appropriation Language....................................... 510 Authorizing Legislation...................................... 605 Budget: Appropriations History Table............................. 605 By Activity.............................................. 511, 607............................................... By Object................................................ 604 For Obligation........................................... 512 Rationale................................................ 514 Summary of Change........................................ 513 Health Insurance Portability and Accountability Act......409, 497, 501, 575 Administrative Simplification...............................429-430 Regulatory Burden............................................ 411 Health Plan Employer Data and Information Set (HEDIS)............ 583 Health System Performance: Beneficiary Health Status and/or Risk........................ 566 Managed Care Access.......................................... 566 Medicare Current Beneficiary Survey........................473, 566 Vulnerable Populations, Meeting Needs of..................... 568 Home Health Care Legislation..............................391, 406, 426 HMO Loan and Guarantee Fund: Amounts Available for Obligation............................. 629 Appropriation Language....................................... 628 General Statement............................................ 628 Language Analysis............................................ 627 Kennedy-Kassebaum (See Health Care Portability and Accountability) Managed Care: Access to Quality Care......................................456-461 Adequate Hospital Stays................................498, 459-460 Discrimination in Beneficiary Care..........................450-452 Education of Beneficiaries.............................453, 458-459 Enrollment................................................... 405 Growing Numbers Served....................................... 405 Historial Data............................................... 625 Medicaid..................................................... 484 Patient Savings.............................................454-455 Medicaid: Administrative Services...................................... 447 Appropriations Language...................................... 480 Authorizing Legislation....................................483, 595 Beneficiary Services............................................. 493 Budget: Amounts Available for Obligation......................... 599 Appropriations History Table............................. 596 By Activity.............................................. 483, 597............................................... By Object................................................ 598 Proposed Law............................................. 603 Rationale................................................ 493 Summary of Changes....................................... 594 Child Health Initiatives......................416-421, 449, 457-458 Components, Coordination of................................486, 577 Contract With America Advancement Act of 1995................ 498 Disproportionate Share Hospital (DSH) Payments.......414, 445, 461, 499, 503, 630 Fraud Control Units.......................................... 502 GeoAccess.................................................... 492 Growth: Blind and Disabled Population............................ 489 By Eligibility........................................... 489 Outlays.................................................. 488 Program Spending......................................... 488 Receipts................................................. 445, 470-471, 488, 490................................. Illegal Aliens............................................... 436 Immigration Bill Funding..................................... 433 Language Analysis...........................................481-482 Mental Health ``Carve-Out''.................................. 458 Medstat Contract............................................. 492 Payments by Type of Service.................................. 600 Personal Responsibility and Work Opportunity Reconciliation Act of 1996.........................................495, 498, 500 Policy Development........................................... 486 Premium Payments............................................. 486 Proposed Per-Capita Cap and AIDS............................. 461 Proposals Being Reviewed: Georgia.................................................. 490 Kansas................................................... 490 Louisiana................................................ 490 Missouri................................................. 490 New Hampshire............................................ 490 New York................................................. 490 Texas.................................................... 490 Utah..................................................... 490 Washington............................................... 490 Proposed Legislation........................................502-507 Prosthetic Devices........................................... 630 Review (Waiver)...................................439-440, 485, 589 Section 1115 Statewide Waivers: Coverage Under........................................... 491-492, 564-565, 568, 589............................. Expanded Coverage........................................ 445 Alabama.................................................. 490 Delaware................................................. 490 Florida.................................................. 490 Hawaii................................................... 490 Illinois................................................. 490 Kentucky................................................. 490 Massachusetts............................................ 490 Minnesota................................................ 490 Ohio..................................................... 449, 490............................................... Oklahoma................................................. 490 Oregon................................................... 490 Rhode Island............................................. 490 Tennessee................................................ 490 Vermont.................................................. 490 Section 1915(b) Waivers...............................457, 565, 589 Service Growth............................................... 487 State Estimates...............................493-494, 499, 601-602 Survey and Certification..................................... 502 Title XIX.................................................... 483 Tracking (Waiver)............................................ 485 Vaccines for Children Program................................ 499 Voluntary Contribution & Provider Specific Tax............... 639 Welfare Reform Transition Costs.............................. 500 Medicare: Demonstrations (See Research, Demonstrations and Evaluation) End-Stage Renal Disease...................................... 568 Fraud Investigation.......................................... 424 Graduate Medical Education..................................422-423 Growth in Beneficiaries and Expenditures....................470-471 Market-Oriented Strategies................................... 452 Medicare Handbook.......................393-394, 398, 409, 472, 476 Peer Review Organizations.............................394, 582, 590 Proposed Legislation.......................................426, 430 Rebate Statutory Formula..................................... 640 SMI Premium Estimates......................................426, 608 Therapists in Independent Practice........................... 437 Medicare Current Beneficiary Survey (MCBS).....................398, 473 Medicare Contractors......................................433, 523, 638 Administrative (Non-Renewals)................................ 437 Appeals.................................................. 533 Authorizing Legislation.................................. 523 Beneficiary and Provider Services........................ 524, 531, 579, 587..................................... Communication............................................ 472, 534............................................... Education and Training................................... 534, 633............................................... Funding.................................................. 437 Simplification........................................... 530 Billing/Claims Payment............................435-436, 527, 576 Budget: Rationale................................................ 525-526................................................ Claims Processing.....................................438, 527, 605 Claims Reimbursement......................................... 528 Commercial Off-the-Shelf Software (COTS)..............539, 555, 638 Expenditures, Control of..................................... 445 Filing Limit................................................. 437 Medicare Secondary Payments.................................. 584 Participating Physician and Supplier Rates................... 535 Payment Safeguards.................429, 434, 437, 476, 535, 583-584 Productivity Investments....................................529-533 Provider Identification...................................... 531 Providers...................................................623-625 Significant Items......................................630-631, 638 Summary Notice.............................................524, 639 Medicare Integrity Program (MIP).......396, 408, 474, 476, 521, 535-538 Los Alamos National Laboratory...................399, 539, 584, 638 Operation Restore Trust...............................399, 408, 474 Medicare Transaction System...393, 398-399, 426-429, 446, 472, 474-475, 524, 638 Opening Statement..........................................392, 396-400 Organizational Chart (Current)................................... 464 Organizational Chart (Proposed).................................. 465 Program Management: Appropriation Language....................................... 518 Authorizing Legislation...................................... 612 Beneficiary Support Network............................398, 469-470 Budget: Account Summary.......................................... 614 Administrative Cost Table................................ 619 Amounts Available for Obligation......................... 609 Appropriations History Table............................. 613 By Activity.............................................. 611 By Object................................................ 615-616................................................ Summary of Changes....................................... 478, 610............................................... Growth Rates................................................. 403 Language Analysis............................................ 519 Percentage of Total Spending.............396-397, 404, 467-468, 573 Proposed Legislation Summary: Health Insurance for Those Between Jobs.................. 642 Health Coverage for Children............................. 642 Survey & Certification User Fee.......................... 642 Voluntary Health Insurance Purchasing Coop............... 642 Research, Demonstrations and Evaluation: Accomplishments............................................563, 584 Authorizing Legislation...................................... 563 Budget: Account Summary.......................................... 563 Congressional Mandates................................... 571 Demonstrations: Alternative Payment Methods.............................. 568 Centers of Excellence.................................... 474, 567............................................... Competitive Bidding...................................... 567 Competitive Pricing...................................... 398, 473, 567.......................................... Coronary Bypass Graft Surgery............................ 564 Medicare Choices......................................... 567, 569............................................... Prospective Payment Systems.............................. 568 Risk Adjustment Methodologies............................ 473 Social HMO............................................... 568 Subvention with Department of Defense (DoD).............. 410, 632............................................... Telemedicine............................................. 411-412, 433-434, 441, 569, 632........................ Funding Summary.............................................. 570 Obligations by Program Areas................................. 572 Reducing Provider Payments................................... 456 Significant Items..................................631-637, 641-642 Strategic Plan: Government Performance and Results Act-Benchmarks (GPRA)..... 471 Survey and Certification: Authorizing Legislation...................................... 541 Budget: By Activity.............................................. 541 Rationale................................................ 548 Constituents Awaiting Surveys....................412, 430, 436, 546 Enforcement: Health................................................... 544 Safety Standards......................................... 544 Funding Summary.............................................. 545 Growth of Facilities.......................................475, 543 Initial Fee Legislation...............................413, 430, 542 Privatizing and Deeming................................413-414, 444 Redesign Survey Process....................................552, 555 Significant Items............................................ 642 Support Contracts............................................ 553 Survey Coverage........................................431, 547-548 Terminations................................................. 624 Unit Cost Methodology, including Variations.................. 550 Total Funding..................................................466, 477 Witnesses, Introduction of....................................... 392 Administration for Children and Families Head Start......................................................662-664 Increase...........................................652-653, 658-659 Cost Per Child..............................................653-654 Eligible Population....................................653-654, 657 Research..................................................... 654 Early Childhood Initiative..................................654-655 Quality.....................................................656-657 Partnerships................................................. 659 Performance Standards..................................661, 674-677 Capital Expenditures......................................... 664 Funding...................................................... 671 Payment System............................................... 673 Performance Measures...............................677-679, 805-808 Program Effectiveness.......................................679-680 Unserved Eligible Children (3-4yrs).........................791-794 Early Head Start............................................. 803 Adoption Initiative........660-661, 669-670, 683, 709-710, 803, 805-807 Office of Refugee Resettlement (ORR)........................707-709 Funds........................................................ 661 Carryover Funds.............................................714-717 Reauthorization........................................717-718, 756 Targeted Assistance.......................................... 718 Community Services Block Grant.................................661, 681 Annual Report...............................................786-787 CSBG Evaluation.............................................. 682 Program Consolidation.......................................682-683 Child Care.................................................664-666, 756 Funds......................................................658, 757 Head Start Collaboration..................................... 685 Child Care & Development Block Grant........................794-797 Foster Care.................................................. 709 Office of Child Support Enforcement (OCSE)......................666-667 Internal Revenue Service..................................... 668 Social Security Administration............................... 668 Fatherhood..................................................788-790 Child Welfare..............................................669, 749-754 Budget Request..............................................754-755 Research..................................................... 808 Government Performance Results Act (GPRA)........................ 712 Bonus and Pay Incentives..................................... 680 Administration on Developmental Disability (ADD)................. 662 Program...................................................... 662 Funding.....................................................686-687 Community Based Resource Centers................................688-690 Enterprise Zone.................................................. 690 National Center on Child Abuse and Neglect (NCCAN)..............690-705 Child Abuse........................................690-693, 797-798 Research Grants.............................................693-696 Demonstration Grants........................................696-698 Training & Technical Assistance.............................698-705 Foster Care.....................................................709-710 Social Services Block Grant (SSBG) Funding............689-690, 710, 712 Cuban Mitigation Program......................................... 711 Family Preservation and Support.................................712-714 Low Income Home Energy Assistance Program (LIHEAP)........718-738, 797, 811-812 Funding.....................................................761-774 Welfare Reform.............................................789, 799-800 State Plans.................................................774-775 Assistance Payments.......................................... 775 Time Limits.................................................775-776 In-State Residency..........................................776-786 Implementation............................................... 801 Research....................................................801-802 Entitlement Funding.......................................... 810 Welfare Recipients..........................................810-811 Tribal Family Assistance..................................... 790 Workload....................................................789-790 Information Dissemination.................................... 790 Temporary Assistance for Needy Families (TANF)..................790-794 State Patterns............................................... 798 Health Care Services............................................. 802 Family Support Payments to States...............................707-709 Administration on Aging Witnesses........................................................ 1257 Introduction and Opening Statement............................... 1257 Statement by the Assistant Secretary for Aging................... 1261 Congressional Justification...................................... 1307 Alzheimer's Demonstration..................1275, 1282, 1283, 1287, 1288 AoA Personnel: Full-Time Equivalents........................................ 1288 Employee Performance.....................................1276, 1277 Community Service Employment for Older Americans................. 1269 Federal Council on Aging......................................... 1284 Future Directions: Growth of Aging Population...............................1289, 1290 Preparing for the Future.................................1296, 1297 Health: Managed Care.......................................1300, 1301, 1302 Ombudsman.................................................... 1302 Preventive Health Services.............1266, 1286, 1293, 1294, 1299 Home and Community-Based Services: Adult Day Care............................................... 1295 In-Home Respite Care......................................... 1270 In-Home Services for Frail Elderly..................1292, 1293, 306 Nutrition Services: Funding for Nutrition Services Program................... 1268, 1271, 1279, 1304................................. Meals for the Elderly.................................... 1297 Numbers Served........................................... 1298 Program Innovation........................................... 1291 Voluntary Contributions for Nutrition Services............... 1269 Information Dissemination....................................1299, 1303 Effectiveness of Aging Programs........................1265, 1276, 1280 Government Performance and Results Act....................... 1276 Legislative Proposals: Title VII Program Consolidation.............................. 1272 Programs Consolidations/Transfers............1265, 1266, 1267, 1295 Reauthorization of the Older Americans Act...............1265, 1275 Native American Services......................................... 1287 Grants for Native Americans........................1272, 1273, 1274 Older Americans Act Funding: AoA FY 1996 Funding Level....................1291, 1292, 1293, 1294 Partnerships.....................................1289, 1300, 1301, 1302 Program Assistance for Vulnerable Elderly: Ombudsman..........................................1275, 1277, 1278 Small Categorical Programs................................... 1277 Senior Community Service Employment Program............1269, 1275, 1285 Tax Credits and Leave Provisions for Elder Care.................. 1271 Title IV Discretionary Funding...................1289, 1290, 1291, 1292