The problem of the uninsured, however, is one the major public policy issues in health. I have been looking extensively at the question of the medically uninsured since I began my tenure at the Department. As I have mentioned, there are several groups studying the issue of how best to provide health care for the uninsured, whether through Medicaid or some other mechanism. I have specifically instructed the Advisory Council on Social Security to produce interim recommendations as soon as possible on health financing issues relating to the uninsured, with particular emphasis on Medicaid. I intend to wait for the recommendations from these groups before I proceed with specific proposals. In his State of the Union address, the President instructed me to lead a Domestic Policy Council review of recommendations on the quality, accessibility and cost of our nation's health care system. POOR FINANCIAL MANAGEMENT GAO has called for government-wide improvements in financial management systems. There are reportedly billions of dollars of differences between balances recorded in accounting systems and financial reports. Question. What is your assessment of weaknesses in financial management of your agency? Answer. The weaknesses in financial management at the Department of Health and Human Services can be directly attributed to the antiquated financial systems currently in place. These systems are labor-intensive, relying heavily on manual processing and report preparation. Also, they are not properly linked to one another (e.g., procurement and core accounting). These deficiencies have led directly to the reconciliation problems recently reported by GAO. Question. What specific areas could be strengthened, and what is your plan for making improvements? Answer. Improvement of financial management systems is a major HHS initiative. The Department is implementing the Phoenix Project, which is aimed at strengthening HHS financial management systems by: continuing to improve and standardize budget and financial information systems and processes for greater operating efficiencies and control; consolidating financial information into an agency-wide perspective as required by OMB Circular A-127; implementing the Federal government's Standard General modernizing our automated financial management systems and those administrative management functions which further improving compliance with OMB/GAO requirements The HHS plan addresses the need for the timely implementation of actions to address these priorities as they affect automated systems, whether wholly within the Phoenix structure (e.g., the operating Divisions' Accounting System) or interfacing with it (e.g., the Personnel Payroll System). The basic concept for the Phoenix Project derived from the Federal government's Reform '88 initiative, which sought to reduce inefficiencies in the operation of governmental administrative and financial systems, and to promote improved decision-making, accountability, and system integrity controls. Question. Do you agree with GAO's assessment that managers need more and better training in Financial Integrity Act issues? Answer. The Department agrees that training is a key element in implementing an effective FMFIA program. In this respect, the Chairman of the Council on Management Oversight has already requested HHS' Assistant Secretary for Personnel Administration to develop a comprehensive, Departmentwide FMFIA training program. In addition, the Director of the Department's FMFIA Program has been working with the Office for HEALTH CARE COST TRENDS -- for remains The continued rate of increase in health care spending the economy as a whole and for the federal budget much higher than the general rate of inflation as measured by the consumer price index. Question. What recommendations do you have for addressing these increases and where can federal policy make the most difference? Answer. First, I would like to point out that Medicare and Medicaid can address only a portion of our national health care needs and costs. But, as you know, there are several studies currently under way which will be providing recommendations for more comprehensive approaches to meeting our national health care needs, especially for the uninsured and long term care. In addition to the Pepper Commission and the Steelman Advisory Council, I have directed the Undersecretary of Health and Human Services to conduct an examination of these issues. Once the results of these studies are available, the President na directer to coordinat Comestic Policy Council revis and consideration of thei recommendations in order to revelar a compreners! I a effective set of proposals for restin the heater car need our ration. But we are not just waiting for those studies things are already in place or I persation a ma few years ago, we implemented the prospective devient suster for Medicare Part A hospital revients. Under the gustær hospitals are paid a predeteriored amount for eat metr based on the cost of deliveron that care. If the ital delivers the care for less the PPS amourn they keep the ev if it costs them more than the PBS amount they must about the extra cost. This approach gives the hospitals a stron incentive to find more efficient wave of provadang care has generally been quite successful in restraining the previously excessive rate of growth in hospital car cxx under Medicare. Beginning in 1992, we will be implementing a refor in the way Medicare pays for physiciar services under Part S. This reform is similar in concept to PPS for hospitals. A fixed amount is set for various physician services based or the cost and amount of resources required to provide the SWID. It is anticipated that this will result in a significant shift in the amounts paid from the higher cost surgical praatres to primary care. This will help to create new incentives for physicians to enter and concentrate on providing primary care, We believe this is desirable because it will lead to more preventive medicine and will result in less need for later surgical intervention. Although Congress has specified that physician payment reform should be implemented in a budget neutral fashion, we believe that in the long run there will be significant savings to the Medicare program due to the shift in emphasis to prevention and primary care. Our FY 1991 budget includes a number of proposals designed to facilitate the movement to the resource based fee schedule for physicians that will go into effect in 1992. I also identifies and proposes corrections for a number of instances where there is currently excessive or duplicative payments. Question. Should we be investing more in reviewing the payments for the highest cost care or changing the incentives for physicians and hospitals to treat patients in more cost effective ways? Answer. There is a major problem in the way in which health care in this country is delivered and paid for. Top of the line care in America is the envy of the world. The "miracle" procedures, technology, and drugs available here enable us to provide a quality of care that is unexcelled. But these "miracles" are not inexpensive. We must insure that our use of new technology is done in a careful and prudent manner so that it does not squeeze out more fundamental forms of care. But artificial or arbitrary constraints, in either the high cost items or the more basic services, will only discourage innovation and limit access, especially for the poor and minorities. The problem isn't a shortage of health care dollars. The problem is the lack of a rational system in the delivery and payment for care. Because of the lack of coordination in our health care delivery system, our medical marvels exist side-by-side with millions of people who have little or no care. And even those who have access to care frequently find the cost burdensome. If we are to insure adequate care for everyone, we must find ways to bring greater coherence, coordination, and efficiency to health care delivery. The prospective payment system and the new resource based scale for physician payments, in conjunction with our managed care initiatives contained in the FY 1991 budget, will make major changes in the incentive structure for health care delivery under Medicare and, we believe, will serve as a model for health care delivery for the remainder of the population. But even these innovations will not address the problems of the uninsured or those in need of long term care. Therefore we eagerly await the recommendations of the Pepper Commission, the Steelman Advisory Council, and the Undersecretary's Work Group. Question. What approaches do you believe hold the greatest promise for success? Answer. Managed care offers the best hope of providing appropriate care while containing the spiraling cost of providing that care. By emphasizing primary care, early intervention, and comprehensive patient-oriented, rather than procedure-oriented, care, managed care will enhance the quality of the care provided. It will prevent the postponement of treatment that so often leads to life-threatening deterioration of health conditions that require emergency, traumatic and expensive corrective intervention. By bringing order and system to the delivery of care, managed care will reduce excess and duplicative treatments and procedures. And to the extent that managed care incorporates capitation and risk-based payment plans, there is a strong inherent incentive for increased efficiency. As I have mentioned, the FY 1991 budget includes several care. proposals to further our goal of the greater use of managed We propose to increase the payment to risk-based HMOS. The increase will be shared with the beneficiaries and thus serve as a dual purpose incentive for the creation of new HMOS and increased beneficiary participation. Our innovative Medicare Plus proposal also provides a new form of managed care which we believe will encourage greater participation while incorporating incentives for efficient delivery of care. the Medicaid program, we will be offering financial incentives for states to make greater use of managed care for Medicaid recipients. In WELFARE HOTELS Question. During last year's hearings, I pointed out that millions of AFDC/Emergency Assistance funds were being used to support "welfare hotels" that can cost $2,000 per month. We have now enacted $20 million to operate McKinney Act demonstration programs to reduce the number of AFDC families in welfare hotels. What progress has been made to reduce the use of Emergency Assistance funds to house AFDC recipients in welfare hotels? Answer. In July, 1989, HHS sent a report to Congress which contained recommendations on ways to reduce the use of Emergency Assistance funds to house AFDC recipients in welfare hotels. One recommendation, supported by the Congress in Appropriations report language, was to revise current proposed regulations on the uses of Emergency Assistance funds. These revisions would restrict use of these funds to emergency needs incurred during any thirty consecutive days in a twelve month period, but would continue to allow their use to pay rent and utilities that have fallen in arrears, or to pay security deposits and first month's rent to move individuals into more permanent housing. These revised regulations are being drafted, and are expected to be published later this year. HHS has also begun to collect data on the use of Emergency Assistance and AFDC special needs funds for housing in hotels and similar temporary housing arrangements. Such data collection is required by section 8005 of the Omnibus Budget Reconciliation Act of 1989. HHS will also propose legislation this Spring to prohibit the use of AFDC and Emergency Assistance funds for welfare hotels, although short emergency stays in commercial facilities would be permitted. |