Due to current Medicare payment policy which is based largely on DRGS and payment limits, we expect Medicare providers to only be able to pass through about 5 percent of user fee costs in FY 1992, or about $9 million. It is possible this percentage may increase in the future. REDUCTION IN AUDIT FUNDING Question. Your budget proposes spending $333.1 million for payment safeguards activities, a cut of $1.8 million. This leaves spending for audit activities below the level of two years ago, despite the explosive growth in Medicare claims. Why would you want to cut an activity which your own budget admits saves more than $4 billion annually from waste, fraud and abuse? Answer. HCFA expects to save $4.3 billion in FY 1992 from all payment safeguards activities, not just Audit. In FY 1992, audit activities are expected to yield $949.0 million in program savings. We believe that we are able to do "more with less" in the audit area by performing more reviews and less audits. This is a time of tight budgets and hard decisions, and we have focused available funding on payment safeguards areas with the highest returns on investments. SATISFACTION WITH AUDIT LEVELS Question. Are you satisfied with only being able to audit 20 percent of Medicare providers in FY 1992, compared to 25 percent audit coverage in FY 1991? Answer. We are satisfied that Audit effectiveness will be maintained in FY 1992 by performing fewer audits and more reviews. This will generate significant audit cost savings because hospital audits average between 300 and 400 hours per audit, while reviews are performed in less than 40 hours. Reviews allow a contractor to limit audit activity to specific questionable costs without the need to address all of the auditing and reporting standards required for audits. This will allow the contractors to provide adequate coverage on a greater number of providers, for lower audit costs. PAPERWORK BURDEN In last years's Senate Report, the Committee expressed its concern that HCFA should take action to streamline unnecessarily burdensome paperwork requirements imposed on both providers and beneficiaries. Question. Why was there no mention in this year's budget justifications of what you intend to do to reduce the burden of excessive paperwork? Answer. Since its inception, HCFA has pursued an active paperwork burden reduction program. Although this activity has not been specifically included in previous budget justifications, it receives continuous attention in the Agency. In recent years, Congress has enacted Medicare coverage and payment policies changes that have resulted in savings during the annual budget reconciliation process and improved quality of care. As the Medicare program has become more complex, such changes have often complicated processes for providers and beneficiaries. HCFA is continually evaluating and revising its information collection activities to minimize data requested from beneficiaries, fiscal intermediaries and carriers, and health care providers. HCFA consults with representatives of these groups during the development of many data collection instruments. This involvement. ensures that these instruments are properly assessed and are as burden-free as statutory requirements permit. HCFA's regulations development and clearance process requires that each proposed regulation be reviewed by an internal paperwork management staff to ensure compliance with the Paperwork Reduction Act and to ensure that HCFA's regulations impose the least prescriptive requirements possible, resulting in less burden. Question. Can you give me some specific examples of how paperwork has actually been reduced in the last year? Answer. Whenever possible, HCFA has worked with the health care community to develop standardized forms that not only satisfy Federal requirements, but also meet private industry needs. One example is the HCFA-1500 (Common Health Insurance Claim Form) which can be used for Medicare, Medicaid, and private insurance claims. Such efforts should reduce the burden upon beneficiaries and providers by establishing a single format instead of necessitating use of many forms to complete and process. Additionally, providers are now mandated to complete the HCFA-1500 themselves, thus ending this burden for beneficiaries. Also, over the last several years, HCFA has made a concentrated effort to require minimal information consistent with the appropriate and proper payment of Medicare claims and, as a result, eliminated over 28 million hours of burden. An example of this is the standardization of Form HCFA-1450 (Uniform Institutional Provider Bill), which simplifies billing for providers and processing for fiscal intermediaries. Providers are submitting 74 percent of these claims through electronic media. In a universe of approximately 8.9 million claims, this results in significant savings since the paper claim requires nine minutes to complete as compared to .5 minutes for the electronic claim. In addition, burden reduction is being accomplished through fewer prescriptive regulations. For example, HCFA attempts to limit, as much as possible, the requirement for providers to keep records needed for substantiation of compliance with prescribed Federal standards to records maintained in the provider's normal course of business. Question. I see you have now formed a panel to study the Medicare "hassle factor" that will report back in a year. Does this mean you won't be taking any further specific steps to reduce paperwork in the interim? Answer. No, it does not. HCFA will continue its ongoing efforts to encourage providers to submit claims electronically and to seek further methods for alleviating the paperwork burden imposed on the public as funds and staffing resources permit. Because of the burden imposed by implementing changes to the Medicare program, it appears that electronic technology provides the most promising means for further reducing Medicare paperwork on providers and fiscal intermediaries. 10 PERCENT INCREASE IN AGENCY'S ADMINISTRATIVE BUDGET Question. You are once again proposing massive cuts in Medicare benefits another $2.8 billion for fiscal 1992 and $23 billion over the next five years. I understand that Senator Bentsen, Chairman of the Finance Committee, has already more or less called this cut proposal dead on arrival. They are interesting, nonetheless, when compared to the $333 million or 10 percent increase requested for your agency's administrative budget. Why is the big increase needed? Answer. Although this 10 percent increase appears high, it is the minimal level required to permit the continued administration of the Medicare and Medicaid programs. Over 60 percent ($17.3 million) of the requested increase is needed to meet mandatory increases in non-discretionary items such as: changes in Federal pay scales; space rental, postage, inflation; and one additional day in the fiscal year. In addition, $7.5 million is required to continue HCFA's Current Beneficiary Survey, $1.1 million and 6 additional FTEs are needed to implement and support the government-wide initiative on the preparation and audit of financial statements, and approximately $1.9 million will be used to restore FY 1991 reductions in HCFA's contract funding. These reductions were made necessary by overall reductions in HCFA's FY 1991 administrative costs funding. HEALTH INSURANCE ADVISORY SERVICE Question. Section 4359 of the Omnibus Budget Reconciliation Act of 1990 (OBRA 90) requires HHS to establish a health insurance advisory service to assist Medicare-eligible individuals by providing counselling, education and outreach services regarding the medicare and medicaid programs and other health insurance programs. What is the agency's plan for implementing this requirement of OBRA 90 and what level of funding is needed to accomplish this mandate? Answer. Even before the enactment of OBRA 90, HCFA began the Partnership for Health Insurance Counseling (PHIC) project. This project brings together the Directors of seven of the largest and most successful State health insurance counseling programs in the United States. This advisory group will help HCFA develop a "best-practices" or model health insurance counseling program for senior citizens that can be adopted by those States that do not presently have such a program. Even without any Federal funding, HCFA hopes that many of these States can be persuaded to start counseling programs because they are very cost-effective. Most of the existing State programs utilize volunteer counselors and have annual operating budgets of less than $200,000. REVISION OF FLOOR TO INCREASE ELECTRONIC CLAIMS Question. SUBMISSION Won't the authorizing committees have to repeal the 14 day hold on claims if we want to encourage physicians to use computers to bill Medicare? Answer. No. Legislation supporting the 14-day floor for processing claims has expired, although HCFA currently maintains this limit through administrative mechanisms. However, we concur that one of the biggest incentives we can provide for physician participation in electronic submission would be to pay these claims faster than paper claims. We continue to consider appropriate means of advancing this concept. POTENTIAL OBSTACLES TO ELECTRONIC CLAIMS SUBMISSIONS Question. What other obstacles do you see in trying to get more health care providers to bill Medicare by computer? Answer. Other obstacles include training provider staffs to use computer equipment and initial costs to providers for purchase of equipment. MEDICARE ADMINISTRATIVE BUDGET Question. The Administration's budget submission states that the domestic discretionary budget authority and outlay caps were increased to accommodate the baseline adjustment of approximately 6 percent, inflation PLUS beneficiary growth, in the administrative costs of the Medicare program. In fact, this increase was mandated by the Budget Enforcement Act. (President's Fiscal Year 1992 Budget, Part Five, p. 4). However, the recommended budget level for the administrative expenses of Medicare is actually cut by 2.5 percent. Why did you choose to cut Medicare services to beneficiaries and providers in FY 92, rather than provide the more adequate funding level anticipated in the Budget Enforcement Act? Where did the funds go that were not allocated to Medicare? |