completed the planning phase of their project. We will use this year to evaluate the program.

HEARINGS AND APPEALS BACKLOG

Question. Is it acceptable to you to have a backlog of 6.9 million cases and to take nine months for an appeals hearing?

Answer. The prospect of having a backlog of this magnitude is not acceptable. However, given the current budgeting constraints, funds available for hearings and appeals are limited, and maintaining prompt claims processing and payment safeguard activities remain higher priorities. Nonetheless, we are examining several alternatives to minimize the impact of such a large backlog on beneficiaries and providers.

ACCEPTABLE HEARINGS AND APPEALS BACKLOG

Question. What is an acceptable backlog?

Answer. Ideally, workloads received would be processed without generating backlogs. Such backlogs differ from cases kept at hand in order to maintain steady and efficient contractor operations.

However, the reality is that backlogs will continue to exist and to exceed accepted volumes for workloads held at hand because of the need to develop cases for additional information, limitations relating to staffing capacities and the widely varied amounts of time required to process hearings, reviews and appeals workloads.

The backlog of Part A workloads for FY 1990 was 20,779 cases, which represents 17.6% of the receipts for that year. For Part B, the backlog was 608,951

cases or 8.1% of the total received.

BENEFICIARY SERVICES

Question. What is going to happen with 21.8 million unanswered inquiries?

Answer. Our projected workload is 30.4 million inquiries in FY 1992, and we expect to be able to process only 8.6 of these requests. However, this will not necessarily result in a total of 21.8 million unanswered inquiries. Since the majority of

inquiries not received will be phone inquiries, it is believed that a significant number of these potential calls will not result in either written or walk-in follow-ups.

To help minimize the impact of the funding limitations on telephone services, increased emphasis is being placed on the use of Audio Response Units (ARUS) for answering both beneficiary and provider inquiries. We are also considering other avenues for achieving savings.

Question. How are beneficiaries supposed to find out about complex and ever-changing provisions of the Medicare program?

Answer. There are several ways that

beneficiaries can find out about the varied issues involving the Medicare program, including the Medicare Handbook and advocacy group publications. Another significant source is the EOMB (Explanation of Medicare Benefits) that beneficiaries receive after services are rendered by their providers. Funding is being provided in the FY 1992 budget to refine EOMBS.

Question. Isn't it the contractors'

responsibility to explain provisions of law, coverage of services, complicated payment rules, and the rights and responsibilities of beneficiaries?

Answer. Yes, contractors are responsible for providing the information you noted. The EOMB (Explanation of Medicare Benefits) is a prime source for this information regarding medical services beneficiaries have received.

Despite FY 1992 funding constraints, contractors will continue to provide information in response to all written and walk-in inquiries, and will process as many telephone inquiries as possible.

USER FEES

Question. Once again, you are proposing to offset your budget request by $341 million through collection of user fees to cover the cost of monitoring facilities such as nursing homes that receive funds from Medicare and Medicaid. These user fees were proposed last year and rejected by the Congress.

Since this was rejected last year, why didn't you just request the funding for the mandated inspections?

Answer. Medicare and Medicaid have historically subsidized the survey and certification costs of all payers. These costs should be a regular cost of doing business, to be equitably allocated among all of a provider's lines of business. Therefore, we believe that user fees are justified, and that our proposal should be enacted. Additionally, the user fee proposal builds on the precedent established by Congress in the Clinical Laboratory Improvement Act of 1988 (CLIA 88).

HCFA is initiating discussions with the authorizing committees on this matter. We are hopeful that the merits of survey and certification user fees will outweigh any opposition to our proposal. We are sensitive to the concerns that are raised by proposals that cross jurisdictional

boundaries. HCFA will do what it can to help address these jurisdictional concerns.

Question. How do you plan to pay for monitoring work until user fees are collected?

Answer. HCFA believes that the collection of CLIA user fees into the Survey and Certification Revolving Fund will begin in the summer of 1991. Collection of these funds will enable HCFA to pay for on-going survey and certification activities from the beginning of FY 1992. Until that point, we will use Survey and Certification funds appropriated to the Program Management account.

Question. I understand that the fees would range from $1,700 to $16,000, with the fees going up for larger, more complex facilities.

Is it true that the facilities can recoup these charges by billing Medicare and Medicaid for them as a cost of doing business?

Answer. Yes. Some portion of the fees may be recouped. Medicaid provider payment rates are updated on a staggered basis, as a result we only expect about 50 percent of the fees to be recoverable in FY 1992. We expect this recoupment amount to be about $46 million.

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