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 THE MISSING BASELINE 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? Background. The Budget Enforcement Act provided that the baseline for the administrative expenses of three social insurance programs funded through trust funds, Medicare, Unemployment Insurance, and Railroad Retirement, be adjusted to reflect inflation Plus beneficiary growth. The reasoning behind the change is that since these programs are entitlements with participation levels that are increased by factors other than inflation, the baseline should be adjusted to reflect the additional cost of administering the programs due to the increased number of beneficiaries. The budget adjusts upwards the domestic discretionary budget authority and outlay caps to reflect this baseline adjustment. However, the fiscal year 1992 level recommended for the Medicare administrative budget is 2.5 percent less than the fiscal year 1991 level. These increases were allocated elsewhere in the budget. Answer. Including the contingency fund, the FY 1992 Medicare Contractor budget is actually slightly higher than FY 1991. It should be understood that the Medicare Contractor budget is a part of HCFA's total Program Management budget and accordingly must compete with all of HCFA's administrative needs. In addition, HCFA must compete for administrative funds with other HHS components. This budget attempts to maintain claims processing times within statutory requirements, and fund payment safeguard activity at reasonable levels. There will be slippage in the processing of appeals and inquiries. FUNDING FOR THE PHYSICIAN PAYMENT REFORM Question. Your budget cuts the funding level for answering Medicare beneficiaries' and providers' questions by over 50 percent. It is estimated that over 30 million questions will be asked either in writing or over the phone this year. However, the FY 1992 funding level assumes that only 1 out of 4 of these inquiries will be answered. In light of the fact than physician payment reform (PPR), the most sweeping change in Medicare payment policies since the DRG system, phases in beginning in January, wouldn't it have been prudent for the Administration to provide adequate funding for this program to aid in the smooth transition to the new reimbursement rules? Answer. Claims processing and payment safeguards are the most important Medicare Contractor activities and receive the highest funding priority. Within a limited budget, careful decisions were made about the best way to distribute the remainder of available money. With the large number of systems changes needed to implement OBRA 89 and OBRA 90, less money remained to respond to beneficiary and provider inquiries. SEVEN MILLION UNRESOLVED DISPUTES Question. Will the disputed claims be resolved on a first in/first out basis, or by amount in dispute, or some other standard? Answer. The current policy is to process requests on a first in/first out basis. There are no plans to change this method at the present time. Question. What will happen to the 7 million claims left unresolved during FY 1992? On average, how long will these disputes remain unresolved and how much money in claims will be in dispute? Answer. The current estimate of the expected FY 1992 appeals backlog is 6.9 million cases involving approximately $1.3 billion in benefits payments. These appeals will be handled on a first-in/first-out basis as rapidly as our funding and overall capacity permit. At the present time, we expect appeals processing times to be extended as follows: Part A Reconsiderations: from 27 days to 277 Part B Reviews: from 26 days to 276 days; Part B Fair Hearings: from 81 days to 331 days. SCOREKEEPING Question. The President's budget freezes spending on payment safeguard activities which prevent erroneous or inappropriate payments from the Medicare Trust Fund. These activities now save Medicare nearly $4 billion every year, which could significantly increase with additional funding. However, the budget scorekeeping rules discourage Congress from providing additional spending since the funding levels are scored against the domestic discretionary spending caps, but the resulting savings that occur are not scored. Last year, two |