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important precedents were included in the budget legislation addressing adequate funding for administration expenses of the Veteran's Administration and the I.R.S. Since the savings from Medicare payment safeguard activities can be documented, shouldn't there be similar incentives to provide funding in this program?

Background. The Omnibus Budget Reconciliation Act of 1990 included a provision which allows the Secretary of the Veterans Administration to keep funds collected from secondary payers to be used directly by the VA to cover the administrative costs of collecting these payments.

The new Budget Enforcement Act includes a mechanism whereby the President can adjust the domestic discretionary spending caps to offset additional spending on 1.R.S. collection activities. (The President's FY 1992 budget utilizes this adjustment.). However, the Appropriations Committees are "charged" for providing adequate funding in the Medicare administrative budget for enforcement activities without getting credit for the savings. The new budget law, in essence, hold the Appropriations Committees "harmless" for providing increased VA and I.R.S. funding for enforcement activities, but not Medicare.

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Answer. We do not currently have plans to propose a change in Medicare Trust Fund scorekeeping like the one discussed above. We acknowledge that the number of programs that receive special scorekeeping treatment must be limited lest the efficacy of the caps on overall domestic discretionary spending be jeopardized. Additionally, we still need to determine when the point of diminishing marginal rate of return would be reached for payment safeguard activities in order to set optimum funding levels. However, we remain committed to protecting the Trust Funds, and to exploring new methods for providing incentives to Medicare contractors to maintain such protection through efficient payment safeguard activities.

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Question. I've been concerned about the potential adverse impact on the access to clinical laboratory services, especially in rural areas, of HCFA's proposed regulations implementing the clinical Laboratory Improvement Act (CLIA). The Committee's report of last year directed you to provide us with an update of the five studies which were mandated by

CLIA. What is the status of these studies? The Committee report also asked that you provide adequate opportunity for public review of your revised regulations. What is the timetable you are working under for publishing the revised regulations?

Answer. The Public Health Service, specifically the Centers for Disease Control has responsibility for conducting these studies. The due dates were impossible from the start. The studies deal principally with the effects of certain requirements on quality of laboratory testing (for example, personnel requirements and proficiency testing). proper study in these areas requires longitudinal data, including before and after analysis. Since there was almost no preexisting data in these areas on which to build, it is necessary to start from the beginning. Because final regulations have not yet been published, HCFA has not been able to collect user fees.

As a result, there are no funds available to conduct the studies.

CDC has used some of its own resources to give the Research Triangle Institute funds to develop the study designs. Contracts for the studies will be awarded in late FY 991 or early FY 1992. We will begin collecting user fees in a few months, and we will provide the CDC with funds adequate to conduct the studies.

Implementation of the CLIA regulations is dependent upon final publication of four regulations. In all cases we have made provision for public comment on the regulation. We hope to have all the regulations published in final and the CLIA program ready for full implementation by the end of 1991.


Question. What steps have you taken to notify eligible women of the new mammography screening benefit under the Medicare program? What have you done to encourage the appropriate use of this benefit?

Answer. At the end of last year, just as the mammography benefit was to go into effect, the Health Care Financing Administration (HCFA) issued a press release announcing the availability of the new benefit. The information was carried on the major wire services and in major dailies throughout the country.

Information about the benefit is also included in the Medicare 1991 Handbook, which is being mailed to all new beneficiaries and to anyone who requests the publication from HCFA or Social Security Administration (SSA) offices. We have also drafted a leaflet, Medicare 1991 Highlights, which we will be distributing to the public during the remainder of this year through supermarket displays and through our regular publication distribution channels.

HCFA's Office of Public Affairs has also been working with the National Cancer Institute, with whom we will distribute a package of information to organizations, senior centers, and appropriate news media, encouraging women to be screened for breast cancer and pointing out that the screening is cove ed by Medicare.


Question. The Committee's 1991 report urged that the Department conduct a demonstration project to test the feasibility of applying a regionalized approach to developing guidelines and carrier instructions with respect to one or more Medicare reimbursable services. This request was based on our concern that Medicare rules do not adequately account for local and regional differences. What have you done to implement this demonstration project?

Answer. When HCFA promulgates regulations we solicit comments from concerned parties. In that way we provide an opportunity for local and regional variation to be called to our attention and for modifications to the regulation to be considered. Although we believe consideration should be given to all concerned parties we do not believe it would be efficient to establish different rules and regulations for local and/or regional areas. In fact, this approach would lead to an increase in the inconsistency of program payments in different sections of the country. A practice that we have been criticized for and are working to correct.


The fiscal 1992 appropriation estimate for Medicaid is $59.8 billion, an increase of $8.2 billion over FY 1991. That represents a 16 percent increase for these entitlement benefits.

Question. What are the major factors driving the growth of Medicaid spending?

Answer. There are a number of reasons why Medicaid expenditures are growing so fast. Federal laws have increased Medicaid costs (e.g., maternal and child expansions and nursing home reform). The AFDC and SSI programs are reporting sizeable increases in caseloads, Medicaid eligibility is closely tied to these programs. Participation rates for eligible groups are also rising due to aggressive outreach efforts. States have increased payments for hospitals (through both rate increases and disproportionate share adjustments), nursing homes and physicians. Lastly, with their constrained fiscal environments, many States are being more creative in maximizing their Federal funding, e.g., through donated funds and provider-specific taxes. Thus, Federal expenditures are rising faster than State expenditures.

Question. How much do you expect Medicaid costs to grow over the next five years, based on current law requirements?

Answer. It is estimated that Federal Medicaid expenditures under current law will grow from $59.9 billion in FY 1992 to $99.8 billion in FY 1996, an increase of $39.9 billion or nearly 67 percent.

Provided below are the current law estimates for Federal Medicaid expenditures for FYs 1992-96.

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Contractors' data processing centers are vulnerable to fires, vandalism, and water damage, and some national disaster recovery plan should be developed so that claims can continue to be processed in the face of these emergencies. What is your agency doing to take a leadership role in overseeing the development of these plans by Medicare Contractors?

Answer. HCFA has taken a very aggressive leadership role in the improvement of disaster recovery planning during the past 34 years.

In 1988, we updated contingency planning procedures for all Medicare contractors and surveyed their current plans. In 1989, we provided special training for regional office systems security coordinators. In addition, we conducted a survey of all Medicare contractor contingency planning and risk analysis activity.

In 1990, we arranged for more comprehensive training for all appropriate regional and central office staff. We also initiated a series of central office and regional office in-depth reviews of the preparedness of 16 intermediaries. The intermediaries we have reviewed to date all could resume full Medicare operations within 24 to 72 hours of a disaster. In addition, we worked with the office of the Inspector General on improving our instructions to all intermediaries and carriers regarding contingency planning, and tightening regional office oversight of that planning. This work is continuing in 1991.


Question. To what extent have State and local providers been subverting the intent of Congress with respect to providing Medicaid matching funds?

Answer. Prior to OBRA 1990, 11 States had a tax and/or donation program in place. Since OBRA 1990, 16 States, or 40 percent of those without a tax or donation program, are considering one. As of January 24, 1991, we estimated that the FY 1991 Federal share attributed to tax programs would be $681 million and $879 million for donation programs.

Question. What types of schemes are you uncovering to misrepresent the actual amounts of matching funds provided, and how can you control this type of abuse?

Answer. The specifics of the donation and tax programs being considered by States as a method of financing the States' share of Medicaid financial participation vary widely. One common characteristic of the donation proposals seems to be that donations

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