MEDICARE-MEDICAID ADMINISTRATIVE AND TUESDAY, JULY 27, 1976 U.S. SENATE, SUBCOMMITTEE ON HEALTH OF THE Washington, D.C. The subcommittee met at 8 a.m., pursuant to recess, in room 2221, Dirksen Senate Office Building, Hon. Herman E. Talmadge (chairman of the subcommittee) presiding. Present: Senators Talmadge, Curtis, Dole, and Packwood. I have two brief announcements. First, following this morning's testimony by the General Accounting Office we will apply the 10minute rule with respect to oral testimony. While each witness will be limited to 10 minutes presentation, the committee will of course carefully study the presentations. The Senators' interrogation will be limited to 5 minutes for each Senator on each round. Second, at tomorrow's hearing the meeting immediately following the testimony of Senator Bentsen, we will then hear from Senator Frank Moss of Utah. Any objection? Without objection, it is so ordered. The first witness this morning is Mr. Gregory J. Ahart, Director of the Human Resources Division, General Accounting Office, accompanied by Mr. Robert E. Iffert, Jr., assistant director, and Robert Hughes, assistant director. We are delighted to have you with us, Mr. Ahart. We are aware, of course, of the great amount of work the General Accounting Office has done in this area at my request and perhaps the request of other committees so we feel that you will be able to contribute a great deal to our deliberations. I want to recognize and thank you for your thorough and objective work also in the North Carolina medicaid contract, it is a highly useful report. Without objection, your entire statement will be inserted in full in the record and you may proceed in any way you see fit, sir. STATEMENT OF GREGORY J. AHART, DIRECTOR, HUMAN RESOURCES DIVISION, GENERAL ACCOUNTING OFFICE, ACCOMPANIED BY ROBERT E. IFFERT, JR., ASSISTANT DIRECTOR, AND ROBERT HUGHES, ASSISTANT DIRECTOR Mr. AHART. Thank you, Mr. Chairman. (91) 75-502-767 We are pleased to be here today to discuss our views on S. 3205 which is a bill to provide for the reform of the administrative and reimbursement procedures currently employed under the medicare and medicaid programs. We find that the thrust of many of the bill's provisions are consistent with various reports we issued over the past several years which were aimed at identifying problems and improving the administration of the medicare and medicaid programs. For example, we have issued reports or have work in progress dealing with the following problems addressed by S. 3205: First, the need for better coordination of the medicare and medicaid programs. We have pointed out instances of the lack of effective coordination particularly in the areas of (1) provider reimbursement and auditing and (2) investigating allegations of fraud and abuse. For example, our April 14, 1975, report to this subcommittee entitled "Improvements Needed in Medicaid Program Management Including Investigations of Suspected Fraud and Abuse" recommended that HEW establish a single organizational unit for the systematic investigation of suspected medicare and medicaid fraud and abuse. Section 2 of S. 3205 would establish a Health Care Financing Administration which would be responsible at the Federal level for administering medicare and medicaid. This provision is designed to facilitate coordination of the two programs. Included in section 2 is a provision which would establish within HEW an Office of Central Fraud and Abuse Control which would have overall responsibility to deal with fraud and abuse under the various health programs authorized under the Social Security Act. Second, we have commented on the desirability of disclosing contractual and financial arrangements between hospitals and members of their governing boards and key employees. In an April 1975 report to the Congress we recommended legislation providing for public disclosure of such arrangements. While not going as far as we have proposed, section 40 of S. 3205 would require disclosure to the Secretary of HEW and the Comptroller General, on request, of (1) the officers, directors, owners and/or partners of any entity including hospitals which do business with the programs established under titles V, XVIII, or XIX and (2) full and complete information on any business dealings between the entity and these persons. Third, circumvention of the intent of the Congress in its efforts to eliminate "factoring" from medicare and medicaid. In October 1973 and February 1976 we reported to HEW and the Congress, respectively, that the intent of section 236 of the Social Security Amendments of 1972-which essentially prohibited the reassignment of physician claims under medicare and medicaid-was being circumvented through the use of powers of attorney by so-called factors. Section 26 of S. 3205 is designed to eliminate this loophole. Fourth, the slowness of HEW's process for issuing final regulations. A number of our reports have dealt with HEW's problems in issuing regulations implementing health care related laws in a timely manner. For example, in January 1975, we reported that HEW had not published final regulations for medicaid's early and periodic screening, diagnosis and treatment program until 4 years after the enactment of the provision and 21⁄2 years after the program was supposed to be fully implemented. Section 7 of S. 3205 would require HEW to publish final regulations to implement all provisions of the bill within a year to 13 months of enactment unless a provision of the bill specifies another time frame. Fifth, the need for closer monitoring by HEW of States' medicaid administration. In response to this oft reported problem of a lack of HEW monitoring of State medicaid administration, section 4 of the bill would require HEW to make annual on-site reviews of each State's administrative operations to see whether States were meeting performance criteria specified by the bill. Sixth, the effect of low medicaid reimbursement rates on the availability of medicaid services. In January 1975 we reported that low physician reimbursement rates under medicaid contributed to a lack of participation by physicians in the early and periodic screening diagnosis and treatment program. Section 23 of the bill would establish a lower limit or floor on the levels of payments for physician services. Seventh, decreasing rates of assignment of medicare claims for physicians services. On two occasions in response to requests from the Congress we reported that fewer medicare claims for physicians' services were being accepted for assignment-the physician accepts medicare's reasonable charge as the full charge. Because medicare makes many reasonable charge reductions when paying claims, fewer assignments had the effect of increasing the out-of-pocket medical costs of medicare beneficiaries. Section 21 of S. 3205 is designed to encourage physicians to accept assignments with medicare's reasonable charge as the full charge by simplifying and expediting the billing and payment processes for physicians who voluntarily agree to participate in such an arrangement. Eighth, the need for access to the books and records of independent laboratories. In a report to be released shortly we discuss the difficulties we had in obtaining or disclosing information on physicians who obtained services from independent laboratories at one price and added large markups to their medicare bills for the services. Section 40 of S. 3205 would require independent pharmacies and laboratories providing services under titles V, XVIII, and XIX to enter into agreements with HEW or the State agency to provide HEW with reasonable access to their books and records. Mr. Chairman, we will provide detailed comments on specific provisions of S. 3205. These comments will deal with: First, the role contemplated for the General Accounting Office which would substantially increase our workload and could impede the timely and effective administration of the proposed provisions. We are recommending that some of the requirements be deleted. We are also suggesting that the Comptroller General, as well as HEW, be given access to several kinds of records. Second, matters pertaining to other recent, or pending, legislation where we are suggesting modification or deferral of action on specific provisions of S. 3205 to achieve coordination or consistency. Third, questions of whether the language in some cases will bring about the results sought by the sponsors. Fourth, changes which would clarify the bill or simplify the administration of the proposed amendments. Mr. Chairman, my statement contains some brief details of the highlights. In the interest of time I think I will skip over those and make ourselves available for any questions that the subcommittee may have. Senator TALMADGE. Thank you very much, Mr. Ahart, for your contribution. I do have a few questions. You mentioned the problems HEW has experienced in issuing regulations to implement health related laws. Would you elaborate on this? Mr. AHART. Yes, Mr. Chairman. We have in several of our reports over the years commented on the delays in getting out regulations which of course complicates the administration by HEW, the States and the providers of services. At the present time at the request of one of the committees of Congress we are looking into this process. We find that although HEW has internal requirements which would require regulations to be issued in final form within six months of enabling legislation, none of the 14 recall related regulations we received met the standard. In some cases it was a matter of years before they were issued in final form. We will be making recommendations to HEW to try to shorten up this process so that they will be in a better position to get regulations out in a timely manner. Internally the Secretary of HEW has set up an Office of Regulatory Review which is charged with the responsibility of looking at this process, trying to speed it up as well as to look at existing regulations to see what changes ought to be made. Senator TALMADGE. Your testimony indicates that one of the problems discussed in the prior GAO reports is need for better coordination between medicaid and medicare. In the areas of providing reimbursement do you have any examples in your current work which would indicate that such problems continue to exist? Mr. AHART. Yes, Mr. Chairman, we have. One that comes to mind is a review we are doing which deals with reimbursement under medicaid and medicare to long-term care facilities and we have found cases of rather substantial duplicate payments where the facility was charging both part B of the medicare program and the medicaid program for the same services rendered by staff physicians. In the two cases, the two institutions that we looked at, this added up to about $1.6 million over a period of I think in one case about 5 years and in the other 3 years Senator TALMADGE. That is the same hospital? Mr. AHART. It is the same facility being paid by both programs for the same service. Senator TALMADGE. That is charging two bills for the same patient, one on medicaid and the other on medicare? Mr. AHART. That is essentially correct, Mr. Chairman. Senator TALMADGE. In your statement you said that you had problems obtaining laboratory records. What difficulties did you have in getting these records? |