individual's successful job history, participation in drug treatment, or abstinence from drug use. Federal action to end the ban or narrow it would replicate action taken by a majority of States. A Left unmodified at the Federal level, the ban reduces access to alcohol and drug treatment in 24 States. In fact, a study (of eight women's residential programs in California) found that providers reported that their loss in monthly revenue ranged from none to 25 to 30 percent.22 (Treatment programs, particularly residential programs, have traditionally relied on a family's welfare and food stamps to help fund room and board.) Unmodified, the ban also acts as an impediment to recovery for individual women because it denies them support as they are leaving treatment and re-entering the community. Repealing gives them the means, as well as the incentive, to stay in treatment. Add exceptions to the TANF and Medicaid sanctions for recipients who are in Some TANF recipients with alcohol and drug problems who are trying to become self-sufficient through treatment may have difficulty complying with their work requirements, either because their addiction interferes with their ability to work or because their treatment schedule conflicts with their work or training schedule. Ending their eligibility for TANF and Medicaid virtually ensures that they will not be able to make the transition to recovery and self-sufficiency. Those who are in treatment - or on a waiting list to receive treatment - should be able to retain their TANF and Medicaid so they can continue to afford treatment. Without it, they may not be able to learn the recovery and vocational skills they need to achieve self-sufficiency. Exempt individuals in alcohol and drug treatment – or on a waiting list to receive Without treatment, few welfare recipients with alcohol and drug problems will be ready to work when they reach their time limit on Federal assistance. Unfortunately, in many communities, 21 Legal Action Center, Getting to Work: How TANF Can Support Ex-Offender Parents in the Transition to Self-Sufficiency. Washington, DC: LAC, 2001. Kentucky has since enacted legislation to narrow the ban. 22 A. Noble and E. Zahnd, "The Gramm Amendment to Welfare Reform: Problems for Women's Residential Treatment Providers and Their Clients." Davis: University of California, January 2000. individuals needing treatment and willing to enter it cannot - because it is not available. Providing incentives for welfare recipients with alcohol and drug problems to enter and stay in treatment will help them become ready to work. Exempting TANF recipients in alcohol and drug treatment from the Federal time limit gives them incentive to enter treatment and to stay in treatment. It also gives States more flexibility to engage TANF recipients in treatment as a workpromoting activity for as long as necessary, regardless of whether the State has reached its 20 percent hardship exemption maximum. Codify current Medicaid procedures for ensuring enrollment for eligible individuals who are leaving prison and jail. Current HHS policy23 states that incarcerated individuals must be returned to Medicaid enrollment immediately upon their release unless the State determines they are no longer eligible. Few States, however, scem aware of this requirement. A 2001 study found 46 States and two territories have policies that require termination of Medicaid supports for people in jail, meaning that these individuals must complete the Medicaid application process again when released and wait for a decision and benefits.24 Many women leaving prison and jail reunite with children (whom they left with relatives) and would likely continue to be eligible for Medicaid. Many also having pressing medical conditions – such as mental illness, HIV, and alcohol and drug problems - that if left untreated would decreasc their chances of working and achieving self-sufficiency. Thank you for considering these recommendations for TANF reauthorization. Please feel free to contact me at (202) 544-5478, x13 if you have any questions. Legal Action Center looks forward to working with you on these important issues. Sincerely, Jennifer Collier Director of National Policy and State Strategy 23 Letter from Secretary of Health and Human Services Tommy G. Thompson to Representative Charles L. Rangel, October 1, 2001. 24 C. Brown, "Jailing the Mentally III," State Government News, April 2001, p. 28. The Senate Finance Committee held a hearing yesterday entitled, “Purchasing Health Care Services in a Competitive Environment." The hearing raised important questions regarding the cost-implications of adopting a competitive bidding model for Medicare. More specifically, the Committee focused on competitive bidding models employed by large health care purchasers such as the Office of Personnel Management, the Department of Defense, and General Motors. My judgment is that the cost or savings associated with this approach would depend, in part, on the ability of private plans to negotiate lower payment rates than providers are currently paid under the traditional fee-for-service Medicare program. If private plans could negotiate lower rates than fee-for-service Medicare, there is a potential for savings. Conversely, if these plans could not negotiate lower payment rates, spending by the federal government for beneficiary care would be higher than under current law. Any cost or savings associated with a competitive bidding approach would also be influenced by the ability of private health plans, such as preferred provider organizations (PPOs), to reduce excessive health care utilization. Many argue that the cost-containment tools employed by health plans today have the potential to reduce the excessive utilization associated with feefor-service Medicare. Quantitative data on these questions are difficult to obtain. I understand that the best data available to answer these questions may be the survey results that the Center for Studying Health System Change has collected from its series of community reports over the past several years. Paul B. Ginsburg, Ph.D. April 4, 2003 Page 2 Based on your research and these reports, I am writing for your assistance in answering the following questions: 1) 2) 3) What is the available evidence of private health plans' ability to negotiate How do private plans' ability to negotiate lower rates vary across the What is the current trend of preferred provider organizations' (PPOs') In the interest of including your answers to these questions as part of the Finance Committee hearing record, I am hopeful that you can provide a response by 5:00 pm, Thursday, April 10, 2003, the deadline for submitted comments. Thank you for your attention to this request. I am certain that your research into these matters will inform the Committee's discussion on this very important topic. I am pleased to answer the questions that you posed to me in your letter of April 4 concerning the potential for private plans in the Medicare program to realize lower costs. The Center for Studying Health System Change has been monitoring and analyzing health care markets since 1995. We visit a representative sample of 12 communities every two years for in-depth interviews with leaders of the major elements of local health systems. These site visits complement our surveys of households and physicians. The period in which we have studied these markets encompassed both the expansion of managed care and its subsequent transformation in response to a backlash by consumers and physicians. 1) What is the available evidence of private health plans' ability to negotiate lower provider payment rates than fee-for-service Medicare currently pays? Is there any evidence of excess capacity in the health care system that would enable private health plans to negotiate lower rates than Medicare fee-for-service? In most areas of the country, payment rates for hospitals and physicians that are negotiated by private plans are higher than those paid by the Medicare fee-for-service (FFS) program. In our site visits, we routinely ask managed care plans how much they pay physicians. Since virtually all of them use the Medicare fee schedule as a benchmark, they usually answer the question in terms of a percentage of Medicare rates. In our 2000-2001 site visits, we found that private plans in 8 communities paid higher rates than Medicare while plans in 4 communities paid less. During our current round of site visits, which is mostly complete, 2 communities changed from private plans paying less than Medicare to more while none moved in the opposite direction. We have witnessed this trend of rates paid by private plans increasing relative to Medicare payment rates over a number of rounds of site visits. 600 MARYLAND AVE SW⚫ SUITE 550 • WASHINGTON, DC 20024-2512 - TEL: 202.484.5261. 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