are available, the President has directed me to coordinate a Domestic Policy Council review and consideration of their recommendations in order to develop a comprehensive and cost effective set of proposals for meeting the health care needs of our nation. But we are not just waiting for those studies. Some things are already in place or in preparation. As you know, a few years ago, we implemented the prospective payment system for Medicare Part A hospital payments. Under this system hospitals are paid a predetermined amount for each procedure based on the cost of delivering that care. If the hospital delivers the care for less the PPS amount they keep the excess; if it costs them more than the PPS amount, they must absorb the extra cost. This approach gives the hospitals a strong incentive to find more efficient ways of providing care. PPS has generally been quite successful in restraining the previously excessive rate of growth in hospital care costs under Medicare. Beginning in 1992, we will be implementing a major reform in the way Medicare pays for physician services under Part B. This reform is similar in concept to PPS for hospitals. A fixed amount is set for various physician services based on the cost and amount of resources required to provide the service. It is anticipated that this will result in a significant shift in the amounts paid from the higher cost surgical procedures to primary care. This will help to create new incentives for physicians to enter and concentrate on providing primary care. We believe this is desirable because it will lead to more preventive medicine and will result in less need for later surgical intervention. Although Congress has specified that physician payment reform should be implemented in a budget neutral fashion, we believe that in the long run there will be significant savings to the Medicare program due to the shift in emphasis to prevention and primary care. Our FY 1991 budget includes a number of proposals designed to facilitate the movement to the resource based fee schedule for physicians that will go into effect in 1992. It also identifies and proposes corrections for a number of instances where there is currently excessive or duplicative payments. Question. Should we be investing more in reviewing the payments for the highest cost care or changing the incentives for physicians and hospitals to treat patients in more cost effective ways? Top of Answer. There is a major problem in the way in which health care in this country is delivered and paid for. the line care in America is the envy of the world. The But "miracle" procedures, technology, and drugs available here enable us to provide a quality of care that is unexcelled. these "miracles" are not inexpensive. We must insure that our use of new technology is done in a careful and prudent manner so that it does not squeeze out more fundamental forms of care. But artificial or arbitrary constraints, in either the high cost items or the more basic services, will only discourage innovation and limit access, especially for the poor and minorities. The problem isn't a shortage of health care dollars. The problem is the lack of a rational system in the delivery and payment for care. Because of the lack of coordination in our health care delivery system, our medical marvels exist side-by-side with millions of people who have little or no care. And even those who have access to care frequently find the cost burdensome. If we are to insure adequate care for everyone, we must find ways to bring greater coherence, coordination, and efficiency to health care delivery. The prospective payment system and the new resource based scale for physician payments, in conjunction with our managed care initiatives contained in the FY 1991 budget, will make major changes in the incentive structure for health care delivery under Medicare and, we believe, will serve as a model for health care delivery for the remainder of the population. But even these innovations will not address the problems of the uninsured or those in need of long term care. Therefore we eagerly await the recommendations of the Pepper Commission, the Steelman Advisory Council, and the Undersecretary's Work Group. Question. What approaches do you believe hold the greatest promise for success? Answer. Managed care offers the best hope of providing appropriate care while containing the spiraling cost of providing that care. By emphasizing primary care, early intervention, and comprehensive patient-oriented, rather than procedure-oriented, care, managed care will enhance the quality of the care provided. It will prevent the postponement of treatment that so often leads to life-threatening deterioration of health conditions that require emergency, traumatic and expensive corrective intervention. By bringing order and system to the delivery of care, managed care will reduce excess and duplicative treatments and procedures. And to the extent that managed care incorporates capitation and risk-based payment plans, there is a strong inherent incentive for increased efficiency. As I have mentioned, the FY 1991 budget includes several proposals to further our goal of the greater use of managed care. We propose to increase the payment to risk-based HMOS. The increase will be shared with the beneficiaries and thus serve as a dual purpose incentive for the creation of new HMOS and increased beneficiary participation. Our innovative Medicare Plus proposal also provides a new form of managed care which we believe will encourage greater participation while incorporating incentives for efficient delivery of care. the Medicaid program, we will be offering financial incentives for states to make greater use of managed care for Medicaid recipients. In WELFARE HOTELS Question. During last year's hearings, I pointed out that millions of AFDC/Emergency Assistance funds were being used to support "welfare hotels" that can cost $2,000 per month. We have now enacted $20 million to operate McKinney Act demonstration programs to reduce the number of AFDC families in welfare hotels. What progress has been made to reduce the use of Emergency Assistance funds to house AFDC recipients in welfare hotels? Answer. In July, 1989, HHS sent a report to Congress which contained recommendations on ways to reduce the use of Emergency Assistance funds to house AFDC recipients in welfare hotels. One recommendation, supported by the Congress in Appropriations report language, was to revise current proposed regulations on the uses of Emergency Assistance funds. These revisions would restrict use of these funds to emergency needs incurred during any thirty consecutive days in a twelve month period, but would continue to allow their use to pay rent and utilities that have fallen in arrears, or to pay security deposits and first month's rent to move individuals into more permanent housing. These revised regulations are being drafted, and are expected to be published later this year. HHS has also begun to collect data on the use of Emergency Assistance and AFDC special needs funds for housing in hotels and similar temporary housing arrangements. Such data collection is required by section 8005 of the Omnibus Budget Reconciliation Act of 1989. HHS will also propose legislation this Spring to prohibit the use of AFDC and Emergency Assistance funds for welfare hotels, although short emergency stays in commercial facilities would be permitted. Question. What States have been chosen to operate the McKinney Act demonstration programs, and when do you expect to see results? Answer. At this time, no States have been chosen to operate the McKinney Act demonstration programs. A program announcement is being drafted and should be published by late Spring. Decisions will be made in the fourth quarter on the two to three States which will receive project awards. Project durations could then extend for up to 36 months before we expect final results to be available. Question. Why was the Office of Human Development Services chosen to administer these demonstration projects, despite the fact Congress appropriated the funds to the Family Support Administration? Answer. These funds will be administered by the Family Support Administration's Office of Community Services (OCS), not by the Office of Human Development Services (OHDS). PEDIATRIC AIDS INITIATIVE Question. Would you support targeting funds to Title X clinics for outreach, counseling and testing for HIV-positive women and others at risk for HIV infection, and to provide contraceptive services to these high-risk women? Answer. We certainly agree that Title X clinics provide a good locus for the activities you mention. In fact, funds provided to these programs through the Family Planning Program have traditionally been used for outreach, counseling and testing for a broad array of services which have included diagnosis and treatment of sexually transmitted diseases (SIDS), as well as for contraceptive services to high-risk and low income women. Although the 1991 Title X clinics budget does not contain any funds specifically targeted to HIV services for HIV-positive and high-risk women, we know that these services are provided with varying intensity, based on geographic incidence of infection, across the nation. Also, these clinics seldom operate solely on federal Family Planning Program funds. In addition to State, local, and private resources, these clinics are eligible to apply for HIV/AIDS funds available through other agencies of the Public Health Service, including state CDC funds and grants from the Office of Minority Health. AIDS PREVENTION ACTIVITIES Question. Since 1989, we have spent over $1 billion on AIDS prevention activities. The FY 1991 budget requests a total of $421 million for this activity. What can you tell us about the effectiveness of these expenditures? Answer. AIDS prevention/education activities do appear to be having a positive impact on changing behaviors that would place people at risk of HIV infection. We believe this may be one of the factors that could account for the apparent slowdown, since 1987, in the rate of increase of reported AIDS cases, particularly in homosexual men. Another measure of the effectiveness of AIDS prevention activities is that rates of syphilis in gay white males appear to have declined. For example, infectious syphilis rates for all white males in San Francisco decreased 90% between 1984 and 1989, from 250 to 25 cases per 100,000 population, reflecting safer sexual behavior among this population. Approximately 85% of white males with syphilis in San Francisco were gay or bisexual. Nationally, between 1982 and 1989, syphilis rates for all white males declined 68%, from 10.3 to 3.3 cases per 100,000 population. This decline has occurred despite a rising incidence of the disease in the heterosexual population. Also, rates of HIV seroconversions, or new infections, among participants in a cohort study in San Francisco have declined from 20% in 1982 to less than 2% in 1984, and have since remained constant at less than 2% per year. Since HIV counseling and testing began in public sites in 1985, nearly 2.2 million tests are reported to have been performed and almost 137,000 of these have been reported as positive. Pre- and post-test counseling is a key prevention strategy for motivating and assisting people to change their high-risk behaviors and maintain low-risk ones. Results of 38 studies on HIV counseling and testing indicate that highrisk behaviors can be decreased through these intervention efforts. Six of these studies on IV drug users have shown decreases in risky injection practices. For example, Sacramento, California demonstrated a 23% decline in the proportion of IV drug users who continued sharing needles or using non-disinfected drug paraphernalia after participating in an AIDS education/testing program located in drug treatment centers between 1986 and 1988. - Furthermore, surveys indicate that general public awareness of AIDS issues has increased, and levels of misinformation about how the disease is and is not transmitted - a potential cause of discrimination has declined since the PHS "America Responds to AIDS" campaign was initiated in 1987. Public demand for AIDS information continues to expand. The National AIDS Hotline currently receives an average of 2,800 calls a day, or 84,000 calls a month, for a total of 3,879,817 since 1987; and the National AIDS Clearinghouse is currently distributing over 1,000,000 documents each week. It is still too soon for much more program effectiveness data to be available since a significant amount of CDC funds were not devoted to AIDS information/education projects until 1987, with $103 million, and 1988 with $209 million, compared to 1986 with $34 million. However, CDC continues to |