Health and Human Services United States. Congress. House. Committee on Appro.

Departments of Labor, Health and Human Services, Education, and Related Agencies appropriations for 1996 : hearings before a subcommittee of the Committee on Appropriations, House of Representatives, One Hundred Fourth Congress, first session (Volume 2) online

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Online LibraryHealth and Human Services United States. Congress. House. Committee on ApproDepartments of Labor, Health and Human Services, Education, and Related Agencies appropriations for 1996 : hearings before a subcommittee of the Committee on Appropriations, House of Representatives, One Hundred Fourth Congress, first session (Volume 2) → online text (page 1 of 116)
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DEPARTMENTS OF LABOR, HEALTH AND HUMAN
^^^i SERVICES, EDUCATION, AND RELATED AGENCIES
■ < APPROPRIATIONS FOR 1996



Y 4.AP 6/l:L 11/996/PT.2

JNGS

Departnents of Labor/ Health and Hu. . . eie a

iouj->v^v>'i*xivxx J. 1 JliJlj Or Irlrj

COMMITTEE ON APPROPRIATIONS
HOUSE OF REPRESENTATIVES

ONE HUNDRED FOURTH CONGRESS

FIRST SESSION



SUBCOMMITTEE ON THE DEPARTMENTS OF LABOR, HEALTH AND
HUMAN SERVICES, EDUCATION, AND RELATED AGENCIES

JOHN EDWARD PORTER, Illinois, Chairman

C. W. BILL YOUNG, Florida DAVID R. OBEY, Wisconsin

HENRY BONILLA, Texas LOUIS STOKES, Ohio

ERNEST J. ISTOOK, Jr., Oklahoma STENY H. HOYER, Maryland

DAN MILLER, Florida NANCY PELOSI, CaUfornia

JAY DICKEY, Arkansas NITA M. LOWEY, New York
FRANK RIGGS, CaUfornia
ROGER F. WICKER, Mississippi

NOTE: Under Committee Rules, Mr. Livingston, as Chairman of the Full Committee, and Mr. Obey, as Ranking
Minority Member of the Full Committee, are authorized to sit as Members of all Subcommittees.

S. Anthony McCann, Robert L. Knisely, Susan E. Quantius, Michael K. Myers,
and Joanne L. Orndorff, Subcommittee Staff



PART 2
DEPARTMENT OF HEALTH AND HUMAN SERVICES

I Page

Technical Briefing 1

Secretary of Health and Human Services,
Departmental Management, and the Office for Civil

Rights 93

Health Care Financing Administration 295

Social Security Administration 555

Administration for Children and Families 791

Administration on Aging 1327

Office of Inspector General 1431

Special Tables 4Jik*^f<'tJ>.i4&;.. 1498



Printed for the use of the Commiti



WS tTT^'



DEPARTMENTS OF LABOR, HEALTH AND HUMAN

SERVICES, EDUCATION, AND RELATED AGENCIES

APPROPRIATIONS FOR 1996

HEAEINGS

BEFORE A

SUBCOMMITTEE OF THE

COMMITTEE ON APPROPRIATIONS
HOUSE OF REPRESENTATIVES

ONE HUNDRED FOURTH CONGRESS

FIRST SESSION



SUBCOMMITTEE ON THE DEPARTMENTS OF LABOR, HEALTH AND
HUMAN SERVICES, EDUCATION, AND RELATED AGENCIES

JOHN EDWARD PORTER, Illinois, Chairman

C. W. BILL YOUNG, Florida DAVID R. OBEY, Wisconsin

HENRY BONILLA, Texas LOUIS STOKES, Ohio

ERNEST J. ISTOOK, Jr., Oklahoma STENY H. HOYER, Maryland

DAN MILLER, Florida NANCY PELOSI, California

JAY DICKEY, Arkansas NITA M. LOWEY, New York
FRANK RIGGS, CaUfomia
ROGER F. WICKER, Mississippi

NOTE: Under Committee Rules, Mr. Livingston, as Chairman of the Full Committee, and Mr. Obey, as Ranking
Minority Member of the Full Committee, are authorized to sit as Members of al! Subcommittees.

S. Anthony McCann, Robert L. Knisely, Susan E. Quantius, Michael K. Myers,
and Joanne L. Orndorff, Subcommittee Staff



PART 2
DEPARTMENT OF HEALTH AND HUMAN SERVICES

Page

Technical Briefing 1

Secretary of Health and Human Services,
Departmental Management, and the Office for Civil

Rights 93

Health Care Financing Administration 295

Social Security Administration 555

Administration for Children and Families 791

Administration on Aging 1327

Office of Inspector General 1431

Special Tables 1498



Printed for the use of the Committee on Appropriations



U.S. GOVERNMENT PRINTING OFFICE
91-1780 WASHINGTON : 1995

For sale by the U.S. Government Printing Office
Sujjerintendent of Documents, Congressional Sales Office, Washington, DC 20402
ISBN 0-16-047306-3



COMMITTEE ON APPROPRIATIONS

BOB LIVINGSTON, Louisiana, Chairman



JOSEPH M. McDADE, Pennsylvania

JOHN T. MYERS, Indiana

C. W. BILL YOUNG, Florida

RALPH REGULA, Ohio

JERRY LEWIS, California

JOHN EDWARD PORTER, Illinois

HAROLD ROGERS, Kentucky

JOE SKEEN, New Mexico

FRANK R. WOLF, Virginia

TOM Delay, Texas

JIM KOLBE, Arizona

BARBARA F. VUCANOVICH, Nevada

JIM LIGHTFOOT, Iowa

RON PACKARD, CaUfornia

SONNY CALLAHAN, Alabama

JAMES T. WALSH, New York

CHARLES H. TAYLOR, North CaroHna

DAVID L. HOBSON, Ohio

ERNEST J. ISTOOK, Jr., Oklahoma

HENRY BONILLA, Texas

JOE KNOLLENBERG, Michigan

DAN MILLER, Florida

JAY DICKEY, Arkansas

JACK KINGSTON, Georgia

FRANK RIGGS, CaUfornia

RODNEY P. FRELINGHUYSEN, New Jersey

ROGER F. WICKER, Mississippi

MICHAEL P. FORBES, New York

GEORGE R. NETHERCUTT, Jr., Washington

JIM BUNN, Oregon

MARK W. NEUMANN, Wisconsin



DAVID R. OBEY, Wisconsin

SIDNEY R. YATES, Illinois

LOUIS STOKES, Ohio

TOM BEVILL, Alabama

JOHN P. MURTHA, Pennsylvania

CHARLES WILSON, Texas

NORMAN D. DICKS, Washington

MARTIN OLAV SABO, Minnesota

JULL^J"! C. DKON, Cahfomia

VIC FAZIO, California

W. G. (BILL) HEFNER, North Carolina

STENY H. HOYER, Maryland

RICHARD J. DURBIN, lUinois

RONALD D. COLEMAN, Texas

ALAN B. MOLLOHAN, West Virginia

JIM CHAPMAN, Texas

MARCY KAPTUR, Ohio

DAVID E. SKAGGS. Colorado

NANCY PELOSI, CaUfornia

PETER J. VISCLOSKY, Indiana

THOMAS M. FOGLIETTA, Pennsylvania

ESTEBAN EDWARD TORRES, CaUfornia

NITA M. LOWEY, New York

RAY THORNTON, Arkansas



James W. Dyer, Clerk and Staff Director



DEPARTMENTS OF LABOR, HEALTH AND
HUMAN SERVICES, EDUCATION, AND RE-
LATED AGENCIES APPROPRIATIONS FOR
1996



Thursday, January 12, 1995.
DEPARTMENT OF HEALTH AND HUMAN SERVICES
TECHNICAL BRIEFING

WITNESSES

DENNIS P. WILLIAMS, DEPUTY ASSISTANT SECRETARY, BUDGET

JUNE GIBBS BROWN, INSPECTOR GENERAL

CLAIRE V. BROOME, M.D., DEPUTY DIRECTOR, CENTERS FOR DISEASE

CONTROL AND PREVENTION
HOWARD ROLSTON, DIRECTOR, OFFICE OF POLICY AND EVALUATION,

ADMINISTRATION FOR CfflLDREN AND FAMILIES

Mr. Porter. I have just been informed that the Republican Con-
ference is still going for another 15 minutes. Since we have asked
you to come here not particularly to enlighten me but to enlighten
our new Members, I think we really have no choice but to wait for
them. So I apologize, but they said they would be over as soon as
the Conference breaks, and it looks like it will be — why don't we
simply say we are going to attempt to restart at 10:30 so everyone
can take a break.

[Recess.]

Mr. Porter. Since they got here earlier than we thought, we will
go ahead and proceed, Dennis.

The Subcommittee will come to order. We continue this morning
with the third of our technical or overview briefings by our Cabinet
Departments, and we are very happy to welcome Dennis Williams,
the Chief Budget Officer of the Department of Health and Human
Services here this morning.

If you would, Dennis, introduce the people who are with you and
then proceed.

Introductions

Mr. Williams. Thank you, Mr. Chairman. It is a pleasure to be
back before this committee.

I am accompanied today, on my right, by the Inspector General
from the Department of Health and Human Services, June Gibbs
Brown. On my left is Dr. Claire Broome; she is the Deputy Director
of the Centers for Disease Control and Prevention. And on my far

(1)



left is Howard Rolston, who is the Director of the Office of PoHcy
and Evaluation at the Administration for Children and Families.

We were asked to come here today to provide some budget infor-
mation and statistics, trends in health care and poverty and sum-
maries of some of our audit activities in the Department. We hope
that this information will help the Committee as it evaluates our
programs in the coming months. We are not here to present poli-
cies, but we do hope that the information we give you will help you
as you evaluate our programs.

With your permission, we would like to start with the Inspector
General, who will talk to you about some of the audit activities in
the Department.

OVERVIEW OF THE OFFICE OF INSPECTOR GENERAL

Ms. Brown. Good morning, Mr. Chairman. Thank you for the op-
portunity to appear before you today.

Members of the Committee, let me begin by a brief overview of
the Office of Inspector General. The OIG was created in 1976 to
protect the integrity of the Department's programs and promote
their economy, efficiency and effectiveness. We do that through a
comprehensive program of audits, evaluations and investigations.
We have a staff of about 1,250 people in our headquarters and
eight regional offices and 65 field offices.

In fiscal year 1994, we had 1,169 successful prosecutions, and
1,334 administrative sanctions against individuals and entities that
defrauded and abused our programs. We also generated $8 billion
in savings, fines, restitutions, penalties and recoveries. And that
represents $80 in savings for each dollar spent and $6.4 million, on
average, per OIG employee.

Based on our work, we believe that overall, the Department's
programs are operating substantially as intended. However, correc-
tive actions are needed in a number of areas to stop abusive prac-
tices, correct vulnerabilities and to make programs more effective.

HEALTH CARE FINANCING ADMINISTRATION

Let me summarize our major concerns within each of the Depart-
ment's Operating Divisions. The first is HCFA that administers the
Federal Medicare program and, with the States, the Medicaid pro-
gram, two of the largest and most dynamic programs in the De-
partment.

Over the years. Medicare has instituted many significant reforms
to improve the efficiency and reduce vulnerabilities. For example,
the prospective payment systems for inpatient hospital care, a fee
service schedule for physician services, regional consolidation of
claims processing for durable medical equipment and Medicare con-
tractor fraud units. We have testified many times about health care
fraud, noting that fraud usually takes one of the following forms:
billing for services not rendered, misrepresentation of services ren-
dered, or kickback and physician self-referrals. While these are
often complex types of fraud that permeate the entire health care
arena, we are particularly concerned about abuses and lack of over-
sight in two areas: nursing homes and home health agencies.

An ongoing study found that Medicare paid separately as much
as $70 million annually to skilled nursing facilities for enteral nu-



trition services, surgical dressings and incontinence care items that
should have already been covered under Medicare's global pay-
ments to the facilities. Inhome health agencies: We observed sev-
eral types of fraud in these agencies, including cost report fraud,
excessive nonrendered services, use of unlicensed or untrained
staff, falsified plans of care and forged physician signatures and
kickbacks.

We are also concerned that Medicare and Medicaid are well man-
aged with financial program integrity and high quality of care. We
have testified many times about the statutory improvements need-
ed to protect citizens and health care programs from unscrupulous
providers. For example, many exemptions and adjustments to hos-
pital payment methodologies are not justified by the higher hos-
pital costs. Medicare should also be a more prudent purchaser of
medical equipment and services, such as oxygen concentrators and
ambulance services, both of which we have testified on. To accom-
plish this goal, we recommend allowing competitive billing and
changing the inherent reasonableness test.

PUBLIC HEALTH SERVICE

Under the second operational area, the Public Health Service is
the focal point for identifying and preventing acute and chronic dis-
ease and disabilities and for promoting the health of the American
people. It includes the National Institutes of Health, Food and
Drug Administration, Centers for Disease Control and Prevention,
Indian Health Service, Health Resources and Services Administra-
tion, Substance Abuse and Mental Health Services Administration,
Agency for Toxic Substances and Disease Registry and Agency for
Health Care Policy and Research.

Our concerns in PHS concentrate on the needs for better man-
agement controls, improved program monitoring and sufficient data
and information systems. We have found problems with PHS agen-
cies' ability to monitor grantee compliance with requirements for
biomedical research funding. For example, NIH has limited its
oversight of grantees extramural research inventions. We are also
concerned about possible conflicts of interest in Federal-sponsored
biomedical research and with vulnerabilities in financial disclosure
requirements for the principal investigators. Recent NIH and FDA
activities to improve oversight in these areas are very encouraging.

Finally, we continue to conduct a number of PHS-wide oversight
activities in property management, travel, preaward and recipient
capability audits and evaluation of PHS's information resource
management.

ADMINISTRATION FOR CHILDREN AND FAMILIES

The third operating area is the Administration for Children and
Families. ACF provides funding for State, local and private human
service programs, and it includes Aid to Families with Dependent
Children, Child Support Enforcement, Head Start and Foster Care
and Adoption Assistance.

In many reviews of cost and program effectiveness in the ACF
programs, we have recommended such improvements as criteria
and procedures for appropriate foster care case referral to child
support agencies and also systems for tracking and monitoring sta-



tus and outcomes of the job opportunity and basic skills program.
We found some highly effective examples of cooperation among
Federal, State and local governments, such as using community re-
sources for educating and training jobs participants.

One area of continuing concern is the funding system for welfare
administrative costs. The current method for reimbursing States
for welfare administrative costs is unwieldy, inefficient and unpre-
dictable with much disparity among States. We are examining op-
tions for funding administrative costs with AFDC, Food Stamp and
Medicaid programs, and will have a final report available the end
of January.

SOCIAL SECURITY ADMINISTRATION

The fourth operational area is the Social Security Administra-
tion. Of course, SSA will become independent from HHS on March
31. By statute, it will have an OIG and the new office will be
drawn from the HHS OIG. We expect to transfer 263 people, in-
cluding three executive positions, to staff of the new office.

Overall, the SSA is an efficient agency issuing over $334 billion
in cash benefits to 43 million beneficiaries in the Old Age, Survi-
vors and Disability Insurance Trust Fund programs. SSA also over-
sees a general revenue, needs-based program called Supplemental
Security Income, or SSI, which provides monthly payments to over
six million aged, blind and disabled individuals and amounts to
about $25 billion annually.

Last year we testified before Congress on several issues. One was
SSA notices. We had previously recommended improvements in
SSA notices, but acknowledge the positive action SSA has taken in
improving its communication with beneficiaries. This is evidenced
by an overall customer satisfaction rate of 77 percent based on our
annual survey of SSA clients.

Under disabled children, as a result of a Supreme Court decision
known as the Zebley decision, the criteria for childhood disability
was expanded, resulting in an increase of the disabled children on
the rolls from 296,000 in 1989 to 847,000 in 1994. We found that
while SSA is complying with the law, clarification of Congressional
intent is needed. If Congress intended that the program help chil-
dren overcome their disabilities rather than merely paying them
cash assistance, then changes are needed.

Another SSI program is for drug addicts and alcoholics. The
number of drug addicts and alcoholics on the rolls rose from 24,000
in 1990 to over 80,000 last year. We noted that few were ever leav-
ing the rolls. Legislation passed last year places more emphasis on
monitoring whether these recipients are actively participating in
treatment programs, and it limits their benefits to three years.

Interpreter fraud is another area that we have drawn attention
to in Congress. SSA's reliance on community translators to assist
non-English-speaking claimants has been exploited in some cases
by translators that are conspiring with physicians to submit false
evidence. This has been concentrated mainly in southern Califor-
nia, and we are working with SSA to identify such cases and con-
tain the problem. SSA is making progress in arranging for more le-
gitimate, reliable translation services.



Another perennial problem is the disability claims backlog. We
have assisted SSA in its disability reengineering process and be-
lieve they are moving toward an improved claims processing sys-
tem. One disability area we have studied is the high level of deci-
sion reversals by administrative law judges. We found that dispar-
ity in the decision criteria used by State disability determination
services, which make the initial disability decisions, and the ALJ's.
We found unanimous support by both groups for uniform disability
standards in disability decision-making. We presented our findings
to SSA's disability process reengineering team.

In closing, I would like to acknowledge the cooperative relation-
ship I have had with the Department in my tenure as IG. Having
served in four major departments now as Inspector General, I note
that sometimes the IG's work can place them in an adversarial po-
sition with program managers. I am pleased that that has not been
the case at HHS.

The issues I have discussed are summarized in our semiannual
reports to Congress. In addition, we have two compendia of pend-
ing OIG recommendations which you might find useful. The Red
Book, or Cost-Saver Handbook as we call it, is a major monetary
recommendation — summary of major monetary recommendations;
and The Orange Book is a summary of significant nonmonetary
recommendations which have not yet been implemented. Our 1995
editions will be available soon.

Thank you for the opportunity to be here today, and I would be
happy to answer any questions you may have.

[The prepared statement and biography of June Gibbs Brown
follow:]



Department of Health and Human Services
OFFICE OF INSPECTOR GENERAL



Statement of

The Honorable June Gibbs Brown
Inspector General

before the

Subconunittee on Labor, HHS and Education
Committee on Appropriations
U.S. House of Representatives



January 12, 1995






Good morning. I welcome this opportunity to appear before you with the other
representatives of the Department to provide a summary of the Office of Inspector General's
audits, evaluations and investigations of the Department of Health and Human Services'
programs and operations.

OFFICE OF INSPECTOR GENERAL OVERVIEW

I would like to begin with a brief overview of the Office of Inspector General (OIG), since
our work may be new to some of you. Created in 1976, the OIG is statutorily charged with
protecting the integrity of departmental programs, as well as promoting their economy,
efficiency, and effectiveness. The OIG meets this challenge through a comprehensive
program of audits, program evaluations, and investigations which are designed to improve
the management of the Department and to protect its programs and beneficiaries from fraud,
waste, and abuse. Our role is to detect and prevent fraud and abuse and ensure that
beneficiaries receive high quality, necessary services, at appropriate payment levels.

Within the Department, the OIG is an independent organization, reporting to the Secretary
and communicating directly with the Congress on significant matters. We carry out our
mission through a field structure of 8 regions and 65 field offices and with a staff of over
1,200 auditors, evaluators, and investigators.



Jaouuy 12. 1995 Briefing for House ApproprialiooB SubcommJtlee oo Labor. HHS & Education



8

The OIG has accomplished much in the fight against fraud, abuse and waste in HHS
programs and operations. In Fiscal Year (FY) 1994, we had 1,169 successful prosecutions
and 1,334 administrative sanctions against individuals or entities that defrauded or abused the
Department's programs and/or beneficiaries. Last year, the OIG also generated savings,
fines, restitutions, penalties, and receivables of over $8 billion, which represents $80 in
savings for each Federal dollar invested in our office, or $6.4 million in savings per OIG
employee.

DEPARTMENTAL OVERVIEW

The general conclusion of our work is that while, overall, the programs of the Department
are operating largely as intended, corrective actions, or program modifications, are needed in
a number of areas to stop abusive practices, correct potential vulnerabilities, and/or make
programs more effective.

Before I discuss our specific concerns in each of the Department's major operating divisions,
I would like to point out that we have enjoyed a very cooperative relationship with the
Department. Having served as IG at four major agencies, I realize that the nature of OIG
work can place us in an adversarial position with those operating programs. This, I am
happy to report, has not been the case during my tenure as IG at HHS.



Bricrmg for House Appropn&tiooi Subcommittee on Labor. HHS & Education



Health Care Financing Administration

I will begin with one of our largest and most dynamic program areas. Medicare and
Medicaid are administered by the Health Care Financing Administration (HCFA). Medicare
Part A covers hospital and other institutional care for approximately 36 million persons age
65 or older and for certain disabled persons. Fiscal Year (FY) 1995 expenditures for Part A
are estimated at $112 billion. Medicare Part B, which covers most of the costs of medically
necessary physician and other non-institutional services, has estimated FY 1995 expenditures
of $66 billion.

The Medicaid program provides grants to States for medical care for approximately 35
million low-income people. Medicaid outlays have risen dramatically, making Medicaid the
fastest rising portion of both Federal and State budgets. Federal Medicaid spending is
expected to reach $92 billion in 1995.

Over the years. Medicare has instituted many significant reforms to improve program
efficiency and reduce vulnerabilities to fraud and abuse. Such reforms include (1)
implementation of a prospective payment system (PPS) for inpatient hospital services and a
fee schedule for physician services, (2) regional consolidation of claims processing for
durable medical equipment (DME), and (3) establishment of fraud units at Medicare
contractors. The HCFA's Medicare administrative costs have also been low as a proportion
of overall program costs: 1 percent of Part A claims and 3.5 percent of Part B claims.
About 4 percent of Medicaid funds are for administrative expenses. The HCFA continues to

Jinuuy 12, 1995 BrieTing for Houae Appropriatiom SubcommiBec on Labor, HHS & Education HHS/OIG-P>ge 3



10



make improvements, including implementation of the Medicare Transaction System (MTS)
which should further streamline claim processing fiinctions.

We have testified numerous times during each congressional session about the overall
problems of health care fraud and about specific areas that are most vulnerable to wasteful
practices or to health care providers that are intent on defrauding Medicare and Medicaid.
We have noted tiiat fraud in Uiese programs often takes one of the following forms:

• Billing For Services N ot Rendered - A significant proportion of our investigative
caseload involves billings for services not rendered. These cases are readily accepted
for prosecution by the United States Attorneys and are responsible for a large number
of the convictions obtained in the healtii care field.

• Misrepresentation of Se rvices Rendered - The Medicare program loses money when
providers submit claims that do not reflect the services actually performed or the
supplies actually delivered. Some providers try to "game" the program by unbundling
and upcoding charges. Unbundling involves separate billing for the subcomponent
parts of an item or service rather tiian billing for the complete item or service and can
result in inflated charges far above the appropriate level. For example, the
component parts of a $4 incontinence care kit can be separately billed to Medicare for
$20. Upcoding is the practice of billing for a more intensive service than the one
actually delivered.



Bricnng for Houae Appropriatiou Subcammittce on Labor. HHS & Education



11



• Kickbacks and Physician Self-referral ~ A widespread problem in the fee-for-service
area is the problem of kickbacks and physician self-referral. A kickback is the
payment or receipt of anything of value as an inducement for the referral of health
care business. Physician self-referral is an overlapping and similar problem in which
any item or service is referred by a physician who has a "financial relationship" with



Online LibraryHealth and Human Services United States. Congress. House. Committee on ApproDepartments of Labor, Health and Human Services, Education, and Related Agencies appropriations for 1996 : hearings before a subcommittee of the Committee on Appropriations, House of Representatives, One Hundred Fourth Congress, first session (Volume 2) → online text (page 1 of 116)