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\tf 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*xivxxJ. 1JliJlj 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:UnderCommitteeRules,Mr.Livingston,asChairmanoftheFullCommittee,andMr.Obey,asRanking MinorityMemberoftheFullCommittee,areauthorizedtositasMembersofallSubcommittees. 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 I 1 Secretary ofHealth and Human Services, Departmental Management, and the Office for Civil Rights 93 Health Care FinancingAdministration 295 Social Security Administration 555 Administration for Children and Families 791 Administration on Aging 1327 Office ofInspector General 1431 Special Tables 4Jik*^f<'tJ>.i4&;.. 1498 WS Printed for the use of the Commiti 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:UnderCommitteeRules,Mr.Livingston,asChairmanoftheFullCommittee,andMr.Obey,asRanking MinorityMemberoftheFullCommittee,areauthorizedtositasMembersofal!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 ofHealth and Human Services, Departmental Management, and the Office for Civil Rights 93 Health Care FinancingAdministration 295 Social Security Administration 555 Administration for Children and Families 791 Administration on Aging 1327 Office ofInspector General 1431 Special Tables 1498 Printed for the use of the Committee on Appropriations U.S. GOVERNMENT PRINTING OFFICE 91-1780 WASHINGTON 1995 : ForsalebytheU.S.GovernmentPrintingOffice SujjerintendentofDocuments,CongressionalSalesOffice,Washington,DC 20402 ISBN 0-16-047306-3 COMMITTEE ON APPROPRIATIONS BOB LIVINGSTON, Louisiana, Chairman JOSEPH M. McDADE, Pennsylvania DAVID R. OBEY, Wisconsin JOHN T. MYERS, Indiana SIDNEY R. YATES, Illinois C. W. BILL YOUNG, Florida LOUIS STOKES, Ohio RALPH REGULA, Ohio TOM BEVILL, Alabama JERRY LEWIS, California JOHN P. MURTHA, Pennsylvania JOHN EDWARD PORTER, Illinois CHARLES WILSON, Texas HAROLD ROGERS, Kentucky NORMAN D. DICKS, Washington JOE SKEEN, New Mexico MARTIN OLAV SABO, Minnesota FRANK R. WOLF, Virginia JULL^J"! C. DKON, Cahfomia TOM Delay, Texas VIC FAZIO, California JIM KOLBE, Arizona W. G. (BILL) HEFNER, North Carolina BARBARA F. VUCANOVICH, Nevada STENY H. HOYER, Maryland JIM LIGHTFOOT, Iowa RICHARD J. DURBIN, lUinois RON PACKARD, CaUfornia RONALD D. COLEMAN, Texas SONNY CALLAHAN, Alabama ALAN B. MOLLOHAN, West Virginia JAMES T. WALSH, New York JIM CHAPMAN, Texas CHARLES H. TAYLOR, North CaroHna MARCY KAPTUR, Ohio DAVID L. HOBSON, Ohio DAVID E. SKAGGS. Colorado ERNEST J. ISTOOK, Jr., Oklahoma NANCY PELOSI, CaUfornia HENRY BONILLA, Texas PETER J. VISCLOSKY, Indiana JOE KNOLLENBERG, Michigan THOMAS M. FOGLIETTA, Pennsylvania DAN MILLER, Florida ESTEBAN EDWARD TORRES, CaUfornia JAY DICKEY, Arkansas NITA M. LOWEY, New York JACK KINGSTON, Georgia RAY THORNTON, Arkansas 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 James W. Dyer, Clerk and StaffDirector 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, DEPUTYASSISTANT SECRETARY, BUDGET JUNE GIBBS BROWN, INSPECTOR GENERAL CLAIRE V. BROOME, M.D., DEPUTY DIRECTOR, CENTERS FOR DISEASE CONTROLAND PREVENTION HOWARD ROLSTON, DIRECTOR, OFFICE OF POLICYAND EVALUATION, ADMINISTRATION FOR CfflLDRENAND 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 ofour 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. Ifyou 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 information 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 opportunity 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 ofthe Depart- ment's Operating Divisions. The first is HCFA that administers the Federal Medicare program and, with the States, the Medicaid program, 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 rendered, 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 ofover- 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 payments to the facilities. Inhome health agencies: We observed several 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 needed to protect citizens and health care programs from unscrupulous providers. For example, many exemptions and adjustments to hospital payment methodologies are not justified by the higher hospital 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 disease 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 management controls, improved program monitoring and sufficient data and information systems. We have found problems with PHS agencies' 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 resources for educating and trainingjobs 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 ofJanuary. 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, including three executive positions, to staffofthe 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 ofSSA 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 children 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 ofdrug 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 believe they are moving toward an improved claims processing system. One disability area we have studied is the high level of decision reversals by administrative law judges. We found that disparity 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-Sa—ver 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:] DepartmentofHealthandHumanServices OFFICE OF INSPECTOR GENERAL Statementof TheHonorableJuneGibbsBrown InspectorGeneral beforethe SubconunitteeonLabor,HHSandEducation CommitteeonAppropriations U.S.HouseofRepresentatives January12, 1995