C O N T E N T S

Advisories announcing the hearing

WITNESSES

Centers for Medicare & Medicaid Services, Hon. Thomas Scully, Administrator

U.S. General Accounting Office, Leslie G. Aronovitz, Director, Health Care-Program Administration and Integrity Issues

Advanced Medical Technology Association, statement

H.R. 2768, THE "MEDICARE REGULATORY AND CONTRACTING REFORM ACT OF 2001"

Tuesday, September 25, 2001

House of Representatives,
Committee on Ways and Means,
Subcommittee on Health,
Washington, DC.

The Subcommittee met, pursuant to notice, at 10:08 a.m., in room 1100 Longworth House Office Building, Hon. Nancy L. Johnson (Chairman of the Subcommittee) presiding.

[The advisory and revised advisory announcing the hearing follow:]

Chairman JOHNSON. The hearing will come to order.

The Democratic Caucus is not quite over, and they will be along shortly, so I will start with my opening statement and provide Pete a chance when he arrives.

Before we start, it is important to acknowledge that today's hearing on regulatory relief was supposed to have taken place 2 weeks ago today. As we all know, on that day, our country suffered an extraordinary tragedy, disrupting not only the business of governing, but so much more importantly, the lives of so many Americans--those tragically killed by terrorists, their bereft families and friends, and all Americans.

While we continue to grieve and prepare to respond to the evils of terrorism, it is a sign of the strength of this great Nation that we can also move forward with the work of governing. I want to thank our witnesses for coming back today to give us the benefit of their expertise.

Over the past several months, members of this Subcommittee have been working together closely to better understand the challenges facing providers who serve Medicare beneficiaries, and on March 15, we held a hearing on the need to extend relief from burdensome regulations to Medicare providers.

At that hearing, we heard from doctors and hospitals, from home health agencies and nursing homes. Although examples differed, the basic message from each group was the same--providers are overwhelmed with paperwork. Instead of caring for patients, health care providers are spending too much time filling out forms.

These are good people; yet they are inundated with paperwork, second-guessing, and heavy-handed oversight. If we do not act, we risk losing the providers we need to ensure that seniors have access to high-quality care.

Indeed, the U.S. General Accounting Office (GAO) study documents the loud cries for help that we have been hearing. Medicare is now such a complicated program that endless directives and long explanations and articles are necessary to explain facet after facet. Not only does the GAO report document the volume of paper doctors and hospitals must digest monthly, but the complexities are so great that even the government cannot give clear answers.

In GAO's sample, only 15 percent of the answers to physicians' questions were complete and accurate--15 percent. Thirty-two percent were entirely incorrect. Having chaired the Subcommittee that led the reform of the Internal Revenue Service (IRS), I can tell you this is an absolutely shocking, abominable, and unacceptable record of performance, although just as the IRS problems did, it has its fundamental base in the complexity of the law we passed and the rapidity with which we have imposed changes on the system.

Nonetheless we must do better than providing only 15 percent accurate answers to physician questions.

So the challenge is great to those of us in the Congress, to Administrator Scully, and to Secretary Thompson. We have, however, as you well know, been working hard. Pete and I wrote the Secretary, making a number of suggestions regarding regulatory improvements the Department could make using existing administrative authority, and many of those changes they have made.

At the same time, we began developing a legislative package which is the underlying substance of this hearing, and we will have a chance to examine its provisions this morning and look forward to your comments on how it can be altered or improved to be made stronger or to serve better.

In addition, the Secretary has given the tools to manage the Medicare program operations more efficiently. For the first time, the Centers for Medicare & Medicaid Services (CMS) will be able to competitively contract with the best entities available to process claims, make payments, and answer questions. The Secretary will be free to promote quality through incentives for Medicare administrative contractors to provide outstanding services to seniors and health care providers.

It is a pleasure to welcome Tom Scully here, the Administrator of CMS. Mr. Scully will set forth the administration's view on H.R. 2768 and talk to us about the Department's current efforts to extend regulatory relief to providers.

This is Mr. Scully's first appearance before the Subcommittee in his capacity as administrator, and Tom, we welcome you and look forward to working with you in the months ahead. Mr. Stark?

[The opening statement of Chairman Johnson follows:]

Mr. STARK. Madam Chairman, thank you for calling the hearing today on H.R. 2768, the Medicare Regulatory and Contracting Reform Act of 2001 (MRCRA).

As I know you have said, this legislation shows that when we do work together, we can accomplish some legislation. There are, of course, other areas on which we disagree--Medicare reform, payment to Health Maintenance Organizations, the Bush discount card program, known as the "rocket ranger prescription card"--but when there is some agreement, we can improve Medicare for beneficiaries, taxpayers, and providers.

As I understand it, this bill was written to address two problems in Medicare--first, to improve outreach and assistance to beneficiaries and to respond to certain other concerns raised by physicians and other providers; second, some long overdue contracting reforms that should improve beneficiary and provider services and permit the consolidation of Medicare claims processing.

I emphasize that because our legislation does not compromise the government's ability to protect taxpayer dollars from being inappropriately spent. Let me say that I am concerned about several issues, however, raised by the Office of Inspector General (OIG) concerning our bill, and I hope we can resolve those before we proceed.

I do not think that CMS needs additional legislative authority to improve its education and information for providers. Instead, I think the agency needs additional administrative resources. The GAO will testify today on serious contractor oversight problems. These management problems need to be addressed regardless of whether we enact this legislation or provide additional resources.

While this legislation would reform Medicare administrative contracting, permitting Part A and Part B contractors to be combined, I want to emphasize that we in no way would agree that this would imply any support for combining the Part A and Part B trust funds or any other efforts to combine Medicare Part A and Part B. And I am sure this side of the aisle strongly opposes such consolidation.

To improve services to Medicare beneficiaries, we have proposed that Medicare staff be stationed in Social Security field offices.

The demonstration program will allow us to examine the value of placing Medicare staff in all of those field offices, and I hope it can be expanded; I hope it will work and can be made permanent. Thank you.

[The opening statement of Mr. Stark follows:]

Chairman JOHNSON. Thank you, Mr. Stark. Mr. Scully?

STATEMENT OF THE HON. THOMAS SCULLY, ADMINISTRATOR, CENTERS FOR MEDICARE & MEDICAID SERVICES

Mr. SCULLY. Thank you, Madam Chairman and Mr. Stark.

Thank you for having me here today. First, going back to the subject of New York, since I have the opportunity, I would like to thank all the health care providers in New York City, especially Lower Manhattan. In the last couple of weeks, I think a lot of people were unaware of the fact that in the disabled community, people did not get home health services; there were a lot of problems in Lower Manhattan beyond the obvious ones from the World Trade Centers. I think the providers there did a tremendous job of making sure that seniors who did not have home health below 14th Street, disabled folks who did not have their home health aides, and a lot of other people got wonderful services. I think the hospitals did a great job, and in particular the Visiting Nurse Association of New York City. So I just want to publicly thank them for doing a terrific job.

Thank you for inviting me here today. I have just one other issue before I jump into regulatory streamlining, which I want to flag for the Committee, because I am going to start putting it at the front of all my speeches for the next year and all my committee appearances, and that is the Health Insurance Portability and Accountability Act of 1996 (HIPAA).

In my first 3 months on the job, I probably was not focused as much on HIPAA as I should have been; in the last couple of weeks, I have become totally aware that as of next October, we have to have a standard billing and coding system nationwide between all private and public insurers. And I have not seen a lot of evidence that Congress is interested in changing the law, so I have the responsibility to get it done by next October.

The agency needs to step up to the plate; we need to focus on it a lot more. We are creating a HIPAA Task Force in CMS. And we are determined that absent other legislative guidance, we will do our best to have the entire insurer and provider world ready for HIPAA next fall. So I just wanted to flag that as an issue of increased importance and increased focus for the agency.

That said, let me turn to MRCRA. I want to thank you, Mrs. Johnson and Mr. Stark, for introducing this legislation. I would also like to thank your staff, who spent an awful lot of time working with us to make sure it was drafted effectively and worked out well. In particular, Jennifer Baxendell, Cybele Bjorklund and Deb Williams spent a lot of time on this and I think produced a terrific work product. And as Mr. Stark said, when we work on these things in a bipartisan way, we frequently get good results, and I think that generally this is a very, very good bill. We have a couple of minor concerns that I will express later, but they are very minor.

Clearly we have to balance at CMS the impact of Medicare's laws and regulations on physicians and other providers with the accountability that we have for $240 billion in Medicare payments. In many areas, we can be a lot less intrusive to providers, a lot more responsive to beneficiaries, and in many cases, we can make these changes administratively. I will go through some of those that we have tried to do.

However, there are a lot of important areas where we cannot change things without your help. The Medicare contracting system, which I think is antiquated and has been screaming for reform for the last 20 years, is one, and we are very appreciative of your efforts in this bill to fix it.

We have to fundamentally change our relationship with Medicare's fee-for-service contractors. When I got in the first Bush Administration 12 years ago, we had around 90 contractors, and everybody wanted to get those reformed and get them down to 10. We have made some progress, but 12 years later, coming back in, we still have 51. It is a unwieldy process. The reins between the agency and its contractors who are running the program are not exactly tight, and I think a major goals this year of both the Secretary and myself is to reform the contractor system.

So far this year, actually, we have been very pleased, working with the Committee and with the Blue Cross plans, who tend to be our predominant contractors, that we have actually worked out a lot of the issues that we had with the existing 51 contractors, and I think most of them are actually very supportive of your reforms and the reforms that you have in this bill, as are we.

In June, the President forwarded his proposal to Congress. The goal in that CMS reform proposal was to provide CMS with the flexibility to work with its contractors more effectively, to promote greater competition among contractors, to give us greater flexibility to negotiate contracts, with appropriate incentives to reward our contractors. And basically, when you look at your bill, I think it meets virtually all of those goals and is soundly based on the bill we sent up, with some significant improvements.

What have we done in addition to your bill to try to make our relationships with contractors and carriers and providers and beneficiaries better?

The first thing we did to improve agency responsiveness outside legislation with internal CMS efforts is that I created eight open door policy groups, two of which I chair--long-term care and nursing homes, and rural health. There are also policy groups for physicians, hospitals, health plans, nurses and allied health professionals, home health and hospice, and End-Stage Renal Disease and dialysis centers.

These groups basically meet with all the outside interested groups once a month in person and once a month through a nationwide conference call to find out what the problems are around the country with beneficiary groups and providers and try to do the best we can to work them out.

For example, in the nursing home group, which I chair because I have a particular interest in fixing some of our problems in long-term care, we have the for-profit and non-profit nursing homes. It is co-chaired with me by the executive director of the National Governors' Association; the Service Employees International Union is involved--there are many parties who do not always agree on things, but I think we have found that there are a lot of common, nuts-and-bolts, day-to-day problems in the program, and that if we focus on them, we can fix them, and we are determined to do that.

The goal of these groups is not to overhaul Medicare. The goal is to find a way to make our program work better on a day-to-day basis and to solve the day-to-day operational problems that we have.

On beneficiary education efforts and outreach, as you know, we are launching a $30 million advertising campaign this fall. We are significantly increasing the 1-800-MEDICARE number budget, and it will operate 24 hours a day, 7 days a week, with a great deal of local information. The ad campaign has been delayed a little bit, obviously, by the disaster last week, but I think you will see it up and running in mid-October.

Establishing key contacts for the States--this is more relevant to Medicaid than Medicare--but we have appointed one person in the Baltimore office and one person in each region to be responsible to the Governors, so when the States and Governors have problems with Medicaid, we have folks with direct responsibility in the States who are responsible to me and the Medicaid operation to make sure the Governors and the States get quick turnaround and quicker response in the Medicaid program.

The Secretary has also formed a new regulatory reform group to identify regulations that prevent hospitals and providers and physicians from serving Medicare beneficiaries in the most effective possible way. To support this group, I have started to go around and do public listening sessions around the country. Yesterday I was in Kentucky; I have already gone to Chicago with Mr. Crane--I hope that was a good trip--and also to Montana and Arkansas, and we are determined to go around the country and meet with more of the providers and beneficiary groups and really try to drive the agency, both in Washington and Baltimore and also in the regional offices, to be much more responsive.

In addition to these efforts, we are taking concrete steps to streamline Medicare's regulatory process. We have developed a quarterly compendium of all changes in Medicare that we will send out to all physicians and providers. As of January 1, we will have a listing of each quarter; before the quarter begins, we will put out a listing of all regulations. And our goal, at least for now, working with the Federal Register--we are trying to get them to agree to let us publish all our regs one day a month, so every reg coming out of CMS would come out and be in a compendium at the beginning of the quarter--if it is not on there, it will not come out--and then, once a month, you will see all the regs coming out of the agency on one day. The goal here is to try to make the process more predictable and manageable for the providers who perceive our regulatory process to be kind of random. We are trying to fix that as best we can.

We have a significantly enhanced effort on both physician and provider education and also on beneficiary education.

So in summary, in addition to your bill, we are doing the best we can internally to try to educate providers and beneficiaries and be more responsive all across the program.

If I could just for a second raise a couple of very minor concerns that we have with the bill that we would like to work with you on in the next couple of weeks, one is that there is a provision in the bill--and there are really only two things that I have any concerns about--there is a provision in the bill that says that after CMS promulgates a new policy, there can be no enforcement for 30 days. While I understand that from the providers' point of view, from our point of view, we are concerned that if we have no enforcement for 30 days, most providers are wonderful, honorable people, but if we cannot have any enforcement for 30 days, it is an invitation for people to take advantage of the program from a billing perspective for the first 30 days after a new policy is issued.

Second, from the point of view of the Blue Cross plans, which we have spent a lot of time working on this bill with, current liability for the Medicare carriers and Fiscal Intermediaries (FI), the standard is gross negligence, and the bill changes that to negligence, which is a much lower standard and would subject them to much greater liability.

At least in the 11th Circuit, in fact, right now, they have found that there is no liability for carriers for Medicare problems. So I think gross negligence is an appropriate standard--as I said, in the 11th Circuit, there is no liability--but lowering that to negligence would open the door to a lot more legal issues for carriers. We are trying to draw in new carriers and better carriers and FIs, and I think it would present a significant problem for us if you actually raised the level of liability for the carriers. So we would like to work with you on that as well.

In summary, Madam Chairman, we think the bill is excellent; we are very supportive of it. We would like to work with you, and we are very, very grateful that, on a bipartisan basis, the Subcommittee has moved forward on this bill.

Thank you for having me.

[The prepared statement of Mr. Scully follows:]

Chairman JOHNSON. Thank you very much, Tom.

I appreciate your concern about the 30-day no-enforcement policy. Unfortunately, we are the prisoner of our own past, and the past has seen extraordinarily complex regulatory provisions coming down very, very frequently, with very unclear information.

I was very interested in the GAO's testimony that looked at how much paper flowed into various practices, and only 12 percent of the paper is from Medicare, but it is so unclear that the providers have to rely on others to interpret it.

So while one could say that they could ignore 88 percent of the paper, they cannot, because the directives coming down are so unclear. So I am very pleased that you are moving ahead on some of the things you talked about at the very beginning, putting regulations out at a set time, and the task forces. Through those means, I think we can improve the clarity of the directives to the point where there will not have to be so many industries that spend their time clarifying and interpreting the directives.

But the 30-day delay in enforcement is specifically related to the lack of clarity in the directives and the massive numbers that are coming down and the situation of particularly small providers in trying to integrate that material.

So I would be happy to talk about this with you and your staff further, but there is a very significant problem that is going to be pretty clearly documented in the GAO testimony that we are trying to respond to.

Mr. SCULLY. Well, I would hope that maybe we can come up with some slightly higher standard for the first 30 days, but my concern is that obviously, if everybody in the provider world knows--and as I have said repeatedly, I think 98 percent of providers are trying to be good partners to the program, but if the 2 percent who may not be are aware that for the first 30 days after a program change, there is not going to be any enforcement, it is a problem.

Chairman JOHNSON. I do appreciate that. Unfortunately, I think we have been legislating to the small number who are bad actors, and that, in my estimation in the long term, will have the effect of killing off the small providers. So we will talk about that further.

I just want to ask you one more question and then I will move on to the rest of the panel, because I am very pleased that we have almost the full Subcommittee here.

We have really struggled with the issue of trying to help physicians deal with the normal audit process. Extrapolation has been an issue, and there are many other aspects to the issue. But one way in which our bill does not go far enough, in my estimation, in reflecting upon this since we have written it, I just want to mention to you. That is, it requires that your auditor explain to the physician his evaluation of the cases.

Not so long ago, I and Jim McDermott and some of the staff had a conversation with some of your staff, and we were talking about the difference between a Level 5 office visit and a Level 3 office visit. The Level 5 office visit requires documentation of a comprehensive physical. The Level 3 office visit requires documentation of a detailed physical. No one can clearly tell you the difference between those physicals.

So this is an underlying problem, and it is the kind of problem that requires more than that the auditor just explain to the physician why he thinks their coding was off, or the mistake was there, or whatever the problem is. It really requires that the physician have some level of right of appeal at that point, because if the sample is wrong, the extrapolation is going to be very wrong, and ordinary practices simply cannot tolerate the alternative of a full review of everything. It closes down their office for a week, and so on. It is very, very difficult to bear.

So particularly small practices in rural areas simply do not have that choice. So I am looking at strengthening that provision in the bill, and I have not talked with Pete about this yet, either, so I am putting this before the whole Committee at the same time. But our goal in requiring the auditor to explain his interpretation of the chart to the physician was to allow the physician to then bring information. But the physician has to have the right to say before some neutral body, "This is a Level 5. This is not a Level 3." And this issue of down-coding has been just as bad on both sides of the issue--both the administrative people coming in and looking at things with hindsight, and physicians coding inaccurately.

So I do want to strengthen that point because it is such an important point and has so many ramifications through the rest of the system that I think physicians deserve more than simply an explanation of why they are wrong. They are sitting there saying, "Yes, but you are wrong." So that sometimes, there is going to need to be a right of appeal of that sample so the sample is agreed to at some level.

That is just something that I am thinking about and wanted to lay out to you, because I think this business of moving ahead without a good base of information is one reason why providers are getting terribly discouraged with the Medicare system.

Mr. SCULLY. I agree with you. It is a tough balance to find, and we are certainly happy to sit down and try to fine-tune that provision. We have already spent a lot of time talking to your staff about it.

Chairman JOHNSON. Yes. Pete, would you like to proceed?

Mr. STARK. I have just a couple of issues. The OIG is concerned about giving up the right to conduct random prepayment reviews. Do you share their concern?

Mr. SCULLY. I think that is tied closely to what Chairman Johnson is talking about. We agree that we need to have prepayment reviews. I think the issue is really under what circumstances, and what are the provider rights. But I think that giving up prepayment reviews altogether would be a mistake, yes.

Mr. STARK. Okay. We have talked about major problems with the information and assistance provided by the contractors, and I think we will hear testimony about these monthly bulletins which are close to undecipherable or hard to understand.

Do we have any reason to believe that the contractors are providing any more clear information to the beneficiaries? And as we are looking at the information that is given to providers by these contractors, would it be in order for you to review the information given to beneficiaries, which might be equally complex and bureaucratic in its nature?

Mr. SCULLY. It is complex, and our stated goal is to get down to 20 to 22 good, solid contractors in 4 or 5 years that are reliable and that are more predictable and are giving more common information out. One of the goals there is to make sure that--

Mr. STARK. What I am talking about is that in the bulletins that we are talking about, the providers are given so much information about rule changes all the time, and the GAO is going to suggest that all of this information is sent out in complex language, poorly written. But we would anticipate that most providers can read without moving their lips and get to 20 with their shoes and socks on.

I think our experience has been that when you get to be my age, you have to simplify the language some and spell it out in one-syllable or two-syllable words. So I guess my question is should we not be looking at the clarity of information we are giving to our beneficiaries that is provided by these intermediaries at the same time that we are looking at the information given to the providers?

Mr. SCULLY. Yes, absolutely. I hope we are.

Mr. STARK. I hope so, too, and as I said, I hope that that does not get lost in the process.

On 1-800-MEDICARE, you said that you want to enhance that. We have 27 pages of phone numbers; is there any reason why we cannot just use one phone number over the country and, worst case scenario, have people type in their own phone number to get the local one so they do not have to look through a bulletin to find the right phone number?

Mr. SCULLY. Well, one of the goals of this whole fall campaign, which has been delayed a couple of weeks, is to do exactly that--to have a 1-800-MEDICARE number where all seniors could call that number. We have almost tripled the number of operators we have; as I said, it is 24 hours a day, 7 days a week. The goal basically is that, whether you are in Oakland or in Connecticut or wherever, you can call to get detailed information about your area that you cannot get now on picking a nursing home, a dialysis center, Medigap versus Medicare+Choice versus fee-for-service--much more credible localized information--and also, you can be referred to the contractor. The 27 pages of phone numbers are generally the carriers and the FI numbers, and if you want to be referred to one of those, you can certainly be transferred through that line. But the goal is--I think we get something like 35 million calls a year, so I am not sure that it is going to replace the carrier and FI phone systems, but the idea is to give one standardized access point for seniors.

Mr. STARK. Do you have the money for that?

Mr. SCULLY. Yes, thank goodness. The appropriators were very nice and gave us the money for that.

Mr. STARK. The National Association for Home Care is going to talk to us later about the 15 percent reduction in home health payments now in the law. As I recall, we anticipated when we went to the Prospective Payment System (PPS) that the level of services would drop by at least 15 percent. And we are now hearing that indeed that has happened, that they have reduced services under the PPS perhaps even more than 15 percent.

So I guess my question is can we assume that the quality of care has not been reduced and that indeed that 15 percent reduction in services has occurred? Are you aware of that, or is that something that you do not have information on?

Mr. SCULLY. I am sorry. I am a little under the weather. Did you say home health, with PPS?

Mr. STARK. This is under home health care. We anticipated when the PPS payment system was put into effect that their level of services would drop by about 15 percent. We are informed that that has happened. GAO has suggested that it has dropped by at least 15 percent and perhaps by even more.

My question is does that comport with your information, and as far as you know, has the quality been maintained at the same time this level of services has been reduced?

Mr. SCULLY. Yes, I think it has. In 1992, home health spending was $3 billion; as you know, by 1997, it went up to $18 billion. Now I think it is back at around $12 billion. We probably could have done without that spike.

I think the home health PPS system has worked reasonably well. There were obviously some significant bumps in the road. I think the OASIS data we collect--while some people do not like all the data that we require--is a very good quality measurement, and we are hoping to use it to more effectively put together quality measurements on home health and have it do an even better job.

But I think the evidence that we have seen so far is that home health quality has actually been pretty stable.

Mr. STARK. Insofar as you know, has the evidence supported what GAO is telling us, that is, that the level of services or the number of services has been reduced by about 15 percent?

Mr. SCULLY. I am not sure, but I am sure that is probably about right.

Mr. STARK. Somebody is going to whisper in your ear.

Mr. SCULLY. We have not heard that number.

Mr. STARK. You have not?

Mr. SCULLY. Only from GAO.

Mr. STARK. Okay. Well, I hope you look at it, because this is going to be an issue in the sense that, arguably, if it has been reduced, we can continue with present law, which calls for the 15 percent reduction in the payments.

Mr. SCULLY. I think the 15 percent reduction in the payments, if I remember correctly, is because of the way the baseline works. The actual reduction in payments is 15 percent, but the actual spending would still, even if you did that, go up. That is not to say we should not get rid of the 15 percent, or implement or not implement the 15 percent reduction, but I believe the 15 percent reduction, even if you did it, you would still have a 2 or 3 percent increase in home health spending. It is a reduction in the rates, but spending would still go up.

Mr. STARK. But it would still be interesting to know if the amount of services went down or up, because under PPS, that would of course be important to whether the amount we were paying was correct.

Mr. SCULLY. Yes.

Mr. STARK. Thank you.

Chairman JOHNSON. Mr. Camp?

Mr. CAMP. Thank you, Madam Chair.

Chairman JOHNSON. Excuse me. Before you start, if some of you would like to go vote, and we will rotate, so we do not have to have a break, that would be useful.

I will recognize Mr. Camp and then Ms. Thurman, and back to this side, hopefully before the last of us go vote. Mr. Camp?

Mr. CAMP. Thank you.

Mr. Scully, when this legislation was introduced, the President said that it reflected important elements of his framework for Medicare legislation, which included simplifying Medicare's regulations and administrative procedures and updating and streamlining them, and also trying to reduce the instances of fraud and abuse.

My question is this. Obviously, we take the protection of the Medicare program very seriously in this Committee. I think it is one of the most important responsibilities you have as well. But as it relates to the provider payment audit process, wouldn't it be possible to protect program spending while at the same time creating a more collaborative audit process, giving a greater opportunity for providers to discuss findings and provide additional information where conclusions are reached?

Mr. SCULLY. I think we are trying to find that balance where we aggressively make sure that program payments are appropriate but that we work more closely with providers so that they are not--I think there has been a perception in the last couple of years that they are all scared to death of the Medicare program--we need to find that balance, and we are certainly trying to do that.

Mr. CAMP. I know that some of our witnesses that will come later will discuss some issues, and the Chairman in her opening remarks mentioned that GAO has found that of 60 phone calls recently made to call centers to test the accuracy of responses to frequently-asked provider questions, 85 percent of the GAO responses were incomplete or inaccurate.

Obviously, you believe that this is unacceptable as well, and I wonder how we can correct this.

Mr. SCULLY. Well, hopefully, one of the ways that we will correct it is through contract reform. We have 51 contractors, fiscal intermediaries and carriers, and some are better than others. Right now, we do not have the ability to narrow those down. We would like to be able to identify the best, probably around 18 to 22 contractors, and work with them to have much better services.

I was in Kentucky yesterday, and I heard a lot of complaining about their fiscal intermediary and carrier. I was in Arkansas 2 weeks ago, and they were relatively happy. So I can tell you that the service with the contractors varies significantly by State and by region, and we have very little ability to really fix that until we have contract reform.

If we can find the ability to have contractors compete again every 4 to 5 years, which is what we are talking about in the bill, and have the ability to incentivize contractors appropriately with financial incentives--right now, they are cost-based contracts--there are a lot of carriers and FIs that are slowly getting out of the program anyway. We would like to speed that up and narrow it down to 20 to 22 contractors, and right now, we have very little ability to make sure that the guys who are screwing up 85 percent of the phone calls are no longer in the program.

Mr. CAMP. I appreciate your efforts here, because obviously, there have been problems with what was the Health Care Financing Administration (HCFA) and is now CMS for many years, and I know that you are trying to step in and make some needed reforms and changes there, and I look forward to working with you as we go through that process and appreciate the effort that you are already putting forward on this. Thank you.

Mr. SCULLY. Thanks. Hopefully, I will come back without the flu someday to testify and have better answers for you.

Mr. CAMP. Thank you. You are doing fine.

Chairman JOHNSON. Congresswoman Thurman.

Mrs. THURMAN. Mr. Scully, still on the same idea with Congressman Camp--because as you can imagine, we are hearing from our districts about this very issue as far as the contracting part of it--and particularly what I am hearing from my physicians is that this is probably costing them 20 to 25 percent more in their offices to keep up with all this stuff, which is obviously going to have a direct impact on increases in health care costs.

Maybe you can clarify this or somebody can tell me why, but the physicians have actually told me that they will have their staff call their provider or contractor and say, "I do not know, because of all the changes, and what you told me today is different than what you tell me tomorrow on codings" or whatever. And they are saying, "So I will ask them, well, if it is 26(a), 26(b), whatever those numbers are, in fact, they will say, 'Well, we cannot tell you that.'"

And then they will say, "Well, could you tell me if it is--" and they will say, "Well, if you mention it, maybe we could tell you."

Why would that be?

Mr. SCULLY. I am sorry--if you mention it, then what?

Mrs. THURMAN. That if you mention the number or the coding, "maybe we could tell you," but if you do not mention it, they just do not give you any information.

Is there a reason for that?

Mr. SCULLY. I am not sure what the--I think your question is if you call a provider--most providers are worried that if they give the carrier detailed information, they will be flagged for additional audits--is that what you are saying--so they cannot give them too much information?

Mrs. THURMAN. They will not give them the information to help them work through this. And as we know, over the last couple of years, we have continued to change this whole system over and over and over again, so what was today might not be tomorrow, so they are getting frustrated because when they call these folks, they are not willing to really help them through the system; they are more like, "Well, it is not that, and it is not this," but they will not really say, "Based on the information that you are giving me, this possibly will be what the model should be" or whatever.

Mr. SCULLY. Well, that is something we clearly need to fix, because there is no question that physicians--I spent 3 hours with a physicians group in Louisville yesterday, and they were not real happy with this process. So we need to find a way to get them clear, straight answers. They might not always like the answers. Generally, people do not like the answers unless you are allowing them to bill more than they want. But I do think that providers are entitled to clear, straight answers, and we need to keep pushing the contracts so they do that.

Mrs. THURMAN. The other thing that the contractors actually mentioned to me was that over the last couple of years, because of the changes, we have also had to reduce the amount of education that has been done, both through bulletins--they used to do it once a month; now they are doing it quarterly. They used to bring together providers and their office staffs, bring them in, walk through the system, what the new issues are, what the changes have been, and that they have been dramatically cut in those areas because of some of the things that we have done.

Can you respond to that at all?

Mr. SCULLY. I do not think they have been--I am not sure of the numbers--the carriers actually asked us for $47 million last year, and I think we gave them $42 million. Could they have used more for beneficiary education? Sure. I think that overall, when you are looking at a $240 billion program--and I think our administrative budget is about $2.3 billion, and the contractor budget is about $1.5 billion--it is run on a pretty thin budget, so it is understandable sometimes, with the volume of claims we have, that not everybody is happy with the services.

But on the provider education side--and I will have to check--but I think the amount of money they asked for last year was relatively close to what they got.

Mrs. THURMAN. The other issue on competitive bidding--and I know that GAO and others have talked about that as being something that we needed to do--but on the other side of that, is there a way to develop a system where we can review and look at what the provider or a contractor is doing versus just upsetting the whole system, based on the amount of claims that they have?

My guess is that their infrastructure, what they put in place to help, has got to be an enormous cost, and if we start switching around just because, or we go through the bidding process--is there another way that you might suggest that we could do that?

And then I have just one other question that I need an answer to, because I am going to be doing some town hall meetings on Friday on the TriCare for Life issue with our veterans. They have been raising the question to me--and I do not know if you will have the opportunity to do this or not--for many people who particularly have gone through the Veteran's Administration (VA) system, they have never signed up for Medicare, there is a penalty for them not being in Medicare. I was told that there potentially was a waiver, and are we looking at this, and are we potentially looking at giving these folks who would have been in VA did not take Medicare, a waiver of the penalty that they would have been given if they were to go into the Medicare program now?

Mr. SCULLY. I was not aware of that. I have talked a lot with the American Legion lately about VA subvention, which is obviously billing the Medicare program for services in VA hospitals. But I have not heard anything about the waiver, to be honest with you. I would be happy to look into it before Friday and call your staff with an answer.

Mrs. THURMAN. I would appreciate it, because this is becoming a big issue for those veterans who just never signed up for Medicare because they were always in the VA system; and of course, with the VA system, part of it was to bring closer to their homes. So they are very concerned about this.

Mr. SCULLY. I will get you an answer today.

Chairman JOHNSON. If the gentlelady will yield, Ben Cardin has a bill to this effect. We have just had it analyzed by the Congressional Budget Office (CBO), and we will try to make sure that option is available to our veterans.

Mrs. THURMAN. I would appreciate it. Thank you.

Chairman JOHNSON. I am going to turn the chair over now to Mr. McCrery, but let me just make one comment in response to the dialogue that has gone on with the two preceding questioners.

One of the recommendations in the Medicare Education and Regulatory Fairness Act  driven by providers was that they wanted a written response to questions. This does reflect not only their frustration and anger, but liability exposure to the fact that if they follow directions that they are given, and they are not in writing, and later, the government comes in and says, "Oh, no, those were not the right answers, so you are liable, and you have penalties." We did not put the written response requirement in our proposal, but you should know that it is hanging out there very hard, and if we do not do a lot to improve our ability to offer concrete, specific, and true answers, we will sometime have to get to that.

I appreciate the load that it would place on the contractors, and therefore we backed off from it. I think the simplification task forces that you have got going--and I really commend you in your testimony for all the things that you are doing to drive the system toward a new opportunity to serve in a more collaborative way with the providers--are all important. But that demand for a written response came from a very, very broad body of experience and is a very intense desire. So it is not in this bill, but we should never forget that it is hanging out there.

I am going to turn the gavel over to Mr. McCrery and go vote. Thank you.

Mr. MCCRERY. [Presiding.] Well, Mr. Scully, I understand that you are under the weather, and you have my sympathies, so I will try to be easy on you. You also have my sympathies for being in the position that you are in--although, having said that, I am very pleased that someone of your character and capability and experience has agreed to take on this job. It is a job that nobody should have, in my opinion--which leads me to my first question.

While I am cosponsoring this legislation, and I am all for regulatory reform, couldn't we negate the need for this if we went to a premium support system for Medicare that was proposed by the Medicare Commission, voted a majority vote by the Medicare Commission, and is embodied in legislation in the Senate in the form of Breaux-Frist? Couldn't we avoid a lot of this rancor about who pays what, when, where, and all that?

Mr. SCULLY. Yes, I think you probably could. As you know, philosophically, not just me, but I think the administration's general view is that Medicare is a wonderful program, and seniors love it, but having the government fix prices for $240 billion in payments a year and having us do it the way we do it is probably not as efficient as having us buy insurance and operate more like the Federal Employees Health Benefits Plan. Philosophically, some day, we would like to be there, but as it is now, I just try to be the best price-fixer I can.

Mr. MCCRERY. And I appreciate that. We are not there, and it does not appear that we are going to get there very soon, so in the meantime, we have to concern ourselves with these kinds of questions that we are dealing with in the hearing today--and for that, you do have my sympathy, but I do appreciate your willingness to take this on.

There has been a lot of discussion about the audit process. I do think it is a necessary evil. Our providers, particularly physicians, do not like it. They do not think it is fair. They have to hire extra people to staff their offices to try to deal with these things. And frankly, a lot of them yearn for a day when they do not have to practice, and they do not have to put up with all that, because of HCFA or CMS and these kinds of concerns.

I know that you, like this Committee, are very concerned about the financial integrity of Medicare, and I think most physicians are concerned about the financial integrity of Medicare. However, there has got to be a better way than this combative process that we engage in.

Have you looked at and would you provide us information on any changes to that process that you think could make life better for the providers in the system, some kind of collaborative process that would involve them more at the initial stages so they do not have to go to the hearing level and all that?

Mr. SCULLY. I think one thing that would help--and it is in your bill, and it was in our proposal--is to have a Medicare ombudsman. One of the frustrations that people have is that they are calling, trying to find out what coding problems they have, what legal problems they have, and what compliance problems they have, and usually, they have to hire some lawyer like me and pay him "x" dollars an hour to give them legal advice. I think that is frustrating.

So I think that one thing we could do is create a Medicare ombudsman as a provision of this bill to do that so that providers who have problems can call and get an answer from somebody who is working closely with the Department but is not employed by the Department and have kind of a third party information system on legal and compliance issues. I think one of the great frustrations that physician practice groups have is the expense for small practice groups of having compliance programs. I actually think that most physicians are relatively--I will not say happy--but the Resource Based Relative Value Scale (RBRVS) system works significantly better, I think, than a lot of the other reimbursement systems in Medicare. I think the hassle factor is what drives physicians crazy, and I think that getting straighter, quicker, better answers that they can rely on, because they are usually not big practices that have significant ability to pay legal fees, would be a good step forward.

Mr. MCCRERY. I appreciate the concept of the ombudsman, and I hope that they get better answers than they do from calling the contractors. The GAO is going to testify in a few minutes that they made 60 phone calls to contractor call centers, and 85 percent of the responses that GAO received were either incomplete or inaccurate. So I hope we can find a system that is a little better at providing accurate information.

Mr. SCULLY. That is a stunning number, and we can certainly improve and have to improve on that.

Mr. MCCRERY. Yes.

I have just one more question, and then I know Mr. McDermott wants to inquire. In the bill that is before the Committee, we require CMS to competitively bid for contractors and intermediaries at least every 4 years; whereas in Secretary Thompson's draft reform proposal, he would have allowed renewal of contracts of those entities which met or exceeded certain performance requirements.

Both of those provisions go to the same goal of improved service for the customers. Have you thought about which way is better? Do you have some thoughts on that you can share with us?

Mr. SCULLY. The Federal Acquisition Regulation for other Federal contracting I think has competitive bidding every 5 years. I think 4 or 5 years, either one--we are somewhat flexible on that. I think the real issue is that we would like to have the flexibility that we can identify good contractors that we do not want to rebid. There are some carriers, some FIs, that have a long, good track record; they have a great track record. In some rural States, for example, there are some carriers who probably are not going to change. For instance, Blue Cross of Montana is probably going to be the carrier in Montana most likely. There may not be too many others there. Rather than have us, staff-wise, spend an enormous amount of time rebidding contracts and going through the process, which is a long, lengthy process, I think we would like to have the flexibility or the presumption that we have to rebid every 4 or 5 years, but have the flexibility with some high standard of service to not have to rebid certain contracts, because it is time-consuming. We are hoping to get it down, but if you start with 51 or even 30, rebidding one-quarter of those every year is obviously more than cumbersome for the staff. So I think that some people intuitively probably do not need to be recontracted.

Mr. MCCRERY. So you would recommend that we change the legislation to give CMS the flexibility to renew contracts if the intermediary or contractor has reached a high level of performance standards or--

Mr. SCULLY. Yes--they show sustained excellent performance, and there is no--under some circumstances, we may not want to recontract every time.

Mr. MCCRERY. Thank you. I hope you get well soon.

Mr. SCULLY. Thanks.

Mr. MCCRERY. Mr. McDermott?

Mr. MCDERMOTT. Thank you, Mr. Chairman. When you start your renal task force, give me a call.

Mr. SCULLY. Which one?

Mr. MCDERMOTT. The renal task force to talk about renal dialysis.

Mr. SCULLY. I think actually, it has already started; but we would be happy to get you involved.

Mr. MCDERMOTT. I would like to know about it.

Mr. SCULLY. I think the first meeting was about 2 weeks ago.

Mr. MCDERMOTT. Listening to Mr. McCrery made me think--I think it was Yogi Berra who was sent in to replace somebody who had made a bunch of fielding errors, and he immediately made another error and when asked about it, said, "Well, the last guy in here messed this position up so bad there is no way you can play it right." I suspect that may be the position that you are in.

But I find myself--and others may have already asked this question; one problem with getting it broken up this way is that you do not know what was asked before--I find it very hard to find the equity. And I think we always struggle for equity. I do not usually push the American Medical Association's side of anything, but the equity issue around extracting a payment after you have had the contractor review and having extended periods--I think with the Administrative Law Judge (ALJ), more than a year is the average time it takes; and then, more than 2 more years on the Departmental reviews--to make somebody pay up front when more than 60 percent are rejected in the end means that they have had their money out there for 3 years, and then they get it back.

The weight is all on the physician, and I am not sure that is fair. I think it ought to be the other way, and I would like to hear you talk about the equity of the provider.

Mr. SCULLY. I generally agree with you. I hope we can fix that in the bill. I have had a lot of discussions with staff, and I think there are some changes in the bill on that.

My view is that it should be more like the IRS, that is, if you lose, you pay interest. But there is no reason for us to have money up front and then people have to wait for 3 years. I think there is some version of that in the bill--

Mr. MCDERMOTT. Is that in this particular--

Mr. SCULLY. Yes, I think it is--yes, for the first level of appeal, anyway. I would be happy to talk to you about it more, but to the first level of appeal, you do not have to put the money up in the bill. That is one of the changes in the bill. So at least for your first level of appeal, you have the ability not to pay, and if you lose, you pay with interest, which is more like the IRS provision for taxes.

Mr. MCDERMOTT. Why don't you wait until the end of the appeals process and make it appeals plus interest--well, your penalty plus interest at the end?

Mr. SCULLY. If you do not prevail, yes.

Mr. MCDERMOTT. All the way to the end, not--when do you have to pay them?

Mr. SCULLY. At the end of the first appeal, if you lose, you have to pay with interest--the first-level appeal.

Mr. MCDERMOTT. That is inside the company that just put you on notice in their audit anyway; right?

Mr. SCULLY. That is right. I am sorry. I was going to read all of this last night, but I was not feeling up to it.

Mr. MCDERMOTT. Okay, I will give you some slack.

Mr. SCULLY. The concern was--and to be honest with you, I kind of agree with you; I think this is significantly better than current law--the concern was the incentives for people--this is more, I think, from the IG and the Justice Department and our own lawyers--that people would have an incentive to string out the appeals and wait and wait and wait and appeal and appeal and appeal, as opposed to getting a decision at the first level. But I agree with you--I think this is the first step. As it is right now, you pay up front, and you do not get the money back until you win the appeal. So I think this is half-a-fix, from your point of view.

Mr. MCDERMOTT. So you are not against fixing it more by pushing it one more level?

Mr. SCULLY. Well, as you know, I do not get to set all the administration's policies. We have discussed this, and this is what we came up with in the administration. There is a lot of concern about creating extra incentives for extended appeals, and I share your view that in certain cases, it is not appropriate for us to have the provider pay, and then we keep their money while they appeal.

Mr. MCDERMOTT. I do not have any problem going after corrupt physicians. That is not the problem. The problem is that when we throw this net, it is clear that we catch far more fish than really--there is a lot of "by-catch" as we say in the Northwest--it is not the ones you really want. And those people get hurt badly by having to come up with a cash amount. They have got to go out and borrow it in most cases and then continue fighting the appeal.

So it seems to me that we should move it back further, and I hope we can have an amendment to that point.

Mr. SCULLY. I think the bulk of those appeals, just looking at the numbers--5.7 million claims out of 6.7 million claims at that first level. I am not saying it is a perfect fix, but the bulk of the appeals, or a significant number of the appeals are resolved at the first level, and unlike today, they would not have put the money up front. So I think it will be of significant help.

Mr. MCDERMOTT. But not as much as we--

Mr. SCULLY. Not as much as your idea.

Mr. MCDERMOTT. Okay. The other thing is the whole business of extrapolation. Explain to me why you think extrapolation is a good way to go.

Mr. SCULLY. When I was on the provider side until 4 months ago, I thought extrapolation was terrible. Then I came to the agency and talked to the people on the program integrity side about why they do it, and now I think there are two sides to it.

I think providers are angry that they get extrapolation and then get action taken based on that. Our program integrity folks' attitude is that we only check 1.5 percent of all claims, and then we have no idea what is going on for the other 98.5 percent of claims, and that the only way to really identify trends is extrapolation, and that since we check so few claims, you do not have any choice but to use extrapolations. I think there are arguments on both sides. now that I have been inside the agency, I understand why they do it; I also understand why it drives providers crazy.

Mr. MCCRERY. Mr. Crane?

Mr. CRANE. Thank you, Mr. Chairman.

First of all, Mr. Scully, I want to congratulate you for your participation in our health care conference at Northwestern Medical School; I had nothing but compliments about your presentation. We were grateful that you were able to be there with us.

Back when this bill was introduced in early August, the President issued a statement saying that the legislation was an important step toward strengthening Medicare for seniors and for future retirees and that it reflects important elements of his framework of Medicare legislation.

I would like to ask you specifically--President Bush's principles for Medicare reform state that Medicare regulations and administrative procedures should be updated and streamlined, while the instances of fraud and abuse should be reduced.

How would you intend to try to implement the principles of President Bush's proposal?

Mr. SCULLY. I think we have done a lot already. I was in the hospital business until 4 months ago, and I was one of the angry providers, or represented angry providers, and I think we have tried in the agencies as much as we can--I think I told you this before, that when Secretary Thompson came to Washington, he was one of the great HCFA-haters of all time; as Governor of Wisconsin, he had had a lot of frustrating experience with Medicaid waivers, so he was not a big fan of the agency. Once he spent a week in Baltimore learning more about the agency, he realized as I have that there are a lot of very smart, hardworking people up there. But for the most part, largely because they get pounded by providers, Congress, and lots of other people, they were pretty defensive and pretty insular.

So I have really tried to get people at the agency to go out and talk to the industries that they regulate and that they pay and try to understand them better. These eight working groups are a piece of that effort to try to get people to deal with home health agencies and talk more with the home health agencies; to get the people who regulate hospitals to actually spend some time in hospitals, because it is easy to get stuck in Baltimore and not do that. As much as I possibly can, I have been driving people to the agency to understand the parts of the health care system they regulate better, and so far, they have been pretty responsive. I do not think that will fix all the problems, but I think better communication will solve about 90 percent of the problem.

I had a great relationship when I was in the hospital field with the HCFA hospital staff because I went up there a couple times a week and got to know them all, and I kind of broke the code. The average Chicago hospital administrator has a tougher time doing that. So I am trying to get the regional offices, the Baltimore people and the Washington people to make a bigger effort to go out and understand the people they regulate, and so far, we have not fixed everything yet, but I hope the people in the provider community feel like we have made a big effort to turn that relationship around.

Mr. CRANE. Thank you, and we look forward to working with you.

Mr. MCCRERY. Mr. Kleczka?

Mr. KLECZKA. Thank you, Mr. Chairman.

Mr. Scully, I have a couple of quick questions. I believe that in answer to Mr. McCrery, you indicated your support for the provider ombudsman contained in the bill.

Mr. SCULLY. Yes, sir.

Mr. KLECZKA. And briefly, restate for me what you believe the functions of this person will be within the agency.

Mr. SCULLY. I think the basic idea is that they be kind of a quasi member of the agency. There are a number of ways that you could do it. I think the most likely way is for the agency to contract out with someone in the National Association of Health Lawyers or some party that would be closely connected with the agency and would have a lot of information about the agency's regulations and compliance efforts, but independent.

Mr. KLECZKA. So you do not view this person as an employee of CMA?

Mr. SCULLY. It could be an employee, it could be a contractor. My personal preference would be to hire somebody like the National Health Lawyers Association on contract, because what you do not want people to do is call from Wisconsin, ask opinions, and feel bound by--it could be an employee of the agency as long as it is clear to the person calling and asking for the guidance that no one is going to launch an enforcement action based on that phone call.

Mr. KLECZKA. I would think they would have to be an employee of the agency if they are going to have access to certain information that would respond directly to an inquiry from, say, a hospital or a doctor's office.

Along that same vein, what is your position on providing for a patient's ombudsman or ombudsperson?

Mr. SCULLY. I would be all for it. I do not think it is in this bill--

Mr. KLECZKA. No.

Mr. SCULLY. But I think that better communication with beneficiaries and providers is important. I am not sure--I cannot say that for the administration.

Mr. KLECZKA. Perhaps between now and markup, Madam Chair, we could possibly explore that. It was in legislation last year, I think, the drug legislation, and if we are going to provide sort of a quarterback, someone to run interference for providers, with 30 million-plus beneficiaries, maybe a person helping them a little bit might be in order.

Thank you very much, Mr. Scully.

Chairman JOHNSON. [Presiding.] Mr. Ramstad?

Mr. RAMSTAD. Thank you, Madam Chair, and thank you for your leadership.

Mr. Scully, I join my colleagues in expressing our gratitude that a person of your caliber is in this important position and appreciate working with you.

Let me just say that in my meetings with health care providers back home in Minnesota, every time I meet with them, I hear about the crushing paperwork burden they face. It was certainly brought home to me very vividly recently when I went to a skilled nursing facility, and they told me they had just hired two registered nurses to do nothing but paperwork.

Obviously, we cannot afford to divert those kinds of resources from care for the sick, so we need these reforms, and I appreciate my colleagues on both sides of the aisle working in a bipartisan way to craft this legislation.

One glaring concern that I have concerns local coverage flexibility, something that we have discussed before. According to a recent study with which I am sure you are familiar--and virtually every health care provider and Medicare beneficiary I speak with--the local coverage process is absolutely vital to Medicare's continued quality improvement because the local process is the way that patients can best gain access to the many innovative technologies that otherwise would encounter incredible coverage delays at the national or CMS level. We have all seen too many examples of those unconscionable delays in the past.

One example cited in this recent study, "Breakthrough Technology in Women's Health," which is used to diagnose osteoporosis--it took Medicare over 7 years--this is obviously before you came aboard--but it took Medicare over 7 years to cover this technology at the national level. But because many local Medicare contractors approved local coverage during that time, most women were able to gain access to the technology who otherwise would not have been able to receive it.

These unconscionable delays cannot stand. My question is this, Mr. Scully. If contractors are regionalized and consolidated, how can you assure us that you will maintain the necessary flexibility at the local level to allow new procedures and new technologies to be available as they are currently in selected localities? I am really concerned about this if we nationalize it.

Mr. SCULLY. Hopefully, it will be better. If you took the 51 contracts that we have now in Part A and Part B and consolidated them into a combined A and B contract, you would have about 30. And we are talking about going from 30 to probably 20 or 22, somewhere in that range.

So our goal is to find the best contractors and the best partners who are going to provide the best services and make good, sound, rational, well-thought-out local coverage decisions, among many other things.

So I would guess that the localized trends and coverage decisions would not change that much. You would have 20 contractors, roughly, instead of 30 making those decisions. And I think that probably 75 percent of coverage decisions are made locally, and about 25 percent are made nationally, and I think that kind of flexibility is a good idea and is likely to remain.

Mr. RAMSTAD. It is very reassuring that you plan to preserve the local coverage decision process. From what I understand from talking to people in your office, it is about 75 percent--

Mr. SCULLY. I hope the national coverage process is getting faster and better as well.

Mr. RAMSTAD. Well, certainly, Minnesotans appreciate the ability to work with the local medical community, so this local flexibility, I am glad to hear will continue, because if contractors are regionalized and consolidated, the fear is that it will become more nationalized, with less emphasis on local coverage decisions, which is absolutely imperative to get these breakthrough technologies especially to Medicare beneficiaries.

I am sure you share the judgment that Medicare beneficiaries should have the same access to medical technology, life-saving, life-enhancing medical technology, that every other health care consumer has. Do you share that judgment?

Mr. SCULLY. Sure, absolutely. I think that in some cases, we are faster than private insurers, and in some cases, we are slower; but absolutely.

Mr. RAMSTAD. Thank you again, Mr. Scully. I appreciate working with you and look forward to continuing that working relationship, and I yield back.

Chairman JOHNSON. Mr. English?

Mr. ENGLISH. Thank you, Madam Chair.

Mr. Scully, since you have landed in the administration, you have been a breath of fresh air at gale force, and we appreciate it.

As someone who used to be an internal auditor myself, I was wondering if you could don your green eyeshade for a moment and talk about some of the mechanics. Implicit in some of the things you have said about awarding contracts more based on performance is a very strong system of performance measurement. Also critical in addressing waste, fraud and abuse is a strong system of auditing.

I wonder if you could comment on what improvements you anticipate in the audit process and specifically, do you anticipate that audits could become more collaborative working with Medicare contractors. Specifically, do you think it is possible in audits to create more opportunities for discussion, for exploration of findings, and allowing providers to provide more information?

None of these ideas is new. They are embedded in generally-accepted auditing standards. But too often in the past in your agency, I do not get the sense that these kinds of approaches were tried.

Would you care to comment?

Mr. SCULLY. I certainly think we have to improve the interaction between the providers and the auditors, and I think we can certainly work on doing that.

Getting back to your core question, though, about cost-based contractors, I think the fundamental change that you are going to see in the program is that cost-based payment for anything, in my opinion, does not work. It did not work for inpatient hospital payments in the early eighties, and we switched to Diagnosis Related Groups. The 51 contractors that we have now are paid on cost. If they cannot make a margin, they have no incentive to perform better, they are reimbursed for their costs, and I have never seen a cost-based system that provides the right incentives.

So what we would like to do, basically, is give--theoretically, if you are a Blue Cross plan, Blue Cross of Pennsylvania, right now, you do not make any margin on your Medicare contracts. Now, the reality is that people like it because they can shift the costs of some of their systems and other things on the private side over, and they are kind of a good building base for the rest of your insurance business. But you are theoretically not allowed to have any margin.

We believe pretty firmly that if we actually find 20 to 22 good contractors and incentivize them appropriately and give them the right incentives, and also give the providers the ability to rate them, which we have talked about doing, give the hospitals and the physicians the ability to come and give us feedback on who we compete the contracts with, that we will have good contractors who are sensitive to the needs of the providers and who are obviously sensitive to the fraud and abuse issues, but also provide more aggressive and better services for us, because right now, their incentives are minimal.

Mr. ENGLISH. Do you anticipate any changes--going back to the other part of my question--do you anticipate any changes to make the audit process more collaborative, more interactive, giving the service providers an opportunity to respond to findings before they are made public, and provide additional information to put the audit findings into context?

Mr. SCULLY. I hope we are doing that more recently, and I spent some time talking with our program integrity people about that, and I believe the carriers and the FIs are doing that, and it sounds from the tone of your question like we need to make a better effort. But I thought we were heading in that direction and trying to make it a more cooperative and not quite as adversarial a process.

Mr. ENGLISH. Very good. As my final line of inquiry, with your emphasis on performance evaluation, how do you develop the performance standards that you use for that? You referenced the standards in your testimony. What kind of process do you have, and if it is more appropriate, I would welcome you providing a written answer to the last part of that question rather than tie us up here this morning.

Mr. SCULLY. I would be happy to provide you with a written answer, but I think there are some guidelines in the bill we set up and our proposal for how we do evaluations, and a lot of it is through feedback from the providers and ratings from the providers. That is certainly something that providers want.

Mr. ENGLISH. Very good. Thank you. Thank you, Madam Chair.

[The following was subsequently received:]

Centers for Medicare & Medicaid Services
Washington, DC 20201

Contractors currently are evaluated through a Contractor Performance Evaluation (CPE) process, which evaluates their performance of specific responsibilities defined in the Medicare contract, law, regulations, and general instructions.  The CPE process is structured into five broad criteria: claims processing, customer service, payment safeguards, fiscal responsibility, and administrative activities.  Each of these criteria contains business functions that may be reviewed, such as medical review, beneficiary and provider customer service, benefit integrity, and provider enrollment. 

The law requires that we formulate criteria and standards to determine whether contracts with fiscal intermediaries and carriers should be entered into, renewed, or terminated.  Additionally, the law requires us to publish the CPE criteria and standards in the Federal Register.  On September 7, 1994, in the Federal Register we specified all standards that are mandated by law or court decision and have provided examples of others.  Some mandated standards include paying 95 percent of clean electronic claims within 14 to 30 days and 95 percent of clean paper claims must be paid within 27 to 30 days; as well as writing review determinations at an appropriate reading level.

• respond to telephone inquiries within specified timeframes;
• conduct audits or specified percentages of cost reports from specified types of providers;     
• conduct quality monitoring of the telephone service provided by customer service representatives; 
•  increase over the prior year the amount of automated medical review conducted; and 
•  issue bulletins/newsletters with program and billing information to providers each quarter.  

Medicare contractors perform a wide range of activities as part of each business function, and CMS evaluates contractor performance on an annual basis.  Additionally, other types of reviews are performed at contractors outside of CPE, including reviews of contractors' internal controls as required by the Federal Managers Financial Integrity Act, and reviews of financial operations in connection with the annual Chief Financial Officer audit of CMS. 

Chairman JOHNSON. Mr. Johnson?

Mr. JOHNSON OF TEXAS. Thank you, ma'am.

I would not call it a "gale force"; that is what he called it. I have not seen that coming out of your agency. All I have seen is a name change, which I cannot remember to save my soul, so if I call you "HCFA," please do not worry about it.

What I would like to know is what are you doing to help the people out there, because all I see is in Dallas, Texas, two of our providers have stopped or say they are going to stop providing Medicare+Choice.

So could you tell me what you are doing to stop that?

Mr. SCULLY. Well, I think I was about as aggressive as I could be in stopping Medicare+Choice--too aggressive for some, since I--

Mr. JOHNSON OF TEXAS. We do not want you to stop it. We want you to--

Mr. SCULLY. No, no--to stop the people dropping out.

Mr. JOHNSON OF TEXAS. Okay.

Mr. SCULLY. I have been a pretty strong advocate of Medicare+Choice for a variety of reasons, including the fact that demographics show that lower-income people like Medicare+Choice because they have lower premiums and more drug coverage. So we certainly want to keep as many people in as we possibly can. We had about 5.6 million people in last year, and it will probably be down to a little under 5.1 million for next year.

We moved the adjusted community rate filing date back, which is the date for the plans for file, from July 1 to September 17, which I was sued for, and we worked with the Gray Panthers and the other plaintiffs and the court, and I think we have worked that out. We are sending out additional mailings next month to educate seniors. But we tried to give the plans more time to decide what their finances were for last year. We tried to give them a better opportunity to make the financial decision whether they are going to stay in or not; and to be honest with you, that led to the ad campaign and understanding that we are going to have to start educating seniors later, because of the later filing date. We thought we had better bend over backward to give them a lot of information, and that is largely where the idea for the ad campaign came from, that if we were going to start September 17 instead of July 1 to educate seniors, we had better give them a lot more information about their program.

I think most of the health plans--I regret that there was one that pulled out of Dallas--but I think I spoke with almost every CEO of a major plan in the country, and I personally pleaded with a bunch of them to stay in the hope that Congress would fix the program this year. I personally think and the administration feels that the Medicare+Choice funding formula is broken and is not working and that it is pure economics as to why people are dropping out, and that if we do not fix it, a lot more people will drop out before next year. At many, many, many plans that I talked to, the CEOs asked, "Do you think Congress is going to fix this, because I may stay in for one more year," and in many cases, I pleaded with them to stay in--

Mr. JOHNSON OF TEXAS. If we could do one thing to fix that, what you think that should be?

Mr. SCULLY. I think that with the best intentions in 1997, the urban and suburban areas were doing very well in Medicare+Choice, and there was an effort to push money into the rural areas, and largely what has happened is that you have had 3 years in a row of 2 percent--the payments in the Medicare+Choice program have capped at 2 percent the last 3 years in a row, and cost growth has been 10, 12 percent. So when you look at it, it is pure economics--the plans have gotten squeezed out. They have had to cut their drug benefits, raise their premiums, and the numbers just do not work.

So I think we could revisit the formula. Some would argue you should put more money back into the program. I think you could put some money back into the program and revisit the formula, and I can tell you the administration thinks that is a very top priority for this year, because we are down to a little over 13 percent of people in the Medicare+Choice Program.

I cannot imagine that I could have been any more aggressive than I was in trying to keep people in, so I regret that you lost some providers in Texas, but I talked to a lot of providers, including a couple of Mrs. Johnson's in Connecticut who dropped out as well despite my effort, and I think we did everything we could to send the signal to people that we were trying to make the program flexible. We are very big fans of the program and would like to get as many people back in as we can.

I think the people who are in for 2002 are probably in for 2002. I think the most appropriate thing to do would probably be to put some financing in and fix the formula for 2003.

Mr. JOHNSON OF TEXAS. Thank you. I think part of the problem also is the paperwork issue that was brought up here previously. I just do not know how you can stop that.

Mr. SCULLY. In fairness, we made a number of changes that the health plans complained about to reduce their paperwork burden. I hope that if you ask them--

Mr. JOHNSON OF TEXAS. What are you doing for the individual doc? You were in the hospitals; you know what a problem they have with paperwork.

Mr. SCULLY. Yes. Well, one thing we did--and again, it was not universally popular--we had a major risk adjustment collection mechanism--physicians do not always love managed care, but the one thing they like about it is they generally do not have to provide a lot of very detailed billing information.

Mr. JOHNSON OF TEXAS. Have you stopped changing the codes every month?

Mr. SCULLY. Yes. We suspended the physician requirement for risk adjustment for one year; if we do not find a better one, we are going to reinstate it next year. A lot of the things that the managed care plans and the physicians in managed care plans asked for, we did, to try to make their lives simpler this fall. I cannot think of too many stones I left unturned that I could do without getting sued, and I did get sued, although we worked that out in a reasonable way. But I think we are pretty aggressive in trying to keep people in the plans.

Mr. JOHNSON OF TEXAS. Thank you, sir.

Chairman JOHNSON. I would rather not let your statement about 203 lie, because many of the plans are telling us that they will stay in for next year if, before December 31, it is clear to them what the terms will be, and if there are more realistic levels of reimbursement and some greater regulatory relief.

The whole goal of changing the date--and this Committee is eventually going to have to deal with this--you cannot make people make business decisions when they have no idea what they are going to be paid for their product. And the whole system of the plans saying whether they are going to be in or out and at what price has to be better aligned with our appropriations process.

So one of the ways we got into this trouble was that they decided to stay in, thinking that we were going to help them at a higher level than 2 percent--even last year, this Committee recommended 4 percent, and in the end, it was pulled down to 3 percent, and so on and so forth. So you cannot have people trying to make economic decisions about products in the market when they do not know what they are going to get paid. We need to realign that whole system of provider bidding and consumer education so seniors can have a good chance to know what their choices are, but we maximize the continuity and stability of the program by putting the choices out there once people know what the Congress and the administration have done to address their problems.

In closing off, let me say thank you very much for being here, Tom. I know you do not feel very well today, and I appreciate your staying true to your commitment under really adverse circumstances to be with us.

I want to conclude by reading a small passage from the testimony by the American College of Physicians and the American College of Internal Medicine, because I want your staff to look at this before we get through this process, because I know Jim McDermott raised some issues here, and we just have to take more seriously the crisis that we are creating in physician offices.

This testimony says: "In internist carefully reviewed the 1997 guidelines and calculated the number of decisions that a physician must make before selecting a level of Evaluation and Management Services (EM) in billing Medicare. It includes 11 decision points and categories to consider before selecting the EM code. Each decision point requires several choices. There are 42 choices a decision must consider before selecting the proper EM service. There are 6,144 possible combinations representing the number of ways an office visit for a new patient can evolve and be classified."

It has gotten to be extraordinarily ludicrous, and we have to do something about how physicians bill and what code they select. If we do not do that, in the end, we will erode the quality of medical care in America because we will erode the quality of care that physicians are able to offer and the kind of people who go into medicine.

So this is a big issue. In this testimony, two or three important points are brought up that we had not really considered, and we need to talk about, and Pete and I need to talk about and the members of the Committee need to look at what more along that line we can do even in this bill.

Thank you very much for being here, Tom. We look forward to working with you. You have been very willing to work with us on a lot of complicated issues, and I thank you.

I also thank you for starting out your testimony by talking about HIPAA. We too are being deluged with HIPAA concerns, and we need to come to some conclusion about how best to handle that.

Thank you very much.

Mr. SCULLY. Thanks.

Chairman JOHNSON. I would now like to welcome the next and final panel. We will hear from all the experts and then open the floor for questions.

Leslie Aronovitz is from the Health Care Program Integrity division of the GAO. She will testify on behalf of two different people, so she will be allowed to go a little longer than the 5 minutes and make a 10-minute presentation.

Bill Hall is president of the American College of Physicians and the American Society of Internal Medicine; and Susan Wilson is vice president, Clinical Operations, and chief operating officer of the VNA of Central Connecticut and is speaking here on behalf of the National Association of Home Care.

Thank you all for being with us, and Ms. Aronovitz, if you could start.

STATEMENT OF LESLIE G. ARONOVITZ, DIRECTOR, HEALTH CARE-PROGRAM ADMINISTRATION AND INTEGRITY ISSUES, U.S. GENERAL ACCOUNTING OFFICE

Ms. ARONOVITZ. Madam Chairman and members of the Subcommittee, I am pleased to be here today as you discuss modifications to the Medicare program as set out in the proposed MRCRA.

This Act addresses two key problems that we have recently studied. First, physicians have expressed growing concern that Medicare is creating a blizzard of complicated, unclear, and inconsistent information about program requirements, and because the rules change frequently, they cannot stay current.

Second, observers of Medicare operations have for a long time questioned whether Medicare could be run more effectively if its claims administration contractors were selected through full and open competition and paid based on their performance.

With regard to the first problem, Medicare's communications with providers, our findings, as you noted, were quite disturbing. For example, carriers issue bulletins to physicians as a primary source of information about Medicare rules. For the 10 carriers we looked at, some bulletins were more than 80 pages long, with over 50 pages being the norm. They often contained long articles, written in dense language and printed in small type. Some of these had no table of contents while others did not identify topics by specialty.

We also found a number of instances in which the announcement of program changes came out after the changes had taken effect. Among carriers with multi-State bulletins, some developed separate State inserts; but others required that the physician read the entire article to determine if the change was apropos in his or her State.

In addition to periodic bulletins, carriers rely on their websites to provide another avenue of communication, but these also have many shortcomings. In our review of 10 carrier websites, we found that most lacked basic organization and navigation tools, like site maps and search functions that increase a site's user-friendliness. Further, five of the eight sites that had a required schedule of upcoming workshops or seminars were out-of-date. Although one site contained a potentially useful "What's New?" page, the page contained a single document of regulations that went into effect in October 2000, 8 months prior to the date of our website review.

A third communication vehicle for physicians billing Medicare is the carrier call center. I want to clarify something that we have talked about in our testimony. Call centers answer two general types of questions. One type is on the status of a specific claim. The other is questions that pertain to coding and billing the program in specific instances.

We did not test the adequacy of the call centers in responding to the status of specific reimbursement questions. But we did perform a limited test of approximately 60 calls to provider inquiry lines of five carrier call centers on coding and billing issues. The three test questions, all selected from the "Frequently Asked Questions" on carriers' websites, concerned the appropriate way to bill Medicare under different circumstances.

The results of our tests, which were verified by a CMS coding expert, showed that only 15 percent of the answers were complete and accurate; 53 percent were incomplete, and 32 percent were entirely incorrect.

We found that CMS has established few standards to guide these three types of activities. While CMS requires contractors to issue bulletins at least quarterly, it requires little else in terms of content or readability.

Requirements for web-based communication generally focus on legal issues that do nothing to enhance providers' understanding of Medicare policy.

In regard to telecommunications, contractor call centers are instructed to monitor up to 10 calls per quarter for each customer service rep--but CMS' definition of what constitutes accuracy and completeness in call center responses is neither clear nor specific. Moreover, the assessment of accuracy and completeness counts for only about 25 percent of the total assessment score, with process issues like phone etiquette accounting for the rest.

CMS conducts much of its oversight of contractor communications through contractor performance evaluations--we call them CPEs. While these reviews have not focused on the quality or usefulness of contractor bulletins or websites, CMS has begun to focus on call center service to providers.

But again, the CPE reviews focus mainly on process rather than on the more difficult issues involving an assessment of response accuracy.

CMS officials noted a lack of resources for monitoring carrier activity in this area--and this is not just Mr. Scully, but everyone that we have talked to at the high levels in CMS. Their own data show that there are fewer than 26 full-time-equivalent staff assigned to oversee all carrier-provider relations efforts nationwide, and these people are typically stationed at the regional offices which provide the contractor oversight.

We have noted in the past that under its tight administrative budget, CMS runs the Medicare program on a shoestring. Provider relations activities currently have to compete with most other contractor functions in the allocation of these scarce administrative dollars.

We started this study under the premise that physicians were being inundated with paper from their carriers, CMS, and U.S. Department of Health and Human Services agencies. Actually, we found that only a small percentage, about 10 percent, of the mail the seven physician practices that participated in our study sent us were from those sources. However, given the poor performance of CMS in its communications activities, we could understand why physicians seek materials from other sources, which were primarily their medical and specialty societies and other private organizations.

Despite the scarcity of resources, we did find some bright spots, and I think Mr. Scully enumerated many of them. CMS is working to expand and consolidate training for the customer service reps. Its MedLearn website offers computer-based training, manuals, and reference materials. CMS is developing satellite broadcasts to hospitals and educational institutes. And we also applaud CMS' efforts to establish the Physicians' Regulatory Issues Team, the PRIT, which works with the physician community to address its most pressing Medicare-related problems.

But I would like to emphasize that no matter how impressive these individual initiatives are, they cannot replace the need for consistently reliable and timely information provided to physicians on a regular basis.

We believe that the provisions in section 5 of H.R. 2768, the MRCRA--which I am going to use as shorthand for your bill--square place responsibility on CMS to upgrade its provider communication activities.

For example, it calls on CMS to centrally coordinate the educational activities provided through Medicare contractors and to offer technical assistance to small providers through a demonstration program.

The bill would also channel additional financial resources to Medicare provider communications activities.

Although we have not determined the specific amount of additional funding needed for these purposes, we believe that the current level of funding is insufficient to effectively inform providers about Medicare rules and payment changes.

I would now like to take a minute and turn to our findings related to Medicare's contracting for administrative services. Several key provisions of your bill address elements of Medicare contracting that have limited CMS' options for selecting claims administration contractors and that frustrate efforts to manage Medicare effectively.

First, MRCRA would establish a full and open procurement process that would provide CMS with express authority to contract with any qualified entity for claims administration, including entities that are not health insurers.

Second, the bill would provide for CMS to use incentive payments. For example, a cost-plus incentive contract adjusts the level of payment based on performance.

Finally, MRCRA would modify longstanding practice to specifically allow for contracts limited to one component of claims administration process, such as processing and paying claims or providing provider education and technical assistance activities.

To summarize, the scope and complexity of the Medicare program makes complete, accurate, and timely information of program information vital to providers who need to be kept up-to-date on Medicare's rules. While CMS acknowledges that improvements are needed, we believe it needs to do so through establishing a more skilled, standardized and centralized approach. It is also clear that more resources need to be devoted to these activities. The backers of this bill clearly recognize this need, and we believe that the funding provisions will go a long way toward ensuring that more attention is paid to provider relations activities.

The bill also contains provisions that would provide a statutory framework for Medicare contracting reform. We believe that CMS can benefit from this increased flexibility and that many of the reform provisions will assist the agency in providing for more effective program management.

Madam Chairman, this concludes my prepared statement. I will be happy to answer any questions that you or the other Subcommittee members have.

[The prepared statement of Ms. Aronovitz follows:]

Chairman JOHNSON. Thank you very much for your testimony and for the work that GAO has done on this issue. Dr. Hall?

STATEMENT OF WILLIAM J. HALL, M.D., PRESIDENT, AMERICAN COLLEGE OF PHYSICIANS-AMERICAN SOCIETY OF INTERNAL MEDICINE

Dr. HALL. Thank you very much, Chairwoman Johnson, and other members of the Subcommittee for holding this important hearing to discuss MRCRA.

My name is William Hall. I am a practicing internist and geriatrician in Rochester, New York, and currently, I serve as president of the American College of Physicians-American Society of Internal Medicine (ACP-ASIM), representing 115,000 physicians, the largest medical specialty society and the second-largest medical organization in the country, and also a group of members who supply a major proportion of all EM to Medicare recipients throughout the country.

In the course of my travels this year, the most frequent complaint by far that I hear from my colleagues is that internists are subject to excessive paperwork and as a result do not have enough time to devote to patients.

In our work, time is by far the most valuable resource in diagnosing and caring for older adults, but it is also in the shortest supply, largely due to a growth of unnecessary paperwork. Fortunately, this bipartisan legislation has been introduced to address paperwork hassles.

ACP-ASIM appreciates the opportunity to comment on H.R. 2768. This is a very good start, but more needs to be done. I would like to briefly touch on a few specific points in the bill, actually, all of which have been mentioned in prior testimony, but I would invite the Subcommittee to review our written testimony which contains more detailed comments, such as you already mentioned, Congresswoman.

First, the issue of extrapolation. As you know, auditors use extrapolation to look at a very small sample of Medicare claims and apply the results to a broader universe of claims that the auditors did not review. This process is simply unfair. Congress would certainly not allow the Internal Revenue Service to extrapolate a calculation error in a taxpayer's tax return from one year to other years without actually reviewing the returns in those years. And Congress should not allow the broad use of extrapolation either.

In order to strengthen H.R. 2768, we strongly encourage the Subcommittee to develop report language to define a "high level of payment error" to justify extrapolation. Without such a definition, problems with extrapolation could potentially continue.

We also recommend that carriers conduct a documented educational effort before a provider receives an overpayment demand letter.

Now a word about appeals. ACP-ASIM is pleased that H.R. 2768 precludes carriers from requiring physicians and other health care providers to repay an alleged overpayment until after the first level of appeal. However, ACP-ASIM believes that repayment should not occur until the administrative appeals have been exhausted. It simply is unfair that Medicare providers are compelled to repay money to Medicare contractors when the dispute has not even been settled. We would quickly add, however, that any appropriate interest and penalties should accrue if the provider is unsuccessful in his or her appeal.

Next, on evaluation and management documentation guidelines, ACP-ASIM strongly supports H.R. 2768's provision that requires the Department of Health and Human Services to initiate three or four pilot projects to test EM documentation guidelines. We are particularly interested in the peer review pilot method. Another pilot that ACP-ASIM believes should be explored is documentation of encounter time with patients and a simpler, one-page document as an alternative to more lengthy documentation requirements such as the 1997 guidelines. These are more than 40 pages long and lead to, as you already mentioned, thousands of individual decision points.

ACP-ASIM strongly agrees that pilot project participants should not be targeted for post-payment audits or overpayment demands. This stipulation should actually enhance the viability of these pilot tests.

It is our understanding that the Department of Health and Human Services Office of the Inspector General in the previous administration had some concerns regarding recommendations to improve the Medicare audit and appeal process. Essentially, the OIG was concerned that changes in the audit process could unintentionally allow unscrupulous health care providers to submit false claims to Medicare. The suggestions that we have outlined were developed in consideration of this concern.

ACP-ASIM believes that it is time for Congress to introduce more due process rights and fairness into the Medicare claims payment review system. The overwhelming majority of physicians and other health care providers are honest and law-abiding and should no longer have to suffer from onerous and unfair Medicare rules.

In conclusion, ACP-ASIM is pleased that the Subcommittee is addressing the serious problems that the Medicare regulatory burden poses for physicians. We strongly urge the Subcommittee to report H.R. 2768 to the full House Ways and Means Committee with some of the enhancements that we have presented. We would also ask the Subcommittee to consider provisions from other pending regulatory relief legislation such as H.R. 868, MERFA, which we have endorsed.

I thank you very much, and I would be happy to answer any questions that you might have.

[The prepared statement of Dr. Hall follows:]

Chairman JOHNSON. Thank you very much, Dr. Hall.

Ms. Wilson, it is a special pleasure to welcome you here to this hearing. I have worked with Ms. Wilson extensively in my home town of New Britain, and her leadership at the State level as well as the national level in solving some of the difficult problems we have been facing in the home care reimbursement area have really been appreciated. Welcome.

STATEMENT OF SUSAN WILSON, VICE PRESIDENT, CLINICAL OPERATIONS, AND CHIEF OPERATING OFFICER, VNA OF CENTRAL CONNECTICUT, INC., NEW BRITAIN, CONNECTICUT; PRESIDENT, BOARD OF DIRECTORS, CONNECTICUT ASSOCIATION FOR HOME CARE, WALLINGFORD, CONNECTICUT; AND MEMBER, NATIONAL ASSOCIATION FOR HOME CARE

Ms. WILSON. Thank you, Madam Chairman and members of the Subcommittee, for allowing me to testify regarding MRCRA.

I am Susan Wilson, vice president and chief operating officer of VNA of Central Connecticut, president of the board of directors of the Connecticut Association for Home Care, and a member of the National Association for Home Care.

In March of this year, I had the honor of addressing this panel regarding regulations and policies that impact a provider's ability to deliver efficient, high-quality care. I am pleased to be here today to personally extend my deepest appreciation for the many efforts by you, your staff, and many others to ease these burdens. You are to be commended in particular for the development of H.R. 2768 which, if enacted, will ease the impact of some of the most troublesome policies.

It has been proposed that any final regulation that is not a logical outgrowth of proposed regulation cannot take effect until there has been an opportunity for public comment. Your bill generally prohibits retroactive application and extends protection against compliance actions for 30 days. Home care has suffered greatly by the retroactive impact of issued policies, and this provision should help to prevent a recurrence of this.

Your bill also protects providers against sanctions when they have followed the guidance of a Medicare contractor. Further clarification is needed, however, regarding what constitutes a sanction. Does it relate to possible fines, or does it extend to other obligations that may result from the faulty guidance of the contractor?

Home health agencies have reported that despite adherence to written guidance from intermediaries specifically regarding cost reports, the intermediary has later rejected its own approval, which has led to unfounded allegations of overpayment. We hope that these circumstances are included in the provision.

Also, your proposal provides for education through technical assistance and program information, and certainly this will help to create a better understanding of the Medicare program.

A similar provision applicable to Medicare's contractors for survey and certification would further secure this intent.

Providers are delighted, Madam Chairman, that your bill prohibits recoupment of a perceived overpayment until after a decision has been made on an appeal that is under reconsideration. Denied claims are frequently reversed on appeal, and nearly all denials taken to the ALJ are overturned. Please consider taking this provision one step further so that providers are protected until their appeals are exhausted.

It appears to limit, however, the postponement of overpayment recovery to circumstances in which the provider has initiated the appeal. I might say that the provider frequently does not have the right of direct appeal and must act on the beneficiary's behalf. Language of this provision must be modified to provide pre-recovery protection in all instances.

Also, a majority of denied home health and hospice claims are rejected because they do not meet one or more technical requirements. The agency's only recourse is to undergo a costly appeal, and this delays final payment and unnecessarily burdens providers and intermediaries. Your legislation provides an opportunity to correct any errors or omissions in a most efficient manner.

I would be remiss in my testimony if I did not touch upon the 15 percent cut scheduled for October of 2002. The CBO estimated that an additional 15 percent cut would be needed to meet the targeted $16 billion savings from home health care. It has become increasingly clear that these calculations are dangerously inaccurate.

According to the latest figures, the 5-year total in reductions will exceed $70 billion. Home care providers have met the challenge of Interim Payment Services and PPS; however, we continue to struggle under the financial burden of other related issues. The proposed technical panel regarding the mandated Outcomes Assessment Information System (OASIS) assessment has not yet been convened, so I would like to take this opportunity to state that this process alone, the OASIS assessment, has cost my agency well over $100,000. Only a minuscule percentage of that will ever be compensated.

A letter recently written by a home care nurse in Connecticut stated: "I am disheartened by the paperwork burden which is stealing time away from needed patient care." She goes on to say: "My supervisor is also diverted from helping me with patient care by the third-party liability paperwork, copying, and the review of records going back 3 years."

Several States, Connecticut in particular, are struggling to maintain viability under the burden of the Third Party Liability initiative. Records are requested for retrospective review for payment of duly-eligible clients, and current interpretations are applied to past care. My agency soon must begin the duplication of over 15,000 pages of records which must be sent to the FI, and this only accounts for a very small portion of the review year. One large Connecticut agency reported that their costs will exceed $1 million just for the review process.

H.R. 2768 addresses the burden of the escalating request for documentation. It is my hope that the provision will limit their request to what is necessary rather than reaffirm their current practices.

While Home Care is well aware of the Nation's dwindling surplus, in light of the savings to date, the additional financial burdens home care faces, as well as a growing staffing shortage, we urge you to eliminate the 15 percent cut.

Madam Chairman, the issues addressed by H.R. 2768 may seem quite technical in nature, but they will make a tremendous difference in the day-to-day operations. We in home health and hospice will work diligently to work with you for their enactment.

I thank you for your longstanding efforts on behalf of the Nation's home health providers and the patients and families they serve. On behalf of the National and Connecticut Associations of Home Care, I thank you and the members of this Committee for the bipartisan action that you have taken.

Thank you.

[The prepared statement of Ms. Wilson follows:]

Chairman JOHNSON. I thank the panel for their extensive testimony and for your detailed suggestions. We will review all of them carefully.

Let me just say for the education of my colleagues on the Subcommittee that this third party liability problem that we have in Connecticut and in a few other States is going to spread like a disease. It is a way that States can maximize Medicare reimbursement, move people from Medicaid onto Medicare, reduce the States' costs and increase our costs. What it results in is the State or some contracted agency requiring review of documentation on every, single patient.

We had one agency in Connecticut, just a very small agency, who wrote that it was going to cost them $37,000 just to xerox the first round of requests. That is unconscionable, and any government that allows that kind of squandering of national resources is irresponsible and derelict in their duty.

So we have made a lot of progress in negotiating an agreement on this, but we may need to include some language in this bill or another to ratify the resolution of that problem before it truly destroys particularly the small providers.

But the provider that Ms. Wilson referred to that says it is going to cost them $1 million, it is $1 million for that one agency, just this first set of reviews, and it is big because they are the last agency that now serves inner-city folks needing home care. So it would be catastrophic if we wiped them out through utterly irrational regulatory requirements.

Mr. Crane, would you like to question the panel?

Mr. CRANE. Thank you, Madam Chairman.

Ms. Wilson, in your testimony, you urge us to amend H.R. 2768 to postpone recovery of alleged overpayments until all provider appeals are exhausted. As you know, the OIG strongly opposes that proposal, arguing that the likelihood of successful recovery diminishes dramatically the longer the process is drawn out.

H.R. 2768 tries to find a compromise by permitting recovery only after the first level of appeal is exhausted, which would filter out the majority of denials that will be overturned on appeal.

I understand that you would like us to go further. How can we do so and still be sensitive to the real concerns outlined by the Inspector General?

Ms. WILSON. I believe that what needs to be done is to take a look at what has happened historically. The recoupment does take place after the first round of appeals; however, the continued look at the particular issue by going through additional appeals is lengthy, extremely costly, and I believe the history has been that a great many of those have been overturned in the long run.

Essentially what has happened is that the agency has been paid a certain amount of money for service. It may be recouped at a certain time. However, the appeal process needs to continue. We are talking about many agencies, whether not-for-profit or for-profit, that at this point are working under very tight constraints regarding costs. So that essentially, we are removing moneys from the agency necessary in order for them to continue the care that they are providing. Agencies are extremely hard-pressed to be able to do that.

Mr. CRANE. Thank you.

Ms. Aronovitz, I would like to ask you to expand on some very important statements that you made in your testimony. Don't you think that competition will improve the operations of the Medicare contractors, and specifically, will it improve services for seniors and for health care providers?

Ms. ARONOVITZ. Absolutely. The Federal Acquisition Regulation, which requires full and open competition, we think is essential; it is a real foundation to the way that most government entities contract for most goods and services. We think this is a very important principle even with claims administration contractors. I know there is some discussion of developing a system where CMS could be excused from ever conducting full and open competition where a contractor is performing very, very well.

I personally have a lot of skepticism about that, because we have found that CMS has a lot of work to do before they develop the kind of performance system for claims administration contractors that could justify that kind of flexibility.

Clearly, this is an extraordinarily large endeavor, and we do not expect that CMS would be able to do this in record time. It takes time to develop statements of work and to develop this type of contracting. But we think that CMS should develop these contracts, and there should be some time definite where all these contracts would be competed.

Mr. CRANE. Thank you. Thank you, Madam Chairman.

Chairman JOHNSON. Mr. McDermott?

Mr. MCDERMOTT. Thank you, Madam Chair.

Dr. Hall, since you are the designated hitter for the medical profession, I want to ask you a couple of questions. I was just thinking about the fact that this country is going through an awful experience, and it is my view that there will be a national epidemic of post-traumatic stress disorder in this country. So I was just thinking, well, now, all those doctors are out there, and they are going to have to document this, and they have to find sleep disturbance, and they have to find irritability, and they have to find that it has lasted for more than 90 days. All of those are parts of the diagnostic criteria for making that diagnosis.

And I was having some trouble remembering exactly what the diagnostic indicators were, so I was thinking to myself, what is it about this scheme that is out there of coding and documentation that, if you could change a couple more things in this bill to make it work better, what would you do--because I think physicians are overwhelmed with a lot of stuff coming at them, and I do not start with the premise that they are doing it on purpose, but on the other hand, we do need some documentation.

So if you were looking at this, what else would you change?

Dr. HALL. Thank you, Congressman McDermott.

If I were czar of the universe--and I certainly recognize that I am not--I guess there are a couple of things I would change.

As internists and particularly with evaluation and management services, which are the bulk of our business, particularly where older adults covered by Medicare are concerned, often our ability to tell you what you do not have is more important than our ability to tell you what you do have. I have very few patients, if I spent adequate time after a work-up sitting with them and saying, "I have to tell you that we did not find that you have life-threatening cancer," very few of them say, "Aw, shucks, I am not going to pay your bill because you did not make that diagnosis."

On the other hand, that is what I deal with constantly when I deal with CMS. If I go through the same, identical, exhaustive work-up, but it turns out that I have not diagnosed a more classic disease, I am very likely to have my payment rejected or at least down-coded. This is one of the problems that we face in a very complex system which, I agree with you, is going to get increasingly complex as the population ages, bringing with it a baby boomer level of demand, intellectual inquiry and access to the internet.

Internists are more and more going to be providing services to say to patients, "I understand where you are coming from. This is not what you have. Here is how we can get your life back into a certain amount of order," which is really what the post-traumatic stress syndrome is. Add to that the fear of bio-terrorism, and we are facing an amazing and I think formidable challenge in the next couple of years in our own country.

So, what would I change? Well, I think the things that I hear the most include, first of all, the appeals process. This is felt to be inherently quite unfair to internists. More importantly, it has some very serious practical implications.

We know that after the first appeal, very, very few of these claims turn out to be anything, as has already been mentioned, individual fraud is extremely rare, but some overpayment is unfortunately going to occur, just like underpayment. Then, let us get it right the first time. Let us put our resources at CMS into first of all being much more open and forthright in telling physicians and their staffs what they have to do right. Let us not have a situation where, if we call for advice, the person giving us the advice refuses to give us his or her name. Let us not have a process where, if we send our staff to various intermediary or regional carrier orientation sessions and they ask the wrong question, they are going to be targeted for review. This is not a healthy environment.

I graduated from medical school the same year that Medicare was enacted, and I have never known anything else throughout my 30-plus-year career. I happen to like it. I think it is a good system. But I think we have now reached the point where we are discouraging physicians.

So what happens with this appeal process? Physicians toward the latter half of their careers are the people who are dropping out. They just do not want to have to deal with this problem and be considered guilty until proven innocent. If we then look at rural communities and what is happening in terms of physicians moving out, I am very much panicked about how we are going to take care of this bulge in the demographics without getting on top of it.

Do it right. Set up a system that creates much more of a partnership between CMS and physicians, and let us not have physicians have to settle claims that they know are absolutely wrong just in order to stay in business, which is what is happening in a lot of places.

Second, I guess I would take a very careful look, as you already have and as other people have testified to, at the whole extrapolation process. This just does not make any sense. It is all re-work. Let us do it right the first time. Let us get the educational guidelines set up.

I file one income tax return a year--in fact, I file it for two of us, because my wife and I file together. I understand the need for some kind of random audit there, because I only do it once a year. But if I take care of 2,000 frail elderly people, I am submitting 6,000 claims a year. Wouldn't it be better to look at the claims that are being submitted already and say, "Dr. Hall, compared to your peers in the community, your billing practices are not very right, and we think that we had better take a look at that." Why would we just pick a random audit sample out of those 6,000? It just does not make sense in terms of getting at the real problems. Thank you.

Mr. MCDERMOTT. Would you let me have a little extension on that, Madam Chair?

Chairman JOHNSON. Is that all right with you, Mr. Johnson?

Mr. JOHNSON OF TEXAS. Yes.

Chairman JOHNSON. Yes, that would be fine, Jim.

Mr. MCDERMOTT. We use the term in our bill "a high level of payment error." I would like to know how you would define that. That triggers a bunch of bad things for a doc. So how would you define "a high level of payment error" for HCFA, or whatever that agency is called now?

Dr. HALL. CMS. Well, I would be the wrong person to ask that, because whatever I said could be subject to some bias. But if someone were to ask my opinion on how it should be set up, I would say that within every region, there are standard, acceptable practices and there are frequencies of coding that are very much keyed to the specific population that is being taken care of.

If I am practicing in Sun City, Arizona, my distribution of billing codes and my levels of care are going to be very different than if I am practicing in some other area where there is not such a high concentration of retirees.

I think that the definition should be based on some kind of statistical cut point that says you should be within 95 percent of the spread of diagnostic codes and of billing codes, or whatever is the right number, but let us decide on that number that makes some sort of sense in the context of practice--and I agree there has to be some kind of accountability here. The last thing we are asking for is decreased accountability.

Mr. MCDERMOTT. Thank you.

Chairman JOHNSON. Thank you.

I would note that Gail Wilensky testified to this point at our very first hearing, that the whole system needs to move to that kind of oversight so you can identify patterns early and can use that pattern process to get at providers who are either making errors or exploiting the system. I do not know that we can move that into this specific bill, but we are going to have to get into that much more deeply.

I just want to clarify something before I go to Mr. Johnson. Did you say that if you do not diagnose a serious illness, the visit is then down-coded? We have heard this many times.

Dr. HALL. The likelihood is that with an EM service, if we do not have a piece of paper that has a lab test attached to it that says a certain disease was diagnosed, that claim has a much higher probability of being down-coded.

Chairman JOHNSON. Are your people having trouble with Level 5, which says "comprehensive physical," versus Level 3, which says "detailed physical"?

Dr. HALL. There are problems there, but I think it runs through the entire spectrum of the coding levels.

Chairman JOHNSON. Thank you. Mr. Johnson?

Mr. JOHNSON OF TEXAS. Thank you.

Ms. Aronovitz, would you talk to me about how you have said, I believe, that there is a lack of accuracy in the information that Medicare contractors make available? Are the pressures of the system forcing that on them, or were your questions trick questions?

Ms. ARONOVITZ. They were clearly not trick questions, and we were very disturbed by our findings. We did not expect to have such a high error rate.

Our questions were actually taken from contractors' websites under their "Frequently Asked Questions" section, so these are questions that should have been answered correctly.

We think that there is a lot of pressure for customer service representatives to answer questions quickly and well, and there is no excuse for having such a high error rate. We think that the training and the oversight that is given to customer service representatives and other activities that are conducted at the contractor level need to be more standardized, and they need to be increased.

Mr. JOHNSON OF TEXAS. Is it the fault of the system that makes the paperwork level almost extreme? Most of the doctors, I think, have to hire one or two people just to keep track of what is going on. Is that part of the problem?

Ms. ARONOVITZ. Well, there is some concern that the program is so complicated that customer service representatives have trouble figuring out the correct answers. But in this case, these three questions were ones that had been asked so many times that the answers were very straightforward and very clear and had been discussed with customer service representatives several times.

So we do not think that our questions in any way indicate the kind of complexity where the expectation is that they should not have been able to answer correctly. They clearly should have been able to answer these questions.

Mr. JOHNSON OF TEXAS. Do you think that they are answering truthfully in their own minds and just did not get the question right, or what?

Ms. ARONOVITZ. Yes, I really do. I think maybe it could have something to do with training or oversight or monitoring or feedback. There are lots of things they have to worry about--not just answering the question correctly, but there are a lot of process questions. They need to make sure that they ask a follow-up. There is a lot of phone etiquette that they also have to engage in. And to their credit, they also answer a lot of questions that pertain to reimbursements on specific claims. We have not tested those, but we do not hear complaints from physicians when they call up about those kinds of things.

So we think they need a lot more training, and they need to have more feedback in terms of how their performance is measured.

Mr. JOHNSON OF TEXAS. Did I just hear you say that physicians are not griping about their reimbursements?

Ms. ARONOVITZ. No, no, no. I did not say they are not griping about their reimbursement at all. What I said was that we have not heard the same level of concern when a physician calls one of these call centers and asks, "What is the status of my reimbursement?" In other words, when is it coming? They seem to be satisfied that they get an answer; whether they are happy with that--

Mr. JOHNSON OF TEXAS. Okay. Did you pursue HCFA at all as to why they do not trust the providers and the docs when they are giving them information? That has been my experience in dealing with them. Did you pursue that at all?

Ms. ARONOVITZ. Why the physicians do not trust the answers?

Mr. JOHNSON OF TEXAS. Why HCFA will not take information from the hospitals, docs, and associations as real; they have to go out and do their own studies, which are always about 10 years late. Did you pursue that at all?

Ms. ARONOVITZ. We did not really pursue that, but it is an interesting point. I think that CMS is starting to reach out more, and we are very encouraged by their interactions with physicians, trying to get feedback on their concerns. But you are right, they do a lot of their independent studies, and they feel they really need to to get the kind of evidence they need to make program changes.

Mr. JOHNSON OF TEXAS. Well, I think it is a waste of time and money on their part, frankly. Thank you, Madam Chairman.

Chairman JOHNSON. I just want to pursue one brief question with Dr. Hall and one with Ms. Aronovitz.

Dr. Hall, it was very helpful to hear you follow up on Dr. McDermott's questions, but in your testimony, you said something about instead of all this documentation, a one-pager. Have you thought through what that one-pager would be, or would you be interested in having your people begin thinking through what is--because this is something that actually I have proposed and we have in our bill, sort of a demonstration possibility for people outside the government, without any background or without any attachment to the bureaucracy and the IG, to come up with what they think in the real world is sensible documentation, and then we can go through the process of rectifying it.

But right now, we are trying to rectify a process that is extraordinarily detailed and intrusive with a generalized payment system and with an IG who has the right to require things that even the IRS does not have the right to require.

So there are other steps beyond this bill, but I wonder if you would be interested in sort of giving body to that comment that you made in the course of your testimony.

Dr. HALL. Congresswoman Johnson, I thought you would never ask. I think there is a start. Within the Current Procedural Terminology documentation, there is such a document that is much more contracted than what we have had before. One of the proposals for a pilot study would be to combine that with the element of time, the actual commodity that we are really talking about in an office setting. We could supply some of that information to the Subcommittee. We would be able to get that to you right away, right from our own Washington office.

Chairman JOHNSON. We would appreciate your getting that to us right way, and then we can flesh out that particular pilot idea, because in the long run, I personally believe that we will not be able to continue to attract the quality of mind or heart to medicine if we do not do something about the fact that they are paid on the basis of an RBRVS formula which is so extraordinarily complex, and nobody understands it, not even the people who implement it, a coding system that now is almost unworkable, and a practice expense formula that is also controversial, complex, and in my estimation, unworkable.

So when you look at the three systems supporting physician reimbursement, frankly, it is not the future, and we have to find radical ways to break through and find another basis on which to restore an honest and responsive relationship to a medical community that has to increasingly deal with complex illnesses, complex methods of diagnosis and treatment. This is also true in the home health area and in many other areas, but if you will get that to us, we will work on that.

Dr. HALL. We will do that. Could I just make one comment in relationship to that?

Chairman JOHNSON. Yes.

Dr. HALL. The medical chart for most physicians is more than a legal document. It is really the record of the clinical transaction that goes on behind closed doors with the patient. It often contains, if it is a proper chart, information that maybe some people would not even share with their spouses. It is very, very important to the continuity of care.

What we have now done is taken that record and used it as the sole basis for determining the quality and quantity of the interaction that occurred behind those closed doors. It was never meant for that, so what we are finding is that I personally and all the people we work with spend an inordinate amount of time recording what is quite frankly nonsense--it has nothing to do with what is important for that patient--in order to justify and provide the documentation that is necessary.

To be sure, there has to be some metric for that documentation that is understandable and allowable, but I think the bureaucracy has just gotten away from us. We need to reestablish this dialogue between the medical profession and CMS and just come up with a better way.

Chairman JOHNSON. Thank you. We invite your participation in that dialogue, and we hope to push that dialogue ahead very aggressively from this Subcommittee.

Ms. Aronovitz, I was surprised at your response to Mr. Johnson's comment--or another of my colleagues; I am not quite sure--about giving CMS the flexibility to renew contracts without a bid process. This business of setting standards is not rocket science. Just because the government has not bothered to do it does not mean it is not quite regularly done throughout the private sector and is not a process that we know a lot about.

I would like to preserve that right, because the bidding process is very expensive, and it is going to take a while to get this first round, and I think there needs to be some flexibility to recognize high performance. So one possibility might be to require a report to the Committee on the standards once they have been set so we can have a dialogue about that; we could even have hearings on it if we think the standards are too low or not well enough developed, and then a report when the decision is made by the government not to go to bid, so that we can follow this.

But I think that at the time we are giving flexibility, we need to give broad flexibility, because we are going to make really radical changes in the system. Do you have any comment on that?

Ms. ARONOVITZ. Sure, I do. First of all, I totally agree with you. We believe that performance standards is one of the most important principles in any type of contract. Setting up expectations and then providing oversight and monitoring and feedback is essential to understanding whether you are getting your money's worth for any goods or services you would have.

So we definitely believe that that is critical. It is just that CMS does not have really strong performance measures. I think they are getting there, and in their program safeguard contractor efforts, it is coming along.

In terms of the expense involved in doing full and open competition, we agree that this could be very expensive, but we think the expense really comes in the first round. CMS really does not have experience on claims administration contracts, in writing statements of work, in developing this process. We believe, though, that once it does that for several contractors, it could use the same approach or the same statement of work for competing in future years or even competing with other contractors or doing one big competition.

So we think that the expense that they are going to incur up front is going to be a fixed cost that could apply across the board. We do not think there would be that much saved in exempting one contractor down the road from having full and open competition, and there are some real benefits to it down the road. That is, no matter how well you are performing, it forces you to look around and make sure that you are improving because you know you do have competition.

The last thing I want to say is that we agree that we would not want to push CMS into doing this in a time frame that would be unreasonable. I think that if all competition would have to be completed by 2006 or 2007 or 2008, or whatever amount of time would be reasonable to give CMS a chance to do this well and to do it in a phased approach, we are not in any way opposed to that. It is just that ultimately, these contracts should be completed because there are a lot of benefits that could be derived.

Chairman JOHNSON. Thank you very much. Mr. McDermott?

Mr. MCDERMOTT. Madam Chair, I wonder if it would be possible--I keep thinking about the IRS, and they do not make you pay in advance; what they do is they charge interest when you finally settle up--I wonder if we could not consider an amendment to move it up a layer in the appeals process before people have to pay, knowing that they would have to pay interest. Is there some compromise that we could work out in there to make it a little less onerous to hit somebody right up front and make them pay for what then takes sometimes as much as 3 years to pay--and you may not in fact wind up paying at the end of the 3 years. That seems unfair to me.

Chairman JOHNSON. I certainly would be happy to look at it with you. First of all, I take the interests of the Subcommittee members very seriously, and in addition, there are some data that say that particularly for physicians on that second level of review, 60 percent--on the first level of review, 40 percent have changed, and on the second level of review, the remaining 60 percent are reviewed.

We have found that there is some disagreement about those figures and whether they really hold up, but I think we would be happy to look at it with you and see if we can--I know that for all of you, that second level of review is important.

Mr. MCDERMOTT. When do you anticipate having a markup?

Chairman JOHNSON. We anticipate resolving these kinds of issues this week, so we will be talking about this directly this week, and hopefully will be able to have a Subcommittee markup in 2 weeks.

Mr. MCDERMOTT. Two weeks?

Chairman JOHNSON. Yes.

Mr. MCDERMOTT. Okay.

Chairman JOHNSON. Unless there are other time frames that are beyond our control that require us to move it up more rapidly.

Mr. MCDERMOTT. Thank you.

Chairman JOHNSON. Thank you.

Thank you very much, members of the panel. I so appreciate your joining us and giving such serious consideration to the proposal that we put out a month and a half ago.

Thank you very much.

[Whereupon, at 12:22 p.m., the hearing was adjourned.]
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