Departments of Labor, Health and Human Services, and Education, and Related Agencies Appropriations Act, 2004-Continued

DEPARTMENTS OF LABOR, HEALTH AND HUMAN SERVICES, AND EDUCATION, AND RELATED AGENCIES APPROPRIATIONS ACT, 2004—CONTINUED

ADEQUATE FUNDING FOR MEDICARE CONTRACTORS

Mr. HOLLINGS. Mr. President, I rise to engage in a colloquy with the distinguished chairman and ranking member of the Labor-HHS-Education Appropriations Subcommittee. As the Senators know, Medicare contractors play a critical role, partnering with the Federal Government to administer the Medicare program. This year, these contractors will process over one billion Medicare claims; they are the primary point of contact for beneficiaries and providers and provide the first line of defense against Medicare fraud. They are very efficient, with contractors' administrative costs representing less than 1 percent of total Medicare benefits.

While the subcommittee has done its best to provide needed funding for Medicare contractors over the years, the fact exists that CMS and its Medicare contractors have been severely underfunded for years. The problem has been more acute since the mid-to-late 1990s with the enactment of new Medicare laws placing additional responsibilities with insufficient resources to perform these new duties, e.g., HIPAA, BBA '97, BBRA '99, BIPA 2000. Clearly funding has not kept pace with additional work.

The pending Medicare reform legislation, S. 1, if enacted, will exacerbate funding problems for Medicare contractors. Hundreds of changes are made that will require more work by contractors, such as system changes to adjust provider payments, expedited appeals processes and new coverage requirements.

I know that the chairman and ranking member share my concern that Medicare contractors receive adequate funding. The budget constraints we face resulted in an insufficient 1.6 percent increase for Medicare contractor operations, even though claims volume is expected to rise 11 percent. The Medicare Integrity Program, MIP, which provides contractors with dedicated funding for critical fraud and abuse detection activities, is not increased at all. Further, the money we provide does not account for any of the new responsibilities contractors will face if Medicare reform is enacted.

I am concerned that inadequate funding would be devastating to the administration of Medicare and the safeguarding of the Medicare trust fund. Those that will feel the impact most are Medicare beneficiaries and the providers that care for them.

I am told that if funding is not increased to an adequate level, many Medicare contractors would have to reduce staff levels and eliminate certain beneficiary and provider outreach activities. Since claims must be paid, the result will be decreased customer service to beneficiaries and providers. I'm certain we'll hear from our constituents when they are faced with busy phone lines, longer wait times for questions to be answered, reduced provider training on how to properly submit a claim leading to the submission and potential payment of improper claims.

I ask the Senators from Pennsylvania and Iowa to work with me to ensure that Medicare contractors receive increased funding within the available amounts appropriated in the bill. This is particularly critical if Medicare reform is enacted.