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Public Statements

Military Construction and Veterans Affairs Appropriations Act, 2008 - Continued

Floor Speech

Location: Washington, DC



Mr. GRASSLEY. Mr. President, I come to the floor today to object to the inclusion of provisions that are clearly in the jurisdiction of the Finance Committee in an emergency supplemental appropriations bill to fund the war.

The supplemental appropriations bill seeks to place a moratorium on seven Medicaid regulations until the next administration.

It also prevents implementation of a CMS policy to ensure States cover poor kids before expanding their SCHIP programs.

I know some people have concerns with the CMS policies.

Let me be clear: I am not here to argue the regulations are perfect. I have issues with some of them I would like to see addressed.

However, the regulations do address areas where there are real problems in Medicaid.

Medicaid is a Federal-State partnership that provides a crucial health care safety net for some very vulnerable populations ..... low-income seniors, the disabled, pregnant women, and children. They depend on Medicaid, and it does generally serve them well.

Medicaid is also a program with a checkered history of financial challenges.

Medicaid has a history of States abusively pushing the limits of what should be allowed to maximize Federal dollars sent to them.

And while sometimes States have clearly pushed the envelope, at other times, States have struggled to understand what is and is not allowable in Medicaid.

So after years of work by CMS, numerous reports by GAO and the Inspector General at HHS, and frequent Congressional hearings, CMS issued regulations to try to clarify the rules in some very problematic payments areas of Medicaid.

I will start with the public provider regulation.

We know that in the past, many States used to recycle Federal health care dollars they paid to their hospitals to use for any number of purposes beyond health care.

It was an embarrassing scam that several administrations tried to limit.

For years, the Medicaid Program was plagued by financial gamesmanship. States used so-called intergovernmental transfers or IGTs, to create scams that milk taxpayers out of millions--even billions--of dollars.

Here is an example: a State bills the Federal Government for a $100 hospital charge. The hospital gets the $100 payment and then the State would require the hospital to give $25 of it back to the State. In my view, that is a scam.

What happens to the $25? In the days before Congress and CMS cracked down on the behavior, the money could go to roads or stadium construction.

That is right. Medicaid IGT scams paid for roads and stadiums instead of health care for the poor.

In 1991, 1997 and again in 2000, Congress took specific action to limit the States' ability to use payment schemes to avoid paying the State share of Medicaid.

CMS has continued their work since then.

Over the past 4 years, CMS has been working with States to try to limit these scams.

I will note these efforts have not been without their controversy. States have been very concerned about exactly what the new standards are.

Senator Baucus and I wrote the GAO and asked them to look into what CMS has been up to in trying to limit the way States make these payments.

We were concerned that there was not enough transparency in what CMS was doing.

And CMS did publish a rule for all to see. It is out there in the open.

The core goal of the rule is to limit provider reimbursement to actual cost.

I know some people consider this a radical idea, but I just don't understand why anyone thinks it is a good idea to have hospitals paid more than cost so they can be a part of these scams that rob the taxpayer to fund State pork.

Restricting payments to cost is not exactly a new idea. In 1994, GAO recommended that payments to government providers be limited to cost. This is a fundamental issue for program integrity.

What did GAO find in their 1994 report that led them to this conclusion?

The State of Michigan used these questionable transfers to reduce their share of the Medicaid Program from 68 percent, which is what it should have been, to 56 percent.

The GAO found evidence that in October 1993, the State of Michigan made a $489 million payment to the University of Michigan. Within hours, the entire $489 million was returned to the State.

The report found that in fiscal year 1993, Michigan, Tennessee, and Texas were able to obtain $800 billion in Federal matching funds without putting up the State Share.

Congress and CMS have spent the last 17 years combating that behavior.

Last year, the emergency supplemental included a provision to delay implementation of the public provider rule for 2 years.

Fortunately, cooler heads prevailed and the delay was reduced to 1 year.

But I wish to read what I said at the time. This is from remarks I made on March 28, 2007:

If some people think CMS has gone too far, then we should review their actions in the Finance Committee. We should call CMS in, make them testify, and ask the tough questions to which we need answers. If we think there are things we should have done differently, then we should legislate. That is the way it ought to be done.

That is the right way to operate. We should have dealt with it in the Finance Committee.

We should have tackled the issues here that are extremely complex. They deserve thorough consideration so we can insure we are taking appropriate action.

But a year has passed with no action and instead we are here with this amendment to the supplemental appropriations bill. No hearings have been held. No testimony submitted. Nothing.

Making the CMS regulation go away opens the door for a return to the wasteful, inappropriate spending of the past.

Intergovernmental transfers can have a legitimate role, but it is critical that States have a clear, correct understanding of what is a legitimate transfer and what is not.

If the regulation goes away, those lines will still not be adequately defined.

Why should we care if the lines are not adequately defined? Let me read from the National Conference of State Legislatures Web site: ``IGTs can enhance a State's Federal match and thus bring additional funds to the State in two main ways. First, States can use county funds instead of State funds to generate a Federal match to support services provided by counties. Second, States can use IGTs to help it claim additional Federal funds based on upper payment limits. Under this model, a State can make payments to eligible public facilities using the rate Medicare pays for the same service, a rate that may exceed the State's standard Medicaid reimbursement rate. If it chooses to do so, a State then could use a portion of the new revenues generated--a share of the portion that remains after the standard Medicaid rate is paid for other goods or services.''

States speak openly about these payment schemes to maximize Federal dollars flowing to the States.

It is absolutely the worst thing we could do for the Medicaid Program to leave States without clear guidance on these types of payments.

We cannot simply walk away from this subject.

Now I would like to turn to the CMS regulation on graduate medical education. I personally think Medicaid should pay an appropriate share of graduate medical education or GME.

But I would like to see us put that in statute rather than return to the current customary practice because I do not think the taxpayers are well served by the way Medicaid GME operates today.

If we simply make the regulation go away, what are the rules for States to follow?

There are five different methods States use in billing CMS, 11 States don't separate IME from GME, and CMS cannot say how much they are paying States for GME.

Let me quote from a CRS memo I submitted for the RECORD during the budget debate a few months ago: ``States are not required to report GME payments separately from other payments made for inpatient and outpatient hospital services when claiming Federal matching payments under Medicaid. For the Medicaid GME proposed rule published in the May 23, 2007 Federal Register, CMS used an earlier version of the AAMC survey data as a base for its savings estimate and made adjustments for inflation and expected State behavioral changes, for example.''

To make their cost estimate for the regulation, CMS relied on a report from the American Association of Medical Colleges to determine how much they are paying for GME in Medicaid. That is because the States do not provide CMS with data on how much they pay in GME.

That is simply unacceptable.

You can disagree with the decision to cut off GME, but simply leaving the current disorderly and undefined structure in place is not good public policy.

Now let me turn to the regulations governing school-based transportation and school-based administration.

Is it legitimate for Medicaid to pay for transportation in certain cases I think the answer to that is yes.

I do think it is legitimate for Medicaid to pay for transportation to a school if a child is receiving Medicaid services at school.

That said, we should have rules in place that make it clear that Medicaid does not pay for buses generally.

We should have rules in place that make it clear that schools can only bill Medicaid if a child actually goes to school and receives a service on the day they bill Medicaid for the service.

You can also argue that the school-based transportation and administrative claiming regulation went too far by completely prohibiting transportation, but if making this regulation go away allows States to bill Medicaid for school buses and for transportation on days when a child is not in school, we still have a problem.

It is also critical that Medicaid pay only for Medicaid services.

We all openly acknowledge the Federal government does not pay its fair share of IDEA.

Quoting from the CRS memo: ``States, school districts, interest groups, and parents of children with disabilities often argue that the Federal government is not living up to its obligation to `fully fund' Part B of the Individuals with Disabilities Education Act--IDEA, P.L. 108-446--the grants-to-States program.''

We can also acknowledge that just because IDEA funding is inadequate, States will try to take advantage of Medicaid to make ends meet.

Again quoting from the CRS memo: ``It is generally assumed that such transportation is predominantly provided to Medicaid/IDEA children.''

If a child is required to be in school under IDEA and receives a Medicaid service while in school, is the transportation of that child 100 percent Medicaid's responsibility?

We should define clear lines so that States know what is and is not Medicaid's responsibility.

Now I would like to turn to the rehabilitation services regulation.

I certainly would argue that Medicaid paying for rehabilitation services is good for beneficiaries. We want Medicaid to help beneficiaries get better.

But States must have a common understanding of what the word ``rehabilitation'' means in the Medicaid Program.

Again quoting from the CRS memo: ``Rehabilitation services can be difficult to describe because the rehabilitation benefit is so broad that it has been described as a catchall.''

Also, States need clear guidance on when they should bill Medicaid or another program.

Again quoting from the CRS memo: ``There is limited formal guidance for states in Medicaid statutes and regulations on how to determine when medically necessary services should be billed as rehabilitation services.''

You can say the CMS regulation went too far, but that doesn't mean there isn't a problem out there.

As CRS notes, billing for rehabilitation services between 1999 and 2005 grew by 77.7 percent. I am far from convinced that all of that growth in spending was absolutely legitimate.

Finally turning to the case management regulation, I first want to point out the issues relating to case management are a little different than issues associated with some of the other Medicaid regulations I have discussed so far.

The provision in the Deficit Reduction Act of 2005--DRA--relating to case management received a full review in the Finance Committee, along with Senate floor consideration and conference debate prior to enactment of the DRA. This regulation relates to a recently enacted statutory provision.

There is reason to believe that States have been using case management to supplement State spending. Some believe that States are shifting some of their child welfare costs to the Medicaid Program through creative uses of case management.

Concern about the inappropriate billing to Medicaid for child welfare services extends back to the Clinton administration.

There are some who would disallow most child welfare case management claims from reimbursement from Medicaid. This goes further than I would support. Getting these children the proper services requires thoughtful review, planning and management, and I believe that Medicaid has an appropriate role in supporting these activities.

On the other hand, driving a child in foster care to a court appearance and billing the caseworker's time to Medicaid is not an activity that should be billed to Medicaid.

Certainly, the regulations are not perfect. The degree that CMS has gone to in specifying how case management should operate conflicts with the efficient operation of the benefit in certain respects.

But again let me quote from the CRS memo:

Although there may be a number of issues related to claiming FFP for Medicaid addressed in these sources, at least two issues have been sources of confusion, misunderstanding, and dispute. One issue where there has been misunderstanding is non-duplication of payments. Another area where there has been some disagreement is over the direct delivery of services by other programs where Medicaid is then charged for the direct services provided by the other program.

When CMS tried to come up with rules to increase accountability in case management, they had good reason to be trying to provide clarity and specificity for States.

Surely the answer is not to tell States they are on their own to interpret the case management provision in the DRA.

As CRS notes, billing for case management services between 1999 and 2005 grew by 105.7 percent. With spending growing that fast, we must make absolutely certain States understand how they should be billing CMS.

During the Appropriations Committee markup, a provision was added to delay implementation of an August 17, 2007, State

Health Officials letter regarding the SCHIP program.

Simply put, the idea behind the policy is that States should have to show they are covering their poorest kids before they can expand to cover kids with higher incomes.

No matter how many technical issues people might have with the ability of CMS to implement the policy, I find it mind boggling that anyone would argue with the idea of covering poor kids first.

Poorer kids are generally sicker and in need of care. It is reasonable public policy to require States that want to cover higher income children to first demonstrate that they are doing a good job covering poor kids.

It is just common sense.

Earlier this month the administration issued further clarification on the August 17 directive. The purpose of this additional State Health Official letter is to respond to some of the concerns that have been raised by States looking to accommodate the August 17 directive.

Rather than work with the administration to find solutions--even after the administration made an effort to clarify the policy--this bill simply makes the policy go away.

This bill provides for $1.3 billion in savings to address the various policy provisions in the Finance Committee's jurisdiction.

I actually support the provisions that save money in this bill.

I have been working on the provision related to physician-owned hospitals for years.

But it is wrong to move it in this bill, and as much as I do support that provision, I must object to its inclusion here as well.

The provisions in this bill are scored by CBO as spending $1.7 billion. It is $1.7 billion because the regulations are delayed only until the end of March of next year.

I know supporters hope that the next administration will pull back and undo the regulations completely.

What would it cost if we tried to completely prevent these regulations from ever taking effect?

Not $1.7 billion that is for sure.

It would actually cost the taxpayers $17.8 billion over 5 years and $42.2 billion over 10 years.

It is an absolute farce for anyone to argue that all of those dollars are being appropriately spent and that Congress ought to just walk away from these issues.

Instead of just making the regulations go away, the Finance Committee and the Energy and Commerce Committee should sit down with the administration and fix the problems with the regulations and address real problems in Medicaid.

That is what we should be doing for the taxpayers.

Secretary Leavitt states that the most pressing of regulations will not go into effect on May 25 as many have feared.

He has offered to sit down with us and work on these issues.

There is no cause for us to act today to block the implementation of these regulations while an offer to talk is on the table.

After the President vetoes this bill, I encourage my colleagues to drop these provisions and sit down with the administration to find real solutions.

Separately, I want to voice my concern over the inclusion of an authorization relating to imports of uranium from the Russian Federation.

The Finance Committee has not had an opportunity to examine this complex legislation and evaluate how it relates to our bilateral agreement with Russia concerning the disposition of highly enriched uranium extracted from nuclear weapons, and its potential impact on our bilateral agreement to suspend the antidumping investigation on uranium from the Russian Federation.

The Finance Committee is the committee of jurisdiction over international trade in the Senate, and circumvention of that jurisdiction has in the past led to significant trade disputes. I am disappointed that the Finance Committee was not fully engaged on this matter.

We were deprived of an opportunity to contribute expertise and provide input so that any potential consequences under our trade laws could be mitigated.

Perhaps my concern will prove unfounded in this case. But nevertheless, this manner of legislating does not serve our best interests and should be avoided in the future.

In conclusion, I oppose provisions that are the jurisdiction of the Finance Committee being considered in this bill.


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