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Mr. COBURN. Madam President, this is a pretty straightforward amendment. I am having trouble understanding what we are doing. The average improper payment rate, as published by GAO and OMB, is around 3.5 percent for the programs. We, just now, after 7 years, are starting to see the improper payment rates for Medicaid and SCHIP reported.
What is interesting is that the payment Medicaid error rate for fiscal 2008 is 10.5 percent. Madam President, $32 billion was improperly paid out of Medicaid this last year; $18.6 billion of that is the Federal share. The SCHIP rate was a 14.7-percent improper payment rate.
This is the first time we have seen that SCHIP has reported its improper payment numbers for a full year, and it is important in this regard: The worst offender in the country is the State of New York, with an estimated 40-percent improper payment rate. The purpose of this amendment is to restore fiscal discipline by making the Medicaid and SCHIP programs more accountable and efficient and to limit earmark expansions until the programs are working at least within the range of what other Government programs work.
Now, we have an earmark in this SCHIP bill for the State of New York that allows citizens in the State of New York an elevated level of access to the SCHIP program that is some $30,000 above the rest of the country. We can decide to do that. That is fine. But what we should not do is allow the worst State in terms of offense in fraud in Medicaid to be able to expend additional moneys up to 400 percent of the poverty level until, in fact, they bring their improper payment levels down.
Let me refer to a 2005 New York Times article where the former State investigator of Medicaid abuse estimated that questionable claims totaled 40 percent of all Medicaid spending in New York--nearly $18 billion a year in New York alone.
One dentist somehow built the State's biggest Medicaid dental practice. This dentist--she--claimed to have performed 991 procedures a day in 2003. Get that again: 991 procedures a day. Van services intended as medical transportation for patients who cannot walk were regularly found to be picking up scores of people who walked quite easily when a reporter was watching nearby. These rides cost taxpayers $50 a round trip, adding up to $200 million a year, of which a large portion of that was fraud.
So what this amendment does--it does not affect existing SCHIP programs or States that wish to expand eligibility for families making up to 300 percent of the Federal poverty level. What it says is, until Medicaid and SCHIP payments reach the improved level of 3.5 percent--the average of other Federal agencies--we should not give New York a special earmark for people making 400 percent of the Federal poverty level.
First of all, it is a matter of common sense. Why would we allow the State with the worst fraud rate on Medicaid to have an additional exception over everybody else in the country, when they are the least efficient with spending their money on the people whom they are covering today?
Now, I do not know if 40 percent is accurate. It may not be. But the fact is, the whole Medicaid Program and SCHIP program are three to four times what the rest of the Federal Government is in terms of fraud and abuse. I think it is important we condition the expansion and the earmark for New York State on them coming into alignment with the rest of the Federal Government in terms of its abuse.
So with that, I yield the floor to the chairman.
He has no comments. I will move on to another amendment.
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Mr. COBURN. Madam President, this is another amendment. It is about being prudent with the taxpayers' money. It is about us doing what we are expected to do. It is about us controlling improper payments. This amendment would require that the final rule implementing the payment error rate measurement requirements under section 601(b) shall not be made later than 6 months after the date of enactment of this act.
Now, the problem that we have is, the legislation, in its current form, would effectively erase this long overdue progress by placing an unnecessary moratorium on the reporting requirements for Medicaid improper payment numbers. Let me say that again. In its current form, this legislation erases this long overdue progress by placing a moratorium on the reporting requirements for Medicaid improper payment numbers.
Section 601 of the bill states:
The provision would prohibit the Secretary from calculating or publishing national or state-specific error rates based on PERM--
The ``payment error rate measurement''--
for CHIP until six months after the date on which a final PERM rule, issued after the date of enactment of this Act, is in effect for all states.
However, there is no deadline for the final rule.
So all we are saying with this is, if we really want improper payment information released to the American public and released to Members of the Senate, we ought to be able to get the PERM done within 6 months of the enactment of this bill. It is a fair compromise between those seeking clarification guidance on PERM while ensuring there will eventually be progress and movement to guarantee the continuation of the measuring of improper payments. For the life of me, I don't know why we don't want to measure improper payments with the Medicaid Program. Maybe it is because we know what we are going to see, as with the first 17 States where we have a 10.3 percent error rate, of which over 90 percent is payment out in error.
Six months is more than enough time for CMS to write the PERM guidelines, especially since it took our Founding Fathers only 4 months to write the Constitution.
The Medicaid composite error rate for 2008 is 10.5 percent. That is $32 billion of Medicaid money that could have been redirected in a more proper manner. This marks the first time the SCHIP has reported its improper payment rate, and it was at 14.7 percent. To put that in perspective, the Congressional Research Service notes the average for each of the other Federal agencies is 3.5 percent. This bill, as it is currently written, ignores a law that has been on the books and for which CMS has 7 years to prepare. All we are saying is, after we pass this bill, make them do it within 6 months. They can do it. They know they can do it, and we have said no. I don't understand that. I am willing to learn why we would not want improper payments reported to both us and the American people. CMS itself has advocated for more transparency on improper payment.
CMS is aware of the challenges and noted the lack of information about payment error rates. We have actually had hearings in the Financial Management Subcommittee on improper payment rates in both Medicare, SCHIP, and Medicaid. Kerry Weems, the former Director of the CMS stated: There is a substantial vulnerability in preventing and detecting fraud, waste, and abuse in the Medicaid Program. Measuring performance, publicly reporting the results, and providing payment incentives that encourage high quality and efficient care are paramount to keeping CMS accountable to the beneficiaries and the American taxpayers.
What this bill does is strip the transparency and the information CMS needs to detect and prevent waste, fraud, and abuse. Supporting this amendment is consistent with what our new President has said in terms of his pledge to make sure government works, that government is transparent, and that we actually know where we are spending our money and whether it is working and effective. We have a duty to make sure taxpayers are only paying for the services and the people who are entitled to benefits. This is a simple amendment to just shed transparency on a government bureaucracy.
Madam President, I ask unanimous consent to set aside that amendment and call up amendment No. 47.
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Mr. COBURN. Madam President, the purpose of this amendment is to make sure children don't lose their private insurance and uninsured children can get access to private health insurance.
This amendment would require a premium assistance approach for new Medicaid or SCHIP expansions under this act. It would cut bureaucratic redtape for States to use a premium assistance approach.
I will be the first to say SCHIP was created for targeted low-income children, those families making less than 200 percent of the Federal poverty
level, and I believe that is where the program should stay focused. The Department of Health and Human Services just released new numbers on the Federal poverty level. For a family of four, it is $22,050 a year. That means the current SCHIP without expansions is available to children whose families are making $44,000 a year. That is close to the national median income of $50,000.
The underlying bill will expand the SCHIP program up to families making $66,000 a year or $88,000 if you are fortunate enough to live in the State of New York. I am concerned about this for a number of reasons, but there is little question the majority has the votes to pass the underlying bill and President Obama will pass it. Therefore, my amendment is not about whether to expand SCHIP; my amendment is about how to expand SCHIP.
Are we going to put the majority of American kids on a government-run program? If that is our goal, then we should totally reject this amendment. Or are we going to use an approach that ensures children in America have access to market-based insurance?
Let me tell my colleagues why this is important. Today, only 40 percent of the physicians will take an SCHIP or a Medicaid patient. Sixty percent would not even let them darken their door. So what we have in essence done is put a stamp on the foreheads of people in these programs that says: You get the doctors who are not busy enough so they have to take SCHIP and Medicaid.
What this amendment is designed to do is, if they have an opportunity for insurance, we give them that opportunity, which takes that stamp off their foreheads. In other words, we don't relegate them to lower class health care.
My amendment would require States to use a premium assistance approach to keep kids in private coverage if they want to expand their Medicaid or SCHIP under this bill. The American people know the market generally does a better job of controlling costs and improving the quality than government can. We know that because when we look at outcomes of Medicare versus private insurance, we see it. When we look at outcomes of private insurance versus Medicaid, we see it. When we look at outcomes of private insurance versus SCHIP, we see it. We know that is true. If they need a little extra help to get the private insurance, this amendment would make sure they have it. I believe parents--not government bureaucrats--should be able to make the decisions about the health care of their kids. This amendment will reduce crowdout of private insurance.
Anytime the government offers to give something away for free, it is common sense that an employer or an individual will take them up on the offer. As we offer free health care to higher income children, many of whom already have coverage, we are going to see a resulting drop or crowdout in the number of employers willing to pay for private coverage.
The Massachusetts Institute of Technology economist Jonathan Gruber has estimated the crowdout rate of expanding SCHIP to new eligibility groups at 60 percent. The Congressional Budget Office shows that 400,000 children will be newly covered in higher income families, and there will be a reduction in existing private insurance for another 400,000 children. That is our own Congressional Budget Office. If we send the bill as it is written to President Obama, it is going to break one of his campaign promises when he stated last fall:
If you already have insurance, the only thing that will change under my plan is that we will lower your premiums.
Voting in support of this amendment ensures that President Obama can keep his promise. Not only does crowdout take away the private coverage higher income children have now, it is a bad deal for taxpayers. For those new populations covered by CHIPRA 2009, the SCHIP legislation, one new child for the cost of two. CBO says the bill will cover 1.9 million SCHIP kids in 2013 at a cost of $2,160. However, because of crowdout, taxpayers will actually pay $4,430 for every newly insured kid because we are picking up the tab for those kids who already had insurance. The purpose of this amendment is to minimize that crowdout. Rather than encourage government dependence, it is to help people stay in a private insurance plan. It is also cost effective because the State will only have to subsidize the employee's share of the health insurance benefit rather than having taxpayers pay the entire benefit.
This amendment also cuts bureaucratic redtape to make it easier for States to use a premium assistance approach. Current laws allow premium assistance, but the administrative requirements are so cumbersome that only a handful of States have premium assisted programs. I will note that the underlying bill permits premium assistance but would also note that the administrative burdens would once again discourage States from using this approach.
According to the Kaiser Family Foundation, 55 percent of the 78.6 million children in America have employer-sponsored insurance. If that coverage is working for the majority of American kids, why can't it work for kids who are eligible for SCHIP? The answer is, it can and we have a duty to make sure it does.
The premium assistance language in the underlying bill also denies parents the right to choose certain types of coverage for their children. This language gives parents the right to choose from more coverage options. Parents, not bureaucrats, know best about what fits the needs of their children. A parent should be able to use premium assistance for their share of the employer-sponsored insurance, to buy insurance in the nongroup market, or to buy a consumer-directed product. All this does is give parents that right to make individual decisions about what is best for their children, about what doctor they will have for their children.
Don't forget most people in SCHIP don't get a real choice about who is going to take care of their children. They have a very limited choice. What this amendment does is ensures that a large portion of them can actually choose the doctor they want for their child.
It is not about--this amendment isn't about whether we should cover American kids; it is about the best way to cover those kids. I believe keeping kids with their parents and market-based coverage is going to be better for American kids, better for our country in the long run, and I will guarantee it will give us better outcomes for the children who are covered.
With that, I yield the floor.
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