[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]



                 DEPARTMENTS OF LABOR, HEALTH AND HUMAN

               SERVICES, EDUCATION, AND RELATED AGENCIES

                        APPROPRIATIONS FOR 2001

_______________________________________________________________________

                                HEARINGS

                                BEFORE A

                           SUBCOMMITTEE OF THE

                       COMMITTEE ON APPROPRIATIONS

                         HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS

                             SECOND SESSION

                                ________

  SUBCOMMITTEE ON THE DEPARTMENTS OF LABOR, HEALTH AND HUMAN SERVICES, 
                    EDUCATION, AND RELATED AGENCIES

                 JOHN EDWARD PORTER, Illinois, Chairman

 C. W. BILL YOUNG, Florida          DAVID R. OBEY, Wisconsin
 HENRY BONILLA, Texas               STENY H. HOYER, Maryland
 ERNEST J. ISTOOK, Jr., Oklahoma    NANCY PELOSI, California
 DAN MILLER, Florida                NITA M. LOWEY, New York
 JAY DICKEY, Arkansas               ROSA L. DeLAURO, Connecticut
 ROGER F. WICKER, Mississippi       JESSE L. JACKSON, Jr., Illinois
 ANNE M. NORTHUP, Kentucky          
 RANDY ``DUKE'' CUNNINGHAM,         
California                          

 NOTE: Under Committee Rules, Mr. Young, as Chairman of the Full 
Committee, and Mr. Obey, as Ranking Minority Member of the Full 
Committee, are authorized to sit as Members of all Subcommittees.

           S. Anthony McCann, Carol Murphy, Susan Ross Firth,
             and Francine Mack-Salvador, Subcommittee Staff

                                ________

                                 PART 2

                 DEPARTMENT OF HEALTH AND HUMAN SERVICES

                                                                   Page
 Secretary of Health and Human Services...........................    1
 Health Care Financing Administration.............................  109
 Administration for Children and Families.........................  713
 Administration on Aging.......................................... 1279
 Special Tables................................................... 1457

                              

                                ________

         Printed for the use of the Committee on Appropriations
 
                               ________

                     U.S. GOVERNMENT PRINTING OFFICE
 64-125                     WASHINGTON : 2000

                        COMMITTEE ON APPROPRIATIONS

                   C. W. BILL YOUNG, Florida, Chairman

 RALPH REGULA, Ohio                 DAVID R. OBEY, Wisconsin
 JERRY LEWIS, California            JOHN P. MURTHA, Pennsylvania
 JOHN EDWARD PORTER, Illinois       NORMAN D. DICKS, Washington
 HAROLD ROGERS, Kentucky            MARTIN OLAV SABO, Minnesota
 JOE SKEEN, New Mexico              JULIAN C. DIXON, California
 FRANK R. WOLF, Virginia            STENY H. HOYER, Maryland
 TOM DeLAY, Texas                   ALAN B. MOLLOHAN, West Virginia
 JIM KOLBE, Arizona                 MARCY KAPTUR, Ohio
 RON PACKARD, California            NANCY PELOSI, California
 SONNY CALLAHAN, Alabama            PETER J. VISCLOSKY, Indiana
 JAMES T. WALSH, New York           NITA M. LOWEY, New York
 CHARLES H. TAYLOR, North Carolina  JOSE E. SERRANO, New York
 DAVID L. HOBSON, Ohio              ROSA L. DeLAURO, Connecticut
 ERNEST J. ISTOOK, Jr., Oklahoma    JAMES P. MORAN, Virginia
 HENRY BONILLA, Texas               JOHN W. OLVER, Massachusetts
 JOE KNOLLENBERG, Michigan          ED PASTOR, Arizona
 DAN MILLER, Florida                CARRIE P. MEEK, Florida
 JAY DICKEY, Arkansas               DAVID E. PRICE, North Carolina
 JACK KINGSTON, Georgia             MICHAEL P. FORBES, New York
 RODNEY P. FRELINGHUYSEN, New Jersey CHET EDWARDS, Texas
 ROGER F. WICKER, Mississippi       ROBERT E. ``BUD'' CRAMER, Jr., 
 GEORGE R. NETHERCUTT, Jr.,         Alabama
Washington                          MAURICE D. HINCHEY, New York
 RANDY ``DUKE'' CUNNINGHAM,         LUCILLE ROYBAL-ALLARD, California
California                          SAM FARR, California
 TODD TIAHRT, Kansas                JESSE L. JACKSON, Jr., Illinois
 ZACH WAMP, Tennessee               CAROLYN C. KILPATRICK, Michigan
 TOM LATHAM, Iowa                   ALLEN BOYD, Florida
 ANNE M. NORTHUP, Kentucky          
 ROBERT B. ADERHOLT, Alabama        
 JO ANN EMERSON, Missouri           
 JOHN E. SUNUNU, New Hampshire      
 KAY GRANGER, Texas                 
 JOHN E. PETERSON, Pennsylvania     
 VIRGIL H. GOODE, Jr., Virginia     

                 James W. Dyer, Clerk and Staff Director

                                  (ii)

 
DEPARTMENTS OF LABOR, HEALTH AND HUMAN SERVICES, EDUCATION, AND RELATED 
                    AGENCIES APPROPRIATIONS FOR 2001

                              ----------                              

                                         Tuesday, February 8, 2000.

                DEPARTMENT OF HEALTH AND HUMAN SERVICES

                               WITNESSES

HON. DONNA SHALALA, SECRETARY

                          Chairman's Statement

    Mr. Porter. The subcommittee will come to order.
    Before I welcome the Secretary, I want to remind members 
that we have a very ambitious schedule for this year. We 
attempted last year to have abbreviated hearings and move the 
schedule along as rapidly as possible. I found that was not 
very satisfactory and we are attempting to have, even though we 
are having a very compacted schedule, to have more fulsome 
hearings. I would urge members to be here as often as they 
possibly can, recognizing that they do have other subcommittee 
responsibilities. We intend to finish the hearings by the 
second week in April. I expect that we will mark up very soon 
after we finish our hearings and the expectation is also at 
this point that we will take the bill to the floor very early 
in the process.
    So I want to thank everyone for being here this morning. 
Madam Secretary, we want to welcome you. My staff tells me that 
this is your ninth appearance before our subcommittee. I can't 
figure how that can be because it has been 8 years, but let me 
say what an outstanding, magnificent job you have done at the 
Department. There has been no cabinet member in this 
administration that I think has done a better job. Your 
testimony each year has been as well prepared as any witness 
who has ever come before this subcommittee. We also say among 
ourselves that we can't lay a glove on Donna Shalala when she 
comes before us. We think that you have done a wonderful job 
and appreciate your service to our country.
    Having said that, I want to raise at this moment another 
issue that is troubling to me and to members of the House and 
Senate on both sides of the aisle and that is the latest 
revelation regarding CDC and the hantavirus. I want to state at 
the very outset that for me this is not at all a problem of how 
the money was spent. We all have strong feelings as to how 
money ought to be spent and we express those in the report 
accompanying the bill.
    If there is better science or a greater need in the 
process, we understand that an agency can move that money to 
where it is most needed.
    What we object to is that we are not informed when the 
money is being moved and what we principally object to is that 
we have a representation in this budget justification that the 
money was spent on something it was definitely--apparently, I 
shouldn't prejudge, it was apparently not spent on and none of 
us on either side of the aisle can make public policy unless we 
have the truth before, correct information, and that is what I 
am concerned about.
    I do not intend to hold the hearing that we had scheduled 
for tomorrow. Carl Albert's death, the Speaker of the House, 
former Speaker of the House, is going to require the attendance 
of many members and we are going to move CDC to a more 
propitious time, although as quickly as we can possibly do 
that.
    Before we begin your testimony, my staff tells me I have to 
raise with you that your written testimony was not here until 
about 7:00 last evening and therefore not available for them to 
use as the basis for their questions, and obviously that is 
upsetting to staff because they don't have a sufficient time to 
prepare.
    With that I am going to call on my colleague Dave Obey for 
any opening statement that he may make and then we will proceed 
with your testimony and then questions.
    Mr. Obey. Thank you, Mr. Chairman. First of all, let me 
simply note that this will be the last year that John Porter 
chairs this subcommittee and I know many of us were surprised 
and disappointed to see John's announcement that he was 
intending to lose his mind and leave this place. I certainly 
understand why, but I think it is safe to say that on both 
sides of the aisle we very much regret that decision.
    I have served with John on this committee for as long as he 
has been a member, not as long as I have been a member but it 
has been a long time nonetheless, and in that time I have 
always seen him take a constructive, thoughtful approach to 
issues, insisting that dollars go where science dictates rather 
than where politics dictates to the greatest possible extent, 
and I simply want to extend my appreciation for the qualities 
of his service, both to the country, the Congress and 
especially this subcommittee, and also that of his wife who has 
also, as everyone knows, Kathryn has contributed immensely with 
her caring and passion on human rights issues, and I think 
added to the stature of the Porter family as well as this 
country in doing so.
    With respect to Secretary Shalala, we would like to claim 
her as a Wisconsin product even though she was from Ohio. She 
is the only Secretary of HHS I know who can name the starting 
rotation for the 1954 Cleveland Indians' pitching staff, and I 
would note that she was chancellor at the University of 
Wisconsin. She was the first woman to head a Big Ten university 
and named by Business Week as one of the five best managers in 
higher education and she has been the longest-serving Secretary 
of HHS in the country's history, and her service has been not 
only one of length but of quality, as the Chair has indicated.
    She has numerous accomplishments which we all understand.
    I would also like to make one point, Madam Secretary, 
before you begin because I know that there will be some who say 
that the administration budget is too expansive, especially in 
some of your areas. I would simply observe that when the 
administration began its stewardship we were facing $290 
billion deficits and we are now expecting a $270 billion 
surplus. That is an amazing transformation. I would simply say, 
secondarily, the caps are gone and as Martin Luther King said, 
free at last, free at last, the caps were never a real fiscal 
discipline. They were simply a political pretense by which the 
Congress was pretending that we were spending less money than 
we were actually spending.
    I am glad they are gone. I want to point out just two 
fiscal facts. If we are to as a substitute for the caps now 
consider a budget with a 10-year freeze, as some have 
suggested, that means at the end of that time, given what the 
defense budget will look like, we would be required on this 
committee to cut everything we do on the domestic side of the 
ledger by 42 percent. I don't believe that any rational person 
thinks that is possible. I would point out even if the budget 
is adjusted for inflation, that does not take into account that 
this budget is not supposed to be the last budget for the 
Clinton administration. It is supposed to be the first budget 
for the next decade in the next century and over the next 10 
years this country will have over 20 million more people. It 
will have over a million more kids in college and 40 percent 
more commercial airline flights, 40 or 50 million people 
knocking on the doors of national parks. It will have all kinds 
of increased demands and even a budget which adjusts for 
inflation will not sufficiently respond to building the kind of 
country that we are going to have and that we want to have at 
the end of 10 years.
    So I for one am delighted to see some of the initiatives in 
your budget, especially in your area. With that, Mr. Chairman, 
I thank you for the time.
    Mr. Porter. David, thank you for your very kind words. 
Madam Secretary, why don't you proceed.


                         SECRETARY'S STATEMENT


    Secretary Shalala. Thank you very much. First let me 
apologize the testimony got up here late. There is no excuse 
for that.
    I don't know whether this is the eighth or ninth time I 
have been before your committee, but given what you said about 
accurate information before this committee, whatever your staff 
says.
    Mr. Chairman, let me pay particular tribute to your 
leadership. You have played an integral role in advancing 
support for biomedical research, for family planning, for 
treatment for diabetes and AIDS. Your leadership and 
encouragement of bipartisan cooperation has contributed 
enormously to making this a healthier nation. From our point of 
view, you are an outstanding public servant and it has been a 
pleasure to work with you and we look forward to working in 
this final year. You have our thanks and our gratitude.
    Mr. Chairman, this is certainly the eighth time I have 
presented a budget for the Department of Health and Human 
Services because it is the eighth budget of the Clinton 
administration. It is also my last. I spent half of my 
professional life in Federal service, beginning as a Peace 
Corps volunteer in the 1960s, as an Assistant Secretary of HUD 
in the late seventies and now as Secretary of HHS. I have 
certainly enjoyed working with all of the members of this 
committee. I hope that we continue to attract outstanding 
people to public service, and when I return to private life I 
intend to encourage young people to spend part of their careers 
in public service. It is rewarding, it is challenging, it is 
mystifying; and frankly it is fun.
    The President's fiscal year 2001 budget I believe is an 
excellent budget for the Department, but that is inside 
baseball. What is more important is that it is an excellent 
budget for the American people. Mr. Chairman, I am very 
sensitive to your points about the CDC and after I finish my 
oral presentation, I would like to make some comments about 
steps that Dr. Koplan and I have agreed to for the CDC and he 
will be reporting in detail when he comes in for his own 
hearing.
    This budget builds on 7 years of substantial and measurable 
progress. We have worked with the States to increase the 
availability of Medicaid, we have made it possible for disabled 
Americans to keep federally funded health insurance when they 
return to work. In 1999 the overall immunization rate for 
preschool children increased to a record 80 percent. At the 
same time, the teen birth rate fell for the seventh consecutive 
year, and tobacco and illicit drug use among teenagers also 
declined. We enrolled more children in Head Start than ever 
before. We started early Head Start. We are well on our way 
towards meeting the President's goal of 1 million children in 
Head Start by 2002. In the past 2 years we have cut the 
Medicare payment error rate nearly in half and because of our 
antifraud efforts, we have returned $1.8 billion to taxpayers.
    AIDS has fallen out of the top 15 causes of death and we 
are working with the Congressional Black Caucus and the 
Hispanic Caucus and the other caucuses and communities to fight 
AIDS in minority populations. At the end of last year we 
proposed historic new regulations that will protect the 
confidentiality of health records even as we continue to search 
for new therapies. I could go on, but what we really need to do 
is go forward together. Our budget brings us to where we should 
be at the dawn of a new century, a great nation pledging 
allegiance to great goals. These goals are expanded health 
coverage, renewed support for families and children, greater 
scientific advancement and the creation of a healthier America. 
Our fiscal year 2001 budget brings those goals within reach 
without loosening our commitment to fiscal discipline and a 
balanced budget.
    This budget is about people. It makes a record investment 
in health care coverage, in access and in quality. Two years 
ago with bipartisan support we launched the State Children'S 
Health Insurance Program. Two million children are now 
enrolled. Now we want to make sure that this new program and 
Medicaid carry millions more children and their parents into 
the safe harbor of quality health care. The President's family 
care program will do that. Even as we expand coverage to some 
parents through family care, we recognize that many low income 
adults work in jobs that don't offer health insurance. These 
workers frequently rely on local health institutions and local 
health professionals to provide services at reduced or no cost. 
This year we want to increase our support for these community 
service networks to $125 million, five times our investment 
last year. In my remarks to the press yesterday I actually 
quoted Groucho Marx's quip, who are you going to believe, me or 
your own two eyes.
    Mr. Chairman, the American public can see with their own 
two eyes that we need to strengthen and modernize Medicare. 
First and foremost, that means dedicating more than $300 
billion of the on budget surplus over 10 years to extend the 
solvency of the trust fund until 2025. We also must add a 
voluntary prescription drug benefit to Medicare. As the 
President said in his State of the Union, we would never design 
Medicare today without a prescription drug benefit. We can't 
change the past. However we can change the future.
    But the longer we wait, the worse the problem will become 
and the more expensive it will become. Between 1996 and 2010 
the number of Americans over 85 is expected to double. This is 
a sure sign that we are becoming a healthier Nation, but an 
aging population also means more Alzheimer's and more chronic 
illness, and more older Americans living at home with informal 
caregivers, and that is why our budget includes $125 million to 
help family members take care of their loved ones at home. 
Government cannot step into the shoes of parents and 
communities, but government does have a role to play in helping 
families balance work and children.
    One recent study notes that in 1998 only 10 percent of the 
14.7 million children eligible for Federal child care subsidies 
received them. So as part of the President's child care 
initiative, this year's budget adds another $817 million to the 
child care development block grant. This is part of our 
discretionary budget, and brings the total block grant to $2 
billion.
    Head Start is one of the most successful bipartisan 
programs our two branches of government have ever created for 
children. This year we are requesting $6.3 billion for Head 
Start. That is 1 billion more than last year and the largest 
increase in the history of Head Start. But we can't talk about 
children without talking about drugs. We know that marijuana 
use has leveled off among teens, but too many teens are still 
saying yes to drugs and alcohol, and that is why our budget 
includes over $3.3 billion for substance abuse treatment and 
prevention.
    I have also mentioned the success we have had in cutting 
the death rate from AIDS, but HIV/AIDS is still a disease 
without a cure. And it is still the greatest public health 
challenge both here and around the world so fighting HIV/AIDS 
remains a top priority for the Department. Our total AIDS 
budget this year is $9.2 billion, an increase of 8.4 percent 
over last year. Every agency's AIDS fighting budget is going up 
in prevention, treatment and research. On the prevention side, 
we propose to spend an additional $75 million to help stop the 
spread of the disease. Specifically, the CDC will direct $40 
million of the new funds to local communities, including 
prevention services targeted to minority populations.
    CDC will spend another $26 million to fight AIDS around the 
world.
    At the same time, the Health Resources and Services 
Administration will expend $1.7 billion in Ryan White funding 
to help people living with HIV/AIDS. This is a $125 million 
increase over last year. Our budget request for AIDS-related 
research at NIH is $2.1 billion, a 5.2 percent increase over 
last year. The total NIH budget this year is $18.8 billion, $1 
billion more than a year ago. This committee should take pride 
in the unprecedented investment we have made in basic and 
clinical research, our shared commitment to the National 
Institutes of Health and to producing quality science and 
scientists on both the NIH campus and at the great research 
universities of this country. It is an extraordinary legacy. 
Years from now we will see the results beyond our wildest 
dreams. Some of those results are certain to come from the $73 
million we intend to invest over 2 years to build the National 
Neuroscience Research Center at the National Institutes of 
Health. This will put all of the NIH brain research under one 
roof. More important, the center will usher in what is certain 
to be the century of the brain.
    Last year Dr. David Satcher issued a new Surgeon General's 
report on mental health. The numbers were a wake-up call. Six 
out of 10 Americans with a history of mental illness do not 
seek and will not get help. That is why our budget increases 
the mental health block grant by $60 million, a full 17 
percent.
    We are also budgeting another $78 million to stop youth 
violence so the pictures we saw at Columbine and other schools 
are never repeated.
    In the interest of time, let me quickly mention three other 
areas where we intend to increase our discretionary budget. We 
take very seriously the need to stop infectious disease and 
bioterrorism. Our budget increases by almost 50 percent CDC's 
funding for disease surveillance. As for bioterrorism, which 
may be the biggest threat of the 21st century, we are proposing 
to spend $265 million to prepare for and respond to a 
biological attack. We also want to make a major investment in 
bricks and mortar. In addition to the Neuroscience Research 
Center at NIH, CDC proposes to spend $127 million, 70 million 
more than last year to modernize and expand three laboratory 
sites. The remaining funds will go towards completing the 
Edward R. Roybal Infectious Disease Lab and construction of a 
new environmental health lab.
    Mr. Chairman, I want to conclude my testimony by noting 
that our greatest moral imperative is to close the gaps in 
health outcomes between minorities and the majority population.
    In 1998, the President set a goal of ending health 
disparities in six major areas. Now almost every operating 
division is working to close these gaps. That includes an 
additional $35 million at CDC for community based research and 
demonstration projects to reduce disparities. Mr. Chairman, our 
fiscal year 2001 budget is fiscally responsible and crafted in 
the spirit of the third of President Roosevelt's four freedoms, 
the freedom from want. Our goal is to make all Americans free 
from the want of good health and a long life. The budget will 
bring us closer than we have ever been to President Roosevelt's 
dream. Thank you very much.


                HANTAVIRUS AND CHRONIC FATIGUE SYNDROME


    Now, I would like to make a statement on the points that 
you made about the CDC, and we appreciate both the role of this 
committee and the points that both you and Mr. Obey made. The 
CDC is the world's premier public health agency and the recent 
media stories about the management of hantavirus funding in CDC 
following last year's audit of the CFS funding have called into 
question the information CDC has provided to the Congress. I 
know that Jeff Koplan is as concerned as I am about the CDC's 
failure to report timely these reallocations. I believe that it 
is important that you hear from me that the full accountability 
and integrity of our budgeting and reporting efforts are 
central to what I believe our responsibilities are at the 
Department of Health and Human Services. I literally have zero 
tolerance for inaccurate reporting, for inaccurate statements, 
by any member of the Department. We have an obligation to 
expend our funds consistent with congressional expectations and 
to report accurately to this Congress.
    Today in consultation with Dr. Koplan I am taking what I 
consider to be very aggressive and unprecedented actions to 
rectify the problems and to restore the trust of this 
committee. Our management of resources at the CDC must be 
consistent with sound management practices and so I have 
instructed the Chief Financial Officer of the Department to 
take actions as are necessary to certify all financial 
obligations made by the National Center for Infectious Diseases 
for the remainder of the fiscal year. In other words, the CFO 
will assign a staff person to review and certify along with the 
CDC's financial management office the correctness of the 
Center's expenditures and of its reporting. In other words, 
there will be dual signatures on everything, the Chief 
Financial Officer of the Department as well as the chief 
financial officers of the CDC, until the end of the year or 
where we are satisfied that we have new systems in place.
    In addition to that, the CFO will work with Dr. Koplan to 
ensure that all senior decision makers in the National Center 
for Infectious Disease receive certified budget execution 
training. We have already done this with the budget officers of 
the Department at the end of the CFS discussion. It is now very 
clear that every senior scientific person who is making the 
decisions must also go through that training. And they will go 
through that training. It is the equivalent of a standdown in 
the military where everybody has to get that training before 
they can move forward.
    The CFO will also work with Dr. Koplan on a number of other 
recommendations. He has plans to take a number of other action 
steps in terms of organization and personnel. I will leave 
those for him to report. These are the two actions that I am 
taking right now, and I believe that they are at least the 
first step toward reassuring this committee. But let me be very 
clear. Neither Dr. Koplan nor I nor any other senior member of 
our team has any tolerance for inaccurate reporting or 
statements or anything of the kind. We are all devoted to the 
CDC and to the work that they do, but our credibility and our 
integrity is central to our ability to do our work.
    [The justification follows:]




                          FINANCIAL REPORTING

    Mr. Porter. Thank you, Madam Secretary.
    Let me say at the outset that I have the greatest 
confidence in Dr. Koplan, that the matters that related to CFS 
did not come at all under his watch, although this 
representation in this budget justification obviously did get 
by and the difficulty is that that immediately raises for all 
of us what other inaccuracies there may be and how to deal with 
this. I think you are taking some important steps.
    I might say that when Dr. Varmus took over at NIH I 
suggested that one of the things that he might do is to bring 
in outside consultants to look at everything that they do in 
the Department--in the NIH, to see whether it could be done 
better. He took that advice and on a competitive basis hired 
Arthur Andersen to come in and do a complete review of all of 
the things that they do. I think it helped to establish their 
credibility and to put into place greater efficiencies and 
accurate reporting, and I don't know whether that would be 
appropriate for CDC, but I would ask you as Secretary to look 
into that and see whether that might be needed to address this.
    I don't know--you are saying that you are doing this with 
respect to infectious diseases, which is only one of the 
responsibilities of CDC. We don't know how widespread this is. 
I would also add that a concern with financial data is one 
thing. A concern with the culture of an institution may be 
another, and I think the training is very helpful but I think 
you have to get at whether there isn't something going on 
within this institution that leads us to a very cavalier 
approach in providing data and making decisions regarding how 
money is spent that concerns me even more than any one 
incident.
    Secretary Shalala. We appreciate your recommendation. Dr. 
Koplan will be responding directly to that recommendation when 
he testifies.
    I also agree with you on the cultural issue but it may be 
related to the way that CDC asked for money, which is disease 
specific, as they have asked for money over the years.
    It may be more complex than any of us have anticipated. 
Clearly emerging infectious diseases don't know what the fiscal 
year is. There is no substitute for accurate reporting, but it 
could be the nature of the CDC and the nature of what is 
happening out there require that we actually look at how we are 
describing what we are doing and what the reporting pattern is 
so that Congress has a better sense of how the CDC is 
responding, and it needs to explain all of this on a regular 
reporting basis.
    So I think we can work that through, but I think we all 
have to think about what is happening to the world of emerging 
diseases out there, that they are not fitting as neatly or 
popping up in the same way.
    Mr. Porter. We are not questioning that at all, and we 
understand the importance of their having flexibility to deal 
with crises as they arise. All we would like to suggest is that 
we need accurate information.
    Secretary Shalala. Exactly.

                          BIOMEDICAL RESEARCH

    Mr. Porter. Apparently this did not turn up in any 
financial audit of how the money was spent.
    It appears that the same individuals were involved in this 
incident as were involved in the CFS incident and we want to 
have them come before us and see if we can find out what is 
going on and why such a thing would occur in the first place.
    Let me ask about, and I appreciate what you said about NIH 
and the commitment that this subcommittee and this Congress has 
made to biomedical research, and we are encouraged by the fact 
that the President is putting, I think it is a 5.7 percent 
increase before the tap into the NIH budget, but what it will 
mean, and it is far better than last year, but what it will 
mean is that new grants will decline by 17 percent from 5,900 
to just about 4,900, and my thinking and what I want to ask you 
is: Why propose so many new programs when what the effect of a 
decline in new grants will be in my mind is to send a message 
to young researchers that they can't count on a steady stream 
of funding to be available to them as all these scientific 
opportunities open up? Can you address that question?
    Secretary Shalala. Well, as you know, I have been very 
clear about our need for steady funding of grants, so that the 
next generation of young researchers see these investments as 
an opportunity for their careers.
    Let me say that the previous fiscal year was a record high 
number of noncompeting continuation grants so that the number 
is somewhat artificially inflated. But our goal, and we will 
work with this committee, is not to send any kind of a message 
other than the clearest message to the next generation of young 
scientists, the ones in training now, that funding will be 
there for them.
    So I think the President made a substantial commitment, and 
you can imagine the discussions within the administration over 
that commitment, but he is very clear about wanting to make 
sure that this is a very clear, consistent message that we are 
all sending.
    Mr. Porter. Thank you, Madam Secretary.
    I will tell members of the subcommittee that we are 
operating under the 6-minute rule. Given the time remaining, 
that would take us up to about 12:00, assuming everyone uses 
their time, and there would not therefore be available a second 
round unless the Secretary is willing to stay and members have 
other questions that they feel that they must ask.
    Mr. Obey.

                        NURSING HOME INITIATIVE

    Mr. Obey. Thank you, Mr. Chairman.
    Madam Secretary, let me first of all express my 
appreciation for the administration's new nursing home 
standards initiative. I think that is critically important. We 
have seen a lot of problems come and go in Wisconsin on those 
issues through the years, and I am glad to see that initiative.

                  MENTAL HEALTH SERVICES FOR CHILDREN

    Secondly, I have got some questions that I will ask for the 
record with respect to mental health services, especially the 
remaining gaps in mental health services for children even 
after you take into account the administration initiatives on 
the three fronts that you have in this budget.
    And I want to focus on three things. First of all, let me 
simply say, and I don't expect you to respond, but I do want to 
express my frustration with the one provision in your budget. 
The administration again dings the community service block 
grant program to the extent of $18 billion. The administration 
knows that both Senator Harkin and I are fervent supporters of 
those programs. Whoever in your agency or in OMB is responsible 
to cut that program back, I want them to come to my district to 
Stevens Point to see the agency that in my view does the best 
job in any in my district and in my State in meeting the needs 
of low income people, both in helping them define possible 
employment and helping them with housing and helping them with 
health problems. They get the biggest bang for the buck of any 
of these agencies that throw dollars around.
    Whoever made that decision, I want them out in my district 
to see what they are cutting in Stevens Point when they do that 
because I do not appreciate that reduction. It simply means 
that we have to take $30 million out of the administration's 
priorities someplace else to fund it. I am very disappointed by 
that.

                  HEALTH CARE ACCESS FOR THE UNINSURED

    By the same token, and I have been asked by a couple of 
people whether I am disappointed the administration did not add 
some money to continue the $15 million initiative that we put 
in to help States move ahead on health care coverage. I think 
the administration decision there was correct.
    What I want--and for those who are not familiar with what 
we did last year, this committee took $15 million and put it in 
the budget and said that 10 States can apply to the Feds for 
planning grant money to accomplish two things. One is to do a 
no-baloney analysis of exactly who their uninsured are and why 
they are uninsured.
    Secondly, those States are also expected to come up with 
proposals which in the context of the Federal-State partnership 
on the sharing of public costs, would achieve coverage for all 
of their citizens. And the purpose of this is not to have a 10-
year strung out planning program, it is for the States within 1 
year to review the situation and to come up with plans to 
attack the problem.
    I honestly believe that the best way to cut through the 
sterile debate that we have had on health care long term is if 
you get individual States which are suggesting individual 
approaches for solving the problem. Tommy Thompson, who is our 
governor and I don't agree on very much, but we held a joint 
press conference indicating our joint support for this 
approach, and I think it would be very--I hope that other 
States are aware of what we did in the bill last year because I 
think it could be a real sleeper in helping to move this 
country forward in the debate about not if but how we cover the 
uninsured.

                             WELFARE REFORM

    On welfare reform we didn't think about the how first, we 
simply said we are going to establish deadlines and you have 
got so much time and that is it, baby. And I think we ought to 
do the same thing on health care. If we--and I think this will 
help, and I think the administration is correct not to ask for 
another amount of money for planning because--we will wait and 
see whether States need a little extra money for planning down 
the line, but right now we simply want them to get their 
applications in.

                  HEALTH CARE ACCESS FOR THE UNINSURED

    Which leaves me time for basically one question. I would 
like you to explain what your long term budget plans and 
expectations are for the health care access for the uninsured 
community access program that you have been pushing because I 
think it is important that we understand what the strategy is 
to actually get these numbers down in terms of the uninsured?
    Secretary Shalala. It looks like actually, even though they 
are integrated, there are two tracks here. One is to extend 
health insurance, and in this case the President is 
recommending a major program to pick up the parents of the kids 
in the children's insurance program, plus some other access 
provisions, buy-ins, for instance, for those over 55.
    The other program which is complementary to the one that 
you just described, is first of all to get the States thinking 
and analyzing their own situation to find out where their gaps 
are and how they might fill those gaps, and to get local 
communities the grants. Around the office they are called glue 
grants. Get local communities to convene all of their providers 
and to figure out where their gaps are, and to create networks 
so that there is a seamless system between a person who walks 
into a community health center that finds out that they have a 
more serious disease that needs to get to a specialist.
    Everybody in this country gets to some health care, but for 
the uninsured they get to the wrong place at the wrong time. 
This is an attempt to get communities to think through where 
they have the entry level for the uninsured and a seamless way 
to get people to the academic health center or public health 
hospital for the specialty care.
    To get communities and governors to start thinking about 
how they will pull together the resources they already have, 
what additional holes they have, how they can be filled by 
Federal programs or perhaps by other initiatives. For that 
grant program, the RFPs are actually ready to go. The committee 
graciously funded it for $25 million, and we are asking for 
another hundred million. We see it as very complementary to the 
grants you described for the governors. But, we need local and 
State officials to think about these gaps. At the same time the 
Federal Government is playing a role in expanding health 
insurance for low income workers there is a lot of money out 
there that needs to be put together in a better way so that we 
improve the quality of health care services for individuals 
without insurance or who can pay something on insurance.
    Mr. Porter. Thank you, Mr. Obey. Mr. Bonilla.
    Mr. Bonilla. Madam Secretary, health centers in my view 
have been one of the solutions to helping the uninsured around 
the country, and I will get to a specific number in a second. 
Even in the information you are providing us, you are talking 
about how many more people they are helping.
    I am concerned that year after year our subcommittee has to 
provide a higher level of funding that the administration asks 
for year in and year out. Nevertheless, I thank you for getting 
the money out to those communities as quickly as possible 
because they desperately need it.
    As you know, I serve an area that spans almost 800 miles 
along the border and the health centers have taken in a lot 
more people over the last few years since we have been working 
on this program. As you note on page 23 of your overall budget 
justification, the number of uninsured patients served by 
health centers has increased 60 percent since 1990. My question 
is why only an increase of $50 million in the budget request 
for 2001? Why doesn't the administration give health centers 
additional funds to address the rising numbers instead of 
creating--trying to create new programs and obligating funds 
for other purposes?
    Secretary Shalala. We are doing a number of things in this 
area. As you rightly point out, we have expanded that budget 
for $50 million, which is a 5 percent increase slightly over 
inflation. And these programs for the uninsured which will 
involve health centers in many cases, because they will be the 
applicants, to help them better fit their programs with those 
for specialty care which are obviously helpful to them. And 
third, as I pointed last year, we are helping these health 
centers to increase their reimbursements from Medicaid, from 
Medicare, from other programs and from private insurance so 
they do pick up additional money as part of this.
    I think that we see this as a multifaceted approach to the 
community health centers, but let there be no doubt in your 
mind about our support for them and our desire to strengthen 
them, and also to strengthen their roles in the communities 
through these network approaches that we are also recommending.

                            OBLIGATING FUNDS

    Mr. Bonilla. I only wish that the administration would note 
that this does address a lot of the needs of the uninsured out 
there, and low income areas and minority communities. It is as 
though this Congress is not doing anything to try to provide 
services for the low income neighborhoods. So again, it is 
something that we are very proud of on this subcommittee, and I 
would urge the administration to start talking. This obviously 
does not solve every problem, but it is something that we have 
been working on for a long time.
    The administration's budget for fiscal year 2000 proposed a 
$20 million increase for community health centers but then 
obligated $70 million for health center funds for the 
President's new initiatives, including the initiative on race. 
I am concerned that this approach means that more Federal 
dollars will wind up staying here in Washington as opposed to 
being out in these health centers, and does the fiscal year 
2001 budget similarly obligate part of the $50 million proposed 
increase; and if so, how much and for what programs?
    Secretary Shalala. I am not sure I quite--I will make sure 
that I give you an accurate answer for the record. My 
understanding of the $50 million is that it is going directly 
to the health centers.
    The other monies that you see in health disparities are 
going to community-based organizations, many of whom are 
working directly with health centers. But we will sort out that 
question and make sure that you get an accurate answer.
    [The information follows:]

                            Obligating Funds

    Secretary Shalala: As directed by Congress in the FY 2000 
appropriation, the increase of $94 million is being used to 
stabilize the existing Health Center safety net and expand 
Health Centers to serve communities without access primary and 
preventive care. These added funds will allow HRSA to provide 
services to an additional 450,000 persons and add approximately 
59 new sites in FY 2000. As 66% of CHC patients are minorities, 
these funds will be used to improve the health status of 
populations which suffer from racial and ethnic health 
disparities.
    Similarly, in FY 2001, the entire $50 million increase will 
be used to enhance services provided to existing clients as 
well as increase the number of persons served. It is 
anticipated that the Community Health Centers will use these 
funds to add 100,000 new clients, expand services to another 22 
sites, as well as stabilize the existing Health Center safety 
net.

    Mr. Bonilla. We want to make sure that all of the money 
that we actually designate for those health centers actually 
winds up there.
    Secretary Shalala. Right. A lot of these initiatives that 
we are talking about are existing mechanisms. They go out 
directly to the communities and to the health centers. I don't 
know of anything in this area that we are going to keep 
federally.
    Mr. Bonilla. I would appreciate if you would look into 
that.
    Secretary Shalala. Yes.
    Mr. Bonilla. Go ahead.
    Secretary Shalala. The other thing I would like to add, the 
President has a Medicaid expansion for legal immigrants which 
will also help health centers. We would like to go back to 
covering pregnant women and kids who are here legally no matter 
when they arrived in the United States. That will help health 
centers which have assumed a lot of this burden, and I think 
that will add money to health centers.

                           HEALTH PROFESSIONS

    Mr. Bonilla. Before we started our hearing today I was 
meeting with the director of one of our great health centers 
back home, her name is Rachel Gonzalez, and I am leading into a 
question about health professions. She talks about how the 
SCHIP program has expanded coverage in some of the rural areas 
in south and west Texas, yet because of the problems with 
health professions funding, they don't even have a pediatrician 
to serve a multi-county area. So what--does the administration 
believe that HHS should play a role in helping to produce more 
primary care physicians in some of these areas. The numbers are 
not matching. The budget requests are not matching apparently 
what our intended goals are.
    Secretary Shalala. The issue, as you well know, of how we 
get primary care physicians to go out to rural areas is a 
complex one. Some of it is reimbursement rates. In fact, we 
restored cuts in the balanced budget. The new reimbursement 
rates help rural areas and physicians in rural areas, and will 
help to keep some people.
    Mr. Bonilla. Is that a substitute for the health 
professions line item?
    Secretary Shalala. No, we see this more comprehensively. So 
reimbursement rates is one part of the overall strategy.
    Second, the training of pediatricians. In this budget we 
double the amount of money for the training of pediatricians at 
the children's hospitals, which are responsible for 25 percent 
of all of the training in the United States. And so we go from 
40 million to 80 million in this budget as a direct investment 
in the training of people. That of course helps both to keep 
costs down for training and helps the children's hospitals. 
And--but you are talking specifically about the line in health 
professions, and while that is another approach, I think that 
we see our ability to both get people to go out to rural areas 
and to stay there as a combination of helping young people to 
pay for their--obviously for their costs and the Health Service 
Corps Program helps you do that, as well as making sure that 
once they get there, they are properly reimbursed, that we have 
supported the rural hospitals in particular and that they can 
get their training at the major places that train people for 
children's hospitals. So it is a somewhat different approach. I 
wouldn't describe it as substitutional.
    Mr. Bonilla. I know my time is up, Mr. Chairman, but if I 
can have more dialogue with your office, Madam Secretary, and 
if can you provide a list on fiscal year 2000 rescissions in 
all health professions programs.
    Secretary Shalala. I would be happy to do that.
    [The information follows:]



    Mr. Porter. Thank you. Mr. Hoyer.
    Mr. Hoyer. Thank you very much, Mr. Chairman.
    Let me first of all say, following up to Mr. Obey's and to 
the Secretary's comments, Mr. Chairman, I am an avid opponent 
of term limits and the rationale for that position is no 
clearer than the fact that you are leaving. In part I suppose 
because of term limits. It is a loss to the Congress and to the 
country that you will be leaving as chairman of this committee. 
You have done an extraordinary job. The Secretary observed that 
as well in working in an effective bipartisan fashion. I lament 
the fact that you will be leaving. I will not lament the fact 
that perhaps you would not be chairman next Congress. I want to 
make that clear. You have given extraordinary service, and we 
thank you for that. I will be far more expansive at some point 
in time.
    Madam Secretary, in my service on this committee, which has 
been longer than all but Mr. Porter's and Mr. Obey's, I have 
not dealt with any Secretary nor do I believe there has been a 
Secretary in the history of your department who has devoted 
better service, more faithful service, better management 
service, and with a greater vision than you have.
    And in a way that was very effective in cooperating with 
the Congress of the United States in reaching the people that 
we want to help. As I say, I will be more expansive at some 
point in time in the future but you have given extraordinary 
service and the country has been advantaged by that service. 
Thank you.
    Madam Secretary, I am very interested in Head Start, as you 
are. We are going to have it expanded to 70,000 additional 
under this budget. 236,000 expansion during your term. As you 
know, you and I have discussed the effectiveness of individual 
programs. It is a great program. We all support it, but we do 
know as well that there have been programs which have not 
performed as well as we would have liked.
    Can you give us an overview of the current evaluation of 
Head Start throughout the country?

                               HEAD START

    Secretary Shalala. Yes. We have done two things of course. 
With Congress's willingness to invest in quality on Head Start, 
we have actually raised the bar for the program.
    As I pointed out before for this committee, for the first 
time in the history of the program we have closed programs 
which didn't meet standards. They were put on probation, given 
an opportunity to improve their programs. If they didn't meet 
our standards we have closed programs. Never before in the 
history of the program under Democrats or Republicans has 
anyone been willing to close a Head Start program. 125 programs 
since the beginning of this administration have been closed. 
Obviously those children have not been abandoned. We have 
reopened programs right away with a seamless system, where we 
could, that have covered the children. This has sent a very 
clear message to those involved in the Head Start program. We 
expect that program to improve its quality.
    We began of course with a commission with the country's 
leading experts saying: What do you need to do in Head Start? 
You need to invest in the training of individuals, the 
facilities, and the curriculum. Those changes have been put in 
place. You will see in this budget, Mr. Hoyer, our 
recommendations for another fund for child care--where we want 
to do the same thing for child care. Child care in this country 
is so uneven. We need to invest in its quality while we are 
expanding the program. In addition of course the zero to 3 
program has been introduced for Head Start, but we will 
continue to invest in quality in Head Start and continue to 
have very careful oversight over the quality of the program. 
The future of Head Start is in the collaborations that you and 
I have talked about.

                        COORDINATION OF SERVICES

    Mr. Hoyer. How are collaborations going because as you 
know, you couldn't make it but we, my wife, was honored by 
having the coordinated family service center in Prince George's 
County named for her, and the governor has included a 
substantial number of millions in the State budget for 
coordination of services, essentially school based but health, 
child care and pre and after school care. How are we doing on 
coordination of services at the Federal level?
    Secretary Shalala. For the past three years, including this 
year, we have given priority to expansions, new applications, 
to those centers that send us applications that include 
coordination with prekindergarten and preschool programs in 
their community. So we actually build into the budget process 
and into the application process collaboration as a key to them 
getting the grant.
    This policy has led obviously to full day, full year 
services to more than 50,000 additional children through these 
kinds of partnership arrangements. So the way in which we are 
expanding the full day full year is through these partnerships 
as opposed to just using Head Start money to pay for those 
expansions. It gives us a leverage. That is important. We have 
also provided technical assistance to the child care bureaus 
for successful models of coordination.
    It is called Quality and Linking Together, the QLT program. 
They are disseminating information on successful partnerships: 
they are providing on-site technical assistance for child care, 
Head Start prekindergarten and other child care providers. We 
have also convened our partners at the Federal and State and 
local level. I recently sat with the mayor of Chicago, and he 
leads one of those collaborative efforts where the Head Start 
people, the child care people see themselves as part of a 
partnership.
    Mr. Hoyer. Can you comment briefly on the SCHIP program and 
particularly those States that had very robust programs early 
on and are now finding many of their children ineligible for 
participation in the SCHIP program?
    Secretary Shalala. It is true in part, because of the 
economy, a number of States are moving beyond the income limits 
that they originally set. The expansion of SCHIP, including the 
parents, I think, will help to deal with that. Fifty States 
signed up very quickly even though they didn't get the children 
up as quickly. They are now moving very quickly. I am concerned 
about a handful of States that have done very well, but they 
have hit the limits. The President's new proposal will help 
them although it is in some of the outyears.
    Mr. Hoyer. Thank you very much. Thank you, Mr. Chairman.
    Mr. Porter. You snuck that question in.
    Mr. Hoyer. I know.
    Mr. Porter. The Chair recognizes that 6 minutes is very 
much inadequate to raising important questions, but we do have 
the assistant secretaries coming on the details and we can 
concentrate on the larger issues with the Secretary and that's 
all we can do within that time frame.
    Mr. Istook.

                               ABSTINENCE

    Mr. Istook. Thank you, Chairman Porter.
    Secretary Shalala, I need to ask you about a situation that 
is very sad.
    Everyone is aware that a great many problems that we have 
in providing social assistance to people that affects the lives 
of millions of children, their education, their family's 
stability, their health care and their futures, a great many of 
the problems that we have are driven by the extraordinarily 
high rate of teenage sexual activity and pregnancy. We are glad 
that the rate is down only slightly of course, but it is down a 
bit in the last couple of years, but this has been one of the 
most troubling phenomenon in the country of course for decades 
now. And Secretary Shalala, what is sad is looking back I find 
that you are in your eighth year as Secretary for Health and 
Human Services, and you have never proposed adding even one 
penny to the programs to promote abstinence among teenagers. 
Yes, you have wanted to add lots of funding to programs that 
provide contraceptives and counseling but as far as those that 
try to focus on abstinence, your record is pathetic. Congress 
stepped in in 1997 as part of welfare reform and created a 
program at the level of $50 million per year and you have never 
sought to vary it. Anything else, whether percentages are up or 
down you want to increase spending. But when it comes to trying 
to tell teenagers that the safest thing for them in terms of 
health, the best thing for them in terms of their future, for 
stability in the family, if not even for moral reasons, instead 
of telling them that they ought to be promoting abstinence, 
well, Congress dictated that we have to do $50 million, so it 
is $50 million in fiscal year 1998, 1999 and $50 million in 
fiscal year 2000 and $50 million in fiscal year 2001.
    Secretary Shalala, what is even worse is this year, not 
only do you fail to want to promote abstinence among teenagers, 
you want to reduce the funding. Congress stepped in again last 
year and said we need to add $20 million to the programs that 
are focused on abstinence for teenagers. And your budget 
proposal guts it. You say we are already doing this flat rate 
funding that has been for year after year and you don't want it 
expanded, and I have read your budget and you try to create 
excuses for it, but I really think that it is pathetic. Now, 
are you or are you not seeking to take applications for the $20 
million that Congress in legislation last fall directed would 
be available for the next fiscal year and that the application 
process was to begin now? Are you trying to cut that off, too? 
Are you or are you not moving ahead with that application 
process?
    Secretary Shalala. First of all, our budget does provide 
reduced funding for the adolescent and family-life program. We 
have said in the past, as you have pointed out, that there is a 
substantial investment in stand-alone abstinence programs. It 
is part of the welfare reform bill that the administration and 
the Congress jointly agreed to, so there is a substantial--both 
on the statistics that you have pointed out and that is teenage 
pregnancy rates are coming down in this country, as is 
abstinence going up among teenagers, which is clearly a good 
sign, and particularly among teenage boys, which I consider a 
very good message is getting out.
    Mr. Istook. Why would you want to defund it rather than 
trying to help improve this trend?
    Secretary Shalala. Let me say two things about the 
rescission of the forward-funded amount.
    First of all, we did move to do the rescission, but your 
specific question is are we taking grant applications? The 
answer is, no. We need, as you well know, a technical 
amendment. If Congress decided to go ahead with that amount, we 
would need authorizing language that would allow us to go 
ahead. If we get that authorizing language, we could get the 
grants out by October 1, which is the point at which the 
forward funding would take place. But in this case, we believe 
that there is a substantial investment. We have been strong 
supporters of abstinence education.
    Mr. Istook. Ms. Shalala, don't insult me by telling me that 
you are supporting abstinence education when you have never 
proposed a penny for it. The only money which has been funded 
is what Congress insisted upon over your objections, over your 
efforts to block it. That is pathetic. It is a disgrace, Ms. 
Shalala.
    Secretary Shalala. I have never----
    Mr. Istook. It is not CDC that is the only agency that 
seems to have a problem with following the directives in their 
budget. It was put in your budget this last fall just about 
three or four months ago. But you seem to have a big problem 
with promoting abstinence. You want to provide contraceptives 
at taxpayers' expense, but you don't want to tell kids, wait 
until you are married. You don't want to do that. And don't 
insult us by saying otherwise because your budget shows not one 
penny has ever been proposed by you, and you are in your eighth 
year now as Secretary.
    Mr. Porter. Thank you, Mr. Istook.
    The Chair will remind members that we are operating under 
the same rule that we have operated on in the past and that is 
that members will be recognized for their questions as to who 
is present when the hearing starts. We will go majority, 
minority and back and forth.
    Then those who arrived after the start of the hearing will 
be recognized in the order of their arrival. Based on that 
principle, the Chair recognizes Mr. Jackson.

                           HEALTH DISPARITIES

    Mr. Jackson. Thank you, Mr. Chairman. Let me first begin by 
thanking Secretary Shalala and echoing the sentiments of my 
colleagues here. Thank you for your service.
    I also want to take this opportunity to congratulate 
Chairman Porter as he begins the final round of hearings that 
he will have as chairman of this committee and as a Member of 
Congress.
    I want to begin, Secretary Shalala, by thanking you for 
addressing some of the health disparities that exist 
disproportionately among ethnic and racial minorities and other 
medically under served populations.
    I was pleased, Madam Secretary, that the President's budget 
contains new funding at the National Institutes of Health to 
address the continued problem of health status disparities in 
our Nation's medically underserved and ethnically minority 
communities. However, I am disappointed that the coordinating 
center proposal does not call for fundamental change in the 
structure of the Office of Minority Research at NIH. I am also 
disappointed that the proposal does not address the four 
changes in administrative authority deemed essential by the 
minority health community to improving minority health research 
at NIH.
    These four principles, as addressed in my bipartisan 
legislation, the National Center for Research on Domestic 
Health Disparities, would empower the national center to do 
four things: Number one, participate fully with other 
institutes and centers in determining research policy with 
respect to minority health at NIH; number two, serve as a 
catalyst for forward-thinking strategic planning aimed at 
bringing all of NIH's considerable resources to bear on the 
health status and the disparities crisis; number three, make 
peer reviewed grants for areas of promising research which are 
not being addressed by existing institutes and centers; and 
fourthly, provide support for programs of research excellence 
at those academic health centers which have demonstrated a 
historic commitment to studying and addressing diseases which 
disproportionally effect minority Americans.
    Madam Secretary, I am wondering if you will work with me to 
ensure that we address these four key cases and enact 
legislation in establishing a strong and viable National Center 
for Research on Minority Health this year?
    Secretary Shalala.  First, Congressman, let me thank you 
for your leadership on this very important issue. As you know, 
there is a coordinating center within the Office of the 
Director of the NIH. And the coordinating center will actually 
be in the Office of Research on Minority Health. While it is 
not exactly the structure you recommended, as NIH comes up to 
testify, I hope that you will see that each NIH institute has a 
strategic plan to reduce health disparities among minorities.
    And what I hope you begin to see is a change in culture 
within the institution about the importance of these issues and 
the importance I think of making sure that these issues are 
dealt with within the institutes, and that there is a 
coordinating effort within the Department.
    The proof is in the pudding, Mr. Jackson. The proof will be 
in whether we actually both reduce disparities and whether the 
institutes themselves are taking leadership across the NIH, and 
whether you feel at the end of the process that we have 
developed that there actually is significant movement on the 
part of the National Institutes of Health in all of these 
areas.
    I look forward to continuing our conversations on this 
issue, particularly after you hear the reports from both the 
Acting Director of the National Institutes of Health but also 
from the individual NIH institute directors.
    Mr. Jackson. Madam Secretary, I would agree with you the 
proof is definitely in the pudding. So much so that every NIH 
Institute or Center director that comes before this committee 
this year, I plan to keep them really busy mixing the pot on 
these questions.
    As you well know, November 10, 1993 the Chronicle of Higher 
Education, published an article about racial imbalance at NIH, 
which cites that less than 1 percent of the appropriated funds 
from NIH are awarded to minority researchers. Right now 
minorities are choosing not to go into research because the 
availability to get a grant from NIH has been found wanting. 
The market for minority research is presently closed. And so 
only through better coordination of the grant process and the 
grant-making process to address these fundamental disparities 
will we see any fundamental structural change at NIH and so I 
am certainly hoping that those directors that come before this 
committee this year will be prepared to answer questions about 
real numbers in terms of what has changed under their 
leadership in terms of grant making authority to minority 
research. And I certainly hope, Madam Secretary, that they will 
come to this committee with numbers because beyond my very 
broad analysis of your presentation today, I am going to be 
looking at each of the centers and institutes and what they 
have done to increase the market for minority researchers, 
particularly at minority institutions but not limited to 
minority institutions. Many minorities, women, African 
Americans and others, have determined and decided not to go 
into research because NIH funds, the $18 billion that we 
appropriate, have been found wanting in terms of grants.
    Mr. Chairman, thank you.
    Mr. Porter. Thank you, Mr. Jackson. Mr. Miller.

                            NEW HHS PROGRAMS

    Mr. Miller. Madam Secretary, good morning. This is my 
eighth year in Congress and this is my sixth year on this 
committee.
    How many new programs are in this year's budget?
    Secretary Shalala. The vast majority of the programs that 
we have announced, the Family Care Program, and the expansion 
of the children's health insurance program doesn't require a 
new bureaucracy. It is the same office that the States are 
using for their children's health programs.
    I am trying to think if there is a program in this budget 
that actually requires a new setup by us, and I can't think of 
one. Most of them are just expansions of existing programs to 
expand coverage. Pharmaceuticals would require some kind of 
organization, although the administration has recommended using 
the private sector pharmaceutical benefit managers for the 
administration of that.
    Mr. Miller. There are two new programs in FDA, a new one in 
Indian Health Service, etc. Let me talk about AOA. There is a 
new initiative.
    Secretary Shalala. Yes.
    Mr. Miller. There is a real need in this area, and I think 
there is an effort on the tax side to address that problem.
    Secretary Shalala. Again, those are grants to States. 
Actually, that Family Caregiver Program will give the money to 
the States, to the Office of Aging in the States to create 
these new information systems.
    Mr. Miller. But it becomes a new line item in the budget?
    Secretary Shalala. Yes. But there is a difference between a 
line item in the budget and whether we are setting up a new 
bureaucracy.
    Mr. Miller. It is a line item that never goes away. How 
many line items have been removed in the past 8 years? How many 
new line items have been created? Not that I am opposed to the 
programs, necessarily. For the caregivers, there is a very 
large senior population and I recognize the need. The problem 
is that we keep adding new programs, and nothing ever 
disappears.
    There is always this problem in this ``truth in budgeting'' 
process. We realize that there is a game played in this budget 
as presented, and you will identify programs which are your 
priorities and deemphasize programs that are our priority--on 
both sides of the aisle. Mr. Obey raised one that he was 
concerned with. Mr. Porter is concerned with NIH.
    And I commend you for doing better this year than last 
year. Last year you only provided $300 million, this year it is 
a billion. Mr. Istook was concerned about his issue.
    So the problem is, for example like Meals on Wheels, there 
is no increase. Again, it is a good program. I know that you 
support Meals on Wheels. If you freeze it, that means a cut. We 
have to be the heavy to change that.
    Let me switch to a couple of questions, NIH being one, 
which I know that you support, but the game was played last 
year with the $300 million increase, and I know that you are 
delighted to put the numbers there. Are we giving too much 
money to NIH? Is it growing too fast to be effectively used? I 
am curious from your overall perspective. I think we all want 
the maximum amount.

                               NIH BUDGET

    Secretary Shalala. Well, as you know, we have kept the 
campus to a relatively small size. The expansion of the 
clinical center was considerably less than what was anticipated 
at the beginning. So the campus itself, I think, is the right 
size now.
    The question can only be answered by what you think the 
capacity is of the great research institutions that basically 
get the NIH money. I think the answer is yes, they can absorb 
it at a high quality, but we have to increase our oversight. 
And by we, I mean us and the research institutions themselves. 
This is a partnership, and I recently had a conversation with 
the head of the organization that represents all of the major 
research universities in this country about the need for those 
institutions to police themselves and to follow guidelines 
because what they are putting at risk is this substantial 
investment.
    So I am not at the point where I would say to Congress, no, 
we are increasing too fast, but I do think that everybody has 
to stop and look at what our oversight mechanisms are, be 
prepared to invest in those oversight mechanisms and that the 
scientific community itself--and we recognize that it is on the 
front pages, need to police themselves and to follow the rules. 
This is a partnership that goes right through the research 
enterprises of our country.

                 OVERUTILIZATION OF DRUGS FOR CHILDREN

    Mr. Miller. I agree with you. This is an area and it is 
based on anecdotal types of stories and it is the 
overutilization of drugs by kids, the Ritalin and Prozac and 
such. Do you know if--and I will ask some other departments on 
that issue--Are there any studies going on on that issue?
    Secretary Shalala. Yes. There has been a recent study about 
Ritalin. We would be happy to provide you with what information 
we have. The advertising on television may be leading to 
pressures on physicians from what they are saying to me 
anecdotally to prescribe medicines that people hear about or 
see.
    Mr. Miller. This is children under age 10.
    Secretary Shalala. Yes, and that is the parents' 
responsibility working with their physicians. But, yes, we do 
have information and there have been studies in this area.
    [The information follows:]

                 Overutilization of Drugs for Children

    Secretary Shalala. The National Institutes of Health (NIH) has 
supported research on the pharmacoepidemiology of medication prescribed 
to children and adolescents. These studies have documented the recent 
increase in the use of methylphenidate (Ritalin) and fluoxetine 
(Prozac) in the treatment of youths with conditions such as attention 
deficit hyperactivity, depression and obsessive-compulsive disorder. In 
spite of the recent episodes of extreme violence by children and 
adolescents in school, the overall trend in the last few years has been 
toward a decrease of antisocial and aggressive behaviors of youth. NIH 
has funded large clinical trials to study the effectiveness and safety 
of medications in children and adolescents, including methylphenidate 
and fluoxetine. The current data do not support the hypothesis that 
these drugs lead to increased rates of violence. To the contrary, data 
suggest that use of these medications can decrease impulsiveness and 
improve mood. More research is needed to evaluate the possible negative 
impact of these medications on certain children, especially those at 
risk for manic-depressive disorder. In addition, more research is 
needed on the effects of these medications in very young children, 
given the increased use in this age group.

                      DRUG PURCHASES OVER INTERNET

    Mr. Miller. One more question on drugs. That is drug 
purchases over the Internet. We all have a concern about over 
regulating the Internet. My constituents back home want to buy 
their prescriptions the cheapest place possible, whether it is 
Eckerd's or Walgreen's, but some go to Mexico and some go to 
Canada to buy them. But there are tough laws to make it 
difficult to go to Canada. I guess it is against the law to 
cross over into Canada and buy the drug at a cheaper price, and 
the same way with Mexico, and now we are trying to regulate the 
Internet. I don't know how serious of a problem that is and the 
question is should we open it up to make it easier to buy? If 
you can buy cheaper on the Internet from Paris or Rome, let the 
person order it.
    Secretary Shalala. This is a safety issue. The FDA 
Commissioner will come up and discuss our concerns, not about 
the legitimate drug organizations who sell over the Internet, 
but about the illegitimate parts of it.
    Those rules were originally put in place for safety 
purposes. Whether we need to review the whole issue of pricing 
of drugs or access to drugs as part of this discussion over the 
pharmaceutical benefit, I think that we do, but the rules were 
put in place by the Congress over concerns about safety.
    The FDA Commissioner has raised the issue, made some 
recommendations as part of starting the discussion so that we 
can make sure that when people do purchase drugs, what they 
purchase is safe. We don't want to stop people from purchasing 
drugs over the Internet. And that there is some--we continue to 
have some oversight over the safety. This is a brave new world 
for all of us. We need to work very carefully with Congress to 
make sure we preserve what many of us belief are fundamental 
principles of freedom that we want on the Internet but at the 
same time that we are not increasing the safety issue that has 
to do with drugs.
    Mr. Miller. Thank you.
    Mr. Porter. Thank you, Mr. Miller. I would advise my friend 
from Florida that I met last week with the Acting Director of 
NIH, Dr. Ruth Kirschstein, and told her that every NIH Director 
should be prepared to answer the exact question you asked. Is 
this money being spent wisely? Are we getting good science for 
the investment or not? They are all alerted. I will be asking 
it and I am sure other members will as well. Mr. Wicker?
    Mr. Dickey. Am I invisible?
    Mr. Porter. I will remind the gentleman you are at the 
bottom of list.
    Mr. Wicker. I will point out, Mr. Chairman, before my time 
begins to run, that Mr. Istook and Mr. Dickey and I have a bill 
that Mr. Jackson might want to look at involving an 
institutional development award program that would direct 
research opportunities and infrastructure to those institutions 
that have not traditionally been heavy recipients of those 
awards.
    I would hope that the Secretary would also be willing to 
work with us to get some research dollars to scientists and 
institutions that have not typically been flush with those 
funds.
    Let me say that I want to join in the praise of our witness 
today. Secretary Shalala, I watched every minute of your 
presentation yesterday on C-SPAN, you always do a terrific job 
and you have today also.
    I also note that you mentioned not only a line from that 
great Mississippian, Tennessee Williams, about relying on the 
kindness of strangers, but you also referred to two movies, 
2001: A Space Odyssey and the Cider House Rules. I am not 
surprised that you would refer to--that you would be so 
interested in plays and movies because as you know, you and I 
starred together on Arena Stage in a benefit.
    Mr. Dickey. I will take over now.
    Mr. Wicker. Mr. Chairman, the Secretary and I were pictured 
together on the front of Roll Call in somewhat of an embrace, 
and I would note that Secretary Shalala is now the longest 
serving Secretary of HHS, so it does not to appear to have hurt 
your career at all.
    Secretary Shalala. And the only one that has been to 
Mississippi three times.

                          INTERSTATE ADOPTION

    Mr. Wicker. And I appreciate that, and not many people in 
my district read Roll Call.
    You mentioned Cider House Rules in your statement yesterday 
and you mentioned it in the context of child care, but also for 
those of you who may not have seen the movie, it deals with 
adoption and an orphanage and it is heart breaking at times.
    My question to you is about adoption and facilitating 
interstate adoption. As you know, Madam Secretary, the Adoption 
Safe Families Act contains provisions intended to eliminate 
interjurisdiction issues which pose as barriers to adoption. 
First, the new law requires states to assure that their Title 
4(b) plans will make effective use of cross-jurisdictional 
resources to facilitate timely adoptions and the law also 
denies federal foster care and adoption assistance funding to 
any State that is found not to have participated in timely 
approval and placement.
    And then the act directs the General Accounting Office to 
conduct a study of interjurisdictional adoption issues, 
including implementation of the interstate compact on the 
placement of children, the ICPC, which as you know is a multi-
state contract among the States, and the GAO was directed to 
report its findings, and indeed they did.
    I have that report, which is dated November of 1999, and it 
is entitled Foster Care: HHS Could Better Facilitate the 
Jurisdictional Adoption Process. And on page 14 of that report 
it says HHS has identified problems that affect 
interjurisdictional adoptions but lacks an organized strategy.
    So I would like to ask you, have you had an opportunity to 
look at this report, and what plans do you have to respond to 
the criticisms and suggestions contained in that GAO report?
    Secretary Shalala. I will leave it to Olivia Golden, the 
Assistant Secretary, to give you great details. I have looked 
at the report. I have looked at our response to the report. We 
do have better internal organization. As you know, adoptions 
have increased dramatically in large part thanks to the 
legislation we have worked out together, new energy by the 
States, and again, identifying barriers.
    This and the Internet issue, which also is something that 
we need to implement, are the two great challenges to 
increasing adoptions across state lines. Assistant Secretary 
Golden will tell you the steps she has taken to provide a 
stronger Federal role to increase interstate adoption and 
eliminating some of the obstacles which the GAO identified in 
their report. Again, it involves cooperation by the States. We 
spent most of our time focusing on giving the States the kind 
of technical assistance they needed to upgrade their adoption 
facilities and to move people to adoption much faster.
    Mr. Wicker. As you consider this issue, Madam Secretary, I 
hope you will also consider this. I am told by adoption 
agencies in my State that it is not just a problem with 
children in foster care, the older hard to place children, but 
actually it is sort of a bureaucratic additional steps approach 
that actually hampers the adoption of newborns, too.
    And so I hope when your Department is responding to this 
report, that you will look at adoptions across the board and 
make sure that we are doing everything we can to speed the 
process and not erecting obstacles that simply reinvent the 
wheel and simply do the job that state placement offices are 
already doing.
    Secretary Shalala. I agree with that and of course this is 
under the jurisdiction of the States, and most of our role has 
been in nudging the States to reduce their bureaucracies so we 
can move kids more quickly to adoption. But I will make sure 
that Olivia is well prepared and describes what steps she has 
taken in response to that report.
    Mr. Porter. Thank you.
    Mr. Cunningham. Madam Secretary, I think another great loss 
we have besides yourself is Dr. Varmus. I am a recent member of 
this committee, but I know that he was not only present at 
every hearing, but his insight, his humor I think went a long 
way on both sides of the aisle to gain support for NIH and the 
programs that you and I are supporting.
    I would also like to tell you that our Republican 
Conference a while back sat down and said, what areas do we 
want to march in a single file to, and one of those was medical 
research. And that is why I think you found us so supportive in 
increasing by 15 percent medical research and we support 
doubling medical research over the period of time. I know that 
Ms. DeLauro and myself are cancer survivors and I read every 
single day that there is more and more. We have lost a couple 
of House members and so on. I think it is fantastic when you 
look at the genome program and you look at a young lady at NIH 
who had electronic stimulus in her brain because she had 
Parkinson's. That lady has been given back to her family. When 
we talk about technology, this is the generation in which we 
are going to make the most advances through technology and 
supportive therapy.
    I would ask your help, I don't think that it is right for 
the White House or you or myself to make the determination, 
because politics does get involved in it, on where those kinds 
of researchers should be focused on. We need more money for 
HIV. I met a young man out there who contacted HIV in 1989 and 
he said Duke, the only thing I thought about every single day 
was dying. That is pretty sad.
    With the research that they have out there, that young man 
has bought stocks and he has bought an apartment and he is 
starting to live his life. That is exciting.
    Where we say we want this money to go to HIV, this money to 
go to Alzheimer's or cancers, I think you and I and the body 
here, I think we are misgiven to direct those funds because a 
lot of times politics do get involved in it. I think we need to 
look at where the most good is done and focus on those areas 
and provide the resources.
    With prescription drugs, that is another area you will find 
the Republican Conference very, very supportive. We will not 
support a big government takeover of prescription drugs, but 
again I recovered from pneumonia about two months ago. My wife 
has only missed one day of school in 25 years, and she called 
me and said can you take me to emergency, she had the flu, so 
you know how bad she was.
    I sat in there and I looked at children. My bill was $130 
for antibiotics and you think what about the children that are 
sitting there, do they not get care? Do they just die? Do they 
develop pneumonia if they can't afford those prescription 
drugs? And I listen to the President, he said where a child 
said I am sorry mom for being sick. No child should have to say 
that. And we will support those programs that support people 
that don't have the insurance or those things, but we will not 
support, and I am telling you from my own perspective what I 
have seen in the conference, a big government program which 
takes over everything. We want to thank you.
    When I was in the authorization committee on education, 
there were a lot of reports that came out from the Department 
of Education on Head Start, and in San Diego it works very 
good. It is a good and flourishing program. But in other areas 
the Department of Education pointed out many areas, fraud, 
waste, abuse, ineffective administration. If you can just 
provide for the record where the administration and your office 
is looking at shoring up those pitfalls in Head Start because I 
don't believe that just dumping more money into programs that 
are not working or even schools that are not working without 
fixing those, and maybe you can provide that for the record.
    [The information follows:]



    Mr. Cunningham. Another area on which Mr. Bonilla brought 
up which is very troublesome to California, we have our 
community health care centers, and I would agree with Mr. Obey 
those programs also work, and we will work with you in San 
Diego as well. Our community health centers work with the 
growing number of not only legal population but illegal 
population, in California. It has been very difficult, and we 
need your help in that area, especially in the southern part of 
San Diego and the Los Angeles area. Thank you for your service 
and if you can provide that for the record, I would appreciate 
that.
    Thank you, Mr. Chairman.
    Mr. Porter. You had 14 seconds left.
    Thank you, Mr. Cunningham. The Chair would announce that 
owing to the funeral for the former speaker, Carl Albert, we 
are moving the hearings in a different order. Accordingly, 
tomorrow we will hear the Administration on Children, Youth and 
Families and the Administration on Aging instead of the Centers 
for Disease Control.
    In the afternoon we will do SAMHSA and AHCPR as scheduled. 
Thursday morning we will do HRSA as scheduled and Thursday 
afternoon we will do CDC.
    Madam Secretary, we do not have the budget justifications 
for the Administration on Children, Youth and Families and we 
will need those as quickly as you can provide them to be 
prepared.
    Secretary Shalala. We will get them to you.
    Mr. Porter. Ms. Pelosi.

                   HEALTH CARE COVERAGE FOR CHILDREN

    Ms. Pelosi. Thank you, very much, Mr. Chairman. I want to 
associate myself with those who earlier commended the Secretary 
for her great leadership at HHS. We are all proud of her 
service. And with those who praised you, Mr. Chairman, as well. 
Your departure will be a tremendous loss for this committee and 
our Congress will be greatly diminished by your departure. But 
we will have many occasions to praise you. But I want to take 
every opportunity I can get and we only have a short time, 
Madam Secretary, so I am going to ask some questions quickly.
    Following up on Mr. Cunningham's questions about children's 
health, we all believe all children should have access to 
quality health care, I think. In the era of budget surpluses, 
it seems to me it would be a shame to use resources on a 
massive tax cut when so many children are going without the 
basics. I am pleased that the administration has proposed 
changes to expand health coverage for children through SCHIP. 
Can you briefly tell us how many more children will be covered 
and a little more about these proposals?
    Secretary Shalala.  Well, our expansions are obviously to 
both cover the kids and their parents because up until now in 
most states an adult can only get into Medicaid for example if 
they are pregnant. We want to make sure that their parents are 
healthy, too.
    What we have proposed in this program to increase the 
number of children who enroll in the SCHIP program is to 
actually for the first time start sharing information. We know 
for instance that kids that are in the school lunch programs 
are probably eligible for these health care programs. So for 
the first time we will share the data. Most of these kids one 
way or another are involved with the school system. So for the 
first time we will get the school system directly involved in 
identifying the kids and in registering the kids. We are going 
to expand the number of places where the kids can be 
registered.
    What has happened with the children's health insurance 
program, in some ways is good and that is, there are many 
parents who don't want to be associated with welfare. They got 
out of welfare and they don't want anything that looks like 
welfare. These States and the Federal Government obviously and 
the Congress believes these are investments in the economy of 
the future. We have to convince those parents that is the 
reason both to enroll themselves as well as their kids.
    We expect to add another 5 million people to health care 
programs. Some will be kids; 3 million at least will be 
parents. We do expect to reduce overall the number of people 
without health insurance in this country by a quarter with 
these recommendations. This is the largest expansion of health 
insurance since Medicare.

                      DRUG PURCHASES OVER INTERNET

    Ms. Pelosi. Others have talked about the importance and 
necessity of a prescription drug benefit. You have spoken on 
the record about the purchase of these drugs over the Internet. 
I would hope that the administration would consider a change in 
law regarding the legality of people going to Canada or Mexico 
to buy drugs that are legal, that are approved in the U.S. but 
cheaper in Mexico and Canada. You don't have to comment on that 
unless you wish.
    I want to move on to the minority AIDS initiative. As we 
review the drug issue and its relationship to the Internet or 
just to cost, I hope you will consider changing that law. It 
would be a sad sight to see our senior citizens and any other 
Americans arrested on the Canadian border because they were 
able to buy something cheaper--and some of these prices are 
exorbitant.

                             MINORITY AIDS

    On the issue of minority AIDS, we are all proud of the work 
done by the caucus, the Congressional Black Caucus, and I was 
pleased to work with them on minority AIDS issues. We have had 
town meetings on this subject. There is a great deal of 
interest. We have tried to reach out to the community on it and 
I would like to know how the dollars are being used to improve 
the health status of people living with HIV/AIDS and to prevent 
HIV infection among high risk individuals in these communities? 
What more is needed to develop appropriate capacity in 
communities of color to combat HIV?
    Secretary Shalala.  Because of the work of this committee 
and because of the Black and Hispanic Caucuses, the point was 
to get the money to follow the disease and AIDS is increasingly 
a disease of color and also of those that have substance abuse 
problems. So this expansion in fiscal year 2001 will devote 
$274 million, an increase of $24 million, in the specifically 
targeted program on racial and ethnic minorities. Ryan White 
activities will be expanded, a variety of activities in CDC, 
and a specific investment in substance abuse treatment and 
services related to HIV/AIDS in minority communities.
    I could go through all of the budget numbers, but the most 
important thing is building up the capacity of minority 
communities to work with AIDS patients. To provide services 
directly, and do the outreach. These are communities and 
community organizations, advocacy organizations, and religious 
communities, who have not been grantees in the past. Rather 
than funding the usual suspects to work in minority 
communities, even though many of the usual suspects clearly 
have done good work with minority communities, we are going 
with the grant money directly to the communities themselves. We 
are building their capacity to work with these populations both 
in terms of prevention and outreach and treatment. That is the 
direction I think all of the communities feel would be the most 
effective.
    Ms. Pelosi. Thank you. I have a question for the record 
about homelessness and social services, but I see my time has 
expired. Thank you, Mr. Chairman.
    Mr. Porter. Thank you, Ms. Pelosi. Ms. DeLauro.
    Ms. DeLauro. Thank you very much, Mr. Chairman. Madam 
Secretary, I just looked through your statement and listened to 
you. Whether it is increasing the opportunity for children and 
their families to have health care, immunizations is up, teen 
birth rate down, Head Start, child care, it has been 7 years of 
vision, 7 years of commitment, 7 years of public policy that in 
fact has made a difference in the lives of families in this 
country. We owe you a debt of gratitude. Thank you. It has been 
a pleasure to serve with you.
    In terms of the child care effort my hope is that we can do 
the $817 million that you spoke about earlier this morning. I 
was with the National Council of Jewish Women who are launching 
a campaign and asking members to sign petitions and statement 
of principles of what we further need to do in child care in 
this country.
    The fact that we have made progress, we have been stalled 
in some ways and we have to continue to move in this direction. 
I applaud that.
    Let me just ask--I am not asking you to answer this 
question but my hope is that on the Medicare prescription drug 
issue, we will continue to make sure that all seniors have the 
opportunity for a prescription drug benefit, as has been 
outlined by the administration.

               LOW INCOME HOME ENERGY ASSISTANCE PROGRAM

    Let me ask a couple of questions which have to do--one has 
to do with my particular area of the country which is 
Connecticut where 55,000 households rely on low income heating 
assistance. We have had a crisis in our part of the country in 
the last several weeks. We have designated $300 million as 
emergency funding for fiscal year 2000, HHS has released $45 
million for 11 States. Are there plans to release any of the 
additional $255 million?
    Secretary Shalala. Yes, as needed. In that case we released 
money in the Northeast because heating oil costs had gone up in 
the Northeast. We will release the money as needed as Congress 
designated.
    In addition to that, in some other States we have given 
them advanced funding of their allocation. Minnesota, for 
example, thought they were going to run out of money in the 
first quarter, although they might not overall. In those cases 
we have allowed States to draw down their second quarter money 
to make sure they don't have a cash flow problem. We are doing 
two things, one that we haven't done before and that is giving 
them advance funding on their allocation, if necessary, and the 
second thing is to tap into that emergency fund.

                      SOCIAL SERVICES BLOCK GRANT

    Ms. DeLauro. On the social services block grant, we tried 
to get the Senate floor amendment adopted, which was a $2.3 
billion last year, and we ultimately wound up with $1.7 
billion, but the request from this administration is at that 
$1.7 billion level. Can you explain that and not trying to look 
at moving in the direction of the larger amount, given the 
range of services and programs that the block grant provides to 
communities?
    Secretary Shalala. I think, and members of this committee 
disagree, our view was that we had to make choices in terms of 
priorities. We were clearly recommending some increases in the 
budget. Our overall budget doesn't increase much more than 
inflation. Within that, since the States have some money in the 
area, that they have left over from welfare, which also funds 
some of these services, we thought that we could keep that 
number about where it was at the same time increase some other 
parts of the budget. It really was an issue of priorities, not 
to say anything negative about that particular block grant 
program.

            CHRONIC FATIGUE SYNDROME COORDINATING COMMITTEE

    Ms. DeLauro. I hope that we can look at that and address 
that issue.
    I don't know how much time I have, but with the chronic 
fatigue syndrome, the coordinating committee which is in 
existence, my understanding is that the committee is chaired by 
the Surgeon General, is an advisory body, and in regard to the 
budgeting problems at CDC, what advice have you received from 
the committee? Have you met with the committee, and have you 
met with the patient community to explain the plan for 
correcting problems at CDC?
    Secretary Shalala. I have not personally met with the 
committee, but we have communicated I think very clearly with 
the patient community about the restoration of funds, what our 
strategy is, and our strong views about the inappropriateness 
of what was done before. I think we have communicated our 
strategy, but I have not personally met with the committee, 
although I certainly have talked to many members of the 
community who have approached me in various situations.

                    HEALTH SERVICES TO THE HOMELESS

    Ms. DeLauro. On the homeless issues, Ms. Pelosi is also 
interested in this area, just in terms of services, health 
services to the homeless population, and those numbers are 
increasing, how in fact have you tried to deal with making the 
health benefits more accessible to the homeless population?
    Secretary Shalala. Our strategy has been the seamlessness 
of services for the homeless, working with HUD to make sure 
that it is not simply housing but the integration of health and 
other kinds of substance abuse services and mental health 
services, in particular. We have a number of model programs, 
and I think building the capacities of local communities to 
move into the integration and coordination of services for the 
homeless has been a very important contribution. It takes a big 
lift, but it is the only way of providing services to the 
homeless population. We have got to reduce the number of 
categories and make sure that the person is treated like a 
whole person and that these services are merged together.
    Mr. Porter. Thank you, Ms. DeLauro. Ms. Northup.

                STATE CHILDREN HEALTH INSURANCE PROGRAM

    Mrs. Northup. Good morning. I have a couple of things. 
First of all, when the SCHIP program was first announced, I 
thought that our State really put together a good suggestion, 
which was primarily to allow these children--to subsidize these 
children by allowing them to get into private insurance 
programs.
    This was the way our governor, also a Democrat, tried to 
prevail upon HHS to approve his proposal. And in the end it was 
turned down by HCFA.
    And I should tell you then they followed up, now they have 
gone to managed care provider networks. Managed Care, the 
second largest one in Lexington, after one year has announced 
that it is bankrupt, it is defunct.
    I guess my question is: I think asking each State to 
analyze the problems and to put together a program is exactly 
the right way to go since there are different issues involved. 
But if then HHS and HCFA are not going to allow the States to 
put into place the programs that they suggest, what is the 
point of having them go through that analysis?
    Secretary Shalala. The SCHIP program does allow the States 
to work with private sector employers to provide the program 
through the private sector employers. The problem is when the 
legislation was written, it is pretty specific about how you do 
that.
    I was briefed at one point on the Kentucky approach, but we 
are restricted by what the law says. We are in favor of the 
governors developing their own approaches and I think we may 
have even more flexibility as we are adding the family piece 
because some of those families will have insurance for the one 
individual, the breadwinner, but not for the other members of 
the family.
    I don't disagree that the program itself ought to have the 
flexibility so that the governors have a choice between 
providing the health insurance directly with the full benefit 
package or working with private sector employers. The law wrote 
in, because Congress was so concerned about substituting for 
private sector health insurance that was already available, 
some restrictions on this. So I would be happy to talk to you 
specifically about the Kentucky situation and why it was turned 
down.
    But in principle we believe that that program should be 
State designed within the outlines of the law and that people 
should be able to work with their private sector employers to 
provide it in a different way than simply going out and 
purchasing HMO assistance for everyone.
    Mrs. Northup. I would just point out that the Department 
has never been reluctant to suggest changes which would allow 
the administration to move forward on its goals. Certainly 
Kentucky's experience was not that you were suggesting a change 
in the law or anything, it was much more that you we want these 
children in the government run system and not in a private 
insurer. Maybe our governor just misunderstood, although he is 
pretty smart and he is pretty creative.
    Secretary Shalala. No, I talked to your governor directly, 
and I know that I didn't give him that message.
    Mrs. Northup. It has been very discouraging. Kentucky has 
an insurance program that was considered health care reform in 
1994, taking off on what the administration had proposed, and I 
think that our governor--this is a new governor, thought that 
the approach that the administration had proposed was good. Now 
we only have 2 out of 47 of the insurance companies still 
selling insurance. We have more people uninsured than ever 
before. The cost of health insurance has skyrocketed. One of 
the things that we need to do is to empower the private sector 
to get back into our State and sell policies and one of the 
ways to do that is to help those that are uninsured use private 
insurance.
    Secretary Shalala. Almost all of the SCHIP programs around 
the country are purchasing private insurance through the 
governors. The question is how do you work with an employer 
where the employer provides private insurance and what you want 
to do is subsidize that private insurance to expand it to cover 
the kids.

                         ERGONOMICS REGULATIONS

    Mrs. Northup. That is true for the families. But when you 
are talking about uninsured kids without the families, that was 
not the approach, that was not the support that we got.
    Let me ask you about the hospitals and their concern about 
the new ergonomics law if the Department of Labor pursues that. 
They are very concerned about their costs going up 
significantly. They have been to see me. They are concerned 
about complying with that. I just wondered if the Department of 
Labor had consulted your agency, if you all are concerned also 
about what the financial impact of the regulations would be and 
what sort of subsidies you would have to change for hospitals 
to meet those requirements, and if you have allowed for that?
    Secretary Shalala. There have certainly been conversations 
with the Department of Labor. Whether they have been specific 
on that angle of ergonomics I can't answer that question. But 
if you address that to Secretary Herman when she comes in, I am 
sure she will be able to answer it.
    Mrs. Northup. The problem is that she is going to be in 
charge of the agency that finalizes the regulations. HCFA is 
going to have to pay for and HHS and Medicaid for the nursing 
home, particularly seniors, people who have to be lifted, that 
it would----
    Secretary Shalala. I think that is a fair point. Let me get 
you a better answer.
    Mrs. Northup. That would be great. Thank you, Mr. Chairman.
    [The information follows:]



    Mr. Porter. Thank you, Ms. Northup. Mrs. Lowey.
    Mrs. Lowey. Mr. Chairman, I wish I could speak in New York 
triple time to thank you adequately. You have served with such 
distinction and integrity, fairness in a bipartisan way. I 
share your passion for the NIH. I really do consider you a 
friend. It is very sad that you are leaving here but we will 
have other opportunities to thank you.
    And also, Madam Secretary, you have been such a fighter for 
the causes for our family and our children and our health care, 
our schools. We really want to thank you very much and I know 
that there will be other opportunities to do that as well.
    I also want to say briefly, I see Mr. Istook left but there 
is a bill that Mike Castle and I introduced, John Porter is a 
cosponsor and I hope it will have strong bipartisan support, 
whether you are part of the teen pregnancy task force or not, 
to really evaluate the teen pregnancy program. We have seen 
some real drops. I think it is important that we evaluate the 
program, get some scientific evidence, and I welcome everyone 
to join us on that bill.

                         BREAST CANCER RESEARCH

    Dr. Shalala, I want to use this as an annual opportunity to 
ask you to focus on the progress we have made towards 
eradicating breast cancer. There has been good news. The 
President's proposal to use Medicaid to cover treatment for low 
income women screened through the terrific CDC breast and 
cervical cancer program, which has a lot of support on this 
committee, but there has also been upsetting news, the recent 
revelation that a South African researcher has lied about the 
efficacy of bone marrow transplant for advance stage breast 
cancer, and as always there is confusing news, such as new 
research showing that hormone replacement therapy may increase 
the risk of breast cancer.
    I know that you share our commitment of helping women 
already so busy making good decisions about their health. Can 
you share with us what the Department is doing to help women 
make sense of all of this information that keeps coming out in 
our news media?
    Secretary Shalala. Well, we clearly are expanding 
information on standards of care. As you well know, where you 
live in this country determines what kind of treatment you get 
for breast cancer. So it is not only the gap between white 
women and minority women that we need to be concerned about, it 
is that the standard of care and the updating of information to 
those who are treating women for breast cancer varies so much 
around the country. In one part of the country you are likely 
to get surgery and in another part of the country you are not 
likely to get surgery.
    I think that expanding the information directly to women 
who are diagnosed or going in for prescreening becomes 
extremely important. That is part of the quality movement in 
this country. Reducing medical errors is another piece of it, 
but the strategy of the National Cancer Institute is actually 
to close those kinds of gaps. Getting information out is part 
of that, but also information to the physicians themselves. 
People tend to practice medicine on the basis of where they 
went to school and the region of the country that they live in.
    Second, even though we have a decline in breast cancer in 
this country of mortality at least, the huge gaps are between 
white women and minority women. The program the President 
introduced answers the question if a Federal program screens 
me, I discover I have breast or cervical cancer, and I have no 
insurance, what hope do I have? The answer is: you are going to 
get the services you need and that, we believe, is a major step 
in terms of closing the gap for women and that is for breast as 
well as cervical cancer.
    So the quality movement to reduce breast cancer so we have 
a standard of care, the expansion of research in the 
environmental area, which has been an issue particularly in 
Long Island and in other parts of the country, is a very 
important part of this. A research strategy, a treatment 
strategy, closing the treatment gap, an information strategy.
    I think the big challenges of the future is on the 
Internet. The fact is, everybody is getting their second 
opinion on the Internet. If it says university, it doesn't 
necessarily mean that it is the cancer center of the University 
of Mississippi. It could be that it is someone flacking some 
treatment which has not even been approved by the FDA. We need 
to strengthen our ability to make sure that patients themselves 
can screen the information they get, that their doctors have a 
standard of care that they are following. Putting everybody in 
cancer clinical trials helps because in the end what that does 
is raise the standard. Some of us think that it doesn't cost 
extra money because we are already paying for the treatment, 
but getting some standardization without destroying the 
autonomy of individual doctors is where we need to go in these 
areas so there isn't this huge variation, not necessarily based 
on quality but on where you went to school and what information 
you have and what the traditions are in your area.

                            CLINICAL TRIALS

    Mrs. Lowey. Thank you. Last year the Department announced 
an agreement in principle with the major health insurers to 
cover the medical costs for patients enrolled in clinical 
trials. As you know there have been a number of proposals to do 
this, including the President's proposal to do a demonstration 
covering cancer clinical trials. And I have a bill that would 
cover a broad range of government sponsored trials.
    My first question, has the Department's agreement with the 
health plans moved forward, that is number one? And secondly, 
because we are running out of time, to go back to your response 
to the first question, when it comes to hormone replacement 
therapy, I just think that we need more research. It is not a 
matter of what is on the Internet or what is not on the 
Internet, we just don't have enough information.
    Secretary Shalala.  And the information is confusing 
because some of the leading experts in women's health disagree 
among themselves. Doctors need to sort through this with their 
patients, not just hand them a brochure which argues both sides 
of the question, what is appropriate for this patient given 
their history may be inappropriate for another patient.
    On the AAHP agreement with the American Association of 
Health Plans, I would describe it as inching forward. There was 
not a written agreement between those two organizations. I 
think there are disagreements about the original agreement and 
I think some of it has to do with the definitional issues and 
they are trying to sit down and identify the specific issues 
that they can do together. So I can say what was once seen as 
enormous hope has slowed down a bit. I think people were 
talking perhaps different languages, but both have pledged to 
try to work this through, the NIH and the AAHP. I'm going to 
continue to push them to see if we can reach agreement. Again, 
we are trying to raise quality care here and reduce the 
confusion among women and increase the research so we do have 
clearer answers.
    Mrs. Lowey. I know that many of us feel strongly about this 
issue, we want to be of help to you in any way in moving it 
forward. There was agreement and we can go on for another year 
and nothing happens, and women are dying, and men are too.
    Secretary Shalala. The approach that the President has 
recommended for Medicaid coverage is a serious and important 
step for women because we are doing the initial screening with 
Federal money. It seems to me that we have a moral obligation 
to provide services once that screening produces a result that 
is negative and it is not that expensive frankly and we ought 
to move ahead and get it done.
    Mrs. Lowey. Thank you very much, Madam Secretary.
    Mr. Porter. Last but clearly not least, the gentleman from 
Arkansas.
    Mr. Dickey. Finally. Good afternoon.
    Secretary Shalala. I want you to know that I am stiffing 
the President to wait for your questions. I was supposed to be 
with him.

                              HUMAN EMBRYO

    Mr. Dickey. See, he used to be from Arkansas so I am not 
going to take up for him.
    I want to ask you a question relating to the 1975 Federal 
regulations that classified as I understand it, Secretary 
Shalala, a human embryo as being a human subject. Are we in 
agreement on that part? Excuse me--in the womb, a human embryo 
in the womb is treated as a human subject?
    Secretary Shalala. Why don't you continue and ask the 
question?
    Mr. Dickey. Embryos created outside the womb are also the 
same. There is no distinction. Do you agree with that?
    Secretary Shalala. Why don't you ask your question.
    Mr. Dickey. That's it. Do you agree that a human embryo 
outside the womb is the same as a human embryo inside the womb?
    Secretary Shalala. If your question is related to human 
embryo research, funding for human embryo reserach has been 
banned in this country since 1996. What we are in the process 
of doing is drafting guidelines for stem cell research, which 
the Department's General Counsel has said is not covered by 
that original ban because the cells are not embryos.
    Mr. Dickey. How about the 1975 consideration of an embryo? 
The 1975 Federal regulations protected the human embryo in the 
womb from any harmful research. Now, distinguish between the 
embryo created outside the womb and the one inside. Is there 
any distinction?
    Secretary Shalala. I think that I would rather answer your 
question in writing, Mr. Dickey, so that I can see the full 
question and I could very carefully answer your question.
    Mr. Dickey. Can you answer yes or no now?
    Secretary Shalala. No, I cannot.
    Mr. Dickey. Why not?
    Secretary Shalala. Because I am not prepared to answer the 
question right now.
    Mr. Dickey. What is a human embryo?
    Secretary Shalala. First of all, I am not a scientist. And 
to be fair, I wanted to make sure that I give you an accurate 
answer.
    Mr. Dickey. Let's do this. He is going to cut me off 
shortly.
    If the embryo, wherever it is created, is a human subject, 
how can we spend Federal dollars then, as in keeping with the 
1975 regulations, by having harmful research to the embryo 
through stem cell research?
    Secretary Shalala. I think the General Counsel of the 
Department has very carefully looked at the law as it was 
written and come to a conclusion on that subject in a memo to 
the Director of the National Institutes of Health which 
concludes that the ban on Federal funds to conduct human embryo 
research does not prohibit the funding of research using the 
human pleura point stem cells because those cells are not 
embryos. So what I want to do is to make sure that I answer 
your series of questions very carefully consistent with our 
interpretation of the law. We obviously do not want to break 
the law in this case and our reading of the law, I want to make 
sure that I answer your questions very specifically.
    Mr. Dickey. I will submit it in writing.
    [The information follows:]

                              Human Embryo

    Secretary Shalala. The regulations at Subpart B of 45 CFR Part 46 
provide one set of protections for research activities involving 
fetuses in utero, Sec. 46.208, and another set of protections for 
research activities involving fetuses ex utero, Sec. 46.209.

                    REIMBURSEMENT RATE DISCREPANCIES

    Mr. Dickey. I am in the middle of a 2-year outreach in case 
work project with the doctors in my district, and I have 
assigned a staff member solely for that purpose, and some of 
the things that I have discovered in talking to the doctors in 
the Fourth District of Arkansas I would like to ask you about.
    They express frustration over the discrepancy in 
reimbursement rates for services provided, both as to other 
countries, Puerto Rico is what I am thinking of, we are the 
lowest except for Puerto Rico for reimbursements, but also in 
comparison to other rural districts in America. What can we do 
to increase the reimbursements and therefore retain some of our 
doctors?
    Secretary Shalala. Congress has two choices. As you know, 
it is not just Arkansas versus Puerto Rico, or Arkansas versus 
south Florida and the other places where there are high 
reimbursement rates. The way in which the law was written, we 
basically reimburse based on history, tied to fee standard fee 
for service rates in those areas.
    Congress has two choices. It can put more money in for 
certain parts of the country, as we have for rural areas for 
example, to try to develop a minimum and to raise some of the 
rural area reimbursements because we recognize that sparsity 
does cost more money. To maintain people in rural areas, we 
have to invest more money. So you can add more money to the 
system; or you can redistribute the current amount of money 
that is there, which would involve a difficult politics I think 
most people recognize.
    I have consistently said that I believe that the way in 
which we have done reimbursement needs a careful look by the 
administration and Congress. I understand the difficulty of the 
politics of this, but I also understand that we have many parts 
of the country which are in my judgment underreimbursed to 
maintain high quality health care. We are not going to improve 
rural America or small town America unless we can maintain 
quality health care and we need to do something about that. 
This administration has made proposals which begins to lift 
some of the rural areas around the country and the small towns. 
We have worked with you and with others on trying to do 
something about small hospitals, for example, with these 
programs.
    So you do not find this Secretary unsympathetic, but we are 
locked into a history and a law that makes it difficult for me 
to move money around, under the law, as opposed to this being a 
major policy and political discussion.

                           MEDICAL DECISIONS

    Mr. Dickey. I also hear complaints that nonmedical 
personnel are making medical decisions. Are you able to stop 
that from occurring?
    Secretary Shalala. To the extent that doctors are 
contracting with HMOs around the country in their contractual 
arrangements and their patients are being denied care by a 
nonphysician, I think some HMOs are moving away from that. As 
far as the Department is concerned and the administration and 
this Congress, medical decisions ought to be made by medical 
personnel within standards of care and obviously everything 
else. We all ought to work towards that.
    I think from our point of view a Patient Bill of Rights 
would help that because that is exactly what our advocacy of 
the Patient's Bill of Rights is all about that.
    Mr. Porter. Mr. Dickey, your time has expired.

                        PRESCRIPTION DRUG PRICES

    Mr. Dickey. Just one last question. How come prescription 
drugs cost less in foreign countries?
    Secretary Shalala. They have price controls. Every country 
in the world has price controls except the United States of 
America. The pricing of drugs in those countries is the result 
of a negotiation between their national governments and they 
have universal health care systems. They negotiate prices with 
the major drug companies. As a result the costs are shifted on 
Americans, particularly middle class Americans, that pay 
sticker price. Large numbers of Americans are paying sticker 
price. That is in part what this debate is all about.
    Mr. Dickey. Thank you.
    Mr. Porter. Thank you, Mr. Dickey. Thank you, Madam 
Secretary. You have done an excellent job. It is always a 
pleasure to work with you.
    We stand in recess until 2:00 p.m.
    [The following questions were submitted to be answered for 
the record:]




                                         Tuesday, February 8, 2000.

                  HEALTH CARE FINANCING ADMINISTRATION

                               WITNESSES

NANCY-ANN DE PARLE, ADMINISTRATOR
DENNIS P. WILLIAMS, DEPUTY ASSISTANT SECRETARY FOR BUDGET, DHHS
    Mr. Porter. The subcommittee will come to order.
    We continue our hearings on the budget for the Department 
of Health and Human Services with the Health Care Financing 
Administration. We are very pleased to welcome Nancy-Ann 
DeParle, the Administrator of HCFA.
    Why don't you proceed with your statement?

                           Opening Statement

    Ms. DeParle. Thank you, Mr. Chairman and members of the 
committee.
    We had a busy year last year, and I have some charts here 
that show you, first, the accomplishments for the past year. 
Also, we want to talk about our budget priorities. As you heard 
from the Secretary this morning, we are not slowing down at 
HHS. She is not slowing down, and she is not going to let any 
of us slow down either.

                         HCFA's Accomplishments

    As I said, last year we had a number of accomplishments. 
First, I want to thank this committee for your support that 
made it possible for us to ensure that there were no delays in 
payments to our providers as a result of the changeover to the 
year 2000. That was a very intensive effort, and you helped us 
get the funding and the support that we needed to do all of the 
systems remediation that had to be done.
    Secondly, we did make progress last year combating waste, 
fraud and abuse; and there were some questions with you, Mr. 
Chairman, last year. We were able to cut the Medicare payment 
error rate in half over the last 2 years, and we have started 
to see some results with the Medicaid program as well.
    We also made a lot of progress in implementing the State 
Children's Health Insurance Program. We have enrolled around 2 
million children in the 50 States and the territories; and, as 
you know, the President has some proposals to expand it to 
allow working families, including the parents, to be enrolled 
as well.
    We have worked to improve our relationship with both 
beneficiaries and providers. That is something that the members 
of this committee raised with me last year. I would never want 
to say that we have accomplished that task, and if I did, maybe 
you would tell me that I wasn't doing my job, but we have tried 
to make some efforts to be more responsive and we appreciate 
your advice and assistance on that.
    We are in the process of implementing a new open coverage 
process to decide what kinds of procedures and devices Medicare 
should cover, and we have worked to improve our communications 
with you in Congress. I hope that you have noticed that you are 
getting more letters back from us and things like that.
    We are, I think, approaching this next year with a high 
level of energy and recommitting ourselves to meeting the goal 
of being a more effective agency, and that is something that 
you have helped us with in the past.

                            FY 2001 Request

    I want to leave Medicare and Medicaid and the State 
Children's Health Insurance Program strong, well-managed and 
responsive to our beneficiaries and to you in the Congress. To 
do that, I need to ask you for your help. We are requesting a 
4.7 percent increase for our discretionary management of the 
agency. I hope that I will be able to convince you that is both 
a reasonable request and a good investment in the programs that 
I know that you care about and that the people in your 
districts care about.
    The dollars that we are requesting will be directed to our 
top priorities, and I have listed them under the Fiscal Year 
2001 budget priorities.

                       FY 2001 Budget Priorities

    First is something we have not talked about very much, but 
it is the essence of what HCFA does. Most people don't realize 
that HCFA is a public-private partnership. We are only 4,300 
people running these massive programs, and to do that we have 
to work with the private sector, specifically contractors who 
process the billion claims and who do the fraud and abuse work. 
You have heard a little bit about them because of the Y2K 
problem. We had to fix the systems at all of those contractors.
    We know that we need to improve our oversight of their 
work. Some of you may be aware of problems that occurred in the 
recent years where there have been fraudulent acts by 
contractors who have ripped off the Medicare program. That is 
where those dollars will be utilized.
    Second, never far behind in my list of priorities is 
continuing to reduce waste, fraud and abuse in the Medicare 
program and Medicaid as well. We have made a number of steps 
toward that with our comprehensive program integrity plan, and 
we need help in going further.
    Third, strengthening Federal oversight of health facility 
safety and quality. Through our survey and certification 
program, we oversee the quality standards in 17,000 nursing 
homes around the country and, yes, our facilities and hospitals 
that are not accredited by the joint commission. This is our 
effort to try to step up those things, and it is a major 
priority for the President.
    Fourth is obtaining a clean audit opinion on our financial 
statements, and I pray about this every night because I feel 
very strongly about this--that is, being able to tell you and 
the American people what Medicare's accounts are and what the 
agency's accounts receivable and payable are. And you can help 
us there with the dollars we are requesting for the contractors 
because many of them don't have good accounting systems, and we 
need to make an investment there.
    Continuing implementation of significant legislation, first 
and foremost there is the Balanced Budget Refinement Act which 
the Congress enacted last year where we need to make some 
changes to fine tune the BBA, and we are working hard to 
implement those things.
    Implementing a revised coverage process I referred to. 
Building a workforce for the 21st century is trying to attract 
more of the kind of people that HCFA needs to do its work in 
the future.
    Management reforms, some of which I talked about last year, 
and integrating the budget and the GPRA annual performance 
plan. On that, I also have a couple of charts--I will just 
spend a minute telling you that we have--.
    Mr. Dickey. We can't read that. There is an age difference 
between you and us.

                   Government Performance Results Act

    Ms. DeParle. No, the difference is between me and my staff. 
They said you need something that only lists four or five 
things because this is too hard to read. I guess I should have 
looked at that version of it.
    I will not read this to you, but I will supply it for the 
record. And my point is just that we think the GPRA has been 
very much a success. It has forced us to look at what we should 
be doing and try to come up with measurable aspects of our 
programs that we can present to you and show you what we are 
trying to achieve. We have been successful in our 1999 
performance report. I will supply this for the record.
    [The information follows:]



    Ms. DeParle. We have achieved many of our goals and made 
significant progress on the three that we did not achieve, and 
we added more goals for 2001 that we hope we will be successful 
on as well, and obviously the budget is a key to that.
    For example, one of your staff members made this suggestion 
to me. We put these GPRA goals in the performance plans of our 
Senior Executive Service members so if there is a goal that 
relates to the work that they are doing, it is in their 
performance plan, and they are being evaluated by that. That is 
something that I think will make a difference in how government 
runs in the long run.
    I will just conclude, Mr. Chairman, by saying that this is 
the last budget that I will be presenting to you as the 
Administrator of the Health Care Financing Administration. I 
want to say in particular to you how much I have appreciated 
your generosity and your help over these last few years. You 
have really helped us move forward in the agency.
    Mr. Porter. Madam Administrator, I appreciate that. I also 
value our good working relationship, and you have done a fine 
job there. I think it is probably one of the most difficult 
jobs in all of government. We think that you have done very 
fine work.
    [The statement of Ms. DeParle follows:]



                          FY 2000 Y2K Funding

    Mr. Porter. Let me begin by asking a question about Y2K, 
since that is on your list of original successes.
    At the end of last year we appropriated $150 million for 
Y2K problems in your agency, and there weren't any--or at 
least, if there were, they were minor. Do you still have the 
$150 million and what do you propose to do with it?
    Ms. DeParle. I know that we used around $400 million total. 
We had estimates of almost a billion dollars under a worst-case 
scenario if we had to trigger any of the contingency plans that 
we developed. I need to get back to you on exactly what 
happened with the $150 million.
    Mr. Porter. Dennis, do you know what happened to that 
money?
    Mr. Williams. The funding is for this year. The year is not 
over yet, and there are still some expectations that there 
could be problems, for example, with the last day of the month 
of February, and so there are some contingencies that we are 
waiting to get through. We will send up a detailed operating 
plan to you. It is possible that not all of the money will be 
spent, and we would let you know that.

                   Funding for Legislative Proposals

    Mr. Porter. One would hope that none of the money will be 
spent, because there are no problems, but let's wait and see. I 
agree with that.
    The President's budget includes a large number of 
legislative proposals that, if enacted, will cost over $38 
billion over the next 5 years but also would expand your 
workload greatly. My question is, does your program management 
request, which is an increase of $93 million, assume that these 
proposals will be enacted and reflect the additional costs to 
your agency for administering them?
    Ms. DeParle. No, it doesn't.
    Mr. Porter. No, it doesn't. So if they were to be enacted, 
you would need additional funds presumably?
    Ms. DeParle. I would have to look at what they are. Some of 
them, Mr. Chairman, just build on programs that we already have 
in place like the State Children's Health Insurance Program 
(SCHIP) program, and it might be that allowing States to use 
those same funds and provide them to parents of the children 
might not require more in administrative costs. So I wouldn't 
want to say that you would necessarily require new money for 
everything. There might be some additional funds required, and 
I would be happy to work with the committee on that.

                     Pharmacological Stress Agents

    Mr. Porter. The Balanced Budget Refinement Act of 1999 made 
some changes and modifications to the Balanced Budget Act of 
1997, including changes that impact some of the proposed 
ambulatory patient classifications. Section 201 of the Act 
provides for additional transitional payments for drugs used in 
certain outpatient procedures.
    I want to talk for a moment about the diagnostic nuclear 
medicine procedures which, as I understand it, sometimes 
involve the use of a stress test and at other times, where a 
stress test can't be administered, they will use a 
pharmacological stress agent instead. There is some concern 
that HCFA may be interpreting section 201 as not applying to 
pharmacological stress agents. Can you comment on that?
    Ms. DeParle. No, I don't know the specifics of that. I will 
supply you an answer for the record. What I am thinking is that 
the statute does not allow us to cover drugs in an outpatient 
setting except under certain circumstances when they are not 
self-administered. I wonder if that is what you are getting at, 
but I don't know that precise answer.
    Mr. Porter. What I am getting at is that it is important to 
perform diagnostic tests, particularly on heart patients, but 
others, where you have to stress the individual. Some 
individuals can be stressed by using a treadmill, but for 
others that is a dangerous procedure because it might cause 
them to die or have a heart attack as a result of it so they 
use pharmacological agents in place of that stress test. My 
question is, does section 201 provide for that transitionally, 
and is HCFA interpreting it to do so?
    Ms. DeParle. Let me be clear. You are asking whether or not 
we would interpret this new section of the Balanced Budget 
Refinement Act (BBRA) to cover this pharmacological test so it 
would be one of the ones where pass-through payment would be 
made?
    Mr. Porter. Right.
    Ms. DeParle. I don't know the answer to that, but let me 
get back to you.
    [The information follows:]
                     Pharmacological Stress Agents
    We do not believe that current pharmacological stress agents can 
qualify for transitional pass-through payment under section 201 of the 
Balanced Budget Refinement Act (BBRA) since they are not radio-
pharmaceuticals. However, prior to enactment of the BBRA, HCFA has 
developed a list of drugs to be considered for separate payment when 
the outpatient prospective payment system is implemented on July 1, 
2000. While we have not yet made final decisions, we anticipate that 
pharmacological stress agents will be among those drugs eligible for 
separate payment beginning July 1.

                           Palm Pilot Devices

    Mr. Porter. Recently a company showed me one of the things 
that they are doing to change the practice of medicine which I 
found very interesting. They have a hand-held device like a 
Palm Pilot which allows physicians to dispense prescriptions 
electronically, and apparently that would prevent a pharmacist 
from misreading what might otherwise be written by a doctor and 
therefore prescribing a wrong medication, and it might also 
reduce medication errors because a doctor could thereby be 
informed electronically of any drug interactions that might 
occur as a result of the prescription being made. I wonder if 
you are aware of this device and whether HCFA has taken any 
position in regard to it or has anything that affects it?
    Ms. DeParle. I have seen a demonstration of a similar 
device. Many clinicians and experts believe that kind of device 
could help us in reducing those medical errors that are 
attributable to pharmaceuticals. We have urged the use of such 
things through something called the Medicare Conditions of 
Participation. We published in December of 1997 a notice of 
proposed rulemaking that announced where we wanted to go with 
hospital conditions. One of the things that we suggested, not 
mandated but suggested, that we would consider is whether or 
not those kinds of devices would be useful to hospitals to have 
as a way of reducing errors.
    As you may know, my colleague, Dr. Eisenberg, is working on 
a report from an interagency committee of which HCFA is a 
member about the issue of medical errors, and I believe that is 
going to be discussed in there. That is a report to the 
President.
    Mr. Porter. Thank you. We are operating under the 8-minute 
rule, and I would anticipate we would have time for a second 
round.
    Mr. Bonilla.
    Mr. Bonilla. Thank you, Mr. Chairman.
    Ms. DeParle, thank you for coming by the other day. I will 
repeat what I told you that day. I think it is extremely 
admirable that someone of your caliber would take on this 
responsibility. It is a headache on a daily basis I imagine in 
dealing with the frustrations not only in terms of the budget 
but in terms of folks tugging at you, providers, patients, 
health care groups. So it is commendable that you have served 
so admirably in your job.
    Ms. DeParle. Thank you.

                               User Fees

    Mr. Bonilla. I wanted to start out by asking about user 
fees. The President claims that he has abandoned budgeting 
gimmicks in his new budget, yet the proposal is for about $220 
million in new user fees in the HCFA Program Management budget 
alone.
    As you know, I have had a lot of concerns over the last 
couple of years about the rollout of the Medicare+Choice 
program. In the past, your offices have provided me with a 
breakout of exactly how the Medicare+Choice user fees have been 
spent; and I would just ask for the record if you can please 
provide updated figures.
    Ms. DeParle. I certainly will. I just looked at it myself 
recently.
    [The information follows:]



                          Beneficiary Mailings

    Mr. Bonilla. Some of the questions I have had have involved 
some of the mistakes in some of the brochures that have come 
out, and I question whether or not--these things are very 
involved and very complicated. Just looking through this thing, 
these are hard to put together in the first place and extremely 
expensive.
    This particular booklet--and we have contacted your office 
in the past as well--was distributed in my district which 
contained errors and was confusing to a lot of beneficiaries 
and frustrating to a lot of providers. I also understand that 
the Spanish language brochures were sent to areas where there 
was no Spanish-speaking populations to really speak of. It 
happened in Omaha, Nebraska; Baltimore, Maryland; and West 
Virginia. My question, is what mechanisms do you have in place 
to ensure that these kinds of errors do not continue and we 
spend our tax dollars wisely? I ask that because I have, quite 
frankly, called the fee that is connected with this a Medicare 
tax.
    Ms. DeParle. I believe you told me that last year.
    Mr. Bonilla. That is right. Anytime that there is an 
additional burden placed on the consumer like that I am 
concerned about it being used efficiently and for accurate 
information.
    Ms. DeParle. First of all, I do think that the handbook was 
better last year. And in fact, I would like to share with you 
that we have done some evaluations of the handbook, and we 
included a postcard last year that I think 60,000 beneficiaries 
took the time to fill out and write comments, and some wrote 
us, too. Granted maybe the people who take the time to write in 
are more likely to be positive, but I have been pleased with 
the comments that they had, how they didn't have something like 
this before. Several said it is the best thing they have ever 
seen from the government. Even though I know from what you have 
said that we need to make improvements, I feel that we are on 
the right track and that it is an important exercise.
    On the Spanish-language handbooks, believe me, my blood 
pressure went up when I heard about that. It turns out that our 
director of this project, her mother-in-law got one in 
Baltimore, so she was the first one to find out about it.
    As I mentioned at the beginning, we are very small, and we 
operate all of these things through contractors, and one of our 
private-sector contractors simply got the wrong data file and 
sent them to the wrong addresses. The only thing I know to do 
is to oversee them more tightly this year and make sure that 
they don't do it again.

                        Managed Care Enrollment

    Mr. Bonilla. One of the things that is a myth that exists 
out there is that Hispanic population is that the majority like 
communicating in Spanish. I have a district that is over 65 
percent Hispanic and surveys have consistently shown, that have 
been done objectively, that the overwhelming majority prefer to 
communicate in English. That is something to keep in mind not 
just in terms of receiving advertisements or announcements but 
in terms of receiving brochures like this. We can probably 
provide you some of that survey material. There was one that 
was--that showed the opposite recently, but it was done by an 
organization that is a large communication company that targets 
Spanish-speaking audiences. That is food for thought.
    My last question concerns the Medicare+Choice program and 
ensuring we are maximizing our return here. As you know, last 
fall the Balanced Budget Relief Act included a provision that 
changes the effective date of enrollment changes made by 
beneficiaries when they decide to leave or join the 
Medicare+Choice plan. My understanding is that this provision 
was initially included because it would be beneficial to 
seniors and easier for health plans.
    I have heard from constituents this is not the case. In 
fact, it has been confusing to beneficiaries administratively, 
problematic for health plans and ignores the work done 
previously by health plans and HCFA to establish enrollment and 
disenrollments dates that make sense for beneficiaries, HCFA 
and the health plans.
    I also understand that HCFA did not support this plan in 
the first place. So my question, is it true? Have you heard 
similar frustrations and would you be willing to work with us 
and the industry to come up with a solution for this problem?
    Ms. DeParle. I have heard the same thing. What I understood 
was that this was done in the BBRA to deal with the problem 
that some of the managed care plans were having where a 
beneficiary would sign up on December 31 and they would think 
that as of January 1, they would be in the new plan. 
Administratively, you can't be covered by a new plan overnight 
like that, and so it was creating problems. They were trying to 
fix that in the BBRA, but from what I am hearing from managed 
care plans and beneficiary groups, it has proved to be a 
problem. Yes, we will work with you.
    Mr. Bonilla. I don't know any plan, private sector or 
otherwise, where you can be covered overnight.
    Thank you very much. I appreciated the cooperation that we 
have had from your office.
    Mr. Porter. Thank you, Mr. Bonilla.
    I want to remind the subcommittee Members that tomorrow--
and this is a change from the original schedule--we will hear 
at 10:00 from the Administration on Children and Families and 
the Administration on Aging. At 2:00 we will hear from SAMHSA 
and AHRQ. And then at 10:30 on Thursday morning we will meet 
from 10:30 to 12:30 to hear HRSA, and at 2:00 we will meet 
again to hear from CDC.
    If anybody needs that schedule, please ask a member of the 
staff.
    Mr. Dickey.

                           Provider Outreach

    Mr. Dickey. Nancy, I want to thank you for all of the help 
that you have given and the cooperation. It seems kind of sad 
that this will be the last year. You have done so much, and I 
am glad to hear that you still have energy and you are ready to 
go in completing your term.
    I am in the middle of a 2-year outreach to doctors and 
hospitals, and I have a staff member who is assigned to the 
task of just collecting data, going and visiting doctors' 
offices and just one on one trying to solve the problem.
    In the Fourth District of Arkansas we have a crisis, in my 
opinion, of health care, and it has to do with sometimes 
reimbursements, it has to do with the time spent and the 
frustration. It has sometimes to do with the fact that they 
don't feel like they can complain to anybody because 
retaliation will come.
    Without doing a whole lot more than that in talking about 
that, what steps can be taken in this coming year to eliminate 
some of the mistrust and the frustrations that exist? And I am 
asking you this from the standpoint of just rescuing us in the 
Fourth District.
    Ms. DeParle. One thing that can be done is to arrange 
opportunities for us to sit down directly with some of your 
physicians and other providers, and I appreciate that you set 
that up. We are trying to do that in more areas around the 
country.
    Really, Y2K was a silver lining because it taught us how we 
communicate with physicians and other providers. We don't 
normally communicate directly, for the reasons I said. We are 
4,000 people. We run through contractors. We don't normally 
communicate directly with physicians or other providers.
    But with Y2K being so urgent, we wrote directly to 
physicians; we wrote directly to providers. Then we started 
having teleconferences, conference calls with the State medical 
societies and with physicians in the State. And, lo and behold, 
it opened up a whole new line of dialogue. Which is not to say 
that we always agreed, but they felt better that they could get 
to somebody and talk to someone about their concerns.
    I have learned a lot about some things that we are trying 
to fix, like they wanted to have the ability to call the 
contractors and get someone on the phone as opposed to a voice 
mail. I can certainly understand that. It costs money to do 
that, but maybe that is money worth spending. So there are 
things like that we need to do.
    Another thing that we need to do is improve provider 
education on fraud, waste and abuse. The providers have the 
view that everyone in Washington or at least HCFA and the 
Inspector General thinks that they are all crooks. We don't 
think that.
    I want to run this program so effectively that law 
enforcement is not necessary because everyone understands the 
rules and they are operating by them. So I have an interest in 
making sure that the providers get better education. And we did 
some things, like starting in the residency programs, telling 
them about the Medicare rules and those sorts of things. The 
more communication the better.

                      Provider Reimbursement Rates

    Mr. Dickey. Do you know that doctors are telling the story 
like this? That their reimbursements are coming down. The cost 
of getting the reimbursements is going up. Their equipment is 
going up. Their salaries are going up. Their supplies are going 
up. And everything is coming down, and they are getting to the 
point where it is almost a break-even proposition? Have you 
heard that story?
    Ms. DeParle. I have, and we have heard about certain areas 
of the country where there are problems.
    Mr. Dickey. I know of one.
    Ms. DeParle. I haven't heard about Pine Bluff except from 
you today.
    In Denver, there are some problems. We are doing some 
analysis and surveys of our data to find out if there are areas 
of the country where beneficiary access could be hurt because 
that is obviously what we exist for, to make sure that 
beneficiaries can see the doctors. And if doctors are not 
there, it is a problem.
    Mr. Dickey. As I can remember--and I may have it 
backwards--our reimbursement level in the Fourth District of 
Arkansas is only higher than Puerto Rico's or something like 
that. Or maybe we are even under Puerto Rico, like we are the 
51st or the 52nd if we count the territories. What can we do to 
bring the reimbursements up? What can our doctors do to get the 
reimbursements up?
    Ms. DeParle. Well, it is complicated. We don't look at it 
quite the way you said. You must have a ranking--.
    Mr. Dickey. Well, I am right; and you are wrong.
    Ms. DeParle. I understand that. That is a given, and let's 
put that on the record for everybody here.
    What I mean is that, there are payments for various 
procedures and then built into that is something called a Wage 
Index. So you are probably affected by the fact that the Wage 
Index for Pine Bluff, Arkansas, and maybe Jackson, Mississippi, 
is lower than it would be for New York, New York, Miami, 
Florida, and those places.
    Again, this goes back to the history of Medicare. When 
Medicare was set up, it was a grand compromise. And Section 1 
of the Medicare law says nothing shall interfere with the local 
practice of medicine, and what that meant was that the way it 
was set up was to pay reasonable and customary fees. So the 
historic spending patterns and the volume and intensity of 
services, that is sort of how the original payment rates got 
established. And to a great extent we still have those 
situations today. So when you hear about the differences in 
managed care payments, it is all built on historic spending 
patterns.
    Mr. Dickey. Can we explain to you or does it do--what I am 
saying--obviously, we are getting caught in some kind of 
cookie-cutter type thing and maybe just percentages are put on 
top of how we started and things have changed. How do we get 
that across to you? And, if so, will it do any good if we can 
prove it?
    Ms. DeParle. Well, there are some things that I don't have 
the authority to fix. Some of these payment methodologies are 
in the law that I may not be able to fix, but you all could.
    I would like to take a look at your data and see if there 
are things that they are not taking advantage of. In the BBRA 
last year the Congress made a number of changes to enable more 
hospitals to qualify as critical-access hospitals. That gives 
them a better reimbursement rate. Are the facilities in your 
area taking advantage of that? Do they know that it happened? I 
suspect that they do because your office is very proactive. But 
if they don't, that might be an opportunity.

                           Managed Care Plans

    Mr. Dickey. We are also concerned with nonmedical personnel 
making decisions and actually putting us on hold, literally and 
symbolically, as we are trying to provide medical care for the 
people of the Fourth District of Arkansas. Is there anything 
coming along the way that is going to relieve our doctors from 
that or are they just going to have to take the burden of 
threats and coercion and duress? Sometimes they just have to 
say we are going to do it anyway. Can you help in that regard?
    Ms. DeParle. Are you referring to managed care plans?
    Mr. Dickey. Yes. Or any type of situation where a clerk is 
making medical decisions.
    Ms. DeParle. Well, as you know, there is some legislation 
that the Congress is considering about managed care plans, and 
I suspect that is probably the vehicle to consider that. If 
there is a problem in Medicare, I hope that you will let me 
know, as you have done on others.
    Mr. Dickey. Those things are happening, and it does happen 
in the Medicare field. This won't be a question. Those things 
are happening, but settling them in court is not what we are 
trying to do. We are trying to settle them so that the doctors 
make the decisions, not lawyers.
    Thank you, sir.
    Mr. Porter. Thank you, Mr. Dickey.
    All of the Republicans were on time and all of the 
Democrats arrived late, so Mr. Wicker.
    Mr. Wicker. I thought you were going to say however. Thank 
you, Mr. Chairman.
    Mrs. DeParle, I believe this is your third time before our 
subcommittee.
    Ms. DeParle. It is.

                    Disparity in Reimbursement Rates

    Mr. Wicker. We appreciate the work that you do, and you are 
always a very good witness. I am eager to jump into this issue 
that Mr. Dickey raised about the disparity in the reimbursement 
rates.
    Of course, there was a lot of discussion last year about 
the rural hospitals. There has been and still is a severe 
problem not only in my district but Statewide with regard to 
our small community and rural hospitals. The hospital 
administrators and the hospital association in Mississippi say 
that there is a historic disparity between a classification of 
urban hospitals and rural hospitals and that this stems from 
the 1980s. Do I understand that we are still sort of using 1980 
data and unless the Congress--is it your opinion that Congress 
is going to have to act comprehensively to get us away from 
that?
    Ms. DeParle. I think Congress would have to act to get away 
from the basic classifications of rural and urban. There are 
some new designations, the critical-access hospitals and those 
sorts of special categories, but in general that is how it is 
divided. I don't believe that we are using 1980 data, but the 
decision was made then, and the whole thing was built upon 
that. The point that was made then was that urban hospitals had 
higher costs and more of a need for higher reimbursement.
    Mr. Wicker. Labor and supply costs----
    Ms. DeParle. Yes.
    Mr. Wicker [continuing]. Were thought to be higher in urban 
areas. Actually, there were people who would make exactly the 
opposite case now. Don't you agree that is an outdated approach 
and wouldn't you recommend to this Congress that we take swift 
action to correct that?
    Ms. DeParle. Well, I can see both sides of it. I do believe 
that there are some rural facilities whose costs can be higher 
than urban facilities. They sometimes have a harder time 
maintaining a patient census that is high enough to keep them 
open. Sometimes their costs can be higher. It may not be wage 
costs but other costs of providing the services can be higher. 
I think it is something that we ought to work together on and 
look at.
    Mr. Wicker. I am talking about hospitals that have a high 
utilization rate. It is not that people are not going there. 
People want to use them. It is just the amount of money that 
they can be reimbursed doesn't compare to these big hospitals, 
and I would just say that something needs to be done. It is 
something that I know that Mr. Dickey is struggling with.
    Let me ask you about the market basket inflation update. It 
is my understanding that some former HCFA general counsels have 
stated that you have the authority even now without statutory 
authority to correct the inadequacies in the market basket 
inflation update. Is this your opinion? And I would like to ask 
you to comment.
    Ms. DeParle. I am not familiar with the general counsel's 
opinion, but I do believe a couple years ago the market basket 
was updated to reflect some changes in labor costs. So I 
believe it is something that the actuaries at HCFA periodically 
look at, and maybe they work with other actuaries in the 
government to make sure that it adequately reflects what is 
going on in the marketplace. Yes, I think we have some 
authority to make adjustments in it.

                        Nursing Home Initiative

    Mr. Wicker. Let me move on to the nursing home initiative. 
Secretary Shalala mentioned this in her public remarks 
yesterday, and I think all of us agree that if a nursing home 
is abusing someone or providing inadequate care in any way we 
ought to come down on them very hard and correct that 
situation, and I applaud any efforts you might have.
    I continue to hear stories about a lot of the sanctions 
being for paperwork inadequacies and horrendous fines being 
imposed or threatened to be imposed because there is not 
something in a file. I hear it so much that I think, although 
it might be apocryphal, there has got to be some truth there. 
Because I think most of the people involved in the long-term 
care business are well-intentioned and want to do the right 
thing.
    I want to give you an opportunity to comment about that. Do 
you think that there is too much emphasis on paperwork 
violations? And what institutional safeguards are you enacting 
to ensure that this doesn't happen? And are you doing anything 
to create a collaborative survey process with the industry to 
ensure that the enforcement results in a positive outcome?
    Ms. DeParle. Well, I will say a couple of things about 
that. I don't think that there is too much emphasis on 
paperwork. In fact, I have heard the same stories; and then, 
when I look into them, it doesn't turn out to be the case. If 
you have specific examples that you would like me to look at, I 
would love to do that.
    We oversee the States that go out and do the survey work to 
look at nursing homes to see if they meet the minimal Federal 
standards. So in Mississippi, I guess the health department has 
a survey agency that does the surveys, and they make 
recommendations to us about whether there should be penalties 
or sanctions or whatever.
    I think there is sometimes a problem with inconsistency 
among States, and I have heard this a lot among nursing home 
chains that I have talked to. They will say, well, in Tennessee 
we got sanctioned for X, but in Mississippi or Arkansas we 
didn't.
    I do think that we need to do a better job of making sure 
that the State surveyors and the folks in our regional offices 
who oversee them are all working from the same sort of rules. 
And so last year we did training for all of those people--not 
the first ever training but it was the first time in 8 or 9 
years that they had all been trained together. We invited 
industry in for training. And I was just meeting with the trade 
association for the industry about a week ago, and we decided 
to do another set of conferences together. I think that will 
help us take some steps forward toward more consistency.
    Mr. Wicker. Why would HCFA ever impose a severe fine 
because there is a document missing from the file?
    Ms. DeParle. Well, we wouldn't do it if there is a document 
missing unless that document is something that related to a 
patient's safety. So, for example, if a nursing home failed to 
document that a resident fell and broke their hip and had to be 
taken to the hospital and the surveyor finds that there was a 
person that had been hurt or there is abuse that occurred by an 
employee at the agency or another resident and the nursing home 
failed to document it, that would make me have concern about 
the people in the nursing home because they are extremely 
vulnerable, especially if they are in nursing homes in remote 
areas where family members are not there. If it were something 
like that, that could be something that could impose serious 
jeopardy to residents. But if a nursing home failed to put a 
document in about how many boxes of cereal are in the pantry, I 
agree with you, that should not be an offense that would result 
in termination or anything serious.
    If you have a specific example, I would love to take a look 
at it. I have been spending a great deal of time looking at 
this issue.
    Mr. Wicker. Mr. Chairman, I would like to ask Ms. DeParle 
to supply for the record what efforts you are planning to make 
to make sure that the program is actually increasing the 
quality of nursing home care. What plans you have to actually 
look at the citations and what you are doing to make sure that 
we are getting the results that we want.
    [The information follows:]

                        Nursing Home Initiative

    The Senate Appropriations Committee requested that HCFA conduct an 
evaluation of the Nursing Home Initiative's impact on the quality of 
care provided by nursing homes. The Committee has asked that it receive 
the report by July 15, 2000.
    To comply with the Committee's request, HCFA will assess its 
implementation of important changes to the way in which quality of care 
in nursing homes is monitored and enforced. HCFA will also compare the 
rates of occurrence of important measures of quality of care--such as 
the incidence of pressures sores and the occurrence of unexplained 
weight loss--at points in time both before and after implementation of 
these changes. We expect to deliver a report to the Committee by July 
2000. However, this is a complex question and HCFA may not be able to 
assess the full extent to which events such as the implementation of 
Medicare prospective payment for skilled nursing facilities also caused 
changes in quality of care. Therefore, HCFA will continue to assess 
quality of care changes in the future and keep the Committee apprised 
of any findings.

    Mr. Porter. Thank you, Mr. Wicker.
    I remind committee members that we are operating under the 
8-minute rule, and we should have time for at least an 
abbreviated second round.

                        Medicare HMO Withdrawals

    Mr. Hoyer.
    Mr. Hoyer. Thank you.
    Madam Administrator, I may be a little repetitive here, 
which will not surprise you, I am sure. We are all concerned 
about the reimbursement issue. I am particularly concerned with 
the Medicare+Choice problem. Maryland is the fifth hardest hit 
State in the Nation, having lost about 35,000 people. They 
switched to CareFirst, and then CareFirst has pulled out of 14 
rural counties. We only have 23 counties. While the larger 
counties are not impacted here, the smaller counties are.
    You have referred to the Balanced Budget Refinement Act. 
Now, from what you have seen, has that had an impact on reentry 
of HMOs? We have lost--there were eight, and we now have four. 
So we have lost half of our HMO providers in those areas. Have 
you seen any effect as of this time?
    Ms. DeParle. I don't think that there probably has been 
enough time, but from the managed care executives that I have 
talked to, I think they believe that the steps that were taken 
probably didn't go far enough. They are looking for a higher 
reimbursement rate. In the aggregate--I am not talking 
specifically about Maryland, but, in the aggregate--the 
evidence doesn't suggest that there really is support for 
Medicare to spend more on managed care.

                          Incentives for HMOs

    Mr. Hoyer. Obviously, we are spending less on Medicare. We 
have had some savings which is great unless it impacts 
adversely on the people. In other words, if we are getting the 
same thing for less, hurray.
    What else do you believe Congress and HCFA can do to 
provide enough incentives for HMOs to reenter on a State-by-
State basis? Because you are saying that you don't know about 
Maryland but in the aggregate that there is a case to be made, 
but, State by State, obviously each of us would want to look at 
it from a disaggregated standpoint.
    Ms. DeParle. Sure. And I have met with Bill Jews of 
CareFirst a number of times over the past couple of years, and 
I see how they are analyzing it. They tell me that certainly 
reimbursement is a factor, but in Maryland as well as in the 
other States it is not just reimbursement. If you look at the 
reimbursement rates, some of the managed care plans are pulling 
out of counties where the reimbursement rates actually are 
high. And this mirrors what is happening in the commercial 
sector as well.
    It is also their ability to put together a network. And I 
believe you have met with some of the doctors from the Eastern 
Shore, and I met with them as well, and for lots of reasons 
they are not happy, and they didn't want to be part of the 
network anymore. And it was not just the reimbursement rate 
that meant CareFirst could not put that together and keep the 
network going.
    One thing we should work together to do is put a 
prescription drug benefit in Medicare. I think if we had that, 
then all beneficiaries would be able to get prescription drugs, 
which is one reason why they tell me--and you talk to them a 
lot, too--they want to be in a managed care plan, because those 
plans can cover drugs. That would help the managed care plans 
because if we were covering prescription drugs, we would be 
making an additional payment to them to cover prescription 
drugs.
    Right now, they are supposed to bid on just providing the 
services that traditional Medicare provides, and if they have 
additional money they can use it to cover prescription drugs. 
That is why it is an uncertain thing. If it were a guarantee, 
that would help the beneficiaries, and it would help the 
managed care plans.
    Mr. Hoyer. I think that is a good point. In the event that 
HMOs agree to come back into the market, how long will it take 
for HCFA to devise a plan for that to happen?
    Ms. DeParle. We can do that very quickly.
    I know one example up in Wisconsin around Kenosha, 
actually, where a plan decided to pull out last year, and then 
they decided--I think with some help from one of your 
colleagues--that they would like to stay after all. And they 
approached us about coming back in, and we were able to process 
their application within a few weeks. I can't say if there were 
600 of those we could do it that quickly.
    Mr. Hoyer. But relatively quickly?
    Ms. DeParle. Yes, sir. We want our beneficiaries to have 
that option.

              REIMBURSEMENT FOR CHILDREN'S HEALTH COVERAGE

    Mr. Hoyer. Let me switch now to another problem related in 
terms of reimbursement and covering people.
    First, I am enthusiastic about the Family Care program. I 
think that is absolutely appropriate. However, as you know, we 
have a very significant problem in Maryland with respect to 
your State Children's Health Insurance Program (SCHIP) program, 
which was called Maryland Kids Count, which was a pilot program 
which was in place I guess 1993 or 1994. We now have run into, 
as Minnesota and a number of other--about five of us, a very 
significant problem where we are being penalized for a very 
good effort.
    We now have 93 percent of the children eligible for SCHIP 
in our program. The problem is, as you probably know, is that 
SCHIP is taking the position, presumably because we had a 
provision for maintenance of effort, that we are not going to 
reimburse you for SCHIP children even if--Maryland Kids Count, 
as you know, was a pilot program and was phased out--even if 
they weren't in the program but were eligible for the program. 
Now this is a very, very, we believe, substantial penalty.
    There was a colloquy between Senator Sarbanes from Maryland 
and Senator Roth from the Finance Committee. I am sure that you 
are familiar with that? Are you?
    Ms. DeParle. Yes, I am aware of it.
    Mr. Hoyer. Senator Roth, when asked by Senator Sarbanes, 
said, it is my view that the Secretary of Health and Human 
Services has authority without additional legislative direction 
to determine that children who had been covered under 
Maryland's expired limited benefit demonstration program were 
not receiving true Title 19 coverage and could be considered 
uninsured for the purposes of SCHIP eligibility.
    That was in October just before we went out. Obviously, 
that determination has not yet been made. Can you bring me up 
to date on where the consideration is on the possibility of a 
waiver and what your view is on the--either on the probability 
or appropriateness of such a waiver? You can see--and Martin 
Sabo asked the President this question as a matter of fact 
yesterday down in Hot Springs--we are damned if we did and we--
if we had not made an effort, we would be advantaged.
    Ms. DeParle. I should say, first of all, Mr. Hoyer, I am 
sympathetic with Maryland and Vermont and Minnesota and the 
other States that stepped up before State Children's Health 
Insurance Program (SCHIP) was passed to try to cover uninsured 
children in their States.
    Mr. Hoyer. And we are still doing it. But to the extent 
that we include people, we don't want to be disadvantaged with 
other States that didn't do it and say you had a program which 
is not in place now and they would have been eligible. We know 
that you never covered them, but they would have been eligible. 
They were never in the program, but we are not going to 
reimburse you even though you bring them in now and they 
otherwise would be eligible if you hadn't made the effort.
    Ms. DeParle. These waivers are complicated things and 
require coordination among a number of executive branch 
agencies. HCFA is where the application starts, but it also 
involves the Department and OMB and everybody else.
    I do know that the Secretary of Health and Human Services 
from Maryland was in to meet with our new Medicaid director a 
few weeks ago, and I would like to get back to you with the 
latest on this.
    Mr. Hoyer. Thank you.
    Mr. Porter. Thank you, Mr. Hoyer.
    Ms. DeLauro.

                        COVERAGE FOR HEPATITIS B

    Ms. DeLauro. Thank you very much, Mr. Chairman.
    Thank you, Madam Administrator. It is a delight to see you 
here today.
    First off, it was about October or November of last year we 
got an emergency call from a constituent in my community with 
hepatitis B, and he flew to an out-of-State hospital to get the 
lifesaving liver transplant. When he arrived there, he was told 
that Medicare was not going to cover liver transplants for 
hepatitis B patients.
    First of all, let me say thank you and to commend you and 
your staff for the steps that were taken to assist this 
constituent in receiving the transplant. I saw him just before 
the holidays, and he was very grateful, looking good, and he 
and his family were very pleased to spend their time together, 
not knowing what was going to happen to him earlier.
    I am concerned about the existing regulation that is in 
place. There have been lots of improvements with regard to 
drugs that apply to blocking hepatitis B from attacking a 
transplanted liver. With these breakthrough drugs in mind, is 
there any effort to reconsider your regulation--not your 
regulation but the agency's regulation to ban coverage for 
liver transplants on hepatitis B patients?
    Ms. DeParle. There has been. We were in the process of 
looking at all of the medical evidence on this back during the 
fall before your call even came in, and our chief clinical 
officer had recommended a change, and in fact a regulation was 
published in late November or early December based on the 
latest medical evidence.

                           CANCER SCREENINGS

    Ms. DeLauro. That is terrific. I can't tell you what joy 
and life you brought to this family.
    Let me move to an area of cancer screenings and dealing 
with seniors with what the agency is doing to make seniors 
aware of the Medicare benefits for prevention screening, the 
cancer screenings in particular.
    How are we making sure that they take advantage of these 
screenings? Are utilization rates improving? What do we try to 
do in order to see that they are taking these preventive 
precautions? And are there programs in place now that will get 
the word out about this information?
    If you will, I will digress for a second. This is on the 
SCHIP program. A lot of it is getting the word out to people, 
and I know that I am making a particular press in my own 
district just to take care of this area and working with the 
folks to make sure that we are getting information about the 
SCHIP program out, but how?
    Ms. DeParle. I was thinking that we ought to get something 
out to all of the Members of Congress that they can put in 
their newsletters.
    Mr. Dickey has already told me that my charts are 
impossible to read, but there is a GPRA goal that says that we 
want to increase rates for influenza and pneumococcal 
immunizations, mammograms and diabetic eye exams. So the first 
step is for us to agree that we believe that we are accountable 
and we want to make some progress there.
    One thing that we are doing is, through our peer review 
organizations, we have six national projects that include some 
of the things that you have mentioned, trying to increase the 
screening rate and increase the treatment rate for diabetes. 
And so those peer review organizations are working with the 
hospitals and physicians in their areas all around the country, 
and we will be able to say for each State how they are doing on 
some of those measures.
    Through the Medicare & You booklet that was sent out to all 
Medicare beneficiaries last year we highlighted the new 
benefits that Congress enacted a couple of years ago, and we 
have been working with the Social Security Administration in 
the stuffers that go out every year to tell Social Security and 
Medicare beneficiaries about the COLA and the premium rates for 
the next year. We have been trying to make sure that they get 
the screenings.
    Any other ideas you have, we would be happy to use.
    We are also working with CDC because they have a lot of 
experience in this kind of health promotion, and it is 
something different from what HCFA has done in the past, so we 
are using some of their best practices.
    Ms. DeLauro. I would love to talk about this and the SCHIP 
program. I am doing public service announcements----
    Ms. DeParle. Great.

                        COMMUNITY HEALTH CENTERS

    Ms. DeLauro [continuing]. Because I think we are in a 
unique position to be able to get material out to people. We 
need to take advantage of every opportunity our offices provide 
to get information to people that they need for their own 
health.
    Community health centers got a billion dollars roughly each 
year in the centers that help to care for the uninsured. Some 
States like Connecticut have begun to reduce the Medicaid 
reimbursement to the health centers below the cost of care. How 
do we deal with that--of unreasonably low Medicaid payments to 
health centers which is going to put some of these people out 
of business in terms of the community health centers? Are you 
doing anything in that regard to work on this issue?
    Ms. DeParle. There are standards in the Balanced Budget 
Act, I believe, on reimbursements to community health centers, 
and the governors have always felt that requiring them to pay 
Medicare rates basically to the community health centers wasn't 
fair and it was too high, but they are still required to, I 
think, pass some analysis by us. And I am not aware of what the 
latest is on this, but I would be happy to supply you an answer 
for the record.
    Ms. DeLauro. Thank you.
    [The information follows:]



                            SPECIALTY CODES

    Ms. DeLauro. Specialty codes for the maternal and fetal 
medicine, what is the process by which there is a designation 
of a specialty code? This is for insurance purposes. Recently I 
guess the last code number, 98, was issued by HCFA for the 
gynecologic oncology, and that was in 1993. Is there going to 
be a specialty code for the Society for Maternal Fetal Medicine 
which deals with some of the most difficult OB-GYN issues?
    Ms. DeParle. I don't know the answer to that. I know that 
we have a process that is clearly governed by the 
Administrative Procedures Act, so we have to go through a 
rulemaking, and it is done on at least an annual basis. We take 
a look at what is out there and then go forward with a 
rulemaking. I would like to get back to you whether that 
particular one is being considered.
    Ms. DeLauro. And what the process is. That would be very, 
very helpful. Thank you.
    [The information follows:]

              Specialty Codes for Maternal-Fetal Medicine

    At present, there are no plans for designating a specialty code for 
maternal-fetal medicine. In accordance with the Health Insurance 
Portability and Accountability Act of 1996 (HIPAA), HCFA is developing 
an initiative to standardize national provider identifiers. Under 
HIPAA, a standard taxonomy code for maternal-fetal medicine has been 
included. The proposed effective date for using this code is sometime 
in 2002, or 24 months after the final rule is published. Until then, 
providers should continue to use the specialty code for OB-GYN.
    Requests for new specialty codes should be sent to HCFA for review 
by designated staff. Since implementation of any new code requires 
extensive systems changes and impacts multiple aspects of the Medicare 
program, HCFA review staff must weigh these effects, as well as HCFA's 
ability to accommodate these changes, against the programmatic need for 
a new specialty code.

    Ms. DeLauro. Thank you very much, Mr. Chairman.
    Mr. Porter. Mr. Jackson.

                      ASTHMA DEMONSTRATION GRANTS

    Mr. Jackson. Mr. Chairman, let me first begin by thanking 
Ms. DeParle for taking time to participate with us.
    Actually, I have two questions. I know that many members of 
the subcommittee have been interested in asthma. I share their 
concern and have a particular interest in asthma among 
intercity children. The Medicaid proposal in the budget calls 
for asthma demonstration grants for Medicaid recipients, and I 
am interested in how this particular effort will effect the 
underserved and inner city populations.
    Ms. DeParle. We want to work with the Congress to get that 
enacted, and funding will be through demonstration grants to 
States. So the next step after this is enacted is to work with 
the State of Illinois to make sure that they apply to do a 
demonstration in Chicago, and I think that would be a really 
good place to do one.
    Mr. Jackson. I represent about 30 cities outside of the 
City of Chicago, many of whom are not under the auspices of the 
city government. Is there any particular requirements that 
would limit a demonstration grant from occurring, for example, 
in a city of 50,000 or 150,000 people or does it have to be a 
large municipality like the City of Chicago?
    Ms. DeParle. It doesn't have to be. We have not written any 
rules about this yet because we have to work with the Congress 
on this, obviously. You will be telling us how you want this to 
go forward.

                        LEAD TESTING IN CHILDREN

    Mr. Jackson. My second question, childhood lead poisoning 
continues to be a major public health problem in our Nation's 
inner city communities. However, the development of new 
screening technologies like a hand-held, portable lead-testing 
device developed in part by CDC holds great promise for 
increasing screening rates for at risk children. I am 
interested in knowing what steps HCFA can take to ensure that 
these new screening tests are reimbursable under Medicaid?
    Ms. DeParle. I am not familiar with that particular test. I 
know that we have worked with a number of States to figure out 
ways to help them get funding for removal of lead paint in some 
communities and to do that through the Medicaid program. So I 
am not sure how your particular instrument would work, but I 
would be happy to work with you on that.
    Mr. Jackson. We will get the information to your office, 
and maybe we can begin some conversations.
    I thank you, Ms. DeParle.
    I thank you, Mr. Chairman.
    Mr. Porter. Thank you, Mr. Jackson.
    Mrs. Lowey.

                        MEDICARE HMO WITHDRAWALS

    Mrs. Lowey. Thank you, Mr. Chairman, and thank you, Ms. 
DeParle.
    Many Members on both sides of the aisle are deeply 
concerned about the instability of the Medicare+Choice program. 
At the beginning of this year, four plans have withdrawn from 
my congressional district. Another plan has stopped taking new 
members. Additionally, some plans that remained in the program 
have created extremely high premiums or imposed an enormous 
increase in premiums for enrollees.
    My constituents are understandably upset, which is the 
understatement of the year, about these developments; and, 
frankly, I share their outrage in the way that it all happened. 
Both the loss of managed care coverage and significant premium 
increases can dramatically raise out-of-pocket health care 
costs, particularly the cost of prescription drugs, and you 
referred to that before.
    The process is confusing. It is not friendly. The results 
can be devastating, especially for those living on a fixed 
income. Can you elaborate on what HCFA and Congress can do to 
encourage continued plan participation in the Medicare+Choice 
program?
    Ms. DeParle. Well, as you know, Mrs. Lowey, I think that 
the instability we are seeing in managed care in the Medicare 
program is mirrored in what you are probably seeing and hearing 
from constituents about their private sector plans, those who 
are not in Medicare. To some extent, this is the kind of thing 
that you experience when you are doing business with the 
private sector. There are issues about reimbursement, but that 
is not the only issue.
    I believe one of the things that we can do is to figure out 
a way to cover prescription drugs. It would help the plans and 
beneficiaries so if a plan did decide to move to another area 
or not to cover them any more they would at least know that 
they have prescription drug coverage in traditional Medicare, 
which they don't have now unless they happen to purchase a 
Medigap policy, and those are very expensive.
    Mrs. Lowey. If you can elaborate on that, some of the 
plans, and we here too often, blame everything on prescription 
drugs. Do you think that is credible?
    Ms. DeParle. I think that prescription drug costs have 
risen rapidly over the last few years. The States tell us what 
they are experiencing in the Medicaid program. The private 
sector insurance plans are saying that they are experiencing 
it. So I believe the Medicare+Choice plans have experienced it 
as well.
    But I think this is complicated. If you look at the GAO 
reports done on this and the other market analyses, it is more 
than just that. It is a variety of factors, including that it 
is harder in some areas for them to put together a network of 
physicians who want to participate. There have been enough 
tensions between some of the managed care plans and the 
physicians that it has become hard in some areas of the 
country--Connecticut, Rhode Island--where they have real 
difficulty putting together a network.
    On the premiums, I want to say that I have been concerned 
when I see some of the premium increases that have occurred, 
and I have looked into this, and this may be an area that the 
Congress will want to look at. We are constrained in our 
ability to say yes or no to a managed care plan about charging 
additional premiums. They are allowed to do that up to a 
payment limit that is prescribed in the law. About the premium 
increases that you have mentioned to me, and I think you wrote 
me a letter about this, I believe we have looked into them and 
they are not above the limit prescribed in the law. So they, 
therefore, are acceptable.
    And I understand that your constituents are very upset 
about it, but that is an area that you might want to look at to 
see if that reflects what Congress really intends with this 
program.
    Mrs. Lowey. So there is nothing that HCFA can do?
    Ms. DeParle. I don't believe so. We certainly need to audit 
what managed care plans are charging beneficiaries, and we need 
to look at that, and we need to look at the administrative 
costs. But there is a limit in the law, and plans are allowed 
to charge premiums up to that limit.
    Mrs. Lowey. Obviously, I plan to sit down with you, and I 
look forward to your response so we can talk about the 
specifics of our region. I won't take my colleagues' time, but 
I gather that it is happening everywhere. I would be very 
interested in the analyses that you are doing as to the reasons 
why they are leaving, why the premiums are going up, why they 
give their members a month and say we are leaving town and you 
have to switch to this and HMO and in the meantime that HMO 
raises the premiums.
    Ms. DeParle. We actually did a report on this this past 
year, and I would be happy to supply that for the record.
    Mrs. Lowey. I think that would be helpful.
    [The information follows:]

    This report, which discusses Medicare HMO withdrawals, was sent to 
all Committee members on February 9, 2000. It is not being printed 
here, due to its length (30+ pages). An additional copy will be sent to 
Ms. Lowey to respond to her specific request.

                       OUTPATIENT PAYMENT SYSTEM

    Mrs. Lowey. I just have a few more questions.
    Last year there was really a groundswell of Members, rural, 
urban, suburban, demanding that our hospitals and health 
systems gain some relief from the unintended consequences of 
the Balanced Budget Act of 1997. Passage of the BBRA act last 
fall was important particularly for rural and teaching 
hospitals, but already in New York and around the country we 
are hearing that much more needs to be done.
    I know that HCFA and the hospitals don't always agree on 
the need for relief, but I think they have made a good case for 
the reassessment of the upcoming outpatient PPS system, given 
the strain on this system already. Can you give us an idea of 
where HCFA is on the implementation of the outpatient PPS?
    Ms. DeParle. As you know, Ms. Lowey, the implementation of 
the outpatient prospective payment system (PPS) had to be 
delayed because of our priority of remediating all our systems 
for Y2K. But we are now on schedule to publish the rule and to 
implement the new system in July, which is the arrangement that 
we agreed to with the Congress last year.
    Furthermore, I think it is important that we move forward 
chiefly because the same things that we are doing to implement 
the outpatient payment system also provide much-needed relief 
to beneficiaries who have been paying coinsurance on the 
outpatient side that was getting upwards of 30 to 40 percent a 
year instead of the 20 percent coinsurance that they are 
supposed to pay under the Medicare law. We are moving forward 
with the changes that the BBRA included, but we are moving 
forward to implement the outpatient prospective payment system.
    Mrs. Lowey. Thank you.
    Lastly, I am very much interested in the President's 
proposal to cover parents in the State Children's Health 
Insurance Plan. In fact, Henry Hyde and I--we don't always 
agree on everything, but on this we have been working together 
for a while--first introduced a bill 2 years ago to give States 
the option to cover pregnant women in their CHIP programs 
because we felt so strongly that keeping women healthy in 
pregnancy is essential to the future safe delivery of the 
child, of the infant.
    Frankly, I think it makes sense to cover parents when we 
are covering kids. But my support is tempered by the 
recognition that enrolling children in CHIP has been much 
harder than we would have ever thought. Can you tell us how 
family care will help us achieve our initial goal, which was to 
cover children?
    Ms. DeParle. I actually do believe it will help us. I 
should say, too, that the evidence so far is that the States 
have done a pretty good job of enrolling children.
    I have heard some describe it as a disappointment. I 
wouldn't say that. It has been hard. We have had to think 
beyond the traditional welfare offices as a way of signing 
people up. We have had to go to where the children and the 
families really are. That is why some of the proposals in this 
year's budget are important, to be able to work with school 
lunch programs, for example, to find children that way. That is 
the way, I think, to reach these children.
    But a number of policy experts have argued and I think they 
are right, that it will help to have the entire family be 
eligible, that it is more likely that the parents will come by 
to get an application or will work to make sure their children 
are in there if the whole family will be covered. And then I 
know you are interested in results. It is much more likely that 
they will actually go to the doctor if everybody is covered. I 
think there is evidence that having the whole family covered 
makes a lot of sense.
    Mrs. Lowey. Thank you. And thank you, Mr. Chairman.
    Mr. Porter. Thank you, Mrs. Lowey.
    Mrs. Northup.

                    MANAGED CARE REIMBURSEMENT RATES

    Mrs. Northup. Thank you.
    Ms. DeParle, I was the writer of one of the letters that I 
think several--almost 200 Members wrote about the reimbursement 
levels. I guess I have to go back to the HMO questions. 
Clearly, many of our constituents want to have an HMO cover 
them. What our goal is is to have them compete against each 
other, to have Humana and United and so forth offer one person, 
like maybe Mr. Dickey--are you a senior yet? No.--a choice of 
policies, and those choices would help them get new clients or 
new coverage.
    According to the HMOs, they have had to ratchet down the 
additional services because there simply wasn't the 
reimbursement at that level. They had every intention of 
covering prescriptions, and some actually did cover 
prescriptions. But surely one of the things we all agree is 
that we don't want an HMO to offer services at a level where 
they will be defunct, bankrupt, when all of us start to need 
the service we are insured for.
    Ms. DeParle. Certainly not. But I think the issue here that 
we all have to discuss and come to grips with is, are managed 
care plans supposed to save Medicare money or do we want to 
fund them with additional money just because we want to have 
the choice there for Medicare beneficiaries?
    Mrs. Northup. I think originally the idea was that they 
will be reimbursed at the level that we reimburse people that 
are on a fee-for-service, but you would get so many more 
services, including prescription drugs, eyeglasses, other 
things that seniors say they want. The idea wasn't to make 
money off our seniors. The idea was to be able to provide them 
with a choice of products.
    Ms. DeParle. No, but the original idea was to reimburse 
them at the fee-for-service level in the area minus 5 percent. 
The idea originally was that managed care plans would actually 
save money because they would be managing the care instead of 
just a beneficiary choosing to go to various places whenever 
they wanted to.
    Mrs. Northup. First of all, didn't you then actually, 
though, reduce it to 10 percent? Wasn't the reimbursement level 
closer to 10 percent overall?
    Ms. DeParle. No. The Balanced Budget Act changed the 
reimbursement methodology.
    Mrs. Northup. That is right. There was then an additional 
savings. I mean, the original market basket approach, first of 
all, I would never have any savings. I think a senior is 
entitled to their medical money and to take it to an HMO or a 
fee for service or wherever else they want. So I wouldn't have 
any savings. But after the balanced budget the overall savings 
was increased, and it was never intended to----
    Ms. DeParle. I know what you are referring to. Let me 
explain what that was. In the Balanced Budget Act, there was a 
requirement that we begin to risk adjust the payments to plans.
    Mrs. Northup. That is right.
    Ms. DeParle. What that means is to pay----
    Mrs. Northup. I know exactly what that means. It means so 
that they don't cherry pick. But the overall expenditure was to 
be the same.
    Mr. Dickey. Let her explain. Some of us don't understand.
    Mrs. Northup. My time is going to run out. Will you use his 
time and explain? Risk adjusters are so that Humana doesn't 
take all well patients and somebody else take all----
    Ms. DeParle. That is part of it, but it is also to make 
sure if Mr. Wicker signs up and Mr. Dickey signs up and Mr. 
Wicker is unhealthy that we pay more for him than we do for Mr. 
Dickey because that is not fair to the plan.
    Mrs. Northup. But the overall expenditure for these choice 
plans was to be the same before as after, after the risk 
adjusters.
    Ms. DeParle. No, we don't agree on that. That has been a 
big issue of debate. As you know, it was an issue last year 
with the Balanced Budget Refinement Act (BBRA). We believe that 
the bill that was passed, and this is something our general 
counsel has confirmed, was not what you call budget neutral. 
Your position is that it was supposed to be budget neutral. A 
number of your colleagues agree. Some don't. We have a 
disagreement there.
    Mrs. Northup. I think the point of this committee is that 
we are very upset that our constituents are losing money. If 
there is a disagreement about what that language says, I would 
ask you to have HCFA opt on the side to continue allowing our 
constituents to get the type of coverage that they choose to 
have. I am not a lawyer, but if there is disagreement--and 
clearly everybody at this table wants their constituents to 
continue having that choice--opt on the side of making it 
budget neutral so they not only have more choices but that 
those choices include more services that our seniors are saying 
they want.
    I guess I would just say one other thing to you. And you 
said, well, that you think you are reimbursing them enough. I 
don't believe that our HMOs would withdraw services if they 
couldn't be solvent with it. Their point is to make money. If 
they can cover their costs and they can build a density--
clearly, they can't have one person in Washington, D.C., but if 
they have got enough money in Washington, D.C., that are 
choosing the policies, they are going to stay in that business.
    Insurance is a fine guess. If you make a mistake, you still 
have all the responsibility and none of the reimbursement. And 
it begins to look a little scary when the reimbursements get 
ratcheted down and you are hanging out there on a limb 
promising all of these services to seniors that you are not 
sure you can cover. I would say to you that that is what we did 
to them last year and ask you all to do everything you can to 
increase the choices, not just so that there is one choice for 
our seniors but so that there are many choices.
    Ms. DeParle. Thank you.

                         COLLECTIVE BARGAINING

    Mrs. Northup. I would like to ask you about collective 
bargaining for physicians. As you know, Texas passed a 
collective bargaining bill for physicians, and several people 
have proposed the same thing here in Congress. I assume that 
HCFA would also then be covered in terms that they would have 
to contract with the union representative of those physicians. 
I wondered whether you have had any experience with the Texas 
law, whether in fact it is having an impact on costs, if you 
would be bound or if it would just be the private sector that 
would be bound by those laws. 
    Ms. DeParle. I am familiar with the Texas law, Mrs. 
Northup, but I have never thought about it applying to 
Medicare. I would like to look at that and get back to you.
    Mrs. Northup. Would you get back to us? I think that that 
is something that we are going to wrestle with. Clearly, the 
more small communities that you are talking about, the more 
likely and easy it is for collective bargaining agreements. If 
you only have three orthopedists, for example, it is very 
likely that they will be the only persons you can contract with 
for services. I would like to know if those agreements and 
those negotiations would apply to the public sector as well as 
the private sector.
    Ms. DeParle. I would guess it would take another act of 
Congress to make that happen. Because, right now, the Federal 
Anti-Trust law would preempt that kind of thing, like a Texas 
law, I think.
    Mrs. Northup. Actually I think that the President has 
supported these collective bargaining bills. So I would like to 
ask if you all would then stand up and be willing to be counted 
and insist that Medicare do be covered by the same thing you 
would have thrust on the private sector.
    Ms. DeParle. Let me get back to you for the record.
    [The information follows:]

                         Collective Bargaining

    We are familiar with the Texas statute, which allows joint 
negotiating by physicians of certain terms and conditions of 
contracts with health plans. The Medicare statute prescribes in 
detail how physician payments are to be set, and it would have 
to be changed before physicians could be allowed to bargain 
collectively with Medicare. We are uncertain about the full 
impact but, if the law were to be changed so that we could 
negotiate fees with physicians, there would be, of course, many 
implications. For instance, physician groups that were 
unsuccessful in negotiating fees might be unable to see 
Medicare patients. However, we would defer to the Department of 
Justice position regarding this issue.

    Mrs. Northup. Mr. Chairman, I think that is all right now.
    Mr. Porter. Thank you, Mrs. Northup.
    Mr. Istook.

                      HOSPITAL REIMBURSEMENT RATES

    Mr. Istook. Thank you, Mr. Chairman.
    Ms. DeParle, thank you for taking the time. I am sorry I 
wasn't able to hear all the other discussions. I think you may 
have one of the most impossible jobs. I think not only the 
Congress but the American public often tends to be bipolar on 
things such as this. Everyone wants to control the cost, but 
yet everyone wants to receive whatever services they think they 
need or are entitled to receive. You can't really match those 
two up very well. The notion of saying--it is kind of like if 
the government said, we are going to pay for people's food; and 
then what do you do when some people go to the all-you-can-eat 
buffet, some people go to fast food places and some people go 
to elegant restaurants? There is just so much disparity that it 
is hard to find justice.
    I would like to follow up on something I understand Mr. 
Wicker was asking you about. As you know from our discussion 
together, there is concern about what do you do when 
hospitals--and I am thinking here of Oklahoma hospitals, and we 
know it is true in many other places around the country--when 
hospitals say, every time we see a Medicare patient, we lose 
money; or every time we see a Medicaid patient or every time we 
do a particular procedure, we lose money; and therefore the 
more people to whom they provide services, the quicker they 
will go bankrupt. And then there will not be anyone there to 
provide services, especially in rural communities where they do 
not have much choice.
    I am told that you and Mr. Wicker have gone into a 
discussion about under what circumstances is there some 
flexibility that basically says if an institution is providing 
services at an absolute loss you have some flexibility to 
adjust reimbursement rates. I believe you two, I am told, got 
into that in some way. Can you expand on that? Do you expect 
institutions to provide services for these patients even if it 
means at a loss? Or do you have the tools and the flexibility 
to assure that at least they are breaking even on every 
patient?
    Ms. DeParle. No, we don't have the tools and the 
flexibility to ensure a specific payment level. The payment 
levels are prescribed in the statute and then implemented by 
us, and the area that Mr. Wicker and I were discussing was what 
is called the market basket. You and I discussed the other day 
how the rates in Oklahoma are influenced by something called 
the Wage Index, I believe. There is a rate that we pay for a 
particular procedure, and you come up with what that is, but 
then that is weighted by the Wage Index--an area like Oklahoma 
or some places in Mississippi or some places in Arkansas are 
likely to be less than some places in New York, not every 
place. And so that is probably the thing that weights it more 
towards a negative reimbursement.
    Mr. Istook. Because we have lower wages in Oklahoma, a 
lower cost of living?
    Ms. DeParle. I would expect so. Then there is also a factor 
of volume and intensity. It certainly isn't true for every 
service but for some kinds of services I suspect the volume and 
intensity of medical practice is probably less in Oklahoma than 
it might be in some areas of the country. So that is another 
factor. We don't have authority to just say to a hospital, 
``Here, we will make you whole,'' but there are some special 
designations that are in the law, such as critical access 
hospitals, rural referral centers. There are special categories 
that hospitals can qualify as that can help them get higher 
reimbursement rates.
    Then there is also something called the market basket which 
is the way that updates to hospitals are calculated. Mr. Wicker 
asked me whether we had the authority to make changes in that. 
I told him that I knew that a couple of years ago that the 
actuaries had reviewed labor costs and had made an adjustment 
there. I don't know all the details of it, but I do believe we 
have some authority to make some adjustments there. I am not 
going to tell you that we could just pull something out of the 
blue to consider to try to make it go one way or the other. I 
don't think you would want me to do that. That is something I 
think we have some discretion on.

                       PRESCRIPTION DRUG BENEFIT

    Mr. Istook. I appreciate that. I obviously, as you know, 
will want to be following up with you to try to get a handle on 
the situation in Oklahoma as well as in the country.
    Let me ask you about another thing that has major budget 
implications. Certainly we all know there is a long history of 
trying to squeeze savings out of the system, and sometimes it 
pops up in one area and sometimes in another, and it is all 
interrelated. Right now, of course, there is a great amount of 
attention being given to the possibility of expanding Medicare 
in the area of prescription drugs, whether it be to everyone, 
to a limited segment or whatever it might be. There is a great 
amount of discussion of the possibilities of squeezing some 
savings out in some areas to enable the offering of 
prescription drug payments at least to a means-tested group, 
for example, or to whatever other group it may be. I would 
appreciate your thoughts and comments on the potentials of 
trying to find some savings within this system to enable 
prescription drugs to be made available at least to some 
segment.
    Ms. DeParle. There are some proposals in the President's 
budget that in fact go to that question, Mr. Istook. They deal 
in particular with some proposals to reduce waste, fraud and 
abuse in the program. These are some things that we have 
discussed with the Congress before.
    For example, there is a particular drug that we pay more 
for than almost anyone else does that we cover for patients who 
are on dialysis. The Inspector General has written in several 
reports that we are paying too much for this. By reducing that 
payment, we can come up with some more savings for the Medicare 
program. There are 10 or 11 other proposals like that that 
would help us to come up with the savings that we need to do 
things like cover prescription drugs.
    Then there are some modernization proposals. We would like 
to be able to use some of the tools that the private sector has 
used to control costs and to modernize the program. Some of 
those would also produce some savings.

                          FRAUD, WASTE, ABUSE

    Mr. Istook. I realize that, of course, we all are in favor 
of eliminating waste, fraud and abuse. I do find it 
problematical on can we find those savings in Medicare programs 
when, for example, last fall, and I know you were not among 
them, but we had several members of the Cabinet stand in front 
of national TV cameras and say they didn't even have as much as 
1 percent of waste, fraud and abuse within their particular 
departments.
    Can you tell me, realizing this is a shifting target and 
what we may label it one time, when you get through the whole 
process, when you count on projecting savings from eliminating, 
waste, fraud and abuse, how long does it really take to find 
out if you have really had savings or not in those areas? 
Because sometimes it gets involved in litigation. It has to do 
with the intent with which someone did something or failed to 
do something. How long does it really take to test projections 
of waste, fraud and abuse?
    Ms. DeParle. This is an area the Chairman and I have 
discussed before, and he has had a keen interest in it. I tell 
you, it is difficult. It would depend upon the proposal. But I 
think that the Congress and we, working together, have already 
had an impact here. When you look at what is happening on the 
hospital side of Medicare, the Hi Trust Fund, the solvency of 
the Trust Fund is now projected to go until 2015 and with the 
President's budget, would go into 2025. Of course, he wants to 
dedicate some of the surplus to it. That is an area for 
discussion.
    But hospital spending and the up-coding of hospital 
procedures is down from what it used to be. It used to be that 
every year it was going up. Why is that? I think it is because 
of the effort that we have made and, frankly, the commitment 
that the Congress has shown to supporting us in cracking down 
on waste, fraud and abuse. That has shown real savings when you 
talk about the baselines having dropped in Medicare. I believe 
those are savings to Medicare that would not have occurred if 
we had not had the resources to do the audits that we have done 
and to make sure that we are really reviewing things.
    That is an area where I think you saw results in a year. In 
others, it may take longer. If we reduce the price of that 
drug, I think you would see the results in a year. But, again, 
it just depends on the individual proposal.
    Mr. Istook. As far as the administration's proposal and 
squeezing that out, you really cannot tell how long it would be 
before we knew whether that effort really succeeded or not?
    Ms. DeParle. Well, I believe our actuaries, when they look 
at proposals, develop estimates of when the savings would 
occur. And so, in that sense, that represents a belief that the 
savings would occur at those times. So I believe we do actually 
have a projection.
    But I guess what I am telling you is that it could even be 
more than what is here or it could be less, depending on the 
complicated area of behavioral offsets and much more--did they 
then try to up their volume to get more money or did they in 
fact cut it because they saw that you were going here so they 
moved somewhere else? So it is complicated, but our actuaries' 
judgment is that these savings occur now and would be there to 
help us afford new things.
    Mr. Istook. Thank you so much.
    Thank you, Mr. Chairman.
    For the record, the actuaries' statements upon which you 
have relied for this budget, I would appreciate receiving 
copies of those. That would help my education. Thank you.
    Ms. DeParle. Thank you.
    Mr. Porter. Thank you, Mr. Istook.
    Ms. Pelosi.
    Ms. Pelosi. Thank you very much, Mr. Chairman.
    Madam Administrator, welcome.
    Ms. DeParle. Thank you.

                           HIV/AIDS COVERAGE

    Ms. Pelosi. Thank you for all of your good work. We are all 
so proud of you and your fine record of public service and feel 
confident in what you are proposing here today.
    I had a couple of questions. Because I know my colleagues 
have talked about Medicare + Choice, that affords me the luxury 
of spending my time on the HIV/AIDS issue almost exclusively.
    The Federal guidelines call for treatment of HIV disease 
early in the course of infection, yet Medicaid does not define 
people as disabled for purposes of Medicaid eligibility until 
they are symptomatic with AIDS. Several States that are or are 
considering applying for waivers to apply for treatment for HIV 
through their Medicaid programs--I have a bill in fact that 
would say that if you have HIV infection, without the symptoms, 
you could qualify for Medicaid. Could you give us an update on 
HCFA's consideration of these applications?
    Ms. DeParle. Yes. I know that we are working very hard and 
very closely with the State of Maine which made a proposal 
sometime late in 1998. I hope we are close to reaching 
agreement with that State on a demonstration.
    I personally called the Massachusetts Medicaid director to 
ask them if they would submit a proposal, and I have talked to 
several others. I hope that we will have several other States 
that are interested in moving forward here.
    Ms. Pelosi. Would I interpret that to mean that the waivers 
would be granted?
    Ms. DeParle. We would do everything we could to work with 
them. As you know, waivers are a difficult subject because 
there is budget neutrality and a variety of other things. We 
have to make sure that the Medicaid program is protected, but I 
certainly think this is a positive area to move into and 
appreciate your staff's help with it.
    Ms. Pelosi. Thank you very much, madam.
    The disparities in AIDS care we have talked about this this 
morning as well. Studies continue to confirm disturbing 
disparities in the quality of AIDS care with minorities and 
women often receiving lower quality care. What is HCFA doing to 
respond to this concern?
    Ms. DeParle. As you know, we have a new Medicaid director, 
Tim Westmoreland, who is very interested in these issues. He 
was telling me just recently that, in the most recent report he 
has seen on Medicaid, we are actually doing somewhat better now 
in making sure that the people who are covered with Medicaid at 
least get the kind of treatment that they are supposed to get. 
It is still not good enough. I think Tim has some ideas on how 
we can move forward.
    We are considering, as you know, a rule for Medicaid 
managed care organizations and we are looking at some of the 
comments that we have received there on things we could do in 
this particular area to make sure that the AIDS treatment 
guidelines are followed.

                       PREVENTIVE HEALTH SERVICES

    Ms. Pelosi. I have every confidence in you and in Tim 
Westmoreland in this regard. I look forward to seeing how this 
unfolds. If I may, Madam Administrator, proceed to talk about 
prevention services. Prevention is the best investment in 
health care, early prevention and then early intervention but 
prevention is better if successful. I was pleased at the 
administration's proposal to expand the availability of 
prevention health services in Medicare. Can you provide us with 
more details about how these proposals would affect access to 
such important services as mammography and prostate cancer 
screening?
    Ms. DeParle. I can. We have done studies and the CDC and 
other organizations have done studies that have shown that even 
when the benefit is available, as Congress and the 
administration have worked to make these new benefits available 
in Medicare, that the existence of a deductible or a copay can 
be an impediment for some people. I was shocked to see that our 
mammography rates are not nearly what they should be, even for 
Medicare where it is covered. When you look at the studies and 
look at the interviews of the beneficiaries, it seems that 
often the problem is the coinsurance. So what we are proposing 
to do is waive the coinsurance for all of those preventive 
tests and we believe that you will see quite a significant 
improvement in the take-up rate or the number of our 
beneficiaries who actually get the test. Then we also need to 
work with the physician community and we are trying to do that 
to make sure that they remind beneficiaries of the fact that 
they are covered for the tests and that they need to get them. 
We find that that is probably the single most effective way.
    Yes, we just looked at some studies about this. It turns 
out that the most effective thing is not necessarily a blanket 
letter to everyone but an individual health care provider, a 
physician or a nurse saying, Did you know it is time for a flu 
shot? I think you should get one, or What do you think about 
it? Somehow we need to affect that relationship. We are working 
with the AMA and with other physician groups to see if we can 
make some progress there.

                       PRESCRIPTION DRUG BENEFIT

    Ms. Pelosi. Thank you very much. One other question I have 
is something again, following up on our conversation with the 
Secretary this morning, and, that is, about the fact that it is 
illegal for people from the U.S. to go to Canada or Mexico and 
return with prescription drugs that, although approved in the 
U.S., are cheaper in those two countries, or any other country 
for that matter. It would be a very sad sight to see Americans 
arrested on the border for buying drugs, prescription drugs 
cheaper in another country. The Secretary said that they were 
going to think of ways to deal with the issue of the disparity 
in pricing, et cetera. But I think the administration could 
take the lead in immediately proposing legislation to remove 
the ban on U.S. citizens going to buy prescription drugs. Again 
these are drugs, I understand this is in place because of 
safety issues but nonetheless many of these drugs, as I say, 
are approved by the FDA, on the market in the U.S. but just 
cost a different price for all the reasons that we know. I hope 
that you will consider being part of changing the law that 
makes that illegal.
    Ms. DeParle. Yes. I will be busy working with the Congress 
on I hope getting a prescription drug benefit for Medicare.
    Ms. Pelosi. That would be the best of all but even at that 
we don't want it to be--in the interest of fiscal 
responsibility, we would hope that the cost of it would not be 
more than it costs in other countries.
    Thank you very much, Madam Administrator. Thank you, Mr. 
Chairman.
    Mr. Porter. Would the gentlelady yield on that?
    Ms. Pelosi. I am pleased to yield.
    Mr. Porter. If I understand correctly, you want the 
Canadians to subsidize American citizens buying drugs in their 
market?
    Ms. Pelosi. Right now, Mr. Chairman--that is a perfect 
question, because right now we are subsidizing a lot of the low 
cost of drugs in other countries of the world, too, in the U.S. 
Many of these drugs are U.S.-developed that are cheaper in 
other countries.
    Mr. Porter. Exactly. Let me make the point, if I may with 
all due respect, that they are developed here because our 
pharmaceutical companies have the profit margins to invest in 
the research that develops them. When they put the drug on the 
market, they don't know how long it is going to be on the 
market and be profitable, and they need a return so that they 
can continue to invest in the kind of research that develops 
these drugs. I think suggesting that Americans ought to go over 
and buy subsidized drugs in Canada and make the Canadian 
taxpayers pay for them is very wrong.
    Ms. Pelosi. Mr. Chairman, I think that your point is well 
taken, but it points out the unfairness to Americans, as well. 
I agree with you that there has to be an incentive, a profit 
motive for the pharmaceutical companies to develop these drugs. 
But it is because of our own lack of a prescription drug 
benefit, many of our seniors are in a very difficult place. I 
just hate the sight of them being arrested on the border for 
buying those drugs.
    Mr. Porter. If the gentlelady will continue to yield, let's 
address that through a program aimed at those people that are 
having to make very difficult choices. I think we agree on 
that.
    Ms. Pelosi. Perfect. You are absolutely right. The whole 
point of my line of questioning is just to arrive at exactly 
where you did, which is this shouldn't have to be necessary. 
And it is just to point that out. It shouldn't have to be 
necessary that they go there. Again when you look at the 
complications or the ramifications of what I am saying, the 
points that you make are legitimate. However, it also 
highlights the fact that it shouldn't be necessary for 
Americans to have to resort to this. They are doing it. They 
are doing it. It is a question of let's highlight this so that 
we can reach a conclusion that is fair to the pharmaceutical 
companies but also fair to our seniors as well.
    Mr. Porter. I thank the gentlelady for yielding. Thank you, 
Ms. Pelosi. Mr. Miller.

                        MEDICARE HMO WITHDRAWALS

    Mr. Miller. Actually I think I agree with Ms. Pelosi on 
this issue. In fact I have cosponsored a bill that Mr. 
Gutknecht has to allow people in Minnesota, along the Canadian 
border to cross the border and buy prescriptions at a local 
pharmacy. Why can't, I assume they have an Eckerd's in Canada, 
that they can't go to Eckerd's and buy it there if it is 
cheaper. GAO I think did a study, and sometimes it is more 
expensive in Canada. But they should have the right to choose. 
There shouldn't be a Federal law to prohibit that. I think that 
is an FDA issue for another subcommittee.
    Thank you for being here today. A question we have talked 
about, and I am sorry I missed the earlier part of this meeting 
today, was the HMOs. As you know in my area, Florida, the 
Sarasota-Bradenton area, the HMOs have basically been driven 
out of my area sadly for a lot of reasons. It is unfortunate. 
Whether you believe in HMOs or not it doesn't matter. The 
question is the choice for some people. We completely agree on 
that. People should have the right to choose that. What can I 
tell my people, my seniors back home that have been driven out 
of their HMOs? Is there any hope that it is going to change for 
them in the future? Is there anything that HCFA can do or is 
there something that Congress needs to do to make it possible 
for HMOs to come back into my area? People are probably going 
to be reluctant to get back into it because they have been 
driven out of them sadly. What hope can I give my constituents?
    Ms. DeParle. I should have mentioned this. Mrs. Northup had 
questions on this area. One thing you can tell them is that you 
worked last summer to make some changes to the Balanced Budget 
Act that redounded to the benefit not just of the fee-for-
service hospitals and skilled nursing facilities and home 
health agencies but also by raising their reimbursements. 
Because of the impact that has on the managed care 
organizations' reimbursements, you also affected that. But 
honestly, Mr. Miller, I can't tell you that that will be 
sufficient to bring the managed care plans back into the 
Sarasota-Bradenton area, because when you actually look at what 
is happening, number one, it seems to mirror what is happening 
in the commercial sector. Some of the same managed care plans 
are pulling out of areas around the country for the private 
sector as well as in Medicare.
    Secondly, it seems to be a host of factors, not just the 
reimbursement rates. Some of them have had difficulty putting 
together networks in some areas. Some of them have told me 
frankly that the Wall Street firms don't want them to be in 
this line of business anymore. They want them to move into 
other things. It is a host of different factors. We have been 
working with the managed care industry where we have 
administrative flexibility to try to provide them with some 
flexibility that they say they need. We have made a number of 
efforts. Whether that will be enough to bring them back in all 
the areas where they have left, I don't know. We have seen some 
plans coming back in but it hasn't been at the level that I 
would have hoped. I would just say we will continue our 
efforts.
    Mr. Miller. Areas where they have left, and this is what 
little I have seen about it in Florida, is the high cost areas 
they stay, like Miami they are in. Right across the Skyway 
Bridge from my district, in Pinellas County, they get $800 a 
year more. They are staying in Pinellas County, my 
understanding is. Is that true, just the high cost areas they 
get so much money, they have got plenty of cushion?
    Ms. DeParle. I thought the same thing and it is generally 
true that in the high reimbursement areas, in areas where they 
are getting an additional update, they have more or less stayed 
but it isn't always true. There have been some aberrations from 
that. That is why I say when you talk to the managed care 
executives, which I have done, they tell me it is a host of 
factors. It isn't just the reimbursement rate.
    We prepared a report on this subject last fall, I think in 
October--October or November--that I would like to supply to 
the committee because it gives you our analysis of what has 
happened and how many people have been affected. I think that 
might be helpful.
    [The information follows:]

    This report, which discusses Medicare HMO withdrawals, was sent to 
all Committee members on February 9, 2000. It is not being printed 
here, due to its length (30+ pages). An additional copy will be sent to 
Mr. Miller to respond to his specific request.

                   STATE CHILDREN'S HEALTH INSURANCE

    Mr. Miller. Hopefully you will be able to come down to my 
district. I know you want to meet with some seniors. I want you 
to meet with some, because I have had a number of calls on 
this, these seniors that have been pushed out of HMOs, and get 
a better understanding of that. Let me switch over to this drug 
question issue that I think has been raised also about the new 
drug proposal.
    First of all, are you familiar with the child health 
program that I don't think is run under HCFA but is a block 
grant to States to cover health insurance for children and all 
50 States get to work on the program that was passed 3 years 
ago or so?
    Ms. DeParle. Is this the so-called S-CHIP program, the 
State Children's Health Insurance Program?
    Mr. Miller. Right.
    Ms. DeParle. I am and in fact it is administered by HCFA. 
It is a State-Federal program like Medicaid.
    Mr. Miller. How is that going?
    Ms. DeParle. We were just talking about that earlier. I 
would say it has been a success. Mrs. Lowey was pointing out 
that it has been harder than anyone thought to actually find 
these children. That has been hard. Some States have done some 
very innovative things to try to find them and to simplify the 
eligibility process and make it much simpler than the old 
Medicaid process, to go out to where the children are instead 
of staying in the welfare offices. Some States have been very 
successful in that. There are about 2 million children enrolled 
in it now and we are looking to increase that each year.
    Mr. Miller. The standard of this is not exactly a welfare 
standard.
    Ms. DeParle. No, that is the point. It is working families.

                       PRESCRIPTION DRUG BENEFIT

    Mr. Miller. It is a higher standard, right. Would a program 
like this work for the drug benefit for seniors. A lot of 
States, my understanding is maybe a dozen have a program 
already to help provide subsidy and assistance to seniors 
because of their high prescription costs. Prescription coverage 
is not just if you are poor. You could be prescription poor, 
and so you need to have a variable type of plan.
    Why wouldn't a system like that which is a little more 
controllable than a full entitlement program work, patterned a 
little bit after the child health program?
    Ms. DeParle. There are, as you point out, some programs in 
the States. I know Pennsylvania has one, and I have met with 
seniors up there who have been fortunate enough to have the 
advantage of that program. As you also say, the need for 
prescription drugs and the lack of dependable prescription drug 
coverage is not limited to just one income group. It turns out 
that it is something that affects a lot of different income 
groups depending on what prescriptions they need.
    I believe that one of the beauties of the Medicare program 
has been that it is universal and that everyone participates in 
it. I think that is one of the reasons why it is strong and why 
seniors and disabled people feel so strongly about it and want 
it. I guess my concern would be that if you do the kind of 
program you are describing, a block grant to States, that it 
certainly wouldn't have the same impact as a Medicare 
prescription drug benefit would have. That would be my concern. 
But I am anxious to work with you and the other Members of the 
Congress to do whatever we can to get drug benefits to our 
seniors and disabled people who don't have them.
    Mr. Miller. I am not familiar with what States have it. I 
have just heard that some States have a program. I don't even 
know how much money is involved. We are talking about a fairly 
substantial amount of money. These are the ones we want to 
reach as quickly as possible. I think your plan that has been 
proposed really takes 10 years to phase in, and there are not a 
lot of benefits for several years. I am not sure a plan that 
fits only prescription needy people is the right one, are the 
ones that need it the most, not strictly income based but 
prescription need based. And some way that we could more 
quickly put a program together through the States would make 
possibly more sense. I think that is another committee issue, 
too.
    Thank you very much. Thank you, Mr. Chairman.
    Mr. Porter. The Chair understands that Mrs. Northup and I 
have additional questions. Do you have additional questions, 
Mr. Miller?
    Mr. Miller. No.
    Mr. Porter. Ms. Pelosi?
    Ms. Pelosi. No.

                       HOME HEALTH PAYMENT SYSTEM

    Mr. Porter. Why don't we do one question each and see where 
we are in time.
    Ms. DeParle, we have a new prospective pay system going 
into effect for home health care.
    Ms. DeParle. Yes, sir.
    Mr. Porter. Can you tell us what the status is of that, 
your expectations for it and what the timetable might be?
    Ms. DeParle. I believe I can, sir. The rule was published I 
think in October of 1999, which was on schedule. I am very 
proud of that because when I first spoke with staff about it, 
they didn't think there was any way they could get it done by 
then. We are on track then to have it implemented, I believe, 
in October 2000. We have been working with the industry on the 
rule and of course reviewing comments on it.
    Mr. Porter. At that point, the system changes to a 
prospective pay system entirely. We are in a transitional 
period now supposedly?
    Ms. DeParle. We are. We are in what the BBA established as 
an interim payment system, but then last year in the BBRA they 
added some additional funding and adjusted it.
    Mr. Porter. You adjusted it because it was in some cases 
extremely punishing even to good providers, and Congress made 
some further adjustments. When we go into this system, do you 
think that this is going to significantly affect costs, reduce 
costs?
    Ms. DeParle. I think it will make for a more efficient 
system. It is interesting as I am sure you know that home 
health spending is already substantially less than what had 
been projected. Even more reduced than what the BBA projected. 
I think there are a number of reasons for that. I think part of 
it is the interim payment system and some of the changes that 
have been made but I think the chief reason is the increased 
emphasis on combating fraud, waste and abuse in the Medicare 
program.
    As you know, there were some unfavorable Inspector General 
and General Accounting Office reports about that kind of fraud 
in home health in particular. We began to really pay a lot more 
attention to home health claims, and I believe that has had an 
effect on spending levels. I certainly don't have any 
particular number in mind that I think we are going to go down 
to. I want to make sure that beneficiaries have access as I 
know you do to the services they need. I believe that instead 
of reimbursing agencies for every single service they provide 
and therefore providing an incentive to just do as much as 
possible, the new system provides them with an incentive to be 
more efficient. I hope what we will find is that they are 
efficiently meeting the needs of beneficiaries.
    Mr. Porter. Thank you. I think that was three questions. 
Mrs. Northup.

                        MEDICARE HMO WITHDRAWALS

    Mrs. Northup. I will try to be quick. I do have so many 
questions, but I am just going to submit them and ask you to 
please answer them. I was interested in the exchange I heard a 
few minutes ago about one of the HMOs pulling out of one of our 
colleague's States. He made sure that didn't happen. I just 
wondered if you could tell me a little bit more about that. 
Like how that was prevented.
    Ms. DeParle. I don't know how he did that but it was 
Congressman Ryan in Wisconsin. The plan had announced that they 
wanted to pull out and he went and talked to them and convinced 
them somehow that they should try to stay in his area.
    Mrs. Northup. It was just persuasion? There wasn't any sort 
of reorganization?
    Ms. DeParle. Not that I am aware of. Then what he asked us 
to do was could we quickly re-certify them, because once they 
were out, then they had to apply to come back in, and could we 
quickly process them so that they would be able to start 
serving people at the beginning of this year. We did that.

                       HYPERBARIC OXYGEN THERAPY

    Mrs. Northup. I have learned a lot in this job. Hyperbaric 
oxygen therapy, which let me just say for the 5-second 
explanation is when you have skin wounds, which many seniors 
do, that have to get better and they don't, diabetes can be a 
particular problem. These oxygen chambers help healing go much 
faster. You wrote some new rules on that therapy.
    Can you explain to me why you even wrote the rules? I have 
looked at the information and I can't find that there was even 
a danger or any sort of patient damage that ever occurred, but 
the new rules require so much more training, a doctor to be 
present every minute of it, and the pulmonary doctors or 
whoever else are there, they are not even asking for this. 
Nobody that I can find even asks for it in the medical 
community. There is nobody that has been trained to the level 
that you all are asking. So it is almost--if you finalize this 
rule, people are wondering if this therapy is going to be 
available at all. And there wasn't even damage happening.
    Ms. DeParle. What I would like to do, if I could, is to get 
our chief clinical officer, Dr. Jeff Kang, to sit down with 
you. Maybe the three of us could talk about this. I think you 
wrote me a letter on it, some others did as well. I have spoken 
with him about it. I believe from his perspective, there was a 
lot of damage occurring. This therapy is something that should 
be used only in very rare instances. It can be dangerous, 
apparently. There have been either deaths or some real problems 
that have been caused by it. That was the basis for the 
guidance that we put out. But I would like to have him sit down 
and talk to you about it from a clinician's standpoint, or if 
you have people you want him to talk to. It sounds like you 
have actually talked to some doctors as well.
    Mrs. Northup. I have actually followed up and I can't find 
anything like what he is referring to. My suspicion is surely 
you wouldn't put this in there in order to in a sense just make 
the service unavailable.
    Ms. DeParle. No, we wouldn't, unless we felt it is a 
service that is totally inappropriate. If we felt that, I would 
say so.

                            USE OF RESTRAINT

    Mrs. Northup. In 30 seconds, restraints. I have these 
wonderful child residential facilities. Our State depends on 
them, our local community depends on them. The new restraint 
law, what every one of them tells me that they believe the way 
you have written this is that if they have two kids that get in 
a fight and they pull them apart and hold them, none of them 
use any artificial restraints, they never tie them down, they 
never tie them to a bed, there are no artificial restraints 
ever used in these facilities. The new regulations would not 
allow them without a doctor present saying that, which means 
they virtually have to have a doctor present every minute.
    Ms. DeParle. This has come full circle because it was at 
this hearing last year that Ms. DeLauro raised the issue of 
restraints with me based on some articles that had appeared in 
the Hartford Courant. Their concern was that we weren't doing 
enough to prevent the improper use of restraints.
    Mrs. Northup. Which is important.
    Ms. DeParle. I don't know whether the rule published last 
July actually applies to the kind of facility that you said. So 
what I would like to do is talk to your staff and get more 
information about them. It could be that they have a 
misunderstanding. At any rate, I will certainly spend the time 
to make sure that they understand what the new rule is and, if 
there is a problem, we will continue to talk to you about it.
    Mrs. Northup. I met with a number of institutions and their 
association representative, and I thought that they had 
actually gotten clarification that backed up how they read it. 
That would be fine. If you would do that, I would appreciate 
it.
    Ms. DeParle. Thank you.
    Mr. Porter. We have arrived at the magic hour. Ms. DeParle, 
I think I speak for the whole subcommittee when I say how 
impressed we are with the way you handle our questions and your 
candid and straightforward answers. We are all impressed with 
the absolutely wonderful job you are doing there at HCFA. We 
wish you well in the remaining, how many months, but who is 
counting, right?
    Ms. DeParle. 11 or so.
    Mr. Porter. 10 or 11 months of your stewardship. Thank you 
so much.
    Ms. DeParle. Thank you very much.
    Mr. Porter. The subcommittee stands in recess until 10 a.m. 
tomorrow.
    [The following questions were submitted to be answered for 
the record:]



                                       Wednesday, February 9, 2000.

                ADMINISTRATION FOR CHILDREN AND FAMILIES

                               WITNESSES

OLIVIA GOLDEN, ASSISTANT SECRETARY, ADMINISTRATION FOR CHILDREN AND 
    FAMILIES, ACCOMPANIED BY DENNIS P. WILLIAMS, DEPUTY ASSISTANT 
    SECRETARY, BUDGET
    Mr. Porter. The subcommittee will come to order. We 
continue our hearing on the appropriations for the Department 
of Health and Human Services with the Administration for 
Children and Families, and we are pleased to welcome Dr. Olivia 
Golden, the Assistant Secretary. Welcome once again. We like 
the work that you do in the Department, and why don't we just 
proceed with your statement, and then we will go to questions.
    Ms. Golden. Mr. Chairman and members of the subcommittee, I 
am delighted to present the President's budget request for the 
Administration for Children and Families, ACF, for fiscal year 
2001. I am accompanied by Dennis Williams, Deputy Assistant 
Secretary for Budget for the Department.
    The budget for ACF invests in human services that will 
benefit all Americans, focusing on programs to promote healthy 
development of our Nation's children and economic security and 
independence for families and communities.
    The fiscal year 2001 budget for ACF is $43 billion, of 
which $24 billion is being requested in new budget authority. 
The remaining $19 billion has been appropriated through the 
personal responsibility and Work Opportunity Reconciliation Act 
of 1996.
    In 2001 the budget for ACF includes $12 billion in 
discretionary funds and $31 billion in entitlement funds. Over 
70 percent of the $12 billion discretionary budget request 
supports programs serving young children and their families 
through the Child Care and Development Block Grant and Head 
Start. For fiscal year 2001 we are requesting an unprecedented 
$1 billion increase for the Head Start program, continuing to 
move us toward the President's goal of providing a Head Start 
experience for 1 million children in 2002. We are also 
requesting an increase of $817 million over the amount advance 
funded in the fiscal 2000 appropriations for the Child Care and 
Development Block Grant for a total of $2 billion in fiscal 
2001 and $2 billion in advance appropriations for 2002. In 
addition to the discretionary increases for child care, we are 
requesting $600 million in entitlement funds for an early 
learning fund to focus on the quality of child care and on 
school readiness.
    Other increases in this request include those for tribal 
child welfare, battered women's shelters, Native American 
programs, individual development accounts, youth activities 
related to the Department's mental health initiative, victims 
of torture, and Federal administration. In addition, the 
Administration for Children and Families is seeking continuing 
funding for a wide range of programs serving some of this 
Nation's most vulnerable populations, including low income, 
home energy assistance, the community services block grant, 
programs for persons with developmental disabilities and 
services for refugees.
    I would like to highlight a few key programmatic 
initiatives in our fiscal 2001 request.
    Child care initiative. The Clinton administration has been 
committed to making work pay through a variety of supports for 
working families, including the earned income tax credit, 
family and medical leave, and child health insurance. In this 
year's budget proposal, the President continues his commitment 
to working families. A recent report, Access to Child Care for 
Low income Working Families, found that only 10 percent of the 
14.7 million children potentially eligible under Federal law 
received Federal child care subsidies in 1998. Large numbers of 
children remain unserved despite the fact that States drew down 
virtually all available 1998 Federal mandatory Child Care and 
Development Fund dollars. In the first three quarters of 1999, 
responding to this need, States transferred $1.72 billion in 
Federal TANF dollars to the Child Care and Development Fund, 
more than double the 800 million transferred in all of 1998.
    Affordable and adequate child care, however, remains out of 
reach for many working families. While the average family pays 
about 7 percent of its income for child care, child care 
consumes about a quarter of the income of very low income 
families who pay for care. Two recent studies suggest that 
increased funding for child care subsidies increases employment 
rates and earnings for low and moderate income parents while 
other studies have found that families on waiting lists for 
child care assistance cut back their work hours and are more 
likely to receive public assistance or go into debt, and then 
when families cannot get help in paying for child care it is 
harder for them to find quality care that helps prepare their 
children for success in school.
    In addition, research on preschoolers finds that quality 
child care makes a significant difference in children's 
cognitive performance, language development, social adjustment 
and behavior, with differences found several years after 
program participation. Studies of investments in quality have 
found that statewide quality initiatives such as those 
undertaken in Florida and North Carolina have resulted in 
improved quality of child care programs and enhanced child 
development. Despite the known link between the quality of 
child care and subsequent performance in school, too many 
children are still in poor quality care that threatens not only 
their development but in many cases their health and safety as 
well.
    The fiscal year 2001 request proposes to increase the 
discretionary funds available for affordable quality child care 
by $817 million for a total fiscal year 2001 level of $2 
billion, and it also includes an advance appropriation request 
of $2 billion for fiscal year 2002. These new funds combined 
with child care funds provided under welfare reform will enable 
the program to serve an additional 300,000 children in fiscal 
year 2001. We also are requesting $600 million in entitlement 
funds to create the early learning fund. These funds will be 
used to provide grants to communities to improve school 
readiness by fostering the cognitive, physical, social and 
emotional development of children under 5 years old through 
improvements in the quality of child care. Quality child care 
providers spend more and more meaningful time with children and 
have more age appropriate books, toys, and equipment for the 
children they serve. For the proposed Early Learning Fund, ACF 
will work with the Department of Education and the States to 
establish performance goals and indicators that focus on 
educational outcomes and quality factors such as provider 
training and low child to staff ratios that are associated with 
enhanced school readiness.
    Head Start. Head Start has been and continues to be one of 
the administration's top priorities. The Head Start program 
fosters the development of young children from low income 
families to enable them to function at their highest potential. 
There is an increasing body of evidence that supports the 
advantages that accrue to disadvantaged children and families 
who participate in Head Start. Studies have demonstrated that 
Head Start programs produce immediate gains across a diverse 
range of areas, such as cognitive functioning, academic 
readiness and achievement, self-esteem, social behavior and 
physical health, and that Head Start children have better high 
school attendance rates, are less frequently retained in grade 
and have less need for special education. In addition, Head 
Start has been shown to help parents improve their parenting 
skills, increased participation in children's school 
activities, enhance their confidence and their abilities to 
contribute to their communities and in many cases help parents 
on the road to self-sufficiency. In short, Head Start works.
    Head Start has made dramatic progress toward developing an 
outcome-oriented accountability system--with many thanks, Mr. 
Chairman, to the focus on the Government Performance and 
Results Act that you and this committee have had--outcome-
oriented accountability system that can be used to determine 
the quality and effectiveness of Head Start. The Head Start 
Family and Child Experiences Survey, or FACES, is a periodic 
longitudinal data collection that provides information about 
children as they enter the program, about their experience in 
Head Start and about their status, both at school entry and 
after a year of kindergarten. The ongoing FACES effort will 
continue to help Head Start chart its progress in meeting GPRA 
goals and improving services to children and families.
    The first results, based on a nationally representative 
sample of 3,200 children and families in 40 Head Start programs 
across the country, give reason for encouragement. The quality 
in most Head Start classrooms is good, and no classrooms score 
in the poor range, and perhaps most importantly, program 
quality, small classes and richer teacher-child interactions is 
related to children's outcomes. In addition, Head Start 
children have achieved academic knowledge and social skills 
that indicate a readiness to learn effectively when children 
reach kindergarten and first grade.
    Because Head Start makes such a difference, we are 
requesting a $1 billion increase for fiscal year 2001. This 
level will provide approximately 950,000 infants, toddlers, 
children and their families with a Head Start experience, an 
increase of over 70,000 children, moving us closer to the 
President's goal of enrolling 1 million children by the Year 
2002.
    Native American programs. The fiscal year 2001 request 
includes an additional $9 million for native American programs 
for a total of 44 million. Tribal consultations indicated to us 
the continuing need for social and economic development among 
native Americans. The tribal initiative will emphasize self-
sufficiency through economic development and governance 
projects, including projects focused on energy development and 
tribal codes.
    Individual development accounts. The Assets for 
Independence Act of 1998 authorized funds for a new program to 
empower low income individuals to save for a home, for post 
secondary education or a new business and a match rate ranging 
from 50 cents to $4 for every dollar saved. In fiscal year 2000 
$10 million was appropriated for the program, and an additional 
$15 million is requested in fiscal year 2001. The total of $25 
million will support grants to 100 new nonprofit organizations 
in partnership with financial institutions to administer IDA 
demonstrations, serving an additional 20,500 low income 
individuals.
    The budget request also includes an increase of $10 million 
for youth activities. Under the authority provided in the 
Runaway and Homeless Youth Program, we will support targeted 
early intervention for youth at risk of running away with a 
focus on provision of mental health services to young people 
and their families. These funds will also provide an 
opportunity to establish and strengthen linkages with other 
service programs such as mental health, housing and Medicaid.
    The 2001 request includes $134 million for battered women's 
shelters and the domestic violence hotline, an increase of 16 
million. This is part of a broad departmental initiative to 
curtail violence against women, enhancing the services provided 
to women and their families, and changing the social norms that 
permit violence against women to occur. The total requested for 
ACF will provide an additional 30,000 survivors of domestic 
violence and sexual assault with counselling, shelter and other 
services. We will encourage the funding and establishment of 
shelters in underserved urban and rural areas, including Indian 
tribes and Alaskan native villages. In addition, we will 
provide culturally appropriate services for underserved 
populations such as ethnic minority populations and persons 
with disability.
    The budget request for the Refugee and Entrant Assistance 
Program includes $9.8 million, an increase of two and a half 
million dollars over fiscal year 2000, to fund the domestic 
treatment activities authorized by the Torture Victims Relief 
Act, expanding treatment services to the many survivors of 
torture now in the United States.
    Child support enforcement. The Federal Government has a 
strong interest in a nationwide child support system that is 
effective. We have taken great strides to ensure that children 
receive the financial support that they deserve from both 
parents. In 1999 child support collections reached an all time 
high of $15.5 billion dollars. The budget includes several 
proposals that focus on increasing payments to families and 
making the system work better. The proposals, taken together, 
help States collect more child support, increase payments to 
families by nearly $2 billion over 5 years and are self-
financing. Providing additional income to families helps 
support their children's needs and their efforts to seek work 
and helps them become and stay self-sufficient. Proposals 
include optional changes in the distribution system for child 
support collection and pass-through and disregard provisions.
    The current rules for child support distribution are 
complicated and may result in government, not families, keeping 
child support moneys paid by the noncustodial parent. The 
proposals will enable States to simplify the rules and 
encourage States to pass through more child support directly to 
families. In States that adopt the new options, families that 
have left welfare will keep all the child support paid by the 
noncustodial parent. Families still working their way off of 
welfare will be able to keep a portion of the child support 
they are owed. These proposals will create a clearer connection 
between what a noncustodial parent pays and what the family 
gets, giving parents more reason to cooperate with the child 
support system.
    In addition, the budget includes new enforcement tools to 
get parents to pay the child support they owe. For example, 
when parents refuse to meet their obligation they may have 
their vehicles booted, they may have a harder time obtaining or 
renewing a passport and they may be prohibited from enrolling 
as a Medicare mechanic provider. These proposals will not only 
help families, they will make the program operate better while 
we continue our work for America's children.
    Child welfare tribal initiative. In 2001 the President's 
tribal initiative includes $5 million in entitlement funds for 
a two-tiered child welfare proposal. First, the Secretary will 
provide grants to a limited number of tribes to directly 
improve child welfare programs and outcomes for Indian 
children. In addition, in order to identify the methods for 
improving tribal child welfare capacity, we need to develop a 
knowledge base about the needs and strengths of Indian tribal 
child welfare programs. This needs assessment will provide 
critical information about the status of tribal child welfare 
and serve as a foundation for future technical assistance and 
policy development.
    And finally, Federal administration. The request for 
Federal administration is $165 million, an increase of $17 
million. In addition to built-in increases such as raises, 
higher rents and health insurance costs, this level is expected 
to fund 1,560 full time equivalent staff, a modest increase of 
60 over fiscal Year 2000. The FTE increase will support such 
critical activities as conducting the new child welfare 
monitoring reviews, meeting the demands of an increasing number 
of tribes for technical assistance in developing and 
administering tribal TANF programs and the technical assistance 
required by tribes as we make funds directly available for 
child support enforcement and managing significant increases in 
the number of Head Start and early Head Start grantees.
    In conclusion, I would like to emphasize our commitment and 
my personal commitment to achieving results, to measuring 
results and to jointly working with our partners as we develop 
and refine measurable goals and objectives as required under 
the Government Performance and Results Act. Our performance 
measures are an integral part of the ACF budget. Notably this 
includes the first GPRA performance report, which compares 
fiscal year 1999 results to the goals in our 1999 performance 
plan. Although GPRA reporting must mature before its full value 
will be realized, our performance report for this year shows 
improvements. For example, ACF and its program partners 
exceeded performance expectations when we moved 1.3 million 
welfare recipients into new employment. Information like this 
demonstrates that GPRA is a valuable tool that will enhance our 
efforts to improve programs that serve the American people.
    We look forward to working with you, Mr. Chairman, with 
members of the committee and with the Congress on achieving 
these goals, and I would be delighted to answer any questions.
    Mr. Porter. Thank you, Dr. Golden. We are going to operate 
under the 8-minute rule. I have a question on page two of your 
testimony. You said a report found that only 10 percent of the 
14.7 million children potentially eligible under Federal 
standards received child care subsidies. What does that mean? 
"potentially" is a difficult word here. Either they are 
eligible or they are not eligible.
    Ms. Golden. They are eligible under the Federal law which 
says that the maximum eligibility States can set is 85 percent 
of state median income. Because States don't have enough money, 
some States have chosen to set eligibility even lower than the 
maximum allowed by Federal law. For example, the State of 
Maryland sets eligibility at $22,000 when clearly families 
earning in the middle to high 20,000s could use some help with 
child care if they are paying 4- or $5,000 a year in child 
care. The report shows that about one in 10 are served at the 
Federal eligibility level, and the number is about 15 percent 
if you take the actual levels at which States have set 
eligibility.
    Mr. Porter. And the point being that we are not reaching 
many of the children that need help.
    Ms. Golden. Exactly.
    Mr. Porter. Families that need help.
    Ms. Golden. Exactly.
    Mr. Porter. Okay. You realize that our job is to be 
skeptics.
    Ms. Golden. Absolutely.
    Mr. Porter. Questions are not indicative of what we may do, 
but let us look at Head Start for a minute, and the first thing 
that jumps out at us is that the increase of $1 billion that 
you are requesting, which is about a 19 percent increase, would 
produce only about an 8 percent increase in the number of 
children served. So less than half of the money is actually 
going to increase the number of children. Why is that and where 
is the money going to go?
    Ms. Golden. I appreciate questions, even if they are 
skeptical, because it gives me the chance to explain what is 
really important to us. As you know, Head Start increases go 
both to improve the quality of the program and to increase the 
number of children served. In the bi partisan Head Start 
reauthorization in 1998 we, the Administration and the 
Congress, chose to commit a large investment to quality because 
when you are expanding, you are also trying to make sure that 
you have more qualified teachers and that facilities are up to 
par. That is an expensive task.
    Mr. Porter. Let us stop at that point and explain to me 
what quality means. Does it mean raising the teachers' 
salaries? Does it mean additional teacher training? Does it 
mean putting money into construction and improving the 
classroom environment? Tell me what does quality mean.
    Ms. Golden. It means all of that. In early childhood 
programs, for example, putting dollars into teacher training, 
and into teacher salaries that enable you to get to recruitment 
are crucial. We have had some major success in Head Start as we 
have made those investments. We now have a turnover rate of 
about 11 percent compared to about 30 or 40 percent in child 
care programs typically. What we know from the research is that 
that makes an enormous difference for quality and for 
children's outcomes.
    In this year, in fiscal year 2001, the statute dedicates 
47.5 percent of the increase after cost of living to quality, 
or about $418 million. The remaining dollars after cost of 
living and quality go, as you know, to reaching 70,000 
additional children, of whom about 10,000 will be infants and 
toddlers. So it is expansion in both those arenas, and I think 
that investments in quality are part of the reason that our 
GPRA results show us that we are achieving developmental 
outcomes for children and that results, like the results I 
mentioned around turnover and salaries, show that we are 
achieving intermediate results. So I think that the quality 
dollars are related to the results we are accomplishing.
    Mr. Porter. Would you be able to take the number of 
children served as opposed to the number that could be served 
and project out, putting additional money into this? What would 
it cost to serve 100 percent of the children eligible with 
quality programs? In other words, where are we in terms of 
service of the entire----
    Ms. Golden. We currently serve close to 50 percent of the 
eligible preschoolers. Infants and toddlers, or the early Head 
Start program, which is critically important, was begun in 
1994. While it has been increasing substantially, it is serving 
a much more modest number. That will be serving 55,000 children 
after the increase.
    Mr. Porter. So if the program is at $5.3 billion, would it 
take $15 billion a year to serve all the children with quality 
programs? I mean, I am picking a number out of the air 
obviously.
    Ms. Golden. We probably ought to offer you a number for the 
record, but when we get to the million we will be serving more 
than half of the eligible children.
    Mr. Porter. Is there money backed up in the pipeline in 
Head Start; in other words, money that is not being spent at 
the local grantee level?
    Ms. Golden. No, virtually all of the Head Start dollars 
appropriated are obligated each year.
    Mr. Porter. Secretary Shalala talked about the 125 Head 
Start sites that have been closed since 1993 and presumably 
closed because they weren't meeting standards and providing 
quality programs. What do you do when you look at a site and 
say this site is not performing, we have got to close it? Do 
you construct an alternative for the kids that are in that 
program to get them into a quality program?
    Ms. Golden. I am glad you have asked because it is 
important to lay out the whole framework, and in my previous 
role, when I was commissioner of ACYF, I was personally 
involved sometimes in those situations.
    The framework for what we do is that we invest in quality. 
We have very high expectations through the performance 
standards, and then as you have noted and as the Secretary 
noted, we have tough standards in monitoring. If a program 
can't achieve those standards, then in the end if they can't 
turn it around we will close the project. What we do is follow 
the process laid out in the 1994 reauthorization. We do 
monitoring visits. We did about 575 visits last year. We find a 
very small share of programs with problems. Last year we found 
only 16 percent had deficiencies. The rest were meeting the 
standards.
    When a program has a deficiency we require them to do an 
improvement plan and to do it on a tough time line. We have a 
lot of technical assistance available for them because another 
key part of quality and of technical assistance edifies us that 
you do have some help. We then set a time to come back and look 
at the process made against the plan. If they have serious 
deficiencies and are not able to turn it around, we do close 
that program. Sometimes we negotiate with them that they will 
choose to leave and sometimes we have to move through the 
process of termination.
    You are absolutely right to highlight that we strive always 
to make sure that there is no interruption in service for 
children and families. Our goal is to do that. We seek to do 
that by identifying an interim grantee. We will compete for the 
best possible program to replace the terminated program. 
Sometimes it will be a neighboring Head Start grantee, 
sometimes it will be another top quality program in the 
community that is prepared to offer service on an interim 
basis.
    Mr. Porter. Thank you, Dr. Golden. Mr. Hoyer.
    Mr. Hoyer. Thank you, Mr. Chairman. Welcome, Dr. Golden, to 
the committee.
    Last year when we talked, you told me that you were meeting 
with a lot of people, having conferences, providing technical 
assistance, and you just talked about that in terms of 
streamlining and making more efficient the coordination of 
services. Can you give me an update on what progress we are 
making on coordinated services, particularly as it relates to 
all your child care programs and the Head Start programs as 
well?
    Ms. Golden. Yes, I would be delighted to because I am proud 
of that. You and I share a passion for it I think. Let me 
highlight several elements of that update.
    The first is, that I am very proud that in our work with 
Head Start and child care we have moved much more actively into 
working with education partners this year, at both the local 
and the national level. We have been working around bringing 
three communities to the table, Head Start, child care and pre-
K or early education communities. I had the chance to share a 
keynote with Judith Johnson from the Education Department at a 
conference that we hosted for teams from all the States. I 
talked to them about how much more is going on out there than 
there was even a few years ago. GAO has also underlined that 
our efforts to make sure that people understand not only 
programmatically how to put the pieces together, but fiscally 
how to put the pieces together, are paying off. We are doing 
joint technical assistance around that set of issues.
    We are seeing payoff in the number of children who are 
receiving full day services that are also top quality, and in 
the nature of those settings. In my visits in the past year, I 
had the chance in San Antonio to see a partnership between Head 
Start and a pre-K program in a school where they had managed to 
bring dollars together to provide full day services 
essentially, shared teacher conferences to make sure they are 
doing services for those children.
    I also had the chance, just to pick an example from a rural 
area with a different model, in Maine I had the chance to see 
family child care programs where there has been a partnership 
between the State child care dollars and all the Head Start 
grantees. They actually came together to make a proposal 
together to us for Head Start expansion money that would 
complement State child care dollars. They have used those 
dollars to upgrade quality not only in centers but in a rural 
area where family child care homes can be more valuable for 
parents. They have upgrade some of those homes to Head Start 
standards. That has been very important.
    Mr. Hoyer. Doctor, because our 8 minutes does not give us 
time to develop issues, if you could perhaps have your staff--
and I don't want to spend a lot of time on it--but I think we 
need concrete examples of cooperative efforts and how well they 
are working. As you know, Congressman Portman sort of followed 
on the Glenn legislation, and I was acosponsor of that, to 
facilitate community partnerships which you just spoke. So if you could 
give us some concrete examples of that, and I will follow up on that 
further.
    Secondly, as you know, I have been very concerned, as we 
reauthorize Head Start and expand money for it, about the 
extension of construction eligibility, and the building of 
edifices as opposed to the delivery of services to children. We 
don't have the kind of cooperative efforts between education 
buildings, Head Start buildings, health care buildings. What is 
happening on that and how many--Secretary Shalala indicated you 
were going to be watching that very carefully. Can you tell me 
where we are on that?
    Ms. Golden. You are absolutely right that it is very 
important we follow the procedures we have, which say that we 
only approve a request if the grantee has demonstrated it is 
the lowest cost. We have just done a quick check with our 
regions knowing of your interest, and we believe we have 
approved approximately 25 requests in the past year. In each of 
those cases, those are requests where a grantee demonstrated 
that whatever it was they needed to do was the lowest cost way 
of going about it.
    Mr. Hoyer. Can you tell me what was the universe of 
request, 25 of a hundred, of 1,000?
    Ms. Golden. I actually don't know the answer to that, but I 
can seek to find that out.
    [The information follows:]

    Requests for construction funds generally start as a telephone 
inquiry to the regional office. After discussions, and if the regional 
office is convinced that construction funds from the Head Start program 
is the lowest cost solution to the grantees program, a formal request 
is made. Because most of the telephone conversations between regional 
staff and grantees and a grantees pursuit of Head Start funds to solve 
its problem, the number of approvals is almost equal to the number of 
requests.

    Mr. Hoyer. Thank you very much. On the outcome, you 
referred to outcomes, and you said there were 16 percent 
deficiencies. One of the concerns I have had, as you probably 
know, since I have been on this committee was the deficiencies 
in Head Start so often dealt with paper requirements, the 
proper numbers, the proper forms, et cetera, et cetera, as 
opposed to, which is a much harder analysis, outcomes: Are the 
children where we want them to be? And I am much more 
interested, I know you are as well, on the latter than I am on 
the former. The fact that somebody didn't fill the form out 
correctly, if the child is coming out correctly, that is much 
more important. When we refer to a deficiency of 16 percent of 
the programs you reviewed last year of the 600 or so that I 
think you said, what do they deal with those deficiencies?
    Ms. Golden. Let me say a little bit about that and then 
also tell you what we are doing related to outcomes in the 
FACES and the GPRA work and how that is linking back to the 
monitoring. We have revamped and strengthened our monitoring so 
that it focused much more on program quality and what is really 
at the core of the program. Deficiencies do cover a wide range 
of areas. Often what happens, however, particularly in cases 
where it is most severe, which would be a small subset of that 
16 percent, is that you see a management deficiency that 
results in several kinds of things happening. You might see for 
example that health services aren't being delivered promptly, 
that the money isn't flowing as effectively to the teachers and 
the classrooms as it needs to so that they are not having 
access quickly to supplies and equipment. So you might see a 
mix of problems in the most severe of those, but the idea of 
the monitoring is that we are looking at problems in any of the 
major areas covered by the Head Start performance standards, 
the quality of educational services to children, the quality of 
health and nutrition, the quality of family services and the 
core management processes that undergird that.
    Mr. Hoyer. Let me ask you a question on the educational 
services. Do we pretty much have a consensus now that three-
year-olds or four-year-olds can be skilled educationally as 
well as socially in Head Start programs? There was a real 
debate obviously as you know for a long time.
    Ms. Golden. I believe we have a consensus. I believe that 
the work we did because of the commitment of the Head Start 
program, my own commitment and the committee's bipartisan 
commitment to GPRA really drove that consensus, not only in the 
Head Start program but in the scientific community. When you 
have had a chance to look at the GPRA provisions for Head Start 
and see the kinds of measures we are looking at in FACES, you 
will see they include measures that are about cognitive 
development. They also include health and social development 
because, of course, for young children they go together. They 
include measures that are about emergent, literacy and 
numeracy. We have created a consensus about how you look at 
those things in young children and how you improve your 
practice so you are doing better at it. I also just want to 
note that we have been working on that with the Department of 
Education. They are very excited about what we have done and 
see it as having developed some tools that will be useful for 
them.
    Mr. Hoyer. I am glad to hear that. How are communities 
going to access the early learning fund? That is the 600 
million I think.
    Ms. Golden. Yes. Our general plan is that that money will 
go through States and that they will be providing challenge 
grants to communities. We would like to model it on programs 
like North Carolina's Smart Start that provide flexibility, but 
we want to focus on outcomes and results so the communities 
have to deliver in response to it.
    Mr. Hoyer. Thank you. Thank you, Mr. Chairman. Appreciate 
your advice.
    Mr. Porter. The tyranny of the time clock. We do have two 
agencies to cover today so we will see if we have time for a 
second round. We will do our best. Mr. Wicker.
    Mr. Wicker. I think Mr. Hoyer got away with one there.
    Dr. Golden, I had a conversation with Secretary Shalala 
yesterday about adoption. You and I spoke before the hearing 
and you told me that you were eager to expand on that. Let me 
just set the stage. The Adoption and Safe Families Act contains 
provisions to eliminate interjurisdictional problems which pose 
as barriers to child adoption. First, the new law requires 
States to assure that their Title 4(b) plans will make 
effective use of cross-jurisdictional resources.
    Secondly, the law also denies Federal foster care and 
adoption assistance to any State that is found to have denied 
or delayed a child's adoptive placement if an approved family 
is available outside the jurisdiction.
    And thirdly, the act directs the GAO to conduct a study of 
interjurisdictional adoption issues. That study has been 
conducted. It was presented in November of 1999, in a GAO 
report entitled HHS Could Better Facilitate the 
Interjurisdictional Adoption Process. It goes on to say that 
HHS has identified problems that affect interjurisdictional 
adoptions but lacks an organized strategy, far from a scathing 
report but still an opportunity for improvement, and I would 
like for you first if you could to comment about your plans for 
responding to this very recent GAO report.
    Ms. Golden. The reason those provisions about 
interjurisdictional adoption are so important to us is that if 
we are going to achieve our goal and the Nation's goal and the 
GPRA goal of making sure that children move swiftly to a 
permanent home, we have the specific goal of doubling adoptions 
from the foster care system by 2002, if we are going to achieve 
those goals we can't afford to lose any potential adoptive 
family. So it is really important to take down all the 
barriers, and we identified that as a very important issue back 
in 1997 in our Adoption 2002 report to the President.
    As our comments in the GAO report suggest, we do believe 
both that we have a strategy and that we have taken important 
actions. As part of our broad adoption strategy, we share GAO's 
view that there is a lot left to do. The key things that we 
have done, the first is worked with the States and held them 
accountable for making those changes under ASFA. So they have 
been changing their IV-B plans, and they also have to change 
their fair hearing rules so that if there is a complaint, they 
can address it.
    Second, we awarded a number of grants in fiscal year 1999 
to make that move faster. One grant was to the American Public 
Human Services Association to provide technical assistance to 
States. Others were demonstration grants that would address 
some of the particularly tough issues.
    And third, we have also been moving on one of the ideas 
that has been highlighted in terms of Internet, the possibility 
of cross-state Internet photo listings that would make adoption 
across jurisdictions easier. We expect to award some dollars 
this year for a next step of development there.
    So I guess what I would highlight, when we had talked it 
sounded as though there were also some specific issues. We are 
very interested if there are specific complaints or concerns, 
we would seek to move on those. All of this is part of a big 
strategy which has led us to a 30 percent increase in adoptions 
from foster care from 1996 to 1998, the first time that there 
has been a measurable increase in those adoptions. We think we 
have done a lot but I think we share the view that there is 
plenty left to do.
    Mr. Wicker. All right. Now, let me ask this specifically. 
Did you say 4(e) plans? Is there a misprint?
    Ms. Golden. Yes, I did.
    Mr. Wicker. The information I had said 4(b). So how are we 
doing? How many States have modified their 4(e) plans to comply 
with this new act?
    Ms. Golden. I don't know of any that have failed to, but 
why don't I double-check. What I was told was that the States 
have done it. Let me double-check and get you the exact number.
    Mr. Wicker. All right. Now, the second requirement, the 
potential denial of foster care or adoption assistance funding 
if a State doesn't comply or cooperate, who would make that 
determination, and has that ever gotten to the serious stage?
    Ms. Golden. On January 25th we published our regulations 
that put in place our new child welfare monitoring system. It 
focuses on outcomes. That is where we will look at the broad 
question of is the State doing everything they need to do to 
ensure a child's quick movement to permanency. So if there was 
the kind of problem that would show up there we would find it 
there.
    In addition, we do have a provision that would allow us, if 
there is a specific problem like the one you describe, to go in 
and look at it in a partial review. So we haven't yet gotten to 
the point where we have gone in and done that. We didn't wait 
for the regulations to work with States, but we now have the 
full array of enforcement tools.
    Mr. Wicker. Okay. So it is still early in that regard?
    Ms. Golden. Yes.
    Mr. Wicker. Of course, the act gives the Department a role 
in interstate adoptions, but I am mindful of the fact there is 
the interstate compact which is a series of State uniform laws, 
and this is still primarily a State issue, but I want to ask 
your opinion. The study seems to deal with the matter of foster 
care, adoption of potentially hard to place older children. I 
would like for you to look into the question of whether the 
interstate compact poses unnecessary obstacles for the adoption 
of newborns, and I have some information back in my home State 
that that is perhaps true and the question occurs to me, if you 
have a recognized licensed adoption agency that has been 
recognized and approved by a State, and then you further have 
the requirement for the approval of an adoption by a duly 
constituted judge of a State, if there is a need for an 
interstate compact set of hoops and obstacles for a newborn 
child?
    Ms. Golden. On the specific issue in your State and how 
that might relate to the interstate compact, let me try to 
learn more and then be in touch with you.
    The role of the Administration for Children and Families as 
laid out in Federal legislation and in terms of our funding is 
about those children who are abused or neglected and who are in 
the foster care system and adopted from that. Of course there 
are some newborn children who are in that situation, but most 
of them, as you rightly note, are older children.
    So that is where our focus has been. It sounds as though 
the issues on which you would like some follow-up are both the 
specific concern inyour State and the broader question of the 
interstate compact in situations that are not covered by our statutes 
or the foster care system; is that right?
    Mr. Wicker. That is exactly correct. Frankly, some of the 
faith based adoption agencies tell me, Congressman, it is 10 
times easier for a teenage girl to go across the State line and 
have an abortion than it is to comply with all the hoops and 
actually put the newborn child up for adoption. So I appreciate 
your looking into that and I look forward to talking with you 
later, and I do have to go to another meeting.
    I just want to submit one question for the record, Mr. 
Chairman, and that is with regard to the research that you 
refer to on the Early Learning Fund. You indicate the research 
shows that when children are in better quality care child care 
programs they have stronger language and premathematic skills, 
better social skills and relationship with their teacher and 
stronger self-esteem, if you could provide me that research, I 
would be interested in knowing if that is comparing a quality 
child care program to a poor child care program or are you 
comparing child care to care by a family member or a 
grandparent or a parent in the home.
    Ms. Golden. The specific study that I was thinking of most, 
the cost quality outcome study, which the Department of 
Education funded, looked across a range of children in child 
care and identified differences across poor to better quality. 
The National Institutes of Health study of infant care doesn't 
typically find differences with the average of all care 
compared to at home. What it does find again is differences 
within the group in care in terms of quality of care.
    Mr. Wicker. Well, if you could submit to us for the record 
every bit of research that you have referred to, both in your 
budget justification and in your testimony, I would appreciate 
it. Thank you very much.
    [The information follows:]

    The information requested are publications that will be delivered 
to the Committee under separate cover.

    Mr. Porter. Thank you, Mr. Wicker. I believe the gentleman 
from Mississippi really snuck in a question there. Ms. Pelosi.
    Ms. Pelosi. Thank you very much, Mr. Chairman. We will all 
follow his model. I welcome, Madam Administrator, on this very 
important issue and your very important administration. The 
concern for child care is universal. The need is so great and 
undermet or unmet, and as a mother and a grandmother and a 
Member of Congress and a woman, I just think that we have to be 
thinking in very different terms about how we address the issue 
of child care in America.
    I have said for a long time that there is a missing link in 
our society. We went from higher education of women, more women 
in the workplace, all of these things to the present situation 
without developing the step that was necessary, which is the 
care of our children, and under our chairman's leadership we 
have had many hearings about child development and how 
important those early preschool years are, not only infant 
years. Not only do we have the child care problem, but we have 
the Head Start program which prepares children for school that 
is not universally excellent, and I know you addressed some of 
this earlier.
    We had a discussion about this last night about the fact 
that when we are talking about increased funding for Head Start 
we are talking more about quantity than quality, expanding the 
universe, and I don't know how much more we can do about the 
quality, but there is a lot of disappointment. I am a strong 
supporter of Head Start. I support the requests that you are 
making for the additional funding, and we all want it to go to 
a lower age and every child who is eligible to be included, but 
we really have to make it more even in terms of lifting up some 
of the poorer examples or else not fool ourselves into thinking 
that these children are being prepared for school under certain 
circumstances in Head Start.
    So the whole early childhood education and child care 
situation is what I want to lay before you to have some 
comments from you which may be different from what you have put 
on the record already just to give you additional time to 
address.
    Ms. Golden. Great. Let me make a brief note about Head 
Start and then move to child care. What I was noting earlier 
was that the national numbers that we're getting through our 
FACES survey show us good quality, no program scoring is poor 
and child development outcomes at this point show us that 
children are achieving the skills that they need. So I would 
actually be very interested in knowing, and perhaps we could do 
that separately, about the specific concerns you have. It is 
very important to us to move on those promptly because we do 
make major quality investments.
    Ms. Pelosi. You go before the reauthorizing committee soon 
or you have been already?
    Ms. Golden. Head Start was reauthorized in 1998 so we 
worked on it at that point.
    Ms. Pelosi. I understand that. Do they not have oversight 
hearings?
    Ms. Golden. We work a lot informally with the staff. There 
has not been a formal hearing. In terms of quality, about $400 
million of the billion dollars this year is focused on 
investments in quality. It is very important to me to know 
about any concerns.
    Ms. Pelosi. I would like to, if it is okay, Mr. Chairman, 
to suggest that perhaps we can meet to exchange some views on 
this subject in a different setting and bring in some of our 
colleagues who are chapter and verse on this and are becoming 
critics of the Head Start program who are strong advocates for 
it.
    Ms. Golden. That would be terrific. It would be very 
important to us to address any of those issues.
    Ms. Pelosi. That isn't to say that wonderful work isn't 
being done by Head Start, but every child in the program should 
have the same wonderful opportunity.
    Ms. Golden. Absolutely. I couldn't agree more, and that has 
been the focus of the philosophy. In terms of child care, as 
you also highlighted, I agree absolutely that there is enormous 
need. The report that we issued last year and that the chairman 
and I were discussing briefly said that for the low income 
children who would be eligible under the Federal law, only 
about one in 10 were served through the subsidy program in 1998 
because there weren't enough dollars. That happened even though 
States spent $1.6 billion that they had to spend to draw down 
Federal funds. They asked for more Federal funds and those 
weren't available. You can reallocate dollars if they are not 
spent, but everything was spent. They transferred TANF dollars, 
and yet even with that they were only able, in 1998, to reach 
one in 10 of the eligible children.
    I have been having the chance to talk to parents and 
employers about that and what I hear from them is consistent 
with the press conference yesterday and the news reports 
yesterday about what employers are saying on child care. I am 
hearing from employers that there is such an enormous need. 
They will hire people and after a few weeks of work someone 
will disappear. If they look into it, they will find out it is 
because they had an informal child care arrangement that fell 
apart and they didn't have the money to find something else. I 
have just been hearing terrifying stories from parents, 
particularly as you noted from working parents with moderate or low 
incomes, about the kind of settings that they put their children in, 
that they are moving kids around from one place to another, and that 
they sometimes find themselves missing work or leaving work. One parent 
even told me about having to go back to welfare when all she needed was 
child care help.
    Ms. Pelosi. It is a very, as I say, a missing link. In 
addition to child care, when moms can take babies to work and 
the rest, I was talking to some people. The unions are in town 
this week, and some of them were telling me about women's 
situation in the unions, that they are trying to get rooms 
where women can nurse babies if they bring them to work or do 
what is necessary for a woman who wants to be a nursing mom to 
do when she is away from her baby, but most of the time it is a 
bathroom stall or something like that. So I think we value 
family, children. We understand the importance of the bonds 
between parents and children, and yet it is necessary for so 
many more women to be in the workplace, and we are not 
recognizing that.
    I am not saying you, I am just saying we as a society. I 
appreciate the good work that you are doing, but I do think 
that one organized force, which are women in the labor movement 
who are networking for other reasons, could be part of the drum 
beat in our country for the change that I hear from women who 
are scientists, working at the NIH or PhDs, doesn't matter your 
education level, your income level or anything. You still do 
not have, when you are expecting a baby, you have no idea 
unless you are extraordinarily wealthy and have a nanny in 
advance. Even if you could afford it, the waiting list that you 
have to get on, you have to be on the waiting list before nine 
months. So you don't even know if you are having a baby and you 
have to be on the waiting list. It is an absolutely ridiculous 
situation, and as I say as a grandmother, I say to my children, 
just stay home and take care of your children.
    Now that is not the answer for other people that may not be 
able to afford that, but we have to make a national decision on 
child care that is about quality and accessibility and 
universality, and as I say, I appreciate the value that the 
administration has placed on this and look forward to 
continuing our conversation about Head Start and this subject 
because I hear the little--would that be that little beeper so 
soon?
    Mr. Porter. I am afraid so.
    Ms. Pelosi. Thank you very much, Mr. Chairman. Thank you, 
Madam Administrator.
    Mr. Porter. Let the Chair inform members of the 
subcommittee that we have three members that have not had 
questions of Dr. Golden and then we have a second agency, the 
Administration on Aging, to take up as well. So that will leave 
us not a great deal of time for the second agency. We will 
simply have to do the best we can.
    Mr. Cunningham.
    Mr. Cunningham. Thank you, Mr. Chairman.
    Dr. Golden, I have no doubt that most of the programs that 
you have listed in your testimony will be increased, for 
example, Head Start is very effective in San Diego. I would 
like for you to provide for the record, though, because I have 
got from GAO to different departments outlining faults with the 
Head Start program. I think a lot of it is because it is 
underfunded.
    But I think when you look through the records, and I will 
make a copy of these if you don't have access--I think you do--
it shows that in many areas Head Start is not working, that 
there is no difference in cognitive skills of some children in 
many age groups that go through Head Start, no academic 
achievement, although I can tell you it works very good in San 
Diego, because I have gone down and visited the sites and 
looked at the testing results and so on.
    But I think when we look at overall, where we are last in 
the industrialized nations in math and science, and California 
is last in literacy or next to the last now, I think we have 
moved up a notch, that we need to scrutinize these kinds of 
programs. One of the problems, we dumped a lot of money into 
programs, but there has been no feedback as far as how 
effective they are.
    Ms. Golden. I would love to look at those specific reports. 
I am wondering about the dates on them. Because right now GAO 
has strongly endorsed the outcome, the FACES approach to 
looking at children's outcomes that is reflected in our GPRA 
plan. I am delighted to hear about San Diego. We do know from 
that that the children in Head Start are achieving better 
results on a variety of cognitive and other developments than 
low-income children looked at nationally.
    I think there is a lot more to do--I would never say that 
we are all the way there. One of the issues that GAO 
highlighted for us prior to the last reauthorization was that 
they believed there was a critical next step in rigorous 
research in terms of a focus on the nature of the comparison 
group that we ought to have to do a really rigorous study. What 
we have done is respond to that. I am personally very proud of 
that because the reauthorization told us to convene an expert 
group, and I had the opportunity personally to chair that 
because I care very deeply about having the best information 
possible. We had GAO membership on that group and a wide array 
of the most distinguished researchers around the country.
    Mr. Cunningham. Like I said, I would like you, so I can go 
on with the rest of this, to provide it for the record. But 
this is 1999, the latest back through 1997.
    Ms. Golden. I will look forward to looking at them.
    Mr. Cunningham. And I am a believer in Head Start. Not only 
that, the mental health which I include drug treatment in, 
especially for children. My own son was involved in that and 
Dr. Sams, I know, was very, very effective. I used to think 
shrinks needed shrinks themselves until I saw the effects of 
how it worked. My son is in trouble again but that part of it 
worked. I think it was very valuable.
    We have things like Sister Clare's home for--don't ride 
with her, she is a Parnelli Jones in the car, but her home for 
battered women, we have the Rachel Grosvenor Center for Women 
in San Diego, Storefront for abused children. All those are 
wonderful programs. I think that is why most of us support 
these things. In your testimony, I would like to point out, my 
youngest daughter, my oldest daughter scored 1550--I am very 
proud--on her SATs, my 17-year-old just scored a perfect 1600 
on her SATs.
    Ms. Golden. Congratulations.
    Mr. Cunningham. They, of course, got early selection to MIT 
and Harvard and Yale and everything. And in our family, my wife 
and I reward our children for academic achievement. Now, their 
expectations for reward exceed dad and mom's budget. And that 
is what I am relating to, I think, in your testimony.
    I mean, it is nice for the President to put a budget out 
there, two chickens in every pot for everybody in every 
country, but when you look at reality, a lot of that is based 
on false assumptions. We stopped last year the raid on Social 
Security. For 37 years Congress took money out of the Social 
Security account. We put it in a lock box. You can't use that 
for spending anymore.
    There will not be any new taxes. The billions of dollars 
that the President proposes in his budget, I will tell you 
right now, they are not going to happen in this Congress. We 
are not going to have new taxes. And it is not ``watch my 
lips''; it ain't going to happen. So when you look at a 
realistic budget, and not just in Head Start, of a billion, but 
for this particular committee, the chairman will tell you that 
there are many new programs proposed and billions of dollars of 
adds in it. Under a balanced budget--although we will have 
emergency spending; we will have floods, earthquakes and those 
things--but the budget, we are going to work under the 
assumption of a balanced budget. What I think I would like you 
to do is present to us a realistic budget. We will increase, as 
I said, most of these programs.
    Now, many of my colleagues on the other side will say, 
well, you mean Republicans are cutting Head Start because you 
are not giving the full billion that the President wants, even 
though we increase it. I mean, that is political gamesmanship. 
That is part of the game we live in. But we are probably not 
going to put a billion dollars in there. I think that needs to 
be off the table and up front right away.
    Ms. Golden. If I might, I was just going to note, obviously 
on the overall question, the administration's proposal is a 
balanced budget; and I know that you are raising a set of 
overall questions. But within this budget, the one thing that I 
would highlight for your interest is that we did seek to follow 
that spirit of being realistic within what is available. You 
will note that the child support proposal in particular is 
self-financing. It manages to get----
    Mr. Cunningham. Let me correct one thing that you said, the 
President submits a balanced budget. Last year the President 
took billions of dollars, he said he wanted 65 percent for 
Social Security and 15 percent for Medicare. Well, he took 
billions of dollars out of Social Security and put it up here 
for new spending so he could balance the budget, and then he 
put surplus into the Social Security account.
    We said, no, we're going to lock it up, we're going to pay 
down the debt and not let politicians touch it. Then he 
increased taxes $94 billion to balance that budget.
    That is what I am saying. The billions of dollars in tax 
increases to balance that budget is not going to happen. So it 
is not a balanced budget. But we do support and we will 
increase most of these programs.
    I think one of the areas that is most underfunded, if we 
take a look at one of the deprived and I think has been 
brutalized area in this country, and I don't have any Indian 
reservations in my district, but I know the Barona just to the 
east of me and so on, I have seen how they have suffered.
    But I also see, and that is why as a conservative I support 
their gaming, I support some of the initiatives that they had; 
and if there is anything we need to do with alcoholism, with 
diabetes problems and health care it is the Native American 
population. I have a ranch, or had it--I had to sell it when I 
took this job; I can't afford to keep it anymore--but I worked 
with Native Americans, and the chief and their children up 
there used to swim in my lake. But if you go into those areas 
and see the depravity that, in my opinion, many of us have cost 
the Native Americans in this country, it is an area where we 
need to improve.
    Ms. Golden. Thank you. I really appreciate that commitment 
to those issues.
    Mr. Williams. One clarification. The President's budget 
does also use a lock box for the Social Security surplus. None 
of the Social Security surplus in this budget proposal is 
proposed to be used for anything else.
    Mr. Cunningham. I don't disagree with that. We are glad to 
see the President. And a former Democratic-controlled Congress 
stole every dime of it. We said, no, we put it into a lock box, 
although I believed listening to the budget yesterday--I can't 
remember the Budget Director's name.
    Mr. Williams. Mr. Lew. Jack Lew.
    Mr. Cunningham. There is a lock box program. I am not a 
budgetary person, but I think there is some difference. At 
least we have agreed not to touch that, let that money accrue, 
earn interest and pay down the national debt.
    I think the difference is, they wanted the savings from the 
national debt to also go into the Social Security Trust Fund. I 
am not sure of the specifics. But there is agreement not to 
touch the money in Social Security this year. Prior to that, 
that was not true.
    Mr. Williams. That is correct. There is also a growing on-
budget surplus.
    Mr. Cunningham. I don't disagree with that.
    Mr. Porter. Thank you, Mr. Cunningham.
    Mr. Miller.
    Mr. Miller. Dr. Golden, good morning. I get amazed at times 
about the size of government. From your administration alone, 
just the thickness of the number of programs, obviously very 
important goals and objectives we all share. The question is 
always achieving these goals and objectives.
    One of the questions--I asked Dr. Shalala this question 
yesterday, and she will hopefully get back to me on that--I am 
going to ask you is, the total number of programs, how many new 
ones we have added, say, since 1993 and especially small 
programs. I remember when the administration first presented a 
budget back in 1993, they said they were going to zero out, I 
think, everything under $10 million--maybe it was $5 million; 
anyway, small programs. You have a real concern about small 
programs being effective.
    Do you have any idea about the total number of new programs 
that have been added? Have we eliminated any? In this budget 
how many new programs?
    Ms. Golden. I guess what I would say is that, overall, I 
think we have consolidated programs rather than added. I guess 
I think about the child care area where there used to be four 
different programs, and now while there is funding on the 
discretionary and the mandatory side, we brought together, 
working with the Congress at the time of the welfare reform 
legislation, one simple set of rules for all of it. So it comes 
together into one program for the States.
    I believe also that the TANF, the welfare reform funding 
stream, allows the States again the flexibility to use one 
funding stream. So my overall assessment would be that there 
has been some----
    Mr. Miller. How about on this year's budget? I happened to 
see, for example, at least two. Strengthening Parents and 
Adolescents is a $10 million program.
    Ms. Golden. That is funding within existing program 
authority. So it will be dollars that will be allocated within 
existing homeless youth authorities.
    Mr. Miller. But it is a new line item in the budget. I just 
happened to see it there.
    Then IDA, I guess, is another new line item. I don't know 
how many new line items we have which creates a new program. 
When I get concerned is a $10 million program--$10 million is a 
lot of money--however, when you divide it around 50 States it 
doesn't amount to a lot sometimes in how much really filters 
down.
    I am interested in how many of those programs we have. I 
like the consolidation idea. I like flexibility in programs 
where you have some block grants. I know Mr. Obey yesterday was 
talking about how he is a big supporter of the community 
services block grant to give more flexibility to his community 
rather than a new $10 million program that may get--if your 
community is wise enough to know how to apply for the grant to 
get the money, it doesn't always flow down there.
    Ms. Golden. A couple of things. I will check the exact 
number. I do think that the additions and the subtractions 
roughly cancel out; that is, that we have been focusing on 
consolidating as much as on reducing.
    In the IDAs, this is our third year of those. They 
existed----
    Mr. Miller. I thought it was zero before then.
    Ms. Golden. No, it was at $10 million in 1999 and 2000, and 
then we are requesting $25 million in 2001. What I would note 
there is that that is, in many ways, a really important use of 
a modest amount of dollars, which is to demonstrate on a large 
enough scale that you can learn from it, a really important new 
idea. In this case, is the idea that low-income parents need to 
be able to save in order to have long-term self-sufficiency, 
save for an education, save for work. We are using it to 
leverage other dollars and demonstrate that idea.
    Mr. Miller. One concern I have in this whole thing--
yesterday I had some people in my office from the YMCA in 
Sarasota; they have a program to get a grant from the Runaway 
and Homeless Youth program. One of the young people in the 
program--you see it personally when you can see an individual 
who is going to finish high school and enter the Navy here in 
June--we have a really unique alliance there. That is the only 
grant in Florida apparently for that program. I am not 
complaining, I am glad my community has that, but he said, 
Vermont has five of these programs. He was curious. This is 
anecdotal, but you wonder how it always gets distributed. There 
are frustrating problems.
    Talking about the Administration on Aging, I don't want to 
always be on my State of Florida, but a lot of times money 
flows to other areas and doesn't get evenly distributed. How do 
you make sure this program gets evenly distributed? Alaska and 
Hawaii have relatively small populations; especially because of 
who represents Alaska and Hawaii in the Senate, you know they 
are going to get their share. But it is a problem with the 
fairness and distribution, and smaller communities may not have 
the sophisticated grant-writing talents that a San Francisco 
has.
    Ms. Golden. There are usually a variety of provisions that 
govern how we do competitions. Sometimes there are statutory 
provisions about distribution across all the States. When there 
aren't, we do look for geographical balance, but we are usually 
doing competitions in a way that has a role for the quality of 
the individual proposal, a role for the need of the community 
and a role for balance. I would be happy if there is a specific 
concern to talk about it.
    Mr. Miller. One of the problems is, and this is to other 
areas of the government, unless you have sophisticated, 
experienced grant writers, you can't compete as well. Using a 
Chicago that has that talent, as a community of medium size, 
like Bradenton, my hometown, Manatee County; or Sarasota has a 
degree of that, but we find that whether it is the National 
Endowment for the Arts, whatever the program is. That is why it 
is nicer about block grants, Community Development Services 
Block Grant, there is a formula, it goes right out with the 
formula it gives those communities more flexibility. That is 
why on these categorical programs I have a problem.
    Let me switch to an issue of parenting. I just happened to 
be at a breakfast discussing parenting issues. I am not 
advocating creating a new program, but it was the IMU Child 
Foundation people. I certainly don't want to create a new 
program.
    Mr. Hoyer. Heaven forbid you would do that.
    Mr. Miller. That is right.
    What do we do in the area of parenting? Or is this in 
another area? We have WIC programs and a lot of things. What 
are you doing on education? They were showing me all these 
videotapes which looked interesting.
    I am going to be a new grandfather in May; I am going to 
get copies of their tapes to take home.
    Ms. Golden. I think consistent with your overall interest 
in programs that offer flexibility, we have an array of 
programs that States and local communities can use to invest in 
parenting. Some of the dollars they have under the child abuse 
prevention authorities, can be used for home visits and work 
with new parents. It is about prevention; it is not about 
waiting until something bad happens.
    Head Start programs work intensively with the parents in 
those programs.
    Mr. Miller. I am talking about when they are first born. I 
know we are trying to move it to the early ages, but it usually 
jumps in at age 4 where most people get involved in it.
    Ms. Golden. There are an array of authorities where States 
have some flexibility to use their dollars in that way. In the 
Adoption and Safe Families Act, Congress reauthorized the 
Program for safe and stable homes--it used to be called Family 
Preservation and Support--that allows for very early work with 
families, such as home visiting.
    There are an array of authorities that will get dollars to 
States, as you just highlighted. For all the reasons you gave, 
there is not a single small program, but what there is is 
flexibility for States to make those investments.
    Mr. Miller. I would like to sometime talk some more. I 
don't fully understand how child care programs fully operate 
and how it flows to the States versus Head Start--some good 
programs. Maybe I need to meet sometime and get a briefing on 
that.
    Ms. Golden. A briefing on the child care programs? I would 
be delighted to do that.
    Mr. Porter. Thank you, Mr. Miller.
    Ms. DeLauro.
    Ms. DeLauro. Thank you very much, Mr. Chairman.
    Dr. Golden, it is wonderful to have you here this morning. 
As a very short comment, I think we need to begin to equate our 
children's education with our national security. I think that 
would make us a stronger country.
    I want to applaud the administration's emphasis and focus 
on education, whether it is Head Start or higher education, and 
also to say that I am also very pleased that it is not a budget 
that includes the potential of a $1 trillion-plus tax cut, but 
that we place our resources where they are most needed.
    Let me ask you about, because we are talking about Head 
Start--as you know, I have got a real interest in the zero to 
three--given the kinds of information we have about youngsters 
and when they learn, I think if we take those reports and put 
them on the shelf, then we ought to be charged with neglect 
because we now know some of these. I would like to know your 
agency's commitment to zero to three, both in terms of being 
able to open up the programs and to have the qualified 
personnel to be able to be there.
    Ms. Golden. I agree completely that the care that infants 
and toddlers are getting is an absolutely essential issue. If I 
may, I would like to talk about it both in terms of Head Start 
and in terms of the child care initiatives that we have 
proposed.
    Ms. DeLauro. I might add that I would like us to take 
advantage of what we have learned from Head Start, because 
where there are difficulties, we need to shut them down. I 
think we need to have universal preschool, that is my own 
personal view, but we need to take the lessons learned from 
Head Start; and where it is not working, not continue to do 
those kinds of things and apply them to the zero to three.
    Ms. Golden. And from the infant and toddler arena we need 
to take the lessons from the early Head Start program, which 
are terrific, and make sure that the millions of children out 
there in child care for babies and toddlers are receiving care 
that can at least get a little bit closer to that standard.
    First of all, on the Head Start side, as you know, we are 
very committed to the expansion of early Head Start. The 
reauthorization expands it to 9 percent of the total 
appropriation in fiscal year 2001, so the budget request we 
have made will allow the program to expand by 10,000 children.
    You highlighted the need for investment in our staff and in 
our expertise, which is critically important. We have a newly 
hired director of Early Head Start and we have made every 
investment we could in moving our staff around and in getting 
training and expertise.
    I do want to note that our request under Federal 
Administration in this budget is an extremely important one 
because we are an agency that has gotten drastically smaller. 
We were an agency of more than 2,000 people when I came to the 
Federal Government; we are now at about 1,500 people. We have, 
as several of you have highlighted, important and increasing 
responsibilities. We have spent the last several years doing 
our absolute best to reinvent, to reallocate people, to move 
people to critical areas, to get rid of lower priority work; 
and we are now at the point where we need to make some targeted 
hires. That is the second thing that I would relate.
    Third and just to finish really quickly, when I travel and 
talk to low-income working parents about child care, I hear 
enormous need from everybody, as Congresswoman Pelosi and 
others have highlighted. I hear the most intensity from parents 
of babies and toddlers because the cost of safe and decent care 
is so great because you can't leave an adult with a large 
number of babies and expect the care to be safe.
    And so the subsidy, the $817 million request we have made 
to be able to go up to $2 billion in child care subsidy and our 
early learning fund request are really central to making sure 
that low-income parents can pay for decent care for babies and 
toddlers.
    Ms. DeLauro. A follow-up and quickly--this is in regard to 
welfare reform: My State significantly boosted the number of 
former recipients into the work force. We have had two studies 
that were released last week. They report, the system doesn't 
work for everyone, forces mothers to take jobs with poverty-
level wages and place their children in substandard child care. 
One of the studies was a joint project of Yale University and 
the University of California. It says that more women are 
finding work as they leave welfare; child care remains scarce.
    You have got the $817 million. You have talked about the 
new funds, combined with funds under the welfare reform, to 
enable us to serve an additional 300,000 children in fiscal 
year 2001.
    Do you have any numbers showing the unmet need beyond the 
300,000 children this proposal would serve?
    Ms. Golden. Yes. I want to highlight that the need is among 
the whole range of low-income working families, because when I 
talk to parents, it is not just those who come from welfare. 
Sometimes for me, the most heartbreaking are the people who are 
working at $7.50 or $8 an hour and just can't make ends meet. 
The need that we highlighted in the report that we provided 
last year, said that under the Federal income eligibility 
standard for child care, about 14.7 million children would be 
eligible, and only about 10 percent of them were served in 
fiscal year 1998. States, as a result of that need, have been 
trying to increase the number served, but they are only able to 
get to a modest number of additional families.
    So there is an enormous unmet need in every State.
    Ms. DeLauro. Quickly on this one as well: Loan forgiveness 
for Head Start, other child care workers, is the word getting 
out, there is a loan forgiveness program for Head Start, for 
their education in terms of getting the training that they need 
for Head Start?
    Ms. Golden. There is a lot of investment in training and 
education for Head Start. The reauthorization requires that we 
increase the number if credential teachers. I actually don't 
know specifics about loan forgiveness. There is a variety of 
paying-for-tuition and other kinds of strategies.
    Ms. DeLauro. Let's talk about how that word is getting out, 
if that exists, so that we are getting the people that we need 
to have.
    Ms. Golden. I think one of the key issues is that we have 
learned that on the Head Start side, where there are dollars 
available and we can invest in training and education, we can 
do it, we can improve credentials; and I think the biggest 
issue about getting the word out is figuring out how to do that on the 
child care side where the dollars aren't there. The early learning 
funds kinds of investments help you get there.
    But there is a huge gap, and as a result, there are not 
only the basic problems of recruiting child care staff in the 
first place, but enormous problems of professional development, 
training and retention.
    Ms. DeLauro. My last question is on LIHEAP. I spoke to 
Secretary Shalala yesterday; the portion of the money that was 
designated for emergency has been used. I asked her, was 
additional money going to be released? She said that the money 
would be released as needed.
    Do you have any sense of the unmet need for the program 
across the country? And can you show us, state for the record 
the State-by-State information showing how many LIHEAP 
applications were received, how many people were served and how 
many people did not receive assistance this year?
    I ask this question because I am reading the papers every 
day from my own district about what is going on, first of all 
with the cost of home heating oil, diesel and everything else 
and what has been happening to people in what has been a very 
cold winter in the Northeast.
    Ms. Golden. We can offer the detailed information for the 
record; and I think Secretary Shalala highlighted that 
additional requests we will respond to----
    Ms. DeLauro. Unmet need. Do you know it now or do you have 
any idea now?
    Ms. Golden. I don't know a number. I know that the 
calculations for the release were made by looking at the 
increase in heating oil prices, and the relationship to the 
low-income population, but I don't know a number for unmet 
need.
    Ms. DeLauro. If you can, that would be useful information.
    Thank you for your indulgence, Mr. Chairman.
    [The information follows:]

    During FY 1999, we estimate that, nationally, about 3.6 
million households received winter heating and/or winter crisis 
assistance. Based on preliminary March 1999 Current Population 
Survey data, we estimate that this number is between 10% and 
15% of the households that met maximum Federal income 
eligibility levels in FY 1999.
    We do not have State-by-State figures on the number of 
eligible but unserved households.

    Mr. Porter. Thank you, Ms. DeLauro.
    Mr. Jackson.
    Mr. Jackson. Thank you.
    Secretary Golden, I want to thank you for taking time out 
of your schedule to testify before our subcommittee. Everything 
ACF does from child care to Head Start to LIHEAP is vital to 
the constituents of my congressional district.
    In the short time that we have for questions, I want to ask 
you about something that could literally be the difference 
between life and death for some of the residents of my 
district, and that is LIHEAP. The latest numbers I have seen 
show that the chairman in my home State and I received the 
third largest amount of LIHEAP funds behind the States of New 
York and California. I believe Illinois is somewhere in the $76 
million range, including emergency funds. Of that amount, my 
district receives about $13 million, about 8 million more than 
any other congressional district in the State.
    I am wondering, can you tell me, is the $1.1 billion in 
regular appropriation plus the $300 million in emergency funds 
that the administration requests, and that this subcommittee 
provides, enough to meet that demand.
    I think we ultimately give Americans a Hobson's choice when 
they decide between heating and food. Do you think that the 
$1.1 billion in regular appropriation plus the $300 million is 
appropriate, whether it is adequate to meet the need and if it 
provides enough to meet the demand?
    Ms. Golden. We do believe the request is appropriate. We 
are maintaining that high level of request because we believe 
it is needed, that it is very important and that it will meet 
the need. I agree with you completely that it is an important 
support for families, and I believe that as you have noted, we 
don't want families to make choices among different critical 
needs. Therefore, investing in LIHEAP, investing in child care 
so families don't have to trade that off, investing in each of 
those pieces really matters to enabling working families to 
sustain all the critical pieces of being able to go on, being 
able to hold your job and make sure that your family is okay.
    Mr. Jackson. Thank you, Secretary.
    Thank you, Mr. Chairman.
    Mr. Porter. Thank you, Mr. Jackson.
    Mr. Hoyer. Will the gentleman yield before he yields back 
his time?
    Mr. Jackson. Mr. Chairman, I would be happy to yield to Mr. 
Hoyer.
    Mr. Hoyer. I understand what you are saying, Doctor, about 
the high level, but when Mr. Porter and I first started on this 
committee, I think that LIHEAP funding may have been closer to 
$2 billion--wasn't it, John, $1.7, $1.8 billion? The argument 
was made that energy prices, correctly, had been reduced.
    You may not recall because you are too young, but Silvio 
Conte, who was an extraordinary member of this committee, the 
Republican ranking member, wonderful human being, from 
Massachusetts----
    Ms. Golden. From my hometown. He was my family's 
Congressman as I grew up.
    Mr. Hoyer. He was probably the strongest proponent of 
LIHEAP of anybody on this committee, Jesse. He would say, very 
frankly, that the level of funding is about half what it ought 
to be.
    I asked Congressman Jackson to yield only in the sense 
that, have you made an assessment based upon the geometrically 
rising energy costs, particularly in the Northeast, in 
Illinois, and States which have had real cold weather, as to 
what the projected need might be this year, which is obviously 
going to far exceed what needs have been in the last few years 
because, A, we have had relatively mild winters and, B, energy 
costs have been down.
    Ms. Golden. A couple of things. We have not in general used 
all of the $300 million, but clearly that is available as there 
are needs. In different years there have been emergency needs 
in different parts of the country, and clearly the structure of 
the program with a core appropriation and the $300 million 
available to respond to emergencies is meant to respond; but we 
are looking at it closely.
    Mr. Hoyer. The $300 million, of course, is a portion of the 
LIHEAP money. It is about $1.1 billion. Isn't that what it was?
    Ms. Golden. The $300 million is the additional emergency 
fund.
    Mr. Hoyer. That is the fund of which you have released the 
45 percent?
    Ms. Golden. That is correct. And that is available for a 
range of different kinds of emergencies. For example, the 
flooding that occurred in the Midwest a number of years ago is 
one type of emergency.
    Mr. Porter. Just so this discussion isn't solely on your 
side, will you also yield to me?
    Mr. Jackson. I will be happy to yield, Mr. Chairman.
    Mr. Porter. The majority's, some of the majority's thought 
on this program is that the Federal rationale for it has long 
since disappeared, and it ought to at least become a matching 
program with the States which are flush with surplus money, 
participate in some way in this program and provide for the 
need. There is no doubt about the need whatsoever; the question 
is, who should be paying. I think frankly that it is time for 
the States to take over some of this responsibility and 
gradually move into having prime responsibility for this 
program.
    Dr. Golden, thank you. You have done a wonderful job both 
here this morning and a wonderful job in administering a very, 
very important agency in our government.
    I might add that we like how fast you answer the questions 
because we can cover so much more territory. Thank you for 
being with us. We will do the best that we can.
    Ms. Golden. Thank you. I appreciate your leadership.
    [The following questions were submitted to be answered for 
the record:]



                                       Wednesday, February 9, 2000.

                        ADMINISTRATION ON AGING

                               WITNESSES

JEANETTE C. TAKAMURA, ASSISTANT SECRETARY FOR AGING, ACCOMPANIED BY 
    DENNIS P. WILLIAMS, DEPUTY ASSISTANT SECRETARY, BUDGET, OFFICE OF 
    THE ASSISTANT SECRETARY FOR MANAGEMENT AND BUDGET
    Mr. Porter. The subcommittee will come to order. We are 
pleased to welcome this morning Dr. Jeanette Takamura, the 
Assistant Secretary for Aging. We apologize, Dr. Takamura, that 
we have run so late in the first agency before us this morning. 
The Chair has to estimate how much time Members are going to be 
here and how much time there is available for questions. I have 
to admit error. I underestimated the number of people that 
would be here and we have run a little bit over. If you have 
the time, we have the time to go past the noon hour and give 
you a chance to answer as many questions as you like.
    Ms. Takamura. Thank you. Actually, Mr. Chairman, you are 
calling us ahead of schedule. We were going to be here 
tomorrow.
    Mr. Porter. Exactly. So we appreciate your coming ahead of 
schedule to accommodate our necessary change in schedule as a 
result of the death of the former Speaker of the House which 
has changed our schedule.
    Please proceed with your statement. Then we will have 
questions.
    Ms. Takamura. Certainly. Chairman Porter and members of the 
subcommittee, good morning. I appreciate the opportunity to 
present the President's fiscal year 2001 budget for the 
Administration on Aging. My written testimony is being 
submitted for the record, so in the interest of time I will 
provide you with summary remarks.
    Let me begin by thanking you, Chairman Porter, for your 
leadership of this subcommittee. Your leadership has 
demonstrated your commitment to improving the health and well-
being of our Nation's people. We certainly wish you all good 
things in your future endeavors. The President's budget request 
for AOA totals just under $1.084 billion, or $151 million above 
the enacted fiscal year 2000 level. This amount includes $125 
million for caregiver support activities, a $15 million 
increase for core supportive services, a $5 million increase in 
grants for Native Americans and $5 million more to more 
effectively identify and link to appropriate assistance older 
persons with mental health problems.
    Over the last 2 years, I have suggested that we must 
prepare America for the rising longevity of its people. The 
fiscal year 2000 appropriation, with increased funding for home 
delivered meals, State ombudsman programs and our State and 
local innovations program will permit important progress. But 
critical steps still must be taken. These steps build upon our 
joint efforts last year. They have been embraced by States, 
local communities and thousands of older persons and their 
families with whom my staff and I have had the opportunity to 
meet and talk. In fiscal year 2000, we asked for and received 
an increase of $35 million, that is 31 percent over the 
previous year, for home delivered meals. We very much 
appreciate this as it helps us to support frail and vulnerable 
older persons. This year our budget request recognizes that 
without the support of family caregivers, many of these 
individuals could not even remain in their homes. Families are 
caring for 95 percent of older persons with disabilities who 
need help and might otherwise be in an institution. And 
families are the sole source of assistance for almost two-
thirds of these older persons. They save our Nation millions of 
dollars that might otherwise be required for formal or 
institutional care. Besides increased rates of 
institutionalization, the absence of caregiver support means 
declines in the health and well-being of caregivers, decreased 
worker productivity and other avoidable negative consequences. 
That is, two parties are always at risk when we talk about 
caregivers and their care recipients, both the older person and 
their caregiver. 7 million people, mostly women, are informal 
caregivers for their spouses, parents and other relatives and 
friends. Many are older, vulnerable themselves or are working 
and juggling multiple responsibilities, and certainly I know 
this one well.
    National surveys substantiate the need for caregiver 
support. One national survey as an example found that 56 
percent of all caregivers experience stress and anxiety, 54 
percent are worried about their ability to provide good care 
and 37 percent about the loss of personal time. More than 36 
percent have personal health concerns, 26 percent worry about 
the cost of caregiving, and about 20 percent also worry about 
lost pay from lost workdays.
    Our request would allow States and local communities to 
build a visible nationwide system offering information and 
assistance, counseling and supplemental services, including 
respite specifically for family caregiver support. Secondly, we 
are requesting increased funding for our core supportive 
services program, the glue in a home and community based long-
term care system led by the aging network since the 1970s. 
These funds cover the ``wheels'' for Meals on Wheels, medical 
appointments and grocery stores, chores and other services.
    This year the Administration has called for increased 
funding for services for Native Americans. A $5 million 
increase, nearly 30 percent, will expand the depth and breadth 
of services for Native American elders, including caregiver 
support services which, by the way, tribal organizations say 
are needed.
    Finally, as part of an HHS-wide mental health initiative, 
$5 million is requested to enable the aging network to play a 
strong role in identifying depression and in helping to prevent 
suicides among older persons. I think you know the statistics 
on this matter very well.
    The remainder of our budget is familiar to the 
subcommittee. Our nutrition program provides nearly 265 million 
congregate and home delivered meals annually. Administration on 
Aging funds protect vulnerable older Americans through the 
State long-term care ombudsman and elder abuse prevention 
programs. Funding for State and local innovations and projects 
of national significance supports the Administration on Aging's 
national toll free elder care locator, aging resource centers 
and other important efforts. It also demonstrates cost 
effective best practices through competitive demonstration 
grants. Finally, it allows AOA to provide immediate disaster 
assistance to older persons.
    Federal administrative funds will support 154 full time 
equivalent positions and related expenses to oversee an aging 
network of State, tribal and local agencies and service 
providers. Our request will help us cover increased fixed costs 
and continue the process of effectively meeting our human 
resource needs. Nearly one-third of AOA staff can retire today. 
Thus, we are currently recruiting essential staff.
    Along with our fiscal year 2001 budget, we have provided 
you with our performance report for fiscal year 1999 and our 
plan for this year and next. While the developmental process 
has been long and very demanding, I am confident that the measures meet 
the letter and spirit of the Government Performance Results Act. They 
are aimed at enabling AOA and the aging network to more accurately 
track and improve our program outcomes. Our fiscal year 2001 budget 
proposal and performance plan build on the progress we made together 
last year. It sets the stage for strategic activities in the opening 
years of the new American millennium.
    Thank you, Mr. Chairman. I will be happy to answer any of 
the questions that may be posed to me by the members of your 
subcommittee.
    [The justification follows:]



    Mr. Porter. Thank you, Dr. Takamura. We will operate under 
the 6-minute rule. I said to Dr. Golden, and I want to say it 
to you, also, our job is to be skeptics, so don't take the 
questions as being hostile.
    Ms. Takamura. I never take them personally.

               National Family caregiver Support Program

    Mr. Porter. We simply want to know. The National Family 
CareGiver Support Program, you are seeking an initial 
appropriation of $125 million. Last year you told the 
subcommittee that this proposal required authorizing language 
before it could be funded. This year you are proposing to fund 
it through existing authority. Where did you find the authority 
that you couldn't find last year?
    Ms. Takamura. Well, actually last year we proposed to begin 
the National Family CareGiver Support Program through an 
authorization as part of the reauthorization process. What has 
always been there is Title III(d) which authorizes services for 
caregivers. What we are proposing to do this year is to use the 
existing authority and to fund services that would support 
caregivers through Title III(b).
    Mr. Porter. Would there be any difference in the services 
provided had you got the authorizing legislation that you had 
sought last year?
    Ms. Takamura. I think there are some differences that are 
notable but I will say to you, as I mentioned in my testimony, 
that our overriding concern is that as we look at our older 
adult population. Certainly as we become more and more 
cognizant of the needs of their caregivers, many of them baby 
boomers, what we know is that there are two people at risk, the 
person receiving care as well as the individual who is a 
caregiver. If we were to establish the National Family 
CareGiver Support Program through a reauthorization of the Act 
or as a stand-alone measure, what that would do is provide the 
kind of visibility that we had hoped for for caregiver support 
programs. But secondly, it would afford us probably a better 
opportunity to systematize the services that we are suggesting 
need to be put into a package.
    Having said that, what I will say is that we also feel that 
the existing authority under III(d) with funding through III(b) 
will permit us to do the work that is essential to intervene 
immediately. And we will continue our efforts to seek 
reauthorization of the act and the establishment formally of 
the National Family CareGiver Support Program.

                 Government Performance and Results Act

    Mr. Porter. Last year we talked about GPRA and we expressed 
our concern that your agency had not identified better and more 
ambitious performance standards. Specifically we had said that 
we would like to see more meaningful outcome measures for your 
programs and you referred to this in your testimony. Can you 
expand on that and tell us where you are in the process?
    Ms. Takamura. Yes. We heard your review, we heard your 
comments and we certainly took them to heart. What we have been 
doing over the last year is working in very close partnership 
with the 19 GPRA partners that we have in States and localities 
that were actually selected competitively. In addition to that, 
we are working with this group of 19 partners and an expert 
panel of academicians and researchers who know well how to 
craft outcome measures in specific areas; for example, with 
respect to caregiver support or mental health interventions. 
Where we are with our GPRA partners is we are currently in the 
process of putting together our data gathering protocols. We 
have established consensus around a number of measures and we 
will be launching some test efforts this spring.
    So we have made a lot of progress. We thank you for your 
very forthright commentary to us.

                           Nutrition Programs

    Mr. Porter. Thank you. Nutrition programs. You are 
requesting no increase in either congregate or home delivered 
meal programs. In fact, funding for congregate meals has 
remained relatively flat for the last 5 years. However, your 
budget justification states that the population of elderly 
persons has increased by over 9 percent since 1990. There are 
increases in a number of other areas. Why not here?
    Ms. Takamura. Well, I think everyone testifying before you 
as a witness would say that there are needs in every area of 
their budget. I am not refuting the need for moneys in 
different areas of our budget. But this year we had a very 
deliberate strategy. We want to thank you, first of all, for 
the $35 million of an increase that you provided us for home 
delivered meals last year. It gave us a 31 percent increase 
over the preceding year. What we wanted to do this year is to 
focus in on supportive services, because, in fact, the 
Department is giving great emphasis to the importance of access 
to services.
    I mentioned in my testimony that supportive services 
provide the wheels to Meals on Wheels and to doctors 
appointments and other things. We know that transportation 
needs and other services that are covered under Title III(b) 
are very much needed in order for us to ensure that older folks 
actually are able to get to services they need. So we decided 
this year to focus in on that.

                               Transfers

    Mr. Porter. The States have authority to transfer funds 
between the three programs, do they not?
    Ms. Takamura. Absolutely. That is right.
    Mr. Porter. Why do we need three programs? Why don't we 
just put it all in one and let them decide where this can best 
be done?
    Ms. Takamura. I think one of the advantages of having three 
separate programs such as that really suggests to States and 
localities the importance of remembering the differential needs 
of different segments of the population. Our home delivered 
meals, for example, tend to be best used to provide support to 
people who are either just out of the hospital and recuperating 
at home or perhaps have chronic long-term illnesses. Our 
congregate meals tend to be better for people who are in need 
of socialization services. And our supportive services, III(b), 
are again, as I mentioned earlier, the kinds of things that 
make all of the services that we offer through the Older 
Americans Act kind of stick together. They help people to get 
to other services. We want to remind people that all three are 
needed for differential populations.
    Mr. Porter. So even though the States have transfer 
authority and can move the funds around, this makes them think 
about it?
    Ms. Takamura. I think it really does. I think it holds them 
a lot more accountable and it certainly makes us more cognizant 
of our responsibilities.
    Mr. Porter. Thank you very much. Mr. Jackson.
    Mr. Jackson. Mr. Chairman, I have no questions of the 
Administrate but I do want to thank you for coming today. I 
yield back the balance of my time, Mr. Chairman.
    Mr. Porter. Thank you, Mr. Jackson. Mr. Miller.
    Mr. Miller. Good morning.
    Ms. Takamura. Good morning.

                                Seniors

    Mr. Miller. My area in Florida has a very large senior 
population as so many of the areas in Florida do. You mentioned 
some of the problems of seniors. I just want to point out one 
that was in my newspaper last week. You mentioned suicide 
problems and such. They had a drug sting operation taking place 
in Sarasota about 10 days ago where the FBI and the local 
police were involved and an 88-year-old man was arrested for 
buying cocaine.
    Ms. Takamura. That is a new one.
    Mr. Miller. That is not a national problem so we don't need 
a national program. But the interesting comment in the 
newspaper was, we have a place called Senior Friendship Center 
in Sarasota which provides congregate meals, a beautiful 
facility, a great program, medical care, volunteer doctors 
help. His comment was, well, I guess this destroys my 
reputation at the Senior Friendship Center. An 88-year-old 
worried about his reputation as a cocaine user.
    The reauthorization of the aging programs did not go 
through last year. Is there any hope it will go through this 
year?
    Ms. Takamura. We never give up hope. We keep working at it, 
Mr. Miller. We need your help.
    Mr. Miller. One of the problems I had, and it actually 
relates a little bit to the question I raised to the last 
agency when we were discussing children and family issues, is 
the allocation of moneys. One of the problems I see, my 
chairman and I, or my friend Mr. Jackson, this is not a 
Democrat-Republican issue, this is a geography issue. The 
dollars are distributed based on 1987 census information. 
Florida, being a growth State with lots of seniors coming, 
there is a real fairness issue. I know Chicago and Illinois 
would like to keep their money but we get their seniors. How 
does the administration----
    Ms. Takamura. Congressman Miller, actually I have good news 
for you. I think some of the latest studies have suggested that 
older people are migrating less. They are actually moving less 
between States. They are finding for some reason it more 
attractive or whatever to remain in their own home States or 
their own home communities. I don't know whether it is because 
of technology or because we are providing better services. I'm 
not sure what the answer is. But I think the interstate funding 
formula question which you are referring to is one that the 
Administration on Aging has really not taken a position because 
we do think that this is something that Congress has had 
conversations about and like you, probably we can see six of 
one, half a dozen of the other.
    Mr. Miller. I don't quite see the argument that Mr. Porter 
or Mr. Jackson would argue personally. We went through this on 
the veterans issue. The veterans move to Florida and we get the 
veterans, and the money stays up north. It is frustrating. Our 
needs for the elderly are very similar to the needs they have 
in Illinois. It seems this fairness issue based on the 1987 
census, we should update the census information.
    Mr. Porter. If the gentleman will yield, up north, know 
that under the VA there is a whole new allocation of funds and 
it is all going to Florida.
    Mr. Miller. And we appreciate that. It is about time.
    Mr. Porter. But we still have a lot of veterans.
    Mr. Miller. For example, in the veterans issue, we are 
opening up clinics now in our area. I have had a clinic open in 
Sarasota, one open in Bradenton, and we are getting ready to 
open one in Port Charlotte. Before, they had to drive a long 
distance to go to the nearest hospital, Bay Pines, where they 
don't have very many hospital beds. Veterans that move to our 
area use that as an illustration. They had all these benefits 
up north, and we couldn't offer the benefits. How come we don't 
give the prescription benefit in Florida? There is this 
fairness issue that where population moves, we need to make 
sure the dollars flow. It seems that the administration should 
advocate that with all due respect to my chairman.
    Ms. Takamura. Here is what the Administration is 
advocating. In our reauthorization proposal for the Older 
Americans Act, we introduced three components, one of them the 
family caregiver support program, and the other a life course 
planning program. We think that people need to actually engage 
with some of these issues before they make the move to Florida, 
to stop and think about what they may in fact be gaining or 
losing, what things might be critical in their lives and 
important to them. I know as a resident of Hawaii that we 
oftentimes see people come from California and other parts of 
the country, including Illinois. Once they have been there for 
about 5 years, they all of a sudden discover that they missed a 
certain kind of sausage that is made in their hometown of 
Chicago that is no longer available in Hawaii. I think people 
as we go through the life cycle need to be cognizant of the 
fact that we live a longer life. It is just as important to 
plan for one's retirement years as it might be to plan for 
one's career or one's child's college education. Some of these 
issues we contend in the Administration on Aging are issues 
that can be planned for if in fact we are given the opportunity 
to work with midlife and older people, to put them face to face 
with the critical issues that will later in fact come to bear.
    Mr. Miller. In my area, for example, because we have a 
large aging population; for example, Sun City.
    Ms. Takamura. I have visited your district several times. I 
am familiar.
    Mr. Miller. I have Sun City. Actually when people get too 
old in my home town of Bradenton, they move to Sun City, 
because golf carts is a way of life in this community. Because 
you don't need a car. You can go to the grocery store, you can 
see the doctor or get to the hospital basically in your golf 
cart. We have large mobile home parks of just seniors. I have 
one mobile home park that has got three voting precincts within 
the park. It has got 5,000 people. But the people take care of 
each other. You have that. They may have come down from all 
over the Nation basically to this area but there is this taking 
care of each other. That is the reason I am in Florida, is my 
grandparents moved from Michigan to Florida to move in a, they 
were called trailer parks back in the 1940s, now they are 
manufactured housing. There is something to be said for that.
    You mentioned the meal program. It is a great program. One 
thing I wish we could do more of, I delivered the meals once, 
it was exciting. I need to volunteer to do that again actually. 
I have visited the congregate facilities. We should encourage 
every Meals on Wheels program to invite their local 
Congressperson to deliver meals. It is an eye-opening 
experience.
    Ms. Takamura. I would agree with you.
    Mr. Miller. We need to do more of that. Mine invited me a 
few years ago. I have a nice relationship with them. Maybe they 
just assume I am a friend. I visited their day care program, 
one of theirs, I think in August or September. I think that 
would be a good way to help people appreciate that the 
government does good things and that there is a need and these 
people that are homebound basically are not high profile people 
because they are way up in years and their disabilities require 
them to stay homebound.
    Ms. Takamura. Congressman Miller, I have a proposition for 
you.
    Mr. Miller. Okay.
    Ms. Takamura. If during Older Americans Month you organize 
all of Congress to deliver meals in their districts, I will 
organize our aging network to be sure that they----
    Mr. Miller. I will help organize it. It is a great effort. 
I think it is a great program. Thank you, Mr. Chairman.
    Mr. Porter. Mr. Miller, we are going to have a second round 
here because we don't want Dr. Takamura to get off this easily. 
So we will do a 4-minute second round.
    Can we talk about Native Americans for a moment and meals 
and support services. You are asking for an increase here.
    Ms. Takamura. That is right.

                            Native Americans

    Mr. Porter. Yet you didn't ask for one in the basic 
program. What my question is, is how do the statistics on 
people served and people in need of being served compare in 
each of the programs? And are you asking for an increase for Native 
Americans because we are not doing as good a job for them as we are for 
people in general, seniors in general?
    Ms. Takamura. With respect to the grants to Native 
Americans, the $5 million request is intended to permit the 
Native American tribal organizations who receive money from us 
to utilize that money for a range of services, not just 
nutrition services. They also make good use of transportation 
services, information and assistance services. I took a look at 
the data today. It is quite well spread out. But we also know 
that there were nine eligible organizations that applied for 
funding during the past year. We were unable to provide any 
funds to them because we simply did not have any. We envision 
an ability to fund some of these organizations in the coming 
year if these moneys are provided. I would also like you to 
know that we have had numerous meetings with the Native 
American tribal organizations and some of their representatives 
to determine what their needs are. They have said to us, in 
addition to additional money for supportive services that range 
from meals to transportation and others, they also would like 
some funds to be used for caregiver support activities. So this 
population definitely has needs that have been inadequately 
addressed. I think you know their incidence of chronic disease 
is quite high.
    Mr. Porter. How do we distribute, on a per capita basis or 
is there a poverty line, or what is the formula there?
    Ms. Takamura. This is for the Native American tribes?
    Mr. Porter. Yes, for Native Americans.
    Ms. Takamura. They apply to us, as you know. There is of 
course the use of an age indicator to determine how much we 
would allot to them. It pretty much undergirds the funding 
distribution.
    Mr. Porter. So it doesn't matter, some of the Native 
American tribal situations have improved dramatically with the 
casino gambling available, and they are doing very well, but 
not many. Is that taken into account at all?
    Ms. Takamura. Let me just check on that one. No, it is not.
    Mr. Porter. That is interesting.
    Ms. Takamura. As I have gone across the country and met 
with different Native American Indian tribes, those that are in 
fact doing quite well because of casinos tend not to ask for 
funds. They are quite proud about building their own 
facilities.

                    Alzheimer's Demonstration Grants

    Mr. Porter. Can you tell the subcommittee about the status 
of the Alzheimer's demonstration program?
    Ms. Takamura. Yes, actually I can. We are quite pleased 
with the Alzheimer's demonstration grants to the States. We 
have 15 grant recipients right now. We believe that many of 
them actually have model programs going. In California as an 
example, there is a program called El Portal which is serving 
Latino as well as African American populations. They have some 
best practices clearly that we will be looking forward to 
sharing with the rest of the country. In Washington State we 
also have a number of other populations that are being served, 
again in an exemplary fashion. What we plan to do is to issue 
an RFP in July of this year and we will be asking for 
competition, for applicants to compete for the receipt of 
Alzheimer grant funds in the coming year.
    Mr. Porter. Thank you very much. Mr. Miller.
    Mr. Miller. Let me ask two quick questions.
    Ms. Takamura. Certainly.

               National Family Caregiver Support Program

    Mr. Miller. Getting back to the question I asked earlier 
about this 1987 population information. This new caregivers 
program, will that be based on the 1987? Is it going to be 
formula driven or is that going to be more current?
    Ms. Takamura. The new caregiver support moneys that we are 
requesting through Title III (d) and III(b) would be based on 
the funding formula allocation that is in existence right now.
    Mr. Miller. Which is based on 1987 data. Congresswoman 
Carrie Meek and I have been working together on this. As I say, 
this is not a partisan question. It is a geography question. 
That is a frustration with us. You almost, I don't say you are 
opposing the program because of it but you want to make sure 
there is a fairness to the thing and it is not fair. You could 
use this as an illustration on this program to apply at least 
the latest census data rather than data that is over a decade 
old.
    Ms. Takamura. And I think, Congressman Miller, you would 
agree with me, though, that we would hate to hold both 
caregivers and their care recipients hostage.
    Mr. Miller. Couldn't you just change it for this new 
program more funding, to just say let's use current census 
data? Why would we be spending $6 billion for a census if it is 
useless? That is what we are doing. We are saying it is useless 
data. I know it is not totally your decision. I don't mean to 
put you on the spot.
    Ms. Takamura. I am not with the Census Bureau.

                     Native American Grant Process

    Mr. Miller. Let me switch to one other question. I know the 
Indian program, and this is true with the children and family 
program, these are grant programs. They have to apply for the 
money. Is that the way----
    Ms. Takamura. I am sorry, could you repeat.
    Mr. Miller. Is this a grant program where they have to 
apply and file a grant application for the money?
    Ms. Takamura. Yes.
    Mr. Miller. And I know the Bureau of Indian Affairs is not 
a very popular agency, I don't think. Maybe it has changed in 
recent years. A lot of reservations are fairly small population 
areas, and I know they have children and family programs, and 
they have got to apply for a grant there, and some of these 
reservations only have a few hundred people on it. They spend 
most of their time applying for grants. Isn't there a simpler 
way in the grant process?
    Ms. Takamura. I wish there were. What we have been doing in 
the Administration on Aging, both from our central office as 
well as from our regional offices, is providing a lot of 
technical assistance to our tribal organizations so that they 
can better understand both the grant application process as 
well as how to implement some of the programs once they receive 
our funds.
    Mr. Miller. I served in the Interior for 2 years, and I 
mean, I have visited a number of reservations. Some are 
wealthy. In Florida we have two, Miccosukee and the Seminoles. 
They are relatively small, but they are fairly wealthy because 
of the gambling, but you know, when you only have a few hundred 
people, it seems like it is hard to give up grant programs, 
especially when they are targeted to family and seniors and all 
that, because when it starts expanding throughout the entire 
government, grants become a career and profession. As it is, my 
daughter does grant writing for some of it.
    Thank you, Mr. Chairman. And I want to take you up on that 
effort. I would like to help promote, get members to go on 
delivering meals. I think it is a very worthwhile experience.
    Ms. Takamura. Great. Thank you.
    Mr. Porter. I have done it. It is a worthwhile experience I 
agree with you. Dr. Takamura, thank you so much for answering 
all of our questions and so forth directly. You are doing an 
excellent job at the Administration on Aging, and we very much 
appreciate your varying your schedule at the last minute to 
accommodate our needs.
    Ms. Takamura. We were more than happy to do, and we are 
very sincere in wishing you all the best in the future. We will 
miss coming before you.
    Mr. Porter. Thank you very much for that. Subcommittee 
stands in recess until 2:00 p.m.
    [Whereupon, at 12:03 p.m., the subcommittee was recessed, 
to reconvene at 2:00 p.m., this same day.]
    [The following questions were submitted to be answered for 
the record:]





                           W I T N E S S E S

                              ----------                              
                                                                   Page
DeParle, Nancy-Ann...............................................   109
Golden, Olivia...................................................   713
Shalala, Hon. Donna..............................................     1
Takamura, J.C....................................................  1279
Williams, D.P............................................109, 713, 1279


                                 INDEX

                              ----------                              

                 Secretary of Health and Human Services

                                                                   Page
Abstinence.......................................................    35
Access to the Uninsured/Community Health Centers.................    94
Adoption, Interstate.............................................    42
Appeals Board....................................................    61
Biomedical Research..............................................    26
Border Health Issues.............................................   100
Breast Cancer Research...........................................    55
Chairman's Statement.............................................     1
Children, Health Care Coverage for...............................    46
Chronic Fatigue Syndrome Coordinating Committee..................    49
Classification for Nursing Home Prospective Payment System.......    79
Clinical Research Programs.......................................    96
Clinical Trials..................................................    56
Community Health Centers........................................99, 107
Confidentiality of Health Information............................    92
Departmental Programs............................................    80
Drug Purchases over Internet.....................................40, 47
Drugs for Children, Overutilization of...........................    40
Ergonomics....................................................... 51,97
Financial Reporting..............................................    25
Hantavirus and Chronic Fatigue Syndrome..........................     7
Head Start.......................................................33, 45
Health Care Access for the Uninsured............................. 27,69
Health Disparities...............................................    36
Health Education Programs........................................    91
Health Insurance Portability and Accountability Act of 1996......    78
Health Professions...............................................    30
HHS Programs, New................................................    38
HHS Y2K Funding..................................................    88
HIPAA Administration Simplification Procedures...................    92
HIPPA, Portability and Access Provisions of......................    92
Home Delivered Meals.............................................    72
Homeless, Health Services to the.................................    49
Homelessness.....................................................68, 70
Human Embryo.....................................................    57
Human Subject....................................................    89
Low Income Home Energy Assistance Program........................    48
Medicaid and Medicare Fraud, Tracking............................    83
Medical Decisions................................................    59
Mental Health of Children, The...................................   103
Mental Health Services for Children..............................    27
Minority AIDS....................................................    47
National Institutes of Health....................................    99
NIH Budget.......................................................    39
Nursing Home Initiative..........................................    26
Obligating Funding...............................................    29
Organ:
    Donation Rule................................................    93
    Donor Program................................................    85
Patient's Bill of Rights and Medicare HMO's......................    86
Prescription Drug Benefit Plan...................................    74
Prescription Drug Prices.........................................    59
Program Funding Accountability...................................   106
Reimbursement Rate Discrepancies.................................    58
Ricky Ray Hemophilia Relief Fund.................................    84
Ritalin and Prozac Use for Children..............................    87
Secretary's Statement............................................     3
Senior Citizens, Funding Services for............................    72
Senior Services, Funding.........................................    72
Services, Coordination of........................................    34
Social Services Block Grant......................................    49
State Children Health Insurance Program..........................    50
Substance Abuse Prevention Services..............................    96
Welfare Reform...................................................    28
Work with DoD and VA.............................................   100

                  Health Care Financing Administration

$10.1 Million Lapse in FY 1999...................................   197
Account Structure, Changes.......................................   220
Agency Budget Request............................................   176
Annual Performance Plan and Report.........................256, 494-712
Appropriation History Tables:
    Medicaid.....................................................   395
    Payments to Trust Funds......................................   405
    Program Management...........................................   387
Asthma Demonstration Grants......................................   151
Audited Financial Statements.....................................   419
Authorizing Legislation:
    Medicaid.....................................................   394
    Payments to Trust Fund.......................................   404
    Program Management...........................................   388
Balanced Budget Act..............................................   290
    Implementing.................................................   251
    Program Management Request...................................   431
    Research Initiatives.........................................   328
Balanced Budget Refinement Act of 1999.........................253, 346
Beneficiary Mailings.............................................   138
Breakout of FTEs.................................................   177
Budget Authority by Object:
    Medicaid.....................................................   397
    Payments to Trust Fund.......................................   403
    Program Management...........................................   384
Cancer Data Base.................................................   202
Cancer Screenings................................................   148
Changes in Account Structure.....................................   220
Clinical Laboratory Improvement Amendments (CLIA) of 1988.......416-418
Collective Bargaining............................................   157
Community Health Centers.........................................   149
Community Living Waivers.........................................   225
Companies Withdrawing from Medicare+Choice.......................   205
Contractor Non-Renewals..........................................   189
Contractor's Role in Preventing Fraud, Waste and Abuse...........   203
Coverage:
    Hepatitis B..................................................   147
    HIV/AIDS.....................................................   161
Coverage of Drugs and Biologics..................................   236
Desktop Computer Services Initiative.............................   179
Diabetes Care in Community Pharmacies............................   207
Diabetes Medicare Reforms........................................   214
Disparity in Reimbursement Rates.................................   142
Echocardiography Contrast Agents.................................   233
Effects of Proposed User Fees on Health Providers................   223
Electronic Claims Submission.....................................   187
Encounter Data Collection........................................   190
End-Stage Renal Disease..........................................   170
Executive Summary...............................................240-258
Federal Administration..........................................292-303
    Administration Summary.......................................   294
    Administration Summary Table.................................   292
    Funding Summary..............................................   303
    Method of Operations.........................................   292
    Rationale for Budget Request................................293-301
    Recent Legislation and New Initiatives......................301-303
    User Fees....................................................   293
Federal Administrative Costs.....................................   303
Financial Statements.............................................   419
Fraud and Abuse Performance Goal.................................   170
Fraud, Private Contractors Identifying...........................   201
Fraud, Waste and Abuse................................160, 247, 420-428
FTE Table........................................................   191
FTEs, Breakout...................................................   177
Funding for Legislative Proposals................................   134
Funding for Nursing Home Initiative..............................   192
Funding for Telemedicine Activities..............................   174
Funding Level for Provider Education and Training................   190
Funding Levels for HIPAA, BBA, BBRA..............................   185
Funding of Medicare Handbook.....................................   174
FY 2000 Y2K Funding..............................................   134
Government Performance and Results Act (GPRA)..............256, 499-501
HCFA Budget Summary.............................................237-258
    Achieving Management Reform..................................   255
    Building a Workforce for the 21st Century....................   254
    Discretionary Budget Summary.................................   239
    Executive Summary............................................   240
    Funding Summary..............................................   238
    HCFA's FY 2001 Budget Priorities.............................   245
    Implementing a Revised Coverage Process......................   253
    Implementing HIPAA, BBA, and BBRA...........................250-253
    Improving Oversight of Medicare Contractors..................   246
    Integrating the Budget and Annual Performance Plan...........   256
    Obtaining a Clean Opinion on the CFO Audit...................   249
    Recent Accomplishments.......................................   245
    Reducing Fraud, Waste, and Abuse............................247-249
    Strengthening Oversight......................................   246
HCFA Integrated General Ledger Accounting System.................   214
HCFA Programs--Oversight.........................................   246
Health Care Fraud and Abuse Control.............................420-428
Health Insurance Portability and Accountability A184, 218, 250, 430-432
Hepatitis B Coverage.............................................   147
HIV/AIDS Coverage................................................   161
HMO Loan and Loan Guarantee Fund................................375-378
HMO Spending on Lobbyists........................................   205
HMOs:
    Incentives for...............................................   145
    Medicare Withdrawals.............................145, 152, 164, 167
Home Health Outcome-Based Quality Improvement System.............   170
Home Health Payment System.......................................   167
Hospital Reimbursement Rates.....................................   158
Hyperbaric Oxygen Therapy........................................   168
Incentives for HMOs..............................................   145
Information Technology.....................................297, 408-413
Integrated General Ledger Accounting System....................183, 214
Intermediaries Leaving Medicare Program..........................   198
Lead Testing in Children.........................................   152
Local Carriers...................................................   235
Long-Term Care...................................................   224
Lung Volume Reduction Surgery....................................   176
Managed Care:
    Enrollment...................................................   138
    Plans........................................................   141
    Reimbursement Rates..........................................   155
Management Issues................................................   229
Medicaid...............................................331-366, 393-402
    Grants to States.......................................331-336, 393
    Lead Testing in Children.....................................   152
    Managed Care.................................................   336
    Program Integrity Initiatives...............................358-361
    State and Local Administration Growth........................   348
    State Children's Health Insurance Pr165, 345, 351-356, 366, 445-451
    Summary of Changes...........................................   393
    Survey and Certification.....................................   350
    Vaccines for Children Program................................   350
Medicaid Appropriation.................................331-366, 393-402
    Amounts Available for Obligation.............................   398
    Appropriation Language.......................................   331
    Appropriations History Table.................................   395
    Authorizing Legislation....................................334, 394
    Budget Authority by Object...................................   397
    Composition of Population....................................   340
    Estimates of Grant Awards....................................   400
    Language Analysis............................................   332
    Medicaid Requirements........................................   396
    Proposed Legislation.........................................   402
    Reform Demonstration.........................................   341
    Service Growth...............................................   338
    Summary of Changes...........................................   393
    Unadjusted State Estimates...................................   399
    Vaccines for Children Program................................   350
Medicaid Costs for SCHIP.........................................   198
Medicaid State and Local Administration Obligations..............   173
Medicare+Choice Programs.........................................   231
Medicare as Primary Payer........................................   199
Medicare Benefits................................................   414
Medicare Contractors............................................274-291
    Appropriation History........................................   291
    Change in Configuration......................................   391
    Oversight Initiative..................................208, 285, 295
    User Fees..............................................214, 270-273
Medicare HMO Withdrawals.............................145, 152, 164, 167
Medicare Integrity Program (MIP):
    Contractor Initiative........................................   183
    Funding Range in FY 2001.....................................   183
    HIPAA.......................................................430-432
Medications at Point of Care in Medicaid Program.................   199
Medigap and End Stage Renal Disease..............................   227
National Coverage Determination..................................   180
National Medicare Education Program........................137, 435-444
National Provider Identifier & Health Plan Identifier............   187
Nursing Home Initiative...............................143, 296, 313-317
Nursing Home Prospective Payment System..........................   219
Nursing Home Transition Grant Program............................   193
Nursing Homes, Poor Performing...................................   192
Opening Statement:
    For The Record..............................................114-133
    Oral........................................................109-113
Organ Procurement Organizations..................................   178
Outcome and Assessment Information System........................   176
Outpatient Payment System......................................154, 234
Palm Pilot Devices...............................................   135
Patient Bill of Rights...........................................   222
Payments to Health Care Trust Funds....................367-374, 403-407
    Appropriation Language.......................................   367
    Appropriations History Table.................................   405
    Authorizing Legislation......................................   404
    Budget Authority......................................370, 371, 403
    Funding Levels for Budget Activity...........................   406
    SMI Premium Estimates........................................   407
    Summary of Changes...........................................   369
Peer Review Organizations.......................................433-444
Pharmacological Stress Agents....................................   134
Policy on Self-Injectable Drugs..................................   206
Poor-Performing Nursing Homes....................................   192
Practice Expense Payments........................................   212
Prescription Drug Benefit............................159, 162, 166, 217
Prescription Drug Benefits and Medicare+Choice...................   194
Preventive Health Services.......................................   162
Private Contractors Identifying Fraud............................   201
Program Management.....................................259-329, 381-392
    Amounts Available for Obligation.............................   381
    Appropriation Language......................................260-262
    Appropriation Summary Table (Current Law)....................   265
    Appropriation Summary Table (Proposed Law)...................   269
    Appropriation History Table..................................   387
    Authorizing Legislation......................................   388
    Budget Authority by Activity.................................   383
    Budget Authority by Object--2 Year...........................   384
    Change in Configuration (Medicare Contractors)...............   391
    Detail of Full-Time Equivalent Employment....................   389
    Detail of Positions..........................................   390
    Federal Administration......................................292-303
    Language Analysis, Current Law...............................   263
    Legislation (Proposed) Summary..............................270-273
    Legislative Proposal.........................................   266
    Legislative Proposal Language Analysis.......................   267
    Medicare Contractors........................................274-291
    Research, Demonstration and Evaluation......................318-329
    Salaries and Expenses........................................   386
    State Survey and Certification..............................304-317
    Summary of Changes...........................................   382
    Voluntary and Involuntary Terminations (S&C).................   392
Provider Outreach................................................   139
Provider Reimbursement Rates.....................................   140
Reasonable and Necessary Services and Supplies...................   186
Redesign of Managed Care System..................................   189
Regional Offices.................................................   171
Regulation on Poor-Performing Home Health Agencies...............   173
Reimbursement for Children's Health Coverage.....................   146
Research Data Assistance Center..................................   194
Research, Demonstrations, Grants & Evaluations.............200, 318-329
    BBA Research Initiatives.....................................   328
    Budget by Program Area.......................................   399
    Summary Table................................................   318
Restraint, Use of................................................   169
Risk Adjuster....................................................   226
San Diego Hospice Case...........................................   231
Savings from Financial Management Reviews........................   197
Secretary's Mental Health Initiative.............................   191
Section 1115 Waivers.............................................   224
Sharing Medicaid Information for Fraud Purposes..................   221
Significant Items in House/Senate/Conference Reports............454-493
Specialty Codes..................................................   151
Standard Systems Transition Initiative...........................   187
State Children's Health Insurance Progra165, 345, 351-356, 366, 445-451
    Lead Testing in Children.....................................   152
    Reimbursement for Children's Health Coverage.................   146
State Grant and Demonstration Project............................   429
State Survey Unit Costs..........................................   172
Studies Mandated by BBA and BBRA.................................   195
Summary of Changes:
    Medicaid.....................................................   393
    Payments to Trust Funds......................................   369
    Program Management...........................................   382
Survey and Certification........................................304-317
    Funding Summary..............................................   304
    Nursing Home Initiative.....................................313-317
    User Fees....................................................   305
    Voluntary and Involuntary Terminations.......................   392
Systems Security Issue...........................................   186
Telemedicine Practices...........................................   202
Ticket to Work and the Work Incentives Improvement Act.........199, 346
Tracking BBRA....................................................   186
Use of Restraint.................................................   169
User Fees..................................................136, 270-273
    Effects on Health Providers..................................   223
    Federal Administration.....................................271, 293
    Medicare Contractors.......................................270, 275
     Medicare+Choice.............................................   272
    State Survey and Certification.............................271, 305
    Vaccines for Children Program................................   350
    Workforce for the 21st Century.............................182, 254
    Y2K Budget...................................................   175
    Y2K Funding (FY 2000)........................................   134

                Administration for Children and Families

Administrative Costs.............................................   747
Budget Request:
    Budget Imbalance.............................................   761
    New Programs.................................................   755
Child Abuse......................................................   761
Child Care:
    Children Served..............................................   757
    Early Learning Fund........................................756, 758
    Increase...................................................740, 755
    Quality......................................................   742
    Unlicensed Care..............................................   754
Community Economic Development Grants............................   771
Community Services Block Grant............................749, 750, 765
Congressional Justification......................................   772
Family Literacy..................................................   760
Head Start:
    Income Eligibility...........................................   754
    Increases....................................................   760
    Migrant Program..............................................   770
    Quality......................................................   739
    Relationship to Child Care...................................   752
Individual Development Accounts..................................   743
Runaway Youth.............................................752, 757, 763
Social Services Block Grant......................................   748
Social Services Research and Demonstration.......................   744
Testimony........................................................   713

                        Administration on Aging

Alzheimer's Demonstration Grants.................................  1298
Budget Line Items/New Programs...................................  1342
Caregiver Services for Senior Citizens...........................  1343
Center for Healthy Aging at Texas Tech...........................  1341
Congressional Justification......................................  1355
Family Caregiver Initiative......................................  1301
Funding Formula..................................................  1342
Funding Services for Senior Citizens.............................  1343
Government Performance and Result Act............................  1293
Home Delivered Meals.........................................1342, 1353
Long Term Care...................................................  1345
Long Term Care for the Elderly...................................  1349
Meals on Wheels..................................................  1349
Meals Program Management.........................................  1346
Mental Health Initiative.........................................  1302
National Family Caregiver Support Program..............1293, 1298, 1348
Native Americans.............................................1297, 1304
Native American Grant Process....................................  1299
Nutrition Programs...........................................1294, 1303
Opening Statement by the Assistant Secretary.....................  1283
Research and Demonstration Budget................................  1306
Seniors..........................................................  1295
Senior Community Service Employment Program......................  1346
Staffing.........................................................  1308
State Transfer of Funds..........................................  1304
Support for Caregivers...........................................  1351
Supportive Services and Senior Centers Increase..................  1354
Transfers........................................................  1294
Witnesses........................................................  1279

                                
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