[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]



    PRIORITIES OF THE U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES 
                REFLECTED IN THE FISCAL YEAR 2002 BUDGET

=======================================================================

                                HEARING

                               before the

                         SUBCOMMITTEE ON HEALTH

                                 of the

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION

                               __________

                             APRIL 26, 2001

                               __________

                           Serial No. 107-44

                               __________

       Printed for the use of the Committee on Energy and Commerce


 Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                 house

                               __________

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                    ------------------------------  

                    COMMITTEE ON ENERGY AND COMMERCE

               W.J. ``BILLY'' TAUZIN, Louisiana, Chairman

MICHAEL BILIRAKIS, Florida           JOHN D. DINGELL, Michigan
JOE BARTON, Texas                    HENRY A. WAXMAN, California
FRED UPTON, Michigan                 EDWARD J. MARKEY, Massachusetts
CLIFF STEARNS, Florida               RALPH M. HALL, Texas
PAUL E. GILLMOR, Ohio                RICK BOUCHER, Virginia
JAMES C. GREENWOOD, Pennsylvania     EDOLPHUS TOWNS, New York
CHRISTOPHER COX, California          FRANK PALLONE, Jr., New Jersey
NATHAN DEAL, Georgia                 SHERROD BROWN, Ohio
STEVE LARGENT, Oklahoma              BART GORDON, Tennessee
RICHARD BURR, North Carolina         PETER DEUTSCH, Florida
ED WHITFIELD, Kentucky               BOBBY L. RUSH, Illinois
GREG GANSKE, Iowa                    ANNA G. ESHOO, California
CHARLIE NORWOOD, Georgia             BART STUPAK, Michigan
BARBARA CUBIN, Wyoming               ELIOT L. ENGEL, New York
JOHN SHIMKUS, Illinois               TOM SAWYER, Ohio
HEATHER WILSON, New Mexico           ALBERT R. WYNN, Maryland
JOHN B. SHADEGG, Arizona             GENE GREEN, Texas
CHARLES ``CHIP'' PICKERING,          KAREN McCARTHY, Missouri
Mississippi                          TED STRICKLAND, Ohio
VITO FOSSELLA, New York              DIANA DeGETTE, Colorado
ROY BLUNT, Missouri                  THOMAS M. BARRETT, Wisconsin
TOM DAVIS, Virginia                  BILL LUTHER, Minnesota
ED BRYANT, Tennessee                 LOIS CAPPS, California
ROBERT L. EHRLICH, Jr., Maryland     MICHAEL F. DOYLE, Pennsylvania
STEVE BUYER, Indiana                 CHRISTOPHER JOHN, Louisiana
GEORGE RADANOVICH, California        JANE HARMAN, California
CHARLES F. BASS, New Hampshire
JOSEPH R. PITTS, Pennsylvania
MARY BONO, California
GREG WALDEN, Oregon
LEE TERRY, Nebraska

                  David V. Marventano, Staff Director

                   James D. Barnette, General Counsel

      Reid P.F. Stuntz, Minority Staff Director and Chief Counsel

                                 ______

                         Subcommittee on Health

                  MICHAEL BILIRAKIS, Florida, Chairman

JOE BARTON, Texas                    SHERROD BROWN, Ohio
FRED UPTON, Michigan                 HENRY A. WAXMAN, California
JAMES C. GREENWOOD, Pennsylvania     TED STRICKLAND, Ohio
NATHAN DEAL, Georgia                 THOMAS M. BARRETT, Wisconsin
RICHARD BURR, North Carolina         LOIS CAPPS, California
ED WHITFIELD, Kentucky               RALPH M. HALL, Texas
GREG GANSKE, Iowa                    EDOLPHUS TOWNS, New York
CHARLIE NORWOOD, Georgia             FRANK PALLONE, Jr., New Jersey
  Vice Chairman                      PETER DEUTSCH, Florida
BARBARA CUBIN, Wyoming               ANNA G. ESHOO, California
HEATHER WILSON, New Mexico           BART STUPAK, Michigan
JOHN B. SHADEGG, Arizona             ELIOT L. ENGEL, New York
CHARLES ``CHIP'' PICKERING,          ALBERT R. WYNN, Maryland
Mississippi                          GENE GREEN, Texas
ED BRYANT, Tennessee                 JOHN D. DINGELL, Michigan,
ROBERT L. EHRLICH, Jr., Maryland       (Ex Officio)
STEVE BUYER, Indiana
JOSEPH R. PITTS, Pennsylvania
W.J. ``BILLY'' TAUZIN, Louisiana
  (Ex Officio)

                                  (ii)


                            C O N T E N T S

                               __________
                                                                   Page

Testimony of:
    Thompson, Hon. Tommy G., Secretary, Department of Health and 
      Human Services.............................................     9
Material submitted for the record by:
    Thompson, Hon. Tommy G., Secretary, Department of Health and 
      Human Services, responses for the record...................    68

                                 (iii)

  

 
    PRIORITIES OF THE U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES 
                REFLECTED IN THE FISCAL YEAR 2002 BUDGET

                              ----------                              


                        THURSDAY, APRIL 26, 2001

                  House of Representatives,
                  Committee on Energy and Commerce,
                                    Subcommittee on Health,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10 a.m., in 
room 2322, Rayburn House Office Building, Hon. Michael 
Bilirakis (chairman) presiding.
    Members present: Representatives Bilirakis, Greenwood, 
Burr, Whitfield, Ganske, Norwood, Shadegg, Bryant, Buyer, 
Pitts, Brown, Waxman, Strickland, Barrett, Towns, Pallone, 
Engel, Wynn, and Green.
    Staff present: Marc Wheat, majority counsel; Kristi Gillis, 
legislative clerk; John Ford, minority counsel; and Bridgett 
Taylor, minority professional staff member.
    Mr. Bilirakis. The hearing will come to order.
    I am extremely pleased to welcome the Honorable Tommy 
Thompson, Secretary of the U.S. Department of Health and Human 
Services and, as we all know, the former Governor of Wisconsin 
to testify before the subcommittee.
    This, sir, is your first appearance before the Energy and 
Commerce Committee as part of the new administration, and I 
know all of us are delighted that you are able to take the time 
out of your busy schedule to be here.
    The purpose of today's hearing is to discuss the priorities 
of the Department as they are reflected in the administration's 
fiscal year 2002 budget request.
    In addition, many members are interested in learning more 
about a number of regulatory issues. To facilitate a dialog 
with the Secretary, which Ranking Member Brown and I are both 
anxious to do, I request unanimous consent that the opening 
statements of all members, other than the chairman and ranking 
member, be limited to 1 minute, with full statements submitted 
for the record, of course.
    The fiscal year 2002 budget delivers on President Bush's 
vision for a responsible approach to improving the health and 
well-being of all Americans. This budget includes $468.8 
billion in total outlays, an 8.9 percent increase over fiscal 
year 2001 spending. In particular, I am very pleased to see for 
the first time in a long time an increase in the Health Care 
Financing Administration's administrative budget.
    The committee has communicated extensively with Secretary 
Thompson about our Patients First project, which is intended to 
help HCFA operate more efficiently and improve the quality of 
care for parents; and I think we all agree that increased 
administrative funding is a necessary step. We have all seen 
that to be the case in our hearings, but it is only part of the 
solution. I appreciate the Secretary's active input in our 
Patients First initiative, and I know that we will benefit 
greatly from his practical experience as a former Governor.
    Finally, I would like to commend President Bush and 
Secretary Thompson for recognizing Medicare reform and the 
inclusion of a prescription drug benefit in the Medicare 
program as a top priority. In addition to streamlining 
burdensome and inflexible bureaucratic controls, we must act 
now to protect and strengthen this vital program.
    Mr. Secretary, the members of this committee and I look 
forward to working closely with you and with President Bush to 
enact broader reforms to preserve Medicare for the future while 
improving the program by establishing a prescription drug 
benefit.
    I now yield to my good friend, Mr. Brown of Ohio.
    Mr. Brown. Thank you, Mr. Chairman.
    Welcome, Secretary Thompson. Your appointment to HHS was a 
good one, and we are very glad that you are here with us and 
look forward to working with you in the next few years.
    You and I have spoken previously about a number of issues, 
including the privacy rule and the importance of full funding 
for Children's Hospital GME. Since that conversation, the 
President has decided to move forward with the privacy rule and 
the budget has been released with substantial but not full 
funding for Children's Graduate Medical Education. These 
outcomes are positive, even if we have some distance to go on 
both issues.
    The guidance that will be issued to clarify the privacy 
rule is as important as the rule itself. I look forward to 
working with you to make sure this guidance clears up any 
confusion about the intent of the regulations, without 
compromising the hard-fought protections established by the 
rule.
    Mr. Secretary, the Children's Hospital GME program should 
be fully funded. We do not expect other teaching hospitals to 
squeeze blood from a stone and self-fund graduate medical 
education. We shouldn't expect children's hospitals, most of 
which survive on far-from-generous Medicaid funding, to self-
finance the training of our pediatricians and pediatric 
specialists.
    Let me turn to Medicare. The President's budget diverts 
$150 plus billion from the Medicare Trust Fund into 
prescription drug assistance and Medicare reform. Prescription 
drug assistance would take the form of block grants the States 
do not want and stand-alone prescription drug plans the 
insurance industry tells us they won't sell.
    The Medicare reform proposal, although not specified in any 
level of detail, appears to want to reform the program by 
introducing more choice, also known as HMOs, into the program 
while minimizing the role of traditional Medicare. The 
President plans to deplete the Part A trust fund, even though 
we know that the demands on that trust fund will increase at a 
substantially greater rate than the fund itself, provide 
nowhere near the funding necessary. Both parties agree to 
establish meaningful prescription drug coverage for seniors, 
and plans to overhaul traditional Medicare by making it one big 
plus choice program, when our constituents tell us that it is 
actually the plus choice part, not the traditional fee-for-
service part, that is not working.
    I can see how the Medicare proposals accommodate the 
President's tax cut and I can see how the Medicare proposals 
benefit the insurance industry and the prescription drug 
industry, but I can't for the life of me see how those 
proposals protect Medicare, improve Medicare, or address a 
single concern raised by beneficiaries and their families.
    Again, these concerns overwhelmingly relate to the Medicare 
managed care program, not to traditional Medicare, which is 
working very well.
    I want to switch gears for a moment and talk about HHS-
funded programs on food safety. Five thousand Americans die 
each year from food-borne illnesses. Hundreds of thousands of 
others are hospitalized. In addition to the well-known and 
documented instances of food-borne illnesses, Americans need to 
be concerned about antibiotic-resistant bacteria in food, 
genetically modified organisms of unknown risk, and lethal 
contaminants such as mad cow disease. Yet we inspect at our 
borders only .7 of 1 percent of our food.
    The modest increases in the President's budget barely skim 
the surface of the problem, and even those dollars could easily 
be diverted toward FDA's core drug approval activities. It has 
unfortunately happened before. We need to do better with food 
safety, with inspections. We can't do that, Mr. Secretary, 
without your active participation and leadership; and we look 
forward to that.
    Thank you.
    Mr. Bilirakis. I thank the gentleman. Now the Chair 
recognizes the vice chairman of the subcommittee, Dr. Norwood.
    Mr. Norwood. Thank you very much, Mr. Chairman.
    Mr. Secretary, we welcome you today. I think I congratulate 
you on your appointment. I believe that you perhaps have one of 
the most difficult agencies out there to deal with, and I also 
believe that you are the man for the job that can straighten it 
out.
    I am one of those people that happen to believe that the 
President, the CEO of our country, is very correct in trying to 
make certain that we limit the amount of increase in spending 
every year; and I am one of those people who believes that, 
even though many problems and many things need to be changed--
for example, in Medicare, in managed care, at HCFA, et cetera--
not always the solution is throwing dollars at it. Sometimes we 
may just want to try to do things right and be a little more 
efficient, and I believe that you are the man for that job.
    I am pleased about your passions that you bring to 
Washington and bring to HHS, for example, in your deep interest 
in organ transplants and in other areas. That is the kind of 
Secretary I would like for us to have, not someone who just 
pushes numbers around but one that really believes in this 
issue. So I very much look forward to working with you, and I 
know we are going to do some great things in many areas, and I 
thank you, sir.
    I yield back.
    Mr. Bilirakis. I thank the gentleman.
    Mr. Pallone, for a brief opening statement.
    Mr. Pallone. Thank you, Mr. Chairman, for holding this 
hearing.
    The President, Mr. Chairman, in my opinion should be 
fighting for health priorities that protect Medicare, provide a 
meaningful Medicare prescription drug benefit and ensure 
funding for public health programs that provide care to those 
who cannot afford it. After reviewing the HHS budget 
priorities, it is clear to me that just the opposite will be 
accomplished. That is, the budget will spend the Medicare 
surplus on other priorities, the budget will fail to provide a 
meaningful prescription drug benefit, and the budget will cut 
important safety net programs and public health programs that 
provide care to the underserved population.
    It is particularly alarming that President Bush's tax cut 
forces him to use the Medicare surplus to fund other spending 
initiatives. The budget includes the Medicare surplus in an 
$842 billion contingency fund that will be used for defense, 
education, agriculture and debt reduction. It is estimated that 
the contingency fund will be quickly depleted, therefore 
leaving the Medicare trust fund surplus vulnerable to being 
used for other priorities. From my understanding, even 
Secretary Thompson agrees that the budget fails to protect the 
Medicare trust fund.
    The government is in a unique financial position to make 
necessary changes to Medicare and to add necessary health 
services to those who lack resources. This is not the time to 
funnel Federal dollars that can be used for health priorities 
to instead fund a tax cut plan that costs over $2 trillion 
ultimately.
    I want to thank you again, Mr. Chairman, for holding this 
hearing; and I am interested in hearing from the Secretary on 
the budget and look forward to opportunities to ask questions.
    Mr. Bilirakis. I thank the gentleman.
    The Chair now recognizes Dr. Ganske and would also report 
that a vote is being expected in the next 3 or 4 minutes 
downstairs on the telecom bill, so some of us will be getting 
up and jumping down for that.
    Mr. Ganske. Thank you, Mr. Chairman. I thought you were 
saying a vote on the floor was going to occur and giving me a 
hint to be brief. I will be brief.
    Welcome, Mr. Secretary, a fellow Midwesterner, somebody who 
has been intimately involved with Department of Health and 
Human Services issues for a long, long time, very knowledgeable 
on these issues and I think a great appointment by President 
Bush for this slot. And thank you for your public service 
throughout the years and particularly now in this difficult 
job.
    There are so many things to talk about. I don't know how 
much time you will have with us today. We could talk about 
implementation of patient rights as they relate to Medicare. 
There are important public health issues like tobacco and the 
role of the FDA, which you have spoken about to some extent. 
Prescription drug benefit will, I am sure, come up. I would 
like at some time to talk to you about how we can improve the 
reimportation of prescription drugs which Congress worked on.
    The big issue is the solvency of Medicare in the long term. 
But as it relates to Medicare there is one issue that you, as a 
former Midwestern Governor, and I, as a representative of Iowa, 
think a lot about and that is that rural States have not 
received a fair reimbursement proportion. Nationally, Iowa 
ranks about 25th in terms of overhead expenses and yet we are 
dead last, right at the bottom, 50th in terms of Medicare 
reimbursement. That is not fair, and I think we need to do 
something about it. I know that you have taken an interest in 
that, and I look forward to your testimony.
    Mr. Bilirakis. Mr. Towns, for an opening statement. We have 
had unanimous consent to limit our opening statements to 1 
minute. But obviously if we can stay as close to it as 
possible, that would be appreciated.
    Mr. Towns. Fifty-five seconds, Mr. Chairman.
    Mr. Secretary, let me congratulate you again. I was pleased 
to see in your testimony that you will attempt to streamline 
antiquated systems at HCFA. I hope that under your watch you 
will also reduce some of the burdensome and unnecessary 
regulations from HCFA.
    Let me briefly describe one such unnecessary regulation 
that is affecting the seniors in my district.
    On January 10, 2001, HCFA issued approval of the Home 
Health Advance Beneficiary Notice and required all home health 
agencies to give this form to all of their duly eligible 
patients by March 1 of this year. This form is on the top of 
multiple other written notices home health agencies are 
required to provide to patients under their care.
    While this form is an improvement over earlier versions, it 
still does not allow HHA to inform duly eligible patients that, 
if Medicare will not cover their services, Medicaid has covered 
them in the past and is likely to continue to cover them in the 
future. Instead, the form provides only three options, all of 
them informing the patient that Medicare will either reduce, 
limit, or deny coverage for the relevant home health service. 
This frightens the patients and family members often to the 
point where they will refuse the home health care they 
desperately need in order to avoid getting stuck paying for a 
bill that the home health agency knows is covered.
    Mr. Secretary, if we can put a man or a woman on the moon, 
surely this country can devise a home health care form which 
will permit low-income seniors to receive the care they 
desperately need. I urge you, Mr. Secretary, as part of the 
planned HCFA reforms, to simply add a third option in this form 
which will permit Medicaid to be properly billed for home 
health service.
    I look forward to working with you in the days and months 
ahead. Thank you very much.
    Mr. Norwood [presiding]. Ladies and gentlemen, the 
committee chairman has asked that we hold to 1 minute in order 
to give the Secretary as much time as possible; and though I am 
uncomfortable interrupting you, I am going to at 1 minute. So 
please limit your remarks to 1 minute.
    Mr. Bryant.
    Mr. Bryant. Thank you, Mr. Chairman.
    I, too, want to add my welcome to you and tell you that I 
am personally very pleased that you are in the position that 
you are in. In the interest of saving time, I will adopt the 
statements of my colleagues on this side of the aisle and would 
yield back the balance of my time.
    Mr. Norwood. Thank you, sir.
    Now we will hear from Mr. Green.
    Mr. Green. Thank you, Mr. Chairman. I know we are eager to 
hear from Secretary Thompson, so I will keep my remarks short. 
I have a much longer statement that I will submit for the 
record.
    Welcome, Mr. Secretary. Mr. Chairman, the services provided 
by HHS have a direct benefit and touch the lives of more 
Americans than any other agency. From the life-saving research 
performed at the NIH to the vital assistance provided by the 
LIHEAP program, this agency has vast and critical 
responsibilities. It is essential that we provide HHS with the 
resources it needs to perform those duties.
    While the President has made investments in some programs 
such as NIH and community health centers, he eliminates or cuts 
or provides insufficient funds for others. I am especially 
concerned about elimination of the Community Access Program, 
cuts to the Pediatric Graduate Medical Education Program, and 
also reductions in the CDC's Chronic Disease Program. These 
programs are critical to our fight to provide health care to 
the Nation's 43 million uninsured and our battles against 
chronic disease and the training of pediatricians and pediatric 
specialists. I look forward, Mr. Secretary, to hearing you 
today and look forward to working with you and also to discuss 
some of these particular programs that we have.
    I yield back my time. How long was that, Mr. Chairman?
    Mr. Norwood. One minute and 5 seconds.
    Mr. Green. I thought I was going to do it in 59 seconds.
    Mr. Norwood. You did pretty good.
    Mr. Buyer for 1 minute.
    Mr. Buyer. Mr. Secretary, I also welcome you here today and 
let you know that I come from a rural district in Indiana, and 
I want to make sure that the American rural areas, their 
medical needs and health needs are also met so we will make 
sure that we have equity in our systems. Out there in those 
rural areas reimbursement for ambulance rates are very 
important to make sure that we can get these patients to those 
health centers.
    The other thing I would just throw out on the table to you, 
as you hear Mediscare, and that is what we have heard from some 
statements here today, I would like to remind you that it was 
back in 1995, when Republicans took control of Congress, in the 
face of bankruptcy, we worked with President Clinton. We did 
not get support from those who were the advocates of universal 
health care or government controlled health care. But when we 
moved forward to save Medicare from bankruptcy, that didn't 
mean that we got it all right. So we have to be very attentive 
in that process, and we want to work with you and especially on 
the Medicare prescription drug program.
    Mr. Norwood. Mr. Strickland, I know that 1 minute is not 
enough, but you are recognized for 1 minute.
    Mr. Strickland. Thank you, my friend.
    Thank you, Mr. Secretary, for being here.
    I note that the Community Access Program--which is a 
program that helps rural areas in particular because it helps 
community providers provide greater services for the 
uninsured--has been eliminated to the tune of $125 million. The 
Health Resources Service Administration facilities program 
eliminated, some $251 million. The Bureau of Health Professions 
has been cut by $213 million, and this program helps train 
professionals to serve in medically underserved communities. 
Rural health and telehealth cut by $58 million, and SAMSHA's 
mental health programs cut by $16 million.
    I just point these out because I am from an Appalachian 
area, a very poor area, and I think these programs are very 
vital to a region like mine and many others across the country. 
So I am glad you are here today. I look forward to your 
testimony, and I hope you can speak to some of these issues.
    How did I do?
    Mr. Norwood. You did absolutely great. You gave Mr. Waxman 
an extra 10 seconds.
    I now recognize the vice chairman of the full Commerce 
Committee, Mr. Burr, for 49 seconds.
    Mr. Burr. Thank you, Mr. Chairman.
    Welcome, Mr. Secretary. There still are some people in this 
Congress that believe that if you just pump more money at 
something you get a different result. If we have learned 
anything over the last 6 years, it is that there are many areas 
of your responsibility that require structural and cultural 
change, the type of change that can only happen with a 
bipartisan effort of Congress with the commitment from HHS.
    I want to commend you as you have begun to assemble a staff 
to work under you. You not only have chosen capable but you 
have chosen experienced individuals to head up many of the 
issues that we are going to deal with between this committee 
and your agency. I know today that we can reach solutions to 
these problems if the commitment is as strong on our side as I 
am sure it will be from you. I thank you once again.
    Mr. Norwood. I thank the vice chairman for being exactly 
perfect on time.
    Mr. Waxman, I am delighted to give you 1 minute, sir.
    Mr. Waxman. Thank you, Mr. Chairman.
    Mr. Secretary, I welcome to you our committee. Your 
Department has jurisdiction over health care for Americans, 
whether it is Medicare or Medicaid, the CHIP program, and all 
of the activities of the FDA and prevention programs and family 
planning and on and on and on. Those are within the 
jurisdiction of our committee, and we want to work with you in 
these efforts. We want to be cooperative to assure your 
Department has the resources it needs to do the job that people 
are depending on you to do.
    But, in that vein, I want us to not give away in tax cuts 
for the wealthy the financial resources we must have to meet 
the needs of those who depend on Medicare or Medicaid, or on 
the Ryan White programs for persons with AIDS, or on training 
funds for nurses and medical personnel; on a strong and 
effective FDA, or on services for severely disabled children or 
legal immigrant children, to name only a few. Because the fact 
is when we endanger the surplus and take away available 
resources with massive tax cuts, particularly for the wealthy 
who do not need it, it is at the expense of those people who 
depend on the programs in your Department; and they are the 
ones who will suffer.
    I look forward to your testimony today and working with you 
in the future. Thank you.
    Mr. Norwood. Now, we would like to recognize the 
Pennsylvania delegation. First, Mr. Greenwood for 1 minute.
    Mr. Greenwood. Thank you, Mr. Chairman.
    Mr. Secretary, it was good to meet with you in my office 
yesterday. I am very excited about your stewardship of the 
Department. I think your notion of going from agency to agency, 
actually running your office out of those agencies and running 
those agencies yourself is spectacular.
    In 1 minute, I could list a few of the things that I looked 
forward to working with you on: Title 10, medical records, 
privacy, HCFA reform, FDA reform, organ transplants, computer 
security, clinical research, chimpanzee retirement, average 
wholesale price of drugs, AIDS, NIH, and cloning and a few 
other things. I look forward to your comments.
    I yield back the balance of my time.
    Mr. Norwood. Mr. Pitts of Pennsylvania, you are allowed 1 
minute.
    Mr. Pitts. Thank you, Mr. Chairman. I am pleased that you 
are holding this important hearing today. And, Mr. Secretary, 
thank you for taking time to be with us to discuss the budget 
of one of the Nation's most important domestic spending 
programs.
    I look forward to working with you on a number of issues, 
as we face even some issues of controversy as well as 
importance. Some of these would include funding for community 
health centers; the CDC practice of blind HIV testing; 
abstinence funding; the abortion drug, RU 486, making sure that 
it does not endanger the health of women; alternatives to 
embryonic stem cell research; oversight of the Title 10 program 
and others.
    I look forward to hearing your testimony, and I thank you 
for coming.
    Mr. Norwood. I remind all of my colleagues that all of us 
had a lot more that we would like to say than 1 minute and you 
are more than welcome to submit for the record your written 
testimony. But the purpose of this hearing is to hear from the 
Secretary.
    [Additional statement submitted for the record follows:]

Prepared Statement of Hon. Eliot L. Engel, a Representative in Congress 
                       from the State of New York

    Mr. Chairman, first let me say that I am pleased to be here today 
and I welcome you Mr. Secretary and look forward to your testimony and 
the opportunity to discuss some of the specific provisions of the 
Department of Health and Human Services' (HHS) budget.
    When the President proposed tax cuts totaling over $2 trillion I 
was extremely concerned about what programs would be cut or eliminated 
in order to pay for such a large proposal and how the cuts would affect 
American families. It seems that for health care especially, the cuts 
are deep and will have a terrible impact on our country's health care 
safety net. The budget talks about replacing the State Children's 
Health Insurance Program (S-CHIP) with private health insurance through 
the use of tax credits. In addition, the Community Access Program is 
eliminated, while Ryan White and Healthy Start funding levels are 
frozen. Many of the cuts are in programs that assist families in New 
York and across the country in obtaining basic health services and 
should not suffer at the hand of a huge tax cut that for the most part 
will go to a very few wealthy people at the top of the income ladder.
    These are only a few examples of the types of programs that this 
budget hits hard. Also, the President's effort to provide seniors with 
a Medicare prescription drug benefit appears vastly inadequate. In 
fact, the budget only sets aside $153 billion over ten years for a 
prescription drug benefit and Medicare reform and siphons money out of 
the Medicare Part A trust fund, thus bringing Medicare closer to 
insolvency. Congress must act to provide a real benefit for seniors and 
must pay for it with resources outside of Medicare to ensure the 
solvency of the program.
    Mr. Chairman, I hope that we can examine some of these provisions 
and realize that we in Congress cannot go along with this budget. I 
look forward to working with my colleagues to bring about substantial 
changes so that we can continue the work we have done in Congress on 
behalf of American families.

    Mr. Norwood. With that, Secretary Thompson, you have the 
floor.

 STATEMENT OF HON. TOMMY G. THOMPSON, SECRETARY, DEPARTMENT OF 
                   HEALTH AND HUMAN SERVICES

    Mr. Thompson. Thank you very much, Acting Chairman Norwood. 
It is a privilege for me to be in front of this wonderful 
committee, and I want to thank Chairman Bilirakis for 
scheduling it and also Congressman Brown and all the other 
members.
    Let me just start out by saying that, like all of you, I 
believe very passionately in the Department of Health and Human 
Services, our mission and what we can do together on a 
bipartisan basis. I am looking forward for your advice and your 
criticisms--constructive criticisms and your support to 
accomplish the objectives set out by the mandates that you have 
set in statute, and I am looking forward to working with you.
    I am honored to appear before you today to discuss the 
President's fiscal year 2002 budget for the Department of 
Health and Human Services. Much has been written and said about 
selective portions of our budget and some unfair and some 
inaccurate charges have been leveled against it. That is why I 
am very pleased today to have this opportunity to appear in 
front of you to discuss our detailed budget proposal. I am very 
confident that a review of the full details of our budget will 
demonstrate that we are proposing a very balanced, responsible 
approach to building a strong and healthy America.
    The budget before you today keeps the promises that the 
President of the United States has made and proposes new and 
innovative solutions for meeting the challenges that face our 
Nation. Our proposal begins the modernization and the 
strengthening of Medicare. It expands access to health care, 
reforms the way the Department operations are managed.
    Mr. Chairman and members, the total HHS request for fiscal 
year 2002 is $468 billion. The discretionary component totals 
$55.5 billion, or a 5.1 percent increase.
    I would like to begin today by talking about Medicare, the 
cornerstone of our health care system. It provides coverage to 
40 million Americans, and it is the largest health insurer in 
the Nation. All of us, you on the committee and me at the 
Department and all the other residents of America, are paying 
our taxes into this system; and they are supporting it not only 
for today's beneficiaries but in the full faith and expectation 
that this program will be there when we need it and when our 
children need it, delivering health care at a price that we all 
can afford.
    Costs for all of Medicare will quadruple, growing from 2.2 
percent of the gross domestic product today to 8.5 percent. At 
the same time, revenues only grow from 2.4 percent of GDP today 
to 5.3 percent. That is a big gap.
    What does that mean for America? Precisely why we must act 
now to modernize, strengthen and protect this popular and vital 
program and, yes, add a prescription drug benefit.
    Modernizing Medicare is just one part of President Bush's 
initiatives to strengthen the health care safety net for those 
most in need, notably, the 43 million Americans who do not have 
health insurance.
    Among the President's top priorities is to increase funding 
for community health centers, which provide high-quality, 
community-based care to approximately 11 million patients, 4.4 
million of whom are uninsured, through a network of more than 
3,000 centers in rural and urban areas. The President has 
proposed to expand and increase the number of health centers by 
1,200 by 2006 and increase the number of patients being seen by 
11 million to 20 million.
    As a first installment of this multiyear initiative, we 
propose to increase the funding for community health centers by 
$124 million. We also will be looking at ways to reform the 
National Health Service Corps so as to better target placement 
of providers in areas that experience the greatest shortage of 
health care professionals, a lot of those in rural areas.
    We are also acting to address the nursing shortage in 
America by increasing fundings for nursing professional 
programs to $82 million for fiscal year 2002, which is a 7 
percent increase.
    And you cannot talk about health care in America without 
talking about improving women's health. This administration 
recognizes the vital role that women play in the health of 
their families. Therefore, we are increasing funding for the 
Office of Women's Health by $10 million to $27 million because 
we recognize that healthy women mean healthy families.
    This administration also is committed to giving States 
greater flexibility in managing their health programs. Our 
budget proposes to give States expanding authority to transfer 
funds among public health grants, thereby enabling them to make 
more efficient and inventive use of Federal resources and to 
target and reallocate funds to public health priorities, 
identified at the State and local levels.
    To that end, we are investing in modernizing and increasing 
the efficiency of the Health Care Financing Administration. I 
know that this committee is keenly interested in HCFA, and many 
of you recently visited and visited its office. I commend the 
members of this committee for taking such a very active 
interest, and I want to work with you to improve it.
    I have also been up to visit HCFA, and I saw an agency 
strapped with excess regulations and responsibilities without 
actually receiving the resources necessary in order for it to 
do its job effectively. It is clear that HCFA offices were 
filled with hundreds of dedicated employees but also with 
outdated computers and a bookkeeping system that is absolutely 
arcane and demands that have spread the agency too thin for too 
long. HCFA needs our help now so it will be able to help, 
Congressman Towns, your people and other people across America.
    To help HCFA begin to meet these challenges, the budget 
proposed an increase of $192 million, or 9 percent, to be able 
to manage HCFA in its programs and modernize so it can do the 
job properly. We are going to dedicate $36 million to update 
antiquated information technology systems; and we are working 
to ensures HCFA is more responsive, efficient, pleasant, and 
flexible in dealing with States and health care providers in 
daily operations.
    We are also going the Department a step further. Next week, 
on Monday morning, I will be moving the Secretary's office from 
the Humphrey Building to Baltimore to run HCFA for a week 
personally to see how it truly operates, what it does well and 
what can be done better. This firsthand experience undoubtedly 
will help me learn how we can operate HCFA better so that it is 
more responsive to your constituents that HCFA was set up to 
serve.
    I know some of you have experienced concerns in your 
speeches this morning about various decisions in the 
Department's budget: child care, AIDS, and providing care for 
the uninsured. I am here today to assure you that these are top 
priorities for this administration and for me and the total 
Department of Health and Human Services.
    I would also urge to you look at the budget as a whole and 
not just individual lines and individual agencies. Look at 
issues as a whole and you will see that we will have better 
collaboration among agencies within the Department to make a 
concerted effort on an array of issues that can better serve 
all Americans.
    President Bush recognizes the importance of investing in 
our children, and the HHS budget reflects that commitment. The 
budget includes increases for both existing programs as well as 
new investments in a number of new programs designed to fulfill 
President Bush's commitment to making sure that no child is 
left behind. One of the most important things that we as a 
government can do is to help working families, especially those 
trying to move from dependency to the workforce, is to assist 
them in obtaining child care. The President requested a total 
of $2.2 billion for the child care and development block grant, 
which is a discretionary pot, a 10 percent increase, and 
coupled with an additional $150 million increase for the 
mandatory portion of child care. We will be increasing spending 
on child care, therefore, over last fiscal year by $350 
million.
    To further strengthen American families, President Bush has 
proposed ambitious initiatives to promote stable families and 
responsible fatherhood, paternity group homes, a compassionate 
capital fund and a proposal to establish a center for faith-
based and community initiatives within the Department.
    We also will be increasing funding for substance abuse 
through SAMHSA by $100 million.
    This administration also, ladies and gentlemen, remains 
committed to fighting AIDS, both at home and, yes, abroad, 
which is a serious problem. This budget includes $10.2 billion 
for the HIV/AIDS program, a 7.2 percent increase for research, 
treatment, and prevention. It also includes an additional 11 
percent increase for international AIDS spending.
    Along these same lines, the Department of Health and Human 
Services is joining with the State Department to develop a task 
force headed up by Colin Powell and myself at the request of 
the President to provide real leadership in the fight against 
HIV/AIDS, both domestically and internationally, and looking at 
trying to come up with a total plan, especially in the 
continent of Africa. The President, Secretary Powell, and I are 
committed to fight this disease on all fronts.
    A top priority for this administration, of course, is 
ensuring that the National Institutes of Health continue to 
have the resources necessary to help turn these promises into a 
reality. The research that is conducted and supported by the 
NIH is absolutely phenomenal, from most basic research in 
biological systems to the effort to map the human genome, 
offers the promise of breakthroughs in prevention and treating 
diseases from cancer to Parkinson's to Alzheimer's.
    The potential that lies in these projects is why President 
Bush's plan to double the resources for the NIH by 2003 is so 
vital. The $2.75 billion increase in this budget is the largest 
1-year increase ever for NIH, and it will support 34,000 
research grants, most of those in the States that you 
represent. This happens to be the most in the agency's history. 
The President has also included $208 million for asthma 
research at NIH, a 12 percent increase, and $768 million for 
diabetes research, a 11.3 percent increase. We are committed to 
fighting two of our most prevalent and chronic conditions in 
America.
    Finally, Mr. Chairman, I would also like to commend you 
personally for your work that is particularly close and near to 
my heart, organ donation. Your Organ Donation Improvement Act 
is a strong step in the right direction in helping America 
increase the number of organs donated, and it will work hand in 
hand with the five-point organ donation initiative that we 
unveiled earlier this month at the Department of Health and 
Human Services.
    The President also has proposed a 33 percent increase for 
organ transplantation programs at the Health Resources and 
Service Administration; and we must continue to fight to try to 
cut into the waiting list of 76,000 Americans who need an 
organ, an increase of 300 each and every month. It is time that 
it is brought to the forefront of our health care agenda, and I 
look forward to working with each of you in the future.
    Mr. Chairman, I have talked about a few of the dozens and 
dozens of exciting initiatives in President Bush's budget for 
the Department of Health and Human Services. A more detailed 
list is included in the written testimony that I submitted 
earlier. The common thread, however, that binds all of our 
proposals together, and which binds together the bipartisanship 
of this committee, is the desire to build a strong and a 
healthy America and to improve the lives of all of our 
citizens.
    I am prepared to work with each of you to ensure that we 
develop a budget for this Department that effectively serves 
the national interests.
    Now I would be happy to address any questions that you may 
have.
    [The prepared statement of Hon. Tommy G. Thompson follows:]

Prepared Statement of Hon. Tommy G. Thompson, Secretary, Department of 
                       Health and Human Services

    Good Morning, Chairman Bilirakis, Congressman Brown, and members of 
the Subcommittee. I am honored to appear before you today to discuss 
the President's FY 2002 budget for the Department of Health and Human 
Services. I am confident that a review of our budget for these programs 
will demonstrate that we are proposing a balanced, responsible approach 
to building a strong and healthy America.
    Part of this approach means we must no longer be content to do 
things a certain way because ``that's how we've always done it''. It 
means we must be willing to reform our business practices and seek 
innovative ways to manage our programs. And, while we know that the 
federal government has an important role to play, we must also 
recognize that our State, local and tribal government partners, 
community and faith-based organizations, the private sector and 
academic institutions--all are indispensable sources of new and 
creative approaches to solving public problems. The President and I 
share this view, and I am proud to say it is manifested in the budget 
he has put forward.
    The President's budget proposes innovative solutions for meeting 
the challenges that face the nation. Our proposal begins the 
modernization of Medicare; expands access to health care; enhances the 
groundbreaking research being sponsored by the National Institutes of 
Health; protects public health; and, invests in infrastructure and 
reforms the way the Department's operations are managed. The HHS budget 
also reflects the President's commitment to a balanced fiscal framework 
that puts discretionary spending on a more reasonable and sustainable 
growth path; protects Social Security, Medicare, and other priority 
programs; continues to pay down the national debt; and provides tax 
relief for all Americans. Let me now highlight some priorities in the 
HHS budget.
         enhancing scientific and health care quality research
    Advances in scientific knowledge have provided the foundation for 
improvements in public health and have led to enhanced health and 
quality of life for all Americans. Our FY 2002 budget enhances support 
for scientific research as well as for research to improve the quality 
of the Nation's health care system.
Biomedical Research Sponsored by the National Institutes of Health
    The National Institutes of Health (NIH) is the largest and most 
distinguished biomedical research organization in the world. The 
research that is conducted and supported by the NIH, from the most 
basic research on biological systems to the successful mapping of the 
human genome, offers the promise of breakthroughs in preventing and 
treating any number of diseases. A top priority for this Administration 
is ensuring that the NIH continues to have the resources necessary to 
help turn these promises into a reality.
    This budget keeps the President's commitment to double NIH's FY 
1998 funding level by FY 2003. For FY 2002, we are proposing an 
increase of $2.75 billion, which will be the largest dollar increase 
ever for NIH. This funding level will enable NIH to support over 34,000 
research project grants, the highest level in the agency's history. NIH 
will expand its focus on four research areas that show the greatest 
potential for yielding new scientific breakthroughs: genetic medicine, 
clinical research, interdisciplinary research, and health disparities.
    With any large increase in resources, there also comes the 
increased challenge of making sure that those resources are managed 
properly. I take this responsibility very seriously, and NIH will work 
to develop strategies to ensure that we are managing taxpayer dollars 
in the most effective way in setting research priorities.

                           IMPROVING MEDICARE

    Of all the issues confronting this Department, none has a more 
direct effect on the well-being of our citizens than the quality of 
health care. Our budget proposes to improve the health of the American 
people by taking important steps to improve Medicare, including the 
addition of a prescription drug benefit, and by directing funds to 
various initiatives aimed at directing funds to initiatives aimed at 
expanding access to health care.
Modernizing Medicare and Immediate Helping Hand
    The Medicare program has been the center of our society's 
commitment for ensuring that all of our seniors enjoy a healthy and 
secure retirement. Honoring this commitment means making sure that the 
program is financially prepared for new beneficiaries, and ensuring 
that current beneficiaries have access to the highest quality care. One 
clear example of our need to renew Medicare's promise is the lack of 
adequate prescription drug coverage. When Medicare was created in 1965, 
prescription drugs were not an integral part of health care as they are 
today and coverage was not included as part of the Medicare benefit 
package. But what was acceptable thirty-five years ago is simply 
unacceptable today.
    We have already waited too long to address this problem. The 
President has put forward our Immediate Helping Hand proposal as an 
interim measure to do so. Our proposal provides $46 billion over five 
years to help States so that they can provide prescription drug 
coverage to beneficiaries with limited incomes or high drug expenses; 
and it will provide immediate coverage for up to 9.5 million 
beneficiaries.
    Almost half the states currently have prescription drug assistance 
programs of some kind, and most of the other states are considering 
such programs. With modifications, these programs would be eligible for 
IHH grants. The IHH would be fully funded by the Federal government and 
would provide States with the flexibility to choose how to establish 
coverage or enhance existing plans. Individuals with incomes up to 
$11,600 and married couples with incomes up to $15,700 who are not 
eligible for Medicaid or a comprehensive private retiree benefit would 
pay no premium and no more than a nominal charge for prescriptions. 
Individuals with incomes up to $15,000 and married couples with incomes 
up to $20,300 would receive subsidies for at least half the cost of the 
premium for high-quality drug coverage. The IHH plan also includes a 
catastrophic component that would cover any Medicare beneficiary with 
very high out-of-pocket drug costs.
    The President's Immediate Helping Hand proposal is a temporary plan 
to help our Nation's seniors who are most in need of assistance with 
their prescription drug costs. The benefit will sunset in December 
2004, or as legislation to strengthen Medicare including a prescription 
drug benefit is implemented. However, this plan is critical because it 
provides assistance to millions of Americans immediately. The President 
and I want to work closely with Congress in a bipartisan fashion to see 
this happen.
    We also believe, along with many Members of Congress who have 
supported and continue to support bipartisan efforts to strengthen 
Medicare, that we must take steps to improve Medicare as soon as 
possible. Inadequate prescription drug coverage is only the most 
obvious gap in Medicare benefits. Today, Medicare covers 55 percent of 
the average senior's annual medical expenses, and the options available 
to seniors to help them limit these expenditures are declining. 
Moreover, the program faces a looming fiscal crisis. A full assessment 
of the health of both the Part A and Part B Trust Funds reveals that 
current spending exceeds the total of tax receipts and premiums 
dedicated to Medicare and that this financing gap is expected to widen 
dramatically. Even without a financing problem, Medicare modernization 
would be necessary to ensure that beneficiaries continue to get high 
quality health care. President Bush proposes to devote $156 billion 
(including funding for Immediate Helping Hand) over the next ten years 
to a set of improvements in Medicare that are urgently needed. These 
Medicare modernizations should include taking steps to make better 
coverage options available, to assure that all seniors have affordable 
access to prescription drugs, to provide better coverage for high out 
of pocket expenses, particularly low-income seniors, and to ensure that 
Medicare has greater overall financial security.

          INVESTING IN INFRASTRUCTURE AND REFORMING MANAGEMENT

    For any organization to succeed, it must never stop asking how it 
can do things better. I am committed to seeking new and innovative ways 
to improve the management of HCFA and all our programs at HHS. But we 
must also recognize that we do a disservice to all who rely on this 
Department if we do not provide the resources necessary to effectively 
administer our programs. In preparing our budget, we began the process 
of evaluating the programs and business practices of this Department 
and identifying the areas where we can do a better job of managing 
taxpayer resources, as well as those areas where new investments are 
required if we are to successfully administer our operations.
HCFA Management Reform
    One of the most important management reforms we will pursue is the 
improvement of the Health Care Financing Administration (HCFA). We have 
all heard the complaints by patients, providers, and States about the 
scope and complexity of the regulations and paperwork that govern the 
Medicare, Medicaid, and State Children's Health Insurance programs. 
And, in many cases, these complaints are valid.. But in its defense, 
HCFA has been tasked with implementing several pieces of major 
legislation and its responsibilities have grown more complex with each 
new major health care law or budget reconciliation.
    Concerns about HCFA's management capabilities have been raised in 
several General Accounting Office reports, including the High Risk 
Series: An Update (January 2001) and Financial Management: Billion in 
Improper Payments Continue to Require Attention (October 2000). HCFA 
management reform is an Administration priority. HCFA will undertake a 
major effort to modernize and streamline its operations to effectively 
manage current programs and implement new legislation. In particular, 
HCFA's role in a modernized Medicare program needs to be carefully 
considered. This may require substantial changes in HCFA's mission and 
structure. My goal is to assure that HCFA's resources are focused as 
effectively as possible on improving quality and limiting costs for 
Medicare beneficiaries, limiting burdens for providers, and increasing 
efficiency for taxpayers.
    The budget proposes an increase of $109 million, or 5 percent, for 
HCFA program management. Included in this budget is a $53 million, 
increase of $36 million over this year, to support the development of 
the HCFA Integrated General Ledger Accounting System (HIGLAS). HCFA 
currently relies on several financial management systems to account for 
the hundreds of billions of dollars spent on Medicare benefits, and 
most contractors do not use double entry accounting methods or claims 
processing systems with general ledger capabilities. This system 
requires financial statements to be imputted manually, increasing the 
risk of administrative and operational errors and misstatements. The 
new system will provide a uniform Medicare accounting system that will 
help HCFA detect and collect money owed to the Medicare Trust Funds, 
retain a clean opinion on financial statements without more expensive, 
alternative efforts, and comply with financial management statutory 
requirements.

Contracting Reform
    I am also committed to reforming HCFA's antiquated and inefficient 
contracting system. We are considering a number of options in this area 
including: allowing carriers who are not health insurance organizations 
to become Medicare contractors; allowing the Secretary (as opposed to 
the Part A provider) to contract for and assign fiscal intermediaries 
to perform claims processing, claims payment, communications, audit 
functions, renewing contracts, and transferring functions; and 
replacing current special provisions for terminating contracts with 
more standard terms and conditions embodied in the Federal Acquisition 
Regulation (FAR). In addition, I am including in the budget $115 
million in new proposed user fees for duplicate and paper claims 
processing. We will work hard to enact these fees, which will help to 
improve the efficiency and lower the cost of processing Medicare 
claims.

Revitalizing Laboratories and Scientific Facilities
    There are other investments that are just as important as HCFA 
reforms. For example, it is critical that we invest in the 
modernization of our laboratories and scientific facilities, for 
obsolete facilities affect our scientific readiness and compromise our 
ability to retain the top scientists. Our budget includes funds to 
continue the revitalization of key facilities at the Centers for 
Disease Control and Prevention and the National Institutes of Health. 
We are requesting $150 million for buildings and facilities at the 
Centers for Disease Control and Prevention, which will support 
construction of a laboratory facility dedicated to handling the most 
highly infectious pathogens, such as Ebola, and construction of an 
Environmental Toxicology Lab. The budget also requests $307 million for 
intramural buildings and facilities at the National Institutes of 
Health to support projects such as the construction of the John Edward 
Porter Neuroscience Research Center and a centralized, multi-level 
animal facility.

Enhancing Coordination and Reducing Duplication of Operating Systems
    The only way that this Department can effectively serve its many 
clients is if we commit to making the necessary investments in our 
management and infrastructure. One of the challenges in a large, 
decentralized Department such as HHS is finding ways to bring together 
diverse activities and to develop coordinated systems for managing our 
programs. Our budget provides the resources necessary to begin the 
process of streamlining our financial management and information 
technology systems so that we can enhance coordination across the 
Department and eliminate unnecessary and duplicate systems.
    For financial management, we propose to invest $92.5 million, an 
increase of $50 million over this year, to move toward a unified 
financial accounting system, including funding for HCFA's accounting 
system. The Office of Inspector General has cited problems with the 
Department's current system structure, which involves five separate 
accounting systems operated by multiple agencies. We plan to replace 
these antiquated systems with unified financial management systems that 
will increase standardization, reduce security risks, allow HHS to 
produce timely and reliable financial information needed for management 
decision-making, and provide accountability to our external customers.
    In the information technology arena, we are proposing $30 million 
for a new Information Technology Security and Innovation fund. 
Currently, the Department's information technology systems are highly 
decentralized, heterogeneous, and vulnerable to exploitation. Funds 
would be used to implement an Enterprise Infrastructure Management 
approach across the Department that would minimize our vulnerabilities 
and maximize our cost savings and ability to share information. With 
this approach, we will be able to reduce duplication of equipment and 
services and be better able to secure our systems against viruses and 
network intrusion.
    As the largest grant-making agency in the Federal Government, this 
Department will also continue to play a lead role in the government-
wide effort to streamline, simplify, and provide electronic options for 
the grants management processes. As part of the Federal Grant 
Streamlining Program, we will work with our colleagues across the 
government to identify unnecessary redundancies and duplication in the 
more than 600 Federal grant programs and to implement electronic 
options for all grant recipients who would prefer to apply for, 
receive, and close out their Federal grant electronically.

Redirecting Resources and Enhancing Flexibility
    Being a wise steward of taxpayer resources means not only 
recognizing where you need to invest but also where resources can be 
redeployed to more effective uses. In preparing our budget, we 
carefully reviewed each agency, identified areas where funding could be 
redirected, and made targeted reductions in selected programs. The FY 
2002 budget eliminates $475 million in earmarked projects and $155 
million in funding for activities that were funded for the first time 
in FY 2001. The one-time nature of most of these projects did not 
necessitate their continuation in FY 2002 allowing the Department to 
redirect the associated funding to higher priority investments 
described in this testimony while moderating the overall growth of the 
HHS budget. In addition, the budget shifts $597 million from programs 
that are duplicative, or whose goals are better met through other 
avenues, to higher priority activities. And, to assist in financing 
other high priority activities, the budget expands the use of Public 
Health Service Evaluation funds. These decisions helped to meet our 
goal of moderating the large increases in discretionary spending that 
have occurred over the last few years and putting the budget on a more 
sustainable growth path for the future.
    This Administration is also committed to giving States greater 
flexibility to manage public health grant programs. Our budget proposes 
to give States expanded authority to transfer funds among public health 
grants, thereby enabling them to make more efficient and effective use 
of Federal resources and to target and reallocate funds to public 
health priorities identified at the State and local levels.
    In addition to giving the States greater flexibility, I am seeking 
to increase my transfer authority from one percent to six percent, and 
to eliminate the restriction that the transfer may not increase an 
appropriation by more than three percent, and to make it Department-
wide. I believe this transfer authority is a valuable tool for managing 
the Department's resources and will allow me to respond to emergency 
needs or unforeseen events that would otherwise adversely effect a 
program or agency.

Continuously Evaluating and Improving Program Performance
    The Government Performance and Results Act serves as an important 
tool for making sure that this Department is not only doing the right 
things but that we are doing them well. As in previous years, our 
budget request is accompanied by the annual performance plans and 
reports. The performance measures and targets in these reports touch 
nearly every aspect of the Department's multi-faceted mission and 
detail a number of notable achievements, including:

 HCFA met its FY 2000 target of reducing the Medicare error 
        rate to 7 percent. Auditors estimated improper payments at 
        $11.9 billion, compared with $13.5 billion in FY 1999. The 
        error rate has fallen to roughly half of what its was in FY 
        1996, and HCFA is pursuing increasingly rigorous goals for FY 
        2001 and FY 2002.
 CDC reported a reduction of perinatal Group B streptococcal 
        disease--the most common cause of severe infections in 
        newborns--by 70 percent from 1995 to 1999, exceeding the goal.
    GPRA has been and will continue to be an important part of our 
effort to improve the management and performance of our programs.
                expanding access to quality health care

Expanding Community Health Centers
    Our budget also proposes steps to strengthen the health care safety 
net for those most in need. Community Health Centers provide high 
quality, community based care to approximately 11 million patients, 4.4 
million of whom are uninsured, through a network of over 3,000 centers 
in rural and urban areas. The President has proposed to expand and 
increase the number of health center sites by 1,200 by FY 2006, and to 
double the number of individuals without alternative coverage who are 
served by the centers. As a first installment of this multi-year 
initiative, we propose to increase funding for Community Health Centers 
by $124 million. We will also be looking at ways to reform the National 
Health Service Corps so as to better target placement of providers in 
areas experiencing the greatest shortages of health professionals.
    The Administration believes we should increase our investment in 
proven programs--like the Community Health Centers--and provide 
communities with increased flexibility through the President's Healthy 
Communities Innovation Fund, which allows communities to address health 
care access challenges in innovative ways using existing resources.
Increasing Access to Drug Treatment
    The problems caused by substance abuse affect not only the physical 
and mental condition of the individual, but also the well-being of 
society as a whole. Nationwide, approximately 2.9 million people with 
serious substance abuse problems are not receiving the treatment they 
desperately need. To help close this treatment gap, we propose to 
increase funding for substance abuse treatment by $100 million. Of 
these funds, $60 million will be used to increase the Substance Abuse 
Block Grant, the primary vehicle for funding State substance abuse 
efforts, and $40 million will go to increase the number of Targeted 
Capacity Expansion grants, which seek to address the treatment gap by 
supporting strategic and rapid responses to emerging areas of need, 
including grants to organizations that provide residential treatment to 
teenagers.

Organ Donation
    Our budget supports an initiative very close to my heart. 
Approximately 75,000 patients are awaiting organ transplants, far above 
the number of available donors. In fact, organ transplants in 2000 
totaled 22,827, an increase of 1,172 over the 21,655 transplants that 
occurred in 1999. The number of living donors rose from 4,747 in 1999 
to 5,532 in 2000, an increase of 16.5 percent, the largest one-year 
jump ever recorded. While I am encouraged by the progress that has been 
made in the last year, there is still a very long way to go. To tackle 
this problem, I launched a new national initiative, on April 17th, to 
encourage and enable Americans to ``Donate the Gift of Life''. I am 
beginning a national ``Workplace Partnership for Life'', in which 
employers, unions and other employee organizations can join in a 
nationwide network to promote donation. I released a model organ and 
tissue donor card, incorporating proven elements from today's donor 
cards and have ordered an immediate review of the potential of organ 
and tissue registries where donors' wishes could be recorded 
electronically and made available to families and hospitals when 
needed. I have also made a pledge to create a national medal to honor 
the families of organ donors and will create a model curriculum on 
donation for use in driver education courses, to be offered to states 
and counties nationwide. And, let me tell you, this is just the 
beginning. I intend to do everything I can to increase organ donation 
throughout America and to create the most comprehensive effort ever in 
our nation regarding donation and transplantation.

Patient Safety and Health Care Quality
    The Agency for Healthcare Research and Quality (AHRQ) is the 
Federal agency with primary responsibility for research on the Nation's 
health care system and is HHS's lead agency for improving patient 
safety and the quality of everyday health care. The FY 2002 budget 
provides a total program level of $306 million for AHRQ, an increase of 
$36 million or 13.5% over FY 2001.
    AHRQ will devote a total of $53 million to identify ways to reduce 
the incidence of medical errors. These funds will support activities to 
research the causes of medical errors, develop and test new 
technologies to reduce medical errors, test reporting strategies, and 
improve training. Earlier this week, I announced the establishment of a 
new Patient Safety Task Force within the department in which AHRQ will 
collaborate with FDA, CDC, and HCFA to improve existing reporting 
systems on patient safety. AHRQ will lead this effort to identify the 
type of data health care providers, states and others need to improve 
the safety of health care services.
    Our request includes a $26 million increase for research on health 
care quality and cost-effectiveness. Like you and many others, we are 
reviewing the recent recommendations by the Institute of Medicine for 
research to improve the quality of health care. Once that review is 
complete, I expect that an appropriate portion of these resources will 
be directed toward the recommendations that we conclude should be given 
the highest priority. I also expect the findings of this an other 
research on patient safety, which has emphasized the importance of 
encouraging and rewarding the development of health care systems that 
encourage safer and higher-quality care, to guide our efforts to 
improve Medicare, Medicaid, and other government health programs.

                      PATIENT PRIVACY PROTECTIONS

    Knowing of this Committee's concern for patient privacy 
protections, I wanted to close by commenting on the recent decision two 
weeks ago by President Bush to immediately put into effect strong 
patient privacy protections. President Bush and I strongly believe that 
we must protect both vital health care services and the right of every 
American to have confidence that his or her personal medical records 
will remain private. In response, we allowed the patient privacy rule 
to take effect on April 14, 2001. As you know, under the HIPAA law, 
affected parties have two years to comply with the new regulation, 
until April 14, 2003. While I understand that some members of this 
committee continue to have concerns and differing opinions as to the 
best way to protect privacy, our citizens must not wait any longer for 
protection of the most personal of all information--their health 
records.
    Over the past two months the Department of Health and Human 
Services received and reviewed more than 11,000 written comments, with 
24,000 signatures, on the health information privacy rule. In addition, 
we met with a diverse group of lawmakers, interest groups and health 
care leaders to listen to their concerns regarding this regulation.
    We will consider concerns expressed by all commenters as we move to 
develop guidelines to clarify certain points of confusion about the 
rule, and will issue our first guidance for affected organizations next 
month. Furthermore, we will work with consumer and industry groups to 
develop additional guidance in the future. We are also considering 
where modifications to the rule may be needed to ensure that quality of 
care does not suffer inadvertently from these new rules.
    The focus of our guidance and modifications will be to clarify that 
doctors and other providers continue to have access to the medical 
information they need to provide timely, high-quality care to their 
patients. Patient care will not be unduly hampered by confusing 
requirements surrounding consent forms. And, parents will have access 
to information about the health and well-being of their children. We 
will ensure that this patient privacy rule delivers strong and long 
overdue protections for patient privacy while maintaining the high 
quality of care we expect in this great nation.

         WORKING TOGETHER TO BUILD A STRONG AND HEALTHY AMERICA

    Mr. Chairman, I want to thank you for the opportunity to testify 
before you today on the many different proposals that constitute the 
Department of Health and Human Services budget for FY 2002. The common 
thread that binds them all together is the desire to build a strong and 
healthy America and to improve the lives of the American people. Our 
proposals, from modernizing Medicare and expanding access to care to 
enhancing scientific research are presented with these simple goals in 
mind. I know we share these goals and I look forward to working with 
you on these important issues. I would be happy to address any 
questions you may have.

    Mr. Bilirakis. Thank you very much, Mr. Secretary, and we, 
too, are thrilled with the many somewhat innovative ideas that 
your testimony speaks to. Over the years, certainly the last 
few years, we have held a number of hearings on HCFA regarding 
some of the problems there and the terrible image of the 
organization. I am not saying it is all completely deserved, 
but it is a terrible image that HCFA has had over the years.
    In terms of testimony from HCFA personnel, I can't say that 
there has ever been any emphasis on not enough dollars. It has 
been members up here who basically made those points for the 
most part, but not by HCFA.
    And, in fact, I recall a particular hearing when one of the 
HCFA personnel--I can't recall whether he was a witness or 
whether he was just with a particular witness--came up to me 
and said to me that they had requested over a period of time 
additional dollars for HCFA, and OMB would shoot them down and, 
therefore, for that reason, they weren't coming into those 
requests.
    I understand that your request for HCFA is $2.31 billion, 
which is higher than any request in the last few years; and I 
certainly commend you for that.
    My question is--and certainly I won't say this is extra 
money; it sounds like certainly it is very needed money, but it 
is extra in the sense of that it hasn't been requested in prior 
years. What would you intend to do with that money?
    Mr. Thompson. Thank you so very much, Mr. Chairman. This is 
a subject that it is very near and close to me, and I am 
delighted to be able to answer that question to the best of my 
ability.
    HCFA is an agency that everybody loves to hate. I haven't 
found anybody that really likes HCFA. Democrats, Independents, 
Republicans, providers, people that write into my agency, 
everybody hates HCFA. And I am no exception. As a Governor, I 
was probably one of the biggest critics in America against 
HCFA.
    So I went out and talked to people at HCFA. I first got up 
in front of several thousand of the employees, and I said, you 
know, it is difficult to love something called a HCFA. You 
know, I think the first thing we might want to do is just 
change our name.
    The second thing I said, what is the problem? I mean, why 
are you having the problems out here? And I listened to a lot 
of wonderful employees. My attitude about HCFA has changed 
tremendously.
    First off, Mr. Chairman and members, they have a computer 
program. They have a billion transactions a year, and they have 
a computer program that was installed in 1970. Do you know of 
any law office, any medical office, any hospital, any clinic, 
any insurance company, any business that still operates in 
America with an insurance--with a computer system that was 
installed in 1970? Granted, it has been updated, but it is 
still is a 1970 chassis.
    Then, I looked at it and they came to me and they--the IG 
inspector said they had $11.8 billion in mistakes last year. 
And I called in the people from HCFA and I said, how can we 
have $11.8 billion in mistakes? And they said, Mr. Secretary, 5 
years ago, it was $22 billion.
    And I said, well, that may be true, but that is not good 
enough. We are going to get rid of it. And I said, what is the 
problem? He said, we have an antiquated bookkeeping system. And 
I said, what do you mean? He said, we still have a single-entry 
bookkeeping system which went out in 1911. They don't have a 
double-entry bookkeeping system. I don't know of any business 
in America that can run on a single-entry bookkeeping system.
    The third thing is, when Medicare was adopted in 1965, 
there was a compromise made, which there is in all legislation 
usually, a big compromise in which the hospitals and the health 
insurance industry at that time made a request, and Congress 
adopted to get Medicare through, that the hospitals would be 
able to designate or nominate the fiscal intermediaries to 
operate the contracts. And so we cannot put an RFP out and find 
the best person to be a fiscal intermediary. It has got to be 
nominated by the hospital industry.
    This is contentious, and I put it out there. It is 
something this is going to have to be looked at.
    The second thing is, it is on a cost-plus type of contract. 
Now, how can you have efficiencies when you have a cost 
contract? What is the reason? What is the motivation to saving 
costs?
    So the money that I am requesting is to modernize and to 
change HCFA. I also asked the people at HCFA, you know, you 
have been beaten down by so many people that you have an 
attitude out here that you look for ways to say no. Why don't 
we try and change our attitude and try to find a way to say yes 
in the attitude of HCFA? And they said, you know, that is a 
good idea. And that is what we are going to do.
    These are the kinds of changes that I want to bring to 
HCFA; but I need the dollars, and I want to tell you it was a 
tough sell at OMB. And I fought very hard to get this in, 
because if you want to change HCFA, we have to put the 
resources in there to get the job done.
    And I am asking for this committee's support, because this 
committee is the one that is taking a real interest, Mr. 
Chairman. I know my answer has gone too long, but you can tell 
I am dedicated to changing it and I need your help to do it.
    Mr. Bilirakis. I appreciate that answer, and we certainly 
appreciate your persistence and perseverance with OMB, because 
I guess they have been a fly in the ointment in that regard.
    Very quickly, my time has expired. But the cost-plus nature 
of those contracts that you mentioned, is that something that 
HCFA can do----
    Mr. Thompson. No.
    Mr. Bilirakis. [continuing] on their own? It would take 
legislation on our part?
    Mr. Thompson. You have to change that, Mr. Chairman.
    Mr. Bilirakis. That goes to many of the questions we have 
asked over the years. Tell us how. What can we do legislatively 
to help you do your job better? I don't recall that there has 
ever been a request made to this committee over the years to 
give them the kind of leeway to change that.
    Mr. Thompson. It is in the law, but we have to change it, 
so we can put it out. Times have changed since 1965, and also 
it is--we should reduce the number of fiscal intermediaries. 
You know, with the modern computer system, we can get by with 
10, 15, but that is--I want to be up front with you, you are 
going to have a lot of opposition to changing this from the 
status quo.
    And so I am telling you, it needs to be changed. I am 
asking you to change it, but I also want to alert you--I am 
very honest with you--it is going to be difficult, but it needs 
to be changed.
    Mr. Bilirakis. Who was going to oppose it?
    Mr. Thompson. Everybody has got a contract, sir.
    Mr. Bilirakis. Yes.
    Mr. Thompson. Every hospital in America.
    Mr. Bilirakis. Yes.
    Mr. Brown.
    Thank you very much, Mr. Secretary.
    Mr. Thompson. And every Congressman and Senator has a 
fiscal intermediary in their State.
    Mr. Bilirakis. That is what I was getting at.
    Mr. Brown. Thank you. And I appreciate your comments about 
HCFA. I don't agree that HCFA is as universally unpopular as 
some here say.
    Mr. Thompson. Thank you.
    Mr. Brown. I think it is certainly unpopular with this 
subcommittee, and we spend much time in this subcommittee 
criticizing HCFA and micromanaging HCFA, giving HCFA new 
regulations and rules to carry out and starving it as an 
agency.
    Mr. Thompson. That is true.
    Mr. Brown. So I think there is--there oftentimes needs to 
be a mirror in front of us when we criticize HCFA. It is 
certainly deserving, as all institutions are deserving of some 
criticism.
    I want to talk about prescription drugs, but not so much 
the coverage that you suggested and the President suggested 
with the $100 million. As you know, many of us in this 
institution and both parties think that is not enough to do a 
good prescription drug plan.
    But let me talk more about the costs. Generic drug 
application review times average about 18 months for generics. 
In contrast, new drug applications' review times average about 
12 months, and for those that are on the so-called ``fast 
track,'' that is--apparently the average is 6 months.
    Your budget provides no extra funds for generic drug 
approvals, but all of us know that generics will save billions 
of dollars. The faster generics are in the pipeline, in the 
marketplace, the more money that--the billions of dollars that 
consumers would save as a result.
    Would you reconsider this matter in terms of your budget 
and work with us, one, to provide more money for speeding 
generic drug applications? And second, would you work with us, 
overall, to speed the approval with additional money and in 
other ways also?
    Mr. Thompson. Congressman, let me just tell you, this is an 
area that is a big concern of mine. And I want to work with 
you. I don't know if it is just extra money that it needs. I 
want to work with you to speed up the process and make it more 
efficient and find ways that we can accelerate, when necessary, 
when safety allows us to do it, and make sure that we don't go 
too fast so that we in any way hamper the patient's safety.
    I am not sure that I can say here that the only way that 
you will support me or that I can support you is by increasing 
the money. I don't know so. But the problem is, I have only 
been at the Department for 75 days, and this was--the Food and 
Drug Administration is an area that I have not been able to 
devote as much attention to as yet, but it is something that is 
a prime concern of mine. But I want to work with you in a 
cooperative way.
    Mr. Brown. We have determined in the subcommittee in the 
past and in this Congress that more money did, in fact, 
accelerate approval time, reduce approval time, through the 
Prescription Drug User Fee Act, through PDUFA 1 and PDUFA 2l; 
and that was the purpose for it, in part. There were other 
reforms, but a big part of it was expending the money. And we 
can certainly guarantee a patient's safety--if we can do a new 
drug in 12 months, we can certainly--and a fast track in 6, we 
certainly can approve the generic drug----
    Mr. Thompson. I can't defend----
    Mr. Brown. [continuing] and partly take money.
    Mr. Thompson. There is an additional $37 million in this 
fiscal year budget----
    Mr. Brown. Okay.
    Mr. Thompson. [continuing] a 5.6 percent increase.
    Mr. Brown. Let me talk about cost containment and a 
prescription drug benefit, whether it is the administration 
plan or another plan.
    Estimates for prescription drug spending continued to go up 
at an alarming rate. CBO's new drug baseline this year 
increased significantly since everyone--if someone introduces a 
plan in 6 months, a year from now, it is clearly costing more.
    Mr. Thompson. Sure.
    Mr. Brown. Some have suggested that we rely on competition 
from private plans through an HMO or through an insurance 
mechanism. That was tried in Nevada, they didn't even have 
anybody bid. Finally, when they bid, the cost was too high. 
Pretty clearly, that hasn't worked.
    There are several other ideas that have been suggested. I 
would just like to ask you your opinion of them in terms of 
prescription drug cost containment. One is using a pharmacy 
benefit manager, which the private sector uses, which your 
predecessor, Secretary Shalala, suggested in her plan last 
year. That is estimated to save 10 or 15 percent. That is not a 
huge savings, but that could be a start.
    Second, would you support the approach of the Allen bill to 
allow Medicare--as the Canadians do, for instance, to allow 
Medicare to negotiate on behalf of the 39 million beneficiaries 
to get lower prescription drug costs? Would you look at 
something that I worked on legislatively that was suggested 
most recently by Gail Wilensky, reducing the length of patents 
so generics could get into the pipeline sooner, would pay a 
significant royalty to the patent-holder, and be competition in 
the marketplace.
    Which of any of those would you support--PBMs, the Allen 
proposal with the Medicare buying power, if you will?
    Mr. Thompson. Congressman, I don't think any of those is 
mutually exclusive. I think we should look at all of them. I 
don't think there is anything that should not be under the 
table when we look at drug costs and drug containment. I think 
it only behooves as a department and Congress to try to find 
ways to control pharmaceutical costs in America.
    And I want to be--I am willing to work with you, but I 
would like to point out that it is the President's position, 
and my position very strongly, that in order for us to have 
prescription drugs included in Medicare, we have to reform 
Medicare.
    I really strongly believe that we have the greatest 
opportunity ever to reform Medicare and include prescription 
drugs. But if we just do the prescription drugs, I don't know 
if we will ever get around to reform and strengthen Medicare, 
and I think that is just as vitally important as prescription 
drugs are.
    Mr. Brown. Will you suggest a mechanism for cost 
containment to this Congress when you recommend--will you at 
some point do that?
    Mr. Thompson. I am in the process, Congressman, right now, 
of working with the White House on Medicare and prescription 
drugs, and absolutely it will be coming.
    Mr. Brown. I hope it goes beyond using private plans, which 
private insurance companies don't have because of adverse--
don't have any real incentive to write policies when they 
cannot go beyond it.
    Mr. Thompson. I can assure you, Congressman, that I am not 
an individual that likes the status quo and what is on the 
table. I like to look at all opportunities. And your options 
are just three, but I am not limited to those three. There are 
many others that I am looking at.
    Mr. Brown. We can give you more also. Thank you, Mr. 
Secretary.
    Mr. Bilirakis. Dr. Norwood.
    Mr. Norwood. Thank you, Mr. Chairman.
    Mr. Secretary, it is fairly clear to me and I think most 
members of the committee that we have a looming crisis in 
Medicare. We just simply cannot ignore it, and the longer we 
wait, the harder it is going to be to deal with it.
    I agree with your remarks 100 percent that--I don't see how 
we can logically produce a prescription drug plan without 
looking at the big picture first or we are going to add to the 
future problems of Medicare.
    Mr. Thompson. Yes, sir, accelerate it.
    Mr. Norwood. My question is timing. Do you expect--I know 
you will work with Congress to enact Medicare reforms, but do 
we expect that this year, or will it be next year or the next 
year?
    Mr. Thompson. I want it this year, Congressman. I am--I am 
very much in favor--I am an activist. I don't like to wait, as 
you probably have heard. I like to see a problem--I like to 
come up with a common-sense solution and move forward on it.
    Mr. Norwood. You may have heard, I don't like to wait 
either, and I would like for you to do it this year.
    Mr. Thompson. I figured I was talking to the choir when I 
said that, Congressman.
    Mr. Norwood. Should we--does it make sense, for example, to 
not rush, though, to cure the problem in Medicare----
    Mr. Thompson. True.
    Mr. Norwood. [continuing] but in the interim do something 
about prescription drugs? Helping Hands comes to mind, 
something that immediately we can begin to help those people 
who simply cannot afford any type of medication right now; 
should we do that as an interim step to get to the final 
product?
    Mr. Thompson. If, in fact, we can't get the finished 
product down, this other absolutely. And the President has put 
out Helping Hand because he was not sure that we could reach a 
bipartisan solution on Medicare reform with prescription drugs. 
That is why he put out an additional $12 billion this year for 
States to come up with their own individual program over the 
course of the next 4 years, $12 billion each and every year.
    So it is a wonderful fallback plan, and it is one which we 
should take to the forefront, if in fact we had mired down in 
not being able to solve the major problem, which is Medicare 
reform, Congressman.
    Mr. Norwood. We all have been rather caught off guard about 
the 33 percent increase from CBO in the costs of drugs. I don't 
think we should have been caught off guard, but perhaps we 
have.
    Do your budgeteers feel that we have allocated enough funds 
to enact the reforms needed to change reform, strengthen 
Medicare programs?
    Mr. Thompson. We feel that it is necessary to take a look 
at the overall reforms in Medicare and then cost it out. And at 
this point in time, we are not--not at liberty or not able to 
tell you if the $153 billion--we think $153 billion over 10 
years can get the job done.
    Just a lot of people out there, including CBO, that think 
it will cost more. But they do not put into their mix any cost 
savings in Medicare reform, and we would like to put the 
Medicare reform out there with the prescription drug and then 
have a cost analysis by CBO and other individuals, Mr. 
Congressman.
    Mr. Norwood. Well, I would like to go on record just 
agreeing with that. I don't want to rush into the fix; I want 
to do it right when we do it, because this is very major for my 
grandchildren and yours.
    Mr. Thompson. Absolutely.
    Mr. Norwood. But in the interim, if you think just with 
your brain, not necessarily with your heart, for us to be 
preventive in the area of prescription drugs for those who can 
afford half their prescription or none of their prescription, 
probably there is a cost saver for the trust fund.
    There are going to be--reap great benefits with being able 
to take those medications rather than spend 2 weeks in the 
hospital, because they didn't take those medications. So I am 
just saying, I agree with you, and would encourage us perhaps 
to think like that.
    I am--very quickly, because my time is running out, I am 
one of those people who loves to bash HCFA. And I don't do that 
because I don't have anything else to do; I do that because 
every time I go home, I get jumped on, big time, by a lot of 
people who say their life is absolutely miserable dealing with 
HCFA. Though, I agree with Mr. Brown wholeheartedly, it isn't 
just HCFA; it is the Congress of the United States and some of 
the mess we do, micromanaging that particular agency.
    One of the things I need to hear is, there is some way 
possible that we can do a better job from HCFA to the provider 
physician at home in terms of the rules and regulations that 
that physician has to live under. Now, some people say it is 
130,000 pages of rules and regulations. Some people say it is 
40,000--whatever, it is about 18 inches high. We need to be 
able to do something to help our doctors have more time with 
their patients and less time with government paperwork.
    Any ideas?
    Mr. Thompson. We have lots of ideas, but we haven't 
implemented anything yet. But we are talking to the people at 
HCFA. I had a meeting in my office at 7 o'clock on Monday 
evening on some new HCFA rules. And I looked at them and I 
said, I can't understand them. And, granted, I have only been 
here for 75 days, but I looked at it as a country lawyer, and I 
could not understand it, so I sent it back.
    I am going to keep sending things back until they simplify 
it so I can understand it. If I can understand it, I am 
confident that a doctor can understand it.
    Mr. Norwood. We have to simplify it, because it is so 
unfair.
    And, just quickly, the House has passed----
    Mr. Bilirakis. We will have a second round if the members 
prefer. I don't want to go too far afield here. Very quickly.
    Mr. Norwood. I just want to mention the lockbox has been 
passed by the House, so that we don't tap into the Medicare 
Trust Fund which I am totally against, and the geriatric ward 
over there takes a little longer. They will get to it 
eventually, and perhaps we will make sure.
    Mr. Thompson. I am not going to get into this fight, 
Congressman.
    Mr. Bilirakis. Mr. Pallone, you may inquire.
    Mr. Pallone. Thank you, Mr. Chairman.
    Mr. Secretary, I wanted to follow up on what Mr. Brown 
mentioned with regard to generic drugs, because I really am an 
advocate for promoting generics as a way of saving costs. I 
know you sort of deemphasized the money factor, if you will. 
But, you know, the fact of the matter is that there is a lot of 
manipulation that goes on with the Waxman-Hatch Act that I 
think contributes to the fact that there is so much delay with 
getting approval for generic drugs.
    You know, you have this filing of frivolous patents with 
the FDA to trigger this mandatory 30-month hold on approving 
generic applications. You have these patent extension bills, 
you know, private bills, so to speak, that we hear about during 
the dark of the night or when we are at the end of the session, 
and you have also had the misuse of citizens' process.
    These are a lot of, you know, procedural ways that are 
used.
    Mr. Thompson. Sure.
    Mr. Pallone. And I just wondered if you would support some 
kind of statutory mechanism to try to address some of these 
manipulations and to try to bring the approval process more in 
line with the amount of time it takes for the brand industry to 
get approval.
    Mr. Thompson. Congressman, I would like to have some time 
to--I am not delaying the answer--your direct answer to your 
question. I would just like to have some time to study FDA.
    What I intend to do is, I intend to go to every one of the 
operating divisions and spend a week, actually operating the 
division and being there to find out exactly how things go.
    I would like to be able to come back to you sometime later 
on this summer and talk to you about it and about some of my 
suggestions, how we can improve it.
    Mr. Pallone. That is fine. I don't want to spend a lot of 
time.
    Mr. Thompson. I want to point out, we are putting a 5.6 
percent increase into this area.
    Mr. Pallone. I appreciate that. I don't want to delay it. 
You know, I appreciate the fact that you will get back to us. 
But I just want to point--I think there are a lot of things 
that can be done other than the money as well. I agree with the 
fact that the money is an important factor.
    Mr. Thompson. The suggestions you have are probably very 
good ones. I would like to be able to take those suggestions; 
and I solicit and--I am the type of person who loves ideas. If 
you have got ideas, I would like to take a look at them and 
work on them and come back to each of you, Democrats and 
Republicans alike, to see if we can come together, because my 
feeling is, if we work together, we can come up with a better 
product.
    Mr. Pallone. All right. I appreciate that.
    Let me ask you about the patient protection provisions that 
we would like to see in the Medicaid program. You know that in 
the last, you know, few days or the last couple months of the 
Clinton administration, we put in place, or he put in place a 
regulation that would allow the patient protection, something 
like the Patients' Bill of Rights to be applied to Medicare--to 
Medicaid, I should say. We already have it for Medicare.
    I understand that the Bush administration has delayed that. 
It was supposed to go into effect, I think, sometime earlier in 
April. They have now delayed that and said they are not going 
to make a final decision on whether to lift the hold on that 
until sometime in June.
    That concerns me, because I have to be honest with you and 
say we had a hearing on HMO reform in the subcommittee a month 
or so ago. At that time, I was very critical of the Bush 
administration because I think during the campaign the 
President suggested that he was going to address Patients' Bill 
of Rights and would support something like the Texas law.
    Yet, Mr. Ganske, Mr. Dingell, others have introduced on a 
bipartisan basis a bill, a Patients' Bill of Rights bill that I 
think is exactly like the Texas law, and so far all we have 
seen from this administration is the delay in this regulation 
with regard to Medicaid--the Medicaid program and criticism, if 
you will, of the Ganske-Dingell bill saying that it is not, you 
know, what we want.
    I just don't see any effort really on the part of the 
administration to address the issue of HMO reform. I think it 
is something that was talked about in the campaign, but in 
terms of the actions in the first 100 days, the only action is 
to say we don't like Ganske's bill, and we don't--we are not 
sure if we are going to put these regulations into effect.
    Can you assure us that we will see these regulations go 
into effect so that Medicaid has the same patient protections 
as Medicare? What is going to be done? What is the 
administration proposing on the Patients' Bill of Rights?
    Mr. Thompson. Very valid question. As you know, all rules 
and regulations were put on a 60-day hold. But you also know 
that the privacy rule was published on time last--2 weeks ago 
on Friday. It is a pretty strong indication that this President 
is very--very definite on protecting patients' rights and is 
very passionate about it, as you are, as members are, as I am.
    In regards to the Medicaid one, we are looking at it and 
reviewing it, and it will be--we will be making a final 
decision in the course of the next several weeks. And I will 
get back to you if I have any problems with it, but right now, 
I haven't discovered any.
    Mr. Pallone. You know, I have to say, Mr. Secretary, I 
believe strongly if the President got up and said, I want to 
meet on a bipartisan basis with the members who are playing a 
key role on this, and I want to resolve this and have a 
Patients'----
    Mr. Thompson. Are you talking about the Patients' Bill of 
Rights?
    Mr. Pallone. I am talking in a larger sense. I want to have 
this done by June 1, I have no doubt that it can be done. I 
really don't think the differences are great--are that great, 
and I don't see the President moving in that direction.
    Mr. Thompson. I think the President is doing a very good 
job in moving that direction. He set out his bill of 
particulars, what he needs and what he would like to see in it. 
We all know, you know, every member on this committee and every 
person in the House and the Senate knows that there are really 
two big issues, liability and scope. And we have to work on 
those two, and we have to work on them on a bipartisan basis.
    I am confident that we are going to have a Patients' Bill 
of Rights sometime this summer, and we are going to be able to 
resolve our differences on those two subject matters.
    Mr. Pallone. I hope so. And I appreciate the fact that you 
are willing at least to talk about the summer as a deadline, 
because I am just afraid it is going to continue.
    Mr. Thompson. That is my suggestion, but I am finding out 
that I am no longer a Governor; I am a secretary, so. . .
    Mr. Pallone. Thank you, Mr. Chairman.
    Mr. Bilirakis. Thank you.
    Dr. Ganske.
    Mr. Ganske. Once again, Mr. Secretary, thank you for 
coming. Mr. Secretary, since I came to Congress in 1995, when 
the Republicans took the majority, we have been universally 
opposed to user fees. President Clinton in his budgets 
repeatedly, across various agencies, proposed user fees.
    I can specifically remember a lot of Republican comments on 
the floor of the House of Representatives and in the Senate 
against user fees as being basically tax increases. In 
addition, as I mentioned earlier, in my home State, we were 
dead last in terms of provider reimbursement. My rural 
hospitals are really hurting.
    I am concerned about a user fee on submission of claims to 
Medicare. I personally consider that to be a tax increase, and 
I can tell you that my providers back in Iowa, considering 
their low reimbursement, already believe that adds insult to 
injury.
    And so my question to you, Mr. Secretary, is, is this 
administration proposing user fees on data transmission or 
claim transmission to Medicare?
    Mr. Thompson. First, let me tell you that it is not the 
President. It is not this administration. It is Tommy Thompson 
who is pushing this. So you have nobody to get mad at me except 
me, Congressman, because I am the one who fought very hard to 
get this in, and I will tell you why.
    First off, I have the same problems, or did have the same 
problems in Wisconsin as far as reimbursement. I didn't know 
Iowa was dead last, I thought Wisconsin was dead last, so I 
understand your concern. But I also understand full well that 
HCFA needs a lot of assistance, and when 80 percent of our 
claims are being sent in via the computer, it is much easier to 
process. And if somebody else wants to send in paper, which 
costs more to process, slows down the system, delays it so your 
doctors and hospitals don't get reimbursed as quickly as they 
would have if everything was on the computer system, I thought 
it was only fair and equitable if a doctor and hospital want to 
continue to use paper, they should pay an additional dollar for 
it.
    I would then take that money and use it to upgrade and 
improve the computer system at HCFA. It was one way I found to 
improve the resources necessary to make HCFA more responsive. 
And so don't blame the President, don't blame OMB; blame me. 
And tell your doctors and hospitals, when they complain to you, 
to call me; and I will tell them they don't have do pay that 
user fee, all they have to do is convert over to a computer 
system like 80 percent of the other providers do in America.
    It would speed up the process, and it would make it more 
efficient, and you would learn to love a HCFA just a little bit 
more, Congressman.
    Mr. Ganske. Mr. Secretary, let me ask you to reconsider 
your position on this----
    Mr. Thompson. Okay.
    Mr. Ganske. [continuing] and here's why. I think it is fine 
to have electronic transmission, and the benefit, if it really 
is there, is in the quicker return on your reimbursement.
    Mr. Thompson. Right.
    Mr. Ganske. Okay. So that is a carrot, but I don't think 
that you should basically create a tax increase on those who, 
for particular reasons, may be submitting paper.
    I can give you a lot of reasons why those claims are 
submitted on paper. From my own medical practice, for instance, 
we submitted paper because we provided documentation on a large 
number of procedures that HCFA was going to require paper 
documentation anyway.
    And so if we didn't do that in the first place, then we 
were looking at a 2-, 3-, 4-, 6-month delay because we would 
send in our electronic claim first, and then we would months 
later get a request for paper. There are a large number of 
procedures that particular providers need to do that HCFA 
requires the paper documentation on.
    We can't, for instance, submit the pathology report or the 
operative report by electronic methods. Those are things we 
receive via paper from the hospital.
    I am totally in favor of providing the necessary funding 
for HCFA to do its job. For years, I have been a supporter on 
that, Mr. Secretary. But to leave the carrot for those who want 
to submit by electronic, but don't provide a hammer for those 
who, for various reasons, have to submit paper; there are a lot 
of reasons.
    And that gets me to the second thing about----
    Mr. Bilirakis. Please do this very quickly, the time is up.
    Mr. Ganske. For at least 10 years, 8 years, HCFA has 
refused to give prior authorization for procedures, and they 
basically, in my opinion, have tried to scare Medicare patients 
from getting needed treatment.
    For instance, perhaps a patient needs a procedure on their 
eyelids because they can't see laterally when they drive, okay, 
so today HCFA will say, well, maybe we will pay for it and 
maybe we won't. And if we don't, then you, the Medicare 
recipient, are responsible.
    In the past, it used to be, you would send in your 
documentation, visual fields, whatever, and you would ask for a 
prior authorization from HCFA, and they would say yes or no. 
Then at least the Medicare beneficiary knew where they were at.
    I think the procedure that is currently followed by HCFA is 
designed to scare Medicare recipients from getting needed 
treatment. I would sincerely ask that you revise this policy so 
that on particular types of procedures we can return to a prior 
authorization method, so that you can put at ease the mind of 
the Medicare recipient, knowing in advance whether in fact this 
will be a covered service.
    Mr. Bilirakis. The gentleman's time has expired. If you 
have a very brief comment, Mr. Secretary, you will have the 
opportunity obviously in writing to respond to a number of 
questions.
    Mr. Thompson. Thirty seconds?
    Mr. Bilirakis. Thirty seconds.
    Mr. Thompson. Thirty seconds.
    Mr. Bilirakis. Without objection.
    Mr. Thompson. I will consider it. But I would like you in 
response to give me a list of all of those problem areas.
    Let us change the rules. Let us make it easier. And I also 
have the provision to waive any problems under the user fee. So 
in your case, if there was a problem, we could waive it.
    Mr. Bilirakis. Mr. Green to inquire.
    Mr. Green. Thank you, Mr. Chairman.
    And again, welcome, Mr. Secretary.
    In my opening statement, I talked about a number of issues, 
but first I would like to talk about the CAP program, Community 
Access Program. In your testimony you emphasized the importance 
of utilizing our State and local community partners, and I 
agree we must improve funding for the Community Health Centers. 
But I question the elimination of the CAP program.
    The CAP has helped fill the gaps in our health care safety 
net by improving infrastructure, communications among agencies, 
particularly in our urban areas like Houston which I represent; 
and with better information, the agencies can provide 
preventive primary and even emergency clinical services in an 
integrated and coordinated manner.
    The funding under CAP has been used to support a variety of 
projects, to improve access for all levels of care for the 
uninsured, and each community designs a program that best 
addresses the needs of the underinsured and uninsured and the 
providers of our community.
    Again, I understand the flexibility that the CAP program 
gives districts like I have in Houston. In fact, the vice 
president of Community Outreach at the University of Texas 
Medical Branch, Ben Raimer, said in a letter to the President, 
``the Community Access Program is one of the programs that 
works at the community base level and one that I feel fits 
nicely with the President's own personal philosophy regarding 
local community.''
    Mr. Chairman, I would like to submit that letter from Ben 
Raimer for the record.
    Mr. Bilirakis. Without objection.
    Mr. Green. Mr. Secretary, can you address the 
administration eliminating the Community Access Program?
    Mr. Thompson. Absolutely, Congressman Green. Let me just 
say that we looked at it. And I am not saying that the program 
is not good, but we felt that we could use the money more 
effectively by putting it into Community Health Centers, we 
could serve a lot more people; and that was a decision.
    And in your business and in my business, you know, we have 
to balance it off. And the Community Access Program is a 
relatively new program. It has been in existence 1 year. I know 
Texas has benefited. I know that Louisiana has benefited.
    We felt the Community Health Centers is much more dispersed 
throughout America, and that we would be able to help a lot 
more underserved and uninsured families by putting the money 
there. And that was the reason for it. Not to say anything 
against the CAP program; we just made the decision that 
Community Health Centers was a better buy for the money that we 
had, and we invested it there.
    Mr. Green. And I guess if you have that, those limits, but 
again you really need both, the Community Health Services, but 
also the coordination of benefits. So we do get the most out of 
our dollars.
    Let me go on to the CDC. Our chronic diseases like 
diabetes, heart disease, cancer and arthritis are leading 
causes of death in America. In fact, they kill 7 out of 10 
Americans. The costs of chronic diseases are staggering. More 
than 70 percent of health care expenditures in the United 
States are for chronic diseases, and by 2020, $1 trillion, or 
80 percent of the health care expenditures, will be spent on 
chronic diseases.
    Now, we have learned that chronic disease prevention and 
control programs save lives and money. For example, the 
diabetes programs resulted in a significant decline in 
complications of the disease in New York. When CDC funded a 
comprehensive diabetes control program, the hospital rates 
decreased 35 percent in 2 years; and lower extremity 
amputations have gone down by about 39 percent.
    Can you explain the rationale behind cutting $175 million 
from the CDC's chronic disease program?
    Mr. Thompson. Because we took the money and put it into 
NIH. We put in $639 million, which is a huge increase, in 
infectious diseases in NIH. We felt, Congressman Green, that we 
could do a better job trying to find the research necessary for 
chronic diseases and put the money there, so we put a huge 
increase in NIH to do that.
    So there is a reduction in CDC of some $100 million, but 
there is an increase of $639 million for the same type of 
programs, more for treatment, more for research in NIH. And the 
reason--and the reason we did that, Congressman, is that we 
have an epidemic problem coming in diabetes, and the two things 
that will prevent diabetes--enhance diabetes is changing the 
life-style and exercise. We feel that research--and how we 
might be able to do that.
    And I intend to try to make the Department a focal point 
for preventive health in America. I am asking you for your 
assistance in this, because if we don't, the epidemic of 
diabetes is going to continue to grow and get worse in your 
State and in all the States in America.
    Mr. Green. Mr. Secretary, I agree, but the concern I have 
is, we have--we want the research.
    Thank you again for plussing up NIH. It is an effort in 
Congress we have tried to do, but we have to go from research 
to prevention.
    The concern we have, we have to move that science from the 
bench to the trench where we can actually see it happen.
    Mr. Thompson. I understand.
    Mr. Green. And that is what CDC does. So if you would look 
at it and say, we want to plus up NIH--and believe me, I think 
you have unanimous support on this subcommittee. But also we 
need to see that research being placed out there, like CDC 
does, like we see the success in New York. I would like to have 
the same success in Houston and in every city in our country 
with diabetes control.
    So that is the concern we have. We need to plus up the 
research, but also make sure that information gets out on the 
street.
    Mr. Thompson. Thank you.
    Mr. Bilirakis. Mr. Bryant to inquire.
    Mr. Bryant. Thank you, Mr. Chairman.
    Mr. Secretary, I would like to talk about two subjects, and 
at the conclusion, I invite your comments on both of those.
    The first has to do with Community Health Centers. This is 
a program, I think, that has proven very efficient and cost 
effective. It is one that is important to my district, which is 
both rural and urban.
    But we are looking at reauthorizing the health centers 
program this year, and I certainly want to strengthen that 
program as much as possible in order to serve more of the 
uninsured in the future.
    I am pleased that the President's budget has placed these 
health centers--has called for doubling the number of patients 
that they serve over the next 5 years, and also his budget 
calls for an additional $124 million increase for these health 
centers.
    And, again, I will ask you to comment about that and your 
view of these health centers.
    But the second point I would like to make has to do with 
medical records, privacy regulation. And your testimony has 
indicated that you still have problems with the regulation that 
would have been fixed through guidelines and additional 
modifications.
    I want to ask you about some of those general problems or 
changes that you would recommend, but before I do that, I would 
like to mention two specific problems I see. And this first one 
is, as a former lawyer, recovering lawyer, I might add----
    Mr. Thompson. Me too.
    Mr. Bryant. [continuing] I would say that the American 
Psychiatric Association points out a very good point in a 
letter to you where they talk about the ability of attorneys 
involved in litigation to acquire medical records.
    It generally has been done over the years where you have a 
medical consent authorization from the litigant, the patient or 
at least they know about it, but under this new regulation, the 
lawyer can simply write a letter and make a statement that this 
is needed in litigation, and he is involved in it.
    It is a little more sophisticated then that, but yet, the 
patient whose record we are talking about is kind of taken out 
of that loop. And you generally rely, I guess, on the integrity 
of the attorneys. And I have a concern with that.
    Second, it has to do with, I guess, the administration also 
seeking additional funding for research on health quality; and 
included in the health quality is the issue of medical errors, 
this minimum standard that we are talking about with records 
being----
    Mr. Thompson. Minimum necessary.
    Mr. Bryant. Yes. And how, if we are concerned about health 
care in general, that we are going to limit in effect the 
ability of doctors to acquire the records they might need from 
other sources. It just seems to me that sort of works in the 
other way, and it might cause more medical errors if the doctor 
has not enough in the records to look at.
    Those two examples and anything else you might mention, as 
well as just a comment maybe on the Community Health Centers 
program, I would appreciate it.
    Mr. Thompson. Well, thank you for raising both issues with 
me, Congressman.
    First off, on the Community Health Centers, I happen to be 
a very strong advocate. We have--back when I was Governor, I 
put a lot of money into the Community Health Centers myself 
from the State, and I am delighted that the President has seen 
fit to try and increase the number of Community Health Centers 
in rural America, as well as urban areas to underserved people. 
Approximately a third of those are completely uninsured 
families.
    We are going to hope to go from 3,200 by--increase it by 
1,200 and increase the number of patients being seen from 11 
million to 20 million, almost a 100 percent increase. And what 
a laudable goal, and I compliment the President on doing that.
    I think you know we can really do a great job in covering 
and getting a lot of uninsured and underserved people in to get 
good health care, and that is what we want. That is what we 
want in our country and that is what you want in this 
Department--in this committee. So I think it is it is the right 
decision and the right investment of our dollars.
    And in regard to privacy, it is a very complex rule. There 
is no question about it. But the basic thing is that we want to 
protect patients' rights, as you do and as does every member on 
this committee, and we are going to do that.
    There are certain things--I didn't know about the 
psychiatric letter we received--I think, 12,000 letters; I 
haven't read them all, I am up to 3,300--no, not really. But we 
are looking at them and trying to comprehend and put in some 
sort of usable form how we might be able to make some 
meaningful changes, but not get at the basic premise of 
protecting patients' rights, which every one of us is concerned 
about, especially the President.
    And in regards to the minimum necessary standard, that has 
to have some clarification, because we want to make sure that 
the patient that goes in to see his or her doctor is going to 
be able to get the necessary reports and the necessary 
collaboration between the doctors to be able to give that 
patient the best treatment possible. There has to be some 
guidance in regards to that, some guidance in the purchase of 
drugs, which is another problem.
    I agree with you that the patient needs to be involved in 
any litigation and should have to sign some sort of consent 
form before that information is made available. So we will be 
looking at it. I did not know that problem existed, and I am 
very appreciative that you brought it to my attention.
    Mr. Bryant. Thank you.
    Mr. Bilirakis. The gentleman's time has expired.
    Mr. Strickland to inquire.
    Mr. Strickland. Mr. Secretary, thank you for being here, 
and let me say that on a personal level, your responses to us 
today have encouraged me.
    Mr. Thompson. Thank you.
    Mr. Strickland. I have a young constituent in my district 
in southern Ohio. She is 31 years of age. She has been 
diagnosed with chronic leukemia. Her physician says she needs a 
bone marrow transplant. She has a brother who is a perfect 
match.
    The insurance company is saying they will not pay for it, 
that it is experimental. I have talked to her physician; he 
says it is the standard of treatment. I have gone to the James 
Cancer Center in Columbus, Ohio, and talked to transplant 
specialists there myself about her condition. They say that the 
standard of care is for her to receive this transplant, and 
that her chance of living and being cured is very good, given 
her brother's willingness to assist her.
    We need a Patient's Bill of Rights. We need a strong one. 
We need it quickly. I think it is a matter of life and death. 
And I just encourage you, for the sake of this woman and many 
others like her, this mother, 31-year-old mother of two 
children, that this administration and this Congress needs to 
take these matters seriously.
    I have two questions for you.
    Mr. Thompson. Could I comment on those----
    Mr. Strickland. Absolutely.
    Mr. Thompson. [continuing] on those two things, 
Congressman?
    First off, I would like to--if it is at all possible, for 
you to have this patient give me the information.
    Mr. Strickland. I would be most happy if you would receive 
that.
    Mr. Thompson. I would like to have some of our doctors at 
the Cancer Institute take a look at it. We are doing some 
wonderful things up there. And I would like to be able to help 
you. So if you could give me that information as quickly as 
possible, I would like to get some doctors from our place and 
see if there is a way that we can solve this problem.
    Mr. Strickland. Thank you, Mr. Secretary. I deeply 
appreciate your response.
    Mr. Thompson. I appreciate that.
    Second, on the Patients' Bill of Rights, you have got to 
realize that this President passed a very comprehensive 
Patients' Bill of Rights in Texas. He is in favor of it. I 
passed one in Wisconsin. I am in favor of it. We need 
bipartisan support.
    There are two issues, scope and liability. It doesn't seem 
to me to be that difficult if we are really willing on a 
bipartisan basis to make some compromises to get the job done. 
I am looking for you. You know, it can't only be compromised 
from my side; you have got to have some compromise from your 
side. And if we work together--and I am not saying that you are 
not willing to compromise. I am just saying this as a example.
    Let us see if we can't compromise and get a plan that all 
of us can be very happy with. I agree with you. We need a 
Patients' Bill of Rights, and let us get it done. Let us 
compromise and do the job right.
    Mr. Strickland. Thank you, Mr. Secretary.
    If I can give you one other example of a constituent, and I 
applaud you for your concern about organ transplant----
    Mr. Thompson. Thank you.
    Mr. Strickland. [continuing] concerns.
    A constituent came to me. She is 64 years of age, she is on 
a waiting list to receive a lung. She is covered by her 
husband's Teamsters insurance. If she receives that lung 
transplant prior to her 65th birthday, which is November 24, 
when she goes on Medicare at age 65, Medicare will not assist 
her with paying for the antirejection medications.
    If she does not receive that lung transplant until November 
25 when she is 65, Medicare will not only pay for the 
transplant, but provide for the antirejection medication, which 
is incredibly expensive.
    I know this is a can of worms. I know this is a terribly 
expensive thing to bring to you, but it seems so unreasonable 
that a birthdate would have that kind of impact on whether or 
not this woman would receive the assistance she needs.
    Mr. Thompson. It doesn't make sense.
    Mr. Strickland. And if we could--if we could just talk 
about that and----
    Mr. Thompson. I would appreciate that.
    Mr. Strickland. [continuing] and work on that, I deeply--I 
would deeply appreciate it, sir.
    Mr. Thompson. And maybe we can work on it in the context of 
reforming Medicare and prescription drug provisions. And I 
would like to do that, straightening these things out.
    I am looking for ideas like this in order to improve the 
system. So don't be bashful about sending me these problems. We 
will see if we can help you out on all of them. I mean, that is 
what we are there for, to serve you.
    Mr. Strickland. Do I have a minute left, sir?
    Mr. Thompson. Can I just tell you on organ transplant? We 
have 76,000 Americans, including your constituent, waiting to 
get an organ, and only 22,000 are going to be taken care of.
    Can you understand the angst and the anxiety that a person 
must have, waiting to see if they are going to beat the clock 
and get an organ? We need to redouble our efforts. I would 
appreciate, you know, your help in developing a Congressional 
Medal in which we could bring in five families from every 
Congressman's district to Washington, give them a Gift of Life 
Medal and highlight the need for organ donors in America.
    This is too much of a great country. We are too 
compassionate people to allow this problem to continue, to 
worsen each and every month.
    Mr. Strickland. I look forward to working with you, sir. 
Thank you so much.
    Thank you, Mr. Chairman.
    Mr. Bilirakis. And I am hoping for a second round, Ted. I 
don't know if you know that.
    Mr. Buyer.
    Mr. Buyer. Thank you.
    Mr. Secretary, earlier in the remarks, I brought up the 
issue about quality access of health care in the rural areas, 
and I want to associate myself with the question and your 
answer with regard to Mr. Bryant on the Community Health 
Centers.
    Part of the problem of getting adequate health to 
underserved areas is also a lack of health care providers, and 
you mentioned your concern about nursing care. If 50 percent 
are going to retire in the next 15 years, we are in deep 
trouble, because we don't even have--even if you packed them 
all into all of those universities out there, it is still not 
going to be enough. So I want to compliment you in your 
oversight and what you are doing.
    I would like to ask this question: Don't you agree that we 
should make sure that there are no barriers to faith-based 
charities serving as Community Health Centers? And how will $3 
million of HHS centers for faith-based and community 
initiatives work with the Community Health Center program?
    Then I have a second question for you, so hold that 
thought.
    Mr. Thompson. Okay.
    Mr. Buyer. With regard to the Nursing Home Oversight 
Improvement program--this will be my second question for you--
the President's budget recommends over $67 million for nursing 
home oversight.
    My concern is that there is an overregulation of that 
nursing home operator having Federal regulators and State 
regulators. What can we do to provide relief to the 
overregulation with regard to these nursing home operators and 
let us really go after the bad actors?
    Those are my two questions.
    Mr. Thompson. First off, let me tell you that the nursing 
crisis is very severe, and I am so appreciative that you raised 
that question. I am very appreciative of the fact that this 
Congress is concerned about it.
    At the present time, we have 90,000 shortages in RNs and 
250,000 CNAs that are badly needed, especially in the nursing 
home industry.
    And going into your last question, first, if we don't solve 
the CNA problem and the RN problems, we are going to have a 
severe nursing home problem in America. And whether it would be 
too much regulation or too little regulation, without nursing, 
you are going to have a crisis; and so we have to address that.
    In regards to regulation in the nursing home industry, I 
think we have to spend more time going after the bad nursing 
homes and putting more investigations, more--and more sporadic, 
so they are not timed; and be able to try and improve and use 
the best practices of the good nursing homes and inculcate 
those kinds of best practices into the whole industry.
    And so that is what I intend to do and attempt to do in the 
nursing home regulations.
    In regards to faith-based, it still is in the embryonic 
stages. We are putting $3 million in the Department of Health 
and Human Services to set up the office; then we are going to 
be looking at all the programs and see where the faith-based 
programs could be utilized to the best. We haven't really got a 
plan as of yet, because it is just getting started.
    We don't have the $3 million, as you know, but I would 
appreciate once the plan is further along to come over to your 
office and talk to you about it.
    Mr. Buyer. Would you be open to the idea or the concept of 
a--if you have a particular religious organization that is also 
involved in providing a health service on a community health 
basis that you would include those in a community health center 
funding?
    Mr. Thompson. That question has not been asked. I would 
like to.
    Mr. Buyer. I just invite you to be open to the idea as you 
are developing--you said it is in an embryonic stage. Let us be 
creative and open.
    Mr. Thompson. We certainly are, and we certainly will look 
at that.
    Mr. Buyer. Very good.
    I yield back my time.
    Mr. Bilirakis. I thank the gentleman.
    Mr. Waxman to inquire.
    Mr. Waxman. Yes, thank you very much.
    Mr. Secretary, I am delighted you are here and we have this 
opportunity to exchange some views.
    I wanted to talk to you about section 1115 waivers. That 
section of the Social Securiry Act gives the Secretary broad 
power for demonstration projects and to waive various parts of 
the Federal law. It is often used in Medicaid and other areas. 
It has the purpose of trying to encourage innovation and 
experimentation.
    Mr. Thompson. Right.
    Mr. Waxman. On the other hand, we do have Federal 
requirements that assure us that patients, beneficiaries, get 
the services that they need. So it is a concern that we make 
sure that we don't waive all the Federal laws and find that we 
are not getting experimentation, but regression in the 
requirements. The President's budget has suggested $27 billion 
will be spent in Medicaid demonstration projects in fiscal year 
2001.
    Now, a number of us--Mr. Dingell, Mr. Brown and I--are 
sending you a letter today to request that HHS work with us on 
these waiver issues to provide us with quarterly updates on 
section 1115 waivers, as well as basic information on existing 
waivers and demonstrations, the criteria for waiver and 
demonstration approval and the assurances that beneficiaries 
are adequately protected under current and future programs.
    I look forward to getting your response and working with 
you in this regard. I think it is important for us to be in 
communication with each other as you move forward on these 
waivers. You have the authority to do it, but we ought to be 
involved.
    Mr. Thompson. Congressman, all you have to do is call me, 
and I will be more than happy to discuss anything with you and 
any other member of this committee concerning waivers or 
anything like this.
    I want to point out that 1115 waivers, we have only issued 
one. There are only 20 in existence, and there are a couple of 
those I got when I was Governor, and one set up the Batcher 
care program, which is, I think, heralded by you and by other 
members of the committee as one of the SCHIP programs in 
America.
    Mr. Waxman. I think the waivers can serve a very useful 
purpose. What I would like to ask of you, not just to talk to 
me personally, but if we could have a process to make the 
information on approved and pending waivers available to the 
public to get the terms and conditions and other information 
posted on the HCFA Web site, just like all the 50 States' 
Medicaid programs already put this information on their Web 
sites.
    Mr. Thompson. I would have to consider that.
    Mr. Waxman. You don't have to give me an answer now, but we 
are requesting it.
    Mr. Thompson. Sure. I want to work with you.
    You have got to realize, I believe in waivers. I come from 
a State that was very innovative in coming up and being able to 
develop programs. Most of the waivers, Congressman, have been 
used to expand programs to give more service to underserved 
people, to children and to minorities and those that need help.
    I think that States have done an excellent job. We are not 
going to waive things that are going to be deleterious to the 
health care of America.
    But I want to work with you, and I am willing to.
    Mr. Waxman. I understand we may have differences, but I 
understand that you have good intentions. But what I think we 
need is transparency----
    Mr. Thompson. Okay.
    Mr. Waxman. [continuing] and cooperation and communication. 
And I would----
    Mr. Thompson. I am very cooperative.
    Mr. Waxman. And I would encourage that we have that.
    I understand also the Bush administration is planning on 
revising the Department's policy on granting section 1115 
waivers for demonstrations.
    Previous administrations have articulated their policies in 
the various Federal Register notices, Medicaid operation 
manuals, review guides, approval letters and conditions of 
approval. Can you tell us whether and how you are planning on 
modifying the policies that have been in place during other 
administrations and whether you will solicit our views on those 
as well?
    Mr. Thompson. I haven't made any major changes. I may 
accelerate it considerably; I don't like to delay. I like to 
examine waivers and make decisions one way or the other. I 
think it helps the system if you say no, to allow Governors and 
other individuals to know that it is not going to go. And if it 
is suitable and it is budget-neutral and we are going to say 
yes, why not get it out?
    Mr. Waxman. None of that is inconsistent with what I am 
suggesting.
    Mr. Thompson. So that is my overall philosophy. But 
changing--to having a writing and any other major change at 
this point in time, I haven't--I haven't made any.
    Mr. Waxman. I appreciate that.
    Before my time is up, I do want to commend you on going 
forward with the privacy rules. I thought that was a good step 
and an important one, because the American people have been 
waiting a long time for some privacy protections.
    I also understand you have indicated you are going to make 
some modifications of those rules. The rule is designed to 
respect the approach that the States have taken, even though 
they may vary from one State to another.
    I particularly want to know whether you are going to change 
the medical privacy rule to allow parents to access their 
children's health records, even in States where the policies 
are to allow a minor to obtain an abortion without parental 
consent.
    Mr. Thompson. Truthfully, Congressman, we haven't even----
    Mr. Waxman. You are not there.
    Mr. Thompson. We are not there. We are not there, and it 
would be premature even to attempt to answer that, because we 
haven't--we haven't even published a rule. Right now, we are 
looking at the guidance, not the major changes that you are 
talking about.
    This would be a major change. And we haven't even got to 
that.
    We are looking at how we might be able to put out some 
guidance to solve some of the problems that Congressman Bryant 
was talking about, how to solve the problem about being able to 
pick up your wife's prescription drugs if she is too sick to do 
it and doesn't get a chance to sign a consent, guidance on 
going to a doctor, having some lab work done, being able to 
allow the doctor to talk to the lab technician and get the 
analysis without having to have a written consent.
    Those--those directional kind of things for guidance are 
the things that we are working on. And the minor changes and 
the major changes, we haven't gotten to yet, and you will 
certainly know when I get there.
    Mr. Waxman. Thank you very much.
    Mr. Bilirakis. Mr. Burr to inquire.
    Mr. Burr. We look forward, Mr. Secretary, to any input we 
can offer you of our expertise and experience also, as you move 
through changes in the privacy.
    Mr. Thompson. Thank you.
    Mr. Burr. I want to as well inquire----
    Mr. Bilirakis. Those mikes don't appear to be picking up.
    Mr. Burr. Mr. Chairman, I think this mike is broken, but I 
will try and speak loudly. I also want to encourage you where 
it is appropriate to bring transparency under the waiver 
process to do it; and I am confident had that existed in the 
last administration you would not have inherited so many 
waivers that had not been acted on; and in a bipartisan way, we 
spent much of the last 2 years trying to find out the status of 
waivers.
    I am glad that North Carolina received its waiver on SCHIP, 
because I think our program was just a little bit better than 
Wisconsin's.
    Mr. Thompson. That is debatable, but I know also that I am 
the witness, and I am your--I will be quiet.
    Mr. Burr. Ours was good enough that we still have 
individuals who should be on it.
    Mr. Thompson. Right.
    Mr. Burr. And the Federal estimates for North Carolina had 
grossly underestimated the population. And I look forward to 
working with you to figure out how we can cover those children.
    Let me ask you on two different areas. In the memory of Dr. 
Coburn, who is no longer with us, were he to have been here, 
with your statement on HIV, he would have asked you this 
question: Will HHS consider on domestic AIDS policy a mandatory 
testing for pregnant women so that we can detect the 
possibility of transmission of HIV prior to delivery because we 
know that we have medicine that can lower the incidents of 
transmission?
    Mr. Thompson. Let me first talk to you about the waiver 
situation in North Carolina. We have pushed very rapidly on 
waivers as everybody knows, and we are getting the backlog done 
very quickly. Most of the waivers that we have granted have 
expanded services and programs to people that need them.
    And I think most of them have been widely disseminated and 
been favorably accepted by both political parties. We will 
continue to do that.
    In regards to AIDS, we have not developed that plan and it 
is something that--all of the things that you have talked about 
in regards to mandatory testing are things that will have to be 
considered, but at this point in time have not been.
    Mr. Burr. Great. As it relates to BIPA, it mandated that 
GAO study HCFA's reimbursement methodology and make those 
recommendations to ensure that the methodology reflects actual 
physician costs.
    Even though the study is supposed to be finished, I think 
in July of this year, if the study calls for HCFA to make 
changes, I doubt that those changes could be complete before 
January 1, 2002; and that is the implementation date of the 
reimbursement reductions.
    Would you consider delaying those reductions from taking 
place if, in fact, that report comes back----
    Mr. Thompson. Yes.
    Mr. Burr. [continuing] and suggests it is flawed?
    Mr. Burr. I thank you very much for your answers. I yield 
back the balance of my time.
    Mr. Norwood [presiding]. Thank you, Mr. Burr.
    Mr. Barrett, it is your turn.
    Mr. Barrett. Mr. Secretary, it is nice to see you in 
Washington.
    Mr. Thompson. Congressman, how are you? It is good to see 
you.
    Mr. Barrett. It is a lot like Elroy, would you not say?
    Mr. Thompson. Not quite. Elroy does not have a stop and go 
light. Elroy, if you call someone and get a wrong number, you 
can still talk for half an hour.
    Mr. Barrett. That is right. On this committee last year we 
have had some sharp debate over the issue of organs.
    Mr. Thompson. Yes.
    Mr. Barrett. My sense was always that we were talking about 
a pie of one size and cutting up the pieces. And if there is 
anything that I have been encouraged by--and there have been 
many things that I have been encouraged by--but if there is 
anything in particular that jumps out with me what you have 
done since you had this position is your work on organ 
donations.
    Because I honestly feel that you are in a position to use 
your bully pulpit to travel this country and talk about this. 
And I want to encourage you to do that. Because the success we 
had in Wisconsin that we are both familiar with, I think, can 
be replicated.
    Just if you could elaborate on what you are planning on 
doing, because I think you can really do some good stuff there.
    Mr. Thompson. Thank you so very much, Congressman. This is 
really a passion for me, and I really applaud your support and 
bipartisan support, Congressman Barrett and Congressman 
Strickland. This is something we need to do in America. 76,000 
people are waiting for an organ; 22,000 transplants last year.
    It does not look like it is going to get any better. And 
what we need to do is we need to highlight it; and I have 
developed a partnership with employers, like the welfare-to-
work program, that was started a couple of years ago in which 
we got employers to go out and agree to hire welfare mothers.
    What we are trying to do now is to get employers and with 
the labor unions to team up together and make this a cause for 
the workplace, to talk to employees about the importance and 
the need to the giving of organs.
    I am very, very proud to announce that the big three, 
Chrysler, General Motors and Ford, and UAW have written in to 
their contracts that they are going to do this. That is a giant 
step forward.
    The second thing is we are putting out a national organ 
card with two witnesses; and what we are encouraging people to 
do, not only sign their organ card, talk it over with your 
family. Because what we are finding is that 95 percent of the 
people when they are there, they will say, yes, they will 
support the husband or the wife's views. But when it gets to 
the hospital, only 50 percent follow through.
    The third thing, based upon a Wisconsin law, as you know, 
we passed the Knockrinder bill in which Kelly Knockrinder was 
16 and she was very much advanced for her young age. She got 
killed in a very tragic incident. Her boyfriend was driving, 
she got killed; but she gave all of her organs up to help three 
families. Her family came and says we should do something in 
her memory, and we wrote in the Knockrinder bill in which every 
person before they reach 16 and gets a driver's license has to 
have a 30 minutes' study and course done on organ donation.
    If we could sort off encourage other States to do that, if 
we can get a gift of life medal given out by this Congress, you 
know, a Congressional Gift of Life Medal, like an Olympic medal 
and have five families from every congressional district come 
out here with a recipient and have a day of organ donors on the 
National Capital, what a great way to highlight it. Those are 
the things that we need to do.
    Finally, I tell people--and I am speaking all over the 
country, as you probably know--and I tell people, you know, if 
your organs had a vote, do you think your organs--do you not 
think your eyes would continue to vote to see the beauty of 
this great land? Do you not think your heart would continue to 
want to beat in somebody else's body? I know your kidney and 
livers would love to continue to drink Wisconsin beer and eat 
Wisconsin cheese. So I know that they would vote for that. And 
that is what we have to do.
    Mr. Barrett. I do not disagree with that.
    Mr. Thompson. We have to get that story out. I thank you 
for the question.
    Mr. Barrett. I need your help on something else. Twice 
today you mentioned that the Patients' Bill of Rights has two 
legitimate issues, two real issues: scope and liability.
    Mr. Thompson. Yes.
    Mr. Barrett. My concern is that there is a third, what I 
have often called bogeyman, issue out there, which is that we 
are somehow trying to nail employers. And we need your 
leadership on this issue, because I do not know anybody who is 
pushing this legislation who wants employers to be held liable.
    And, again, twice you identified what I have said when I 
have businesspeople from Wisconsin come into my office. I say, 
there are two legitimate issues here, the scope and the 
liability. You have echoed that today.
    So I think you could advance this debate much further if 
you sent the word out to the business community we are not 
talking about employer liability here.
    Mr. Thompson. I am willing to do that.
    Mr. Barrett. Good. The third, I was in Marshfield last week 
at St. Joe's Hospital and they were talking about diabetes and 
the concerns there.
    Just briefly if you could talk about what you are planning 
to do, because what you mentioned today about diabetes was 
something that was mentioned in Marshfield last year.
    Mr. Thompson. I went down to CDC, Congressman, and the 
experts down there tell me that 75 to 80 percent of diabetes 
can be controlled or eliminated by doing two things: eating 
properly, life-style change and exercising.
    Now, if we were able to motivate America about smoking, 
what an impact we could have on the Medicare dollars, the 
Medicaid dollars, and the health care dollars in America, if we 
could somehow get the information out about life-style and 
about exercise.
    And I think this Department, the Department of Health and 
all, should be leading the effort in that. We want to develop 
programs and preventive health, especially in diabetes.
    I am looking for ideas. I do not have any. And I am looking 
for ideas from you, Congressman, to find ways in which we can 
do that. I do not know if the 75 to 80 percent figure is 
correct. But if it is only 50 percent, what a tremendous impact 
we could have on the health care of America if we just did 
that.
    Mr. Barrett. Thank you.
    Mr. Norwood. Thank you, Mr. Barrett.
    Mr. Whitfield, I believe it is your turn.
    Mr. Whitfield. Thank you very much. Mr. Secretary, welcome 
to the committee. We are all delighted that you are in your new 
position of responsibility.
    Mr. Thompson. Thank you.
    Mr. Whitfield. Last month, Rose Crum-Johnson, who is the 
Region IV administrator for HCFA, was in my district and helped 
us arrange a forum for health care providers to express their 
frustrations with reimbursement issues; and we had over 120 
providers there. There was about a 2- and a 3-hour--2- to 3-
hour question and answer series, which I think went very well.
    I hope as you address these issues of reform internally 
that you might at least consult with her, because she may have 
received some insights from that forum that could be helpful.
    She did a great job, and I must say very frankly that we 
were not nearly as impressed with the contractor for that 
region as we were the HCFA personnel that were there.
    The second thing, we have heard a lot of discussions today 
about Patients' Bill of Rights, and all of us obviously want a 
Patients' Bill of Rights. I, for one, am pleased that the 
administration is taking its time, particularly on the 
liability issue, because anytime you talk about preemption of 
ERISA, there is a problem with employer liability.
    I know that--we know for a fact there is some 
reentrenchment on health care benefits from employers, and the 
last thing that we want to do is pass a bill that is going to 
create more uninsureds. So I am delighted that the 
administration is moving forward cautiously on Patients' Bill 
of Rights.
    Mr. Norwood. The time is up.
    Mr. Whitfield. I want to talk to you about the issue of a 
nursing shortage. There has been some legislation regarding 
that and Lois Capps and others are involved in that. And I 
think we would like to get our legislation over to you and let 
you all look at it and see if you have any suggestions and see 
if we can work together to try to move that legislation.
    Mr. Thompson. I would like that very much, Congressman.
    Mr. Whitfield. On the fourth issue, like everyone else, I 
am very much interested in this Community Health Centers. It is 
frustrating to see people who are just over the line, they are 
not eligible for Medicaid, and they are paying taxes for 
Medicare and Social Security and Medicaid for other people; but 
they are not receiving any benefit.
    And as we look for ways to address this uninsured pool--
obviously, Community Health Centers is one way to do it. Other 
ways are health marks, tax deductions, tax credits for health 
care premiums and so forth.
    Do you all at HHS have any sort of task force that is 
looking at ways that we can address this uninsured problem at 
all at this time?
    Mr. Thompson. We do not have a task force, but we certainly 
are looking at it. We are looking at Community Health Centers 
as you know. We are looking at the Presidential tax credit that 
he wants. But we are always--we do not have to have a task 
force to be looking at. We are looking at ways to improve it 
and make more people eligible.
    The working poor that you are concerned about is something 
that, you know, I was very concerned about as a Governor; and I 
always felt, you know, that people on the Medicaid end of the 
spectrum were able to get very good medical care. People that 
were middle income to wealthy were able to get good medical 
care.
    It was the poor working person that was just above the line 
that worked very hard that could not afford health insurance; 
and that is when we decided to work on Badger Care in 
Wisconsin. And I am sorry the gentleman from North Carolina is 
not here; I would like to tell him how much better tragic areas 
than his program in North Carolina is but----
    Mr. Whitfield. I will tell him.
    Mr. Thompson. You tell him that I said that, but I waited 
until he was out of the room. I want to be helpful, and this 
Department wants to be helpful. We would like to be able to 
reduce the number of uninsured and increase the number of 
people that get health coverage.
    Mr. Whitfield. But you see the Community Health Centers as 
one of the primary ways to do that?
    Mr. Thompson. I see it as an excellent way to do it.
    Mr. Whitfield. And I am not sure on eligibility 
requirements for Community Health Centers, but is there some 
sort of sliding scale based on income to be eligible?
    Mr. Thompson. There is. And usually in the Community Health 
Centers that you fill out a form, and the ones that I am most 
familiar with, you have to pay something. You have to pay 
something toward it, but it is based upon your income. It is 
affordable, but the concept has been that you should pay 
something to go in there.
    Mr. Whitfield. And the $124 million that you are 
requesting----
    Mr. Thompson. $124 million.
    Mr. Whitfield. [continuing] how many centers do you 
anticipate with that?
    Mr. Thompson. We want to be able to increase the number of 
centers by 1,200 over the next 5 years.
    Mr. Whitfield. Okay.
    Mr. Thompson. And this is the first installment, so it 
would be about 300.
    Mr. Whitfield. Mr. Chairman, thank you for giving me the 
time.
    Mr. Norwood. The last time, thank you Mr. Whitfield. Mr. 
Wynn it is your turn.
    Mr. Wynn. Thank you very much, Mr. Chairman; and welcome, 
Mr. Secretary.
    Mr. Thompson. Thank you, Congressman.
    Mr. Wynn. One of the things I am very pleased about is that 
you bring enthusiasm to the job, and I think that is the first 
and the most important prerequisite.
    Three issues. First, this is a picture of Melissa Forelich. 
She is a poster child for the Red Cross. She is here with us 
today with her mother. She is a victim of congenital heart 
defect.
    Also with us is the family of Samuel Ellison. His parents, 
Marcus and Vongi Ellison, are here. My colleague, Ms. Morella, 
and I are going to sponsor a bipartisan measure that would 
propose a Medicaid waiver for families such as these so that 
they would not have to be doomed to poverty as a result of 
addressing their child's health care problems.
    This waiver would kick in after all of their private 
insurance has been exhausted. I wanted to somewhat vividly 
illustrate this point, because I hope that you can consider 
supporting this legislation. I think you are well aware of the 
problem of congenital heart defects, such as there are multiple 
operations over the child's life, even beyond the age of 18. 
And under the current Medicaid laws, these parents, these 
families would have to literally spend down to poverty and who 
would otherwise be productive tax-paying citizens would 
basically have their lives substantially destroyed.
    I hope you will consider that and maybe even if you have a 
moment to talk to the families who are here.
    Mr. Thompson. I certainly would like to. And I am very 
appreciative that they are here, and let us hope that we can 
help them.
    Mr. Wynn. Thank you, Mr. Secretary. Second is Head Start. I 
noted that you say that you are going to be able to serve 
915,000 young people in Head Start. With $125 million increase 
out of a budget of $6.3 billion, that seems somewhat modest; 
and I would like to know how many young people are eligible 
beyond the 915,000, because I got the impression that there 
were probably another 40 million who might be eligible who are 
not served; and it would seem that we ought to be able to find 
the money to serve them.
    Third, I had an interesting conversation--first of all, let 
me commend you in this context about your commitment about 
preventive care. I had a conversation with some State 
Department folks on the subject of Cuba, and they begrudgingly 
admitted that Cuba had addressed the problem of preventive 
health care. Obviously, it is a different system; but I feel 
bad that our system has not been able to do as good a job as we 
think we ought to do in that area.
    My colleague, Mr. Whitfield, mentioned Community Health 
Centers. It seems to me that is a move in the right direction. 
I would like you to amplify on your thoughts on that with the 
eye toward how can we do this in the most direct way so that 
there is not a lot of insurance or tax papers and things like 
that so that the people can go in, get preventive care, and we 
can in turn get the savings of having them healthier.
    If you could comment on those latter two issues, I would 
appreciate it.
    Mr. Thompson. Well, preventive health care is something 
that, you know, we need to do in America. Our health system is 
set up, Congressman, to wait till a person gets really sick, 
then we pay lots of money to correct it.
    Mr. Wynn. And ask them if he has any insurance.
    Mr. Thompson. And ask them if he has any insurance. I 
started a program back in Wisconsin and invested $150,000 a 
year for the abatement of lead poisoning, and a community--
through a community health center. And then 5 years for an 
investment of $750,000, we were able to reduce the lead 
poisoning in that census track by 60 percent.
    Now, what that means is that we have probably saved the 
Medicare and Medicaid budgets thousands, possibly millions, of 
dollars; but the more important thing is that we gave young 
people, especially minorities in that census track, an 
opportunity to lead, you know, successful lives instead of 
having lead poisoning.
    Diabetes, it is so important for us to get out information 
on obesity, nutrition, and exercise in order to do that.
    I am looking for ideas, because I want to try and focus 
Congress and America on ways that we might be able to be a more 
healthy society and be able to change the reimbursement systems 
toward more prevention.
    And I need your advice and ideas on how to do that, because 
I am there, I know the problem; but I do not have the expertise 
to bring all of the ideas together without some assistance from 
Congress and so on. But I think we need to do that.
    In regards to your waiver, if you are going to have to pass 
legislation, we would be more than happy to look at it. Once 
you get it drafted, send it over, we will make some contact--
some comments and look at it.
    As far as community health, it is a wonderful way, you 
know, to get minorities, underserved people in urban areas, as 
well as in rural areas to get the necessary health care 
coverage that they need.
    This is probably the first avenue for health care for 
millions of Americans; 11 million are being taken care of right 
now. We would like to expand that up to 20 million. We would 
like to expand the number of Community Health Centers by 1,200, 
which is a laudable, but ambitious, goal. I am appreciative of 
the fact that we are having bipartisan support for that.
    Mr. Norwood. Thank you, Mr. Wynn. We will have a----
    Mr. Wynn. My time has expired.
    Mr. Norwood. Yes, it has. We will have a second round.
    Mr. Norwood. Mr. Secretary----
    Mr. Greenwood. Mr. Chairman.
    Mr. Norwood. I'm sorry, Mr. Greenwood. I beg your pardon, 
sir. You are absolutely recognized.
    Mr. Greenwood. Thank you, Mr. Chairman. It is not your 
fault; I was entertaining 50 ninth graders downstairs. I had to 
leave. They had some tough questions; you think you got tough 
questions.
    Mr. Secretary, you and I spoke yesterday briefly in my 
office about privacy issues. And as you understand the privacy 
rule that I had some problems with in the last administration, 
I have some problems with in this administration. We talked 
about maybe working together to correct some of that.
    I want to ask you two things, but they are very related; 
and they have to do with privacy and computers.
    The health entities that will have to comply with these 
privacy regulations will have to redesign their computerized 
health information systems in order to do that, and that is 
going to be very expensive.
    Mr. Thompson. Yes.
    Mr. Greenwood. They also, pursuant to HIPAA, will have to 
make similar changes to comply with the rule when it is 
finalized on security and electronic signatures.
    And one of the expressions that they have made is that the 
problem that they have is they are going to have to go in and 
justify to their boards of directors the expenditures for the 
revamping of their computers to meet with the privacy--to meet 
the privacy standards and then wait until the second set of 
rules comes out on security and electronic signatures and maybe 
have to go back and do it again, and that it would make a lot 
of sense in terms of costs to synchronize those two actions to 
be able to take care of them at the same time.
    So part one of my question is, do you think we can figure 
out a way to blend, merge those two calendars so that they have 
to comply with both of those rules so they would know what the 
new rule is in time to comply with both of them at the same 
time?
    Similarly, another privacy and computer issue goes to the 
other direction, and that is----
    Mr. Thompson. Congressman, could I just interrupt before 
you ask me the second question. You know that the privacy 
effective date is statutory. I have no way to extend it at all. 
That is written into the law. You will have to----
    Mr. Greenwood. I think what we will probably have to do is 
to see what the fastest route you think is to the security and 
electronic signature rulemaking and see whether you can do that 
fast enough so that the two can be synchronized or whether we 
need to make an adjustment in the privacy piece----
    Mr. Thompson. All right.
    Mr. Greenwood. [continuing] statutorily, if necessary, to 
push that out a little bit further, so you can catch up with 
the other piece. I look forward--you do not even need to go 
into much more detail than that right now.
    Mr. Thompson. Okay.
    Mr. Greenwood. But I would like to work with you.
    Mr. Thompson. I appreciate your comments on that and would 
like to work together with you on that.
    Mr. Greenwood. The second issue related to computers and 
privacy, as I said, goes the other way, and that is, although 
the information that your Department has is very personal in 
nature----
    Mr. Thompson. Right.
    Mr. Greenwood. [continuing] particularly over at HCFA. We 
have been holding hearings in my subcommittee in oversight 
investigation into cybersecurity of the Federal Government. We 
found some pretty alarming information out about how frequently 
hackers are trying to get into your systems and all of the 
Federal Government's systems and how frequently they succeed.
    There was a recent Inspector General report that found 
numerous general control weaknesses primarily at HCFA's 
Medicare contractors. Such weaknesses do not effectively 
prevent, one, unauthorized access to and disclosure of 
sensitive information; two, malicious changes that could 
interrupt data processing and destroy files; three, improper 
Medicare payments; and, four, disruption of critical 
operations. So there are vulnerabilities at HCFA that the IG 
found there. We will be having a hearing soon to have some of 
your folks come and talk about that.
    Have you had a chance in 75 days to become aware of this 
issue?
    Mr. Thompson. Yes, I have.
    Mr. Greenwood. And if so, what do you think you can do 
about it?
    Mr. Thompson. First, let me compliment you on holding the 
hearings. I think it is absolutely vital that we get more 
information out there about the security of our computer 
systems and how we might be able to make them more secure.
    We are asking, I believe, $30 million in our budget for 
that particular issue, to correct that problem. And HCFA, of 
course, is the big one because that is where the computers are 
and that is where most of the information is. We are looking at 
that. They have a task force working on how they can continue 
to improve. And I think they are doing a fairly good job of it, 
but we need the $30 million to submit it.
    But in the meantime, we want to work with you and your 
staff and your subcommittee on this; and I just would like to, 
once again, say and reiterate that we are appreciative of the 
fact that you are holding hearings on this thing, and let us 
see if we cannot correct it. It is a problem.
    Mr. Greenwood. I appreciate that. I have seen HCFA's 
computers. They look pretty fancy; but I think they are pretty 
old, as you mentioned.
    Mr. Thompson. They are actually 31 years old, and it is 
absolutely amazing to me that HCFA is still operating a 
computer system.
    Mr. Greenwood. I, for one, will be supportive of the 
requests for the $30 million. Thank you.
    Mr. Thompson. Thank you very much.
    Mr. Norwood. Thank you, Mr. Greenwood.
    Mr. Secretary, in your written statement you indicate that 
there should be some changes in the medical privacy rules that 
are put out, and I do not want to sit here you and ask you--I 
do not think it is fair to ask you at this point what those 
changes should be.
    I want to encourage you to work with the health 
subcommittee, because we are vitally interested in it.
    Mr. Thompson. I know you are.
    Mr. Norwood. I want to point out to you that when the 
Government has rules or laws that they produce and it falls 
down on the provider to choose between obeying that rule in law 
versus good care for the patient, that is a very difficult 
place to be.
    And some of these rules interfere with good patient care; 
and what we do is if we allow that to stay, of course, we turn 
them into criminals, because they have chosen not to follow the 
rule versus doing what is best for the patient. And I know you 
will consider all of that, but we are all really interested.
    I was not going to ask you any questions about patient 
protections; but my good friend over here, Mr. Pallone, 
stimulates me, usually; and, therefore, I need to just make a 
point or two with you about that.
    Mr. Thompson. Thank you.
    Mr. Norwood. And I would like to defend the President. If I 
were President, I would sign the Ganske-Dingell bill today. 
Now, I say that saying I know that it is not perfect. I know 
that if we got there over 6 years of difficult work--and I 
think it may be the best we can do to achieve the goals of 
protecting patients--but if I were the President and I had been 
in town 100 days, I am not sure I would not want to sign it 
without trying to make it more perfect.
    I want you to know, and everybody in this audience, he is 
doing that. To say that he is ignoring this subject is not 
correct.
    Mr. Thompson. He is doing that.
    Mr. Norwood. I know for a fact that they are working very 
hard on that; and our differences are very, very, very slight 
at this point. There is no reason we cannot this summer, I 
believe, get a patient protection bill out, maybe even spring.
    But you pointed out that there is still two areas of 
concern: one is scope, which means how many Americans are going 
to be covered under this bill, and the other is liability.
    I think those differences, though, are not that big. This 
President is on record saying that he wants every American 
covered. Now, that tends to take care of scope.
    It comes down to how hard is it to get every American 
covered, how difficult do you make it; but when you say that we 
want every American covered, which he did say in his debates, 
that means every American, including the teachers and the 
firemen back home. So there is no reason we cannot come to an 
agreement, I believe, on scope and at the same time try not to 
run roughshod over the laws of this country that you so 
delicately helped put together.
    The other thing is about liability. This President is on 
record saying that he believes any bill we produce should have 
liability. The Congress is on record in the ranges of 98 
percent saying we should have liability, whether they voted for 
it through the Norwood-Dingell bill or whether they voted for 
it through the Coburn bill or whether they voted for it on the 
Senate side through the Nickles bill. Almost everybody in 
Congress and this President says that we need to have some form 
of liability.
    Now, do you have any suggestions how we get over that 
hurdle? Why is that--why does that still seem to be the 
difficult problem as to the liability section in that we all 
agree that there should be liability? Can you bring--help me. 
How do we get around that problem, since we all agree anyway?
    Mr. Thompson. I think it takes a lot more discussion. I 
think it needs good people like you, Congressman Norwood, and 
Congressman Ganske to sit down with people that are lobbying 
this in the Senate side, and also people that are working on it 
in the White House; and I want to be helpful as you do.
    Mr. Norwood. I know you do. That is the reason I am asking 
that question. I know the President wants us to get there 
badly.
    Mr. Thompson. And the President is, you know, has indicated 
that he--the President really wants a Patients' Bill of Rights. 
He wants one that works and so do you and so do I.
    Mr. Norwood. I know.
    Mr. Thompson. I think there are ways to do it. I think we 
are just talking at each other and not--and not trying to sit 
down and solve the problem. I think we need--we need a couple 
of good afternoons in which we can lock the door and just roll 
up our sleeves and just get it done.
    Mr. Norwood. I have had that afternoon every week for the 
last 8 weeks, and we still--we really are there. It is just 
that one little arena, whether we go to Federal court or 
whether we go to State court.
    Mr. Thompson. Can I be helpful?
    Mr. Norwood. Perhaps when we have our visit, we can talk 
about that.
    Mr. Thompson. Thank you.
    Mr. Norwood. And I yield back my time and the chair.
    Mr. Thompson. Thank you, Congressman Norwood.
    Mr. Bilirakis. Mr. Brown to inquire.
    Mr. Brown. Thank you, Mr. Chairman. I, again, apologize for 
the rudeness of going downstairs and voting and leaving. I do 
not like doing hearings this way, but--so that is the way that 
happens sometimes.
    You made a comment in the South Florida Business Journal 
recommending a change in the entire culture of antibiotic use. 
Thank you for that comment.
    As you know, the Department of Health and Human Services 
and the Centers for Disease Control and other agencies issued 
an action plan--released an action plan to talk about 
antibiotic resistance in four fronts: surveillance, prevention 
and control, research and product development.
    Will that serve as the blueprint for your administration's 
attack on antibiotic resistance?
    Mr. Thompson. I would say absolutely. I do not know why it 
would not.
    Mr. Brown. Okay. I think it would and I talked--Chairman 
Bilirakis and I are working on some legislation to authorize 
funds to implement it. And it is--I know there is a hundred 
things to----
    Mr. Thompson. If you could, Congressman, you know, bring us 
in, and, you know, as you are developing this legislation, we 
would love to work with you and see what we can do.
    Mr. Brown. I very much appreciate that. Let me talk about--
the people were mentioning situations in their districts and 
this is a larger problem than that; but it is very--it is 
crucially important to a thousand families in the eastern end 
of my district, near Warren, Ohio, where a steel plant closed.
    They are not eligible for COBRA, because the plant declared 
bankruptcy. They did not just close one plant; the whole 
company declared bankruptcy. They have been told that they 
need--they have been offered insurance, many of these families, 
for about $1,200 a month. I mean, it is extraordinarily 
expensive. That may be more expensive than some other places 
and may not be in every case.
    But the tax credit that the administration has proposed is 
a $2,000 tax credit, but that is the bad news. The good news, 
and Congressman Barrett told me about Badger Care, and I read 
about Badger Care in other places. When you were Governor, you 
used very efficiently and effectively public programs, Medicaid 
chip, Badger Care, those kinds of things, that have a proven 
track record of getting the job done.
    The Senate--the Senate budget resolution included a 
bipartisan amendment, Senators Wyden and Smith from Oregon 
dedicating $28 billion to the constituency fund, not using tax 
credits but using health coverage, health insurance coverage 
expansion through program expenditures.
    Is that not how we move toward universal coverage? I mean, 
talk to us for a moment, if you would. With 40 million people 
uninsured in this country, the number is surely going to get 
larger as we see these layoffs. Will you support that Smith-
Wyden resolution? Will you come down on the side of using 
public dollars in addition to tax credits where we really do 
not have the insurance reform that allows tax credits to take 
care of people when insurance is so much more expensive than 
the tax credits we seem to offer?
    Mr. Thompson. Congressman, I do not think you have to have 
one over the other. I think, you know, if we are--if we really 
want to address the uninsured issue, which I know you do and I 
do, you have to look at a whole plethora of ways to do it.
    Community Health Centers is the President's primary way of 
doing it, along with tax credits; and even though you can make 
the argument that $1,000 and $2,000 refundable tax credit is 
not enough, the truth of the matter is, it does defray a 
portion of the health insurance, if not all, part of it, which 
is a good inducement for doing it.
    We think--our analysis means that 6 million more Americans 
will be covered by it. The third way, which we did in 
Wisconsin, which was very effective, was expanding the SCHIP 
program and developing a new program called Badger Care; and a 
lot of people have indicated that that program is one of the 
best programs for uninsured, the working poor, in America.
    I cannot certainly--I certainly cannot sit here and say I 
am not going to be supportive of that, because I am. But if you 
are going to have an expanded SCHIP program and it is 
expensive--and I do not know where that money is at this point 
in time--but we are looking at waivers. We are looking at ways 
to do that.
    I would appreciate working with you on this along with 
Chairman Bilirakis.
    Mr. Brown. Okay, good. Thank you. The last--more a 
statement than a question, I have been very pleased, as Mr. 
Wynn said, your enthusiasm to do new things and try new things 
and make things work in that Department.
    Mr. Thompson. Thank you.
    Mr. Brown. And I have been real pleased with a great 
majority of your answers. One I wanted--I was a little confused 
on the questions Gene Green asked about the Centers for Disease 
Control. I just think that this country--a physician told me 
the other day that we are about 5 percent of the world's 
people.
    We consume almost 50 percent of the world's health care 
expenditures. We are pumping huge amounts of money into NIH, 
which I believe, as I think Mr. Strickland said, everyone on 
this committee agrees, what Mr. Green says, everybody on this 
committee agrees that we should do that, but we are 
shortchanging CDC.
    And when you said that--when we are talking about diabetes 
and obesity, research is great, and we support that; but to cut 
the prevention and the CDC efforts on public health, I mean, we 
put so much into high-tech medicine, which has worked to help 
people live longer in this country. But the real advances for 
life expectancy have come from public health, from everything 
from buying antibiotics to preventive care, to a better 
understanding of tobacco and alcohol and safe drinking water 
and all of those things; and those are CDC kinds of things.
    And I would hope that you would reconsider, and 
understanding you put a lot of money into research, but please 
also do something more with CDC so we can do better on the 
prevention side.
    Mr. Thompson. I happen to be a big fan of what is going on 
in CDC. And I have been done there, and I do not know if you 
have been done there or not. I am sure you have, Congressman. 
It is a wonderful place, and they do great things.
    Most of the reduction in CDC was out of the $125 million 
for the youth awareness program, and that was Congressman 
Porter's program that went in for more publicity of getting a 
program out for healthy life styles for our young people, which 
is laudable.
    But we just felt as an administration that we got some 
problems that we wanted to--we thought a better investment of 
the dollars, the financial resources was in NIH for research.
    You know, you can question that decision; but the decision 
is based upon what we think is the best, getting the best bang 
for our dollars instead of spending $125 million for publicity, 
put the money into research.
    We also increased the amount of money for chronic diseases, 
I think, by almost 11 percent in research. That is a huge 
increase. It is over a $600 million increase for that kind of 
program. We are not saying that CDC was not doing a good job. 
We just think it was a better investment.
    Mr. Brown. I think--and this might sound a bit a more 
partisan--but I think when we look at--those are great. I mean, 
we all want you to do with NIH.
    But when I came to this Congress, the NIH budget was $12 or 
$13 billion. The CDC budget was, I do not know, 2.5, maybe. Now 
the CDC is somewhat over 3 and NIH is up over 20, which is 
great for NIH.
    But we really do--we have this kind--we have an opportunity 
in this country now with this surplus to do something better 
with public health, and I wish we would have the same 
commitment. We talked about doubling it. We all stayed with it, 
doubling the NIH budget over 5 years.
    I wished we would have a similar kind of commitment to do 
something, something bold with CDC. And I would hope--you have 
a reputation as a guy that really cares about public health in 
Wisconsin. And I hope that you can--even though some people 
that might be above you in this business--in our committee, I 
guess, but a couple of people above you may not have the same 
interests in public health as you do. But I would hope that you 
would in these meetings speak out for what you really do care 
about. Thank you.
    Mr. Thompson. Thank you. As you probably know, I do.
    Mr. Bilirakis. The Chair thanks the gentleman. And I think 
to support your last statement that the previous administration 
for chronic disease prevention health promotion requested $385 
million last year, and under this budget, these programs would 
receive 190 million more dollars over that request, which is an 
increase of 49 percent.
    So I think that is an indication that you do care about 
chronic disease prevention and health----
    Mr. Thompson. Thank you.
    Mr. Bilirakis. [continuing] promotion program.
    Mr. Secretary, I commend you, I thank you, whatever, 
regarding Community Health Centers. Mr. Waxman knows--over the 
years he so very ably chaired this committee--and I know how 
strongly I feel about that particular subject. He is still 
there. And I commend you for the additional dollars and the 
emphasis on this.
    Getting to the National Health Services Corp.'s 
reauthorization, the way--the way NHSC works now--and I do not 
think this has changed in the last couple of years--is a person 
can get out and maybe get himself or herself based in one of 
these underserved locations where they are direly needed, and 
then pick up an offer from a large health care firm that offers 
to buy out their contract. Apparently, they still can do that.
    Frankly, I have problems with that, and I just wonder how 
you might feel about that subject and how you might feel about 
possibly our legislation preventing that from taking place. I 
mean, these people have entered into a contract where the 
taxpayer is taking care of the health care--I mean, their 
medical education, and then they decide--because with or 
without big dollars to be able to buy out of that contract. I 
have problems with that. Any comments?
    Mr. Thompson. Mr. Chairman, I have to confess I have not 
looked at that issue. I have not looked at your legislation. I 
guess I should have realized that problem was there, but I have 
not really addressed it.
    Mr. Bilirakis. I think it is a problem. I know that an 
awful lot of areas lose an awful lot of needed people, as a 
result of the big dollars coming in from some of these----
    Mr. Thompson. I would like to take a look at your list and 
work with you on it. And, you know, coming from a poverty area 
myself in rural Wisconsin, you touched the right strings for 
me; and we are an underserved area where I personally live, and 
so we need to get as much--we need good health care there as 
well as you do in your area.
    Mr. Bilirakis. Yes. And we would all like to--Mr. Brown 
emphasized the uninsured--we would all like to do something 
about the more vulnerable members of our society in some way. A 
few years ago, a group of us got together on a bipartisan 
basis, and we thought we were doing that; but that legislation 
did not get anywhere.
    But until that happens, we need the Community Health 
Centers desperately, and we still might continue to need them; 
but we need them desperately. And we need, I think, the 
National Health Service Corp. desperately.
    Mr. Thompson. I applaud your passion for them. They do a 
great job. I mean, $11 million--most of the Community Health 
Centers is the first avenue for a lot of underserved people to 
get medical care.
    Mr. Bilirakis. Yes.
    Mr. Thompson. And I applaud the President and this 
committee for being so supportive of that.
    Mr. Bilirakis. I will yield back the balance of my time and 
recognize Mr. Pallone for a second round.
    Mr. Pallone. Thank you, Mr. Chairman.
    I wanted to ask you, Mr. Secretary, about the Indian Health 
Service, which is a concern that I have. Myself and Mr. Miller 
and Mr. Hayworth on a bipartisan basis, we are about in the 
next few weeks to reintroduce the Indian Healthcare Improvement 
Act, which seeks to reauthorize and improve upon the existing 
Indian Health Service.
    I just wanted you to be aware of the fact that we were 
doing that.
    There is a great deal of concern among tribes about 
disparities, if you will, between health care provided to 
American Indians to the rest of the population; and that is 
basically what we are trying to address with this legislation.
    When you talked about diabetes in particular, I was 
thinking of American Indians, because it is unbelievable the 
epidemic that we are witnessing now with diabetes. And, 
although, you know, they are happy over the fact that there is, 
I guess, $100 million that was appropriated or, you know, 
budgeted, appropriated a couple of years ago with regard to 
diabetes for American Indians, I noticed that the budget 
actually just leveled funds for diabetes programs for American 
Indians.
    I would like to see more money go to it, particularly for 
prevention. You mentioned prevention, and I am totally 
convinced that that is the answer with regard to diabetes in 
American Indians.
    Mr. Thompson. So do I.
    Mr. Pallone. We actually had a few forums on the Health 
Care Improvement Act, and we went to some of the reservations, 
and one of the ones that I visited was the Tohono reservation 
in Arizona, which now the majority of the tribe members 
actually have diabetes, adult onset of diabetes.
    There are people there who--there is actually a program 
there where they would like to use prevention, diet, in 
particular, as a way to try to prevent that. So maybe I will do 
a follow-up letter.
    But I would like you, if possible, to see more money for 
diabetes prevention with regard to tribes and also see if maybe 
we can do some kind of pilot program looking at diet as a way 
of trying to deal with the problem. And I was hoping maybe I--
we could have a meeting maybe with some of the Commerce members 
and staff to talk about the Indian Health Service. I want to--
--
    Mr. Thompson. I would like to do that.
    Mr. Pallone. If I can get back to you about that, I would 
appreciate it; and we would show you the bill.
    Mr. Thompson. I would like to do that.
    Mr. Pallone. In addition, at some point, I am hoping after 
we introduce this that we can get this subcommittee to have a 
hearing on it, and I will talk to my leadership about that here 
in the future.
    Mr. Thompson. No, if you want to get a group together and 
talk about Indian health, I would like to.
    Mr. Pallone. I appreciate that.
    Mr. Thompson. I would appreciate getting a copy of your 
legislation, and so I get a chance to review.
    Mr. Pallone. We will send it to you. Thank you. I wanted to 
follow up on what Mr. Brown and Mr. Waxman said, though, with 
regard to the SCHIP program, because I know that you mentioned, 
you know, the question of funding, in other words, you know, 
how do we expand SCHIP unless we have significant more funding, 
and that is a concern I have.
    You talked about the waivers. As you know, New Jersey has 
one of the these waivers also, and we have been now covering 
adults as part of the SCHIP program as well. But I know from my 
own State that there is a tremendous demand, and there would be 
a need for a lot more money even in New Jersey to expand SCHIP 
to cover family members as opposed to children.
    What I do not want to see is that, you know, in expanding 
it to cover adults, which I think is a good idea, that we cut 
back or have waiting lines for children. I do not see a 
significance amount of money--I do not know if there is any 
increase, but certainly enough extra money in what the 
President proposed to actually expand SCHIP in a major way.
    You sort of suggested that, I think, that that is the case 
in response to Mr. Brown's question. And I was just wondering 
then why does the--you know, why does the administration not 
simply support what Mr. Wyden and some of the other Senators 
did when they voted for this larger sum of money to cover the 
uninsured.
    In other words, could that not be used, if the 
administration was willing, to cover more uninsured to expand 
the SCHIP program?
    See, I guess my problem--I would like you to answer the 
question; but my problem is, as much as I support Community 
Health Centers, I still think it makes a lot more sense for us 
to cover people who are uninsured, and I think that is a lot 
more effective than it is to expand Community Health Services, 
albeit I would like to do both. But I just do not see where the 
money is going to come from, and I certainly do not want to see 
any cutback in services for children.
    Mr. Thompson. You have raised a lot of issues. Let me try 
and tick off as many as I can. I do not think by expanding the 
program to adults that you are going to reduce the number of 
children that are going to be enrolled. I think just the 
opposite happens.
    I think the studies have shown that if a low-income family 
is able to enroll as a family, you will have more children 
enrolled with their parents than if you just have the children 
enrolled.
    Mr. Pallone. I agree with you. And my only concern is that 
I am afraid that if there is too much expense, that some of the 
States may end up cutting back on the kids. Because it is a 
block grant, they are not told by you what to do. Right?
    Mr. Thompson. Well, there is a prohibition from doing that 
right now in the statutes. You have to get a waiver in order to 
do that.
    Mr. Pallone. No, but I am saying it is possible that some 
States could, in expanding, cut back on the number of kids or--
--
    Mr. Thompson. It is possible, but most States are looking 
at ways to expand. I mean, most States are doing an excellent 
job; and that is why the waiver program has been so effective.
    In regards to costs, in regards to costs, Mr. Pallone, you 
know, this President has treated us very equitably. My overall 
budget for the Department of Health and Human Services is going 
up by $436 billion to $470 billion, an 8.2 percent increase. 
The discretionary funding is going up by 5.1 percent when the 
overall budgets have been limited to 4 percent. So HHS has been 
treated fairly.
    Next year, I think you are going to see--if we can reform 
Medicare this year, I think next year, hopefully, it is going 
to be a reform of Medicaid, if we can get Medicare done this 
year. And I think then the issue of expansion of SCHIP is a 
program that we should look at very seriously. And that is what 
I was referring to to Mr. Brown.
    I said costs, but it really is one of delay, that we should 
take a look at this in the context of Medicaid reform, which I 
hope we can look at next year after we get Medicare done.
    Mr. Bilirakis. The gentleman's time is expired.
    Mr. Pallone. Thank you, Mr. Chairman.
    Mr. Bilirakis. Dr. Ganske.
    Mr. Ganske. Mr. Secretary, I think that Medicare reform is 
important in that we need to help make the system function more 
efficiently; but I have serious concerns about whether 
realistically Medicare reform, is going to provide much in 
savings.
    And here is why: I think you would agree with me that while 
there is some abuse in Medicare/Medicaid, it is small. It is 
watched over by Governors.
    We have had several congressional hearings. You are never 
going to effect the type of savings from further clamping down 
because you reach a certain level where the costs of the 
oversight equalize the costs of the benefit from the oversight.
    And I would say this, in looking at Medicare and Medicaid 
recipients in Iowa, I am sure it is the same as in Wisconsin. I 
just do not see very many people receiving unnecessary care, 
unless you want to get into issues of euthanasia, end of life. 
And I would certainly say--and I would be interested in your 
opinion on this--I do not think Medicare providers and Medicaid 
providers are overly compensated, do you?
    Mr. Thompson. I really--you are asking me a question. I do 
not think so. But I have no empirical data.
    Mr. Ganske. Well----
    Mr. Thompson. I would think that the Medicare and Medicaid 
system is based upon reasonable reimbursements, and that is 
what it was set up to do. I do not think anybody is getting 
overly rich on this system.
    I think some people, you know, may have used the system 
unfairly or maybe even illegally have gotten more money than 
they deserve; but the honest practitioner, like you and other 
people in your capacity, no, I do not think so.
    Mr. Ganske. So my point is this, if there are not very many 
Medicare recipients getting unnecessary care and if the costs 
of the care, by and large, are fair, then the only way you are 
going to achieve significant savings is basically to tighten 
rationing and decrease necessary care. That gets me to the 
issue----
    Mr. Thompson. I am not ready to buy that conclusion, 
Congressman. I am willing to work with you on it. I am willing 
to say that there are savings to be had within the system. We 
have not really addressed those; you have not as a Congress, 
and I do not think we have as an administration yet. And I 
think we need to do that. I think we need to explore those 
possibilities and see if there are some meaningful ways to save 
costs without rationing services.
    Mr. Ganske. If you accept the premise that people are 
receiving necessary care and are not overreceiving care and 
they are being paid at a reasonable level as the system is now, 
then it gets me to the point I wanted to get to, and that is, 
you are either looking at adding a benefit, like prescription 
drug or addressing the inequity in the payment schedules that 
we see for certain States like Iowa, Wisconsin, or you are 
going to have to bring in some additional revenues. You cannot 
rely on the trust fund.
    Because if you rely on the trust fund, you are just going 
to shorten the life of the trust fund. As I look at a 
prescription drug benefit, just like any other benefit, there 
has never been a benefit added to Medicare that has saved 
money. But the prescription drug benefit could cost easily $300 
billion or $400 billion over 10 years, if it is structured as 
either the Democrats or the Republican bills were last year.
    If we do not pass a comprehensive benefit and a Medicare 
reform bill, then I would like you, Mr. Secretary, to look at a 
bill that I have introduced which would basically provide help 
for those in Medicare that are not in Medicaid, they are not 
supported in Medicaid, but are truly needy, the Qualified 
Medicare Beneficiaries and the Select Low-Income Medicare 
Beneficiaries and allow them to utilize the State Medicaid drug 
programs, but pay for it from the Federal side. So we are not 
asking the Governors to come up with additional funds, but we 
take advantage of the types of savings that Governors around 
the country have utilized in terms of their own prescription 
drug programs as they have related to Medicaid.
    So we do not have to reinvent a wheel; it is there already. 
It would be simple. It would allow people to utilize a program 
that is already there. In fact, it might even help Governors in 
terms of their negotiations with their various health plans. 
And I think that this would be preferable to a so-called 
Helping Hand program, because you have a State Medicaid program 
set up in every State already. I just wondered if you had any 
response to that.
    Mr. Bilirakis. Very, very quick response, sir.
    Mr. Thompson. I would love to look at it. I would like to 
say that the President meeting Helping Hand is 100 percent 
federally funded; and that is the one that, you know, that I am 
most familiar with, but I would be more than happy to look at 
your program; but I would hope you would look at the 
President's program as well.
    Mr. Bilirakis. The gentleman's time is expired.
    Mr. Green to inquire.
    Mr. Green. Mr. Chairman, I was under the impression that 
Mr. Engel was in here first.
    Mr. Bilirakis. We are in the second round now.
    Mr. Green. Have you had your second round?
    Mr. Bilirakis. If you are yielding to Mr. Engel, that is 
fine.
    Mr. Engel. I thank my colleague for yielding.
    Mr. Secretary, I just want to reiterate some of the 
comments made by my colleague, Mr. Ganske. When I go home to 
New York, I hear my constituents talk about a prescription drug 
benefit more than anything else.
    Mr. Thompson. I am sure you do.
    Mr. Engel. And I just, you know, want to--I know there are 
many different ways of going about it, and I know that you said 
that you want to do it as part of a reformation of the Medicare 
program. But I just want to add my voice to those who are 
saying that the $153 billion that the budget sets aside for 
prescription drug program is woefully inadequate.
    And I just hope that this thing is not relegated to a back 
burner; that we really, really tackle it and tackle it soon.
    There is a lot less talk about it, unfortunately, now than 
there was last year; and I hope that does not mean that it is 
being, you know, relegated to the back burner. The $153 billion 
for prescription drug benefit was very disappointing to me when 
I saw that in the President's budget, so I just want to 
reiterate that.
    Mr. Thompson. Congressman, I want to assure you that it is 
not relegated. In fact, we are working very hard. But I want to 
point out, as I did previously and before you were here, 
Congressman, is that the President and my Department feel very 
strongly that we just cannot do the prescription drug in 
isolation.
    We need to reform Medicare at the same time or else I do 
not think we will ever have this great an opportunity again. 
And if you just pass prescription drugs, I think maybe then the 
$153 million will not suffice; but if we reform Medicare and 
put some efficiencies in there, I think we can still get by. I 
do not know if it is 153 million, the President says if it is 
not. We will cost it out, and we will see what it is.
    But right now, I just want to allay any fears you have that 
we are not dedicated, because we really are. This is a cause 
that this President wants to see solved.
    Mr. Engel. I appreciate what you have said. I just get very 
concerned that in some quarters the call for a reform of 
Medicare because an excuse for an action on prescription drugs. 
I know that is not your intent, and obviously you are going to 
push ahead.
    Mr. Thompson. That is not the President's intention.
    Mr. Engel. I am happy to hear that, because that is a major 
concern. I would like to mention something that is very 
important to my State of New York. Last year, I worked with our 
Governor, Governor Pataki, and the Clinton administration on a 
compromise on the Medicaid upper-payment limit----
    Mr. Thompson. Yes.
    Mr. Engel. [continuing] to ensure that States like my 
State, that are sending Federal Medicaid dollars on health care 
programs for the poor, can continue to do so, while States not 
using the funds for health care could not. The compromise 
provided a phaseout so that these States would not see a 
dramatic reduction in Medicaid payments that would severely 
impact the ability to provide basic health care to the poor.
    Now, the President's budget references changes to that 
compromise, while at the same time, the House budget resolution 
rejected this type of Medicaid cut.
    I am obviously more comfortable with the House budget 
resolution in this regard.
    Mr. Thompson. I bet you are.
    Mr. Engel. The projected savings in the budget from 
altering the UPO rule is $606 million in fiscal year 2002 and 
$17.4 billion over 10 years. Would the administration consider 
the language in the House budget rule; and can you tell me if 
not, where the President believes this savings would be 
achieved, specifically, which States would lose their Medicaid 
funding? It is really a matter of grave concern to us.
    Mr. Thompson. I understand, because I worked on this 
formerly as a Governor.
    Mr. Engel. I know.
    Mr. Thompson. But that was formerly. I am working on it now 
as the Secretary, and I do not think you are going to see much 
movement to the extend or expand the upper-payment limits from 
this administration.
    Mr. Engel. Well, I hope that we can try to make a case that 
it is really important in these programs for the poor and it 
is--the States that are really using the money for what it was 
supposed to be utilized are not penalized as a result.
    Mr. Thompson. I understand. As you know, there has been 
some abuses.
    Mr. Engel. And the abuses should be corrected.
    Mr. Thompson. A lot of abuses. And even under the 
compromise last year, some States are going to be phased out in 
2 years; other States are going to be phased out over 8 years. 
The President's or--our budget, the President, our budget 
accelerates that to one.
    Mr. Engel. I just want to ask you one other thing.
    Mr. Bilirakis. Very, very quickly.
    Mr. Engel. The Ryan White AIDS programs are frozen at $1.8 
billion, you know, at a time when there are many different 
therapies; and we found in New York City 3,000 people alone 
increased in the enrollment in terms of those seeking 
assistance from the AIDS drug assistance program.
    It would seem to me that a freezing of the budget $1.8 
billion is really unwarranted; and I am wondering if you could 
look at that and, perhaps, consider increasing the assistance 
for the Ryan White AIDS program.
    Mr. Thompson. We have looked at it. And I want to tell you 
that this is an issue that I am very interested in. Thirty-six 
million people in this world have--are HIV infected or have 
AIDS; 25.1 million are in Africa. Forty-three percent of the 
new tuberculosis cases in the United States come as a result of 
HIV infected people internationally, 43 percent in America.
    This is a problem that is going to be coming to the United 
States. We have a serious problem, not with the HIV but the 
tuberculosis. We have a serious problem. This administration, 
led by me in this regard, feels that the best hope is to come 
up with a vaccine.
    We are putting huge amounts of money into discovering a 
vaccine to prevent the spread of HIV. And Ryan White, which is 
a wonderful program, has had a 50--well, over 100 percent 
increase in the last 5 years. We decided comparing to the 
problem that is facing us internationally that we thought that 
the money should be invested in finding the vaccine as soon as 
possible and level-funding Ryan White.
    That was a decision made by me and members of the 
administration. We still think it is the right decision, 
because there is a tremendous problem out there; and we are 
going to try and solve it.
    Mr. Bilirakis. The gentleman's time is long expired.
    Mr. Pitts to inquire.
    Mr. Pitts. Thank you, Mr. Chairman.
    Mr. Secretary, the first question I have for you is one 
that may take some time for you and your staff to research, so 
I will just mention it now and ask you to get back to me later.
    Is the Centers for Disease Control and Prevention currently 
conducting or funding blind or unlinked HIV surveillance tests? 
Many have argued that these tests are unethical because they do 
not disclose positive test results to those who have been 
diagnosed with HIV/AIDS, thereby denying live-saving treatment.
    I would be interested to know your thoughts about these 
studies and whether you would instruct the CDC to discontinue 
further blind testing. You can respond later if you would like 
to that.
    But my second question, Mr. Secretary----
    Mr. Thompson. Congressman----
    Mr. Pitts. Go ahead.
    Mr. Thompson. [continuing] I do not know anything about 
that; that is the first time anybody has ever raised that. I 
would like to----
    Mr. Pitts. I will give you information.
    Mr. Thompson. Give me information, and we will get an 
answer back to you.
    Mr. Pitts. Thank you, Mr. Secretary. My second question 
relates to abstinence funding. In June 1999, then Governor 
George W. Bush promised that if he became President he would 
increase funding for abstinence-only education to equal the 
Federal funding for safe sex programs.
    The Bush Campaign conservatively estimated that to bring 
abstinence funding to parity with safe sex programs, abstinence 
would need to be funded at a minimum of $135 million from its 
current funding of $80 million.
    As you know, the final budget released last week does not 
increase abstinence funding of this level of parity. In fact, 
the official budget contains little or no increase in existing 
law.
    The question is do you intend to keep the President's 
campaign promise to increase abstinence funding to the $135 
million in fiscal year 2002?
    Mr. Thompson. Congressman Pitts, absolutely the President 
said that, and he stands behind it. We are going to fulfill it. 
There has been a 10 percent increase in this budget going from 
$82 million from $93 million in this budget for abstinence.
    We know there is a disparity between abstinence and title 
10; and we expect over the years, over the next 4 years, to 
grow that to parity, not to take away one from the other, but 
to grow so that they are both equal funding.
    Mr. Pitts. Over a 4-year period, not in this budget?
    Mr. Thompson. I do not think we can do it in this year's 
budget.
    Mr. Pitts. Okay. Mr. Secretary, do you have plans to make 
sure----
    Mr. Thompson. We went up 10 percent, I want to you know; 
and I think that is a very sizable commitment by this 
administration.
    Mr. Pitts. All right. The next question is, do you have 
plans to make sure that Federal funding is not going to 
directly or indirectly fund abortion? And how do you plan to 
increase oversight of programs like title 10 that have never 
been studied for its effectiveness?
    Mr. Thompson. Well, Congressman, we have rules in effect 
and the law is very clear in this regard. The Henry Hyde 
amendment is very forceful and straightforward, and we think we 
are complying with it.
    If you have--if you have instances where we are not, I 
would appreciate hearing from you. We will then take a look at 
it, but it is my understanding that we strictly enforced the 
law. That is what people tell me.
    Mr. Pitts. Okay. We will share information that we have for 
you.
    Mr. Thompson. Thank you.
    Mr. Pitts. The last question, Mr. Secretary, is, as you are 
aware, under the previous administration, the FDA approved the 
abortion pill RU 486 and this drug protocol has been the 
subject of significant controversy, since together they are 
known to cause severe side effects, such as hemorrhaging for 
women.
    In fact, as reported in the L.A. Times, the second drug in 
this two-drug protocol is manufactured in Chinese factories 
that have been cited in the past for falsifying documents and 
importing impure drugs into the United States. There are 
actually 30 known cases of uterine rupture caused by RU 486.
    Women in other countries where this drug is legal are 
protected in significantly greater fashion than here in the 
U.S., which should concern us. A recent survey of colleges and 
universities determined that only one of over 30 schools 
surveyed would offer this drug to their students since the 
risks were too high for the schools. Many of them admitted that 
they were unprepared to deal with the known side effects due to 
the lack of necessary medical equipment at the campus health 
facilities.
    My question is, do you feel RU 486 requires any action at 
this time by the FDA or HHS; and if so, has any money been 
budgeted to review or study or monitor the severe side effects 
caused by RU 486?
    Mr. Thompson. There is no additional money budgeted for 
review, other than to tell you that all drugs are reviewed for 
safety. If there are questions of safety, we review them and 
with all drugs approved by FDA, we will be monitoring RU 486 
for safety and efficacy; and if there are problems that 
develop, then a more intense review will take place.
    But once a drug has been approved, the law does not provide 
for the withdrawal of any drug, only based upon safety reasons. 
And to this--to my knowledge, Congressman, there has not been 
any empirical data submitted to show that there have been 
safety violations of RU 486; but we will continue to monitor 
that, as I am sure you want us to.
    Mr. Pitts. Especially the imported drugs with the 
documentation on impurities from China.
    Mr. Bilirakis. The gentleman's time is expired.
    Mr. Thompson. Thank you, Congressman. Thank you very much 
for asking.
    Mr. Bilirakis. Mr. Green to inquire.
    Mr. Green. Thank you, Mr. Chairman. I will not talk all of 
my time. Mr. Secretary, I appreciate your patience today; and 
we do not always have a Secretary before us. In fact, serving 
20 years in the legislature, I was trying to remember in Texas 
if I ever had a Governor to question, so I appreciate your 
patience today.
    Mr. Thompson. So that is why you want to beat me up for so 
bad?
    Mr. Green. We are just inquiring; we are not beating 
anybody up.
    Mr. Thompson. You have been very good to me. I appreciate 
it, thank you.
    Mr. Green. I want to follow up from my other colleagues, 
both Mr. Barrett and Mr. Brown, in the research and prevention 
and that discussion. I understand the concern about putting the 
dollars and the research; and if what we see happens with the 
Senate, and the tax cut is scaled back, I would hope that you 
would fight and advocate every way you could for whatever money 
is available to be able to provide that funding for CDC and for 
prevention.
    I understand the limitations you had, but hopefully that if 
there is some money there, you will be able to use it for that 
prevention.
    Mr. Thompson. Congressman Green, all I can tell you is if 
you ask OMB, they said I have been very forceful.
    Mr. Green. I understand. I will also follow up on my 
colleague Mr. Engel and the concern about the prescription drug 
benefit for our seniors. And if we continue to link it with the 
need for Medicare overhaul--and I understand that the force is 
for us to do--but everyday it seems like you could not hardly 
leave the building in HHS without having a senior come up to 
you and say we need it not only this year but we needed this 
last year with the high cost of prescriptions for everyone, but 
particularly for seniors who take more prescriptions than any 
other age group and also have the least ability to work 
overtime or something else to cover it.
    So I would hope that the administration would reevaluate 
saying maybe we need to do a prescription drug benefit without 
necessarily having the Medicare overhaul. Because I would like 
to look at both of them, too; but it just does not seem like 
that is going to happen in Congress.
    Mr. Thompson. Congressman Green, the President--that is why 
the President submitted Helping Hand, because he did not know 
if we were going to be able to get the reformation of Medicare 
done with prescription drugs. So he put forth the Helping Hand 
in case we cannot.
    But I have to tell you, I do not see any move whatsoever in 
this Congress. And I am not being political, I am not being 
critical, I am just stating my assessment, that I do not see 
any real effort to reform Medicare unless we do have 
prescription drugs.
    And I think we would be missing a golden opportunity about 
reforming Medicare, because I think everybody recognizes that 
Medicare needs some reform, and we can do that and have 
prescription drugs. It is the catalyst to get the job done, and 
that is why this administration feels so passionate about 
having reformation at the same time with prescription drugs, 
but also recognizing the need of seniors.
    We have Helping Hand there in case we cannot get it done 
immediately; we could pass Helping Hand and get some money to 
the States so they can pass a prescription drug provision.
    Mr. Green. And our committees have held hearings on Helping 
Hand, and I have a very urban district and not a wealthy 
population, and Helping Hand will not even provide the benefits 
because, again, the State of Texas has no senior citizen 
prescription drug program.
    There is nothing even talked about in our legislature now, 
so it would be years away before we get that. Our legislature 
meets once every 2 years. And at the end of May, they are going 
to be gone for 2 years. Our Governors also do not want to have 
them in a special session.
    Mr. Thompson. As a former Governor, I can understand that. 
If I could have had the privilege of having my legislature come 
over once a year, I would have felt very good about it.
    Mr. Green. President Bush had them once every 2 years, 
whether they needed them or not. Also I have a question I want 
to submit to you concerning Medicaid regulations and 
audiologists and the like.
    Mr. Waxman asked if I would ask this question--or do you 
want me to yield to you so you can do this--on lead poisoning. 
I know that the advisory committee to end childhood lead 
poisoning has for years asked that Medicaid be allowed to pay 
for the lab tests on dust to find the lead poison in children's 
homes.
    We were told that you have the discretion to let Medicaid 
do that, and will you look at that issue----
    Mr. Thompson. I will.
    Mr. Green. [continuing] on lead dust for children?
    Mr. Thompson. I do not think Congressman Waxman was in here 
when I said that I invested $150,000 a year to the Community 
Health Program back in Wisconsin for 5 years, and we were able 
to reduce the incidents of lead poisoning in that census track 
by 60 percent, Congressman, by doing that.
    It is a tremendous investment, and it is a great way to 
hold down future medical costs of lead poisoning, especially 
for minority children, which are usually the ones that get 
affected.
    Mr. Green. Thank you, Mr. Secretary. Thank you, Mr. 
Chairman.
    Mr. Bilirakis. I thank the gentleman. Mr. Greenwood to 
inquire.
    Mr. Greenwood. Thank you, Mr. Chairman. I have a question 
for you, Mr. Secretary, about Medicare+Choice; but before I get 
there, my colleague from Pennsylvania, Mr. Pitts, in his 
questions to you was making a comparison between the funding in 
your budget for abstinence-only education and the safe sex 
campaign, and I quickly turned to the budget to see if I could 
find the safe sex campaign and I am having trouble.
    I found the family planning campaign, family planning 
program which supports the network of 4,600 clinics nationwide 
serving more than 4.5 million people. These clinics provide 
access to such areas as reproductive health care, preventative 
services counseling, routine gynecological care, hypertension 
screening, screening and referrals for breast and cervical 
cancer and substance abuse. Abstinence counseling and education 
are an important part of the program. Service protocol for 
adolescent clients, that is title 10.
    You do not have a secret safe sex campaign funded in this 
budget that I do not know about, do you, Mr. Secretary? You do 
not have to answer that.
    Mr. Thompson. I do not think so.
    Mr. Greenwood. Medicare+Choice, Mr. Secretary, the crisis 
with prescription drugs is real; and as everyone has said all 
morning, we need to fix that. But there is an arguably equally 
critical issue and that is the relative demise of 
Medicare+Choice programs over the past several years. What used 
to be a magnificent option for people to get their Medicare 
through an HMO without having to pay the costs of MEDIGAP 
insurance, getting a nice prescription drug benefit and other 
goodies like glasses and hearing aids and so forth has been 
underfunded. Part of that is the fault of the Congress, part of 
that frankly was resistance from the previous administration 
who hasn't been wild about Medicare+Choice.
    The result of that is people who had prescription drug 
benefits have lost them, people who have had access to managed 
care have lost it, and people who had it at zero premium are 
now paying a lot of money for it that they cannot afford. So we 
really have to fix that.
    In my area, it is compounded by the fact that the 1997 
average area per capita costs of Medicare, the AACPCC, which 
was designed to put more money where the costs are higher and 
less money where the costs are lower, has really led to some 
problems. One of them is that people from my district in Bucks 
County go into Philadelphia for headaches; they go to 
university hospitals and some of our other very fine teaching 
institutions there.
    And I am told by the insurance company that the cost of 
their care gets attributed back in the 1997 calculation to 
Philadelphia health care costs, not to the costs of--from the 
assenting counties. So, therefore, the premiums HCFA was paying 
to the insurance companies on behalf of my constituents is 
considerably less than those in Philadelphia; and as a result 
of that, my constituents are now paying about $60 a month more 
for the same exact care that folks just across the border in 
Philadelphia are paying.
    We really need to fix that. I think it is a crisis that 
needs to be fixed probably in the midst of, if not sooner than, 
doing the whole Medicare reform and prescription drug issue. 
Some of that is going to take--probably most of that is going 
to take congressional action, but I would hope that as you 
settle into this job you become very up to speed on the 
existing crisis in Medicare+Choice and that we can work 
together on that.
    Mr. Thompson. It needs a lot of help and a lot of changes 
and a lot of support. I think it has got a lot of good 
possibilities and could have a bright future if we worked 
together. And I cannot think of anything more I would rather do 
than work on that subject. I got a couple others.
    Mr. Greenwood. Something like 15 percent, I think it is, of 
the Medicare recipients, including the disabled who have come 
to rely on----
    Mr. Thompson. You are right.
    Mr. Greenwood. [continuing] managed care and come to rely 
on the prescription drug benefit of managed care. I have 
constituents who had a good--disabled constituents who had a 
good prescription drug benefit up until January 1 of this year; 
and when their prescription ran out, they lost any option they 
had to get a prescription drug that they had been taking for 
years.
    I have one instance where a man who was 45 years old struck 
by a car, a former computer programmer, is in such pain, 
without his pain medication he becomes suicidal. That is, I 
think, a poignant instance of the urgency of this issue.
    Mr. Thompson. Thank you very much, Congressman. I want to 
work with you on it. Please if you got ideas, send them to you. 
As I once again reiterate to any members of the committee, if 
you got ideas on how I can do my job better for you and how we 
can improve the system, please let us know.
    Mr. Bilirakis. The gentleman from Ohio, Mr. Strickland.
    Mr. Strickland. Mr. Chairman, I do not want to give up my 
opportunity to ask questions, but I would like to allow 
Representative Waxman to go before me, if he may.
    Mr. Bilirakis. I am amenable to it.
    Mr. Waxman. I thank the chairman, and particularly Mr. 
Strickland for letting me go ahead of him.
    Mr. Secretary, I have to tell you, I think it is absurd 
that we are going to freeze funding for the family planning 
program which not only provides contraception, but reduces 
infant mortality, maternal mortality, and low birth-weight 
babies, in order to give more money for a chastity program on 
abstinence, which I do not think anyone can argue is nearly as 
important as the family planning program.
    Second, I want to point out that to limit the amount of 
money that goes into the Ryan White program, while you are 
working on a vaccine, is to tell all of those people with HIV 
infections that they may not be able to survive if we cannot 
afford to buy the drugs for them.
    We have not been able to limit the epidemic. I think the 
problem we have is given the overall budget, you have indicated 
you are going to increase the Community Health Centers, but you 
are going to decrease the Community Access Program. We are 
going to increase diabetes research, but then we are going to 
take money away from the CDC.
    We are going to give less for Ryan White and more for an 
AIDS vaccine. So that seems to me moving the money around at a 
time when the Congress and the President is saying let us give 
billionaires more money by repealing the estate tax. And I just 
point that out more rhetorically than anything else.
    There are a couple of----
    Mr. Thompson. May I respond, Congressman?
    Mr. Waxman. Sure. But my problem is I only have 5 minutes. 
Let me touch on a few other things, then you can respond to 
everything.
    Mr. Thompson. Okay. Thank you, Congressman.
    Mr. Waxman. There are a couple of areas where I hope we can 
be together. Congressman Diaz-Balart from Florida and I are the 
lead sponsors of what is a bipartisan proposal to cover 
immigrant children under Medicaid. It allows the States to 
decide to cover those kids, rather than make them wait 5 years 
and it eliminates other barriers that may even keep them 
permanently from getting health care coverage.
    The National Governors Association supports this change, 
and I hope the administration will look at it favorably as 
well.
    The second area is this: there is a large bipartisan group 
of members on this committee and the House and the Senate who 
support the Family Opportunity Act to allow severely disabled 
children to access Medicaid coverage. I hope you will look 
favorably on that program, too.
    And then I do want to comment on the fact that today it has 
been very clear from your testimony that you are committed to 
the promise of NIH research. In that regard, I want to note the 
tremendous promise of stem cell research and hope that you will 
keep that very much in mind as we look at that issue of 
research.
    And then my last comment is to just point out something 
that Columnist Matt Miller recently wrote about when he talked 
about coverage for all the people that are uninsured. There are 
43 million uninsured in this country. There are 43 million 
Americans today without health insurance, and President W. Bush 
wants to help 6 million buy coverage.
    But back in 1992, there were only 34 million uninsured, and 
the first President Bush would have helped 30 million of them 
get insurance. So what we have is President Bush, the son, 
proposing to help so many fewer uninsured Americans than 
President Bush, the father, did even though we are at a time 
when there are more in need. I think that goes to the other 
point that I was making.
    We are spending the money, in effect, by giving tax breaks 
to the people at the upper income; and those who have no health 
insurance who have to rely on government assistance, programs 
like the CHIP program or Medicaid, they cannot get that 
coverage.
    So with that, I just wanted to make those points to you; 
and I hope we can work together on them, and certainly I want 
to hear any response you have.
    Mr. Thompson. Congressman, I want to work with you; I 
really do. And there are philosophical differences. This 
President, you know he won. He ran----
    Mr. Waxman. And he got to be President. He did not win.
    Mr. Thompson. He won. That is another philosophical 
difference that you and I have. He won and he campaigned on a 
tax cut. He campaigned on making equity between abstinence and 
family planning. He campaigned----
    Mr. Waxman. I did not hear that one, but all right.
    Mr. Thompson. He campaigned on doubling the NIH budget. 
This budget really is a reflection of what this President ran 
on in the campaign. I have to give him a lot of credit for 
carrying through on what he said he was going to do.
    Now, our Department--and you are passionate, and I applaud 
you for your positions on a lot of issues. You are passionate 
about it; so am I. I am passionate in giving the best health 
care for Americans from California through Wisconsin to Florida 
and every State.
    This budget has treated our Department very favorably. It 
has gone up from $436 billion to $470 billion, an 8.3 percent 
increase. That is a huge increase. Ryan White had an 81 percent 
increase over 5 years, $811 million over Ryan White. It is a 
good program.
    I used it very effectively in Wisconsin, but we have an 
international AIDS problem that needs attention. And in order 
for us to do that, we thought, in order to really get some 
direction, some way to really control HIV in the world and also 
in America was to find the best way to come up with a cure or a 
vaccine, not a cure, a vaccine, and I know you applaud that, 
because you will be the first one there to help us support 
that, but there are priorities.
    And, you know, you do not like a tax cut. And as it is 
obvious you do ot, I happen to think that we can have both. We 
can do an excellent job of improving the health care and have a 
tax cut that the President campaigned on. Besides that--forget 
about the tax cut. In other areas, I want to work with you, I 
want you to give me your best ideas, and I will come back with 
our suggestions.
    And if we can develop a bipartisan way to solve these 
problems, I think not only will we be better off; but America 
will be better off, and that is all I can offer you.
    Mr. Waxman. Thank you for your answer.
    Mr. Bilirakis. Mr. Strickland.
    Mr. Strickland. Thank you. Mr. Secretary, I have sat here 
and I watched you today and I thought of your experience not 
being dissimilar to mine when I go to my district and I go to 
the supermarket or I go somewhere shopping and people bring me 
case work, and we have brought you a lot of casework today.
    Mr. Thompson. You are right.
    Mr. Strickland. You have spoken about being willing to 
accept information about my constituents, and I have heard you 
say to other members here you wanted to hear specifically about 
their concerns.
    Mr. Thompson. Yes.
    Mr. Strickland. I appreciate that. As I said to you 
earlier, I have been encouraged by what I have perceived to be 
your attitude of genuine concern. I just wanted to say 2 or 3 
things.
    Many of us feel very strongly about research and 
specifically about stem cell research and the great promise it 
holds. I would just encourage to you do whatever you can within 
the administration to make sure that legitimate scientific 
life-affirming research is not interfered with because of 
idealogical concerns.
    Second, we have heard a lot of talk about the tax cut and 
George W. Bush is our President, and we must embrace him as 
such; but many of us also understand that over one half million 
people voted for the other person in terms of a popular vote.
    So we think that there is a necessity for us to compromise 
on whatever agenda that is moved through this Congress, because 
we do think that not every aspect that the President campaigned 
on was, in fact, endorsed or embraced by the majority of the 
American people.
    I have just one final question--and you have been 
incredibly patient, and I thank you for that--but in your 
budget, you increase substance abuse treatment services funding 
by $100 million, and I applaud you for that. However, your 
budget decreases funding for mental health treatment services.
    As you know, this program provides desperately needed 
treatment services for mentally ill, around 13 percent of whom 
are also substance abusers. Last year the Surgeon General's 
report on mental health reported that less than \2/3\ of adults 
with severe mental illness actually received treatment. Yet 
this budget--the effect will be a decrease in monies received 
by 33 of the States, including the State of Ohio.
    Can you tell me if there are any circumstances under which 
the administration would reconsider its proposal regarding 
mental health treatment programs and, perhaps, support an 
increase that would be at least commensurate with the increase 
that you are making available for substance abuse treatment?
    Mr. Thompson. First, let me thank you for your comments, 
Congressman Strickland, and I do--you did offer me a lot of 
cases, and I sort of thrive on that. I am a Governor. I like to 
have problems; I like to solve them like you do.
    Mr. Strickland. Can I say one word to you? I was 
hypercritical of HCFA. I have been, people on this committee 
know that, because I have been frustrated in the past that it 
seemed impossible to get any action, and I wanted someone in a 
position of authority to be able to make decisions. You appear 
to be such a person, and that gives me some considerable hope.
    Mr. Thompson. Thank you very much. I can do a much better 
job if I can get some of my assistant Secretaries and Deputies 
confirmed, and we are still running a Department with the few 
young people I brought from Madison and Washington.
    But be that as it may, mental health is a serious problem. 
And I do not know where you are getting your figures, because 
according to the figures I have here, we are going up by 100--
by $100 million and maybe there is some way that we can 
reconfigure.
    Mr. Strickland. A block grant program?
    Mr. Thompson. I believe so. I believe we can reconfigure 
the overall budget was $100 million, maybe we can reconfigure 
some things to do things, because, you know, this is a budget 
that I got--that was pretty much a budget put together before I 
got there. And so I am willing to work with you on it. I do not 
know the exact figure that you are looking at. I know your 
staff is looking at it. I have to talk to my staffs.
    Mr. Strickland. Yes. According to the information I have, 
although there is a substance abuse increase, as I say, I 
applaud you for, there is a significant decrease in the mental 
health portion of that.
    According to the allocation formula that I am familiar 
with, some 33 States will actually receive a decrease in, and 
Ohio will receive a significant decrease in, the funding for 
that program.
    Mr. Thompson. You are right with your figures. You are in 
the mental health straight line, and we put $100 million in the 
drugs for that. Maybe there is some way we can work together 
during the budget negotiations to try and figure out how to do 
it.
    Mr. Strickland. If we could, here again I keep saying----
    Mr. Thompson. I am not locked into these. If there is some 
way that we can adjust the figures and make it more compatible 
with what your constituents and what you want and what dictates 
to with a bipartisan committee, I would be more than happy to.
    Mr. Strickland. Thank you, Mr. Secretary, and thank you, 
Mr. Chairman.
    Mr. Bilirakis. I thank the gentleman.
    Mr. Thompson. Nice meeting you.
    Mr. Bilirakis. I had a request from Mr. Pallone to insert 
these letters into the record, two letters to Mr. Thompson, one 
dated April 6 of this year, and the other dated March 29 of 
this year. And I ask unanimous consent they be made a part of 
the record.
    [The letters are retained in subcommittee files.]
    This hearing is about to be adjourned. Mr. Secretary, there 
always are questions that we submit to you, and I know that you 
do not mind responding to those. I do not know how close we are 
to reforming Medicare and our patients versus HCFA program; but 
obviously, we want to work together; and I think that I can 
speak for the entire committee how very impressed we are with 
your concern, with your wanting to work with us; and we really 
look forward to great things.
    Is it true, you are camping at HCFA for a couple of weeks?
    Mr. Thompson. One week.
    Mr. Bilirakis. One week.
    Mr. Thompson. I am going to set up Monday morning at HCFA 
and run the----
    Mr. Bilirakis. Good for you. That is just great. Well, that 
being the case----
    Mr. Thompson. Come and visit me, Congressman Strickland and 
Congressman Bilirakis.
    Mr. Bilirakis. There is so much of the cost-plus point that 
you raised earlier regarding the contractors that we can help 
you to do your job so much better. Please, do not hesitate to 
submit to us or even wait until we request it, things that we 
can do in order to help the Department function even more 
efficiently. Thank you very much.
    Mr. Thompson. Thank you. You are wonderful.
    Mr. Bilirakis. Thank you, sir.
    [Whereupon, at 1:20 p.m., the subcommittee was adjourned.]
    [Additional material submitted for the record follows:]

    Responses for the Record of Hon. Tommy G. Thompson, Secretary, 
                Department of Health and Human Services

    Question 1. Your staff reported that the HCFA Program Management 
request, $2.351 billion, is higher than any year requested by the 
Clinton-Gore Administration. What do you intend to do with this extra 
money? What is the state of the accounting and information systems at 
HCFA?
    Response: The request for the Centers for Medicare & Medicaid 
Services (CMS's) Program Management funding, $2.35 billion represents a 
4.9 percent increase over the FY 2001 appropriated level. This is 
comparable to the President's Budget overall government-wide increase 
of 4 percent.
    Most of the proposed $109 million increase in CMS's Program 
Management account is targeted for the Medicare contractors who process 
almost 1 billion claims a year. Some of the increase will help CMS 
improve its information technology infrastructure and some of it will 
go to building a uniform accounting system at the Medicare contractors 
and to replace the CMS administrative financial systems. The balance of 
the budget increase is for implementing legislation and covering 
payroll expenses.
    Modernizing and stabilizing the Medicare claims processing systems 
is one of our highest priorities for CMS. These systems are rooted in 
the 1970's, when the claims being processed were a fraction of the 
volume being processed today. They are based on outdated technology 
that is expensive and difficult to maintain. Our ability to keep up 
with the increasingly complex and rapid pace of change in our programs 
depends on updating these payment systems and expanding their 
capabilities.
    Another priority is improving the financial management systems. CMS 
spends hundreds of billions of dollars each year on Medicare benefits, 
yet the Medicare contractors use ad hoc, piecemeal systems to account 
for these funds. The General Accounting Office and the HHS Inspector 
General have both expressed concerns about CMS's current financial 
management system. It is simply inadequate for detecting and collecting 
debt, for retaining a clean audit opinion, and for complying with 
statutory requirements. For these reasons, the President's Budget 
includes funding in FY 2002 to begin building a uniform accounting 
system at the Medicare contractors and to replace CMS's administrative 
financial systems. This is a multi-year commitment, but with billions 
of trust fund dollars at stake, we believe it is worth the investment.
    Question 2. On page 8 of your written testimony, you indicate that 
you would like the Secretary of HHS (as opposed to the Part A provider) 
to contract for and assign fiscal intermediaries to perform claim 
processing. Do you anticipate that this will improve quality and lower 
costs?
    Response: Yes, I do believe it will improve quality and lower 
costs. In order to manage an evolving Medicare operational and business 
environment, and to bring more competition into its contracting fee-
for-service processes, I believe that CMS needs the authority to 
contract for Medicare claims processing and payment functions through 
full and open competition. Specifically, we need the ability to 
contract with any entity qualified to perform specified Medicare claims 
processing and payment functions. We submitted our legislative proposal 
to reform the current contracting environment on June 28, 2001.
    The major benefit of this proposal is that CMS would be able to 
involve the broad expanse of capable business entities such as entities 
with expertise in customer service, claims processing or education B in 
meeting the needs of the evolving Medicare program, providers, and 
beneficiaries.
    In the new Medicare environment, there will need to be more 
alignment between the marketplace, the government's requirements, and 
available funding. CMS needs to increase its ability to leverage the 
forces of competition and our proposal to move to performance-based 
contracting should help ensure that contractors deliver effective 
Medicare services on a best-value basis.
    With regard to lowering costs, in the longer term, contracting 
reform should save money. That is because the consolidation to fewer 
contractors will reduce overhead and provide economies of scale. New 
contracting methods will promote more efficient operations through 
financial incentives for innovation and effectiveness.
    CMS is engaged in a modeling effort to estimate cost and savings 
over the first few years following contracting reform. We have 
extensive experience with the cost of transitions; the more difficult 
part of the equation is working with the factors and assumptions to 
estimate the longer-term savings of consolidation and innovation. How 
will you use the Government Performance and Results Act process to 
generate information needed by your managers to reform and streamline 
their programs? Will the need to accomplish higher goals with fewer 
resources lead to more cooperation with private sector organizations?
    In the short term, contracting reform may cause some increase in 
the cost of program administration. As we transition from the current 
environment to the post-contractor reform environment it will be 
necessary to meet the costs of increased contractor transitions and 
terminations. In addition, it may be necessary to provide incentives in 
the first phases of the new environment that will not produce overall 
administrative savings in the short term.
    Question 3. How will you use the Government Performance and Results 
Act (GPRA) process to generate information needed by your managers to 
reform and streamline their programs? Will the need to accomplish 
higher goals with fewer resources lead to more cooperation with private 
sector organizations?
    Response: CMS's performance goals represent its vast programs and 
responsibilities. Performance planning under the Government Performance 
and Results Act provides CMS the opportunity to learn from approaches 
that work well and those that have been less successful as the Agency 
strives for meaningful improvement.
    Performance measurement results will provide a wealth of 
information about the success of CMS's programs and activities to 
inform all levels of management. It also will identify opportunities 
for improvement and ways to better shape CMS's programs, policies, and 
management choices for short and long-term goals. At CMS, Government 
Performance and Results Act performance measures are included in annual 
evaluations for SES-level managers, which underscores the importance of 
performance measurement in CMS culture.
    Our programs, as reflected in many of our Government Performance 
and Results Act performance measures, entail partnerships with the 
public and private sectors. Since many CMS responsibilities involve 
external partnerships through the Medicare contractors, and many 
States, etc., a major intended outcome of tracking performance is more 
effective and efficient program management. We also know that working 
in partnership leverages resources and increases coordination.
    Question 4. At what time should Congress expect the nomination of 
an FDA Commissioner?
    Response: We are in the midst of the search and selection process. 
We intend to make a selection as soon as possible.
    Question 5. The President's budget calls for $40 million to be 
spent on mandatory cost-of-living and pay-related increases for FDA 
employees. Such pay increases were never proposed during the Clinton 
Administration, so they were paid for by decreased funding elsewhere 
within FDA. Why did the President feel it was important to include FDA 
pay-related increases in his budget?
    Response: You are correct that in some recent years, FDA has 
reduced the amount of work it accomplished in some areas to fund pay 
raises and other inflationary costs. The President's budget reflects 
the importance of increasing, not decreasing, the front-line FDA staff 
who work to ensure the safety of our foods and medical products. For 
example, last year, FDA was able to meet only about half the statutory 
requirements for inspecting drug and device facilities. The request for 
$40 million for pay raises ensures that FDA can maintain inspection 
rates and product approval time frames at the same time it expands 
efforts in specific areas, such as mad cow disease, oversight of 
imports, food safety, patient safety, and research subject protection.
    Question 6. As Secretary of HHS. You are required to rule on the 
safety and cost savings of reimporting prescription drugs. What are 
your initial thoughts on that issue and when should Congress expect a 
final decision?
    Response: My decision on this matter was announced in a letter to 
Senator Jeffords on July 9, 2001. After a careful review of the factors 
that affect the safety of imported drugs and the expected savings, I 
concluded that the determinations required under the law could not be 
made and that I therefore could not implement the program. I do not 
believe that we should sacrifice public safety for uncertain and 
speculative cost savings.
    Question 7. How will the $15 million funding increase for Mad Cow 
Disease prevention proposed in the budget better enable FDA to ensure 
the disease never makes its way into America?
    Response: Bovine Spongiform Encephalopathy (BSE) belongs to a group 
of progressive degenerative neurological diseases known as 
Transmissible Spongiform Encephalopathies (TSE), which are always 
fatal. To prevent the spread of BSE through certain animal feed 
products, in August 1997, FDA published a regulation that prohibits the 
use of most mammalian protein in the manufacture of animal feeds for 
ruminants (Title 21, Code of Federal Regulations (CFR) Part 589). With 
the strong support of renders, cattle owners feed manufacturers, and 
feed lot owners, FDA launched a compliance and education program, 
including a rigorous inspection program to implement the regulation.
    In addition, in April 2001, FDA implemented its TSE Action Plan, a 
comprehensive approach to addressing FDA's responsibility in this 
important public health issue. This plan will protect the public health 
by:

--strengthening our efforts to keep BSE out of the American cattle herd 
        and to keep it from amplifying in the herd were it ever to be 
        found in American cattle;
--strengthening our vigilance to keep potentially TSE-infected foods 
        and other FDA-regulated products from Americans; and
--enhancing the research needed to better understand TSEs and to 
        develop needed diagnostic tools, therapies, and preventive 
        measures for humans and animals.
    The proposed FY 2002 budget, which includes an increase of $15.0 
million for BSE activities, is a down payment on better enabling FDA to 
help industry achieve compliance with the 1997 feed rule and will 
assist in the implementation of the FDA TSE Action Plan.
    The specific activities proposed for FY 2002 that would be 
partially funded by this $15.0 million that implement the 1997 feed 
rule and the TSE Action Plan are as follows:

Foods Program, $1.1 million:
1. expand work efforts to identify food and cosmetic products 
        containing brain, spinal cord, and other specific risk 
        materials (SRMs); the origin of the animal; and country of 
        origin;
2. research the risk factors and mechanism for chronic wasting disease 
        (CWD), a TSE that affects elk and deer in several western US 
        states; and
3. participate in international BSE meetings to help ensure safety of 
        the U.S. food supply by providing up-to-date information on 
        this emerging public health issue.

Biologics, $0.5 million:
4. help address the potential BSE threat to the safety of biological 
        products. Two biological product areas affected include the 
        safety of the blood supply and the safety of vaccines derived 
        from bovine-source material.

Animal Drugs and Feeds $13.1 million ($2.2 million Center, $10.9 
        million Field):
5. conduct targeted BSE inspections of all known renderers and licensed 
        and non-FDA licensed feed mills handling prohibited material, 
        such as meat and bone meal, on a yearly basis, and conduct 
        reinspections of those with compliance deficiencies, taking 
        appropriate enforcement actions for repeated or egregious 
        violations;
6. leverage with State agencies by funding approximately 4,000 contract 
        inspections of feed mills and renderers, and conduct 
        compliance, follow-up, and audit inspections to state contracts
7. review and evaluate field inspection data and take enforcement 
        action when necessary;
8. develop a domestic sampling plan, collecting and analyzing 600 
        domestic feed, and feed component samples for BSE related 
        contaminants. In addition, the Animal Drugs and Feeds Program 
        will increase the number of import samples by 600. This 
        sampling will help ensure that imported products are properly 
        declared on their import manifests;
9. provide intensive line entry and label review, when appropriate, of 
        an anticipated 175,000 import line entries for use in domestic 
        commerce for the Animal Drugs and Feeds Program by expanding 
        import staff by 17 FTE;
10. conduct additional training for Federal and State inspectors on the 
        BSE feed regulation, update them on the current European Union 
        situation, Animal and Plant Health Inspection Service (APHIS) 
        authority and approach, and what to look for and how and when 
        to sample;
11. modernize the existing information technology infrastructure to 
        facilitate electronic inspection reporting and information 
        collection and distribution; and
12. educate industry and the general public on BSE through public 
        meetings, publications, and FDA's website.

Other Activities, $0.3 million:
13. provide advice and counsel on legal matters, render opinions, and 
        support rulemaking proceedings, legislative matters, policy 
        deliberations, and domestic and international negotiations; and
14. provide litigation support for enforcement, defensive and third-
        party matters.
    Question 8. The President proposes to increase the FDA's budget by 
nearly 10%, which is more than nearly every budget proposed by 
President Clinton. Also, the 10% increase represents the second highest 
discretionary increase within HHS, Why did you ensure that the FDA 
would receive this amount of funding?
    Response: The relative size of these increases reflects the 
importance of a strong FDA. There are many public and statutory 
expectations that FDA cannot meet now. FDA's responsibilities are 
broad, and the FY 2002 Budget proposes resources to match. We need to 
improve oversight over all imports; improve the use of medical products 
to reduce adverse events; make sure food is safe and protect against 
mad cow disease; and make sure human research subjects are not 
endangered.
    Question 9. The budget allocates $10 million to protect human 
subjects in clinical trials. How will this impact the number of 
clinical trial-associated inspections?
    Response: FDA, whose product reviews depend on the validity of 
clinical trial data, monitors the entire system of safeguards for all 
clinical trial participants. Currently, the Agency conducts about 1,200 
trial-associated inspections per year, with approximately 1,100 
domestic and foreign. These inspections may involve extensive 
interviews with sponsors, monitors, investigators, site staff, and IRB 
administrators, and examination of their records, procedures, and 
responsiveness to participants' concerns.
    With the requested FY 2002 $10 million increase, the number of 
annual inspections will increase by more than 20 percent with an 
emphasis on high-risk trials, such as those enrolling vulnerable 
populations such as the mentally impaired and children. The increase 
will also enable FDA to review and provide an initial follow-up on 
virtually all complaints concerning clinical trials within 30 days of 
receipt.
    FDA views the protection of human subjects in product studies as 
highly important for both the health and safety of the study 
participants and for the integrity of the drug development process.
    Question 10. As you are aware, under the previous Administration 
the FDA approved the abortion pill regimen, RU 486. Has there been any 
decision to examine the FDA's approval process, and does the 
Department's budget reflect this? Do you feel any money needs to be 
used to explore the FDA's drug approval process?
    Response: While RU 486 is a unique and controversial drug, there is 
no evidence that the drug approval process was compromised in any way. 
The same high standards of safety and efficacy were applied to RU 486 
as with any other drug product. We see no evidence of problems with 
FDA's drug approval process that merit investigation.
    Question 11. Has any money been budgeted to educate ob/gyns and 
other medical and health care professionals on the potential dangers 
and risks of RU-486? Do you think the Department should spend time and 
resources to educate doctors and clinics and abortion providers about 
the very real dangers involved with RU 486?
    Response: Although there is no specific money budgeted, in 
approving mifepristone (RU-486), FDA did put in place a detailed risk 
management plan to be carried out by the drug manufacturer to help 
ensure that the drug would be used only by qualified physicians and 
that there would be widely disseminated information explaining the 
risks and benefits of the drug. An important component of this program 
is the education of both physicians and patients about the safe and 
effective use of this product. FDA determined that a Medication Guide, 
written information for patients explaining important safety 
information and instructions for use, was necessary for women to be 
able to effectively and safely use mifepristone. The Medication Guide 
is important for women to be fully informed about how mifepristone 
works and about its risks, as well as the need for follow-up visits 
with their health care provider. In addition, patients are asked to 
sign an agreement that explains what mifepristone is used for and how 
it is administered to patients. Also, the company agreed to provide 
mifepristone only to physicians with particular qualifications who 
signed agreements that they understood certain information about the 
drug and that they would provide the Medication Guide to each patient. 
The current patient and physician information is approved by FDA. These 
materials, combined with the other components of the risk management 
program, provide the appropriate information about the potential risks 
and benefits of mifepristone. FDA currently maintains a web page on its 
website that contains all of the mifepristone information. The address 
is www.fda.gov/cder/drug/infopage/mifepristone.
    Under the terms of the FDA approval, mifepristone is distributed as 
follows:
    MifeprexJ must be provided by or under the supervision of a 
physician who meets the following qualifications:

--Ability to assess the duration of pregnancy accurately.
--Ability to diagnose ectopic pregnancies.
--Ability to provide surgical intervention in cases of incomplete 
        abortion or severe bleeding, or have made plans to provide such 
        care through other qualified physicians, and are able to assure 
        patient access to medical facilities equipped to provide blood 
        transfusions and resuscitation, if necessary.
--Has read and understood the prescribing information of MifeprexJ.
--Must provide each patient with a Medication Guide and must fully 
        explain the procedure to each patient, provide her with a copy 
        of the Medication Guide and Patient Agreement, give her an 
        opportunity to read and discuss both the Medication Guide and 
        the Patient Agreement, obtain her signature on the Patient 
        Agreement and must sign it as well.
--Must notify the sponsor or its designate in writing as discussed in 
        the Package Insert under the heading DOSAGE AND ADMINISTRATION 
        in the event of an ongoing pregnancy, which is not terminated 
        subsequent to the conclusion of the treatment procedure.
--Must report any hospitalization, transfusion or other serious events 
        to the sponsor or its designate.
--Must record the MifeprexJ package serial number in each patient's 
        record.
    Question 12. Part of the problem of getting adequate health care in 
undeserved areas is the lack of health care providers. Do you agree 
that we should make sure that there are no barriers to faith-based 
charities serving as Community Health Centers?
    Response: We agree that faith-based charities should be considered 
for funding as community health centers along with other public and 
private nonprofit entities that meet the statutory requirements of 
section 330 related to the provision of services, governance, 
management and finance.
    Question 13. How will the proposed $3 million HHS Center for Faith-
Based Community Initiatives work with the Community Health Center 
program?
    Response: The HHS Center for Faith-Based and Community Initiatives 
will support the ongoing work of the Community Health Centers (CHC) 
Program. The CHC Program is an example of how HHS already works with 
faith-based organizations to improve access to quality care. The two 
programs will work together to ensure that faith-based charities are 
considered for funding as community health centers along with other 
public and private nonprofit entities that meet the statutory 
requirements of section 330 related to the provision of services, 
governance, management and finance. Several faith-based organizations 
currently receive CHC funding.
    Question 14. This year one of the most critical public health 
reauthorization before our Committee is the Community Health Centers 
program. While there are some changes needed to strengthen the program, 
we are interested in your views concerning desirable changes. Are there 
other issues concerning the reauthorization of the health centers 
program that you would like to share with the Committee?
    Response: Reauthorization and expansion of the Community Health 
Centers programs is a priority for the Administration. The President's 
fiscal year 2002 budget requests an increase in funding of $124 million 
for the health centers program. Our goal is support 1200 new or 
expanded sites over five years and provide quality health care services 
to an additional one million individuals in fiscal year 2002. The long-
term goal is the double of the number of people served by community 
health centers. With these goals in mind, the Department will carefully 
review any proposed changes to the program
    Question 15. Last year, one of the top priorities of this Committee 
in the Beneficiary Improvement and Protection Act was the establishment 
of a new Medicaid prospective payment system for health centers. The 
Committee established the PPS to stabilize the health center safety net 
by making sure that state Medicaid programs pay their fair share for 
the care of health center Medicaid patients. In doing so, the Committee 
is ensuring that the Public Health Service grants we authorize for care 
of the uninsured are utilized fully for that purpose and are not used 
to subsidize Medicaid underpayments. Full implementation of the PPS is 
critically important to this Committee. Can you please tell us what the 
Department and HCFA are doing to implement the PPS and how states are 
responding to the new system?
    Response: To date, all fifty States and the District of Columbia 
have submitted the required State Plan Amendments to implement the 
changes in their payment rules for federally qualified health centers. 
CMS has approved most of these State Plan Amendments and have been 
working closely with the States whose amendments were not approvable, 
as submitted, to get the amendments into approvable form.
    This, however, is just the first step to full implementation. 
States are reconciling cost reports and gathering other pertinent 
payment data for fiscal years 1999 and 2000 in order to accurately the 
calculate the baseline payment rate for the PPS system. While that 
process is taking place, States are reimbursing centers/clinics based 
on the payment methodology in place on December 31, 2000. Once the 
baseline rate for the PPS system has been determined States will make 
clinics whole for any shortfall between the interim payment rate and 
the new PPS rate back to January 1, 2001.
    Question 16. Another important public health program is the 
National Health Service Corps. This program places health professionals 
in undeserved locations across the country by offering to pay for a 
portion of their medical education. The program works very closely with 
the health centers program and others to provide care to the most 
vulnerable in our country. The authorization for the NHSC expired last 
year. In his budget submission, the President has stated that he thinks 
the NHSC should be reformed to better target needy communities. What 
specific ways do you think the NHSC should be reformed?
    Response: We are examining the ratio of scholarships to loan 
repayments awarded as well as other set asides to ensure maximum 
flexibility to better meet community requests for NHSC providers. To 
more accurately define shortage areas and target placements, the 
Administration will seek to amend the shortage area definition to 
reflect other non-physician providers practicing in communities. We are 
also planning to enhance coordination with immigration programs such as 
the J-1 visa program.
    Question 17. In his budget, President Bush proposes to create a 
$400 million ``Healthy Communities Innovation Fund'' will work? How 
will it fit with other programs this Committee oversees?
    Response: The President's fiscal year 2002 budget proposes $400 
million annually for The Healthy Communities Innovation Fund for local 
demonstration and pilot programs aimed at addressing local health 
problems. Activities will target health risks, increasing access and 
improving health care quality. The Healthy Communities Innovation Fund 
will improve coordination and increase innovation among certain 
activities of the Centers for Disease Control and Prevention (CDC), the 
Health Resources and Services Administration (HRSA) and the Centers for 
Medicare and Medicaid Services (CMS, formerly the Health Care Financing 
Administration).
    HRSA programs included in the Fund ($221 million in FY 2002) are: 
Healthy Start, Maternal and Child Health National and Regional Special 
Projects, Community Integrated Service Systems, and Community/Migrant 
Health Centers-Integrated Service Delivery. CDC programs included in 
the Fund ($183 million in FY 2002) are: Cardiovascular Disease 
Prevention, Diabetes Prevention and Control, Comprehensive Cancer 
Prevention and Control, Tobacco Use-Reduction State, Local and 
Community Awards, and Racial and Ethnic Approaches to Community Health 
(REACH). The CMS included is the Fund ($10 million in FY 2002) is the 
Community Innovation Fund.
    Question 18. Your written testimony on page 3 indicates that the 
budget keeps the President's commitment to double NIH's FY 1998 funding 
level by FY 2003, with a request of $2.75 billion, which will be the 
largest dollar increase ever for NIH. How will NIH set priorities for 
its research? Why are thee such a large research-dollar-per-mortality 
disparity among diseases? Should we expect those ratios to be more 
comparable with one another in the future?
    Response: How will NIH set priorities for its research? NIH will 
set the priorities for the budget increase according to long 
established policies and practices used each year to allocate the 
agencies budget. The allocation of NIH funds during a given year is the 
culmination of a lengthy, comprehensive, and ongoing process. Many 
factors are considered in the allocation of funds from the NIH budget 
public health needs, a commitment to support work of the highest 
scientific caliber, a responsibility to seize the scientific 
opportunities that offer the best prospects for new knowledge and 
better health, a need to maintain a diverse portfolio that supports 
work in many scientific disciplines and on a wide range of diseases, 
and an obligation to insure a strong scientific infrastructure, with a 
high quality workforce and excellent research facilities. The 
allocation of the NIH budget reflects the use of the best available 
information and judgments regarding balancing the criteria for budget 
decisions.
    To evaluate these many criteria for making decisions, the NIH seeks 
information and advice from many individuals and groups, including the 
extramural scientific community, patient advocacy groups, Congress, and 
the Administration. For example, each Institute and Center (IC) 
convenes meetings of national advisory councils or boards, with members 
from the public, medical, and scientific communities, to review a broad 
range of IC policies, and many conferences and workshops are organized 
each year to gather opinions on specific scientific, health, and 
management issues. The IC's efforts to seek public input are augmented 
by those carried out by the Director, NIH. The views of the scientific 
community and the public are gathered through meetings of the Advisory 
Committee to the Director (ACD), NIH, the NIH Council of Public 
Representatives (COPR), and other meetings and workshops. In addition, 
the NIH holds an annual Budget Retreat to help develop its priorities 
for the President's budget. The meeting involved the NIH leadership 
along with external advisors, from the ACD and from the COPR. Efforts 
to encourage and coordinate public participation in NIH programs have 
been undertaken through the public liaison offices that have been 
established in the Office of the Director and in each IC.
    To help in explaining the NIH process for setting priorities, NIH 
prepared a brochure entitled, ``A Setting Research Priorities at the 
National Institutes of Health.'' In addition, the FY 1998 DHHS 
Appropriations Act required the Secretary to contract with the 
Institute of Medicine (IOM) to conduct a comprehensive study of the 
policies and processes used by the NIH to determine funding allocations 
for biomedical research http://www.nih.gov/news/ResPriority/
priority.htm. The IOM Committee released its report, Scientific 
Opportunities and Public Needs: Improving Priority Setting at the 
National Institutes of Health on July 8, 1998. http://www.nap.edu/
books/030906130X/html/index.html The IOM report made several 
recommendations to enhance the NIH priority setting process and it 
endorsed the criteria used by the NIH to set priorities.
    Why is there such a large research-dollar-per-mortality disparity 
among diseases? First, I want to assure you that information on burden 
of illness (BOI) is widely and routinely used to inform the NIH 
priority setting process. I would like to make three points in response 
to the implicit suggestion that funds should be allocated in proportion 
to the number of persons who die from the disease. First, the number of 
people who die from a disease is an incomplete and imperfect indicator 
of public health need or burden associated with a specific disease or 
condition. Second, coding or classifying research expenditures to a 
particular disease or condition is an inexact art, which can only be 
done approximately, at best. Third, the allocation of research 
resources is influenced by scientific opportunities as well as public 
health need.
    It is arbitrary and misleading to select one measure, whether 
deaths, the number of cases, or dollars spent on treatment, to rank 
diseases in terms of burden. For example, funding according to the 
number of individuals affected by each disease would emphasize common 
diseases, but might have a limited effect on overall health and 
survival. By that criteria, much research would be done on the common 
cold and allergies, but little would be allocated to childhood cancers. 
More inclusively, the burden of illness includes the degree to which a 
disease cuts short a normal, productive, comfortable lifetime the years 
lost to premature death; the pain, suffering, and reduced functioning 
associated with a disease; and the number of people who have a 
particular disease. The economic and social costs associated with a 
disease are an important additional consideration, but only partially 
reflect the personal costs of mortality and morbidity. The extent to 
which the threat of a disease is expected to increase or spread over 
time must also be included as an element of burden (e.g., increasing 
threats may result from a recently detected infectious disease, a 
manifestation of an environmental hazard, aging of the population, 
e.g., Alzheimer's disease).
    Unfortunately, there is no simple formula or index that summarizes 
all the dimensions of burden into a single number. The simple counting 
of deaths is clearly an incomplete proxy for burden. Without 
consideration of age at death it fails to capture the potential life 
years lost. It does not capture the economic and social costs 
associated with morbidity and if fails to reflect trends in the 
relative threat of disease over time.
    Allocating burden to a specific disease is also difficult. Many 
people suffer from more than one condition, which may or may not be 
inter-related. One disease or condition such as diabetes or HIV may 
lead to a complication or vulnerability to another condition. For 
example, a person with diabetes who dies secondary to diabetic kidney 
failure may appear as a death due to kidney failure without mention of 
diabetes. Available statistics on disease-specific burden are based on 
somewhat arbitrary decision rules and do not always recognize the 
contribution to burden of comorbidities and underlying causes. The 
allocation of burden may be further biased when certain conditions are 
systematically misdiagnosed or are under reported because of social 
stigma.
    Similarly, assignment of research funding to a particular disease 
category may be somewhat arbitrary. It is extremely difficult to assign 
the large investments in basic research, research instruments and 
equipment, and training investigators to any one disease. Also, from 
long experience we know that research aimed at one target often hits 
others as well. For example, cancer research, i.e., research on 
retroviruses, laid an important foundation for relatively quick 
progress in the development of drugs for the treatment of HIV/AIDS.
    Finally, even if consistent and comprehensive estimates of the 
relative burdens of specific diseases were available, decisions 
regarding research priorities would also have to include the importance 
of scientific opportunities. A recent research advance often creates 
greater scientific opportunities for research and development in one 
disease area than in others. Conversely, a lack of knowledge regarding 
underlying pathophysiological processes can inhibit the development and 
evaluation of diagnostic and therapeutic technologies for other 
conditions, regardless of their social burden. Increased spending on a 
disease is wasteful when there are neither promising pathways to follow 
nor an adequate number of qualified investigators to fund.
    Should we expect those ratios to be more comparable in the future? 
Because trends in disease-specific burden and the distribution of 
scientific opportunities do not change rapidly, it is not necessary or 
desirable to radically readjust the allocation of program funding from 
year to year. An across the board increase in funding for each program 
is a reasonable starting point for allocating increases in annual 
appropriations. The program funding increases are modified up or down 
to adjust for any perceived changes in disease-specific burden or to 
capitalize on newly generated scientific opportunities. But those year 
to year changes will generally be slight.
    It is important to recognize that much of the planning of NIH-
sponsored research is centered on broad scientific themes (such as 
genome projects, development of instrumentation, training in clinical 
research, or developments in basic science), without reference to the 
many specific diseases that might be addressed through these efforts. 
The success of individual applicants for NIH grants, the nature of 
their interest, and the specific knowledge generated by the non-
disease-related projects, will gradually uncover new opportunities and 
will influence subsequent disease-oriented planning and disease-
specific spending patterns.
    The substantial base of research funds already committed to grant 
recipients and the need to provide stable support for scientific work 
restrict the degree to which funds can be directed. Scientific work is 
not simply a commodity that can be purchased; the effective shifting of 
priorities requires new ideas and new personnel as well as budgetary 
realignments. To augment research on specific topics in a more 
responsible fashion, it is necessary to show that under-explored 
opportunities exist and that they can attract investigators either 
newly trained scientists or scientists from other fields who will then 
propose meritorious projects.
    In conclusion, the number of deaths associated with a disease is an 
imperfect guide to research resource allocation. It is not an adequate 
standard by which to evaluate the allocation of NIH funding. The NIH is 
responsible for conducting research on the broad array of health 
problems affecting people in this country, but it cannot simply 
allocate funds to research on one disease or another according to a set 
formula.
    Question 19. Many members of this Committee support an increase in 
funding to NIH for cures to devastating diseases. However, the 
Committee wants to ensure that these large increases will be 
accompanied with appropriate oversight. What kind of oversight will HHS 
put in place to monitor the NIH increases?
    Response: The recent increases in the NIH budget have enabled us to 
better capture scientific opportunities, translate research from bench 
to bedside, complete the Human Genome Project in less time than 
anticipated, and engender excitement about research among the young 
investigators. NIH recognizes that in this optimal budget climate, it 
is important to maintain the highest quality of science by upholding 
the rigor of peer review. We continue to seek advice and input from the 
Institutes and Centers (IC's) advisory councils on funding decisions, 
priority setting and other portfolio management issues. We are keenly 
aware that the increased budgets must be accompanied by enhanced 
oversight to ensure proper stewardship of public funds. For example, in 
the area of clinical trials, the NIH supports more than five thousand 
clinical trials involving several million-research participants. With 
the recent increases in the NIH budget, these numbers have gone up. 
However, even with the increased number of clinical trials, we must 
ensure that the overall system for protection of research subjects is 
intact. Moreover, the NIH has recently taken steps to strengthen the 
oversight of clinical trials. Since 1979, NIH has had a long-standing 
policy of requiring data and safety monitoring for clinical trials. 
Monitoring is commensurate with the level of risk, the size and 
complexity of the trial. For most phase III trials, a data and safety 
monitoring board is required.
New steps taken include:
--Beginning with the October 1, 2000 receipt date, applicants must 
        submit a monitoring plan for phase I or II trials. The plan is 
        subject to the review and approval of the funding Institute and 
        Center, and awards are contingent on their approval.
--Principal investigators must report certain types of FDA 
        communication to the NIH. These include warning notices and 
        letters, consent agreement and clinical hold letters. 
        Investigators must report to funding IC within 72 hours of 
        receipt. Failure to comply may result in corrective and/or 
        enforcement action.
--Required education on the protection of human subjects--Beginning Oct 
        1, 2000, the NIH requires investigators, i.e., key personnel, 
        who are responsible for the design or conduct of research 
        involving human subjects to be educated on the protection of 
        human subjects. To facilitate implementation, the NIH made 
        available a number of ready-to-use curricula, including two 
        online modules developed by the NIH. Investigators have some 
        flexibility to determine what is an appropriate level of 
        education. Documentation of education is required before funds 
        are awarded.
    Question 20. The NIH is in the process of organizing the new 
National Institute of Biomedical Imaging and Bioengineering (NIBIB). 
The NIH reported in a 1998 letter to Chairman Bilirakis and in 
testimony before this Subcommittee just last September, that it 
invested $217 million in basic bioimaging research in FY 1997 and 
indicated that spending in this field had increased since then. Earlier 
this year, the NIH leadership directed each individual Institute to 
identify existing grants in its portfolio that are primarily 
fundamental imaging research for transfer to NIBIB. Despite the 
previous NIH claims about the magnitude of its investment in basic 
imaging, it looks like the amount of grants to be transferred will fall 
short of the amount reported earlier.
    Mr. Secretary, either the NIH exaggerated its investment in imaging 
then or the NIH is now attempting to thwart the will of Congress in 
creating the new Institute. In either case, it appears that NIBIB will 
be severely underfunded. It also appears that the NIH is delaying 
release of the amount to be transferred to NIBIB to ensure that the 
Appropriations Committees will not have complete and accurate 
information to consider in setting a funding level for NIBIB.
    Mr. Secretary, can you look into this matter and report back to 
this Subcommittee on the relationship between the previous NIH 
testimony and the current process of identifying grants for transfer to 
NIBIB?
    Response: We are excited about the new opportunities that the new 
National Institute of Biomedical Imaging and Bioengineering (NIBIB) 
will create for support of fundamental research that applies principles 
of engineering, mathematics, computer science and the physical sciences 
to biological processes, disorders and diseases.
    The President's budget request for NIBIB for Fiscal Year 2002 is 
$40 million. These funds will be supplemented through a transfer of 
appropriate grants to NIBIB from other NIH Institutes and Centers 
(ICs). The transfer of grants to NIBIB is intended to strengthen and 
complement, not subtract from or substitute for, research programs in 
the other NIH ICs. NIBIB will support undifferentiated research not 
related on a one-to-one basis to the mission of another IC and act as a 
unique focal point for multidisciplinary research planning and 
strategic development. The other NIH ICs will continue those studies 
that are a natural fit within their current organizations--those 
focused on specific diseases or conditions. The ICs and key 
constituencies in the imaging and engineering communities have endorsed 
this strategy for building the new Institute and continuing to support 
these studies across NIH.
    The process for identifying the appropriate grants for transfer is 
underway. After we review the entire slate of grant transfer 
candidates, NIH will submit the transfer information to the House and 
Senate Appropriations Committees for final approval and incorporation 
into the FY 2002 budget for NIBIB.
    Question 21. Can we have your assurance that NIBIB will have the 
resources necessary to fulfill its extremely broad and important 
mission? This institute has the potential to produce dramatic 
breakthroughs in the detection, diagnosis, and treatment of a wide 
range of diseases, but that potential will not be realized if NIBIB is 
starved.
    Response: We believe that the Fiscal Year 2002 budget request of 
$40 million, plus the appropriate grants transferred from the other 
ICs, will establish an adequate base upon which to build future year 
funding requests for the NIBIB and will permit careful stewardship and 
oversight of research programs in the first year of this newest of the 
NIH ICs. As rich opportunities emerge, we will adjust our future budget 
requests accordingly
    Question 22. In light of recent studies proclaiming the Connecticut 
Baby AIDS law a success and the remarkable data from the New York Baby 
AIDS law, will you direct the CDC to re-evaluate the agency's 
opposition to routine diagnosis of women and newborns of HIV?
    Response: CDC does not oppose the routine diagnosis of women and 
newborns for HIV. Focusing testing on newborns, however, offers much 
less chance of successful interventions to prevent perinatal HIV 
transmission than do efforts to encourage pregnant women to seek 
testing and providers to increase prenatal voluntary counseling and 
testing and antiretroviral interventions during pregnancy. CDC 
recommends that voluntary HIV testing should be a routine part of 
prenatal care. Based on data from all States, including New York and 
Connecticut, the U.S. Public Health Service Recommendations for HIV 
Counseling and Voluntary Testing for Pregnant Women are being revised. 
The revised guidelines should be published in late summer and will 
strengthen the recommendations that all pregnant women be tested for 
HIV, emphasize HIV testing as a routine part of prenatal care, 
recommend that providers explore and address reasons for refusal of 
testing, and place more emphasis on HIV testing and treatment at the 
time of delivery for women who have not received prenatal testing and 
chemoprophylaxis. The New York law's major effect appears to be 
associated with increased efforts by providers to offer prenatal 
voluntary counseling and testing. Increased prenatal voluntary 
counseling and testing offers the best chance of maximally reducing the 
risk of perinatal transmission because it increases the opportunity to 
lower maternal viral load to nondetectable levels near delivery and 
provide chemoprophylactic therapy to the baby during labor, delivery, 
and afterwards. States other than New York have excellent prenatal 
voluntary counseling and testing rates in the absence of mandatory HIV 
testing in newborns. For example, data on HIV testing in 1998 indicated 
that in Arkansas 85 percent of pregnant women were tested during 
pregnancy or at delivery. In Colorado and Florida, these numbers were 
79 percent and 84 percent, respectively.
    Question 23. The Bush Administration and John Walters, the Director 
of the White House Office of National Drug Control Policy, have set as 
a priority stigmatizing drug abuse. Yet the CDC is claiming that the 
stigma associated with drug abuse and other high-risk behaviors is, in 
large part, responsible for HIV infection. Recently, the CDC held a 
national teleconference to address how to remove such stigma. The CDC 
admits no studies have been conducted to substantiate claims about a 
link between HIV infection and stigma. What are your views on this 
issue and do you think it is appropriate for the CDC to invest limited 
resources in a campaign to remove the stigma associated with drug abuse 
and other risk behaviors?
    Response: Between 800,000 and 900,000 persons in the United States 
are estimated to be living with HIV or AIDS. Many of these people face 
stigma and active discrimination because of their health status or 
related reasons. Stigma finds its roots in fear and misunderstanding 
about how HIV is transmitted and in underlying attitudes about the 
populations most heavily affected by this epidemic.
    CDC and other organizations have found that HIV prevention efforts 
are significantly hindered by biases and stereotypesBin fact, some 
communities are reluctant to even discuss risk behavior and 
transmission, resulting in community members not being able to receive 
appropriate information and prevention services to prevent HIV 
infection and transmission.
    Focus on this area also was recommended by the Institute of 
Medicine (IOM) in its September 2000 report No Time to Lose: Getting 
More from HIV Prevention. In this document the IOM Committee described 
stigmatization of persons with HIV as a pernicious barrier to 
preventing new infections, and specifically said that it believes that 
the protection of human rights, privacy, and equity continues to be a 
significant concern, and that concurrent efforts at the federal, state, 
and local level to remove or at least lessen the impact of stigma and 
discrimination are necessary.
    CDC's interest in this important prevention issue is not to support 
illegal drug injection or specific sexual behaviors, but rather to 
eliminate stigma and discrimination as a barrier to reducing new HIV 
infections and accessing prevention services and care. As the nation's 
prevention agency, CDC must recognize and address barriers to disease 
prevention and health promotion in order to fulfill our mission of 
protecting the public health.
    In June 2000, CDC convened a group of experts from across the 
country to discuss the role stigma plays as a barrier to HIV 
prevention. Several action steps were recommended, and CDC has been 
working to implement many of them. Although there are numerous articles 
describing research related to stigma and health effects, one area of 
concern was the lack of specific data regarding HIV-related stigma, 
particularly population-based data on which to base decisions regarding 
communications and programs. As a first step in acquiring such data, 
CDC conducted a study that was reported in the December 2000 issue of 
the Morbidity and Mortality Weekly Report, which found that of the 
6,000 American adults surveyed, 1 in 5 believed that people who got 
AIDS through sex or drugs got what they deserved. This research 
indicates that addressing this important subject is critical to our 
efforts to decrease the number of persons becoming infected and to 
ensure that those infected receive appropriate care and prevention 
services.
    Question 24. The Centers for Disease Control and Prevention is the 
lead agency in the federal government to help prevent disease. Yet many 
CDC programs focus on methods to reduce the consequences of risky 
behavioral practices instead of preventing those behaviors in the first 
place. In fact, in respect to HIV/AIDS and sexually transmitted disease 
prevention, the CDC actively promotes condoms as the best protection 
for preventing infection. What should be the response of the CDC should 
medical data reveal that condoms are far less efficacious than was 
previously thought?
    Response: When important new scientific information becomes 
available, CDC updates its policies and recommendations to reflect this 
new information. For example, the 1995 recommendations for HIV 
counseling and voluntary testing of pregnant women are being revised to 
reflect lessons learned since the first guidelines were published.
    Question 25. What criteria does CDC use in selecting members of its 
HPPC? Does the CDC consider the views of members as part of a selection 
process for membership on an HPPC?
    Response: CDC requests clarification from the committee as to what 
the acronym ``HPPC'' represents.
    Question 26. Last year, Congress specifically directed federal HIV/
AIDS; care programs to include HIV data funding formulas to ensure that 
racial and demographic disparities noted by the General Accounting 
Office are eliminated. The Committee is concerned that states with 
unreliable HIV tracking systems using on code reporting will continue 
to shortchange minority communities. Can you assure us that by allowing 
states to experiment with coded surveillance systems--which even the 
CDC has fund to be faulty--that data will be properly and fully 
reported so that these disparities will indeed be eliminated?
    Response: CDC has adopted minimum performance standards for HIV 
reporting that all States must meet over time. These standards were 
published in the recent Guidelines for National Human Immunodeficiency 
Virus Case Surveillance, Including Monitoring for Human 
Immunodeficiency Virus and Acquired Immunodeficiency Syndrome. The 
performance standards include using methods that provide complete and 
timely data, result in accurate case counts, and ensure that 
demographic and risk information is complete. In addition, States must 
collect the recommended standard data in a reliable and valid manner, 
allow matching to other public health databases (e.g., death 
registries) to benefit specific public health goals, and allow 
identification and follow-up of certain individual cases, such as 
perinatally exposed infants, to identify infection status. To date, of 
those States that have implemented HIV reporting using non-name-based 
methods, none has completed CDC evaluations addressing all performance 
standards. However, Massachusetts and Washington have had time to 
establish routine surveillance methods for collecting HIV data. An 
evaluation of how well the code identifies one and only one person has 
been completed for these states. Both report that the current system 
meets this aspect of the recommended performance standards. Other 
performance criteria have not yet been evaluated in these states. One 
other State, which previously published an initial evaluation, is 
currently conducting CDC-recommended modifications to their evaluation 
methods. CDC will continue to work with States to complete these 
evaluations, strengthen their systems, and promote comparability of 
data throughout the United States.
    CDC collaborates with all 50 States, the District of Columbia, US 
dependencies and possessions, and independent nations in free 
association with the US to report AIDS cases using a uniform case 
definition and report form. Basic elements collected on all cases 
include information about the AIDS diagnosis, demographic 
characteristics, exposure and death information. As of January 1, 2000, 
CDC and the Counsel of State and Territorial Epidemiologists expanded 
the surveillance case definition to include the reporting of HIV 
infection and recommended that all areas conduct HIV case surveillance 
as an extension of current AIDS case surveillance activities. As of 
April 2001, 33 states, the Virgin Islands, and Guam have implemented 
HIV case surveillance using the same confidential system for namebased 
case reporting for both HIV infection and AIDS; two additional states 
conduct pediatric surveillance only using the same method. Seven states 
are currently using a coded identifier rather than patient name to 
report HIV cases and three states are using names to initiate HIV 
reports which are later converted to codes after public health 
followup. Published guidelines for HIV surveillance include recommended 
best public health practices and minimum performance standards for 
integrated surveillance systems. Surveillance programs are currently 
conducting or planning evaluation studies to measure the accuracy, 
quality and timeliness of their HIV/AIDS surveillance systems. 
Additional funding and technical assistance for evaluations of 
integrated HIV/AIDS surveillance using standardized CDC protocols will 
be announced in the fall of 2001.
    In regard to the CARE Act, its goals and objectives focus on the 
extent to which programs serve lowincome, medically underserved 
populations and remove barriers and enhance access to care for these 
vulnerable populations. HRSA is in the process of establishing an 
interagency agreement with CDC in order to jointly pursue a task order 
with the Institute of Medicine (IOM). This work will help determine 
whether the core integrated HIV/AIDS surveillance system provides 
adequate data to allocate Ryan White funds at the State and local 
levels; what data can be used to determine a communities severity of 
need for the purposes of resource planning and allocation; and what 
data on HIV primary care and support services can be used to measure 
outcomes and quality of services in low income, under and uninsured 
populations. Section 501 of the Ryan White CARE Act Amendments of 2000 
requires that the IOM conduct this study.
    Specifically related to the use of HIV data in federal funding 
formulas, the IOM study shall determine:

1. Whether the surveillance system of each of the states regarding HIV 
        provides for the reporting of cases in a manner that is 
        sufficient to provide adequate and reliable information on the 
        number and demographic characteristics of cases, at the State 
        level and for specific geographic areas within the state.
2. Whether the case reports are sufficiently accurate for purposes of 
        formula grants under parts A and B of title XXVI of the PHSA.
    If the study identifies inadequacies or unreliable information, the 
IOM is to make recommendations for improvements in the core 
surveillance system. Not later than July 1, 2004, The Secretary shall 
take into consideration the findings of this study in rendering a 
determination as to whether there is data on cases of HIV disease 
suitable for such use in allocating funds.
    Question 27. How will you ensure that recent changes to Ryan White 
will only pay for ``support services that are health care related?'' 
What are your plans to evaluate grantees that expend resources on non-
health care related activities? How will programs be evaluated that 
expend resources from any source that encourage or destigmatize risk 
behaviors?
    Response: The HRSA HIV/AIDS Bureau has through letters, program 
guidance and technical assistance activities informed all of the CARE 
Act Title I and II grantees and Planning Councils, about the new 
amended CARE Act requirements regarding health related support 
services. We will monitor grantee compliance through ongoing program 
monitoring activities such as site visits, monthly monitoring calls, 
and review of progress reports and expenditure data. Moreover, the HIV/
AIDS Bureau each year reviews the amount of funds allocated by Title I 
and II grantees to several service areas. This activity has been under 
way for some time so there is sufficient information to assess any 
significant changes in the grantees funding of support services.
    Where we find inconsistencies with this guidance and policies we 
will allow grantees reasonable time to correct the inconsistency. 
Failure to satisfactorily correct the inconsistency could result in the 
imposition of grant restrictions.
    Annual application guidance to grantees asks them to describe and 
discuss the impact of non-CARE Act funding which assists in the 
provision of HIV care and treatment services. We view this area as very 
important because it demonstrates the grantees ability to successfully 
coordinate CARE Act funds with other appropriate funding streams. CARE 
Act funds are viewed as the A payer of last resort and therefore should 
not be used to pay for services where it is expected that services be 
covered under any other Federal or State program.
    HRSA has recently completed a series of locally based evaluations 
that look at the association of the provision of support services and 
entry into and retention in HIV primary care. The results from these 
targeted evaluations will soon be disseminated along with descriptions 
of methodological approaches for such evaluations. HRSA is currently in 
discussion regarding a proactive technical assistance approach that 
supports local evaluations and provides useful methods for conducting 
focused evaluations with limited resources.
    Question 28. Last year, Congress passed and the President signed 
legislation to address the prevention of Human Papillomavirus infection 
(P.L. 106-554). What is the status of the enactment of this law?
    Response: CDC has begun research efforts to help develop science-
based messages and educational materials regarding human papillomavirus 
(HPV) prevention and consequences of infection. They will be based on 
sentinel surveillance and epidemiological studies to better define 
prevalence and progression of HPV and its health consequences; 
formative research on HPV knowledge and attitudes about HPV healthcare 
and sexual behaviors, as well as HPV informational needs; and a 
healthcare provider survey of perceptions, healthcare practice, 
barriers and facilitators to HPV risk assessment, diagnosis, treatment, 
counseling and partner services.
    CDC is working to ensure that any educational materials on STDs, 
and HPV in particular, which are under development, are in compliance 
with the requirements of P.L. 106-544. CDC's National Center for HIV, 
STD, and TB Prevention has informed its HIV and STD grantees, 
subgrantees, contractors, and a wide range of public health partners 
about the requirements of P.L.106-554, especially these requirements 
regarding educational materials. Organizational components of CDC 
affected by the legislation have been similarly notified. In addition, 
CDC has notified both the National Coalition of STD Directors and the 
National Alliance of State and Territorial AIDS Directors who represent 
state and local health department STD and HIV programs.
    Question 29. The budget plan includes a request for $20 million for 
the purposes of increasing organ donation. How will those resources be 
used to increase donation among minorities who have very low donation 
rates?
    Response: A large portion of HRSA's donation funds supports a grant 
program focused on model interventions to increase donation. Sixty-five 
percent of the currently funded projects specifically target 
minorities. HRSA will continue to emphasize the need for minority-
focused projects in at least the same proportion.
    In addition, as the key HHS agency responsible for implementing 
Secretary Thompson's new campaign to increase donation, HRSA is 
currently developing an outreach strategy to involve minority 
businesses and organizations. As part of this strategy, outreach 
efforts have already begun with the NAACP and other minority 
organizations.
    In keeping with the Administration's interest in working with faith 
communities, HRSA will work with the Congress of National Black 
Churches (CNBC) to promote organ and tissue donation through CNBC's 
membership of more than 65,000 churches and 20 million individuals. 
HRSA will also implement a strategy to encourage donation through 
community health centers, the clientele of which is approximately 43 
percent minority.
    HRSA plans to promote minority donation in various other ways. 
Among these are exhibiting at minority meetings and conferences, 
developing brochures and other education materials targeted 
specifically to minorities, and promoting donation on the campuses of 
Historically Black Colleges and Universities, Hispanic Serving 
Institutions, and schools with high Asian populations.
    Question 30. What is going to be HHS's approach to the organ 
allocation regulation, which went into effect last year? As Governor, 
you filed suit to enjoin the agency from enforcing the rule. What will 
be the approach to revising or modifying the Clinton Administration's 
rule?
    Response: The suit to enjoin the agency from enforcing the rule has 
been withdrawn. There are no plans to rescind or change the rule. The 
Department is enforcing the rule and is working cooperatively with the 
transplant community to implement the rule in a very fair and balanced 
manner. There has been good progress toward fulfilling the requirements 
of the rule. For example, the Organ Procurement and Transplantation 
Network has proposed, and is testing the feasibility of a new liver 
allocation policy that would greater emphasis on patients' illness 
severity and less emphasis on waiting time as a basis for priority on 
the waiting list.
    Question 31. The HHS budget on page 5 requests $33 million for a 
new program to support group homes for teenage mothers. How will the 
Department ensure that women seeking counsel or treatment at Title X-
funded programs will receive information about this program? How will 
the Infant Adoption Awareness Act be coordinated with the program 
supporting homes for teenage mothers?
    Response: The President's budget for FY 2002 requests $33 million 
to fund Maternity Group Homes, community-based, adult supervised group 
homes for young mothers and their children. These homes will provide 
safe, stable, nurturing environments for mothers who cannot live safely 
with their own families and will assist them to move forward with their 
lives by helping them to complete their education, obtain job skills 
and learn to be good parents. The budget also requests $10 million to 
continue funding the Infant Adoption Awareness Act, first authorized 
and funded by Congress in FY 2001. That program is intended to train 
designated staff of eligible health centers (including Title X family 
planning clinics) in providing accurate adoption information and 
referral to pregnant women on an equal basis with all other courses of 
action included in nondirective counseling to pregnant women
    Because women facing unexpected pregnancies may be in need of a 
multitude of services, the Department will also ensure that eligible 
health centers are provided with information on the Maternity Group 
Homes (providing funds are appropriated for that initiative) for their 
clients who may be in need of that type of program. In addition, 
subject to the availability of funds, the Department will ensure that 
Maternity Group Home grantees receive information on adoption 
information and referral for young women who might choose to place a 
baby for adoption after entering a Maternity Group Home program.
    Question 32. Could you please describe some of the ongoing 
initiatives and activities at the Office of the Secretary's Office for 
Human Research Protections?
    Response: The recently created Office for Human Research 
Protections (OHRP), together with other HHS agencies, launched a new 
approach to the protection of human subjects in research, one based 
upon the concept that the primary responsibility of everyone involved 
in the human research process is to protect the rights, interests and 
well-being of those individuals who voluntarily participate in research 
activities. The new system will not to be simply an improvement of the 
existing oversight and sanction approach, but a system focused on 
prevention. The Department's reform plan specifically addresses the 
five major recommendations of HHS' Office of Inspector General (OIG in 
its 1998 Report.
    Working with other federal agencies, OHRP has developed and 
implemented a unified Federal registration system for all human 
research review boards, regardless of the source of research funding. 
This will provide an important database for improved communications 
with IRBs and an important first step toward establishing greater 
uniformity in the IRB process. In December 2000, OHRP implemented a 
simplified assurance process. With the resources freed from the former, 
overly complex assurance process, OHRP is implementing a new program 
that emphasizes education and support as part of a broad quality 
improvement effort that will be administered through a combination of 
proactive site visits, video conferences, and directed self-
evaluations. The assessment tools and procedures are undergoing pilot 
testing in voluntary cooperation with institutions across the country 
in anticipation of formal implementation. When fully implemented, and 
with sufficient resources, OHRP expects to conduct 60 quality 
improvement evaluations every month, and will conduct quality 
improvement evaluations at every major medical school in the United 
States during the first year of the program.
    For greater uniformity and public accountability in the review and 
approval process, OHRP, through the Department, contracted last October 
with the Institute of Medicine (IOM) of the National Academy of 
Sciences to recommend uniform performance and resource-based standards 
for private, voluntary accreditation of human research protection 
programs. In April 2001, the IOM issued its report on accreditation of 
human research protection programs, and pilot testing began in July 
2001 in selected medical centers in the Department of Veterans Affairs 
and other institutions, including NIH. Having completed the first phase 
of its project, the IOM began work on a study of the evolving human 
research system to determine the extent to which the issues and 
concerns raised by the OIG, the General Accounting Office, the National 
Bioethics Advisory Commission, and other national groups are being 
addressed within the current program of reform. The IOM working group 
has also been charged with developing objective measures for the 
effectiveness of the system for protection of human subjects in 
research.
    OHRP, the FDA, the NIH, and other federal agencies have just 
launched an effort to carefully examine the continuing review process 
and to develop guidance for institutions and review boards regarding 
appropriate mechanisms for ongoing monitoring of approved research, 
particularly recognizing the need for more effective monitoring and 
management of adverse events. Toward this end, the Department will seek 
support for the development and implementation of an integrated 
electronic information system and database to carry out this process.
    In the past year, OHRP staff members have given over 50 
presentations to institutions, IRBs, investigators, and professional 
societies. In February, OHRP and the DHHS Office of Research Integrity 
hosted the first Human Research Education Summit, attended by 
representatives from both the academic and corporate sectors, as well 
as representatives from almost every federal agency subscribing to the 
Common Rule. This meeting was an initial step toward developing a 
system of shared resources and best practices. A second summit is 
scheduled for August 2001. OHRP has developed and implemented web-based 
educational modules for institutional officials, IRB managers, and IRB 
chairs to ensure that these individuals are fully cognizant of their 
responsibilities under their assurances.
    IRBs and institutions are trying to shoulder what seems to be an 
ever-increasing burden of compliance activities. OHRP is convening the 
SUEE Task Force (Simplicity, Uniformity, Efficiency and Effectiveness) 
with the Human Subjects Research Subcommittee (HSRS) later this fall to 
identify and recommend opportunities for reducing unproductive 
administrative burdens. At the Executive Branch level, the HSRS, 
chaired by the Director of OHRP, is working to integrate the activities 
of federal offices, agencies and departments that share 
responsibilities in this oversight process. Under its charter, the 
working groups of HSRS have taken on issues such as conflicts of 
interests in clinical research and appropriate application of the 
federal policy for protection of human subjects in non-biomedical, 
social and behavioral sciences research. The HSRS has become the 
Acentral nervous system of the federal system for human research 
oversight. Its role and its effectiveness continue to grow.
    Following the very successful August 2000 HHS-sponsored conference 
on financial conflict of interest and human subject protection, an HHS 
working group developed and in January OHRP disseminated widely for 
comment the A Draft Interim Guidance Financial Relationships in 
Clinical Research: Issues for Institutions, Clinical Investigators, and 
IRBs to Consider When Dealing With Issues of Financial Interests and 
Human Subject Protection on the OHRP website and taking steps to expand 
its scope to include all Common Rule agencies. Next steps include 
reviewing the comments received from the public and NHRPAC, revising 
the document, and then formally sharing the revised document with the 
human subject protection community for additional suggestions. The 
Department anticipates publication of new guidance this fall.
    Last March, OHRP created a new component Office for International 
Activities to lead and coordinate Departmental activities in the 
international domain. OHRP is working with the World Medical 
Association, the European Forum on Good Clinical Practice, the Council 
of International Organizations of Medical Societies and other 
international organizations to refine the interpretation and 
application of the revised Declaration of Helsinki.
    Question 33. When will the HHS review on the meaning of the Dickey 
Amendment regarding human embryo experimentation be completed?
    Response: The Dickey appropriations rider prohibits the use of 
federal funds for ``research in which a human embryo or embryos are 
destroyed, discarded, or knowingly subjected to risk of injury or death 
greater than that allowed for research on fetuses in utero.'' The 
Administration has determined that the research that the President has 
agreed to fund (using existing stem cell lines where the life and death 
decisions have already been made) does not violate the Dickey 
amendment. No Federal funds will be used for the destruction of human 
embryos or the derivation of stem cells, and no Federal funds will be 
used for research on stem cell lines created from human embryos that 
are alive as of this date. HHS will fund research and will conduct its 
own research consistent with this determination.
    Question 34. Because many faith-based organizations direct the 
majority of their resources to services, they often have little 
expertise to navigate the maze of federal grant programs that could 
help them serve the sick and needy. What steps do you think need to be 
made to educate and assist faith-based organizations so that they have 
an equal opportunity to the assistance the federal government provides 
non faith-based community organizations?
    Response: In order to build the capacity and competency of 
charitable faith-based organizations, this Administration proposes the 
establishment of a Compassion Capital Fund and Best Practices Research 
Initiative. Under this proposal, a national funding source would be 
established to support charitable organizations in expanding or 
emulating model social service agencies through public-private 
partnerships. The organizations supported by this funding source would 
work with community and faith-based organizations in:

--providing technical assistance to help small community and faith-
        based charities increase their capacity to provide service 
        delivery, improve competence and expand program availability;
--operating a revolving loan fund to provide bridge loans which would 
        enable smaller groups to cope with the slow flow of 
        procurement; and
--providing grants for start up and operation to qualified charitable 
        organizations.
    These capacity-building entities also would be responsible for 
obtaining private matching funds to support their efforts, in addition 
to their responsibilities in assisting community and faith-based 
organizations. Further, we propose the establishment of a national 
funding source to support and promote research on A best practice among 
charitable organizations, called the Best Practices Research 
Initiative. This new authority would be created specifically to 
research and disseminate information on the effectiveness of service 
programs for low-income individuals operated by charitable social 
service organizations. Information regarding successful programs 
identified through the Best Practices Research Initiation would be 
disseminated among charitable organizations so that such models could 
be duplicated and expanded.
    The FY 2002 budget request for the Compassion Capital Fund is $67 
million, and for the Best Practices Research Initiative, the budget 
request is $22 million.
    Question 35. Research has found that families that contain a mother 
and a father provide significant health and behavioral benefits to 
their children. What steps are you taking to make sure HHS programs 
strengthen families, and support marriage and responsible fatherhood?
    Response: We have funded eight-child support enforcement 
responsible fatherhood demonstration projects that will help bolster 
fathers' financial and emotional involvement with their children. Each 
project is different, although they all provide a range of services to 
aid in collecting child support, such as job training, access and 
visitation, and social services.
    We have provided over $1.5 million to the National Center for 
Strategic Nonprofit Planning and Community Leadership (NPCL) to work 
with grassroots fathers' organizations to help unemployed and 
underemployed fathers become responsible parents. In addition, we have 
approved ten State waivers supporting the Partners for Fragile 
Families, a set of projects to test ways for child support enforcement 
programs and community and faith-based organizations to work together 
to improve the opportunities of young, unmarried fathers to support 
their children both financially and emotionally. Further, Personal 
Responsibility and Work Opportunity Reconciliation Act (PRWORA), 
created a $10 million access and visitation program for States, serving 
more than 22,000 individuals in 1997 and an estimated 50,000 in 1998.
    Most recently, President Bush and I made a clear commitment to 
promoting involved, committed and responsible fatherhood as a national 
priority by emphasizing it the FY 2002 budget request. One of the many 
goals of the Administration's FY 2002 proposal is to provide $64 
million for the first year to support low-income families by helping 
low-income non-custodial parents (mainly fathers) support their 
children by paying child support and connecting or reconnecting with 
their children.
    Question 36. The budget request includes $10 million for the Infant 
Adoption Awareness program, enacted as a part of the Children's Health 
Act. How will HHS ensure that women seeking pregnancy options 
counseling at federally funded centers receive information and referral 
on adoption? Aren't they required to provide this information already?
    Response In order to implement Title XII, Subtitle A, Infant 
Adoption Awareness of the Children's Health Act, the Department will 
enter into cooperative agreements for the purposes of developing and 
implementing programs to train designated staff of eligible health 
centers in providing accurate adoption information and referral to 
pregnant women. Although some adoption counseling may already be 
provided by federally funded health centers, studies show that adoption 
is an infrequent outcome for women who go to title X clinics. 
Implementation of this legislation will ensure that clear and accurate 
information about adoption is presented, giving women choices and the 
opportunity to make decisions based on clear and accurate information.
    Question 37. How will the $89 million Compassion Capital Fund 
works? How will effective charitable programs and social service 
organizations be identified?
    Response: The FY 2002 budget includes $89 million for a new 
Compassion Capital Fund. The Fund will support several grants to 
public/private partnerships to provide start-up capital and operating 
funds to qualified charitable organizations that wish to expand or 
emulate model social service programs.
    The fund will also provide funds for research on best practices 
among charitable organizations.
    The HHS Center for Faith-Based and Community Initiatives and the 
Administration for Children and Families (ACF) are working with the 
White House Office of Faith-Based and Community Initiatives to develop 
guidelines or recommendations for specific proposals from charitable 
organizations.
    Question 38. The Administration is requesting $90 million for the 
Healthy Start program. Will the Bush Administration help seek funding 
for initiatives recently authorized by this Committee within the 
Healthy Start program, such as mobile health clinics and pre-natal 
surgery?
    Response: Health centers funded under section 330 of the Public 
Health Service Act provide, either through the staff or through 
contracts or cooperative arrangements, primary health services for all 
residents of the area served by the center. The required primary health 
services are defined at section 330(b) and include preventive health 
services with voluntary family planning services specifically 
identified. The HRSA's Bureau of Primary Health Care issued a policy 
notice on August 17, 1998, entitled Health Center Program Expectations, 
describing its expectations for all health center programs covered 
under section 330. The program expectation related to Clinical Systems 
and Procedures requires health centers to have written policies and 
procedures that address a number of elements including the use of 
clinical protocols. These clinical protocols should reflect the current 
guidelines established by health agencies or professional 
organizations. For example, the Guidelines for Women's Health Care 
issued by the American College of Obstetricians and Gynecologists 
indicates that, in the event of an unwanted pregnancy, the patient 
should be counseled about her options, one of which is to continue the 
pregnancy to term and offer the infant for legal adoption. Further, we 
are confident that the Infant Adoption Awareness training to be offered 
to health center staff will serve to enhance their knowledge about 
providing adoption information. Monitoring of health centers' use of 
appropriate clinical protocols is accomplished either through national 
accreditation reviews or the Bureau's Primary Care Effectiveness 
Reviews.
    Question 39. How does the budget reduction for training health 
providers effect pharmacist training?
    Response: The training of allied health care professionals under 
the Title VII Section 755 grant authority does not include the training 
of pharmacists. Pharmacists are excluded by definition as an allied 
health provider as are physicians, dentists and registered nurses. The 
budget reduction would, therefore, have no effect on pharmacist 
training. It would have a possible impact on the training of pharmacist 
technicians since they are considered an allied health profession.
    Question 40. Can we expect a specialty designation for 
interventional pain physicians? If so, when?
    Response: Recognized medical specialties in the United States meet 
the requirements of, and are recognized by, the American Board of 
Medical Specialties (http://www.abms.org), a private non-governmental 
501(c)(3) organization. Additionally, there are special certifications 
for subspecialties within some, but not all, ABMS member organizations. 
A subspecialty pain certification is currently available through these 
recognized specialties: anesthesia, psychiatry and neurology, and 
physical medicine and rehabilitation.
    All physicians should be familiar with basic pain management 
techniques and many disciplines include it in certification 
requirements and examinations. The discipline pf palliative care and 
American Board of Hospice and Palliative Medicine (ABHPM) focuses on 
pain management as well as management of other symptoms (such as 
shortness of breath, fatigue, and nausea) which cause suffering in the 
ill. The ABHPM has not been recognized by the ABMS and the desirability 
of doing so is subject to considerable debate and discussion.
    Question 41. Congress mandated HCFA to implement a national 
Medicare ambulance fee structure by January 2000, and despite HCFA 
having its negotiated rulemaking Committee's recommendations in hand 
for over nine months, it has failed to release final regulations. And, 
in keeping with reimbursement policies enjoyed by the other 48 states, 
Congress also mandated that HCFA reimburse in-country ambulance mileage 
for both North Carolina and Tennessee by July 1, 2001, which the agency 
has also delayed. When will we see implementation of these two very 
important congressional mandates?
    Response: CMS published the proposed ambulance fee schedule on 
September 12, 2000. Although the proposed rule was based on the 
negotiated rulemaking committee's recommendations, over 340 comments 
were received by the end of the comment period on November 13, 2000. 
CMS is carefully reviewing and analyzing all of the comments as they 
prepare the final rule. CMS shares your interest in implementing the 
fee schedule and is working expeditiously to publish the final rule.
    Section 423 of the Medicare, Medicaid, and SCHIP Benefits 
Improvement and Protection Act, required CMS to structure the phase-in 
of the ambulance fee schedule so that the Agency make payments for in-
county mileage in certain states (e.g., North Carolina and Tennessee) 
for both the fee schedule portion of the payment, as well as the 
portion of the payment that is calculated under the payment method in 
place prior to the implementation of the fee schedule. This provision 
will be implemented concurrently with the fee schedule.
    Question 42. North Carolina runs one of the most successful SCHIP 
programs in the United States. Unfortunately, last year the state was 
forced to freeze enrollment at 69,000 because the number of children 
wanting to enroll in Health Choice (100,000+) far exceeded the federal 
government's estimated number of potential enrollees (71,000). North 
Carolina simply did not have a large enough allocation from the federal 
government because of the poor estimate. Are you interested in revising 
future allocations using more accurate numbers?
    Response: As you may know, in November 2000, North Carolina 
submitted their 5th amendment to establish a freeze on new enrollments 
in SCHIP. The amendment was approved in February 2001. At the time of 
the freeze, however, North Carolina had budgeted only $61.3 million of 
the $89.2 million in federal funds allotted to the state for FY 2000.
    The SCHIP allocation formula was revised in the Balanced Budget 
Refinement Act which made changes to the SCHIP allotment formula 
stabilizing State allotments, imposing floors and ceilings on changes 
from one year to the next, and using a blend of low-income children and 
uninsured children starting in FY 2000. The Balanced Budget Refinement 
Act also included $10 million for the Department of Commerce to 
increase the sample size of the Current Population.
    Survey to increase the reliability of the estimates of uninsured 
children by age, income, and race on a State by State basis. These 
changes, in combination with additional state funds, will enable North 
Carolina to enroll eligible children now on a waiting list and use all 
of their federal SHIP allotments.
    Question 43. Last year, Congress passed and the President signed 
into law the Pubic Health Threats and Emergencies Act. How does the 
Department's FY'02 budget request reflect needed changes, 
infrastructure improvements and the like as required by that 
legislation?
    Response: The Public Health Improvement Act authorizes HHS to 
undertake a broad range of activities to ensure that the Nation's 
health and medical systems are prepared in the event of bioterrorist 
attack. The Department's FY 2002 budget includes $353 million, an 
increase of $50 million (+17%) over FY 2001 and $93 million (+35%) 
above FY 2000, for the Department's bioterrorism preparedness 
activities authorized under the act. This includes:

 Bioterrorism Core Activities: $322 million from funds solely 
        dedicated to HHS's Bioterrorism initiative, including 
        surveillance and medical response activities.
 NEDSS: $27 million for the National Electronic Disease 
        Surveillance System (NEDSS) at CDC, which supports bioterrorism 
        detection and, communication in addition to surveillance for 
        naturally occuring infectious diseases.
 Centers for Public Health Preparedness: $4 million provided to 
        CDC's partners at State public health departments and academic 
        institutions for demonstration projects designed to implement 
        new technologies and training for bioterrorism preparedness and 
        other public health emergencies.
    The Act authorizes the Secretary of HHS, in coordination with the 
Secretary of Defense to establish a joint interdepartmental working 
group on preparedness and readiness for the medical and public health 
effects of a bioterrorist attack on the civilian population. The 
working group is tasked with the following responsibilities:

 Coordinate research on likely bioterrorist pathogens including 
        development of detection equipment, and shared standards for 
        detection and protection (319F (a)(1)(2)(3)); Develop 
        priorities for future research related to bioterrorism 
        epidemiology, pathogenesis, and development of vaccines, 
        therapeutics and medical diagnostics (319F(f)(1)(2)(3)(4)): 
        $123 million, an increase of $21 million (+20%) over FY 2001 
        and +$28 million (+29%) over FY 2000 for NIH biomedical 
        research, CDC anthrax efficacy studies and development of the 
        rapid toxic screen and smallpox and anthrax vaccine research 
        and development.
 Coordinate the development, maintenance and procedures for the 
        release of strategic reserves of pharmaceutical supplies needed 
        after a bioterrorist attack (319F(a)(4)): $53 million for the 
        maintenance and deployment planning of the National 
        Pharmaceutical Stockpile at CDC and the National Medical 
        Response Team medical caches supported by the HHS Office of 
        Emergency Preparedness (OEP).
 Train health care and public health personnel to recognize 
        symptoms of bioterrorism, rapidly identify the pathogens, and 
        coordinate medical care (319F(c)(3)(A)(B)(C)): $64 million, an 
        increase of +$17 million (+34%) above FY 2001 and +$25 million 
        (+61%) above FY 2000 for CDC support of the Epidemic 
        Intelligence Service, State & local planning and 
        epidemiological capacity, and OEP's support of medical response 
        teams, Metropolitan Medical Response Systems and training of 
        medical and other personnel at Noble Training Center.
 Coordinate rapid communication of data generated from a 
        bioterrorist attack between national, State and local agencies 
        and health care providers (319F(c)(3)(A)(B)(C)): $71 million, 
        an increase of +$9 million (+15%) over FY 2001 and +$21 million 
        (+43%) over FY 2000 for development of the Health Alert 
        Network, the National Electronic Disease Surveillance System 
        (NEDSS), and the Department's new Cyber-Security Initiative to 
        protect and improve HHS information systems needed for 
        bioterrorism preparedness and response.
 Develop and implement education programs to instruct public 
        health and medical officials to recognize and treat victims of 
        bioterrorism, and laboratory personnel to identify potential 
        bioterrorist pathogens (319F(e)(1)(2)): $38 million, an 
        increase of +$4 million (+10%) over FY 2001 and +$18 million 
        (+86%) over FY 2000 for CDC's national planning for 
        preparedness and response, implementation of the Select Agent 
        rule and laboratory training and support.
 Make grants for not more than three demonstration projects to 
        improve detection of pathogens and development of plans and 
        measures to respond to bioterrorism (319G(a)). Demonstration 
        Projects to Improve Detection and Planning: $3.5 million, an 
        increase of +$.5 million (+17%) over FY 2000 for Centers of 
        Public Health Preparedness communications and training related 
        to bioterrorism.
    Question 44. What other steps does HHS intend to take to improve 
our nation's public health infrastructure? How are those steps 
reflected in the budget?
    Response: The Fiscal Year 2002 Budget reflects a major change of 
displaying CDC's public health infrastructure programs in a single 
line, allowing for greater coordination and accountability in the areas 
that constitute Public Health Improvement: strengthening public health 
practice, awarding prevention grants to universities, eliminating 
racial and ethnic health disparities, building the National Electronic 
Disease Surveillance System, and building cross-cutting capacities and 
expertise. Categorical programs such as antimicrobial resistance and 
bioterrorism preparedness and response build upon these foundational 
activities. Within this new line, an increase of $1 million is targeted 
to begin implementation of the infrastructure portion of the Public 
Health Threats and Emergencies Act. Activities planned for FY02 include 
developing capacity performance standards for public health systems, 
measuring gaps, and building standards-based capacity on the foundation 
lay by the National Public Health Performance Standards Program. The 
following activities are included in the FY2002 budget and illustrate 
how HHS will work to improve the nation's public health infrastructure:

 Provides technical assistance to 50 states to establish rapid 
        communications capacity, access to training via distance-
        learning mechanisms, and Internet access for local public 
        health officials through the Health Alert Network;
 Continues work with public health partners on the Global and 
        National Implementation Plan for Public Health Workforce 
        Development and, as part of this plan, the continuation of the 
        Centers for Public Health Preparedness based in schools of 
        public health;
 Supports the Public Health Grand Rounds program, a combined 
        broadcast/Web-cast series of public health program and case 
        studies, with live satellite programs on such topics as 
        Disaster Management, Genetics, and Asthma;
 Monitors and provides technical assistance for the 55 
        prevention grants to universities, with investigators at 
        schools of public health, state and local health departments, 
        and other academic- and practice-based organizations;
 Provides states with the capacity to tailor prevention 
        programs to their health priority needs through the Preventive 
        Health and Health Services Block Grant. The strategy behind the 
        Block Grant is that it can be used to fund categorical services 
        that may otherwise go unfunded. It can also supplement priority 
        state programs funded through other means. States can use the 
        Block Grant to address urgent, rapidly developing health 
        hazards such as those that would occur during a bio-terrorism 
        event. Funds could also be used for preparedness activities. 
        For example, one state funded the development of a medical and 
        health preparedness emergency response system for eight 
        counties using monies obtained through the Block Grant.
    A strong public health infrastructure is necessary if the US is to 
mount a rapid, effective, response to a bioterrorism event. Building on 
the activities targeted to improve public health infrastructure 
overall, the FY02 Budget provides a total of $182 million for CDC's 
bioterrorism preparedness activities. These funds will enable CDC to 
continue to assist states, US territories, and major metropolitan areas 
to develop and maintain core capacity for the primary components of a 
bioterrorism preparedness and response effort. For example, 
bioterrorism activities targeted for increased funds in the FY02 Budget 
include the following:

 Updating a national strategy for public health preparedness 
        for bioterrorism;
 Increasing the detection and investigation capabilities for 
        infectious disease outbreaks and rapid collection, analysis and 
        dissemination of data;
 Rapid laboratory diagnosis of biologic agents and 
        identification and management of chemical exposures; and
 Maintaining the National Pharmaceutical Stockpile to assure 
        rapid availability of pharmaceuticals, supplies and medical 
        equipment in the event of an attack. The Stockpile includes 8 A 
        push packages containing antitoxins, therapeutic drugs, 
        antidotes, and other supplies ready for rapid deployment to the 
        site of a bioterrorism incident.
    Antimicrobial resistance (AR) continues to be a worsening global 
problem that affects virtually all of the pathogens previously 
considered being readily treatable. Many important drug options for the 
treatment of common infections are becoming increasingly limited and 
expensive, and in some cases, nonexistent. In collaboration with 
numerous federal partners, A Public Health Action Plan to Combat 
Antimicrobial Resistance, released in January 2001, addresses this 
growing problem. The Action Plan calls for (1) developing a coordinated 
national AR surveillance plan for monitoring AR in microorganisms that 
pose a threat to public health; (2) promoting the appropriate use of 
antimicrobial drugs and preventing the transmission of infections 
(whether drug-resistant or not); (3) increasing our understanding of 
microbial physiology, ecology, genetics and mechanisms of resistance, 
and translating research findings into clinically useful products, such 
as novel antimicrobial therapeutics, diagnostic tests, vaccines and 
other tools that prevent AR emergence and spread; and (4) developing or 
evaluating new products to prevent, diagnose, and treat infections. 
With sustained funding of $25 million, CDC will continue the following 
activities:

 Provide grants to academic research institutions for applied 
        research on antimicrobial resistance;
 Provide support to state/local health departments and 
        healthcare systems for surveillance, prevention, and control of 
        antimicrobial resistance; and
 Implement comprehensive community-based demonstration projects 
        on antimicrobial resistance prevention and control.
    Question 45. Does the Department foresee any changes in the 
operations of the Office of Emergency Preparedness? Is the $14 million 
request sufficient for the office to provide medical and health-related 
services under Emergency Support Function 8 of the Federal Response 
Plan?
    Response: The Department foresees some changes in OEP's activities. 
We will be expanding the number of Metropolitan Medical Response 
Systems (MMRS) beyond the original 120 envisioned in the Defense 
Against Weapons of Mass Destruction Act of 1996. OEP will be working 
with communities to link the local MMRS with rural areas as well as 
state systems. In addition, OEP will be working with hospitals to 
ensure that they are linked to MMRS activities and are prepared to 
accept WMD victims. The $14 million request in the General Departmental 
Management (GDM) is a part of the overall OEP budget request for FY 
2002. While the budget request is divided between GDM and the Public 
Health and Social Services Emergency Fund (Emergency Fund), the request 
is not divided between ESF #8, WMD, or chemical, radiological or 
biological terrorism. Rather, the request encompasses an all hazards 
approach to disaster response. Similar to CDC's approach to building a 
bioterrorism response on a sound public health infrastructure, OEP has 
continued to build on a basic disaster preparedness and response for 
mass casualties and impacts to the health and medical infrastructure. 
The FY 2002 President's budget request for OEP (GDM and Emergency Fund) 
is sufficient for current infrastructure activities, as well as for the 
special WMD activities (MMRS, hospital development, Noble Training 
Center, and NMRT equipment, team maintenance and training/exercises). 
Provision of ESF #8 activities as part of the Federal Response Plan is 
centered in the all hazards approach to the emergency preparedness 
infrastructure.
    Question 46. Can the Department describe its pharmaceutical 
stockpile management agreement with the Department of Veterans Affairs? 
Does HHS intend to continue using the VA to manage the medical response 
teams' stockpiles on a daily basis?
    Response: CDC has responsibility for managing all aspects of the 
National Pharmaceutical Stockpile. CDC has a memorandum of agreement 
with the DVA's National Acquisition Center which enables CDC to utilize 
the multi-billion dollar purchasing power of the VA in procuring 
pharmaceuticals, medical supplies and equipment for the National 
Pharmaceutical Stockpile. However, CDC maintains full management 
responsibility for all aspects of the stockpile, including that 
purchased through the National Acquisition Center. Can the Department 
describe its pharmaceutical stockpile management agreement with the 
Department of Veterans Affairs? Does HHS intend to continue using the 
VA to manage the medical response teams stockpiles on a daily basis?
    OEP has an agreement with VA to provide daily management of OEP's 
medical response team stockpiles. VA ensures that: the stockpiles are 
stored in secured facilities, with appropriate temperature and other 
controls; inventory records are maintained; the pharmaceuticals are 
appropriately rotated as expiration dates approach; HHS/OEP intends to 
continue to use the VA for this activity.
    Question 47. Does HHS intend to expand the number of Disaster 
Medical Assistance Teams (DMATs) or National Medical Response Teams 
(NMTTs)?
    Response: At this time, we do not have plans to increase the number 
of NMRTs (which currently total four). However, we are trying to 
increase the number of NMRT members in order to ensure that full team 
complements can be deployed as required. HHS is always ready to 
increase the number of DMATs, and we actively recruit team members as 
well as new teams and their sponsors. In addition, OEP works to 
increase the number of level-1 DMATs. These are teams that can field 35 
medical professionals and support staff, can be ready to deploy to a 
disaster area within hours, and can be self-sufficient in hazardous and 
austere conditions for up to 72 hours. Currently, the National Disaster 
Medical System has a total of 27 level-1 teams.
    Question 48. Does the Department foresee the various bioterrorism 
programs operated by the agency (Office of Emergency Preparedness, CDC, 
etc) working together?
    Question 49. Your written testimony on page 18 indicates that there 
are still problems with the privacy regulation that will have to be 
fixed through guidelines and additional modifications. What kinds of 
changes do you believe are necessary?
    Response: On July 6, 2001, the Department issued the first guidance 
package on the Privacy Rule. The guidance provided is meant to 
communicate as clearly as possible the privacy policies contained in 
the Rule. Each section has a short summary of a particular standard in 
the Privacy Rule, followed by ``Frequently Asked Questions'' about that 
provision. Among the privacy provision addressed in the guidance 
material are consent, minimum necessary, oral communications, business 
associates, parents and minors, health-related communications and 
marketing, research, and restrictions on government access to health 
information. Additional guidance materials and other forms of technical 
assistance will be provided by the Department to facilitate 
implementation of and compliance with the Privacy Rule. In addition, 
the guidance identified areas of the Privacy Rule where a modification 
or change to the rule is necessary. For example, standards in the 
Privacy Rule for which we will propose changes are:

 Phoned-in Prescriptions--A change will permit pharmacists to 
        fill prescriptions phoned in by a patient's doctor before 
        obtaining the patient's written consent.
 Referral Appointments--A change will permit direct treatment 
        providers receiving a first time patient referral to schedule 
        appointments, surgery, or other procedures before obtaining the 
        patient's signed consent.
 Allowable Communications--A change will increase the 
        confidence of covered entities that they are free to engage in 
        whatever communications are required for quick, effective, high 
        quality health care, including routine oral communications with 
        family members, treatment discussions with staff involved in 
        coordination of patient care, and using patient names to locate 
        them in waiting areas.
 Minimum Necessary Scope--A change will increase covered 
        entities' confidence that certain common practices, such as use 
        of sign-up sheets and X-ray lightboards, and maintenance of 
        patient medical charts at bedside, are not prohibited under the 
        rule.
    We continue to review the input received during the recent public 
comment period to determine what changes are appropriate to ensure that 
the rule protects patient privacy as intended without harming 
consumers' access to care or the quality of that care. Other changes to 
the Privacy Rule may, therefore, be considered as appropriate. For 
example, HHS may reevaluate the Privacy Rule to ensure that parents 
have appropriate access to information about the health and well-being 
of their children.
    Question 50. How will the Department distinguish State laws that 
are to be superceded and those, which are to remain, unimpaired?
    Response: The statute provides specific criteria for which State 
laws are exempt from preemption by the Privacy Rule. State laws that 
meet the statutory criteria will remain unimpaired. In addition, the 
Privacy Rule provides a definition of ``more stringent'' which should 
aid in the identification of State laws which are exempt from 
preemption.
    Question 51. What are the staffing and budgetary requirements for 
enforcement of this regulation by the Office of Civil Rights?
    Response: In FY 2001, the Office for Civil Rights (``OCR'') 
received $3.4 million for implementation and compliance activities 
associated with the Privacy Rule. In FY 2002, OCR has requested $ 5 
million, which will allow for staffing of 33 FTEs focused on education, 
policy guidance and technical assistance activities. The resources 
required for compliance monitoring and enforcement will be reflected in 
OCR's FY 2003 budget request, since the rule will not be enforceable 
until April 2003.
    Question 52. What is the impact of the privacy rule for the 
Medicare and Medicaid Programs and providers (such as Pharmacy Benefit 
Managers) participating in the programs?
    Response: [Referred to CMS for response]
    Question 53. According to a letter dated March 12, 2001 from 
American Psychiatric Association (``APA'') to you, Mr. Secretary, 
``Patients will lose some existing privacy protectionY as a result of 
the regulationY For example, currently when hospitals or doctors 
receive a request for a medical record from an attorney for civil and 
administrative purposes, they will generally not disclose medical 
records information without notice to the patient and /or the patient's 
consent. But the new regulation would allow providers to disclose 
medical records information to attorneys who write a letter `certifying 
that the Y information requested concerns a litigant to the proceeding 
and that health condition of such litigant is at issue.' These 
procedures provide no check on attorney's behavior in requesting 
records of marginal relevance to a case or for the purpose of 
embarrassing or intimidating opposing parties.'' Is this an area that 
you believe will need to be changed?
    Response: According to a letter dated March 12, 2001, from American 
Psychiatric Association (``APA'') to you, Mr. Secretary, ``Patients 
will lose some existing privacy protection . . . as a result of the 
regulation. For example, currently when hospitals or doctors receive a 
request for a medical record from an attorney for civil and 
administrative purposes, they will generally not disclose medical 
records information without notice to the patient and/or the patient's 
consent. But the new regulation would allow providers to disclose 
medical records information to attorneys who write a letter `certifying 
that the information requested concerns a litigant to the proceeding 
and that health condition of such litigant is at issue.' These 
procedures provide no check on attorney's behavior in requesting 
records of marginal relevance to a case or for the purpose of 
embarrassing or intimidating opposing parties.'' Is this an area that 
you believe will need to be changed?
    First, the APA unfortunately quoted a condition on the permissible 
disclosure of protected health information in a judicial or 
administrative proceeding that was contained in the Notice of Proposed 
Rulemaking issued in November, 1999. That provision was changed in the 
final Privacy Rule, issued in December, 2000. The final Privacy Rule 
permits the disclosure of protected health information in a judicial or 
administrative proceeding if there is a court order for such 
information or if there is otherwise adequate assurances provided that 
the individual whose medical information is being sought has been 
notified of the request in order to raise objections to the release of 
the information or that the information will remain confidential 
pursuant to a protective order.
    Second, despite the change in the final Rule, some commenters 
continue to favor a stricter policy of requiring a court order for the 
release of any protected health information sought in a judicial or 
administrative proceeding. The Privacy Rule in no way impedes a covered 
entity from continuing a policy of releasing protected health 
information to a court or administrative tribunal only pursuant to a 
court order or the individual's consent. Given that the standard for 
disclosures for judicial or administrative proceedings is permissive in 
nature, and does not preclude practices that are more protective of 
privacy at the discretion of the covered entity, the Department is not 
contemplating any change to this standard at the present time.
    Question 54. On page 17 of your written testimony, you state that 
the Administration is seeking an additional $26 million for research on 
health quality, and that a portion of those resources will be used to 
implement the Institute of Medicine's recommendations to eliminate 
medical errors. According to the 1999 Institute of Medicine report, To 
Err Is Human: Building a Safer Health System, in hospitals alone, 
almost 100,000 Americans die each year due to medical errors. If 
nursing homes, ambulatory care centers, home health services, and 
doctors' offices were included, estimates of the number of unnecessary 
deaths would be much higher. As the IOM stated in its report, ``more 
people die in a given year as a result of medical errors than from 
motor vehicle accidents (43,458), breast cancer (42,297), or AIDS 
(16,516).'' After months of investigation and research, the IOM 
reported:
    The decentralized and fragmented nature of the health care delivery 
system (some would say ``nonsystem also contributes to unsafe 
conditions for patients, and serves as an impediment to efforts to 
improve safety. Even within hospitals and large medical groups, there 
are rigidly-defined areas of specialization and influence. For example, 
when patients see multiple providers in different settings, none of 
whom have access to complete information, it is easier for something to 
go wrongY(Institute of Medicine, To Err Is Human: Building a Safer 
Health System, 2-3). If insufficient information leads to lower quality 
patient care, don't you believe that the ``minimum necessary'' standard 
needs to be rewritten so as to permit the development of common-sense 
practices in the health care setting to reduce medical errors?
    Response: The Agency for Healthcare Research and Quality (ARHQ) is 
pursing a vigorous research program to identify and validate patient 
safety practices that can reduce the risk of injury to patients. ARHQ 
has just released a report that reviews the available scientific 
evidence on patient safety practices and rated 73 practices that are 
likely to improve patient safety and describes 11 for which there is 
strong evidence of effectiveness. During this current fiscal year, AHRQ 
plans to award over 60 research and demonstration patient safety 
grants. As our knowledge grows regarding which patient safety practices 
are scientifically demonstrated to be effective, the Department will 
continuously assess the standards governing our health care service 
delivery and payment programs to ensure that they facilitate, not 
frustrate, the safety and quality of patient care.
    Question 55. As you know, it was under tremendous pressure from 
consumers, patient groups, and others that Congress passed FDAMA to 
speed up the approval process for new drugs, biologics and devices. 
This rule may in fact slow down that process, because although the rule 
sets out explicit standards for collecting information for future 
clinical trials, under the proposed rule it may be impossible or 
illegal to get information from subjects of previous clinical trials. 
How will you account for the best interests of patients and consumers 
as you fashion guidance for this regulation?
    Response: We do not anticipate that this rule will affect access to 
information from prior clinical trials or affect in any way the 
timeliness of drug approvals by the FDA.
    Question 56. Under the regulation, all covered entities will have 
to recontract with their business associates to require that the 
associates comply with the entities' privacy policies. We hear from 
hospitals and health plans that they may have upwards of 700 business 
associates each, some of whom may also be covered entities. Even if 
they started today, they would have to sign a new contract on nearly 
every day in order to be in compliance in two years. Considering this 
was an administrative simplification requirement to start with, how 
does the Department plan to address this formidable paperwork 
requirement in crafting guidance for the final rule?
    Response: The claim of hundreds of business associates for a given 
covered entity highlights the need for the business associate 
standards. Without any standards, an individual's private medical 
information could be handed over to vast numbers of commercial 
enterprises, most of which would have little or no obligation to 
protect the confidentiality of the information. The Privacy Rule does 
not interfere with these necessary business relationships, but it does 
require covered entities to obtain a written assurance from these 
business associates that they will appropriately safeguard the 
individual's protected health information. On July 6, 2001, the Office 
for Civil Rights (OCR) issued the first in a series of ongoing guidance 
and technical assistance materials to assist covered entities and 
others in better understanding what the Privacy Rule does or does not 
do. The business associate standards were one of the many topics 
addressed by the guidance. In the July guidance materials, we responded 
to three frequently asked questions concerning the limits of the 
Secretary's authority under the HIPAA statute with respect to business 
associates, the extent of their contractual obligations to the covered 
entity, and whether covered entities are liable for the privacy 
violations of their business associates.
    Question 57. What if two covered entities are contracting with each 
other and their privacy policies vary slightly: What if a hospital has 
ten business associates who are covered entities with varying privacy 
policies? Does the Department have any guidance on this situation?
    Response: As we make clear in the July guidance, the Privacy Rule's 
requirements are not A passed through to the business associate. There 
is no requirement that the ten business associates of the hospital 
follow the hospital's privacy practices. The business associate is 
required to provide assurances that protected health information will 
be appropriately safeguarded and used or disclosed to others only for 
purposes that are necessary to carry out its business associate 
functions. For example, if a hospital contracts out its billing 
function, the business associate must safeguard the protected health 
information received from the hospital and use or disclose that 
information only for the billing services that it provides and other 
activities needed to operate its business. A covered entity may be the 
business associate of another covered entity, in which case, its own 
privacy policies under the Rule would suffice as the appropriate 
safeguards required by the business associate provisions. The Privacy 
Rule does not required the covered entity that is acting as a business 
associate to conform to B or even know the details of B the other 
covered entities privacy policies.
    Question 58. What is the Administration's timeline for putting the 
Security and Electronic Signatures standard in place?
    Question 59. We understand that a need to clarify the most basic 
issue--the very definition of what is ``individually identifiable 
health information,'' which is protected and governed by the rule, has 
been brought to your staff. The claim has been made that HIPAA allows 
states to regulate ``individually identifiable health information: in a 
more stringent manner than the rule that has taken effect, but does not 
allow States to change the definition of what the rule covers. Further, 
If States can change what is and isn't governed by the rule the use of 
de-identified health data will be at risk. Can you tell our Committee 
if your staff has decided on the need to issue guidance or to make a 
modification to the rule on the basic definition of what the rule 
covers and what it does not?
    Response: The preemption provisions of the statute, sections 1178 
of the Social Security Act and 264(c)(2) of HIPAA, concern the issue of 
conflict between provisions of State law and the federal rule that 
imposes ``requirements, standards, or implementation specifications.'' 
In general, we do not think that the definition of ``individually 
identifiable health information'' comes within this statutory 
preemption framework. We also note that the term ``individually 
identifiable health information'' is defined at section 1171(6) of the 
Social Security Act. In light of these considerations, we do not see a 
need to issue guidance or a modification of the rule concerning the 
definition of ``individually identifiable health information.''
    Question 60. In the past, Members of the Committee have raised 
concerns about having a Federal floor instead of a Federal ceiling on 
privacy laws. A claim has been made that HIPAA allows States to 
regulate ``individually identifiable health information'' in a more 
stringent manner than the rule, but dos not allow States to change the 
definition of what the rule covers. Further, I've been told that if 
States can change what is and isn't governed by the rule, the use of 
de-identified health data will be at risk. Are you going to issue 
guidance on what States can or cannot do to regulate `` individually 
identifiable health information?''
    Response: As noted above, the preemption provisions are statutory. 
Therefore, the Department cannot address through guidance the 
Committee's concerns about the federal privacy provisions operating as 
a federal floor rather than a federal ceiling.
    Question 61. Even before the April 14 effective date of the rule, 
we had an illustration of what may happen when State privacy laws are 
alleged to apply to the uses and disclosures of individually 
identifiable health information. The dispute between Quintiles 
Transnational and WebMD illustrates at least two of the problems likely 
to result from State preemption of federal privacy standards: first, 
that States may lack the expertise to address certain aspects of health 
information privacy, such as trying to define statistical methods for 
the de-identification of health information that ate ``more stringent'' 
than the federal standard and still allow the use of data for health 
research and vital public health purposes; and, second, that such State 
actions will be employed not to protect individual privacy but as part 
of a contractual dispute between covered entities and their business 
partners. Are you aware of the dispute between Quintiles Transnational 
and WebMD regarding the creation and transmission of de-identified 
health data, and a United States Federal District Court ruling that 
addresses the potential impact of the U.S. Constitution's Commerce 
Clause regarding any State's ability to interfere with commercial 
transactions that occur in other states?
    Response: We are aware of the dispute in Quintiles Transnational 
Corp. v. WebMD Corp., Civ. No. 5:01-CV-180-BO(3), E.D.N.C. We note 
that, in a ruling entered on March 21, 2001, the District Court granted 
Quintiles Transnational's request for a preliminary injunction 
requiring WebMD to continue to abide by the terms of the Data Rights 
Agreement between the parties. The court held that the Dormant Commerce 
Clause prevents the individual States from regulating the interstate 
transmission of data, and that WebMD, therefore, erred in relying on 
the privacy laws of some States to excuse its failure to perform its 
obligation to transmit data to plaintiff under the Data Rights 
Agreement.
    Question 62. When can we expect to have all the regulations on 
administrative simplification finalized--security, enforcement, and 
national identifiers (provider, employer, and health plan)? In 
addition, when can we expect the national identifiers to be available 
for distribution?
    Response: I have an ongoing, concentrated effort to implement the 
Administrative Simplification section of the Health Insurance 
Portability and Accountability Act of 1996. Of the nine rules that 
comprise Administrative Simplification, five Notices of Proposed 
Rulemaking have been issued. Two of these, the Privacy and Transaction 
and Code Sets, have been issued in final, with corresponding compliance 
dates. CMS hopes to have the final Security and Employer Identifier 
rule published by this fall.
    The Notices of Proposed Rulemaking have generated a large number of 
comments by the covered entities, including 17,000 comments on the 
Transaction and Code Sets, and in excess of 50,000 comments on the 
Privacy Notice of Proposed Rulemaking. Significant progress has been 
made on issuing notices of proposed rulemaking, categorizing, 
reviewing, and responding to the comments received, and issuing final 
rules. CMS is working as quickly as it can to complete work on the 
remaining rules.
    Regarding the regulation and implementation of provider and health 
plan identifiers, the Department is reviewing how best to achieve this 
goal, as well as evaluating the budget implications.
    Question 63. The industry anticipates significant modifications to 
the final rule on Electronic Transactions Standards as permitted under 
HIPAA. Do these changes need to go through an NPRM and Final Rule 
process? When do you think these changes will be in their final form?
    Response: Yes, changes to the implementation guidelines recommended 
by the Designated Standards Maintenance Organizations must go through 
the Department's regulation process. The Department will be publishing 
a notice of proposed rulemaking, proposing the Designated Standards 
Maintenance Organizations' changes. Also, the specific proposed changes 
will be available shortly from the American National Standards 
Institute Accredited Standard Committee X12, Health Care Task Group--
the nationally recognized electronic data interchange standards 
development organization for all forms of electronic commerce.
    Question 64. What actions has the Department taken to educate 
physicians, hospitals and other providers on these regulations?
    Response: There are substantial, on-going efforts to inform and 
educate all covered entities regarding the Administrative 
Simplification regulations. These include:

 Publication of all Notices of Proposed Rulemaking and Final 
        Rules in the Federal Register, including any technical 
        corrections
 A comprehensive, up-to-date website with all information 
        relating to Administrative Simplification--available on the Web 
        at: http://aspe.hhs.gov/admnsimp
 Active participation in meetings of standard setting 
        organizations such as the Workgroup on Electronic Data 
        Interchange, as well as congressionally mandated advisors such 
        as the National Committee on Vital and Health Statistics;
 The issuance of Guidance Documents to help health care 
        providers and health plans come into compliance with the 
        regulations. The guidance is available on the Web at: http://
        www.hhs.gov/ocr/hipaa.
    CMS is reaching out to educate physicians and other providers in a 
variety of ways. For Medicare, they are focusing on reaching providers, 
both directly and through the Medicare contractors. They expect that 
CMS Medicare contractors will be ready to begin testing HIPAA 
transactions for claims and remittance information this Fall.

 Disseminating articles through contractor bulletins and 
        websites. The first article went out last Fall, and dealt 
        primarily with transactions. CMS is planning additional 
        articles regarding privacy, the National Provider Identifier, 
        testing, security, and claims attachments.
 Offering web-based training for providers, including an 
        overview of HIPAA. CMS also is developing self-assessment 
        guidance. A draft of the full course on self-assessment will be 
        completed in August, and the course should be available by the 
        end of 2001.
 Offering several Web resources, a summary of which will be 
        published on the Medlearn page by the end of July. Pointers 
        will be provided to materials at Washington Publishing Company, 
        Workgroup on Electronic Data Interchange, and other websites.
 Broadcasting information, via satellite, that is now available 
        from our web-based training and presentation materials. The 
        first broadcast is scheduled for later this year and should 
        reach several thousand providers at 600 satellite sites. We 
        will rebroadcast the information 3 or 4 more times.
 Developing a HIPAA brochure to be distributed at provider 
        conferences.
    My focus is on the State Medicaid programs and their critical intra 
and inter-state trading partners, such as for Medicaid, the State 
Departments of Human Services that provide health, screening, 
diagnostic and nutritional services to low income children, mothers, 
the elderly and disabled.
    While I expect each State to conduct their own HIPAA outreach 
efforts with physicians, hospitals, laboratories, pharmacies, nursing 
homes, and beneficiaries, CMS's role is to support State efforts and be 
a national resource on Medicaid HIPAA. To that end, CMS is working with 
staff at all levels of State government, including Department heads, 
Commissioners of human service agencies, State CIO's, legislative staff 
and the Governor's offices, who can provide executive support and 
resources to State HIPAA implementation efforts. CMS also has developed 
and distributed a 10-page bi-monthly newsletter, HIPAA Plus, covering 
news from national and regional sources. In April, CMS held the first 
annual National Medicaid HIPAA conference. Over 500 people from all 50 
States and Guam attended the 3-day conference. They plan to hold the 
second annual conference in April 2002. In addition, CMS has developed 
an interactive tool States can use to conduct a HIPAA ``gap analysis,'' 
called the Medicaid HIPAA Compliant Concept Model. This tool helps to 
highlight areas where States need to take action to ensure compliance. 
CMS has identified a representative in each State to assist with 
implementation of the model, and will hold monthly conference calls 
with States to share information. CMS will hold a working lunch at the 
MMIS conference in New Hampshire to review the new Version 2 of the 
model. The model is available on CD and on the web at Washington 
Publishing Company. Also, two brochures on the Medicaid HIPAA Compliant 
Concept Model have been distributed to the States, and a new brochure 
is in development now. Ultimately, one brochure will include a detailed 
view of HIPAA, a second will explain the Medicaid HIPAA Compliant 
Concept Model, and a third will be tailored for audiences requiring 
basic information on HIPAA.
    In the Medicare+Choice area, CMS's focus is on the plans 
themselves. CMS expects that they will conduct their own outreach to 
their providers and trading partners. In addition, CMS is planning a 
managed care HIPAA conference for September, at CMS headquarters in 
Baltimore, and CMS is developing a HIPAA self-assessment tool 
specifically for managed care plans.
    Question 65. With the recent announcement that HHS would implement 
the HIPAA as scheduled and as written, the President and HHS have taken 
a bold step towards protecting an individual's medical information. 
However, it is becoming increasing apparent that there are some flaws 
with the regulations. As an example, the regulations do not acknowledge 
that there are benefits to the public to know, through the press, about 
some basic health information. For instance, as presently written, some 
have argued that the public would not have been able to learn the 
status of the students shot at Columbine High School, the misconduct of 
health providers at a local hospital, or the medical condition of 
people involved in widespread or highly dangerous epidemics or 
diseases--unless, of course, each of the individuals consented to 
having this information released. Does HHS plan to address the lack of 
access to basic information that the public, including journalists, has 
the right to know or should know?
    Response: The Department is aware of the concern of journalists and 
other members of the press that the Privacy Rule does not place the 
public's right to know above the individual's right to decide whether 
to disclose his or her private medical information. A proper weighing 
of the public v. private benefits is made particularly difficult in 
this case due to the widely disparate views on what is A newsworthy and 
what is merely commercially profitable. The balance struck in the 
Privacy Rule was that, provided the individual did not object, the 
public B including the press B would have access to basic information 
about an individual who has been admitted to a health care facility. 
Basic information would include the person's name, location in the 
facility and general condition. The only condition on access is that 
the person making the inquiry knows the name of the individual whose 
basic information is being sought. In addition, as the question 
acknowledges, the individual can authorize the release of the 
information. Finally, there is no problem with covered entities 
releasing information that does not identify the individuals involved. 
For example, a hospital could release numbers of persons admitted 
following an accident and how many were in serious condition. We will 
evaluate the comments made by journalists, as well as others, to 
determine if these requirements unduly burden freedom of the press.
    Question 66. It is alleged by some that the recently implemented 
HIPAA regulations provide whistleblowers with no protection if they 
choose to go ``outside the system.'' If for instance, a paramedic 
becomes aware that the ambulance service he or she works for will not 
service certain areas, that paramedic is prohibited from objecting to 
that policy to anyone but an attorney, a health care agency, a public 
health authority or a health care accreditation organization, and then, 
only under certain limited conditions As has been often documented, the 
working relationship between regulators and the regulated often results 
in situations where few complaints are found meritorious and regulators 
sometimes fail to perform their jobs. Does HHS plan to permit a 
whistleblower to go outside the system without being subject to 
criminal liability?
    Response: The Privacy Rule provides when it would be permissible 
for a whistleblower to use or disclose protected health information in 
the course of exposing unlawful conduct, violations of professional or 
clinical standards, or other conduct that may endanger others. In many 
instances the complaint can be made without revealing the private 
medical information of any individual. The example used in the question 
demonstrates this. The Privacy Rule would not prevent a paramedic from 
publicly objecting to ambulance service disparities, including 
identifying areas of town which are underserved. It is not necessary to 
disclose individually identifiable health information to raise such 
objections.
    Question 67. Given recent reports of increased drug prices, does 
the Administration believe that $150 billion over 10 years is adequate 
to provide a prescription drug benefit? How does the President purpose 
implementing his state-run plan given the extensive opposition by the 
states?
    Response: The Administration is now proposing to spend $190 billion 
over the eight year period [FY2004-2011] on the Medicare drug benefit. 
We want to working closely with Congress in establishing the final 
specifications and administrative details of this program.
    Question 68. The NIH testified last September that it invested $217 
million in basic bio-imaging research in FY 1997 and indicated that 
spending in this field had increased since then. It is the Committee's 
understanding, however, threat NIH plans to transfer a much smaller 
amount of basic imaging and bioengineering grants to NIBIB. What is the 
funding level, which NIH has dedicated to NIBIB? How does this relate 
to the NIH resources dedicated to bio-imaging and bioengineering 
research in the past?
    Response: We are excited about the new opportunities that the new 
National Institute of Biomedical Imaging and Bioengineering (NIBIB) 
will create for support of fundamental research that applies principles 
of engineering, mathematics, computer science and the physical sciences 
to biological processes, disorders and diseases.
    The President's budget request for NIBIB for Fiscal Year 2002 is 
$40 million. These funds will be supplemented through a transfer of 
appropriate grants to NIBIB from other NIH Institutes and Centers 
(ICs). The process for identifying the appropriate grants for transfer 
is underway. After we review the entire slate of grant transfer 
candidates, NIH will submit the transfer information to the House and 
Senate Appropriations Committees for final approval and incorporation 
into the FY 2002 budget for NIBIB. We believe that this initial budget 
will form an adequate base upon which to build future year funding 
requests for the NIBIB and will permit careful stewardship and 
oversight of research programs in the first year of this newest of the 
NIH ICs. As rich opportunities emerge, we will adjust our future budget 
requests accordingly Institutes. As rich opportunities emerge, we will 
adjust our future budget requests accordingly. The transfer of grants 
to NIBIB is intended to strengthen and complement, not subtract from or 
substitute for, research programs in the other NIH ICs. NIBIB will 
support undifferentiated research not related on a one-to-one basis to 
the mission of another IC and act as a unique focal point for 
multidisciplinary research planning and strategic development. The 
other NIH ICs will continue those studies that are a natural fit within 
their current organizations those focused on specific diseases or 
conditions. The ICs and key constituencies in the imaging and 
engineering communities have endorsed this strategy for building the 
new Institute and continuing to support these studies across NIH.
    Question 69. The President has stated publicly his opposition to 
medical research on human embryonic stem cells. In fact, Mr. Secretary, 
you recently canceled a meeting of the NIH Committee responsible for 
reviewing applications from scientists seeking federal funds for this 
type of research. Please provide for the Committee the findings upon 
which President Bush has based his position that human embryonic stem 
cell research should be limited. Please also include a detailed 
description of the Bush Administration's position on stem cell/fetal 
tissue research, including when it is or is not appropriate.
    Response: The President is consulting with advisors and appropriate 
agencies who have been formulating policy recommendations in this area 
which is receiving close and careful attention.
    Question 70. Can you assure us that Congress' intent to provide 
adequate Medicaid payments to health centers will be protected by not 
applying the Upper Payment Limit to Medicaid payments made to 
individual Federally qualified health centers or, likewise, to all 
health centers in a State?
    Response: CMS has not previously had to examine the interplay 
between its regulations on maximum payments to clinics and its payment 
rules for Federally Qualified Health Centers. In order to respond to 
your question, I have taken a look at the issue, but my answer here is 
preliminary at best.
    It appears that because Federally qualified health centers fall 
into the clinic provider category, they are covered by the provisions 
of the Upper Payment Limit regulatory changes implemented in March of 
this year. However, since Federally Qualified Health Centers also have 
specific payment rules that were based on reasonable costs and are now 
governed by the new Prospective Payment System, I also believe that the 
Upper Payment Limit provisions would not come into play. So even though 
Federally Qualified Health Centers may be covered by the Upper Payment 
Limit regulations, those regulations should not result in any adverse 
impact on Federally Qualified Health Center payments.
    Question 71. Some have expressed a concern that Congress is giving 
NIH too much money without any guidance on where that money should be 
spent. While we have teaching hospitals and researchers all around the 
country that would benefit from extramural NIH grants, a significant 
amount of the money is spent on campus at NIH, and it seems likely that 
a large portion will be spent on bricks and mortar construction. Would 
you support that use of research money?
    Response: The NIH budget supports the individual research projects 
conceived of and conducted by either government scientists working in 
the NIH facilities or scientists working at universities or other 
institutions across the country and around the world. NIH support of 
these research projects includes, in whole or in part, the salaries of 
scientists and technicians, and the cost of equipment, supplies and 
procedures employed in the research. Biomedical research funding also 
encompasses the costs associated with providing and maintaining the 
physical infrastructure that is an essential component of the research 
enterprise.
    The Buildings & Facilities (B&F) appropriation supports the 
essential physical infrastructure required to carry out the intramural 
part of NIH's biomedical research mission. Rapid advances in the 
understanding of basic biology and the complexity of human disease are 
providing unique research opportunities for new treatments and cures. 
As the approaches to basic and clinical research evolve, the demands 
for, and on, research facilities change as well. Properly planned and 
equipped, safe, and flexible research facilities are important 
resources in the formula for achieving the next scientific advance or 
biomedical breakthrough. These facilities underpin the pace at which 
research can advance by accommodating new research tools and 
instruments, providing infrastructure, such as information 
technologies, and supporting animal models to investigate new 
therapies.
    More than 80% of the NIH budget goes to extramural programs, about 
10% is for intramural research, and only about 1% is for the NIH 
facilities infrastructure. The Congress reviews the programs in the NIH 
B&F budget request as line items, and the amount appropriated is 
balanced in terms of the intramural research needs and those of the 
entire NIH supported research enterprise. The B&F budget is the product 
of a deliberate, corporate, facilities planning process that addresses 
the immediate and longer-range facility requirements to meet the 
research needs of the entire agency. It strikes a balance among three 
critical facility priorities: the creation of new facilities for new 
and expanding scientific opportunities, the upgrading of existing 
facilities to keep pace with the changing requirements of ongoing NIH 
programs and the responsible stewardship of the entire NIH real estate 
portfolio. The proposals for new construction, renovations and 
maintenance are key elements to ensuring the vitality of the NIH 
biomedical research enterprise.
    Question 72. Regarding the cuts in rural health for telemedicine 
and outreach programs. Why is the President proposing to cut one of the 
most innovative and cost effective mechanisms that ensures access to 
specialty services for rural patients? The health care community has 
slowly been moving in the telemedicine direction for many years, slowly 
due to the high cost of technology.
    Response: The reductions in both the telemedicine and outreach 
programs are not cuts. The reductions are due to the removal of earmark 
funding from both authorities. The Outreach Line in FY 2001 had $19.5 
million in congressionally earmarked projects. The base amount for the 
program, the amount that was given out in competitive grants, was 
$31.067 million. For FY 2002, the Administration is proposing flat 
funding for this program with a total of $31.067 million.
    Question 73. Regarding the cuts for health professions training 
programs from $353 million in '01 to $140 million in '02, a cut of $213 
million. This funding supports training for a number of health care 
professionals including allied workers. We are facing a shortage of 
health professionals in the health care community. How can the 
President propose to help the uninsured through tax credits, thereby 
increasing utilization of health care services and at the same time cut 
programs that support training of health care professionals? Who is 
going to take care of the newly insured individuals when they try to 
access the health care system?
    Response: The Department is very concerned with health 
professionals workforce issues. HRSA's health professionals programs 
have worked to expand the health professionals workforce as well has 
recruit providers to underserved areas of the country. With regard to 
physicians, there is no longer an overall shortage. Between 1970 and 
1988, the supply of physicians grew 127% and current data indicate that 
the physician to population ration remains steady. The Department is 
working to address emerging shortages in the disciplines of nursing and 
dentistry. The President's fiscal year 2002 budget requests an increase 
of $5 million for Nursing Workforce Development and an increase of $1.4 
million within the Public Health Workforce Development cluster for 
dental public health programs. Additionally, Secretary Thompson is 
using his transfer authority to increasing funding to HRSA's Nursing 
Loan Repayment Program by $5 million this fiscal year. Finally, the 
Department is considering management reforms to the National Health 
Service Corps to improve the programs ability to recruit and retain 
qualified primary care providers to underserved areas.
    Question 74. I represent a rural state, Wyoming, so I am naturally 
concerned about ensuring adequate health services in rural areas. How 
does the President's budget specifically address the needs of rural 
communities?
    Response: The Administration continues to support rural health. For 
FY 2002, the Administration proposes level funding for all of the key 
rural health programs: Outreach, Telehealth, State Offices of Rural 
Health, the Rural Hospital Flexibility Grant Program and the Rural 
Health Research Center program. These programs help build rural health 
infrastructure development through grant awards under the Outreach 
Program and the Rural Hospital Flexibility Grant Program. The State 
Offices of Rural Health Program provides matching grants to states to 
maintain a rural focal point within each of the 50 states. In addition, 
the Rural Health Research Center grant program provides grants to six 
rural health research centers to conduct policy relevant and rural 
specific health services research. The Administration also provides 
level funding to the policy activities of the Federal Office of Rural 
Health Policy to continue its work within the Department on behalf of 
rural communities.
    Question 75. The National Health Service Corps is a very beneficial 
program in helping to recruit and retain health care providers in my 
state. The President has expressed his support for this program, and 
has provided an increase in funding for it in the budget. I also 
understand that the President is calling for various reforms within the 
program. Could you please explain what specific reforms the President 
is proposing?
    Response: We are examining the ratio of scholarships to loan 
repayments awarded as well as other set-asides to ensure maximum 
flexibility to better meet community requests for NHSC providers. To 
more accurately define shortage areas and target placements better, the 
Administration will seek to amend the shortage area definition to 
reflect other non-physician providers practicing in communities. We are 
also planning to enhance coordination with immigration programs such as 
the J-1 visa program.
    Question 76. The President's budget calls for reductions in funding 
for Health Professions and the elimination of the Community Access 
Program, both of which service rural areas. Can you please explain the 
rationale behind this?
    Response: The Bureau of Health Professions' program that primarily 
supports rural areas is the Quentin N. Burdick Program for Rural 
Interdisciplinary Training. While successful, this program supports 
relatively small training efforts that have secured support from other 
funding sources, including other Federal programs such as the 
Administration on Children and Families and private foundations, such 
as the Robert Wood Johnson Foundation. States participating in this 
program have found it to be a significant healthcare workforce pipeline 
for rural underserved areas. Since rural health workforce shortages are 
evident in all 50 states, we believe that we must work to attract 
health care students to the rural areas with rural clinical training 
experiences that are supported by training programs like the Quentin N. 
Burdick Program for Rural Interdisciplinary Training. To accomplish 
this goal the Bureau of Health Professions promotes the inclusion of a 
rural component in all of its grant programs.
    Question 77. I have concerns about Medicare reimbursement rates as 
they apply to rural vs. urban areas. There currently seems to be a 
great deal of disparity, and it is having a negative impact on the 
providers in my district.
    Take for example the town of Jackson Hole, in my home state of 
Wyoming. It is an affluent area with a cost-of-living comparable to the 
New York area. Medicare's allowable charge for a routine EKG in WY is 
about $25, in NY $59. A physician would be reimbursed $20 in WY for 
that EKG whereas in NY reimbursement would be $47. I have trouble 
understanding that disparity, especially when it is the very same test 
being administered in both places. This is causing many providers in 
rural areas to pull out of Medicare.
    Knowing that Medicare reform is a priority for this Administration, 
I would like to know if you see the Medicare reimbursement formula as 
problematic? If yes, does the Administration plan to address this, and 
how?
    Response: I recognize rural providers frustration with this system, 
and Congress, CMS, and I have worked to ensure all providers are paid 
appropriately. Rural states have long argued that, due to the way the 
wage index is calculated, payment amounts are weighted toward urban 
areas. There is a strong argument to be made, and obviously this is a 
difficult issue to address. I also share your concerns about providers 
in rural areas pulling out of Medicare, and I want to work with you to 
ensure that all Medicare beneficiaries have access to affordable, 
quality health care, regardless of where they live.
    As required by law, physician services paid under the physician fee 
schedule are divided into three components: 1) physician work, 2) 
practice expense (such as employee wages, rents, and medical equipment 
and supplies), and 3) malpractice insurance. On average, physician work 
represents 54.5 percent of the total relative value, practice expenses 
represent 42.3 percent, and malpractice represents 3.2 percent. 
Payments for a particular service vary among 89 geographic fee schedule 
payment areas only to the extent that the resource cost of providing 
such services varies. This variation is measured by geographic practice 
cost indices which, by law, compares the local costs in each of the 89 
areas to the national average for each of the three components.
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