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



                 DEPARTMENTS OF LABOR, HEALTH AND HUMAN

               SERVICES, EDUCATION, AND RELATED AGENCIES

                        APPROPRIATIONS FOR 2002

_______________________________________________________________________

                                HEARINGS

                                BEFORE A

                           SUBCOMMITTEE OF THE

                       COMMITTEE ON APPROPRIATIONS

                         HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS
                              FIRST SESSION
                                ________
  SUBCOMMITTEE ON THE DEPARTMENTS OF LABOR, HEALTH AND HUMAN SERVICES, 
                    EDUCATION, AND RELATED AGENCIES

                      RALPH REGULA, Ohio, Chairman
 C. W. BILL YOUNG, Florida           DAVID R. OBEY, Wisconsin
 ERNEST J. ISTOOK, Jr., Oklahoma     STENY H. HOYER, Maryland
 DAN MILLER, Florida                 NANCY PELOSI, California
 ROGER F. WICKER, Mississippi        NITA M. LOWEY, New York
 ANNE M. NORTHUP, Kentucky           ROSA L. DeLAURO, Connecticut
 RANDY ``DUKE'' CUNNINGHAM,          JESSE L. JACKSON, Jr., Illinois
California                           PATRICK J. KENNEDY, Rhode Island
 KAY GRANGER, Texas
 JOHN E. PETERSON, Pennsylvania
 DON SHERWOOD, Pennsylvania         

 NOTE: Under Committee Rules, Mr. Young, as Chairman of the Full 
Committee, and Mr. Obey, as Ranking Minority Member of the Full 
Committee, are authorized to sit as Members of all Subcommittees.
       Craig Higgins, Carol Murphy, Susan Ross Firth, Meg Snyder,
             and Francine Mack-Salvador, Subcommittee Staff
                                ________
                                 PART 2
                 DEPARTMENT OF HEALTH AND HUMAN SERVICES

                                                                   Page
 Secretary of Health and Human Services...........................    1
 Health Care Financing Administration.............................  413
 Administration for Children and Families.........................  887
 Administration on Aging.......................................... 1547
 Special Tables................................................... 1732

                              

                                ________
         Printed for the use of the Committee on Appropriations
                                ________
                     U.S. GOVERNMENT PRINTING OFFICE
 74-669                     WASHINGTON : 2001




                      COMMITTEE ON APPROPRIATIONS

                   C. W. BILL YOUNG, Florida, Chairman

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

                                  (ii)

 
DEPARTMENTS OF LABOR, HEALTH AND HUMAN SERVICES, EDUCATION, AND RELATED 
                    AGENCIES APPROPRIATIONS FOR 2002

                              ----------                              

                                            Wednesday, May 2, 2001.

                        OFFICE OF THE SECRETARY

                                WITNESS

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

                          Chairman's Statement

    Mr. Regula. Good morning and welcome, Mr. Secretary.
    You have a somewhat larger budget than you did in 
Wisconsin, I see. You have jurisdiction over $468 billion. 
That's a fairly sizeable challenge.
    Secretary Thompson. Only five countries in the world are 
bigger.
    Mr. Regula. Is that right? You even have more than 
Secretary Rumsfeld with broad responsibilities including human 
service programs, Head Start, child care, LIHEAP and a wide 
array of health programs. I've said this before--the Bible says 
there's two great commandments. One is to love the Lord and the 
second is to love your neighbor. We're the ``Love Your Neighbor 
Committee,'' and you're the ``Love Your Neighbor Secretary'' 
because there isn't a person in America that's not touched in 
some way or another by what you're doing in that agency.
    I think the President's budget recommendations outline an 
ambitious agenda for you and your department. There are several 
new initiatives, expansion of programs and I see there's a 
redirection of about $1.3 billion of departmental spending, 
which I assume gives you some latitude in the way you approach 
it.
    I was very pleased to see the President's recommendations 
in the areas of health research, the community health centers, 
I'm sure you had those in your State, the substance abuse 
treatment prevention and child care. I note that there's over 
$400 million requested for new programs that help some of the 
most vulnerable people in our society. So you have an enormous 
challenge and an enormous opportunity to leave a great legacy 
for people.
    We welcome you this morning and we welcome the Chairman of 
the Full Committee. I have to tell you, I think it's the first 
time he's been here, so that's a tribute to you.
    Mr. Secretary, we'll put your full statement in the record 
and you can summarize as you choose.


                         SECRETARY'S STATEMENT


    Secretary Thompson. Thank you so very much, Chairman 
Regula.
    First off, let me thank you for your kindness and 
consideration and also Chairman Young. I'd also like to thank 
my home State Ranking Minority Member, Congressman Dave Obey, 
who will be coming later. I'm honored to appear in front of you 
and all the distinguished members of this tremendous Committee.
    And it truly is love your neighbor. This Department, as you 
know, Chairman, actually interacts with every American, every 
man, woman and child somehow is affected by the Department of 
Health and Human Service budget. So it is an awesome 
responsibility that I have and that you have. Together, with 
bipartisanship, I think we do a great job and leave a great 
legacy and help a lot of Americans improve their quality of 
life.
    I'm confident that a review of the full details of our 
budget will demonstrate that we are proposing a very balanced, 
responsible earpiece to building a strong and healthy America. 
The budget before you today keeps the promises the President 
has made, and proposes new and innovative solutions for meeting 
the challenges that face this great Nation.
    Our proposal increases support for America's children and 
families. It enhances the groundbreaking research being 
sponsored by the National Institutes, which I know you and 
several other members have been up to see.
    Mr. Regula. We're planning to go back, incidentally, to get 
the members that missed the first trip.
    Secretary Thompson. It's exciting to be up there and see 
what's going on. It also begins the modernization of Medicare 
and expands access to health care. It reforms the way the 
Department's operations are managed or will be managed. Mr. 
Chairman, the total HHS request for fiscal year 2002 is $468 
billion. The discretionary component totals $55.5 billion. The 
amount before this Committee totals $300 billion in budget 
authority, of which $51.4 billion is discretionary.
    I know some of you have concerns about various decisions in 
the Department's budget, notably child care, AIDS and providing 
care for the uninsured. I'm here today to assure you that these 
are top priorities for this Administration and the whole 
Department of Health and Human Services.
    I would also urge you to look at the budget as a whole, and 
not just individual lines at 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 
more concerted and coordinated effort on an array of issues 
that can better serve all Americans.
    President Bush recognizes the importance of investing in 
our children. The HHS budget reflects the commitment. Overall, 
this budget provides nearly $3 billion in increased spending 
for children's programs through this Department. The budget 
also includes increases for both existing programs as well as 
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 to help working families, especially those trying to 
move from dependency to the work force, is assist them in 
obtaining child care. The President has requested a total of 
$2.2 billion for the child care and development block grant, 
which requires a 10 percent increase. And as proposed, 
tospecifically dedicate $400 million of that $2.2 billion for after 
school certificates within the block grant. These certificates would 
help low income working parents to pay for the costs of after school 
care for up to an additional 500,000 children who are under 19 years of 
age.
    These after school activities are to have a strong 
educational component, helping children to achieve success in 
schools. There's also an additional $150 million increase in 
spending on mandatory child care programs. Any way you look at 
it, these are real increases in child care.
    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 increase funding for substance abuse treatment by $100 
million.
    You can't talk about the health of American families 
without talking about women's health. This Administration 
recognizes the vital role that women play in the health of all 
of their families. Therefore, we're increasing funding for the 
Office of Women's Health by $10 million to $27 million, which 
is a 51 percent increase. Because we recognize that healthy 
women mean healthy families.
    This Administration also remains committed to fighting AIDS 
and HIV, both at home and yes, abroad. We have a serious 
problem internationally. The budget includes $10 million for 
AIDS and HIV programs, a 7.2 percent increase for research, 
treatment and prevention. It includes an 11 percent increase 
for international AIDS prevention as well. I hope we can 
discuss that later on this morning.
    Along those same lines, we have joined the State Department 
to develop a huge task force, provide real leadership in the 
fight against HIV and AIDS both domestically and 
internationally. The President, Secretary Powell and myself are 
committed, and passionately so, to fight this disease on all 
fronts.
    A top priority for this Administration is ensuring that the 
National Institute of Health will be able to continue to have 
the resources necessary to help turn these promises into a 
reality. The research that is conducted and supported by the 
NIH, and the most basic research of biological systems, to now 
the effort to map the human genome offers the promise of 
breakthroughs at preventing 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 resources for 
the NIH by 2003 is so vital.
    The $2.75 billion increase in this budget is the largest 
yet ever for NIH, and it will support an additional 34,000 
research grants, the most in the agency's history. The 
President also has included $200 million for asthma research, a 
12 percent increase, and also $768 million for diabetes 
research, an 11.3 percent increase.
    Of all these issues confronting this Department, nothing 
has a more direct effect on the well-being of our citizens than 
the quality of health care. 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 is the 
largest health insurer in the Nation. All of us are paying our 
taxes into this system, 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 nearly quadruple over the 
next 75 years, growing from 2.2 percent of the gross domestic 
product today to 8.5 percent in 2075. At the same time, 
revenues will only grow from 2.4 percent of GDP today to 5.3 by 
2075, a huge gap.
    What does this mean for the American taxpayer? Today there 
are nearly four workers paying for Medicare. By 2030, it will 
be down to two and a half to one. While modernizing Medicare is 
a cornerstone of our health care agenda, we're also proposing 
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 care centers by 1,200 
by fiscal year 2006. As a first installment of this multi-year 
initiative, we propose to increase funding for community health 
by $124 million.
    This Administration also is committed to giving States 
greater flexibility to manage their health programs. We also 
are acting to address the nursing shortage in America by 
increasing funding for nursing professional programs to $82 
million for the fiscal year, which is a 7 percent increase.
    For any organization to succeed, it must never stop asking, 
as you know, Mr. Chairman, you and I have discussed this, how 
we can do things better. And I am committed, as Secretary, to 
seek new and innovative ways to improve the management of our 
programs. 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. 
Preparing our budget, we began the process of evaluating the 
programs and the business practices of this Department, and 
yes, 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 going to successfully 
administer our operations.
    To that end, we're investing in modernizing and increasing 
the efficiency of the Health Care Financing Administration. As 
many of you know, I am spending this whole week working out of 
HCFA in Baltimore. I moved my whole office up there for a week 
to see how HCFA's run and are making the decisions. Today, I'm 
taking a little time off to be with you. But I'll be back there 
tomorrow and Friday.
    You can learn a lot by visiting HCFA. What I've learned is 
that HCFA is an agency that has been strapped with excess 
regulations and responsibilities, without receiving the 
resources necessary to do its job effectively. HCFA offices are 
filled with hundreds of dedicated employees, but also with 
outdated computers and bookkeeping systems, and demands that 
have spread the agency too thin for too long.
    HCFA needs our help now so it can help you and the American 
people. To help HCFA begin to meet these challenges, the budget 
has proposed an increase of $100 million or 5 percent for new 
program management. We are dedicating $36 million to update 
antiquated information technology systems, and we're working to 
ensure HCFA is more responsive, efficient and effective, as 
well as flexible in dealing with providers and States and 
health care providers.
    Mr. Chairman, I've talked about just a few of the dozens 
and dozens of exciting initiatives in this budget for 
theDepartment of Health and Human Services. A more detailed list is 
included in the written testimony that I have already submitted.
    The common thread, however, that binds all of our proposals 
together, is a desire to build a strong and healthy America and 
to improve the lives of the American people. I am prepared to 
work with each of you on a bipartisan basis to ensure that we 
develop a budget for this Department that effectively serves 
the national interest.
    I will be happy to answer any questions that you may have, 
and thank you for giving me this opportunity to make those 
remarks.
    [The statement follows:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
    Mr. Regula. Thank you, Mr. Secretary. I'm going to defer 
some of my questions so my colleagues, who have other committee 
commitments, have a chance to get them in. First of all, I want 
to call on our Chairman of the full Committee, who has, as he 
tells me, 23 years of service on this Subcommittee. I'm sure, 
Mr. Chairman, you've seen it grow a little bit in the amount of 
money.

                          ORGAN DONOR PROGRAM

    Mr. Young. Well, Mr. Chairman, thank you very much. I 
wanted to include my welcome to the Secretary. When he was 
appointed by the President to this very important position, I 
was very pleased with that because of his record of public 
service in Wisconsin, and also the fine management decisions 
that he brought to Amtrak. Finally got them starting to show a 
little bit in the black. They still have a little way to go, 
but he made a big improvement. A lot of the equipment is better 
now, he did a really good job. So I know he's going to be very, 
very successful in his role as a member of the President's 
Cabinet.
    He's a hands-on guy, I know that from experience, because 
we've talked about a number of things in the past that actually 
came about. The tobacco settlement was one of the big issues we 
dealt with. But early on, I think it was at the end of your 
first week as Secretary, you got personally involved in the 
organ donor program. And that's something that is very close to 
my heart. You know, I have worked for years on the marrow donor 
program.
    Give us a couple of minutes on where we're headed with the 
organ donor program and how successful your effort has been so 
far. I know it's only been a short while. But I also know that 
when you move, things happen.
    Secretary Thompson. Well, thank you so very much, Mr. 
Chairman. First let me thank you for your leadership on the 
Subcommittee and the full Committee, and also your great 
support for organ donorship in America.
    We have a serious problem. Seventy-six thousand Americans 
are waiting. We're losing about 300 individuals each and every 
week. There are more people being added to the list. Six 
thousand one hundred individuals died last year waiting for an 
organ. That's just not right in this compassionate country of 
ours.
    What we have to do is we have to get the message out. Only 
22,000 individuals received organs last year. Can you imagine 
the angst and anxiety that person has got to go through, 
waiting, watching the clock, wondering whether or not they're 
going to beat the clock, and be one of those lucky individuals 
to get an organ.
    So what we're trying to do is we're trying to put on a lot 
of new initiatives. The first thing we were able to do is we 
were able to start a new group, employers and employees. We got 
the three big automobile companies, Daimler Chrysler, Ford and 
General Motors, with UAW, to write into their contract that 
they will work in a collaborative way in order to encourage 
employees to sign up to become organ donors. They're going to 
go throughout all of their factories to do so. We've got 18 
companies to do that so far. We should have thousands of 
companies across America, every State, working with their 
employees.
    The second thing I think we should do is I think we should 
recognize the tremendous amount of giving that people do give 
when they give an organ or marrow or whatever. And I would hope 
that Congress would give a Congressional gift of life medal. I 
think it would be a wonderful day, some day next year, if we 
could get five families for every Congressional district across 
America with one or two recipients to come to this Capitol and 
be able to receive a gift of life medal, to recognize what 
these families have done, as well as have the recipients get up 
and say how important it is to have a second chance.
    What that would do to all of America would highlight it. It 
wouldn't be that much, but what a great thing it would do for 
you, for your constituents and for America.
    The third thing, we have to get people to sign donor cards. 
What we have to do is we have to have them talk to their 
families. Because we have found that once you sign anorgan 
donor card, if you don't talk to your family members, 50 percent of the 
family members will tell the doctor that they don't want to give up the 
organs. So it's important for you to discuss this, it's a difficult 
thing.
    The fourth thing I would like to see happen is something I 
did in Wisconsin. I did the gift of life medal in Wisconsin, 
and it was the most moving, emotional thing I've ever done in 
my life and I would hope that we could convince Congress to do 
the same thing.
    But a young girl, Kelly Knockrimer, who is very advanced, 
very young age, before she turned 16, she went to her mother 
and said, I would like to give my organs if something would 
happen to me. And her mother said, well, nothing's going to 
happen to you, you're only 16. She got her driver's license, 
and she signed her driver's license.
    Thirty days later, in a freak accident, young Kelly was 
killed. She gave away her organs, her mother gave away the 
organs. Three families, two from Wisconsin and one from 
Missouri, were saved, because of Kelly Knockrimer. Her mother 
came to me and said, can't we do something, Governor, to be 
able to remember Kelly? And we came up with a program in which 
every young boy or girl, young man or woman, in Wisconsin, 
before they get their driver's license, has to have a mandatory 
30 minute course on organ donors.
    It's not much, but it's the Knockrimer bill, and what a 
great idea, to convince young people you know that they should 
talk about it and get involved in it. Those are the kinds of 
simple steps we can do to reverse this instead of an additional 
300 people being added to the list each and every month, let's 
see if we can't reduce it by 300 each and every month until we 
solve this problem.
    Mr. Young. Mr. Secretary, that's very inspiring. And I 
think it's a great idea to give the life medal that you just 
mentioned.
    Many of us here have seen the importance of organ donor 
programs within our own families. But right here in Congress, 
we have a perfect example. We have a long-time serving member 
who was near death just a few years ago. In fact, rumors of his 
death were already on the Floor. He had a double lung 
transplant and he's alive and well today and he has performed 
well for this country, especially in the field of national 
defense.
    And I'm talking about Congressman Spence of South Carolina, 
who served as chairman of the House Armed Services Committee 
and has made a great contribution. So we've all had an 
opportunity to see the value of organ transplants.
    Mr. Chairman, you have very good attendance today, so I'm 
not going to use up any more time, because I want to make time 
for all the other members that are here. Thank you very much.
    Mr. Regula. We welcome your observations of the role of 
this Committee. I think you're the longest serving member that 
is presently a part of it.
    Mr. Young. I think except for Mr. Obey.
    Mr. Regula. Right. Was he on ahead of you?
    Mr. Young. Yes, he was.
    Mr. Hoyer. After 17 years, I feel like a newcomer. 
[Laughter.]
    Mr. Young. You made up for lost time, Steny. [Laughter.]
    Mr. Regula. It is kind of interesting, the Secretary for 
the Interior Subcommittee of Appropriations just got a lung 
transplant about two weeks ago. Mr. Hoyer was very helpful with 
Johns Hopkins in making it happen, and she's getting around now 
and seems to be doing well. It saved her life, it's just that 
simple. She waited a long time.
    Secretary Thompson. It's such a moving thing. And I tell 
people, you know, and I speak all over the country, I tell 
people, if your organs had a chance to vote on your deathbed, 
don't you think your eyes would vote to continue to see? Don't 
you think your heart would vote to continue to beat? And I know 
your kidneys and livers would continue to vote to enjoy that 
Wisconsin beer, milk and cheese. [Laughter.]
    Mr. Regula. Mr. Obey, our Ranking Member, wants to defer to 
Mr. Hoyer.

                          COORDINATED SERVICES

    Mr. Hoyer. Thank you, Mr. Obey.
    Mr. Secretary, Mr. Istook, who is a member of this 
Committee, we're holding a hearing now for the Treasury Postal 
Subcommittee, so I'm going to have to go there right now. But I 
note in your statement, you say at page 16 of your statement, 
the only way this Department can effectively serve its many 
clients is if we commit to making the necessary investments in 
our management and infrastructure. You go on at the beginning 
and throughout saying we need to do things new ways. And I 
share that view.
    Then you say later on, that you recognize where you need to 
invest, but also where resources need to be redeployed to more 
effective use. Mr. Secretary, I have been talking for many 
years about the necessity for the Federal Government, including 
your Department, as well as the Departments of Education, 
Labor, Transportation, Agriculture, and the other agencies that 
have programs dedicated to helping children to coordinate 
better at the Federal level.
    These services use the funnel example, we have all these 
resources and all these departments. And you have the spigot of 
the funnel where you have the child, that all of us want to 
help in one way or another. To the extent, Mr. Secretary, you 
and your colleagues in the Cabinet can come to grips with how 
better to not only coordinate those resources but to also co-
locate those resources, so that those who access those services 
will be empowered and enabled to do so in a better way.
    So I was very excited to hear your thoughts about new ways 
of doing things, because I think we can do it better. I think 
we can help States, and you know that as a Governor, and LEAs, 
local education agencies, and other organizations that 
ultimately are in the front line of delivering the services 
that we talk about and fund, but that they deliver. We don't 
really, for the most part, deliver services. It's States and 
local governments that do that.
    So I would look forward, I have a bill in, or I'm going to 
have in, the Full Service School Improvement Act, which seeks 
to enhance the co-location of services from your Department, 
Head Start being a specific example, and other services as 
well, in school settings where the only local, as we all know, 
the only local facility we have in every community in America 
is an elementary school. No other facility can we name like 
that. Maybe a firehouse, but few others.
    I would look forward to working with you toward that 
objective and carrying out the premise of your statement, which 
says we do good things and we need to do them better, so that 
we can help people more.
    Secretary Thompson. Congressman, that's music to my ears. I 
don't know how I could do a better job than what you just 
articulated. It needs to be done.
    Mr. Hoyer. I look forward to working with you, Mr. 
Secretary.
    Secretary Thompson. HUD, for instance, you know, has got 
some programs for the homeless. We've got programs for the 
homeless, but we never communicate, we never give the services 
to the proper people. Food stamps, food safety, all of these 
kind of things that need to have a better coordinated effort. 
And I'm not here to tell you that I'm the expert, I've only 
been on the job 80 some days.
    But I can see that there seems to be a fracturing of the 
way the services are delivered. And I would love to be able to 
work with you and members of this Committee on a bipartisan 
basis, how we can develop a better coordinated effort. We all 
want to deliver better services for children. There's no 
question about it. It's an ultimate objective, and we should 
have that as an ultimate objective.
    But I don't think we're doing as good a job as we can or 
should.
    Mr. Hoyer. I agree with you 100 percent. And we have in a 
bipartisan way, Mr. Portman and I had a bill in that passed the 
Congress, signed by the President, which enhances local 
jurisdictions' ability to come together and make one 
application for various grants. It makes it much simpler. But 
we can work on this in a bipartisan basis.
    I put $500,000 in this bill maybe five years ago for study. 
I worked with them. Unfortunately, they focused on what the 
locals could do to facilitate and come together. That was good. 
But what we really need to focus on is how we can make it much 
simpler for States and local governments, this myriad of 
programs that are good programs, but are uncoordinated at this 
point in time between HUD, between Ag and HHS, between 
Department of Education and Department of Labor, etc.
    Mr. Chairman, thank you very much for giving me this time. 
Mr. Secretary, I'll look forward to working with you on this.
    Mr. Regula. Mr. Miller.
    Mr. Miller. Good morning, Mr. Secretary. It's a pleasure to 
have you here for the first time.
    Secretary Thompson. Thank you.

                           STEM CELL RESEARCH

    Mr. Miller. Let me agree with the comments by Mr. Young, 
I'm delighted you're taking on this issue of organ donation. I 
think the bully pulpit that you have can be very beneficial, 
and obviously we share it. I'm really delighted on that.
    I'm also pleased with your NIH increase. I'm also pleased 
you're working out at HCFA. It's been one of the most 
complained about agencies in the Federal Government for many 
years. I don't think Ms. Scully's been approved yet.
    And you also have a man from Florida that's going to be 
there, too. So I'm glad you're going to get first hand 
experience.
    The first question is, an issue that's come up is stem cell 
research. I personally support allowing the scientists to make 
as much decision as they can. I think you've been in that 
position in Wisconsin. So as a Republican, I encourage you to 
not tie the hands of scientists as they address that issue. The 
potential is enormous, as you're well aware. There are of 
course other sources for stem cells, but we don't know whether 
umbilical stem cells will do the same that stem cells left over 
from in vitro that are there. So I don't know where you stand 
on your decision, but please, hopefully you'll let scientists 
have the opportunity to find these miracle cures for 
Parkinson's or Alzheimer's, or all the potential that exists 
out there. I don't know if you wish to comment on that now.
    Secretary Thompson. Thank you very much, Congressman. It's 
a very contentious issue, and of course, I am passionate about 
research, as everybody knows on this Committee and in America. 
There is the legal impediment that's being reviewed, and the 
legal decisions and the scientific and ethical decisions are 
being reviewed. Those reviews should be on my desk by the first 
week in June, and we will be making a decision on that.

                               CDC BUDGET

    Mr. Miller. Good luck on your decision.
    A few weeks ago this Committee, a number of us, were in 
Atlanta to visit the CDC, which is obviously a great 
organization. I was a little disappointed in the total budget 
appropriation that you've requested. Could you justify that 
appropriation? Because it seems like it's on the low side, when 
the needs are so great there.
    Secretary Thompson. Well, CDC just does an excellent job. 
I've been down there as well, and I'm just amazed at the job 
they do. A lot of the things that we put into the budget are 
for increasing the capital physical plants. There are 22 
buildings that we're renting in Atlanta, 22 various buildings 
all over the city. What I'm trying to do is develop a plan in 
which we can build on our campus. We've got the real estate, 
but we should be consolidating all of those buildings. It would 
save money. It would actually save money, if we had the capital 
buildings built on our land instead of all over, the people 
dispersed throughout the community, 22. So we put in an 
additional $150 million.
    I know CDC would have appreciated $175 million, but I 
fought very hard to get $150 million, and it's a giant step 
forward in order to start another laboratory and another office 
building on the property that we own. I would hope this 
Committee would look at it.
    In regards to the other dollars, we put a lot of money into 
NIH. We looked at the total budget, Congressman Miller, and we 
felt that we could do a better job on contagious diseases and 
so on if we put the money in NIL. That's where the money went.
    Overall, you'd have to give me a specific question as to 
what you see as an area we didn't deliver on, because I think 
we did quite well considering the money we had.

                             NURSE SHORTAGE

    Mr. Miller. We'll submit a couple of questions.
    Let me ask one more question, there was something you made 
comment about, that was the nurse shortage problem. A 
generation ago, nursing and education were the priority for 
women, and now women have great opportunities everywhere. But 
there's a real area of retirements coming, both in education 
and in nursing.
    It's very concerning, I know in the State of Florida, the 
State legislature is trying to upgrade standards in nursing 
homes and raising the number of nurses, CNAs, but you've got to 
find them to work. So it's not just the college graduate RNs 
that are needed, we need CNAs and whether we can get more from 
overseas, but we hate to take them away from countries that 
need that type of service, too.
    So I'm glad you're putting some emphasis in there. We do 
have a crisis coming up in the years ahead for the staffingof 
hospitals and nursing homes and home health agencies, the whole area of 
caregivers. I think that was addressed the other day in a Senate 
hearing. But it's going to take a bully pulpit, too, on that one, in 
addition to the resources.
    Make sure you consider the CNA level as much as the RN 
level, too.
    Secretary Thompson. Right now there's a shortage of 250,000 
CNAs in this country, and 90,000 RNs. That is a tremendous 
shortage and it's going to increase unless we do something. 
It's not only, I can't do it alone. I need your help, 
Congressman, and this Committee and this Congress, in order for 
us to try and work together on the nursing shortage.
    We have to encourage a lot of young people, men and women, 
to go into nursing. And it's an important, absolutely important 
profession that we have to articulate, the satisfaction and the 
rewards going into nursing.
    We also have to find ways in which scholarships and loans 
would put money into it. But there's always a question whether 
or not it's enough. We have to look at that as a way to do it. 
We also have to look at the way the rules and the regulations 
and the paperwork, a lot of people are telling me that the 
amount of rules and regulations and paperwork that nurses have 
to spend their time in filling out takes away from their job of 
providing health care to the patient. And that's frustrating to 
them, and a lot of people are leaving.
    So there's a lot of problem areas that we have to look at. 
But there's no simple silver bullet out there. We have to work 
together on a bipartisan basis. It's going to get worse unless 
we address it. And I appreciate so much your question. I 
appreciate also the questions I've received from other 
Congressmen who want to work on this on a bipartisan basis. 
This is one area that I think we can all work together on on a 
bipartisan basis and hopefully solve, or at least address the 
problem and try and have an improvement as far as the numbers 
going into nursing.
    Mr. Miller. Thank you, Mr. Chairman.
    Mr. Regula. Mr. Kennedy.
    Mr. Kennedy. Thank you, Mr. Chairman.
    Thank you, Mr. Secretary, for your leadership on the organ 
donation. It's a terrific program. We're trying to do more in 
Rhode Island about that.
    I wanted to focus my----
    Secretary Thompson. I'm coming up and speak at an organ 
donor's program in Rhode Island.

                           MENTAL HEALTH CARE

    Mr. Kennedy. Like I said, we're excited about what you're 
doing. I look forward to having you up in my State.
    I wanted to focus your attention today on mental illness. 
The World Health Organization, World Bank and Harvard 
University conducted a large study on global burden of disease, 
and ranked mental illness, depression, depression alone is the 
single biggest cause of disability. Despite lost productivity 
to work in this country, despite enormous costs of untreated 
mental illness, our system imposes additional barriers to 
treatment.
    Medicare, for example, requires a 50 percent co-pay for 
outpatient mental health, but only 20 percent for other 
diseases. And it caps hospital stays for mental illness, but 
not for other diseases.
    The implication of this differential coverage is that 
mental health care is not real health care, that mental illness 
is somewhere between elective surgery and real health care. Mr. 
Secretary, given all these studies, the Surgeon General's 
report on children's mental health, the National Academy of 
Sciences that says that it's unsupported that there's any 
physical health difference in science between mental health and 
overall health, will you support parity for mental health 
insurance coverage in this Nation in Medicare?
    Secretary Thompson. I did as Governor. In fact, I was maybe 
not as passionate as you, Mr. Kennedy, in your remarks right 
there. But I certainly feel as strongly as you do about it. It 
needs to be done. But it's not going to be overnight, I've got 
to tell you that.
    Mr. Kennedy. I understand that.
    Secretary Thompson. There's been a long period in which 
there has been a degree of discrimination for mental health 
versus other overall health, as you've indicated.
    Mr. Kennedy. Absolutely.
    Secretary Thompson. There have been a lot of rules and 
regulations, and every time you change it, you know, there's a 
fiscal impact. I can tell you this much, I think it needs to be 
done, I think we should work in that regard, and I would like 
to work with you on that.
    But I want to tell you, it's not going to happen as quickly 
as you would like or I would like.
    Mr. Kennedy. I agree. Your leadership, though, like with 
the organs, speaking out on this issue, would be very 
instrumental. Because again, this is a matter of stigmas, which 
is one of the biggest barriers. Talking about it like you do 
organ donation, in terms of your audiences, would be a big, big 
help. I encourage you do to that whenever you have a chance.
    Secretary Thompson. Thank you.
    Mr. Kennedy. With regard to that, we have found that the 
Community Mental Health Services block grant, has been a very 
effective tool in implementing the President's idea of the 
Olsmtead decision, with its New Freedoms Initiative. Try to get 
some community based support services. And in my State of Rhode 
Island, institutionalization of children with serious mental 
illness is a default option. The chief of adolescent and child 
services at Bradley Hospital, one of the nation's leading in 
psychiatric hospitals, says half of their children any given 
night could be in less intensive community based settings.
    What we need to do is, and all the experts are telling me 
this, we need to support additional money for the Community 
Mental Health Services block grant. Unfortunately, this budget 
freezes the Community Mental Health Services block grant, and I 
would encourage you to review that. Because it goes to what 
you're asking for, more implementation in the community and 
less bureaucratic setting. This is all about what I think your 
leadership has already demonstrated about getting it into the 
community.
    Finally, in respect to two areas of mental health coverage, 
one for children, obviously we could do a lot better in Part C 
of IDEA, which is not in your Department, but goes to Mr. 
Hoyer's whole issue of trying to get some coordination between 
all the different departments when it comes to children's 
issues. That could be increased.
    But the point I wanted to make is, if we could get early 
interventions with children in the schools, we'll save 
ourselves so much money on Special Ed, so much money on other 
programs that probably kick into the Justice Department and 
into other services. It's definitely our charge to reach out 
into the schools.
    Secretary Thompson. Can I Just interrupt real quickly?
    Mr. Kennedy. You bet.

                            PRACTICE HEALTH

    Secretary Thompson. I really think this Committee and my 
Department that I head needs to look at preventive health 
overall. I really don't think we have done enough in America. 
And you, as the policy makers, to look at ways in which we 
invest our money up front, to wait until people get really 
sick, and ten we put the money in there. It costs more, and we 
should be doing things in mental health and children and so 
forth up front. It would be an investment that I would like to 
see us look at.
    I know it can't be done overnight, but I think that's the 
direction you would like to go. I know it's the direction I'm 
trying to lead the Department.
    Mr. Kennedy. Well, you know, with CDC, which we did get a 
chance to go down and see, the biggest health problems in the 
future are all behavioral, obesity, smoking continues to be a 
problem, diabetes, managing asthma, which you put an increase 
in, all has to do with behavioral and managerial science. So 
your emphasis on mental health not being something of a stigma, 
but focusing on total health, would be incredibly important.
    I like the idea of incenting. And HCFA, now that you're up 
at HCFA, if we could just get HCFA to incent reimbursement for 
outpatient and preventive services. I don't know how you do it 
with the insurance industry now looking at the bottom line 
every quarter. Once you have a public offered company, you're 
in trouble when it comes to an insurance company, because they 
need the bottom line rather than the long term health 
consequences of investing early and prevention, rather than 
just taking care of people when they get sick.
    So your leadership in HCFA to try to reverse this 
reimbursement mechanism to provide incentives for prevention 
would be extraordinary. Mr. Chairman, finally----
    [Laughter.]
    Mr. Kennedy [continuing]. Senior mental health; those 85 
and over, are six times more likely to commit suicide. We have 
a baby boom generation ready to retire. We have no 
infrastructure in place to deal with identifying depression 
among seniors. Over-utilization under Medicare is one of the 
biggest problems we have in terms of a budget consideration 
going forward. And you mentioned Medicare coming in.
    We could cut that down if we had properly diagnosed 
depression. I can tell you more anecdotal instances where 
seniors come to me and tell me about how they went to every 
last doctor, the podiatrist, the heart doctor, this doctor, 
that doctor, we know we're all getting the bill, why can't we 
address their fundamental problem, which is a mental health 
problem? Our doctors are not trained to identify mental health 
problems. All I would do is encourage you to try to help our 
medical schools try to get more mental health training, so they 
can more properly diagnose depression early on, rather than 
leave it untreated.
    Secretary Thompson. I want to work with you, that's all I 
can tell you, so you come up with your ideas, and let's sit 
down and discuss it at greater lengthy with you in your office 
or mine.
    Mr. Kennedy. Me too.
    Secretary Thompson. I've told the people at HCFA, I 
addressed all the employees, you'll appreciate this, I said, 
you know, you spend a lot of time up here trying to find a way 
to say no. I would like to see a behavioral change and try to 
find a way to say yes.
    Mr. Kennedy. All right, thank you, Mr. Chairman.
    Mr. Regula. Good for you, that's right. Mr. Wicker.
    Mr. Wicker. Thank you, Mr. Chairman.
    First, I want to yield some of my time to Mr. Kennedy on 
the issue of prevention, but I see I don't need to. He took it. 
[Laughter.]

                          OBESITY AND DIABETES

    Mr. Wicker. And I'll get back to that in a minute.
    It is wonderful to have you here. I think you can see from 
the questions on both sides of the aisle that there's a great 
deal of enthusiasm for the type of leadership we believe you'll 
bring to this very difficult department.
    Chairman Young mentioned Amtrak. Frankly, I admire your 
ability to think outside the box and think for yourself and not 
take an old answer for granted, and I expect you to do the same 
thing as Secretary.
    Also, Mr. Chairman, you mentioned the two greatest 
commandments, love God and love your neighbor. The Secretary 
echoed that in his initial remarks. It happens that my wife and 
I teach fourth grade Sunday School at First Baptist Church in 
Tupelo. We taught that very lesson this past Sunday.
    The only thing I would add is that what the Scripture says 
is that the first commandment is love God, and the second 
commandment is like unto it, love your neighbor. In other 
words, the two commandments are almost the same. When we take 
care of our neighbors, as your department does so well, we are 
fulfilling that first commandment, too.
    Back to what Mr. Kennedy said about prevention. I couldn't 
agree more with what you and he have both concluded. It does 
concern me, therefore, that the budget proposes to cut chronic 
disease and prevention, health promotion, by some $22 million. 
We also had $152 million for a one time program, so that 
actually amounts to a $175 million cut. I think we really need 
to re-look at that, Mr. Secretary. Because what has been said 
already is correct.
    The research is part of it. And NIH, I support every penny 
of research that you want to put into NIH. But they are telling 
us solutions that we then need to apply. And as Mr. Kennedy 
says, we already know what the great killers are. The greatest 
causes of disease and disability are heart disease and stroke, 
cancer, diabetes and arthritis. And we know right now how to 
prevent these.
    So I would hate to think that now that we've got some 
programs, State based programs, to prevent these diseases, such 
as diabetes, cardiovascular disease, this huge epidemic of 
obesity and particularly childhood obesity, and we're about to 
go nationwide with those, I would just hope that the 
Administration could either explain its rationale about cutting 
appropriations for disease prevention, or perhaps better yet, 
get with the Committee, get with the Subcommittee, and rework 
the numbers, so that we can continue to do the research, but 
also the prevention on things we already know how to address.
    Secretary Thompson. I appreciate your question. Let me try 
and answer it this way. We have to do something about obesity 
and diabetes in this country. It's going to be growing by 
epidemic proportions in the coming years. What we have to do is 
we have to change the quality of life issues. People at CDC 
tell me that 75 to 80 percent of the diabetes in America and 
the conditions affected in diabetics, could be alleviated by 
eating properly and exercising properly.
    Now, we've done a fairly good job of reducing smoking in 
America. We should redouble our efforts to inform people about 
eating properly and about exercising properly. The 
Administration feels very strongly that we are close to coming 
up with some breakthroughs on some of these chronic diseases. 
That's why we've put the money, we put in an additional $629 
million in research up at NIH for these diseases.
    Granted, there's a $23 million reduction in CDC. But when 
you compare that with a $629 million increase at NIH, we think 
that's a better bang for the buck.
    Now, it's in your power, you know, to change that. But we 
think that NIH and research, in order to find that, is 
something that needs to be done. That's why we made that 
decision, Congressman.
    The second thing is, in regard to asthma, we put in a lot 
of additional money up there. Because we're looking for some 
medical reasons to reduce asthma. Asthma happens to be the 
number one cause, especially for poor children in urban 
settings, as to health reasons, to skip school. What we need to 
do is find a way to prevent that or reduce it. That's what 
we're trying to do through NIH. That was the decision that was 
made.
    Mr. Wicker. Okay, I want to listen further to you on that, 
on the contention that further research at NIH on diseases such 
as cardiovascular and diabetes gets it out to the consumer. I 
will just add, and I will not ask a question, that the CDC 
testimony has always been that the State based cardiovascular 
disease program is a good program, it's working and it's ready 
to go nationwide. And so I just look forward to visiting with 
you further on that.
    Secretary Thompson. I appreciate that, Congressman, and I'm 
very accessible, as people will tell you, be more than happy to 
sit down and discuss it at greater length with you.
    Mr. Regula. Mr. Obey.

                          DEPARTMENTAL BUDGET

    Mr. Obey. Thank you, Mr. Chairman.
    Governor, Mr. Secretary, it's good to see you. Sorry I was 
late, but I had a few other things I had to deal with this 
morning.
    Before I ask a few specific questions, I would simply like 
to make a general observation about the Administration's budget 
for your Department. And I know that you tried as much as you 
could in order to get the best number that you could for the 
agency. The budget does have an increase of 14 percent for NIH. 
Frankly, both parties have been stumbling, running to the 
nearest microphone for the past two years, each trying to out-
do the other one in terms of support for NIH. And that's going 
to continue. It's become a holy picture item in this budget.
    I'm all for seeing those increase. The problem is that when 
those increases in research occur, we get more knowledge that 
very often will also create more expensive options for people 
who now have hope where there was none before. And yet, given 
the shape and nature of our health care system, we often can't 
deliver the goods in terms of the results of that research to 
the poorest people in this society. And we have a devil of a 
time disseminating the information, especially to rural areas, 
that are really underserved medically in many, many ways.
    I think this budget in that sense exacerbates that problem. 
Because if we gave NIH the 14 percent increase that they're 
asking for, and increased nothing else at HHS, the result would 
be about a 6 percent increase in the Department's total 
appropriation. But that was too large to fit into the 
Administration's budget plan, so they made a wide ranging 
series of cuts. There are very few programs that receive the 4 
percent increase that has been talked about in the press. And 
there are a number of programs that received actual cuts below 
current year's level.
    The administration's basic budget is a $2.8 billion 
increase for NIH and essentially a $200 million cut when you 
look at the ups and down for other remaining programs. If you 
look at some specifics, in terms of what was delivered this 
year versus what will be delivered next year, the Low Income 
Heating Assistance Program will be about $500 million short of 
the actual money that was delivered for this year.
    HRSA, the agency most involved in trying to get basic 
health care to rural areas and inner cities, and to uninsured 
people, will receive a 10 percent cut below the current level. 
Adjusted for inflation that's more like a 13 percent cut. For 
CDC, some of those cuts have already been mentioned by people 
on both sides of the aisle. Head Start receives a 2 percent 
increase, which is not enough to even cover the mandatory cost 
of living adjustments and will lead to a reduction in the 
quality of that program, in my view.
    And so I am concerned about the fact that we're going to 
have some very large tax cuts for some very wealthy people. But 
it's like our friend Harvey Dueholm used to say in the 
legislature, the poor and the rich get the same amount of ice, 
but the poor get theirs in the winter time. I'm not very 
enthralled by that result.
    But having stated that, I'd like to ask a couple of 
specific questions about provisions of your budget. And they go 
to the issue of States being given more flexibility in using 
health grants.
    Let me ask you to clarify a point, where I think the 
proposed legislative language is ambiguous. You allow 20 
percent to be moved around. Is that 20 percent limit to be 
applied grant by grant or only to the aggregate of all grants 
that a State receives?
    Secretary Thompson. It's supposed to be only the aggregate, 
Congressman.
    Mr. Obey. Only the aggregate? All right. So will this apply 
to grants that are awarded on a competitive basis, rather than 
under a formula?
    Secretary Thompson. It's supposed to. But I'm not exactly 
sure on that, Congressman.
    Mr. Obey. If there's somebody here who could tell us that, 
or if somebody----
    Secretary Thompson. Yes.
    Mr. Obey. So the answer is, it would apply, the flexibility 
will apply to grants that are awarded on a competitive basis, 
rather than formula?
    Secretary Thompson. That is correct.
    Mr. Obey. Let's suppose the State wins a grant based on the 
strength of its application. Would the State then be allowed to 
use part of the grant funds for something completely different 
from what was described in its application?
    Secretary Thompson. It's our understanding that that would 
be put through the rules, and they would not be able to do 
that. They would have to be in the basic overall rubric of what 
the grant was for.
    Mr. Obey. Well, I've got a number of other specific 
questions for the record, so that we can understand the 
details.
    Secretary Thompson. Why don't you submit them and we will 
answer them for you, Congressman.
    Mr. Obey. I'd appreciate your responding to that.
    Secretary Thompson. I'd be more than happy to.

                        COMMUNITY HEALTH CENTER

    Mr. Obey. Then with respect to community health centers, I 
note that the President's announcement made a lot of the fact 
that you were providing for an increase over last year. But as 
I look at the numbers, the increase that's provided this year 
is actually smaller than the increase that was provided last 
year for that same program, isn't that the case?
    Secretary Thompson. That is correct. It still is a huge 
increase, Congressman, overall. We're trying to almost double 
the number of underserved and the uninsured patients that's 
going to be covered from 11 million. Our goal is to get it up 
to 20 million.

                           STEM CELL RESEARCH

    Mr. Obey. I know what the goal is. My problem is, I don't 
think the recommendations are going to do enough to help get us 
to that goal. Because first of all, it's a smaller increase 
than we provided last year, which is, I think, a quaint way to 
reach a goal, by slowing down. And secondly, I think that it's 
financed by taking virtually the same amount of money out of 
efforts to coordinate those services in a number of 
communities, including an area like Milwaukee, which got a 
$900,000 grant under the program that's being cut back, in 
order to help finance this $150 million increase. And I don't 
see much gain there.
    I would also simply make one additional point, because I 
don't want to take more time than is necessary. This issue of 
stem cell research. I envy the certitude with which people on 
both sides of that question plunge ahead and attack people who 
disagree with them. But I remember Eric Sevareid said once, 
that one of the requirements for a civilized citizenry was that 
we hang onto our informed doubts in a world of passionate 
certainties. And I think in this area, I frankly don't know 
what the right place is to cut the line with respect to stem 
cell research.
    There are incredible equities on both sides. And I simply 
hope that you are allowed to make that decision on the basis of 
merit, rather than on the basis of political or ideological 
pressure from either side on the issue, because these are 
fundamental questions of both ethics and mercy. And I would 
hope that rather than screaming at each other on issues like 
this, we would be trying to work with each other, to work 
through some very troubling, conflicting sets of values on one 
of the most complicated issues that faces any policy maker in 
this country. I wish you well in deciding what you're going to 
do about it.
    And with that, Mr. Chairman, let me save my other questions 
for later.
    Mr. Regula. Would you like to respond?
    Secretary Thompson. I'd just like to first thank the 
Congressman for his advice and his suggestions, and tell you 
that we're looking very diligently at the stem cell matter, and 
it's not easy.
    Mr. Regula. No, it's not easy.
    Mr. Sherwood.
    Mr. Sherwood. Thank you very much, Mr. Secretary. It's good 
to see you again.
    Secretary Thompson. Thank you very much, Congressman.

                                MEDICARE

    Mr. Sherwood. I commend you on your commitment to reform 
and redirect HCFA. Representing rural northeastern 
Pennsylvania, that's music to our ears. You really have your 
work cut out for you.
    One of the great inequities in this country, I think, 
people in rural Pennsylvania or other parts of the country have 
all paid the same Medicare taxes over their working lives. But 
because of the way that HMO Plus Choice was funded, seniors in 
some parts of the country do not have that option any more. I 
would like your thoughts on that, and what we could do to 
correct it.
    I worked very hard in the last Congress to get enough money 
put in the bill so that we wouldn't lose our HMO Plus Choice 
providers, but money moved out anyway. And it was particularly 
distressing to me to find out later that the changes that were 
made allowed premium reductions in some areas. Because we have 
an old system here that started from a very low base and 
increased it over 20 years by percentages. I think you'll find 
some areas of the country that are very well funded and ours 
just doesn't work.
    Secretary Thompson. You've raised several questions, and 
let me try and hit them one at a time. First off, as far as 
HCFA's concerned, there's a lot of great people out there, a 
lot of dedicated people who want to do the right thing. First 
off, we have a bookkeeping system out there that is really 
arcane. And there's money in here, $36 million, to change that.
    We're still using a single entry bookkeeping, and we're 
running the largest health insurance company in the world. 
Absolutely unheard of. We have some 30-year-old software that 
has all of the data for all the Medicare patients in America, 
that the processors, the fiscal intermediaries and the carriers 
use our software, the 30 year old software, in order to make 
out the payments.
    To me, it's an accident waiting to happen. We have to 
change that.
    We also I think should change the name of HCFA. I mean, 
it's very difficult for people to get very excited about a 
HCFA. It's a Medicare and Medicaid association, and that's what 
it should be called. And the acronym would be MAMA, and that 
would be something that people would learn to love. [Laughter.]
    And it would be something that I think we should consider.
    In regards to Medicare plus choice, something I'm very 
interested in. I don't think it's been given the right amount 
of attention over the last several years. And I'm not being 
critical at all, I just think it's such a huge agency, you have 
to look at the things that you can, you've got a passion for, 
and the things that you can do. I think Medicare plus choice, I 
think this Congress last year and over the course, through BPA, 
over the course of the next four years, is putting an 
additional $4.3 billion into rural areas across America.
    That money hopefully is going to, some of that's going to 
be in Medicare plus choice. We have to find ways in which we 
can encourage more Medicare plus choice. At one time in the 
last couple of years, there were 16.6 percent of the Medicare 
recipients that had Medicare plus choice. It's now down to 
around 15 percent. When Medicare plus choice was passed and the 
Balanced Budget Act of 1997, the projections were it would be 
up to 30 percent. There has to be a way for us toaddress this, 
look at it and find out why people are pulling out of your area and 
other areas, when your beneficiaries and constituents in your area are 
asking for it.
    We're going to be looking at that. We're going to make a 
detailed study of it. I would like to work with you and try and 
find some ways in which we might be able to encourage more, 
especially the ones that are in it, not to pull back any more.
    Mr. Sherwood. Thank you very much. But I think we'll find 
that the reason they pull out of certain areas is that the 
funding in those areas is much less than the ones they stay.
    Secretary Thompson. That's very true.
    Mr. Sherwood. We have equal citizens, but we don't do equal 
funding. That's one of the great inequities that's been 
disappointed to me since I've been here.
    Secretary Thompson. Mr. Sherwood, Congressman, you know 
that when you have any type of a formula fight, they become the 
most vicious and most controversial of any fights at all, 
because it affects money going into your district. And it's not 
a partisan one. It's a bipartisan one.
    So you're going to have to find ways in which we're going 
to have to equalize the system, but you're not going to be able 
to take money from the higher priced areas to equalize it, I 
don't believe, if you're going to be successful.
    Mr. Sherwood. Well, we've got to find an answer. Thank you.
    Secretary Thompson. I appreciate it. I know the problem you 
raise, because I dealt with it as Governor of the State of 
Wisconsin. I always thought it was crazy that Wisconsin was 
being penalized, and now I'm finding out it's a much more 
complex subject. And I find out that you're hurting in 
Pennsylvania as we were in Wisconsin.
    Mr. Regula. Mrs. Northup.

                        LONG TERM CARE INSURANCE

    Mrs. Northup. Thank you. Welcome, we're delighted to be 
looking at the challenges we face to see if we can improve the 
programs we have or change the ones that may need some fine 
tuning.
    I have two areas I'd like to ask you a couple of questions. 
First of all, long term care insurance. It is my observation 
that both Medicare and Medicaid are under a great deal of 
financial stress. This is increased by the number of senior 
Americans that need to see either Medicare services expanded, 
or Medicaid expand the number of people they are able to care 
for. Because they have nothing else to rely on for long term 
care.
    I believe we're going to need a new revenue stream to 
address long term care issues. When we do that, we will relieve 
some of the financial stresses on Medicare and Medicaid, so 
that they can better meet the needs that they were originally 
created to address.
    I believe that is your long term care insurance, private 
insurance. And yet many Americans today have no access to such 
insurance. They are unaware or unfamiliar with the need to get 
it, and get it at an early age. We aren't creating a growing 
population with a private stream of money that can address 
these needs, so that the pressure will be taken off these other 
programs.
    Do you have any observations or thoughts about what the 
Administration might do over the next couple of years to grow 
long term care insurance?
    Secretary Thompson. It's needed. You've addressed one of 
the big problems. I think there's two huge failings in public 
health in America today. Number one is that we don't do enough 
of preventive health. And we waste too much money waiting until 
people become acutely sick and end up in a hospital, then we 
start paying. I think that's problem number one.
    I think the second problem is, we haven't had enough 
leadership or enough support to develop a long term care 
insurance program in America.
    Mrs. Northup. I would like to work with you on that. I'm 
eager to do that.
    Secretary Thompson. Mrs. Northup, that is something that 
needs to be done if we're going to really help Medicare and 
Medicaid.

                        TOBACCO PRODUCT RESEARCH

    Mrs. Northup. Let me address, from a little bit of a 
different point of view, the prevention aside of healthcare. 
NICHD or one of the NIH institutes was here recently, and just 
sort of dropped in to the course of their testimony that all 
the money we've spent to discourage teens from using tobacco 
products, what we've found is that while there may be an 
immediate positive effect, several years after they're out of 
their teens, the difference in the number of young people that 
use tobacco products that had the programs compared to those 
that didn't have the programs is negligible.
    I feel like that is relfective of a lot of our efforts at 
changing behavior. We only have to look to ourselves to 
understand that. Every one of us understands eating properly, 
not using tobacco products, getting regular exercise, I could 
go on and on how important it is. We have good weeks, we have 
bad weeks. Some of us really struggle with all these health 
habits, including eating good, healthy, nutritious meals.
    And so as I nag my six children, I'm not surprised they 
don't all wake up the next morning and have yogurt for 
breakfast. I think that there's not enough research on what 
works. Instead, we have an outcry for spending more. I'm eager 
to see us, before we spend more money on prevention and so 
forth, to make sure that we have better controls in place about 
what works, who's doing the research, whether it's legitimate 
research, and that we have some long term input, so we don't 
keep pouring money into programs that we find out later someone 
has already assessed and found out it didn't make any 
difference.
    Secretary Thompson. All I can say is, long term health 
insurance and changing people's habits is important. I don't 
know if you need more research, when we all know what the 
problem is. We eat too much, we don't exercise, we smoke too 
much and we drink too much.
    Mrs. Northup. Except that we're spending a lot of money on 
discouraging kids from using tobacco products, something that I 
have been a strong advocate for. Now we find out that despite 
the fact that we have increased money for these programs, when 
they compare the populations that took part in these programs 
with the populations that didn't there's basically no 
difference between them.
    So we need another approach. We need to at least open our 
minds to a different paradigm. And I feel like a lot of times 
what Government does is keep pouring more money into programs 
without assessing whether the long term goal is achieved or 
not.
    Secretary Thompson. I couldn't agree with you more. But I'm 
not sure of the study you're talking about. I'm not privy to 
it. I do know this much, that the Surgeon General and myself 
unveiled the causal relation of smoking and women's health, 
especially lung cancer, which is the number one killer of 
women.
    Mrs. Northup. Huge. Huge.
    Secretary Thompson. It's overtaken breast cancer. And we 
found that in teenagers, if you don't smoke while you're a 
teenager, 85 percent of those individuals when they reach 21 
will not smoke. So it's important for us to get to the 
teenagers if we're going to prevent smoking.
    We also found out that 30 percent of the high school 
students this past month had a cigarette, smoked. So we know 
those facts and figures. I don't know what further study is 
going to do, except get the information out that smoking is 
harmful to your health, you shouldn't smoke.
    Mrs. Northup. Well, I couldn't agree with you more that you 
shouldn't smoke, that we ought to try to discourage kids from 
smoking and that the effects of smoking are devastating to 
health. I'm just hopeful that besides spending to address the 
problem, we might ought to spend money to assess whether or not 
the programs we're funding actually are achieving a long term 
goal.
    Secretary Thompson. We have been effective in reducing 
smoking in America. We've gone from 52 percent of the 
population down to 26 percent of males and 23 percent for 
women. We've dropped from 32 percent of women smoking down to 
23 percent. There's been a much bigger percentage of drop 
between males than females in our society. We know that.
    I think we have to, as a country, rededicate ourselves to 
making the same kind of concerted effort, eating properly and 
exercising properly. We have to renew that, and it has to be 
constant. I'm not smart enough to tell you what program or what 
buttons to push to accomplish that. I just know that 75 to 80 
percent of the diabetes, which has an impact of about 22 
percent of our Medicare dollars, is caused by diabetes, that 75 
to 80 percent of the diabetic conditions can be altered or 
stopped by eating properly and exercising properly.
    To me it's a tremendous causal relationship that we should 
work on to get that information out and try and encourage 
people, like we encouraged people to stop smoking, to eat 
properly and exercise.
    Mr. Regula. Mrs. Granger.
    Mrs. Granger. Mr. Secretary, thank you for being here, and 
thank you for taking the job. It's important.
    Secretary Thompson. Thank you.
    Mrs. Granger. Several things. First of all, I want to 
compliment you on your hands-on approach to HCFA. I really 
learned what was happening to physicians and their offices when 
one of the physicians in my district said, come spend a day in 
my office. So it really does make a difference.
    Secretary Thompson. No Secretary has ever done this.

                       PROMISING PRACTICE PROGRAM

    Mrs. Granger. It's wonderful. Very good.
    And also, on prevention, I agree with everything you said. 
One thing, if you're not familiar with it, promising practices 
program, headed by Dr. Jean Spaulding at Duke University 
Medical Center. It's excellent. She went after diabetes, asthma 
and hypertension and heart disease. Very cost effective, very 
practical, done some really, really good work in prevention 
that I would certainly recommend.
    Secretary Thompson. These programs work. We've got to get 
the information out.
    Mrs. Granger. That's right.
    Secretary Thompson. There are great examples, what you've 
just said, all over America that show how we can live much 
healthier, more productive lives.
    Mrs. Granger. Yes. This took it to the community and really 
could be replicated almost anywhere, very good. I want to talk 
just a second about substance abuse, and tell you how pleased I 
am at your increase on that. Again, I've been working with Duke 
on some treatment and what they're discovering about addiction, 
which is really fascinating. If we're going to put all this 
money into stopping the supply, if we don't do something about 
the demand, we're the ones that are using it.
    But one thing that's very important, what they're 
discovering about addiction is, it doesn't take 30 days in-
patient for drug treatment. It can be done very, very 
differently and much more effectively. So I think that's very, 
very important. I think it's important that we fund to find out 
what works, and then really work with that drug treatment that 
works. It's going to be very, very important to us. The drain 
on our families and the drain on our health care system from 
substance abuse is still enormous.
    Secretary Thompson. It is. I appreciate your concern on 
that.
    Mrs. Granger. Love to work with you on it.
    Secretary Thompson. I'd love to work with you. Do you have 
suggestions that you want me to come over and talk to you 
about?
    Mrs. Granger. I'd love for you to, thank you.
    Secretary Thompson. I'd appreciate it.
    Mrs. Granger. Good, thanks.
    Secretary Thompson. I love ideas.
    Mrs. Granger. I collect them.
    Secretary Thompson. So do I. I try to implement most of 
them, but it's impossible.
    Mr. Regula. Mrs. Lowey, can you get done quickly?
    Mrs. Lowey. I'm going to be very quick, because after so 
many people have spoken on the issues that I care passionately 
about, I just want to say I agree, and I'm very enthusiastic 
about working with you.
    Congressman Kennedy talked about mental health parity, and 
I just want to add to that, you said it's going to take a long 
time, some of us have been working on this a very long time.
    Secretary Thompson. I know you have.

                      COMPREHENSIVE SCHOOL REFORM

    Mrs. Lowey. Hopefully with your Administration we can get 
it done.
    Secondly, I wanted to add a couple of words about 
Congressman Hoyer's comprehensive school program. We've been 
working on that for years, seeing some great results in Port 
Chester, New York, and I know Congressman Hoyer has other 
examples of success. We can really see all the services in that 
school, including adult literacy programs, kids are staying 
after school, and I wholeheartedly support you on that.
    I also wanted to make a couple of points, because we've 
been talking about prevention on this Committee for a very, 
very long time. I happen to agree with you, it's been shown 
that it works. When you look at all the diseases, I don't even 
have to go through the list, because I know the Chairmanwants 
us to hurry, prevention is absolutely vital.
    I do hope that although we've had great increases in the 
NIH, that we can work together as Congresswoman Northup said to 
fine tune parts of the budget, including the CDC. I feel if you 
can't translate all this research into great programs that 
affect people, we're not doing our job.
    And specifically, the budget proposes severe cuts in the 
CDC program for chronic disease funding, including termination 
of a media campaign designed to teach children the importance 
of regular exercise and good diet. Well, that to me is madness. 
If one commercial isn't working, we have to try something else. 
I agree with you that prevention is shown to work. And I look 
forward to working with you to fine tune the prevention part of 
that budget, specifically funding for CDC, so we can do more 
about obesity, smoking, all these addictions that many of us 
may be subject to.
    If we can get these kids early and fund the CDC to continue 
doing this good job, I think we'll make tremendous progress. 
And I thank you so much for your testimony. I look forward to 
working with you and the Chairman in fine tuning the budget a 
little bit in different areas.
    Secretary Thompson. Thank you.
    Mrs. Lowey. So I'll stop. I have other things to say about 
child care and we'll have to do it at another time. Thank you 
very much.
    Secretary Thompson. Thank you, Congresswoman. I appreciate 
that.
    Mr. Regula. We're going to recess. We have the rule on H.R. 
10, and then we have a journal vote. We'll be back as quickly 
as possible.
    My list when we return is Mr. Peterson, then Mr. 
Cunningham, Ms. Pelosi, Ms. DeLauro and Mr. Jackson. We'll 
stand in recess.
    [Recess.]
    Mr. Regula. Okay, we'll get started. I think Mr. 
Cunningham, by virtue of being here, you're up. [Laughter.]
    Mr. Cunningham. When you're hot, you're hot. When you're 
not, you're last, Mr. Regula. Thank you.
    Hi, Mr. Secretary.
    Secretary Thompson. Hi, Mr. Cunningham.

                        OFFICE OF WOMEN'S HEALTH

    Mr. Cunningham. I want to bring to effect, not many people 
remember, but you and Governor Engler, with your leadership, 
spent hours on welfare reform with our task force and stuff 
like that. You see what a benefit that is. I think you're going 
to do the same thing with HCFA.
    My father-in-law had me spend a day in the office with his 
doctor, and it was a nightmare, not just for the receptionist 
and the administrator, but for the doctor as well, and the 
amount of time.
    I have another issue, a little different, I'm not going to 
repeat some of the same questions. The Office of Women's Health 
has been an administrative position. We'd like to make it 
permanent. We're also starting on a very bipartisan----
    Secretary Thompson. I did not know that, that it was not 
permanent.

                         OFFICE OF MEN'S HEALTH

    Mr. Cunningham. Yes, it's an administrative switch instead 
of legislative. We'd like to make that permanent. And by the 
same token, it's been so beneficial in getting information out 
and collating different responses, we'd like to start an Office 
of Mens Health. It's supported on both sides of the aisle, it's 
supported by the women. And a lot of the work is very similar. 
Matter of fact, when you talk about prevention, that I think 
can really help.
    We also have, I'd like to invite you, with Mayor Williams, 
with Dr. Klausner, a cancer research town hall meeting for 
prostate cancer within D.C. The highest incidence, I'm working 
with Mike Millken, the highest incidence of prostate cancer is 
for the African American community. Of all the areas, 
Washington, D.C. is the highest. And they've never had a town 
hall meeting for those folks----
    Secretary Thompson. I did not know that.
    Mr. Cunningham [continuing]. Right here in our capital that 
have that. We'll send you a time on it.
    Secretary Thompson. That's awfully nice of you to be doing 
this.
    Mr. Cunningham. No, I'm on the D.C. committee. [Laughter.]

                           STEM CELL RESEARCH

    Trying to make some small victories there.
    The only thing we really deal with with pro-life and pro-
choice that you're aware of is the funding for or against. And 
in that area, I'm pro-life in my own personal beliefs.
    But I want you to know that I have spent a lot of time out 
at NIH at the training universities and the teaching 
universities and the biotechs. And I'd like to let you know, as 
a pro-life supporter of stem cell research, when you're talking 
about diabetes, you can take pancreatic cells and inject into a 
juvenile diabetic where they don't have to get the finger 
sticks, with the different burn and cancer victims, it's 
amazing what that research is doing.
    I'd like to echo the same response that many of my 
colleagues on both sides of the aisle have put forth, is that 
members on both sides of this issue are supportive of stem cell 
research. It's difficult, the toty and pluripotent cells. But 
those are going to be thrown away anyway from people that 
discard those and why can't we use those for not only saving 
life but the quality of life as well?
    I want you to know there's people on both sides of the 
issue that are supportive of that.
    Secretary Thompson. I know that, Congressman, but there 
still is the law that is there.
    Mr. Cunningham. Oh, I know, Tommy. And it's something, 
though, I think we need to work toward on the research of both 
of that, the areas.
    I don't really have any more, I was going to cover HCFA, I 
was going to cover prevention, and my colleagues have done 
that. But I'm not going to go through and just reiterate the 
same questions.
    But with the remaining time, is there anything that you 
would like, that I have remaining time, that you would like to 
say that you haven't had a chance to say?

                  HEALTH CARE FINANCING ADMINISTRATION

    Secretary Thompson. I'd like to say this, that I'm very 
much a people person, and I love the opportunity to work with 
you on a bipartisan basis, with all of the members on this 
Committee. I really would like to continue the dialogue and be 
able to take an issue, whether it be the reformation of HCFA or 
whether the NIH funding or CDC funding and have a committee 
meeting specifically on one thing, and how we might be able to 
work together on a bipartisan basis to reform HCFA.
    I've got lots of ideas. I'd like to bring in my HCFA 
director. But I've got many ideas myself, and I'd like toput 
them out here in front of the Committee. And maybe anybody that wants 
to come, sit down and say, these are the things that I would like to do 
at HCFA, and I'd like to have your support. Some of these things we can 
do administratively, but others, we're going to have to have some kind 
of legislation, such as contracting.
    It's going to be contentious and controversial. But it 
makes no sense to me, Congressman Cunningham, that a 
contracting procedure for HCFA that was set up in 1965 should 
still be the way that we put out contracts in the fiscal 
intermediaries and the carriers.

                        DEPARTMENTAL REGULATIONS

    Mr. Cunningham. I was thinking even more recent, the 
departure of President Clinton, they at the last minute put a 
whole bunch of regulations that are burdensome, costly, tie the 
hands of HCFA, and those kinds of things I hope would also be 
covered in this.
    But I want to thank you.
    Secretary Thompson. I don't know how we would interact 
doing that, if I could come to you and say----
    Mr. Cunningham. Oh, you come to the Chairman. [Laughter.]
    Secretary Thompson. I'll come to the Chairman and see if we 
could have a short Committee meeting.
    Mr. Cunningham. Yes, sir, like we did on welfare reform.
    Secretary Thompson. People want to do these types of 
things. But in a setting like this, where there's the whole 
budget it's pretty hard to get into real specific details of 
what we want to do on a particular subject.
    Mr. Cunningham. Thank you, Mr. Secretary.
    Mr. Regula. Mr. Secretary, I've already made a note, I'm a 
great fan of oversight. There's not enough of that in the 
Federal government.
    Secretary Thompson. I agree with you.
    Mr. Regula. What I anticipate doing is, once we get a bill 
out and we have a little time, perhaps in July, we will do just 
what you were discussing with Mr. Cunningham. We'll have a 
hearing or two and focus on one of these areas in an oversight 
way. We'll welcome your suggestion as to what you would like to 
do, based on your experience down there.
    My staff just wrote a note, we have a HCFA hearing 
scheduled on May 9th. I don't know if you want to participate 
in that one or not.
    Secretary Thompson. Why not.
    Mr. Regula. It would be your call. I think what I hear you 
saying is, let's find out what works, be pragmatic about this 
whole thing.
    Secretary Thompson. Absolutely.
    Mr. Regula. Mr. Peterson.
    Mr. Peterson. I'd just like to suggest, when you talked 
about having a working session with the Committee, maybe a 
dinner meeting some evening. We are not interrupted. Around 
here, it's tough, with all the pressures. But if you can get 
everybody isolated for 7:00 o'clock or something in the evening 
and have a couple hours of working session, that's just an 
idea. That would be up to the Chairman's call.
    Mr. Secretary, I'm excited about your leadership in this 
huge agency. I just hope you don't lose your energy level. I've 
seen these departments wear people down at the State and the 
national level, because there's just so many components that 
you have to deal with and they're so big. But I think we're 
blessed to have someone with your leadership skills at the 
State level and someone who has the record that you have of a 
can-do, get things done, working bipartisanly. There was a 
great consternation a while ago here from one of the members 
about some small cuts that you inflicted.
    I've seen good Cabinet people like yourself take huge 
agencies and energize them where more happened with less, 
actually more. I think here we don't talk about that very much. 
But I've worked with four governors, and I've seen governors at 
the State level energize departments and absolutely improved 
outcomes with not more money, but energizing a huge bureaucracy 
to be more effective and efficient.
    So I'm looking forward to this kind of leadership from you.
    Secretary Thompson. I can tell you this much, Congressman, 
the people at HCFA have just received me with open arms. They 
could not believe that a Secretary, a person would come visit 
them so I could spend a week with them. They really want to 
change. They want to do things differently.
    Mr. Peterson. I'm sure they're as tired of being picked on 
as we are of picking on them.
    Secretary Thompson. I think so, yes.

                           RURAL HEALTH CARE

    Mr. Peterson. I just want to quickly go back. I'm told by 
my State people that your record in rural health care is 
excellent. I represent a huge rural district. My number one 
issue is rural health care. Because the system has been slowly 
phasing it out, that's the term I use, and when rural hospitals 
fail and rural agencies fail, they go to the urban areas where 
we pay a lot more for the same care, treating the same people 
and they're not close to home.
    So if I were a HCFA manager, looking for economic use of my 
dollars, I would be treating people where it's cost effective, 
and there's no doubt about it, it costs less money to treat 
people in the rural setting than it does in the urban setting. 
But we've had a system that's been rewarding urban care and 
penalizing rural care for a long time. It may be as much 
Congress' fault as HCFA's. But it's one that I hope you can 
make HCFA more rural friendly, or understand the complexities 
of their rules and how it impacts on rural hospitals and rural 
health care agencies.
    Secretary Thompson. I come from a community of 1,500 
population. We don't have any stop and go lights. I tell 
people, you can call someone, get a wrong number and still talk 
for half an hour. That's how small my hometown is.
    Mr. Peterson. I come from 986.
    Secretary Thompson. Well, you and I know what the small, 
rural communities are all about then.

                        LONG TERM CARE INSURANCE

    Mr. Peterson. My largest community nearby is 5,500. That's 
where our hospital is. And they give very good, quality care.
    Long term care was mentioned by the member from Kentucky. I 
have a bill that would remove the Waxman language that prevents 
States from getting waivers. Now, I'm not so sure we should 
even have them get waivers. But we have language that prevents 
States from getting waivers to offer people credit for long 
term care insurance. So if they would have $300,000 of long 
term care insurance, they could shield that much of their 
resources, they wouldn't have to spend it. But they provided 
for it.
    And to have a law that prohibits that just makes no sense. 
Because it's prohibiting the sale and promotion oflong term 
care insurance where people take care of themselves.
    Secretary Thompson. You need to encourage more people to 
get long term----
    Mr. Peterson. Yes, I would hope you can help us. Our bill 
just removes the Waxman language that prohibits waivers. In my 
view, I don't see why you should have to have States have 
waivers, why that shouldn't just be allowed. So I'd be glad to 
work with you on that if you agree with that.
    Secretary Thompson. I appreciate it. I agree with you.

                            PREVENTIVE CARE

    Mr. Peterson. The issue of preventive care, I chaired 
health at the State for 10 years. I want to tell you, I fought 
the battle there. As we, and I'm all for the research money. 
But here we are, gaining in research every day, all kinds of 
cures and new medications that are wonderful and treatments 
that are wonderful. But we're going backwards on the quality of 
health in this country because of choices. The American public 
are not healthier than they were 10 years ago, they're less 
healthy. They're more obese, they're more out of shape.
    But the last strong voice, and I want to say nothing 
against Mr. Satcher, because everybody tells me he's a 
brilliant gentleman, I've never mentioned. But nobody has 
equaled the voice of C. Everett Koop, who we all know, 
everybody knew, because he was a strong, outspoken advocate on 
health issues. I know I listened to him all the time. He even 
inspired me to do things at the State level, as a legislator, 
from that public presence.
    I guess what I'm suggesting to you, in your position, and 
if you can raise the level of his podium, have him out there 
more on these issues, CDC has all the data, they have all the 
information. But it's not really absorbed by the American 
public.
    We need to see the morning talk shows and evening magazine 
programs with these people, the experts, giving the data, the 
facts. In sales, sometimes people have to hear the message 10 
times before they buy. We forget that in Government. But we 
need to pound it home that we have more choice, whether we have 
a serious illness in our lifetime depends more on us than the 
availability of a doctor or medicine. We don't think like that 
today. We want a pill to fix everything, medication to fix 
everything, when behavioral change can absolutely do more for 
quality of life of health than anything. Am I right?
    Secretary Thompson. Yes.
    Mr. Peterson. But somehow we have to energize all these 
government information banks we have and get the general public 
to understand that they have more to do about their health than 
the local hospital doctor. It's just their choices. I again 
would like to work with you on helping somehow market that 
information.
    I don't think you can throw, some of them here would give 
them half a billion dollars and say, get your information out 
there. But I think it's going to have to come from leadership 
like yours, that says, here's how we 're going to get it out 
there. You have the data, you have the information, let's arm 
the American public with good health, preventive health care 
information, that they know that their cholesterol level, 
whether they have diabetes or not, their blood pressure, all 
those things are vitally important. I guess the number one 
growing disease is now prostate cancer with men, it's now 
surpassed women and cancer deaths. And I know a lot of men in 
my district don't take that seriously until they have it.
    I'd like to work with you on any and all of those issues. I 
just want to wish you the very best in your job. I'm excited 
that you're here.
    Secretary Thompson. I'm excited, but a little bit 
overwhelmed. I appreciate your support, no more than your 
willingness to work with me to try and solve some of these 
things. You've got great ideas, Congressman, and what I love is 
ideas, I love to hear from you and see what we can do to 
implement them and do a better job. That's what I've talked to 
Chairman Regula about, and he's been so responsive to me, and I 
appreciate that.
    And this whole Committee, I've been in a lot of 
Congressional Committees, both as a Governor, now as a 
Secretary. I've never found a tone so complete for 
bipartisanship than I have this morning as I have on 
bipartisanship on preventive health and trying to work together 
to solve some of these things. It must be to the credit of the 
Chairman and the members of this Committee. And I just offer my 
support. Let's work together and get something done.
    Mr. Peterson. I look forward to working with you.
    Mr. Regula. Ms. DeLauro.
    Ms. DeLauro. Thank you very much, Mr. Chairman. Welcome, 
Secretary, a delight to see you again.
    Secretary Thompson. My privilege.
    Ms. DeLauro. Thank you for all of your great commitments 
and efforts, and your openness to ideas. That's really very 
refreshing. Oftentimes in our own offices, you talk to your own 
staff about ideas, but we don't know everything in these walls. 
There are lots of good ideas out there that we can take 
advantage of.
    Secretary Thompson. I can confess, I certainly don't. 
[Laughter.]

                           USE OF RESTRAINTS

    Ms. DeLauro. Let me mention a couple of areas. I don't know 
if you've seen the series that appeared, you probably haven't, 
but I will forward it to you, the Hartford Courant. This was 
back in October of 1998. They ran a series of articles between 
about the 11th of October and the 15th. It was a nationwide 
pattern of death. It was about restraints that are used in some 
of our mental health facilities and so forth.
    This says, ``Rachelle Claiborne pleaded for her life. 
Slammed down on the floor, Claiborne's arms were yanked across 
her chest, her wrists gripped from behind by a mental health 
aide. I can't breathe, the 16 year old gasped. Her last words 
were ignored.''
    They broke a series of stories and I didn't know anything 
about this. They broke with this series of articles a story 
about the tragic deaths particularly of young people through 
the use of restraints, either with people who weren't qualified 
to use them or the improper use. It was very, very chilling.
    So a number of people, in a bipartisan way, were very 
concerned about the improper use of restraints and seclusion, 
and these kinds of practices in health care facilities. In 
1999, the GAO released a report that found that children are 
especially targeted by facility staff, and the unsafe practice 
and are at greater risk for injury or death.
    What we did in the Congress last year, almost on a dime and 
this institution doesn't often work as quickly as you would 
like, but we responded and we passed nationalstandards. This 
year, the Department released rules to protect vulnerable children in 
psychiatric residential treatment facilities. The rules were supposed 
to become effective on March 23rd. But they have been delayed until May 
22nd. During this period of time, we continue to read in the newspapers 
of youngsters who are dying from this abuse.
    What I'd like to have you do is to please take a look at 
this area, and if you could let us know why the rules were not 
subject to the waiver under the moratorium that sets emergency 
or other urgent situations that were related to health and 
safety. If you can get back on that and we can do something 
about this, as I say. It is a tragic loss of life. Oftentimes, 
the kids in these institutions, are about as bereft of any kind 
of support or any kind of support system. They're often out 
there pretty much on their own.
    If you could take a look at this, I would be appreciative.
    Secretary Thompson. I certainly will. Congresswoman, 
there's no hidden agenda about the delay. There's so much. And 
I really haven't got a chance to focus on that. I'm trying to 
move as rapidly as I can. And I think this rule will, if there 
would be any change it would be to strengthen it.
    Ms. DeLauro. Terrific. I understand.
    Secretary Thompson. We'll get it out as soon as possible. 
If there's any problem----
    Ms. DeLauro. I'll send you a copy of the articles. Again, 
when this broke, it was the Hartford Courrant, and our 
Connecticut Post did an article, did several articles. Everyone 
was stunned. We just--people began to read these things and 
take a look at it and say, my God, we can have a role here, we 
can do something. So thank you very much.
    I associate myself with my colleagues this morning on 
preventive care. We've had a chance to talk about some of this. 
I look at the areas of alcohol and tobacco, you've got 440,000 
people dying from tobacco use or some tobacco related illness 
in the country, the alcohol usage, the other things that were 
mentioned here. My gosh, if 440,000 were mowed down somewhere 
in this country, I think. We would clearly go to war.
    Nobody is suggesting that we run folks out of business or 
that we take away people's livelihoods. But we need to come to 
grips with the kinds of money that we are spending to look into 
the causes of illness, and then once we find that out, then we 
almost do nothing, or very little, to try to address the 
situation.
    Let me ask a LIHEAP question. Connecticut gets cold in the 
winter. That's serious.
    Secretary Thompson. Not as cold as Wisconsin.

               LOW INCOME HOME ENERGY ASSISTANCE PROGRAM

    Ms. DeLauro. Amen. And I've always been allied with the 
folks in Wisconsin on this issue on this Committee. The 
President's budget proposal calls for $1.4 billion in regular 
funding for LIHEAP, plus an additional $300 million in 
emergency funds. That's about the same level Congress approved 
last December for fiscal year 2001.
    Congress also approved additional help to low income 
households through a $600 million supplemental appropriation 
last summer. All of that money was used. Forty-five million 
dollars for cooling assistance last summer and $555 million in 
the just completed heating season. Emergency funds now 
depleted, additional funding for cooling this summer would have 
to come through a supplemental appropriation.
    The Administration is not considering any supplemental 
legislation at this time. I think we're seeing what's 
happening, but that there isn't much relief in sight for high 
energy prices. Reducing the available funds for LIHEAP from 
$2.2 billion, including the supplemental, to $1.7 billion, I 
think has got to be viewed as a cut. I'm asking again if the 
Administration would be willing to reconsider its position and 
see if we can offer greater assistance to the poor, to the 
elderly through this enormously valuable program. Again, 
something that works well and assists those people who are in 
very cold climates.
    Secretary Thompson. The $522 million was a carryover, I 
believe, from the fiscal year before that. So it made it $2.2 
billion, so we put in the same amount of money as the base year 
fiscal year. The President's spoken very clearly that there 
will be no supplemental appropriations.
    Ms. DeLauro. Well, I'm hopeful that when the problem hits, 
and it's hit every summer, we've found in Chicago people were 
dying from the heat and so forth and we had to do something 
about it with emergency dollars. It may be that we have to get 
to that point before it happens.
    My hope again is prevention of tragedy, it's something when 
you've had a pattern that you try to do. Again, I'm hopeful 
that the President might reconsider and if not now, when the 
heat of the summer is upon us and we are faced with the 
situation. Thank you very, very much.
    Secretary Thompson. I will take your plea to OMB.
    Ms. DeLauro. Thanks very, very much. Thank you, Mr. 
Chairman.
    Mr. Regula. Mr. Istook.
    Mr. Istook. Thank you, Mr. Chairman.
    Secretary Thompson. Hi, Congressman, how are you?
    Mr. Istook. I'm doing great, Secretary Thompson. I was 
coming back from the Capitol with some other members and you 
were the topic of discussion. Let me just convey, you have a 
great amount of admiration and respect in this body, not just 
the service you did, but the creativity you brought to solving 
major problems in Wisconsin. It's well recognized and well 
appreciated by me, and by a great many people.
    Secretary Thompson. Thank you.
    Mr. Istook. You get hard enough hit many different times 
over things, so you deserve some compliments once in a while, 
too.
    Secretary Thompson. It's very nice once in a while to hear 
nice things, yes, Congressman. I appreciate that, thank you.
    Mr. Istook. What I don't yet know though is that it's going 
to be now a job requirement that the HHS Secretary has to be 
from Wisconsin. I don't know if you're putting that in place.
    Secretary Thompson. I don't think so, sir.
    Mr. Istook. That will be a relief to some people.
    Mr. Regula. If you'll yield, the job requirement is that 
you have had to be a small town lawyer. [Laughter.]

                           ABSTINENCE FUNDING

    Mr. Istook. Very good. Well, being a lawyer isn't good 
enough. So I guess I'm safe.
    Let me, I know this is an important opportunity with all of 
us to talk about some of the fundamental and major themes that 
drive HHS and the agenda, and that you're going to 
beundertaking. I wanted to take my chance to address several of those.
    One thing that I mentioned to you before, and we're 
receiving very positive feedback from the Administration and 
OMB right now is concerns over the level of abstinence funding, 
to promote abstinence, which is broadly supported in a 
bipartisan way, as a way not only to prevent disease but 
frankly, to prevent a lot of the problems with which you and so 
many other people in Government and society have to deal.
    I think we're making significant progress, and perhaps 
having some agreement on putting additional and extra funding 
in that. I just wanted to express my appreciation for that. I 
think an ounce of prevention is worth a pound of cure.
    Secretary Thompson. Thank you, and let me congratulate you, 
Congressman, because I know you had an advance appropriation of 
$10 million, which is in this budget. I compliment you on your 
leadership, the President wants to equalize it up to $135 
million from Title X on abstinence. I think that there's a way 
to get there and hopefully we can accomplish that goal.

                        MEDICAL RESEARCH GRANTS

    Mr. Istook. I think that's terrific, and I look forward to 
continuing to work on that. I appreciate the diligence that I 
know people are exercising at HHS to make sure that the grants 
that are to be awarded are going to those that meet the proper 
requirements of that, because this is a very important effort.
    Let me turn to some other things. You discussed with some 
of the other members NIH and the elevated funding that's coming 
forward. I wanted to echo some things that frankly, Mr. Obey 
said, that have been part of my concern. That is that, with the 
tremendous increase in medical research funding, sometimes 
people are discovering ways to treat things but they're not 
affordable.
    People know that there is a cure possible, and certainly if 
they believe that some sort of cure or treatment is possible, 
they want to make it available. But it may be priced in a way 
that either they cannot afford it or if the Government or an 
insurance carrier or some other provider pays for it, creates 
part of the medical inflation we're experiencing.
    There's been some reports recently sponsored by Blue Cross 
that indicate that a significant amount of medical inflation 
that we're having right now is being driven by the medical 
research and the new things that it makes possible, even if 
it's a challenge to afford them. So one thing that I certainly 
am trying to encourage is that we start making a devoted and a 
focused effort as part of these increased dollars going to NIH 
to put a significant portion of that research into finding ways 
to make treatments affordable, whether it be changing something 
about the mode of treatment or frequency, I don't know.
    But there's often many ways that researchers can find, if 
they're given the resources, not just to find new treatments or 
new information, but to find ways to make it more affordable. I 
think that's a very significant and important part, hopefully, 
of the future NIH budgeting.
    Another aspect of that is that sometimes the benefits of 
medical research are not disseminated everywhere. We have a 
situation where half of the NIH research grants are going to 
research institutions in five States. Now, there are more than 
one-tenth the population----
    Secretary Thompson. Say that again?
    Mr. Istook. That's right, more than half of the research 
grants out of NIH go to five States. The other States have to 
share the other half. In fact, for about half of the States, 
25, 26 of the States, collectively receive, I'm not sure of the 
current figure, it's approximately 8 percent, 7. Approximately 
8 percent, 7.7 percent I'm told.
    Now, I realize that's not weighted for population, those 
particular statistics. But I think it tells a tale that we're 
not making sure that the advantages of medical research are 
going to institutions that are spread out across the country. 
Hopefully institutions that are involved also in clinical 
practices so that physicians that are associated with each 
other receive through that contact the benefits of medical 
research, that it's being disseminated throughout the country, 
not just something that may be a scholarly publication that is 
never seen. But that it's in enough places that people are 
rubbing shoulders and getting the information.
    With that in mind, I've been working with an EPSCOR or IDEA 
effort within NIH to make sure that the States which have been 
on the disadvantaged side of that are----
    Secretary Thompson. I presume your State is one of those.
    Mr. Istook. You are correct, sir.
    And as I say, there's half the States in this situation. 
But it is the opportunity to make sure that this tremendous 
investment in medical research is shared throughout the 
country. As I mentioned to you, the figures on the numbers of 
States I realize is not the same as when you adjust for 
population. But even when you make that adjustment, I think 
there's a significant problem and that the time of increase in 
funding is the time to make sure that problem is addressed. 
Because otherwise, people feel they have a vested interest, 
that they've already received certain shares of funding.
    Secretary Thompson. So you worked with the IDEA program. 
You know, the President put in an additional $135 million into 
this budget to make it better.
    Mr. Istook. I wish it were an additional $135 million. I 
think it's an additional $35 million. I've been working on 
this, we've got it up to a hundred, would like to get it up to 
a couple of hundred. But the important thing is to explain to 
you what's going on here. I think it is a good idea, and I'll 
pass on to people that you said that. Because it's not simply a 
funding matter.
    Secretary Thompson. What are the five States?
    Mr. Istook. Let's see if I can give them correctly here. 
It's Maryland, Massachusetts, California, Pennsylvania, and New 
York.
    Secretary Thompson. Now I know it's an even better idea. 
[Laughter.]
    Mr. Regula. We'll have equal time here.
    Mr. Istook. I understand that.
    But it is something that make sure that this percolates 
throughout the country. Because we want the advantages of it to 
be there.
    Secretary Thompson. Absolutely.
    Mr. Istook. And we want it to be affordable. I think making 
some focus within NIH is part of that.
    If I might have 30 seconds, Mr. Chairman, just to express, 
there is, as you know, a lot of concern with funding formulas 
involving HCFA, and whether it stays HCFA or goes to MAMA or 
whatever it might be in the future.
    But there is certainly a concern that the formulas, whichI 
know involves Congress, not just HHS, the formulas, the weight in them, 
some of the historical factors they take into play, is causing a lot of 
disparity. Oklahoma, yes, is one of those States that is hurt 
tremendously, and it creates problems in health care, creates problems 
in nursing homes.
    We've had some convictions in Oklahoma recently with some 
nursing home operators involving bribery, who felt the pressure 
to try to get extra funding. They went far beyond what the law 
allows on that. I don't want that kind of temptation, but more 
than that, I don't want that kind of problems with the 
disparities. We have enough red tape involved in the funding 
formulas. Some hospital administrators from Oklahoma who heard 
you speak yesterday were very optimistic about your approach to 
bringing some more common sense into those.
    But I just wanted to express those concerns and hope that 
we can work together and make sure again that everyone has an 
equal opportunity and equal consideration in these formulas.
    Secretary Thompson. Congressman, I thank you for your 
comments. The disparity in funding is something that's been a 
bother to me as a Governor for many years, because Wisconsin 
was like Oklahoma. But this is really in the purview of 
Congress. I can't change the law and the equalization of 
payments has to come through some kind of Congressional change.
    Mr. Istook. I understand that. I do know that the degree of 
understanding that you can help be made known to people, 
though, is very important, because you're a major source of 
information for this, you and your agency.
    Secretary Thompson. Thank you for your comments and your 
questions.
    Mr. Regula. Just as a follow-up, does NIH work with the 
universities, on how they can be better qualified to get 
grants, so that we can get a better spread of this research 
money?
    Secretary Thompson. NIH does, maybe not as complete as it 
should, but that's what the IDEA fund is set up to do. HRSA and 
AHRQ also get out information on how to apply for grants.
    Mr. Istook. If I may, Mr. Chairman, I ought to say to the 
Secretary, Dr. Kirschstein has certainly been very positively 
disposed toward this effort, and we appreciate that.
    Mr. Regula. The gentlelady from California.
    Ms. Pelosi. Thank you, Mr. Chairman. Did I detect a 
challenge in your voice? [Laughter.]
    Thank you, Mr. Chairman.
    Mr. Secretary, congratulations to you on assuming this 
very, very important position. I wish you much success, as I 
know all of my colleagues have expressed to you as well. Good 
luck.
    Secretary Thompson. Thank you.

                           PREVENTIVE HEALTH

    Ms. Pelosi. A couple of things, I wanted to associate 
myself with Mr. Kennedy's remarks about parity in mental 
health. It's an issue that we've all long fought for. Some of 
the other issues that were raised in terms of addiction, 
obesity, smoking, etc., I just want to make one point on that.
    I think kids are very smart. We tell kids that smoking is 
bad for their health, and then we're surprised when they don't 
stop smoking, when we don't really give many kids access to 
quality health care. So if we want to place a value on their 
health, we've got to be consistent in how we do it, not just 
stop smoking, but here you are in the loop of access to quality 
health care.
    So I think we'll have a stronger message when it's a more 
consistent message of the value that we all place on health. I 
think the same is true of schools, when we send the kids to 
schools that are not in good shape and tell them that education 
is important. But we haven't placed a value in it from a budget 
standpoint. But anyway, that's just my soapbox on that for the 
moment.
    I had a couple of questions, but I wanted to address the 
concern Mr. Istook had, and I certainly associate myself with 
his concern. I will say that we have, these are competitive 
grants and that in our State, being the largest State in the 
Union, I don't know where we figure in that five, but we 
certainly have huge investments in having excellent centers of 
research so that we can compete on a scientific level.
    I think it's very important to make the investments in 
other States so they would have the absorbed capacity for these 
grants as well as the strong science to compete for them. But 
we have to keep this on the basis of science, but recognize 
that these estimates have to be made.
    Secretary Thompson. Absolutely. No question about that.

                                HIV/AIDS

    Ms. Pelosi. I wanted to express a concern, Mr. Secretary, 
with all due respect and good wishes to you, I unfortunately 
was detained and I didn't hear your oral presentation. But I 
read your statement and I was concerned that the word AIDS and 
HIV were not mentioned in it at all.
    Secretary Thompson. I spoke about it.
    Ms. Pelosi. I do know that in your statement that you made 
here, you did mention it, and I want to address what you said. 
The Administration has been saying that HIV-AIDS are a priority 
and in your remarks you cited a 7 percent increase. That 7 
percent largely is in research at NIH and that's very, very 
important, and for mandatory spending under--but Ryan White and 
domestic prevention and minority HIV health initiatives are 
just about flat funded. Of course, this amounts to a decrease 
in terms of meeting the needs of people after you go through 
inflation.
    So if it's a priority, I think that there are ways of 
tangibilitizing that good intention in the budget. That means 
more money. And if it is a priority, I hope that it would be 
more part of your presentation, because it certainly is a very 
important challenge that we have, and I know that it is a 
priority for you. But this budget number is just barely meeting 
inflation, not in any way meeting the increased need.
    And if I just may address what they are, in prevention, 
40,000 new HIV infections occur each year domestically, half of 
them among young people under 25. And in the ADAP program, the 
drug program, 10 States currently have waiting lists for this 
program. We need to redress that. So the flat funding doesn't 
take us there, and it's hard to see how that's a priority.
    Secretary Thompson. May I respond?
    Ms. Pelosi. Please do.
    Secretary Thompson. This is an issue of great importance to 
me, one I'm very passionate about. There are 36 million people 
in the world that have AIDS or HIV, 25.1 million are in Africa. 
Only 1 million people across this world are getting any kind of 
treatment whatsoever.
    Thirteen million orphans since 1999, 12 million are in 
Africa. Forty-three thousand of the new people that get TB, 43 
percent of the new people who get TB in the United Statesare 
from countries that have an epidemic in AIDS. If we don't control it in 
Africa, there's 3 million people in India, it's going to go into 
Afghanistan, it's going to go into China, it's going to go into Russia, 
it's going to go to Brazil. And we're going to have a tremendous 
problem.
    We have to do something about it. And I just don't think 
putting more money into Ryan White at this time is the answer. 
I think we have to find a vaccine to prevent it.
    Ms. Pelosi. Glad to hear you say that. That's my bill.
    Secretary Thompson. That's why we put the money in NIH. I 
happen to be a big supporter of Ryan White and the ADAP 
program. I put extra State money, when I was Governor, into the 
program, over and above the money I got from the Federal 
Government to do that. You'll notice that there's not a waiting 
list in the State of Wisconsin. It's a program, and Colin 
Powell, the President and I are setting up a joint commission, 
and I'm going to be leading a group to Africa, and I would love 
to have you go along with us.
    Ms. Pelosi. I would love to.
    Secretary Thompson. And see what we can do. I think once 
you're there, once you see the problem, you will also be 
supporting, hopefully, an international fund that we are going 
to have to set up somehow to get not only the United States, 
but the international community motivated to do something. It 
is a serious epidemic. And some countries, more than likely, 
will fail if in fact we don't do it.
    Ms. Pelosi. I really appreciate your depth of knowledge on 
the subject and your commitment. But you should know also, Mr. 
Chairman, since I came to Congress 14 years ago, over 13,000 
people have died in my district of AIDS, 13,000, 14 years ago. 
We tried to spare the rest of the country and the world that. 
We beat the drum for international, the AIDS issue, many, many 
years ago. I was very disappointed that it did not rise to the 
level of the G7 year ago, when we asked the Secretary of 
Treasury, Jim Baker, and we asked the Secretary of Treasury 
when it was Secretary Bentsen. And now it finally is at that 
level. This could have been avoided. The world leadership did 
not make the commitment.
    Secretary Thompson. You were a visionary, Congresswoman.
    Ms. Pelosi. And all the money that we have for 
international AIDS we got in my other bill, where I was ranking 
member in foreign operations. Never enough, but the most we 
could get and fight for. So I would love to go to Africa with 
you so we can make progress on this issue. But our district has 
been educating the world on this issue for a very long time.
    Secretary Thompson. I know it has.
    Ms. Pelosi. Sadly from our experience that we didn't want 
anybody else to have.
    But I'm not just talking about Ryan White. I think we need 
more funding for the ADAP.
    But we also have to have domestic prevention. Now, I have a 
bill on the vaccine which we tried to get in the tax bill for 
incentives for the private sector to invest in a vaccine for 
HIV-AIDS. We haven't been successful yet, but we're trying on 
that score.
    And of course, the increased funding at NIH for that 
research is very important as well. So I'm glad that you have 
it as a priority. Because prevention, prevention, prevention is 
a priority. Domestic prevention, which I hope will be at the 
end of the day better funded from our Chairman here, and also 
the minority HIV-AIDS initiative, recognizing the newer face of 
HIV in our country.
    Secretary Thompson. Seventy percent of the new cases are 
minorities.

                   CHILD CARE DEVELOPMENT BLOCK GRANT

    Ms. Pelosi. That's right. That's why we have this minority 
AIDS initiative that came from this Committee. The Chairman, 
I'm not sure what my time is, but I just want to put on the 
record issues of concern that perhaps we can follow up on 
another time. And that is, the CDC's national exposure report 
was a significant step forward. Lou Stokes, Mr. Chairman, as 
you recall, was here on behalf of Pew Commission, describing 
the need to expand CDC's efforts to develop coordinated 
nationwide health tracking network. I'd like to talk to you 
about that at some point.
    And also I'm concerned about the President's budget 
proposals and increases for child care development block grant. 
Four hundred million, though, is marked for school programs, 
which are important. But that is not, as a result, existing 
child care programs are cut by $200 million. So hopefully we 
can redress that in our budget this year.
    Secretary Thompson. I have to disagree with you on that. We 
put in an additional $200 million in the child block grant, 
went from $2 billion to $2.2 billion. But then we earmarked 
$400 million of the $2.2 billion. But there's still a 10 
percent increase, from $2 billion to $2.2 billion. And we 
expanded the program from 13 to 19 for those kids after school. 
So another 500,000 kids will be taken care of after school.

                          AFTER SCHOOL PROGRAM

    Ms. Pelosi. And the after school program is something that 
we all advocate for. But when you say it's still a 10 percent 
increase, it's something that we'll have to work through our 
budget process here, so that when we have an increase, it 
really is where it is.
    In closing, Mr. Secretary, and I'll say to the Chairman, 
this is lamb eat lamb, this Committee. There's every good thing 
in here. If we have a cap on our spending, everything that is 
competing is something you would fight your heart out for. So 
there's no bad thing. It's just that when we say it's an 
increase, we want to make sure that that's what it is, and when 
we say it's a priority, we want to make sure that's what it is.
    But again, I really am so delighted to hear of your 
commitments on the AIDS issue. It's not a surprise to me, but I 
love the reiteration of it, and look forward to working with 
you and wish you every success. Thank you.
    Mr. Regula. Ms. Pelosi, we're going to try to love our 
neighbor.
    Ms. Pelosi. That's where we started. We love God and we 
love our neighbor. And we define our neighbor as not only the 
person who lives next door to us, but every person on the face 
of the earth, right, all God's children.

                          EARLY READING FIRST

    Mr. Regula. I think that was the intent of the statement in 
the Bible.
    Mr. Secretary, you've been extremely generous with your 
time. I don't want to prolong it. As you can see, this 
Committee is dedicated. I think we have excellent Members. They 
care about the things that you do, and they want to be a 
partner with you in helping people. We'll look forward to 
continued dialogue through oversight and so on.
    Just one thing I did want to ask about was the Early 
Reading First proposal. Because HHS has the Head Start program. 
I've often thought it probably should be in Education, but it's 
at HHS and I can understand why, because Head Start has many 
elements in addition to reading, writing and arithmetic. It's 
getting the parents involved in the welfare of the child.
    I'm not sure I know how Head Start and Early Reading First 
fit together.
    Secretary Thompson. Are you talking about the new program 
the President put into Education?
    Mr. Regula. Yes, he proposed Early Reading First, in the 
Education part of the bill. I don't know whether it overlaps 
with Head Start or whether there is a coordination of this 
proposal.
    Secretary Thompson. No, not really. The President is 
passionate about making sure that every child learns how to 
read. He thinks that's the cornerstone of a good education.
    Mr. Regula. Absolutely he's right.
    Secretary Thompson. I agree with him. He wants to highlight 
and stress reading. And he did not give it to us in our 
Department. I requested it, but it went to the Department of 
Education. And we want to work with the Department of 
Education. We think we developed a true Head Start and reading 
program, we can develop even a better program.
    Mr. Regula. Well, I like your comments earlier about cross-
checking and cross-working with other Departments.
    Secretary Thompson. I don't think we do enough of that.
    Mr. Regula. As you know from your experience, turfgets very 
sensitive in a political arena. But it's people we need to care about, 
and not so much about whose turf is being involved and invaded. So I 
like what you're saying.
    I'll put a number of questions in the record, because I 
don't want to hold you up. You've been more than generous with 
your time.
    I just want to say that I've admired you from afar, that is 
Ohio. [Laughter.]
    My faith, as I discover, is not misplaced. I think you've 
been very impressive this morning. Mr. Istook mentioned, and I 
had the same experience walking over to vote, that people who 
had been here during the morning were very complimentary.
    We really look forward to working with you and I think that 
the country will be well served. Thank you for coming.
    Secretary Thompson. Thank you, Mr. Chairman, for your 
kindness, both your comments but also your kindness to me when 
I come to visit you. I'm looking forward to it. I just would 
have to reiterate what I said this morning. This Committee has 
been a wonderful experience for me to come in front of, because 
I haven't sensed the tone of bipartisanship as complete in 
other committees as I have here today. It's been very 
refreshing to me.
    Mr. Regula. Well, we're both on a learning curve. This is 
my first experience in this Committee.
    Secretary Thompson. Nothing a small town lawyer shouldn't 
be able to handle. [Laughter.]
    Mr. Regula. That's right, thank you. With that, the hearing 
is adjourned.
    [The following questions were submitted to be answered for 
the record:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]




                                            Wednesday, May 9, 2001.

                  HEALTH CARE FINANCING ADMINISTRATION

                               WITNESSES

MICHAEL Mc MULLAN, ACTING DEPUTY ADMINISTRATOR, HEALTH CARE FINANCING 
    ADMINISTRATION
ELAINE M. RAUBACH, DIRECTOR, BUDGET AND ANALYSIS GROUP, HEALTH CARE 
    FINANCING ADMINISTRATION
DENNIS P. WILLIAMS, ACTING ASSISTANT SECRETARY FOR MANAGEMENT AND 
    BUDGET, DEPARTMENT OF HEALTH AND HUMAN SERVICES
    Mr. Regula. We'll get started this morning. Welcome, Ms. 
McMullan, Ms. Raubach, and Mr. Williams. We have a very 
important topic this morning.

                           Opening Statement

    Ms. McMullan. Good morning, Mr. Chairman. I'm Michael 
McMullan, the Acting Deputy Administrator for the Health Care 
Financing Administration. I'm honored to be here today to 
present HCFA's fiscal year 2002 budget request and to answer 
any questions that you have.

                         HCFA'S ACCOMPLISHMENTS

    First, I'd like to tell you about some of our recent 
successes and some of the challenges that lie ahead for the 
Agency. As always, we appreciate your support and look forward 
to working with Members of the Committee.
    Our first chart highlights a few of our recent 
accomplishments. I would like to mention just a couple of them, 
starting with the Government-wide award winning Medicare.gov 
website. This has been cited as the best Government site for 
health care issues.
    We have made progress reducing the fee-for-service payment 
error rate toward our goal of a 5 percent error rate. Last 
year, our Medicare fee-for-service claims payment error rate 
was less than 7 percent, half of the error rate in 1996, and 
below the target for our fiscal year 2000 performance goal. 
While we strive to pay claims correctly the first time, with 
the billions of claims and very sophisticated payment systems, 
some errors occur. We want to address honest billing errors 
through good program management and business practices and 
improved provider education and communication.
    Our Medicare & You Handbook has been recognized for being 
written in plain, easy to understand language. We have left 
copies of this handbook for each of the Members in your chairs 
to introduce you to the work that we do to better inform people 
with Medicare about their health care choices.
    Mr. Regula. Is there one for each State?
    Ms. McMullan. Yes, there is one for each State, and we put 
the State specific one in each chair.
    We have also strengthened our oversight function. Our 
nursing home initiative, now known as the Nursing Home 
Oversight Improvement Program, has helped reduce the use of 
restraints in nursing homes and has improved the quality of 
care for nursing home residents. We have made progress, but a 
lot of work remains to be done. Our workload grows each year.
    In fiscal year 2002, we expect to pay almost 1 billion 
Medicare claims, process over 7 million appeals, answer 40 
million inquiries and manage and update 75 different claims 
processing systems. We oversee 17,000 nursing homes, conduct 
inspections and complaint investigations for 65,000 health care 
facilities and almost 13,000 clinical laboratories. We will 
also distribute 40 million Medicare & You handbooks and answer 
5 million calls on our Medicare+Choice 1-800 number.

                        HCFA's BUDGET PRIORITIES

    One of our highest priorities is modernizing and 
stabilizing our Medicare claims processing systems. Our systems 
are rooted in the 1970s, when we processed only a fraction of 
the claims that we processed today. These systems 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 stabilizing 
and modernizing these systems and expanding their capabilities.
    Another priority is improving our financial management 
systems. HCFA spends hundreds of billions of dollars each year 
on Medicare benefits, yet our Medicare contractors use ad hoc, 
piecemeal systems to account for these funds. The General 
Accounting Office and the Office of the Inspector General have 
both expressed concerns about HCFA's current financial 
management systems, stating that they are simply inadequate for 
detecting and collecting debt, for retaining a clean audit 
opinion and for complying with statutory requirements.
    We ask for funding in Fiscal Year 2002 to begin building a 
uniform accounting system at the Medicare contractors, and to 
replace our administrative financial systems. This system 
modernization is a multi-year commitment. With billions of 
trust fund dollars at stake, we believe that it's worth the 
investment.
    We want to make our national coverage determination process 
more open, understandable and predictable and to reduce the 
time that it takes to reach an official decision. We are also 
working with physicians to reduce unnecessary regulatory and 
administrative burdens. HCFA now has a team that will work with 
physicians to identify these issues and resolve them. We will 
continue to work with States on their nursing home inspections.
    As we face these many workload challenges, we recognize the 
need to manage our human capital responsibly. Forty percent of 
our current workforce can retire by 2006, taking with them 
valuable institutional knowledge. We are developing a workforce 
planning process to ensure that in the coming years we have the 
right number of people with the right skills and in the right 
jobs.

                 GOVERNMENT PERFORMANCE AND RESULTS ACT

    Finally, I would like to say a word about the Government 
Performance and Results Act and our Annual Performance Plan. 
You can see from our chart that we have performance goals for 
each of our programs. We continue to work to integrate the 
budget with these goals. In 2000, we met or exceeded 20 of the 
25 goals for which we have complete data, and we have added 
four new goals for 2002.

                      HCFA'S DISCRETIONARY REQUEST

    This brings me to our request. We are asking for $2.351 
billion for Program Management, a 4.9 percent increase, or $109 
million, over our fiscal year 2001 appropriation. Most of this 
increase is targeted for the Medicare contractors who process 
almost a billion claims a year. Some of the increase will help 
us improve our information technology infrastructure, and some 
of it is for the new accounting system that I mentioned 
earlier. The balance is for implementing new legislation and 
for covering ourpayroll expenses.
    To put this request in context, we have a constant dollar 
chart which shows that our budget request really only brings us 
up to the fiscal year 1992 funding level. Our workloads and 
responsibilities on the other hand have grown substantially in 
the last 10 years. In fiscal year 2002, HCFA's programs will 
pay out close to $400 billion in benefits, second only to the 
Social Security Administration in the level of Federal 
spending.
    The programs administered by HCFA affect the Nation's 
health care economy and millions of people in the health care 
pyramid. This pyramid is our final chart. Let us start with the 
4,600 employees. These employees leverage the efforts of more 
than 64,000 State and private sector employees who in turn deal 
with over 1 million providers, serving 70 million 
beneficiaries. HCFA must have an adequate level of funding to 
ensure that its programs are strong, well-managed and 
responsive. I am confident that this request will provide us 
with the resources and flexibility we need to meet this 
challenge.
    Thank you for the opportunity to present HCFA's fiscal year 
2002 budget request. I look forward to working with the 
Committee and I'm prepared to answer your questions. Thank you.
    The information follows:

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
    Mr. Regula. I think we'll recess for the vote and come 
right back, well, we can take two minutes before we have to go. 
Mrs. Pelosi.

                         EARLY TREATMENT OF HIV

    Ms. Pelosi. I look forward to the cooperation of HCFA. I 
had a question about HIV and AIDS. New HIV/AIDS treatments have 
improved both the health and qualify of life for many people 
living with HIV/AIDS. However, many uninsured Americans still 
do not have access to these life-saving medications because 
childless adults generally do not meet Medicaid requirements 
until they are disabled by full-blown AIDS. We know that early 
treatment saves lives and reduces health care costs as 
progression from HIV to full-blown AIDS is prevented or 
delayed, and there is a pressing need to eliminate treatment 
barriers for vulnerable populations.
    Representative Gephardt and I will soon be introducing the 
Early Treatment for HIV Act which allows low-income individuals 
living with HIV to qualify for Medicaid coverage earlier in the 
course of their disease. I hope that we can work together to 
ensure that low-income, uninsured people living with HIV are 
covered by Medicaid and are able to receive the treatment they 
need to stay healthy.
    Ms. McMullan. We will be glad to provide any technical 
assistance you need in preparing that legislative request. And 
we'll be happy to work with you.

                  SOLVENCY OF THE MEDICARE TRUST FUNDS

    Ms. Pelosi. The next question I have is, does the 
President's budget do anything to extend the solvency of 
Medicare? As the baby boomers begin to retire, it is well known 
that Medicare requires resources outside of the current program 
in order to ensure its long-term solvency. Yet the President's 
budget does not provide additional resources. In addition, the 
budget conference agreement appears to allow the Medicare 
Hospital Insurance Trust Fund to be tapped for the prescription 
drug and ``Medicare Reform'' package.
    We all agree that Congress must enact a prescription drug 
benefit for seniors, but should this be done at the expense of 
Medicare's solvency?
    Ms. McMullan. The current projection for the solvency of 
the trust fund has it extended to 2029. Anything, depending on 
any proposals that Congress would agree to on prescription drug 
coverage or any other changes to Medicare could affect that 
projection. But without knowing what those are, our current 
projection for exhausting the trust fund is 2029.
    Ms. Pelosi. If that is to be a source of funds for the 
prescription drug benefit, I just want to put that in the 
record.
    Ms. McMullan. That determination would be made by Congress, 
when the law funding this benefit is enacted.
    Ms. Pelosi. Thank you, Mr. Chairman. I will mark it down. 
[Laughter.]
    Mr. Regula. Okay, we'll recess to go vote and come back.
    [Recess.]
    Mr. Regula. We will reconvene. Mr. Peterson?

                   PAYMENT DISPARITIES IN RURAL AREAS

    Mr. Peterson. Good morning. Welcome.
    I'm from Pennsylvania, I represent a very rural, rural 
area, about 20 percent of Pennsylvania. I have 16 hospitals and 
countless nursing homes and home health care agencies in my 
district.
    I guess the question I would like to ask, from your 
opinion, how did we get to the situation where, in urban 
America, we have Medicare Plus Plus, suburban American, we have 
Medicare Plus, and in rural America, we have Medicare Lite? And 
I mean, you can't describe it any other way. How did we get 
there? That rural gets so significantly less much payment for 
the same services? How did that happen?
    Ms. McMullan. There's a long history of the way the payment 
systems have been developed. Significantly, payment systems 
rely on cost reporting information from the institutions 
themselves and the wages that are paid in rural areas, as well 
as some of the other costs, have influenced payments in the 
past. In some of the recent legislation, even in previous 
legislation, Congress has done a great deal to try to balance 
some of the rural-urban payment differences. And there is more 
parity developing in the systems. But it has its roots in 
payment formulas thathave relied on the cost reporting 
information from the institutions themselves.
    Mr. Peterson. Does health care consumed have something to 
do with it, per person, history of consumption? I mean, rural 
America has historically, does not go to the doctor as quick as 
suburban or urban people for some reason. They're further away 
from them, I guess, have not consumed, they were a younger 
population. Today it's our senior population. I mean, rural 
America is the senior population in this country who are going 
to consume a huge amount of health care.
    And the number one threat to rural health care being alive 
and viable is the unfair Medicare and Medicaid payment.
    Ms. McMullan. What we can do is supply you some of the 
findings of recent studies on what has changed and what other 
kinds of changes are needed. I can't answer the question on the 
effect of consumption.
    Mr. Peterson. I think it is. I think it is a factor. But is 
this formula determined all from legislation, or is part of it 
regulatory?
    Ms. McMullan. Virtually all components of the payment 
systems are statutory. There are some judgment issues, but the 
structure of our payment formulas are set by statute.
    Mr. Peterson. Because what was happening in this country, 
and we've been trying to stem that in recent years, that is, as 
rural health care goes broke or out of business, the patients 
go to the suburban marketplace and you pay significantly more. 
So nobody wins. Rural health care loses its health care at home 
where it ought to be, close to home, goes to the suburban 
marketplace, where you pay significantly more for the same 
service.
    It would seem to me that if I were running HCFA, I would be 
strategizing as a business person how to provide my care in the 
most cost-effective, quality way as possible. And I'll stack 
rural health care quality wise up against anybody's health 
care, on the average. But they certainly have been 
discriminated against, in my view. Usually when you deal with 
sparsity in education or other issues, you add money to the pot 
because it costs more to serve a rural area. In health care, 
it's significantly less. Your patients are farther apart, 
farther from the health care, and you may not have as many 
people using a sophisticated device, you pay them less. So you 
deprive them of the service, in my view.
    This is not personal. You're just here for the agency 
today. So I guess the whole thought process, in my view, is 
certainly, if I was running HCFA, I would be trying to figure 
out ways to cost effectively provide the care.
    Ms. McMullan. There are work groups dealing with the rural 
health issue. And as I say, I'll be glad to provide you with 
some of the findings of the studies and some of the issues that 
they have determined.

                          RURAL REPRESENTATION

    Mr. Peterson. I guess the other thing, on most your panels 
and boards, do you absolutely make sure that a fair 
representation of rural people are on those panels and boards? 
I see you shaking heads yes, but I often hear no.
    Ms. McMullan. Under the Federal Advisory Committee Act, 
when we seek members of public boards, we look for 
representation of the community that we serve. And to my 
knowledge, we have gone out of our way to make sure that we 
have at least a single, if not more than one, rural 
representative on each.
    Mr. Peterson. Yes, but a huge part of America lives, in 
Pennsylvania, a third of the population lives in towns of 2,500 
or less. I mean, a huge part of America is rural. But we're so 
urban driven that we're not often at the table.

                        PROVIDER COMMUNICATIONS

    I'll move on to the next issue. I've been in public policy 
for too long, I guess, I was at the State for 19 years. I 
chaired health, so I'm familiar with your 50 Medicaid programs 
that you also play a role in. Has there been an effort at HCFA 
to figure out a way for health care providers to talk to you 
and deal with you? Somebody local that they can deal with the 
immense complexities of your programs and your rules and your 
regulations? I find health care providers just reacting and 
reeling all the time from the new HCFA rules, the new wave of 
paperwork. And there's nobody, if they don't have a legislator 
that's interested in health care, they don't have anybody to 
talk to, in my view. Would you respond to that?
    Ms. McMullan. We have several different activities to 
address the needs of providers to make sure that we get them 
the information they need. We have provider education efforts, 
where we are aggressively trying to reach out to the provider 
community and tell them about any changes that are made in the 
way that we administer the programs.
    We do that both directly through our contractors, through 
the regional offices and through national telephone calls and 
satellite broadcasts to answer those questions. We also are 
building a significant capacity on our website, so that 
providers have access through the internet.
    In addition, each of the contractors is required to have a 
committee of representatives to meet with provider 
representatives, so that they can tell them about changes that 
are occurring in the way we implement our program. We are 
interested in anything else that might be useful, because 
communication with providers is one of our primary 
responsibilities. Unless providers know how to bill correctly, 
it's to our disadvantage, the program's disadvantage, as well 
as theirs. So we're very anxious to do as good a job in that 
area as we can.
    Mr. Peterson. If my hospital has a real quarrel with an 
intermediary, where do they go?
    Ms. McMullan. The regional office first, and then if 
they're not satisfied----
    Mr. Peterson. For Pennsylvania, that's Philadelphia.
    Ms. McMullan. Yes. Then if they're not satisfied, they can 
come into the central office.
    Mr. Peterson. Who would they end up talking to if they 
called Philadelphia?
    Ms. McMullan. There are people in each region who 
specialize in the Medicare program, the Medicaid program, and 
the different aspects of the programs that we administer in 
HCFA. And if they had a hospital question, they would get a 
Medicare expert.
    Mr. Peterson. Would you furnish me with the Philadelphia 
office listing of who people would talk to for the right 
situation? I don't think that information is readily available 
to providers, and it ought to be.
    Ms. McMullan. We'll provide that.
    Mr. Peterson. Okay, thank you.
    [The information follows:]

                 Philadelphia Regional Office Contacts

    The following Regional Office employees are specialists in 
HCFA's programs:
    Peter Goodman--Beneficiary Services Branch Chief and Acting 
Contractor/Provider Branch Chief: 215-861-4215.
    Carol Messick--Public Affairs Specialist: 215-861-4244.

    Mr. Regula. Mrs. Northup.

                             SCHIP WAIVERS

    Mrs. Northup. Thank you. Congress passed the SCHIP program 
in an effort to ensure that more children were covered. We all 
know that States have grappled, with different amounts of 
success, with attracting more children into this program.
    It's my understanding that the legislation was very 
prescriptive about what the benefits needed to be, which has 
eliminated or at least restrained from States any flexibility. 
States that wanted to combine the SCHIP funds with, say, 
private insurance funds that are accessible through the 
workplace have been unable to do so.
    Can you comment on the problems States have had in getting 
a waiver and what sort of provisions we might need to include 
in legislation that would expand the sort of delivery systems 
they can use to deliver SCHIP services?
    Ms. McMullan. As far as SCHIP implementation, we have been 
working closely with the States to help them implement the 
SCHIP program, including processing the requests for waivers in 
the SCHIP program. As far as any legislative proposals, I would 
have to provide that to you separately. I'm just not familiar 
enough with that aspect to be able to answer your question, as 
to think about what we have suggested to Congress that might 
improve the program.
    Mrs. Northup. Well, specifically, I think that the concern 
is there are sort of two ways we can go. We can try to attract 
every American into public health, either in Medicare, 
Medicaid, deliver more services, mandate more prevention 
services, more people would be entitled to government health 
care. And we tend to do that, which of course is bankrupting 
some of our systems.
    Or we can try to help leverage the public dollars to help 
people access the private health insurance market, and 
therefore have more choices about where they go, where they get 
their services. Specifically, in Kentucky, we asked for a 
waiver, would have liked to, for example, have subsidized a 
family plan for a working family, a family that had a member of 
the family that was working in it, was employed and was able to 
get family coverage, but couldn't afford family coverage. And 
maybe this family would have liked to have just expanded their 
coverage to family coverage so that their children would now 
have coverage for a fraction of the dollars that it takes to 
include them in the Medicaid program.
    We couldn't get that waiver. And so now every child in 
Kentucky that's entitled to the SCHIP funds gets it through 
Medicaid, a much more expensive delivery system. And quite 
frankly, many of their families feel less inclined to opt for 
employer based insurance if they have to share in the cost, and 
if their children already have coverage through another means. 
Other families don't take advantage of SCHIP because they quite 
frankly don't want to be in Medicaid. They're now privately 
employed, they go to their own doctor, that's what they want 
their children to do. Since that door is closed for them, they 
don't take advantage of the SCHIP funds.
    But I think what's of most concern to me is whether or not 
we're using the public funds as efficiently as we could if for 
a fraction of the dollars we could expand individual coverage 
to family coverage. Clearly we could stretch our Medicaid 
dollars further.
    My concern is, when I've asked the Administrator about 
this, what I have been told is that the language in the law is 
very specific about what sort of coverage every child has to 
have, and that because private insurance plans clearly don't 
cover what Medicaid does, I mean, Medicaid pays for the taxi to 
take you to the doctor, that private insurance coverage doesn't 
meet the legal specifications of the law. So that sort of 
flexibility is lost.
    Does that sound familiar to you at all?
    Ms. McMullan. Medicaid and SCHIP rules are complicated at a 
level that I don't fully understand. I would be happy to set up 
and arrange a briefing for your staff on your issues, so that 
they can be explained more fully by people who are more expert 
than I.
    Mrs. Northup. I think I want more than that. I want 
recommendations of what changes in the law would allow more 
flexibility, so that State waivers would have a better chance 
of being approved. Many of our States are desperate about the 
negative balance they have in Medicaid, and desperately need to 
be able to employ some of these new strategies, so that they do 
not find that the costs of these programs are sinking their 
State budgets.
    So I'm not really as eager to understand what the obstacles 
are as I am to know what sort of statutory changes would have 
to be made, so that we could eliminate those obstacles.
    Ms. McMullan. We'd be happy to provide whatever technical 
assistance we can.
    Mrs. Northup. Okay.
    Thank you, Mr. Chairman.
    Mr. Regula. Mr. Miller.

                    PROVIDER IDENTIFICATION NUMBERS

    Mr. Miller. Good morning. Let me start off with a question 
that's, HCFA's been a great frustration to many people in my 
district, a large number of elderly in my area, Sarasota, 
Florida, Manatee County, Florida. And one was one from the 
medical society, that it takes too long to get a provider 
number. This is a fairly specific type of problem.
    But the frustration they have, and apparently this is not 
just in Sarasota County, because they said it was a big issue 
at a national physician meeting, is that for example, a group 
in Venice, Florida, several physicians broke up their practice, 
continued practicing in the same town, it took them four months 
to get a new provider number. It was so frustrating for them, 
they had been in the system, but it was a group. But they felt 
it was a bureaucratic problem.
    There was another case of a doctor moving just from St. 
Pete down to Sarasota, same problem, just took months to get 
that number.
    So those are kind of some of the frustrations they have, 
that with HCFA, and the day to day issues, it's not a partisan 
policy type issue, but it's just that frustration. So I'm just 
sharing it with you, I'm not sure there's an answer to it or 
anything, but to let you know, those are the type problems that 
just kind of drive people, kind of upset with you.

                    MEDICARE+CHOICE PLAN WITHDRAWALS

    Another issue in my area is these choices, and I was just 
reading this book, it's interesting, I have six more year and 
I'll be eligible for this book. It's interesting to follow it. 
But in my area, we have no choices. They've all been driven 
out, basically. And is there any hope? We've passed some more 
money the past couple of years. Is there any chance any of 
these are going to come back into areas that they dropped out 
of? I mean, what's the future there, especially in medical 
savings accounts, which don't evenexist, even though they're 
somewhere in the law? Can you comment about choices?
    Ms. McMullan. We are working hard to understand what the 
administrative burdens are, and what other kinds of issues are 
creating difficulties for Medicare+Choice plans to operate 
within different areas of the country. And we're working 
closely with the industry to understand those things.
    Some of the issues can be remedied by changes in statute. 
Some of the issues are things that can be remedied by our doing 
business differently with the Medicare+Choice plans. Some 
issues involve having access to provider networks, which is 
something that the managed care industry and the 
Medicare+Choice plans need to understand at a local level.
    It is a priority of this Administration to look at ways to 
work better with the Medicare+Choice organizations. We have had 
no interest in medical savings accounts.

                        MEDICAL SAVINGS ACCOUNTS

    Mr. Miller. You don't mean HCFA has no interest----
    Ms. McMullan. No, no. We've gotten no applications. No 
insurance company has approached the agency.
    Mr. Miller. Why?
    Ms. McMullan. I can only assume that it's not a good 
business choice.
    Mr. Miller. Or is it because of the way it's structured, 
that there's no choice, I mean, it just makes it very 
unattractive? Well, I mean, it's not available. Some people 
would like to have that as an option, which is just a 
catastrophic type of insurance plan. It must be the way it's 
structured. And maybe it's the way the law was written too.

                          BENEFIT PLAN CHOICES

    I just believe people should have choices. I just think 
everybody should have the right to choose whatever they want. 
If you don't like HMOs, stay away from HMOs. But if you want to 
join an HMO, some people love them, you should have the right 
to choose them. We've just lost all of our choices in my area 
of Florida, for a variety of reasons. It's very frustrating for 
those that had an HMO and had to go out of it, and they can't 
even switch to one, because there's nothing really available in 
my area.

                     CRIMINALIZING MEDICAL PRACTICE

    Let me ask a question I've had that people complain that, 
we've had a lot of fraud. And you've made some progress in 
reducing that. But a lot of people feel we've criminalized 
health care practice. The physicians say, my gosh, it's 
criminal. They give some illustrations back in my district. 
Doctors are afraid to practice, because they're made a criminal 
for some issue. We want to crack down on fraud, but yet maybe 
we've gone over. Do you feel there's any problem with that as 
far as allowing the physicians to practice medicine rather than 
worrying about going to jail, the threat approach rather than 
working together?
    Ms. McMullan. The criticism of criminalizing the system, 
we're very familiar with that. We are changing some of the 
rhetoric that we use to make sure that people understand that 
we really are trying to work within the system to reduce the 
number of payment errors. Many of the errors are very honest 
errors, made by not understanding the system. We're investing a 
lot of energy into the education of provider groups, so that 
they can understand exactly what the rules are, so mistakes do 
not occur and we can avoid creating any kind of tension within 
the system.
    So we are conscious of the concern and we are working to 
change the dynamic. It is important, because of the entirety of 
our program and the trust fund, that we deal with payment 
errors and make sure that they don't occur. But our greatest 
tool in doing that is education and communication with the 
provider community.
    Mr. Miller. Well, I hope you make some progress. Because 
right now, they're worried if they make a billing error and 
it's not intentional, all of a sudden they're threatened with 
jail. They say, wait a minute, wait a minute, I want to 
practice medicine. There are the ones that try to commit fraud 
and we should obviously stop that. So I mean, there is a fear 
factor out there, and that's unfortunate, it was created over 
the past couple of years and I hope we can resolve it.
    Thank you. Thank you, Mr. Chairman.
    Mr. Regula. Mr. Wicker.

                      HOSPICE CARE IN RURAL AREAS

    Mr. Wicker. Thank you, Mr. Chairman.
    First of all, let me just say that I share Mr. Peterson's 
concern about the disparity between rural and urban 
reimbursement, and I hope to get back to that if I have more 
time.
    My question is really related to that, but it deals with 
hospice care in rural areas. Now, there is currently a rule, 
and I spoke with the panel off the record before the hearing 
reconvened about whether that's statutory or regulatory. I do 
not know. But basically, the requirement is that no more than 
20 percent of hospice care can be inpatient. The rest has to be 
outpatient or in-home.
    The problem that we have in my neck of the woods is that 
the pool of persons desiring hospice is so much smaller than 
when you take 20 percent of that, it becomes impractical to 
have inpatient at all. And we have some people in Mississippi 
who would like to have a non-profit hospice facility that is 
100 percent inpatient, on the theory that other hospice 
agencies have already taken care of the folks or are already 
taking care of the folks out in the home.
    So I hope that you'll get back to me on what the regulation 
or whether this is a regulation or whether we can work with it, 
whether we must work with it from a statutory standpoint.
    Do you see any reason why we should have this 80/20 rule, 
when there's no ability to take the 20 percent and actually 
have a viable inpatient hospice facility?
    Ms. McMullan. As I understand it, the rule deals with the 
census of each organization. So it's 20 percent of the census 
needs to have inpatient care. My expectation is that in the 
original design of the hospice benefit, the anticipation of 
some people progressing to a stage of needing to be an 
inpatient was acknowledged.
    So in order to continue to focus on the purpose of the 
hospice benefit, we keep people in the home as long as they are 
able to stay at home for the care--the majority was at-home 
care--but acknowledge that people sometimes progress to a stage 
where they need to be an inpatient. So that's my expectation of 
why the balance is 80-20. I can respond to you as to whether 
it's statutory or regulatory, and also give you some background 
as to why, when it was developed, they thought that was the 
right mix.
    Mr. Wicker. Well, I'll tell you, the further concern that I 
have is that when the situation gets to the point where it's 
just not practical to have an inpatient facility at all, then 
the people who need to leave the home and go to a facility, go 
into nursing homes or hospitals, that it's more expensive for 
the entire system. We could do better by thetaxpayers by having 
more flexibility for inpatient. So I'm glad to know that we're going to 
work on that.

                   PAYMENT DISPARITIES IN RURAL AREAS

    Now, let me get back to Mr. Peterson's point. It is a fact 
that a rural hospital in rural Pennsylvania or rural 
Mississippi performs a procedure and a hospital in an urban 
performs the same procedure in the same manner that the urban 
hospital is reimbursed at a higher rate, correct?
    Ms. McMullan. It can happen. The law is not structured to 
say, if you're in a rural area you get paid less. But it 
certainly can happen, because of the way the payments are 
formulated.
    Mr. Wicker. Because of the way the payments are formulated. 
It happens more often than not, does it not?
    Ms. McMullan. The structure of the payment systems often 
relies on costs reported by each of the institutions. So if you 
look at the cost of an institution where the wages may be less, 
or other costs associated with providing care, that provides 
the base and from that base there could be a cost differential. 
But as I mentioned earlier, we'll be happy to talk to you about 
what we have done to try to deal with the issue of parity and 
payments. Congress has done a great deal as well to change, to 
try to even out, the payment systems.
    Mr. Wicker. Well, okay, let me just say that if I were 
convinced it was based totally on actual, real costs, and it 
just cost more to perform these in an urban hospital than in a 
rural hospital, I would agree with that result. But I don't 
think that's what is happening. But what we are seeing, and I 
think this is what Congressman Peterson is crying out about, is 
we have hospitals in small communities, in rural areas, where 
people have not voted with their feet to leave. They want to be 
served in the small hospital. They come to the small hospital.
    But the hospital cannot make it financially, bottom line, 
because they're not being reimbursed at a fair rate to treat 
those people. Even though there are people in the hospital 
there, they can't make it, bottom line, because it's not 
financially feasible. And that is a situation that we need to 
work together to address.
    Thank you, Mr. Chairman.
    Mr. Regula. Mr. Cunningham.

              SUPPORTING HCFA'S EFFORTS TO SOLVE PROBLEMS

    Mr. Cunningham. Thank you, Mr. Chairman.
    You know, I want to tell you, the Secretary spoke very 
supportively of HCFA. I worked with the Secretary when he 
helped with Governor Engler in writing the Welfare Reform Act. 
I know the dedication he had to that, and the ability to solve 
problems. I think the first thing to recognize in any 
organization, group or person, is to recognize that there is a 
problem and I think that is recognized, both by yourself and by 
health care providers and this Committee on both sides of the 
aisle.
    It's kind of like the IRS, when we went after the IRS, we 
felt that they were overburdensome and wielded power, because 
of their agency. It was an attitude problem, and now they're 
serving cookies and milk. That's quite a difference from IRS, 
when you walk in, they still may hammer you. But what a great 
opportunity we have. The Secretary told us about the 
understaffing that you have. He's basically living down there 
at HCFA, which I think is very noteworthy. The outdated systems 
that you have to work with, difficulties, the burdens that you 
have.
    And even the current rules and regulations, that in many 
cases tie your hands from providing the health care that you 
and this Committee would like to see worked. What a great 
opportunity we have to fix that. There are some that want those 
tight rules. There are some that want Government control. For 
those I would say that it is counterproductive.
    But I want to tell you that I've noticed a slight 
difference. I mean, we're getting phone calls back now. In 
February, I had a local physician asking for help dealing with 
a contractor that owed a bunch of money to him, and HCFA was 
very instrumental in that, I want you to know that, and I want 
to thank you for that.
    But what I would like you to know is, this member at least 
is looking forward to helping you with the personnel, with the 
equipment, with all the things we can within the budget 
constraints that we have, but really going forward to making 
that happen.

                         NURSE ANESTHETIST RULE

    I support limiting the amount of privacy, or not limiting 
privacy, but the amount of information that goes out on the web 
for privacy. Another thing I think is important that we look 
at, some of the issues have been covered, with the nursing 
emphasis, do you plan on letting that rule go forward on May 
18th, which is due? They provide about 65 percent of all of 
those health care needs. I think many of us are supportive, 
especially since anesthesiology is about 50 percent more safe 
than it was in the past. Is there going to be any conflict with 
that?
    Ms. McMullan. That rule, along with several others, was 
delayed in order for additional information to be considered, 
and it's still being considered. There has been a considerable 
amount of input on both sides of the question, and it's 
currently under consideration in the Office of the Secretary.
    Mr. Cunningham. Does that mean yes or no in the 18th? Is it 
going to go beyond the 18th date before that is implemented? Or 
is that process going to take us beyond that period of time, do 
you think?
    Ms. McMullan. It has not been the custom of the Secretary 
to take longer. But it is within his office to make the 
decision.
    Mr. Cunningham. Okay. Well, I thank you. I think you've 
heard something. My father-in-law, I've got the greatest 
father-in-law in the world, had me go down to his doctor's 
office. He was just fuming mad on the paperwork and rules and 
regulations, just to get health care through the system with 
all the rules. Many of us have concern about the latest. 
President Clinton, I think, I will give him credit, the health 
care issue he put up forward, he put it out in front. We feel 
that his way to deal with it was wrong. But at least he made it 
a focus so that there would be legitimate debate.
    And in this, I think those rules and regulations at the 
last minute that he put forward, and many times it's tying your 
hands, like we talked about before, from providing that care. 
Members of this Committee will do everything we can to help you 
take the good, the bad and the ugly and separate them, and try 
and work with you. We're sympathetic with your problems. If you 
allow us to help you, we will. If there's politics involved, if 
there is gridlock involved, then there's going to be a problem.
    But I think most of us are willing to bend over as much as 
we can, bend backwards and help in any way we can. I think you 
do have some monumental problems, not all self-generated. I 
want to thank you, we've already seen someresponsiveness out of 
HCFA. We've got a long way to go.
    Thank you, Mr. Chairman.
    Mr. Regula. Thank you. Mr. Kennedy.

                    PARITY OF MENTAL HEALTH COVERAGE

    Mr. Kennedy. Thank you, Mr. Chairman.
    I'd like to address a really important issue that I had an 
opportunity to address with the Secretary, and that is parity 
insurance for mental health coverage. As you know, the mental 
health parity act of 1996 took a good step forward in 
recognizing discrimination exists in almost every health care 
policy. It's still legal to charge onerous co-pays for all 
services for mental illness and restrict the number of hospital 
days and outpatient visits, without regard to an individual's 
condition.
    So it's estimated that 5 million Medicare beneficiaries 
have mental disorders, and many are severely disabled. Yet the 
Mental Health Parity Act does not apply to Medicare. So I'd 
like to ask you, there is a 50 percent co-pay for outpatient 
mental health, but only 20 percent for other health care 
patient physician visits. For inpatient days, there's a 190 day 
lifetime limit under Medicare for psychiatric hospital care.
    What are you doing at HCFA to address the disparate 
coverage for other mental health services beyond medications in 
comparison to other physical health issues?
    Ms. McMullan. Basically those are statutorily-required 
limits. Medicare was in its beginning, and remains, an acute 
care benefit program. The issue with mental health is caught up 
in that. But those are statutory benefit structure design 
issues.
    Mr. Kennedy. Okay, so we have to pass a law making sure 
that there's parity, that's what you're saying?
    Ms. McMullan. The underlying foundation of Medicare, in its 
root, is an acute care benefit. So to pay for care of both 
mental and physical chronic illness, the structure of the 
benefit needs to change.
    Mr. Kennedy. I would love to have some input from your 
agency to what exactly we need to change in the law.
    Ms. McMullan. I could provide that for you.
    [The information follows:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


               COVERAGE OF NEW ANTI-PSYCHOTIC MEDICATIONS

    Mr. Kennedy. Because I'd like to push for that as long as 
I'm here in Congress.
    I want to get to another issue, and that is in 1998, HCFA 
issued a letter to all State Medicaid directors on the use of 
newer anti-psychotic medications. The letter included an 
opinion from the NIMH director, Steve Hyman, detailing medical 
evidence regarding the benefit of newer anti-psychotic 
medications in treating illnesses such as schizophrenia. 
Unfortunately, since this letter was sent out, a number of 
States have attempted to limit access to these new, more 
effective medications through restricted formularies and 
policies that require Medicaid beneficiaries to first try on 
older medications which typically have severe side effects.
    What is HCFA undertaking to assure that States, all States, 
comply with the spirit of the February 12, 1998 letter?
    Ms. McMullan. I'll have to provide information for the 
record on that issue. I'm not familiar with it.
    Mr. Kennedy. Okay, if you would, that would be great.
    [The information follows:]

                       Anti-Psychotic Medications

    On February 12, 1998, HCFA sent a letter to State Medicaid 
Directors providing information about recent advances in the 
treatment of schizophrenia. This letter was informational in 
nature and meant only to bring these advances in psychotropic 
medications to the attention of the States. To that end, we 
enclosed a letter from Dr. Steven E. Hyman of the National 
Institute of Mental Health that provided detailed information 
regarding advances in new psychotropic medications. As there is 
no requirement that States use these particular medications, 
our letter was designed to provide information for State 
consideration, not to establish new regulation or requirements.

                 MEDICAID EARLY AND PERIODIC SCREENING

    Mr. Kennedy. Now I'd like to get to a question about the 
Medicaid Early and Periodic Screening and Diagnostic Treatment 
program. As you know, the Surgeon General in his report, as 
well as the National Academy of Sciences have issued reports 
emphasizing the importance of prevention and early detection in 
childhood to avoid serious emotional disturbances in children 
and youth. The science is very clear on this, that we can 
change the developmental trajectories of many youth with 
emotional problems.
    Fortunately, we have a program that can assist with this. 
It's called the Medicaid Early Period and Screening Diagnostic 
Treatment Program, requiring States to provide screening and 
preventive services to children and treat conditions revealed 
by the screen. Federal law requires that the screen include 
identification of developmental delays and mental health 
problems.
    But unfortunately, the program is not fulfilling its 
promise. In one study, only 21 percent of providers in this 
Medicaid program, in the States, completed all 6 EPSDT checkup 
components. The percentage of children identified for mental 
health problems is much lower than expected from the Medicaid 
population. So HCFA does not require States to report the 
number of mental health and substance abuse screenings 
performed.
    Can you tell me what concrete steps you are undertaking to 
ensure that States adequately screen children for mental health 
and behavioral health problems as required under current law?
    Ms. McMullan. Again, I'll have to have that provided for 
the record. I'm familiar with the program, but not with the 
question that you've asked.

                    DECREASES IN THE RESEARCH BUDGET

    Mr. Kennedy. Okay, I'll submit that for the record. And 
just draw your attention to it, because it is critically 
important, as you well understand. We can solve a lot of 
problems if we catch them early and identify and treat these 
kids.
    Finally, I just want to get to an issue that has been 
addressed here with respect to choice issues for Medicare. In 
Rhode Island, we have a terrific advocacy group called Aging 
2000. They provide important consumer information on Medicare 
benefits and coverage for seniors. This has been a very 
important program, especially since so many of our HMOs in the 
Medicare market in Rhode Island have pulled out and decided 
that Medicare is not profitable.
    Aging 2000 has helped our senior population really adjust 
to all these changes within the HMO market. We're really 
excited about this, and we want to see it continue. But 
unfortunately, in the budget that's submitted, research and 
development is cut by $80 million. So that's what this would 
come under. In particular, the budget for improving Medicare 
delivery is being cut, because of this.
    Can you explain how important consumer choice programs and 
education programs will be and how important they are to be 
continued in the future and what we're going to do to make up 
for the cuts in the research and demonstration programs that 
are so vital to helping our Medicare population address all 
these changes in the Medicare system?
    Ms. McMullan. To answer your question about the research 
budget, the research budget request for 2002 is at traditional 
levels. In 2001, it had been increased substantially due to a 
number of single-year activities and Congressional earmarks.
    As far as getting information out to Medicare consumers 
about choices and changes in choice in their area, we have a 
substantial activity that is sponsored through the Health Care 
Financing Administration to make information available to 
individuals, both through the handbooks that we put at each 
place, the 1-800 number, and also through work with State 
organizations. I am familiar with Aging 2000, and it is a very 
noteworthy and capable group of people doing the work in Rhode 
Island to make information available at a local level.
    We do have partnerships that we sponsor. One of the workers 
in that group is a member of our advisory committee that helps 
us find direction for the program and target local areas. So we 
have, separate from our research activity, work going on to 
inform Medicare beneficiaries.
    Mr. Kennedy. Well, I would appreciate any initiatives that 
you see yourself embarking on to address this baby boom senior 
boom population coming down the road and how we're going to 
have more programs like Aging 2000 out there, and what I can do 
to help you with Aging 2000. This has become a great model for 
consumer advocacy and I'd love to see it available in other 
States, to help my friends here, and their serving their 
constituents.

                        PREVENTIVE CARE BENEFITS

    Finally, let me just ask you, when we had the Secretary, we 
talked about an ounce of prevention is worth a pound of cure. 
All of our health care system is geared toward sickness based 
care, taking care of people after they get sick, not covering 
any benefits that help keep people from getting sick. What 
steps are you taking to add preventive health benefits to 
Medicare?
    Ms. McMullan. Again, the benefit structure of Medicare is 
basically an acute care benefit program. Congress has added in 
recent years some preventive health benefits including flu 
shots, mammograms, and cancer screening benefits. Basically, it 
would require a benefit structure change, which requires 
legislation.
    Mr. Kennedy. All right. Like the mental health stuff, would 
you get me what I would need to do as a legislator to try to 
make those changes statutorily?
    Ms. McMullan. Yes, we'd be happy to do that.

                         NURSE ANESTHETIST RULE

    Mr. Kennedy. And the HCFA final rule on anesthesia care 
becomes final on May 18th as scheduled. Is it going to be 
finalized--did you ask that already, Mr. Chairman?
    Mr. Regula. Mr. Jackson's deferred.
    Mr. Kennedy. Well, I'll submit this question for the 
record, and thank you for your kind attention.
    Mr. Regula. Mr. Jackson.

                         PROPOSED LAW USER FEES

    Mr. Jackson. Thank you, Mr. Chairman, and thank you, Mr. 
Kennedy.
    I have a number of questions, Mr. Chairman, that in the 
interest of time that I'm going to submit for the record. I 
have a number of meetings that are going to be scheduled in the 
future with the Administrator and with the Secretary.
    I have a question about user fees. I notice that your 
budget assumes $115 million in user fees to offset the $109 
million increase in HCFA's discretionary budget. I'm wondering, 
is there any way the providers will end up passing this $1.50 
user fee on to consumers in the form of less care?
    Ms. McMullan. I can't imagine that would occur. We can 
certainly look and see if we see any sorts of patterns that 
would indicate that. We just don't expect that that would 
occur.
    Mr. Jackson. I'm very interested in your analysis of that, 
because every indication is that whenever the discretionary 
budget decreases, that somehow it ends up getting passed on to 
the consumer, either in the form of less care or in the case of 
some consumers, in the form of increased costs.

                        NURSING HOME INSPECTIONS

    Let me ask one last question, if I might. With the number 
of people getting older and living longer and more people 
working and not being able to take care of their patients, I 
would imagine more elderly would be going into nursing homes. 
I'm concerned that your budget did not include funds for 
nursing home inspections. How are you planning on making up for 
the shortfall?
    Ms. McMullan. The budget does include money for nursing 
home inspections.
    Mr. Jackson. One second, please.
    Again, Mr. Chairman, in the interest of time, I'm going to 
submit that question for the record with our backup 
information, and we'll see if we can reconcile the two. If you 
could be so kind, Madam Administrator, as to respond to my 
questions in the record, I would be greatly appreciative.
    Thank you, Mr. Chairman.
    Mr. Regula. Thank you. Mr. Kennedy, did you have anything 
else?

                         NURSE ANESTHETIST RULE

    Mr. Kennedy. Thank you, Mr. Chairman. I do. On 
theanesthesia, there's a rule coming out May 18th. Are you going to go 
ahead with that, for nurse anesthetists?
    Ms. McMullan. That rule is in the Office of the Secretary. 
They are looking at the comments they've received and will make 
a decision.
    Mr. Kennedy. Thank you, Mr. Chairman.

                         1-800 TELEHONE SERVICE

    Mr. Regula. I think we're going to have a vote around 
11:30. I have some questions, and perhaps we can finish before 
we have to go and vote.
    This is a practical question. I noticed you have an 800 
number for people in the state booklets. When they call that 
800 number, and I am going to try it out myself, do they have 
to go through the whole automated series of press 1, 2, 3, 4, 5 
or do they get a live person?
    Ms. McMullan. The 1-800 number operates 24 hours a day. 
Eight hours a day, it is staffed by customer service 
representatives. The caller does go into an automated response 
unit, but they can immediately go to a customer service person 
if they so choose.
    Mr. Regula. So they have that option?
    Ms. McMullan. During 8:00 to 4:30 local time.
    Mr. Regula. Okay. And during the other times you'd get 
what, a voice response or canned response?
    Ms. McMullan. There are a couple of options. They can leave 
their name and address if they want a publication, or they can 
listen to frequently asked questions to get the answers.
    Mr. Regula. But I think the important thing is that during 
working hours you can get to a voice without going through the 
whole automated series.
    Ms. McMullan. Yes, you can get to a real person.

                        NURSING STAFF SHORTAGES

    Mr. Regula. I was talking with some people this morning 
that support the health care programs, nurses, nurse 
anesthetists, etc., and they said that we already have 
shortages of personnel in these professions, and that it will 
be exacerbated over time. What's your evaluation of that? Is 
adequate staffing for physical therapists, etc. going to be a 
problem? There's a whole range of support services that are 
part of the medical care system.
    Ms. McMullan. I'm very familiar with the nursing shortage 
issue. That has come up recently, and it's something that the 
Department is looking at across all its programs to see what we 
can do to deal with some of the issues around nursing 
shortages. I'm not as familiar with what the future pattern of 
other support services is, but I can certainly provide that 
information, any information we have within the Department.
    [The information follows:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Mr. Regula. I don't know whether it would be your agency or 
another agency that would have responsibility to sort of look 
out into the future and try to anticipate problems. Is that a 
proper role for HCFA?
    Ms. McMullan. We look at it in relationship to our 
population and our programs. But the primary responsibility is 
in HRSA.
    Mr. Williams. Dr. Duke was here yesterday testifying for 
the Health Resources and Services Administration, and the 
health professions program in HRSA does keep statistics and 
does research on the availability of various health 
professionals over time. And the nursing shortage is something 
they have documented, and as we testified yesterday, the budget 
does include some additional resources there.
    Mr. Regula. Would HCFA be privy to information that would 
be indicative of this possibility and pass it on to HRSA?
    Mr. Williams. There's a lot of communication inside the 
Department. I'm sure HRSA passes its information to HCFA. If 
HCFA has independent information, I'm sure they would share it. 
But that may not be part of its normal research function, and 
wouldn't necessarily be a central issue for them. But they 
certainly have access to the information that the Health 
Resources and Services Administration would develop on these 
issues.

                        MEDICARE & YOU HANDBOOK

    Mr. Regula. How often is this booklet revised?
    Ms. McMullan. The handbook is updated once a year.
    Mr. Regula. Do you base revisions on sort of a focus group 
approach, where you actually get a group of seniors and give 
them a chance to have input as to whether this is something 
they find usable?
    Ms. McMullan. Yes, we do.
    Mr. Regula. User friendly, I guess is the right word.
    Ms. McMullan. We do a couple of things. One, if there have 
been any statutory changes, as an example, in 2002 there's a 
statutory provision that goes into effect that affects 
enrollment in Medicare+Choice plans, those kinds of changes are 
reflected. So we look at any statutory changes that need to be 
explained.
    We go out and test with people who have received the book 
to see what they understood, and what they didn't. We do low-
literacy review because our population is less literate, and 
also has some reading impairment. We review it to make sure 
that we're explaining it as simply and as clearly as possible 
to that audience.
    Mr. Regula. Do you do this in other languages at all?
    Ms. McMullan. We do it in Spanish and we do some of it in 
Chinese. And in areas where other languages are frequently 
spoken, our regional office staff will take elements of it and 
convert it into languages that are found in the areas they 
serve.
    Mr. Regula. Do you get many calls? I notice it says if you 
don't understand some thing, you can call this 800 number. Do 
you get a lot of calls?
    Ms. McMullan. We are projecting 5 million calls next year.
    Mr. Regula. And that information then will be used in part 
to revise future editions----
    Ms. McMullan. Yes it will.
    Mr. Regula [continuing]. To address those most frequently 
asked questions.
    Ms. McMullan. Yes. And we also use it to revise our 
website. We have a very good website, I mentioned it in my 
testimony, www.Medicare.gov. It's a very comprehensive website 
targeted to people with Medicare, who are actually receiving 
the services. It explains the benefits, explains the choice of 
Medicare+Choice plans, nursing homes. For people on dialysis, 
there's a dialysis facility comparison. There's a lot of very 
useful information.

                         PROVIDER REIMBURSEMENT

    Mr. Regula. How do you arrive at the amount you reimburse? 
It seems that each different procedure has a reimbursement 
number. The complaint I hear from the medical profession is 
that these numbers are totally inadequate for the service that 
they're expected to provide. My question is, how do you arrive 
at these numbers?
    Ms. McMullan. There are nine different payment 
systems,largely dictated by statute, as are the formulas that we use to 
derive the payment systems and the structure of the payment systems. 
But in any one particular case, or in all of them, actually, we'd be 
glad to give you a high-level overview of how the payments are 
formulated and on what basis.
    Mr. Regula. Well, as I understand it, the statute sets the 
formula, but it doesn't set amounts. For example, let's take a 
heart bypass. I don't know what the reimbursement is on that, 
but its set internally, is it not?
    Ms. McMullan. To use inpatient care as an example, the cost 
of providing the care is provided by the hospital, the wages 
are provided by the hospitals, and other factors that are used 
to make adjustments, such as disproportionate share of the 
poor. That all goes into a statutorily-mandated formula, often 
that needs to be budget neutral, so there are redistributional 
effects within the formula.
    In the end, we publish a rate. We're actually in the rate 
publishing season now. Our rate regulations are coming out, 
where we publish exactly what the prices are for each of the 
different categories. The payment systems also are paid by 
categories. The one that you mentioned would be the inpatient 
hospital, which is based on a diagnostic-related group, so we'd 
pay by the diagnosis.
    But again, we'd be happy to explain any of them in 
particular. But there are nine different payment systems with 
different methods to set the payments.
    Mr. Regula. So a physician that provides a certain service 
in rural America would perhaps not be reimbursed as much as 
somebody in the city of New York for a similar procedure?
    Ms. McMullan. That's correct, because there are geographic 
factors in the physician fee schedule.

                    PHYSICIANS ACCEPTING ASSIGNMENT

    Mr. Regula. At one time, was it not the practice that the 
physician had to be willing to accept whatever the Medicare 
reimbursement was, that they were not allowed to negotiate an 
extra amount with the patient?
    Ms. McMullan. In Medicare, physicians can accept 
assignment, in which case they accept a Medicare payment. 
Physicians do not have to accept assignment. They can charge, 
but then there are balance billing limits on how much they can 
charge.
    A physician can offer any service to a beneficiary. Between 
the beneficiary and him or herself, they can agree to pay 
outside of Medicare. The beneficiary does not have to bill 
Medicare if they do not choose to.
    There is also a very particular provision that I think was 
part of BBA, where physicians can privately contract with 
individuals. But that's a much more structured activity.
    Mr. Regula. When you say accept assignment, is that on a 
case by case basis, or is it the case that if a physician is 
delivering Medicare services, and accepts assignments, that 
would preclude them from negotiating extra amounts with 
patients?
    Ms. McMullan. If they participate in Medicare and accept 
assignments, they do it for all Medicare beneficiaries.
    Mr. Regula. So they're locked in. That created some 
unhappiness among the medical practitioners and currently the 
system is still in place.
    Ms. McMullan. A significant proportion of physicians do 
participate.
    Mr. Kennedy. Mr. Chairman?
    Mr. Regula. Yes, I'll yield.

                             PAYMENT DENIAL

    Mr. Kennedy. How do you track denial of care? Do you have 
any kind of mechanism, when the Chairman was asking about the 
phone number, is there any measure or complaints about 
insurance companies denying care, something like that?
    Ms. McMullan. Are you talking about denying care or denying 
payment?
    Mr. Kennedy. Yes, denying payment.
    Ms. McMullan. We actually have numbers of payment denial. 
So when claims are processed through, we know the percentage of 
claims that are paid and the percentage of claims that are 
denied. As far as denying care, we would not have that 
information. If care wasn't provided, we wouldn't be billed, so 
we wouldn't know what care wasn't provided. We have no way of 
tracking that. But we do keep statistics on the number of 
claims that are processed without question and the number that 
are denied.
    Mr. Kennedy. I'm talking about like the Patients' Bill of 
Rights, trying to establish that people are not going to get 
the care, that they are insured for, denied. Do we have any 
idea what those figures are?
    Ms. McMullan. In Medicare in general, all of the elements 
of the patient's bill of rights exist[s] within the Medicare 
program. If someone believes that they have been denied access 
to care, they can make a complaint and we can investigate that 
complaint.
    Mr. Kennedy. And how many complaints are made in a year?
    Ms. McMullan. I'll have to provide that to you for the 
record.
    Mr. Kennedy. Would you? That would be, I think, interesting 
for the whole Committee, too. How many would you guess? A 
thousand?
    Ms. McMullan. I really have no idea.
    Mr. Kennedy. No, but I mean, it's a big difference if it's 
less than a thousand or over 50,000. You've got a population, 
you know how any people are covering.
    Mr. Regula. Well, you can put it in the record.
    Mr. Kennedy. I have a feeling, Mr. Chairman, that it's less 
than 1,000, which is pretty dramatic illustration of the fact 
that there isn't an adequate tracking, people don't have an 
ability to really complain and see their complaints addressed. 
I'll look forward to the information.
    [The information follows:]

                      Complaints of Denial of Care

    HCFA's data on beneficiary complaints about denial of care 
come from two different sources: the independent review entity 
(IRE) and the peer review organizations (PROs).
    Managed care plans review the initial denial given to a 
managed care enrollee. If the plan upholds its denial, the case 
is forwarded to HCFA's IRE for reconsideration. Although HCFA 
does not collect data on the number of appeals submitted 
directly to managed care plans, we can extrapolate from the 
number of cases processed by the IRE that, in calendar year 
2000, managed care organizations received about 52,000 appeals 
of initial care denials.
    In the last year, the PROs received an estimated 110 
beneficiary complaints (3.3 per million beneficiaries) 
involving access to care issues and 3,880 beneficiary appeals 
(114 per million beneficiaries) involving additional days stay 
in the hospital. The PROs also received about 380 Emergency 
Medical Treatment and Labor Act (EMTALA) complaints; however 
these reflect care delivered to all individuals, not just 
Medicare beneficiaries. These figures reflect the total number 
of complaints received by the PROs; typically, only a small 
fraction are confirmed as actual instances of inappropriate 
denial of needed care.

                   PAYMENT DISPARITIES IN RURAL AREAS

    Mr. Regula. Mr. Peterson was talking about the problems in 
rural areas. One of the problems in my area is you have a 
community of say, 25,000, and it's treated as rural and yet, 
the city 30 miles away is treated as urban and therefore get 
substantially more reimbursement for nurses. What this does, as 
a practical matter, is prices the smaller hospital out of the 
market, because the nurses in the smaller hospital can easily 
drive to the larger urban area and get the extra money.
    Is that a problem generally? I guess that would be 
something that would require a statutory change in the formula.
    Ms. McMullan. To answer your second question first, I don't 
know whether or not that's part of the pattern of nursing 
issues that we're seeing, that nurses are going where they can 
to get more money. You can understand that that's not an 
unusual behavior. But as far as the payments, the differential 
payments are rooted in the costs and the wages that are paid in 
those areas and their historic formulas. So there have, as I 
said earlier, been some adjustments to those formulas to 
account for the rural differential. And we would be happy to 
provide information regarding the kinds of issues, what has 
been changed, what we understand about the continuing rural and 
urban disparities and what we're doing about that.
    Mr. Regula. But you cannot arbitrarily make adjustments 
internally, as I understand it. You're bound by the statutory 
formula.
    Ms. McMullan. We are.
    Mr. Regula. I've talked to the Chairman of Ways and Means, 
and they're looking at it.
    Mr. Peterson, do you have some additional questions?

                         ADMINISTRATIVE BURDEN

    Mr. Peterson. Yes. Back to the nursing issue, nurses are 
fleeing the bedside care, where we need them, in my view. 
They've always had the problem of weekends and seven days a 
week care, swing shifts. It's not been an 8:00 to 5:00 job. So 
whenever there's a chance that a nurse can do an 8:00 to 5:00 
job, they take that.
    But what I'm told by young nurses who have just practiced a 
few years, they didn't go to school to be a nurse, to be a 
clerk. And the maze of paperwork that an RN does in almost any 
setting is driving them out of--they just don't want to be 
clerks. You have put such a paperwork load on nursing that 
nobody wants to be a nurse. And I guess in the bigger picture, 
is there any thought process at the leadership of HCFA to 
simplify this complicated, convoluted system that is more 
complex than the IRS?
    Ms. McMullan. We are indeed looking at the issue--at the 
kinds of assessment instruments that we are asking, that nurses 
are customarily asked to complete, as part of the payment 
system--to see what we can do to streamline that process. We're 
very conscious of the complaint and the criticism.
    There is, in all things, a balance to be struck on those 
assessment instruments. I understand the complexity of the 
individual's care, so that the payment can be adjusted to pay 
fairly for the complexity of the care and the burden that it's 
putting on the professional at the bedside. So we are looking 
at that as part of the overall Department review of what we can 
do about the nursing shortage and what barriers we can remove--
the things that are under our discretion.

                 OUTCOME AND ASSESSMENT INFORMATION SET

    Mr. Peterson. Well, as a practical business person, I would 
suggest that you take those who are designing those forms and 
let them go work in a hospital for a while at bedside care. 
They need to know what bedside care is about. I guess that's 
the problem I really have. And this is not personal.
    But the system of HCFA is so removed from patient care that 
this theoretical paperwork maze you're continuing to build on, 
and I'll just take OASIS. I had to fill out an OASIS form two 
years ago. Ninety-some questions. If I had left home health 
care for a month and came back into it again, I would have to 
answer those 92 questions again. If I left for another month 
and came back into the system, in most systems, once you put 
the data in there, it's once. You don't do it every time. You 
force home health care agencies to fill out the OASIS form 
every time they re-enter a person into home care. That's not 
how most business is done.
    People are scared to death of HIPAA. Hospitals and agencies 
are scared to death of what's going to come down in that 
paperwork, because they can't handle the paperwork they have 
and provide care. I guess, if I can impress on you, those who 
are designing these systems, and I know it's all done about 
quality and control and outcome, but send them to the bedside 
where care is given so they understand the role of nurses and 
other health care providers in providing health care. Then 
design a system that doesn't remove the health care provider 
from taking care of the patient. That's really what's happening 
out there.
    And I'll go back into the old DRG system. We were working 
on a bill in Pennsylvania when I was a state senator. We had a 
book of the DRGs, a doctor, a family physician could charge in 
his office. And not that the list was huge, page after page, 
hundreds of pages, there was 10 levels of care on every DRG. 
And I don't understand that, because it seems to me it ought to 
be that you could have three levels of care, you could have a 
simple visit, a medium visit or a complex visit. Not ten.
    But I mean, your whole system has people, and the providers 
today are afraid if they mark the wrong one they're going to be 
jailed because they defrauded the system. If it's simple, 
medium, complex, that's pretty simple. But when you give ten 
levels of care, then it can be challenged.
    So the whole maze of paperwork, in my view, is the biggest 
problem that's driving people out of the health care system. 
They just can't handle it.
    Ms. McMullan. We are looking at that. We're conscious of 
the issue. It is one of the barriers, and one of the balances 
to be struck is the precision of the information and its 
importance to payment, and then the burden and its importance 
to access to care. And we do understand that dynamic.

                        NURSING HOME INSPECTIONS

    Mr. Peterson. Earlier someone mentioned nursing homevisits. 
There's no shortage of nursing home inspections. Check with your 
nursing homes.
    But the good homes are inspected maybe 10 times in a year, 
and the bad homes--you know. A good system goes to the homes 
that have problems. If you have an A plus home that provides 
quality care, you don't over-inspect them. You take your 
resources and you go and you take all of the, you should 
somehow work out a system that all of the providers, or those 
that are assessing nursing homes, develop--I mean, nursing 
homes are the most over-inspected place we have, and yet we 
still have problems, because there are a few bad ones. Most of 
them are pretty good places of care.
    But we over-inspect the good ones and under-inspect the bad 
ones, in my view. That's it. Because we treat them all alike. 
In the real world, if you're a problem case, you get a lot of 
attention. If you're listed as A plus care, you're going to get 
very little attention, because we know you give good care. And 
I think the system doesn't do that.
    And in response to the person, I don't know whether that 
answers their question, but that's my view of nursing home 
inspections.
    Mr. Jackson. Would the gentleman yield?
    Mr. Peterson. Sure.

                 STATE SURVEY AND CERTIFICATION BUDGET

    Mr. Jackson. I thank the gentleman for yielding. I looked 
at my question again, and maybe I didn't present it correctly 
the first time. What I asked specifically was that the number 
of people who are getting older and living longer is 
increasing. And therefore, more people will be entering into 
nursing homes.
    The end result of your budget, you didn't actually zero it 
out, but because the increase, because there are no significant 
increases in home inspections, there's going to be a shortfall. 
So what I asked specifically was about the shortfall. I may not 
have phrased that correctly, but my sense was that because the 
population is aging, we have to assume that more people are 
moving to nursing homes.
    But the budget, as I have had it reclarified for me, 
suggests that the number is not necessarily increased, the 
number for inspections is not keeping up with the amount of 
people who will be entering the homes. So we'll have to have 
more nursing homes, but obviously a shortfall in inspectors.
    Ms. McMullan. The budget line that you're talking about 
actually has increased substantially in previous years, and 
it's at a stabilized level in the 2002 budget. We're not 
expecting substantial increases in the census of nursing homes. 
The population is aging, but the bulge is coming more in 2010 
and after.
    Mr. Jackson. I thank the gentleman for yielding.

                         ADMINISTRATIVE BURDEN

    Mr. Peterson. You're welcome.
    Back to the OASIS issue. Is it true that you require the 
OASIS documentation on a home health care agency, even if it's 
not a Medicare patient?
    Ms. McMullan. Yes we do.
    Mr. Peterson. Why?
    Ms. McMullan. I believe that we can provide this for the 
record.
    [The information follows:]


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    Ms. McMullan. They're looking at the census to make sure 
that each patient has a sufficient assessment and an evaluation 
of what their health care needs are. But I will be happy to 
provide that for the record. I don't know the----
    Mr. Peterson. But that's the perfect example of a 
bureaucratic structure deciding they are the god of health 
care. Did Congress give you the role of being the goddess of 
health care? Not you personally. Please don't take this 
personally. But I mean, your agency, the goddess of health 
care, and that you're to protect people that have nothing to do 
with Medicare, that's your job?
    I mean, I guess that's the reach of HCFA that I have real 
trouble with. And to force them, if you were in and out of the 
system eight times in a year, you're going to do that eight 
times. That's just bad public policy.
    Ms. McMullan. We can look at your issue around OASIS. 
Indeed, anyone receiving care in a Medicare and Medicaid--
certified facility is under the auspices of our survey and 
certification program.
    Mr. Peterson. So you are the goddess of health care?
    Ms. McMullan. I've been called a lot of things----
    Mr. Peterson. Not you personally. [Laughter.]

                    ASSISTED LIVING FACILITY SURVEYS

    Mr. Regula. You've got a new title this morning.
    Along this line of questioning, on assisted living, which I 
understand could be Medicaid reimbursed, do you conduct 
inspections?
    Ms. McMullan. Assisted living centers are not subject to 
the survey and certification rules. They're outside----
    Mr. Regula. Even though they're getting Medicaid 
reimbursement in some cases?
    Ms. McMullan. There may be State inspections, but they're 
not part of the Federal survey and certification system.
    Mr. Regula. Okay. I think Mrs. Northup is next, and then 
we'll go to you, Mr. Kennedy.

                           HMO REIMBURSEMENT

    Mrs. Northup. I had a Committee meeting across the hall, so 
I don't think this is entirely repetitious. I asked you 
originally about the SCHIP program and do we want to pull 
everybody into public health or do we want to empower the 
private sector. I'd like to continue that in a different area, 
and that is with the Medicare+ Choice plan and the problems 
we've had with their reimbursement rates.
    It's my understanding that there is a reimbursement rate, 
and then there are risk, adjustors, so that if one company 
happens to pick up a number of high cost individuals or people 
that are high risk, and another company tends to have low risk 
or a more well population, that there are risk adjusters to 
transfer money from one to the other. In the course of doing 
that, the claim has been made, and I thinkfairly substantiated, 
that HCFA's way was also to sort of suck out another 5 percent and keep 
it for themselves, as they moved this money around.
    Because of that, the HMOs that have wanted to serve our 
seniors and provide them with some choices have left the field. 
I wondered if you would comment on this, and clarify anything 
that you think was mistaken in my impression.
    Ms. McMullan. We are indeed implementing risk adjustors, in 
order to more appropriately pay for more complex cases. I am 
not aware of any part of the payment formula that gives any 
money back to the trust fund.
    Mrs. Northup. Well, I think the question is, wasn't the 
amount paid the HMO a proportion of what the average Medicare--
--
    Ms. McMullan. In the previous payment system, we paid 95 
percent of what was paid for fee-for-service Medicare. That 
payment system has changed. By statute, we no longer use that.
    Mrs. Northup. And what does the statute say? Doesn't the 
statute say to provide for risk adjustments and the 
Administrator has taken that to give them license to withdraw 
money out of that system?
    Ms. McMullan. To my knowledge, there's no opportunity to 
withdraw money. I can get you a simple explanation of the 
current payment structure for how we pay Medicare+Choice or 
capitated plans.
    Mrs. Northup. And when you pay capitated plans, you pay a 
percentage of what the fee for service is, and then apply risk 
adjustors, is that correct?
    Ms. McMullan. The current payment system is based in part 
on the previous system. This is just a risk adjustment. The 
payment formula for Medicare+Choice plans--let me see if I can 
give this to you easily. It's a very complex system.
    Mrs. Northup. Oh, I know it's complex.
    Ms. McMullan. But it's not based on a percentage of the 
fee-for-service system any longer. It's a much different 
structure.

                    BBA CHANGES TO PAYMENT STRUCTURE

    Mrs. Northup. And that was part of which law, the Balanced 
Budget Amendment?
    Ms. McMullan. Of 1997.
    Mrs. Northup. And the Balanced Budget Amendment of 1997, 
what did it say about the payment structure?
    Ms. McMullan. It changed the way we formulate the payment 
structure. It said floor payments and a percentage increase in 
the payments were planned. And it added the requirement for a 
risk adjustment, so that we could pay for more complex cases.
    Mrs. Northup. Would you say that in reading that, that it's 
impossible to conclude that what Congress intended was to make 
sure that there wasn't cherry picking, but not to reduce 
further the overall amount that we paid for the private choice 
plans?
    Ms. McMullan. As we understand it, the purpose of the 
change was to pay correctly, to pay for the level----

    COMPARISON BETWEEN CAPITATED RATES AND FEE-FOR-SERVICE PAYMENTS

    Mrs. Northup. Absolutely. It's to pay correctly. And if we 
paid 95 percent of what the traditional fee for service was, we 
would still save money.
    But by allowing risk adjustors, in other words, if one 
company takes 100 people that have cancer and another company 
takes 100 healthy people, to pay them the same per person makes 
no sense. So it is the claim of many of us that the risk 
adjustor was added in order to try to say, based on the high 
cost to individuals to transfer money between plans, not to use 
that as a basis to pull money out. What's the current 
percentage we pay these plans compared to the fee for service?
    Ms. McMullan. Congress asked for us to do a report on what, 
on a county-by-county basis, we pay in the Medicare+Choice 
capitated rates and the equivalent fee-for-service amount. I 
believe that report was due in March. We are now targeted to 
give the first report in June. Our actuaries are developing 
that, so I can't answer that question until we have that data.
    Some of what you may be referring to is that there are 
budget neutrality provisions in the BBA.
    Mrs. Northup. Well, and they're all to come out of the 
capitated plans?
    Ms. McMullan. As in most systems, budget neutrality is 
within the----
    Mrs. Northup. The whole plan?
    Ms. McMullan. The system, yes.
    Mrs. Northup. Well, I'm sorry, then that wouldn't explain 
it. If you're going to have a budget neutral plan, and the 
capitated plans take the same hit as the fee for service run by 
HCFA does, then they'd all be reduced proportionately. That 
doesn't explain for a bigger variance.
    I believe that the figures I've seen show that we're now 
down in the 80 percent capitated plans to get--no? Is that 
incorrect?
    Ms. McMullan. But we'll be happy to provide that 
information.
    [The information follows:]

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    Mrs. Northup. Mr. Chairman, on the record I want to say 
that I believe that considering the cost of administering the 
program, we should do everything we can to allow individuals 
that want to be in private health insurance in their senior 
years, and want to have choice, choice for plans similar to 
what those of us that currently have insurance have, that we 
should encourage that, especially when every person that 
chooses that also saves taxpayers dollars. Thank you.
    Mr. Regula. Mr. Kennedy.

                    OVER-REGULATION OF HOSPICE CARE

    Mr. Kennedy. Thank you. I know we have a vote on, but I 
just wanted to have you provide for me what you're doing with 
regard to the hospice programs. I get complaints from my 
hospice care providers that it's the over-regulation is just 
counterproductive when you're dealing with someone who's dying, 
who is terminally ill, that these Medicare regulations that 
they have to adhere to are not sensitive to the unique 
situation that these providers are in, because they're really 
there to help assist someone in dying, and yet they're being 
evaluated as if they're trying to keep them well, when that's 
not the possibility.
    I think the pain management issues are a big problem for 
them, too, in terms of what they're permitted to prescribe in 
terms of pain management. I would just like to have your agency 
provide me what you're trying to do to help not get doctors and 
so forth in trouble for doing what they need to do to help 
people who are terminally ill.
    Ms. McMullan. We'll be glad to provide that.
    [The information follows:]

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    Mr. Kennedy. Thank you.

               COST EFFECTIVENESS OF PREVENTIVE MEDICINE

    Mr. Regula. Just one last question. Based on your 
experience, what preventive techniques, and we've done it with 
flu shots and cancer screenings, but are there other things 
that could be 100 percent reimbursed that would actually reduce 
overall costs? That would be cost effective in terms of 
preventive medicine? Do you have examples that you could 
suggest to us? I realize this would take statutory change, but 
are there ideas that your agency has?
    Ms. McMullan. In the Department, there are ideas on what 
preventive care would best advantage the population. We'll be 
glad to provide that to you. There are other parts in the 
Department that focus their energies on looking at these 
issues, for example, the Centers for Disease Control and 
others. We'll be happy to provide that to you, and also provide 
the things that the Medicare program has looked at directly.
    Mr. Regula. I know in the case of flu shots, people from 
HHS said they felt it was very cost effective because it 
reduced respiratory illnesses, it reduced early deaths, and for 
a variety of other reasons. For the cost involved in providing 
the shots it was a very good program. I just wondered if there 
were other opportunities.
    Ms. McMullan. I'm sure that there are, and we'll provide 
those to you.
    [The information follows:]

             Suggestions for Additional Preventive Benefits

    Both the Balanced Budget Act of 1997 (BBA) and the 
Medicare, Medicaid and SCHIP Benefits Improvement and 
Protection Act of 2000 (BIPA) added significant new preventive 
benefits to the Medicare benefit package.
    We closely follow the work of the U.S. Preventive Services 
Task Force (an independent entity supported by the Agency for 
Healthcare Research and Quality), which reviews and evaluates 
evidence for clinical preventive services. This work should 
become even more relevant to Medicare in the future, since BIPA 
directed the Task Force to conduct a series of studies to 
identify preventive interventions of particular value to older 
Americans.
    We would be happy to work with you as Congress considers 
adding new preventive benefits to the Medicare program.

    Mr. Regula. I think that concludes our hearing. We do have 
a vote on the budget resolution rule. Thank you for coming. 
It's been a productive hearing and we appreciate your patience.
    The subcommittee is adjourned.
    [The following questions were submitted to be answered for 
the record:]

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                                             Tuesday, May 15, 2001.

                ADMINISTRATION FOR CHILDREN AND FAMILIES

                               WITNESSES

DIANN DAWSON, ACTING PRINCIPAL DEPUTY ASSISTANT SECRETARY
DENNIS P. WILLIAMS, DEPUTY ASSISTANT SECRETARY, OFFICE OF BUDGET, 
    DEPARTMENT OF HEALTH AND HUMAN SERVICES
    Mr. Regula. Well, we will get the committee hearing 
started. We are happy to welcome you, Mrs. Dawson, and you are 
going to tell us why we should continue to support the 
Administration for Children and Families and about all the good 
things they do, and we will be very persuaded when you are 
finished. Right?
    Ms. Dawson. Yes.
    Mr. Regula. Okay. We will put your entire statement in the 
record, and you can summarize as you choose.
    Ms. Dawson. Thank you, Mr. Chairman.
    Mr. Chairman and Members of the Committee, I am pleased to 
present the President's budget request for the Administration 
for Children and Families for fiscal year 2002. I am 
accompanied by Dennis Williams, Deputy Assistant Secretary for 
Management and Budget.
    Mr. Regula. We have gotten to know him.
    Ms. Dawson. The fiscal year 2002 budget for the 
Administration for Children and Families is $44.4 billion, of 
which $25 billion is being requested in new budget authority. 
The remaining $19.5 billion has been appropriated through the 
Personal Responsibility and Work Opportunities Reconciliation 
Act of 1996.
    This budget request for ACF is 2.9 percent above the fiscal 
year 2001 enacted level and reflects the President's commitment 
to a balanced fiscal framework while, at the same time, 
increasing support for America's children and families. Within 
this context, I would like to share some highlights.
    In fiscal year 2002, the budget for the Administration for 
Children and Families includes $12.6 billion in discretionary 
funds and $31.8 billion in entitlement funds.
    In addition to seeking continued funding for a wide range 
of programs serving some of the Nation's most vulnerable 
populations, including Low Income Home Energy Assistance, the 
Community Services Block Grant, programs for persons with 
developmental disabilities and services for refugees, the ACF 
budget includes a number of targeted programmatic increases and 
new initiatives aimed at improving the quality of life of our 
Nation's families, as well as increasing support for the 
charitable organizations that can make such a difference in 
people's lives.
    I would like to turn to a few key programmatic initiatives 
in our fiscal year 2002 request.
    In the area of child care, the fiscal year 2002 request 
proposes to increase the discretionary funds available for the 
Child Care and Development Block Grant by $200 million for a 
total FY 2002 level of $2.2 billion. The President's budget 
includes a $400 million set-aside to provide parents with 
certificates to obtain after-school child care with a high 
quality education focus for eligible children up to 19 years of 
age. This would help low-income working parents pay for the 
cost of care to children especially vulnerable to crime and at-
risk behavior when left unsupervised after school.
    Additionally, the FY 2002 budget includes a $150 million 
increase in preappropriated child care entitlement funds.
    We are also seeking a $60 million increase in funding for 
the Independent Living Program within the Foster Care and 
Adoption Assistance entitlement. This funding is intended to 
provide vouchers worth up to $5,000 for education and training 
to help young people who age out of foster care to develop 
skills to lead independent and productive lives.
    The budget includes $33 million for community-based adult-
supervised group homes for teenage mothers and their children. 
The homes would provide safe, stable nurturing environments for 
teenage mothers and their children who cannot live with their 
own families because of abuse, neglect or other extenuating 
circumstances.
    Promoting responsible fatherhood is part of our budget. 
Helping young mothers is an important part of programs to 
assist America's families, but it is also important that we 
recognize the critical role that fathers play in the lives of 
their families. A new $64 million program would be authorized 
to strengthen the role of fathers in families and marriage. The 
program would provide competitive grants to faith-based and 
community organizations, as well as fund projects of national 
significance that focus on public education and awareness, the 
use of mass media campaigns, the development of best practices, 
research and technical assistance.
    The President has been a leader in recognizing the 
important role that charitable organizations play in delivering 
services to the public. And our budget includes a newly 
proposed Compassion Capital Fund. The fund would provide start-
up capital and operating funds totaling $89 million in FY 2002 
to support qualified charitable organizations that wish to 
expand or emulate model social programs. This funding would 
build on the efforts of charitable organizations by supporting 
the creation of public-private partnerships in addressing the 
needs of low-income families.
    In addition, these funds would be used to promote research 
on best practices among charitable organizations.
    Further, to encourage States to create State tax credits 
for contributions to designated charities, this budget proposes 
to allow States to use the Federal Temporary Assistance for 
Needy Families, TANF program, funds to offset revenue losses 
from such contributions.
    Finally, our budget takes a number of steps to help protect 
our most vulnerable and at-risk children and to help them live 
safe and productive lives. First, we are proposing a $200 
million increase for the Promoting Safe and StableFamilies 
program, which supports State and Tribal child welfare agencies in 
carrying out family preservation, family support and adoption 
assistance services. These additional funds will be used to help serve 
the best interests of children by either keeping them with their 
biological families, when it is safe and appropriate, or expediting 
adoptive placements when it is not.
    Second, we are proposing to create a new discretionary 
initiative that will provide $67 million within the Promoting 
Safe and Stable Families program to assist children of 
prisoners. This additional new funding would go to States to 
fund competitive grants to faith-based and community-based 
groups to mentor the children of prisoners and probationers.
    I would also like to highlight the fiscal year 2002 budget 
request for Head Start of $6.3 billion; this is an increase of 
$125 million. This will support all Head Start programs in 
maintaining the current level of services, while efforts are 
undertaken to improve the program's focus on child and family 
literacy in order to better prepare children for school.
    The fiscal year 2002 request for Federal Administration is 
$172 million, plus an additional $3 million for the 
Department's Center for Faith-Based and Community Initiatives 
for a total of $175 million, an increase of $11 million or 4.9 
percent over the fiscal year 2001 enacted level. This level is 
expected to fund 1,547 full-time equivalent staff. This request 
would provide sufficient funds for pay raises and additional 
support for ongoing implementation of the child welfare 
monitoring initiative, as well as provide 15 new FTEs needed to 
support the Department's Faith-Based Center that was 
established in accordance with the President's executive order.
    In conclusion, I would like to emphasize that ACF is 
committed to results, to the measurement of results, and to 
joint work with our partners. Under the requirements of the 
Government Performance and Results Act and within the framework 
of the departmental goals, ACF has developed strategic goals, 
performance standards and measures. The priorities reflected in 
the FY 2002 budget are in support of the strategic goals that 
are contained in our performance plan, that is, to increase 
economic independence and productivity for families; to improve 
healthy development, safety and well-being of children and 
youth; to increase the health and prosperity of communities and 
tribes; and to build a results-oriented organization.
    We look forward to working with Congress on achieving these 
goals.
    Thank you, Mr. Chairman, and I will be happy to answer any 
questions that you may have or the committee may have at this 
time.
    Mr. Regula. We will go to Mr. Hoyer.

                          ADMINISTRATIVE COSTS

    Do you have any idea what percent of your budget is spent 
on administration versus actually directly benefiting the 
children and families?
    Ms. Dawson. I think our budget is roughly about .4 percent, 
the Federal Administration part of our budget.

                           PROGRAM EVALUATION

    Mr. Regula. Do you do any follow-up? Is there any system 
whereby these children that have received benefits in one way 
or another are evaluated, as to whether there is a long-term 
impact? Is there any follow-up evaluation of the program?
    Ms. Dawson. We have over 60 programs in ACF, and certainly 
in many of our programs we have research studies; we conduct 
evaluations.
    To give you some examples, we do a number of research 
evaluations in the area of child care, in our welfare reform 
programs, and in our Head Start programs. All of these studies 
of various kinds are either to demonstrate impacts on children 
and families or are to evaluate how well programs are operating 
and how successful the effects of the programs have been.

                             EARLY LEARNING

    Mr. Regula. Well, the President is proposing an Early 
Reading First program, and I am not sure that I know the 
difference between--or understand the difference between that 
and Head Start in terms of the objectives.
    Ms. Dawson. As I understand the Early Reading First 
program, which is not in the ACF, that program would actually 
be administered and funded by the Department of Education.
    Mr. Regula. Yes.
    Ms. Dawson. The Head Start program, which is certainly one 
of our major programs, is a program that is comprehensive and 
focuses on early learning and focuses on getting children ready 
for school. The Head Start program has many components, which 
include the educational component, as well as social services, 
health, nutrition, all the aspects that go to supporting 
children's early learning, as well as to supportomg families in 
helping their children to learn.
    So our Head Start program does contain an educational 
component that focuses on literacy, on learning, on helping 
children to increase their vocabulary, on writing skills, et 
cetera, to prepare them for school.
    Mr. Regula. But my experience in visiting these programs is 
that the staff were not trained teachers. How do you get some 
of these goals in literacy without having people with some 
skills in teaching those subjects?
    Ms. Dawson. One of the things that happened in the Head 
Start Reauthorization Act was an emphasis being placed on 
performance standards and an emphasis being placed on 
credentialing. We have a goal, which is statutorily mandated, 
to increase the number of degreed teachers in early childhood 
to 50 percent by 2003.
    Mr. Regula. That is in the Head Start program?
    Ms. Dawson. That is in the Head Start program. At this 
time, roughly about 40 percent of the teachers are 
credentialed.
    Mr. Regula. What do you think could be done to improve the 
skills of these students or the young people that are in the 
Head Start program? What would you do in addition to what is 
presently being done?
    Ms. Dawson. We continue to place an emphasis on quality 
Head Start programs and learning. One of the things that we are 
very pleased to see is the early data from our FACES survey--
this is a survey that is conducted annually. It is the Head 
Start Family and Children Experiences Study, and certainly it 
shows that we are getting good results in terms of quality of 
learning in the classroom.
    Because Congress enacted and appropriated substantial funds 
over the past few years for Head Start expansion, we have set 
aside about $1.6 billion specifically focused on the quality 
aspects. And so it is a continuing effort to increase the 
educational component and the learning component of that 
program.
    Mr. Regula. What ages? Do you have an age, a parameteron 
Head Start?
    Ms. Dawson. Head Start now has two components. We have the 
Early Head Start program, which is from zero to 3, and Head 
Start from 4--from 4 to 5. To clarify, Head Start is for ages 3 
to 5.
    Mr. Regula. Mr. Hoyer.
    Mr. Hoyer. Thank you, very much.

                          HEAD START SERVICES

    Welcome, Secretary Dawson. Let me start with Head Start, if 
I can. How many children are eligible for Head Start in 
America?
    Ms. Dawson. I don't know that I have that number right at 
hand, that are eligible. Right now, we are serving about 
916,000 children in Head Start.
    Mr. Hoyer. I understand that Head Start is a program 
everybody seems to say, it works, and we want to leave no child 
behind, and we are apparently taking too much of America's 
money to invest in our children or in other things in America. 
And my question to you is, what percentage of the children 
eligible are not getting services in Head Start, a program 
everybody says works, because we do not have seats for them in 
America?
    Ms. Dawson. We are serving, currently, about 60 percent of 
the eligible children.
    Mr. Hoyer. So 916,000 approximately is 60 percent----
    Ms. Dawson. Yes.
    Mr. Hoyer [continuing]. Of the eligible children; 60 
percent of about 1.4, 1.5 million is 916,000?
    Ms. Dawson. That is right.
    Mr. Hoyer. In that ball park?
    Ms. Dawson. That is about right.
    Mr. Hoyer. That means that about half a million children 
who are eligible are being left behind; am I correct?
    Ms. Dawson. Right now, we don't have funding to support 
that; that is correct. To clarify, we don't know how many of 
unserved Head Start-eligible children are being served by other 
programs.
    Mr. Hoyer. Okay. You are in a difficult spot. I don't want 
to put you in a spot, but I do want to make my points.
    Now, a $125 million increase in Head Start: If the CPI is 
2.7 and we give it 2 percent increase, your testimony indicated 
that we were going to stay even. Presuming we were going to 
stay even by that seven-tenths of a point being taken care of 
someplace else, where is that going to be taken care of?
    In other words--do you understand my question?
    We are getting a 2 percent increase in Head Start. The 
administration is using a CPI of 2.7 percent. If we assume that 
the costs of Head Start are going up by 2.7 and they get a 2 
percent increase, there is a seven-tenths differential there 
that needs to be made up somewhere. Are we assuming that is 
going to be made up? And if so, how?
    The Children's Defense Fund, as you know, thinks this 
budget will result in less children, a lower percentage of 
children being served. Does the administration believe that is 
the case, or do you believe that we will stay even with the 
number of children being served? And if so, how do we make up 
the seven-tenths of a point difference, assuming that rents, 
electricity, teachers' salaries, et cetera, et cetera, are 
going to go up?
    Ms. Dawson. Certainly all of the children who are being 
served with our programs are not being served solely in Head 
Start. Where we have really stressed emphasis is to increase 
services to children in both Head Start and in child care. The 
$125 million increase this year that is being requested will 
assure that we maintain the quality by having the teacher 
salaries and benefits paid during this year.
    Mr. Hoyer. Now, let me pursue that.
    Do we agree that $125 million is 2 percent of the base, of 
2001's base, plus 2 percent, is the 2002 budget request?
    Ms. Dawson. That is correct.
    Mr. Hoyer. Okay.
    Now, how are we going to increase teachers' salaries, 
maintain the number of students and absorb the CPI cost for 
rent, whatever else the costs are of running a Head Start 
program, and do what you just said in terms of maintaining or 
increasing quality teachers' salaries and maintaining seats?
    Ms. Dawson. I think certainly if all of the Head Start 
programs were able to absorb all of the needs that you 
indicate, then we would certainly have a problem; but that is 
not going to be the case. There are some programs that will not 
be able to absorb all of the substantial increases that we 
received last year, and so this budget reflects sort of the 
average of understanding about how many dollars will actually 
be needed for this fiscal year.

                           HEAD START FUNDING

    Mr. Hoyer. If I understand what you just said, there are 
carry-over funds? Is that what you mean?
    Ms. Dawson. There are no carry-over funds, but the funding 
for this year reflects the base that we had for last year and--
--
    Mr. Hoyer. That was the 916,000, plus or minus, children?
    Ms. Dawson. For the 916,000 children----
    Mr. Hoyer. 916,000 is----
    Ms. Dawson. Nine hundred sixteen thousand children.
    To ensure that we have the same level of funding, there is 
1.4 billion on the entitlement side of Head Start that is going 
to take care of the fact that we do not have advanced funding 
as we requested last year.
    Mr. Hoyer. I am not sure I understand.
    Ms. Dawson. So we have a total of $6.3 billion, plus $1.4 
billion on the entitlement side of Head Start.
    Mr. Hoyer. What did we have last year? Are you saying that 
we have $1.4 billion more for Head Start this----
    Ms. Dawson. We have the same level of funding.
    Mr. Hoyer. Correct.
    Ms. Dawson. But we are asking for $125 million increase to 
assure that we can maintain and sustain those levels of salary 
benefits and costs.
    Mr. Hoyer. I am not sure I understood the $1.4 billion in 
entitlements money. I am not following; maybe others are. I am 
just----
    Mr. Williams. I think she is referring to the advance 
appropriation from last year.
    Ms. Dawson. Yes.
    Mr. Hoyer. So are you saying, what, that money was not 
spent last year? That is what I asked you about the carry-over. 
You can't spend it in both years, 2001 and 2002. If we had 
advanced appropriation for 2002, is what you are saying, of 
$1.4 billion--correct?
    Ms. Dawson. You can go ahead.
    Mr. Williams. I think the total amount of money available 
this year in 2001 was $6.2 billion.
    Mr. Hoyer. Are you telling me----
    Mr. Williams. Including the advanced appropriation, and 
this year the total amount--in 2002, the total amount available 
will be $6.3 billion, the $125 million increase. So thereal 
increase, year to year, is $125 million.
    Mr. Hoyer. Okay. That is the point I wanted to make, that 
the $1.4 billion is a constraint--or would--when you say, we 
advance-funded $1.4 billion last year, that was so we could 
meet our--whatever our budget numbers were last year that--
really nobody ever knew what they were, with all due respect. 
Mr. Regula didn't know what they were, and his consternation 
equaled mine, all of us on the Appropriations Committee. What I 
am trying to get at, there is a net increase of $125 million in 
the Head Start budget.
    Ms. Dawson. That is correct.
    Mr. Hoyer. So the $1.4 billion sounds nice, but it doesn't 
really mean anything in terms of services to children on the 
ground in seats for Head Start. Correct?
    Ms. Dawson. That is correct.

                         HEAD START PERFORMANCE

    Mr. Hoyer. I go back to my question, and I will stop with 
this, and then Mr. Regula can ask a question. I will come back 
our second round; I have a lot of questions.
    I am very interested in this program, as you know. I am 
very interested in coordinated services, as you probably also 
know. And I want to see us maximize that, and I will ask a 
question for--that Mr. Regula may not know. But I mentioned the 
other day, as an aside, until 1995, there had been no Head 
Start program cancelled in America for nonperformance, not one 
in 30 years of Head Start, 1965 to 1995.
    Donna Shalala was the first Secretary to say, we are going 
to meet standards, we are going to have performance and kids 
are going to get what we promise them, or we are going to shut 
you down.
    How many Head Start programs, if any, did we discontinue 
last year?
    Ms. Dawson. I don't know the exact number.
    Mr. Hoyer. But there were some?
    Ms. Dawson. But there were definitely some.
    Mr. Hoyer. That is a significant step, not because any of 
us want to shut down Head Start centers, but what we do want to 
do is make sure that the promise of Head Start is the reality 
of Head Start for children. And there are some Head Start 
programs--and Jesse Jackson was here when I made this 
observation last time--that were simply used, frankly, as 
political patronage. They were good programs for adults, but 
not particularly good programs for children, as you--I don't 
want to ask you to--I don't want to get you in dutch with the 
Head Start operators around America, so you don't have to 
respond to that.
    So that is my observation. I think that is accurate. They 
were, luckily, the very small minority.

                           HEAD START FUNDING

    Now, going back to my question, we have cancelled some that 
don't. So we are getting programs that work, that we are making 
sure work, and we are getting results. If we only increase this 
particular program by $125 million, which is 2 percent--we talk 
about a 4 percent increase across the bill, but only 2 percent 
here.
    And, in fact, for Early Head Start, as I understand it, we 
don't go from 9 to 10, but the budget says we are going to be 
frozen at 9. Correct?
    Ms. Dawson. That is correct.
    Mr. Hoyer. So that we will be frozen at the 9 percent of 
the 2 percent increase, which means that Early Head Start will 
get squeezed as well.
    My only question to you is, how can we maintain a level of 
services and not lose seats, even though we are only serving 60 
percent of the children who are eligible for Head Start; that 
is to say, who meet the income criteria, come from homes that 
really need help and that we want to help?
    Ms. Dawson. I think I would respond to your question by 
first of all saying, Congressman Hoyer, that certainly in terms 
of the need out there, we can all agree that there are not 
enough Federal Head Start funds to address the full needs of 
the children who are eligible. However, Head Start received 
some significant funding increases in the past few years, 
increases that we believe are certainly good for increasing an 
expansion of the program. But we also need to focus on 
stabilizing those programs.
    And certainly in the area of Early Head Start, it has grown 
significantly since 1993, rather 1998, when there were roughly 
about 37,000, rather 38,000, children served, and we now have 
about 55,000 children who are served in that Early Head Start 
arena. This budget certainly will maintain that level, and we 
do believe that we should focus some of our attention on trying 
to make sure that these programs are stabilized, that they are 
really providing the quality that the funding supports.
    Mr. Hoyer. Ms. Dawson, again--and maybe I will ask Mr. 
Williams. It is very difficult for us on this side to really 
want to put you guys on the griddle who are sort of warming the 
chairs and not--not the decision-makers. You are a very 
important person. I don't mean to, but--I understand you are in 
a difficult spot, but I really--and this is not partisan.
    I feel passionately that we have a program that works, and 
we say--and I agree with the President 100 percent--that we 
ought to leave no child behind, and we have 40 percent of the 
kids eligible for this program that we do not serve because 
allegedly we don't have the resources to do it in the richest 
nation on the face of the Earth.
    And we need to give money back to people. I am for giving 
money back to people; I am for tax cuts. But I think the 
premise that we have done everything in America that we need to 
do when we are not serving 40 percent of the kids eligible for 
Head Start is bogus. I don't buy it. It is not true. It is not 
worthy of a great nation. That is my view.
    Now, all I am--and I am not asking you to say yea or nay on 
either--on any of that stuff, but I don't see--and then I will 
yield, because I have already taken more time than I should 
have. But I don't see how we can maintain services at a 2 
percent increase in a 2.7 percent CPI environment, freeze Early 
Head Start at 9 percent, notwithstanding the fact, we said it 
was going to go to 10 percent in the statute, and say that we 
are doing what we need to do to leave no child behind.
    You can't answer that because that is a policy issue, that 
is a political judgment. But I just want you to know, and then 
the Department to know, this department is to advocate for 
children and families. And you cannot do so--if we are not 
serving them properly, at least we ought to say, we are not 
doing it. But we don't have the resources to do it; that is an 
honest answer. I don't mean, to you, not giving me honest 
answers.
    But any event, Mr. Chairman, I will yield. I will come back 
in the second round.
    Mr. Regula. Mr. Wicker.

                           ROLE OF MS. DAWSON

    Mr. Wicker. Thank you. Secretary Dawson and Secretary 
Williams, are you simply warming the bench today? Did Mr. Hoyer 
accurately characterize your role?
    Ms. Dawson. It feels pretty hot to me.
    Mr. Hoyer. Would the gentleman yield? I in no way want to 
in any way cast aspersions on Diann Dawson, who is an 
extraordinarily able and conscientious servant. She is, 
however----
    Mr. Wicker. No.
    Mr. Hoyer. It is just a political point. That is my point.
    Mr. Wicker. No. I just think it is a fair question to--did 
you have any input whatsoever in the budget request? If you 
didn't, that is fine. I want to know, but is this totally 
someone else's budget and you are just here?
    Ms. Dawson. This is the administration's budget.
    Mr. Wicker. I see. Did you have input in it in the request 
that was made?
    Mr. Hoyer. Mr. Williams is going to save you, the good 
lawyer that he is.
    Mr. Williams. Secretary Thompson was here when this budget 
was put together, and he helped to negotiate the budget with 
the Office of Management and Budget. The President has laid out 
some priorities, both in terms of tax cuts, but also in terms 
of the amount of spending that he believes is appropriate for 
discretionary programs in the government, and within those--
within that framework, the Secretary set some priorities, and 
the budget that you see here is a result of that negotiation 
with the Office of Management and Budget and the President.
    Mr. Hoyer. He has been around a long time, Roger.
    Mr. Wicker. I really am strapped for time, so I will just 
leave that.

                         HEAD START POPULATION

    Sixty percent of eligible children, Secretary Dawson, are 
part of Head Start now, and I think you have gone a long way to 
answer Mr. Hoyer's questions. I do think we have made great 
strides in the last 7 years or so in Head Start. There have 
been significant increases, and I am a fan of Head Start. I 
feel like I have been a part of a fairly substantial stride 
forward in this program.
    We are not turning 40 percent of the people away, are we, 
at the door? I mean, some of this is voluntary, is it not?
    Have you looked at the 40 percent of eligible children who 
are not in programs? Are we turning them away, or are there 
other reasons, and have you studied that?
    Ms. Dawson. Certainly there are other preschool programs 
and child care, and many programs that parents take advantage 
of that are available there are not just Head Start programs.
    The Department of Education funds a number of programs, and 
certainly, as I say, one of the things that we have been 
encouraging are full-day, full-year programs with Head Start 
collaborating with the child care providers. So children are 
being served in other ways, but other than in Head Start.
    Mr. Wicker. All right. Let me just ask one other line of 
questioning, Mr. Chairman, if I might.

             DEVELOPMENTAL DISABILITIES COMPLAINT PROCEDURE

    Your agency, I believe, has within its jurisdiction the 
office of developmental disabilities.
    Ms. Dawson. That is correct.
    Mr. Wicker. And within that agency, there is a mechanism to 
have advocacy programs for children in schools who have 
disabilities; is that correct?
    Ms. Dawson. That is correct.
    Mr. Wicker. A while back, I sent a letter to that 
particular office, the Development Disabilities Office. I 
received a complaint from a school district, not that the 
advocacy program existed, but that in a particular instance, in 
one particular instance, the school district thought that the 
advocate and the counsel had gone too far, had been 
overzealous.
    A hearing--a complaint was lodged against the school 
district, and an administrative hearing was held. The 
administrative law judge ruled in favor of the school district, 
and the advocate, as provided for under the law, took the next 
step of going to court. But the school district felt that the 
lawsuit was frivolous.
    There is a grievance process that clients may use, that the 
child may use, or advocates of the child or the parents of the 
disabled child may use; there does not seem to be any grievance 
process for the other party, the school district, to simply 
take to some higher authority. We believe, in this instance, 
that the lawyer has gone overboard and has gone outside the 
bounds of what is proper. And I got back a response listing the 
grievance procedures that a client may use.
    So I would just ask you, do you know--are you able to tell 
me whether there is a grievance procedure that the other party 
could use also, or is the school district simply left to 
complain to the protection and advocacy agency that is actually 
bringing the action against them? Is there some independent 
grievance for both sides of an issue?
    Ms. Dawson. I think there certainly should be. Frankly, I 
don't know the full extent of the procedure in the DD program 
to address your concern, but I will be happy to look into it 
and get back with you.
    Mr. Wicker. Okay. Very well. You will place that on the 
record, then?
    Ms. Dawson. Yes. I will.
    Mr. Wicker. That is all I needed.
    Thank you very much, Mr. Chairman.
    [The information follows:]

Grievance Procedures--Development Disabilities Protection and Advocacy 
                                Programs

    In a case where a third party (e.g., a school district) has 
a complaint about the actions of the P&A, they would use the 
same grievance procedures as a client. Under the case in 
question, the school district would contact the Executive 
Director and obtain the grievance procedures. Each State P&A 
has their own, but typically the Executive Director would 
forward such a complaint to the Governing Board for resolution.

                        HEAD START APPLICATIONS

    Mr. Regula. Okay. I am curious. It has been pointed out 
that there are a number, maybe 40 percent of the eligible 
children, that are not served. How do you get applications? Do 
the parents call Head Start, or how do you get students? 
Because in my district, which is an industrial district, they 
were trying to find kids for the Head Start program. They were 
making announcements. They didn't--their enrollments were down.
    Ms. Dawson. Well, that is an issue in terms of the new 
dollars that have been funded in fiscal year 2001; we are 
presently receiving applications now for expansion grantees.
    Mr. Regula. Applications from----
    Ms. Dawson. From the grantees in terms of the number of 
children----
    Mr. Regula. Like community development.
    Ms. Dawson. Community----
    Mr. Regula. Community action agencies?
    Ms. Dawson. Yes, Some are school administrators.
    Mr. Regula. They administer these programs?
    Ms. Dawson. Some are nonprofit organizations. Some are 
certainly CAP agencies.
    Mr. Hoyer. Mr. Chairman, about 25 percent of the Head Start 
programs are run through school systems. The other 75 percent 
are like community action committees or other agencies that are 
not school-based. Some, however, have, as you may know, 
cooperative arrangements with school systems, and although 
community action agencies run them, they run them at school 
sites.
    Mr. Regula. Well, yes. In our area, it is the community 
action agency, it is separate from the school system. But 
sometimes we play with numbers, and I wonder if there are 40 
percent, whatever number it is, of children seeking this help 
that would not necessarily be getting it; or is it a case, 
perhaps, that there are not always applicants to run a program?
    Ms. Dawson. The 40 percent who are not served are the 
number that we have who are Head--who are Head Start-eligible 
but are not being served by Head Start.
    Mr. Regula. How do you know if they don't have an 
applicant? How do you know they are eligible?
    Ms. Dawson. We have guidelines about family eligibility.
    Mr. Regula. I understand that, but do you survey the 
community to see if there is this number of children that fit 
the guidelines?
    Ms. Dawson. Yes. We use information from the Census Bureau 
that tells us a lot about where the populations have shifted 
and where the need is greatest, and so we then make our 
announcements targeted toward those populations.
    Mr. Regula. Is the key to success, though, getting a good 
organization to be responsible for the program?
    Ms. Dawson. Absolutely.
    Mr. Regula. And you don't always have that in every 
community probably?
    Ms. Dawson. We are always seeking to ensure that as we 
designate the guidelines for expansion, that we are able to 
target new grantees, as well as make sure that the existing 
grantees are able to take care of the needs in their community.
    Mr. Regula. Do you have to turn down grantees for lack of 
funds?
    Ms. Dawson. For lack of funds, no. No. We have sufficient 
funds that we have been able to accommodate grantees.
    Mr. Regula. So you can respond to all the applicants you 
get--applications you get?
    Ms. Dawson. We have so far been able to do that.

                          HOURS IN HEAD START

    Mr. Regula. What is the average number of hours that 
children spend in Head Start that are enrolled in a program? Is 
it a half day, a full day?
    Ms. Dawson. From the genesis of the Head Start program, 
most of the programs were half-day programs, but as I said 
earlier, we have put a specific emphasis on getting those 
programs to be full-day, full-year funded, particularly as a 
result of welfare reform. More parents are working, and there 
is greater need for those kinds of quality education programs 
for the children all day, full day, rather to clarify all day 
full year.
    Mr. Regula. What percent of your programs are a result of a 
school district making the application?
    Ms. Dawson. I don't know that I have that in front of me.
    Mr. Regula. Well, do you get quite a few applications from 
school districts to operate the Head Start program?
    Ms. Dawson. Yes, we do have quite a few.

                        HEAD START PARTNERSHIPS

    Mr. Regula. Is that increasing? Are more and more school 
districts recognizing the importance of early childhood 
education--it would seem school districts would want to 
encourage this as a precursor to their enrollments in the 
kindergarten program--and, therefore, would be applicants.
    Ms. Dawson. We are seeing a lot of communities that are 
beginning to do more collaboration with stand-alone Head Start 
programs in their school districts.
    Mr. Regula. Okay.
    Ms. Dawson. And certainly we ensure those partnerships.
    Mr. Regula. I would think so. The Judy Centers do some of 
this. Isn't that part of the role of the Judy Centers to 
coordinate these programs?
    Mr. Hoyer. Yes. The whole concept of Judy Centers, as you 
know, Mr. Chairman, is that, collaboratively put together, 
different programs; as you said, they are multiple programs 
that can serve--many serve the same children. And if you pull 
them together, A, you ought to save money; and B you ought to 
have a better effect. That is the whole theory of the Judy 
Center.
    Mr. Regula. I think you have a bill to----
    Mr. Hoyer. Yes.
    Mr. Regula [continuing]. Encourage that.
    Mr. Hoyer. We are going to introduce the full-service 
community school bill, which I have been working on for years, 
really. Hopefully, by the time we take the break, and then I 
will sit down with you and others on the committee and go over 
it.
    Mr. Regula. Ms. DeLauro.

                  EARLY LEARNING OPPORTUNITIES PROGRAM

    Ms. DeLauro. Thank you very much, Mr. Chairman. Thank you 
for being here. Let me just--I have about two or three 
questions to ask about. Let me just lay this on the line here.
    I can't tell you how really upset I am--and it is more than 
disappointment--really upset about eliminating the Early 
Learning Opportunities program. Last year we created and funded 
this program, about $20 million really, in an effort to address 
the need for quality child care for the youngest children. I 
spent a lot of time in trying to deal with thoseyears zero to 
3, zero to 5. We have--we could probably--it is more than this table.
    We could fill rooms with the information that we have 
today, scientific information, and as far as I know--I am not a 
scientist. I don't know about any of my colleagues on this 
committee, but we have listened to academicians, to scientists, 
to people who deal with children and learning and how they 
learn and when they learn. And we know that those years from 
zero to 3 are the years when you have--the greatest learning 
exists for our kids; and if you don't utilize those years and 
teach and provide a kind of child development environment for 
youngsters, that it is not like you can go back, you can fast-
forward 10 years and they can recoup. They can't. Because the 
neurons and whatever it is because--I am not a scientist, but 
they tell you that you learn then, and if you don't, you have 
missed the opportunity for life.
    Now, I think we have some sort of an obligation as public 
servants, with the volumes of material that we have, to utilize 
it in the way that we maximize our youngsters' learning 
potential, because this is the early start. This is where they 
learn and where they go on to Head Start and to elementary 
school and so forth. They have been in an environment which 
then has provided them with the best that we can offer.
    And I will be very honest. I have said this about myself, 
so I would--I think that if we do not utilize the material and 
the data that we have in this area and act on it, that we ought 
to--we ought to be held criminally liable, because we know and 
then we choose not to do anything.
    And when we now have seen that this kind of a program, 
Early Learning Opportunity program, is eliminated, so what are 
we going to deal with in terms of cognitive, emotional 
development? And I will tell you that there are the fewest 
placements in our child care system, or this area, the least 
qualified people in the area. What we need by way of 
accessibility, affordability, credibility and credentialing in 
this area is something that we would be wise to spend our money 
on.
    I might just add that this program that we dealt with for 
$20 million was a bipartisan effort to provide parents, child 
care providers, teachers, other caregivers the support they 
need in this area.
    I am interested to hear your thoughts on why the program 
was eliminated despite the fact that only 25 grants out of the 
300 applicants were able to be funded last year. Does the 
administration not feel that early learning, quality infant and 
toddler care are no longer a priority in this country?
    Ms. Dawson. I think you will find that this budget, the 
administration's budget, is a strong budget with the children's 
interest in mind. The Early Learning Opportunity Fund that you 
are referring to was funded for the first time in 2001, and 
this budget request does not request funding beyond last year's 
level. However, this budget does request $75 million. So where 
we have lost the $20 million in the Reading First Program, the 
$75 million is the Reading First Program, which will be 
administered by the Department of Education where the President 
chose to demonstrate his commitment toward children in the 
early learning area.
    Ms. DeLauro. And what does that entail, $75 million?
    Ms. Dawson. $75 million is for the Early Learning First 
program.
    Ms. DeLauro. I know. What is it, though?
    As I say, we have put together a pretty solid bipartisan 
effort in the Early Learning Opportunities that was, you know, 
vetted, went through all kinds of processes here to--you know, 
when you are looking at a commitment of this sort, this is 
leaving a lot of kids behind. This is leaving a lot of kids 
behind if we can't get to them in those early years.
    If somebody can please give me, or get to me, an 
explanation of why this kind of a program gets eliminated.
    We have cut child abuse prevention 18 percent. That is--
when we have got the rising statistics of children being abused 
in this country, and I deal--come from New Haven, Connecticut 
where I spend a lot of time with the folks at the Yale Child 
Center, who witness every single day what is happening to 
children who are abused. And the statistics keep rising. So 
that is another area.
    But explain to me--not--you don't have to--just lay out, 
get us something that shows the rationale for cutting back on 
the Early Learning Opportunities program, if you can. That 
would be helpful.
    Ms. Dawson. Okay.
    [The information follows:]

                  Early Learning Opportunities Program

    The Early Learning Opportunities Program was not included 
in ACF's budget for FY 2002 because the program largely 
duplicates a new reading program included in the Department of 
Education's budget at $75 million.

                 CHILD CARE AND DEVELOPMENT BLOCK GRANT

    Ms. DeLauro. The President's budget increases the Child 
Care and Development Block Grant by $200 million this year. 
However, you have got a proposed set-aside of $400 million for 
the after-school certificate program. Now, it looks like there 
is an increase to the 2.2 number, but if you actually take a 
look at it, as I understand that, the increase becomes a 
decrease in funding for basic child care services to the tune 
of about $200 million.
    I am for after-school programs. I used to teach in the 
after-school programs in the city of New Haven. I was a 
volunteer. I taught modern dance and calligraphy many years 
ago. Haven't done either for a lot of years, not sure I could 
do either. But we do have the Department of Education's 21st 
Century Learning Centers. That is a good--you know, an 
excellent program to deal with after-school programs.
    So what I am not trying to do is to say that we shouldn't 
have the after-school programs; they are critically important. 
But what we are doing here is that this carve-out in the block 
grant, in the State grants, would be cut from $1.9 billion to 
$1.7 billion in fiscal 2002.
    Again, we are looking at a need these days for core child 
care services, and for low-income families this need is rising, 
specifically when you are moving from welfare to work. How does 
the administration justify taking money fromthis program at a 
time when only 12 percent of eligible children are receiving services?
    Ms. Dawson. First of all, there is an increase in the Child 
Care and Development Block Grant of $200 million. There is also 
an increase of $150 million in entitlement funding for child 
care; so there is a total increase of $350 million in child 
care funding.
    The $400 million set-aside that you referred to is the 
administration's desire to target funding for child care to the 
older children as well. Those funds are being requested in 
order to deal with some of the at-risk behaviors of older 
children.
    One of the things that we have learned with some of the 
evaluations in welfare reform is that while the younger 
children seem to be faring well, there are certainly indicators 
that older children are not doing as well. And so this is an 
effort in terms of balancing the budget framework to target 
funding for after school care for adolescents, but at the same 
time to continue the commitment to provide for child care for 
the younger children. That funding results in a $350 million 
increase in child care, in terms of the Child Care and 
Development Block Grant, as well as the entitlement funding for 
child care.
    Ms. DeLauro. But it is true that you do take $200 million 
out of the child care services and put them into the after-
school program.
    Ms. Dawson. Well, they are----
    Ms. DeLauro. It was 400, but it is 200 from the child care 
services that are ongoing; and I understand--and I don't have 
all the details, but I will take a look at it--that $150 
million was previously authorized.
    Ms. Dawson. Yes.
    Ms. DeLauro. So it is not new. So that is----
    Mr. Williams. Ms. DeLauro----
    Ms. DeLauro. If you take a look at both discretionary and 
mandatory, as I understand this, the total funding for core 
child care services would increase about 8 percent in fiscal 
year 2002, compared with a 29 percent increase in fiscal year 
2001. When you do all the moving--and the moving around and so 
forth, which is what you want to try to take a good look at, is 
what we are dealing with in terms of increase versus where we 
need to go when you have only got 12 percent of kids who are 
eligible taking advantage of these kinds of services--I am 
sorry, I didn't mean to----
    Mr. Williams. The only thing that I want to put out is the 
150 million is new money, though.
    Ms. DeLauro. I understand that.
    Mr. Williams. It is new resources this year.
    Ms. DeLauro. I understand that it was previously 
authorized, and that is fine, whenever it was authorized. It 
doesn't make a difference. We will take it wherever it comes 
from.
    And I think we have to be accurate in taking a look at 
taking 200 out of the child care services, you know, taking 
that piece and putting it somewhere else. We cannot count 
twice; we need to count once from whatever we are doing, and 
then when you take a look overall at both mandatory and 
discretionary programs, the increase is at a level of 8 percent 
versus 29 percent in the prior year.
    Mr. Williams. I think what we project is that the after-
school certificates program would increase the number of kids 
served by about 500,000 kids, and the younger children that 
would be served by both the entitlement and the discretionary 
would stay roughly the same, wouldn't grow, but we would be 
able to maintain the same levels, but we would serve a lot more 
kids under the after-school initiative--in the adolescent age.

                     21ST CENTURY LEARNING PROGRAM

    Ms. DeLauro. And what happens to the 21st Century Learning 
programs? Are they--that is an after-school program? That is 
Education?
    Mr. Williams. Department of Education.
    Ms. DeLauro. Fine. That has been frozen, if you will, in 
terms of after-school programs from the Department of 
Education, and I went to visit one of those about a week ago--
more than that, about 3 weeks ago.
    In terms of a commitment to after-school programs, you 
know, we need to have consistent commitments to what we are 
doing and to be able to build on what we do, like the Early 
Learning Opportunity. I think it is unfortunate that we start 
things, even things that we know are going well, and now they 
are cut and are cut in midstream.
    Thank you, Mr. Chairman.

                   JUDY CENTERS--CO-LOCATING PROGRAMS

    Mr. Regula. Mr. Hoyer, based on the Judy Centers and the 
fact you have been on this committee for several years, do you 
see any potential, prospectively, from combining some of these 
programs? It seems like, just listening--and I am new to the 
committee--there is a proliferation of programs that would 
appear to be duplicative and would result in a lot of money 
being spent on the administration of a whole group of separate 
programs.
    Mr. Hoyer. Mr. Chairman, I think--I personally think some 
of that is true.
    The administration has an interesting proposal to move Head 
Start into education--Department of Education. I don't know 
where that is going to go. There was a big argument in 1965 as 
to where Head Start belonged, either as an education or as a 
social services program. Social services won on the theory that 
young children were not in a learning mode. I think the science 
on that is substantially changed.
    But you are correct in terms of my premise that we have a 
lot of programs that are designed to serve children and their 
families, but they are relatively discrete programs and not 
necessarily coordinated. And as a result, I think they do cost 
us more, but much more importantly from my standpoint is, they 
serve the children and families less well than they otherwise 
could. I have talked to Donna Shalala, Dick Riley and Alexis 
Herman in particular; but you need to include HUD and you need 
to include Agriculture for nutrition programs and other 
programs.
    To the extent that we can get the Federal Government to 
coordinate its programs so that a Judy Center, for instance, 
which is a multiple service theory for delivery of service to 
children, including child care, including Head Start services, 
including education, including family services, including adult 
literacy, et cetera, et cetera, mostly delivered at school 
sites, mostly elementary schools which are the only public 
facilities available in every community. Obviously some are 
farther away, because the communities are more rural, but the 
only facility--and the theory was, if you did that, A, you 
maximized the use of your capital investment; B, you maximized 
the use of your personnel.
    Obviously, custodians, for instance, if you have a separate 
Head Start facility and a separate school, you need two 
custodians, two nutritional services, maybe 
recreationalservices duplicated, all those kinds of things, which if 
you have a school-based Head Start, whether it is run by the school 
system or run by a community action agency--and I have experience in 
both. Prince Georges County in Maryland is school-based. Charles 
County, southern Maryland, they are run by the community action 
agencies, and they are tri-county agencies, and, you know, there are 
other counties in Maryland which are county-focused.
    So you have a multiplicity of delivery scenarios, and I 
think that to the extent we could all work together and say--I 
use, as you have heard me, Sally and John, the two kids, little 
girl and little boy--we all want to do certain things for them, 
a lot of things for them. But we have sort of separated out 
where we have those delivery services.
    And what I want--I use my funnel analogy, that you have--
you gather from eight agencies, Federal agencies, services that 
Sally and John ought to get, and the delivery person, the LEA 
or the community action agency or whatever gets these 
resources, and Sally and John are advantaged.
    Right now, we have a very complicated structure delivered 
discretely in many respects, and it is my theory that less 
efficiently, more costly, and I think we need to work on that. 
And I don't know that there is anybody that doesn't want to 
work on that, but these services have grown sort of like Topsy. 
We have a good idea, whether it is Early Head Start, Head 
Start, Even Start, health programs, literacy programs, Chapter 
One. I mean, we have just a lot of different programs in Health 
and Human Services, education in particular, that are not as 
well coordinated as they could be.
    Now, let me tell you, the problem I have with block 
granting is that usually block granting means, Mr. Chairman, 
that we take 25 percent off the top for, so-called, what we 
spend on administration. I don't think, A, we spend that much 
money; but B, what it is frankly at the Federal level or State 
level, whoever wants to do it, is an excuse for reducing 
effort.
    I frankly think we need to maintain, as you can hear, 
maintain and expand effort, but make it much more effective and 
much more inclusive. And I don't think anybody is opposed to 
that. It is just very difficult to get to, for all sorts of 
reasons, not the least of which is the turf questions among the 
advocacy groups in the community, who all have a vested 
interest in how the programs are now run, whether they are in 
LEAs or in community action groups or counties, States, local 
governments. And that is a very real problem, as you know.

                           HEAD START MISSION

    Mr. Regula. Is it a fair statement that Head Start has 
moved from a welfare culture to more of an education culture 
over the past several years? I think probably the initial 
decision was to put it in the, and I quote, welfare program, 
because you hope to deal with nutrition, with working with 
parents to do a better job of parenting, all of which of course 
is important to the child's development. But it seems to me 
that what I observe is that it is going more toward education--
--
    Mr. Hoyer. No. Mr. Chairman, I refer to it as a social 
service, not so much welfare.
    Ms. DeLauro. It was never meant to be a welfare----
    Mr. Hoyer. Well, to the extent Head Start eligibility 
obviously is needs-based, it has a needs base, but it is a 
social--it is really social service versus education. That was 
the argument in 1965, and it was, how do you deal best with 
getting children, which George Bush the First said, we ought to 
have every child ready to learn by the time they go to school.
    Well, this was one of the components in 1965, that 
disadvantaged children that did not have exposure to the kinds 
of services Head Start offers were less able to go to school. 
So that was really a precursor of that theory, which was, I 
think--I think we all support. But it was social service versus 
education, and very frankly, the expertise in the 1960s, and 
the real expert, Zigler, is----
    Ms. DeLauro. From New Haven. Right.
    Mr. Hoyer [continuing]. From New Haven.
    But the argument was whether or not children could be 
exposed to an educational experience that early and whether 
they were ready for it and whether that would be a positive 
experience; and frankly, the social services side of the 
argument won that, albeit that is why it is in HHS.
    Now, I think with--and Hillary Clinton in particular made a 
lot of effort in making us all aware of how early children 
begin to learn--prenatal, effectively. You know, that is why--
--
    Mr. Regula. Do you yield?
    Mr. Hoyer. Sure. It is your time, sir.
    Mr. Regula. I just noted that Mrs. Bush, on this Sunday 
show, used--included Head Start as part of an education 
environment; and so it follows up with what you mentioned about 
Mrs. Clinton.
    Mr. Hoyer. I think increasingly the expertise is that 
learning begins at a much, much earlier stage than we 
originally thought, and therefore, there is much more 
discussion about Head Start being a multi--a broader service 
program than simply a social service program and a child care 
program, that it is, in fact--needs to be a learning 
experience.
    Let me give you--I have gotten on my soapbox here. One of 
the problems with Head Start being discrete from public 
education, because of this theory that they got, is that there 
is little articulation between, therefore, a Head Start 
experience and a kindergarten experience. If you have them 
collocated where the Head Start teacher can talk to the 
kindergarten teacher and the kindergarten teacher talks to the 
first grade teacher, there is really a much better opportunity 
to know what the child's needs are, what the child's experience 
has been, what the child has gotten, what the child hasn't 
gotten and needs, than if you have them sort of located at 
various different sites.
    So that is--but I think you are right, and I--Rosa wanted 
to say something. Clearly, the education component is--I think 
we are much more aware that children can benefit at much, much 
earlier ages from an educational experience.
    Mr. Regula. Ms. DeLauro?
    Ms. DeLauro. Thank you very much, Mr. Chairman.
    And, you know, my colleague, Mr. Hoyer, has for years--long 
before I ever got here, both he and Judy have been real 
pioneers in this effort, people who have been devoted to making 
the Head Start experience one that is centered in child 
development as well as a whole variety of other things. But it 
was about what the mission of Head Start was all about, which 
is child development.
    And there was extraordinary research in the 1960s that 
indicated that, you know, kids were hard hit by poverty, poor 
nutrition, health, education, all of those measures; and 
theydid a pilot program with the OEO. And then they--the legislative 
history of this program was, when those results were good and positive, 
they moved on to try to expand the effort.
    And I might add Ed Zigler, who was known as the father of 
Head Start, administered that program in the Nixon 
administration, so that this is not--again, this is centered in 
what was viewed to be the best kind of child development effort 
for our youngsters. The legislative history is that it was 
intended to function as a comprehensive child development-
family support to look at a wide range of problems, so that 
poor youngsters could go to school, and begin school on a more 
equal footing as well, as disadvantaged kids.

               RELOCATING HEAD START AT THE FEDERAL LEVEL

    And I might just add that some of those same people today 
have really commented on moving Head Start to Education, and 
that they really believe that the comprehensive nature of the 
program lends itself to staying where it is in terms of health, 
mental health, nutrition, the educational needs. They are very, 
very strong in their views that moving Head Start to the 
Department of Education would be a bad idea.
    I won't regale you here, but we can make available--there 
are loads of studies that have been done that deal with this 
issue, and they can be passed on, particularly in terms of 
early interventions, that deal with----
    Mr. Hoyer. Rosa, will you yield?
    Ms. DeLauro. I will be happy to yield to my colleague.
    Mr. Hoyer. You know, part of the consternation that Judy 
had and that I have is that we have this argument which is 
essentially, in my opinion, a zero-sum argument, an either/or 
argument.
    I don't think that argument is particularly valid, and the 
reason I don't think it is valid, I think both sides are right. 
It is not a question--the problem with the schools, for 
instance, is, the principals own the schools and others, child 
development; others are concerned that if the child is in a 
school setting, the school is going to own the child and the 
child is going to be subjected solely to some educational 
experience which may be much too narrow for that child's needs.
    I think that is what Rosa is saying, that is what the 
argument was; and I happen to agree with that. The school 
facility, although it is an educational facility, is in fact a 
community investment, a major community investment; the major 
investment that most communities make is their school. We are 
spending now on elementary schools, Prince Georges County, 
Maryland, I think between $12 and $20 million. On high schools, 
we are spending in the neighborhood of $30 million plus. That 
is a tremendous investment.
    Rosa is correct. And it is not so much a problem with 
locating, in my opinion, Rosa--and in education at HHS, it is; 
that is the argument. It is presumed that Sally and Johnny 
don't give a darn about whether it is in the Department of 
Education or HHS. They don't. And very frankly, the deliverer 
of service at the local level doesn't particularly care. What--
the delivery of service that Sally and Johnny care about is the 
services getting to them in a way that is coordinated, so they 
get the biggest result.
    We at the Federal level have got a very complicated system, 
and--Mr. Chairman, you heard me say I introduced legislation 
for $500,000, put in a bill 5, 6 years ago to ask us to look at 
how we coordinate these better; and effectively what I got back 
was a study which told the locals what they need to do to 
access money better. And I came back and I lamented the fact 
that that is what came, that we really didn't say how the 
pedagogues were going to organize it better so the locals could 
get it easier, which is what I really think we need to do.
    But, Rosa, you and I don't disagree, and I don't disagree 
with any of those studies. Child development is critical, 
education is critical, and we need to figure out also how 
families--mothers, dads, single moms in particular--you know, I 
used the Jesse Jackson analogy of the child and the mom going 
to the school and getting multiple services, including 
employment services, literacy services, et cetera, et cetera, 
with the child getting education and health and human services, 
social services, child development services, so that at the end 
of the day they both leave this institution we call a school 
and say, boy, this was a great day, Mom and Dad--or Mom and 
child.
    That is the model that I think was Judy's vision. It is the 
vision I think we ought to have.
    We are in a new era. We talk about child care as if it is 
discrete. It is not. And for the most part, we are developing, 
where schools are, before and after child care locations that 
also have services. They are not baby-sitters; they are places 
where you have recreational, arts, enrichment programs before 
and after school.
    And I think it is an exciting concept if we all get over 
the fact that we are in competition with one another, when we 
are not. We ought to be in cooperation with one another.
    Mr. Regula. I think that role will grow.
    I see we are out of time. We have the agency, the 
Administration on Aging. Do either of you have any salient 
questions or comments you want to make?
    Mr. Hoyer. Can I make one more comment?
    Mr. Regula. You bet.
    Mr. Hoyer. The argument where things are will be moot if we 
don't provide sufficient resources to provide the services.

                           CONCLUDING REMARKS

    Mr. Regula. On that note, we are ready to conclude our 
hearing. We have had a pretty good panel discussion from up 
here.
    Ms. Dawson. I should say so.
    Mr. Regula. It is a difficult issue, and it--I think it 
troubles those who do not want a child left behind, how do we 
get that accomplished? It is a great challenge.
    Well, thank you for coming, and we can spend a lot more 
time, as you well know, but we have to move on to the other 
side of the ledger and get to the Administration on Aging. So 
we again thank you.
    [The following questions were submitted to be answered for 
the record:]

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                                             Tuesday, May 15, 2001.

                        ADMINISTRATION ON AGING

                               WITNESSES

NORM THOMPSON, ACTING PRINCIPAL DEPUTY ASSISTANT SECRETARY
EDWIN L. WALKER, DIRECTOR, OFFICE OF PROGRAM OPERATIONS AND DEVELOPMENT
DENNIS P. WILLIAMS, ACTING ASSISTANT SECRETARY FOR MANAGEMENT AND 
    BUDGET, OFFICE OF BUDGET, DEPARTMENT OF HEALTH AND HUMAN SERVICES

                       Introduction of Witnesses

    Mr. Regula. We will start the hearing on the Administration 
on Aging. Thank you, gentlemen, for coming. And with the 
demographic changes in our society, your agency gets more 
important by the day, and with the demographic changes that 
Steny and I have, it also gets more important.
    Right?
    Mr. Hoyer. Amen.
    Mr. Regula. So we are happy to welcome you. And I see, Mr. 
Williams, you are going to stick around for this one, too.
    Mr. Williams. Yes, sir, a little bit of continuity here.
    Mr. Regula. That is great.
    Okay, your statements will be made part of the record, and 
you can proceed as you choose.
    Mr. Thompson. Thank you, Mr. Chairman. We appreciate the 
opportunity to be here this afternoon to discuss with you the 
President's fiscal year 2002 budget request for the 
Administration on Aging.
    I would like to take this opportunity to welcome you, 
Chairman Regula, to the distinguished position of chairman of 
the subcommittee. This Administration looks forward to working 
with you on issues concerning America's seniors, a population 
that you have dedicated yourself to serving as chairman of the 
Older Americans Caucus for many years.
    With me today are Mr. Edwin Walker, the Director of the 
Office of Program Operations and Development with the 
Administration on Aging; and Dennis Williams, the Deputy 
Assistant Secretary for Budget with the Department of Health 
and Human Services.
    As you mentioned, my written testimony is being submitted 
for the record. So in the interest of time and with your 
permission, I will summarize my testimony.

                       Summary of Opening Remarks

    Mr. Regula. Thank you.
    Mr. Thompson. This administration's fiscal 2002 budget 
requests nearly $1.1 billion for AoA programs, including $12 
million in increases for core programs to support the aging 
network. One of the Nation's largest providers of home- and 
community-based care for the elderly, this network comprises 56 
State units on aging, 655 area agencies on aging, 235 Tribal 
organizations and approximately 29,000 paid and volunteer 
service providers that, in turn, support the well-being, health 
and independence of older Americans.
    The President's budget for AoA requests $562 million for 
nutrition programs to serve over 301 million meals in fiscal 
2002, an increase of over 7 million meals. Congregate meals, 
home-delivered meals and meals to Native Americans are a core 
component of our Nation's home- and community-based long-term 
care system, helping America's elderly maintain their health 
and remain independent.
    We are requesting $327 million for the Supportive Services 
program. Supportive Services funding allows a community to 
develop comprehensive and integrated systems to deliver 
services such as rides to medical appointments, chore services 
and adult day care.
    In addition to programs that directly assist the elderly, 
AoA now provides assistance to those who care for the elderly. 
The National Family Caregiver Support Program was established 
last year in the reauthorization of the Older Americans Act to 
provide information on available resources, assistance in 
locating services, caregiver counseling, training and peer 
support and respite care. On February 15th, Secretary Thompson 
authorized the release of $113 million to States to begin the 
implementation of this important program. For fiscal 2002, our 
budget requests $127 million, an increase of $2 million over 
fiscal 2001.
    The budget request also includes $17.6 million for Title IV 
training, research and discretionary projects. Our fiscal 2002 
request will continue to fund ongoing activities, such as 
Senior Legal Hotlines and related elder rights projects, Native 
American Resource Centers and other minority aging projects, 
models for preventing health care waste, fraud and abuse and 
GPRA-related evaluation activities.
    We are also asking for a total of $1.8 million for Pension 
Counseling and the Eldercare Locator. Preventive Health 
Services, Protection of Vulnerable Older Americans and 
Alzheimer's Disease Demonstration Grants are smaller programs 
that have a big impact on the health and well-being of the 
Nation's elderly. For these programs our fiscal 2002 request 
totals $44 million.
    And, finally, our budget requests $18 million for Federal 
administration to support 124 full-time equivalents and related 
expenses. This request will enable AoA to continue to improve 
services to our customers, expand our information activities 
and continue our work on behalf of older Americans.
    Along with our fiscal 2002 budget request, we also provided 
the Committee with our performance report for fiscal year 2000 
under the Government Performance and Results Act and our 
performance plan for this year and next. These documents, Mr. 
Chairman, reflect a significant improvement over previous 
years' plans and reports, in large part because of the efforts 
of States and local area agencies on aging to improve the 
availability and quality of data. I would like to commend our 
partners for working with us on this.
    Thank you, Mr. Chairman, Mr. Hoyer, for your time. I will 
be happy to answer any questions you may have.
    [The information follows:]

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               NATIONAL FAMILY CAREGIVER SUPPORT PROGRAM

    Mr. Regula. Mr. Hoyer, since you have to leave, if you want 
to proceed?
    Mr. Hoyer. Thank you very much, Mr. Chairman.
    Mr. Thompson, I recently was at a nursing home in St. 
Mary's County and met with Alzheimer's spouses, mainly, in one 
case, a daughter of an Alzheimer's victim.
    You mentioned the Caregiver Support Services Act. It was--
it is obviously--I am sure it is not just Alzheimer's patients, 
but they are particularly burdensome for an individual to care 
for. Would you, again, give me the statistics in terms of where 
the funding is for that program and the increase in that 
program?
    Mr. Thompson. Yes, sir. The total appropriation for 
Caregivers this fiscal year is $125 million; $5 million of that 
was set aside for funds for the Tribal Caregiver Support 
Program. The act also provides that 4 percent of the funds 
available to States will be used for competitive grants to 
demonstrate new techniques for providing caregiver services; 1 
percent would be used for projects of national significance. 
That leaves about $113 million for grants directly to States. 
That money was released in February. The request for FY 2002 
was $127 million.
    Mr. Hoyer. Now, in terms of--what is the expectation of how 
that will be used, that $113 million essentially, in terms of 
the grants?
    Mr. Thompson. The monies are available to States to develop 
integrated systems of support. The statute lays out five 
required activities; that is, providing information to 
caregivers, to assist in access to services, to provide 
counseling, training, peer support, respite care and then a 
catchall of supplemental services to deal with other needs.
    Mr. Hoyer. Is there a research or a statistical component 
to this aspect in the sense of assessing the needs, for 
instance, for respite care?
    One of the things that the spouses and, in one case, the 
daughter, as I said, were very clear on was that there was 
maybe hourly respite care available, but very--even that was on 
a limited scale, and almost no weekend or week sort of respite 
care. Are we doing an assessment of that need?
     Ronald Reagan, I think, is a perfect example of someone 
who courageously indicated, look, this is a problem and it 
could happen to anybody. And he was obviously subjected to very 
good health care for much of his life, if not all of his life. 
And he luckily, and many of us, would have the resources to 
handle perhaps respite care and needs, or full-time nurses, 
around-the-clock nurses; but most people can't because it is so 
darned expensive.
    Do we have an assessment of what the need is? We are doing 
$113 million. I am not sure where that figure came from, but I 
guess it is what we had available.
    Mr. Thompson. It is very difficult, I think, to get a 
handle on the exact nature of the need. In putting the program 
together, we surveyed States that had caregiver programs in 
place. We talked widely to State and local agencies and to 
individuals themselves to try to get some indication of what 
was needed.
    The program is designed to be very flexible. States have 
considerable flexibility in determining how to spend the funds 
and what kinds of services to provide within the general 
statutory framework that I mentioned.
    There is research in terms of the efficacy of providing 
caregiver support. For example, there is a study that indicates 
that providing early, basic support to caregivers of victims of 
Alzheimer's, in terms of counseling and peer support, can have 
the effect of delaying the institutionalization of the 
Alzheimer's victim for up to a year. So, we think, this is a 
very important program.
    Mr. Hoyer. Statistical information of the savings affected 
by that would, I think, be important as we determine, you know, 
if you spend it here, you save it over here.
    I quoted--I quote Ted Agnew a lot, Mr. Chairman, which may 
surprise you. He and I were elected to office, State-level 
office, at the same time in 1966, and he gave an inaugural 
address, which was a really good one. In the course of it, he 
said that the cost of failure far exceeds the price of 
progress. It is a great line, and I use it all the time, 
because I think this is an instance where if we allow families 
to keep not just Alzheimer's, but other patients who require an 
extraordinary level of care in their homes, or in the patient's 
home, for a longer period of time, we effect substantial 
savings in the public sector, whether it is nursing homes 
which--as you know, 70 percent of the nursing home folks are 
Medicaid patients, because they buy down until they are 
eligible.
    But I thank you for your answer, but I would like to see 
maybe an answer as to whether or not you think we have enough 
information on which to make sound judgments and, if not, 
whether we are getting such information.
    Mr. Thompson. Mr. Hoyer, we are doing that. One of the 
requirements when States receive this money is that they 
develop a needs assessment. States are in the process of doing 
that. They just received funding in February, so we will be 
getting information----
    Mr. Hoyer. Good.
    Mr. Thompson [continuing]. On how States are perceiving 
their needs.
    Mr. Hoyer. Thank you, Mr. Thompson.
    Thank you, Mr. Hoyer.

                              STATE MATCH

    Mr. Regula. Do the States put any money into these 
programs? Do they match what the Federal Government does? Do 
they provide input in different ways to the aging programs?
    Mr. Thompson. Absolutely, Mr. Chairman. In our core 
nutrition programs, the match is basically 15 percent; in our 
caregiver program, it is 25 percent--75 percent Federal, 25 
percent State.

                       PREVENTIVE HEALTH SERVICES

    Mr. Regula. What do you do in preventive health care? I 
guess this would be basically education. Do you have some 
programs that are made available, or information made 
available, through the aging centers on preventive health care 
techniques?
    Mr. Thompson. Absolutely. We have a preventive health or 
health promotion program. This program is funded at $21 
million. The program provides basic health information in 
senior centers, at meal sites, and in other locations in the 
community. The program provides health screening, looking at 
areas like glaucoma, hypertension, hearing.
    Mr. Regula. Right in the centers?
    Mr. Thompson. Right in the centers or in the community, and 
other locations as well. It provides a variety of information.
    Out of that $21 million, $5 million is specifically 
available for medication management to help seniors who take a 
wide variety of medications manage theirmedications, avoid 
mistakes.

                       INFORMATION DISSEMINATION

    Mr. Regula. Well, we have a lot of areas, either rural 
areas or people that simply are not aware of services. How do 
you reach them, if at all?
    Mr. Thompson. Well, we think we are doing a pretty good job 
reaching them, Mr. Chairman. All of our programs at the State 
and local level conduct outreach activities. They will hold 
events in the community, at churches, at malls, other areas 
where seniors may gather, to get the message out.
    We also in the Administration on Aging fund the Eldercare 
Locator that I mentioned earlier. This is an 800 number where, 
say, if I am looking for help for my father who lives in 
Olympia, Washington, I can call the 800 number and say, ``He 
has these conditions'' and they can refer me to service 
providers in that community.
    We also make a great deal of information available through 
the National Aging Information Center, which AOA runs. We 
respond to telephone inquiries, mail inquiries and e-mail 
requests for information on aging, as well as we put an awful 
lot of information on our programs and programs in other 
agencies and State and local programs on our Web site.
    Mr. Regula. I suspect that seniors are not likely to use 
that as much as perhaps their grandchildren.
    Mr. Thompson. Well, that is correct. We target both the 
elderly themselves and their family members and caregivers.

                               VOLUNTEERS

    Mr. Regula. Mr. Hoyer asked you about the Family Caregiver 
Support Program. Do you get a lot of volunteers involved in the 
program? I think that Meals on Wheels, for example, is carried 
out by volunteers.
    Mr. Thompson. Absolutely. In our--particularly in our 
senior center programs, in nutrition programs, volunteers are 
an integral part, an essential part, of operating those 
programs. There are many, many volunteer activities. And we 
think that is very important, because not only does it support 
the programs, but it also gives the elderly an opportunity to 
become more involved in activities and be more active. And that 
is good for their long-term health, both mental and physical.
    Other programs, the ombudsman program that we run that 
basically helps folks resolve issues with nursing homes and 
other care facilities, as well as the pension counseling 
program, both are staffed in large part by volunteers.

                             WAITING LISTS

    Mr. Regula. I notice in your budget document that you said, 
on any given day, there are 139,000 elderly on waiting lists 
for home-delivered meals. Is this a lack of funding to provide 
the meals or a lack of volunteers to deliver the meals? What is 
the reason for the inability to meet this need?
    Mr. Thompson. Well, the 139,000 figure comes from a 1996 
study which indicated that there was--for those folks that were 
on the waiting list, there was about a 2.7-month delay. That 
can result from a variety of reasons, including lack of 
volunteers, delays in expanding coverage to other areas, any of 
the reasons that you mentioned, sir.

                         MEDICATION MANAGEMENT

    Mr. Regula. I was interested also that you have the program 
on trying to help people to avoid the difficulty that comes 
with medications, because they get so many; and it can be 
confusing and often the medications are at cross-purposes. How 
do you reach those people that need this kind of help?
    Mr. Thompson. Well, one of the more interesting approaches 
to that is what we call the ``brown bag program,'' wherein 
folks that come to the senior center are encouraged on a 
particular day to put all their medications in a brown bag and 
bring them into the senior center where a doctor or a 
pharmacist will look at those medications, look for possible 
drug interactions, work with the person to make sure that he 
understands the doctor's instructions of when to take the 
medicine and the dosage and so forth, perhaps look for lesser-
cost alternatives to those particular medications, that kind of 
thing.
    So we think that is a particularly innovative program.
    Mr. Regula. Seems to me that would be extremely helpful to 
seniors, because there is a tendency for proliferation of 
drugs. Everyone looks for the magic bullet that is going to 
take 20 years off their life.
    Mr. Thompson. Absolutely.
    Mr. Regula. And it is easy to get confused with it.
    Mr. Sherwood, do you have any questions you would like to 
ask?
    Mr. Sherwood. Yes, Mr. Chairman. I am looking for that 
magic bullet, only maybe 20 ain't a big enough number anymore.
    Mr. Regula. They only have the fountain in Florida.
    Mr. Sherwood. Not in Ohio?
    Mr. Regula. No.
    Mr. Sherwood. Mr. Thompson, Bill Farley, the Executive 
Director of the area agency at home for several of my counties 
has told me that he supports the President's--the 
administration's request for increasing the level of in-home 
services, and I understand that on his waiting list for in-home 
care, he has almost 150 customers that are receiving no 
services and nearly 100 others with only partial care, and this 
is in a fairly small rural area.
    Could you describe for me the Federal programs that provide 
in-home support for the elderly that will help them to stay in 
their homes?

                            IN-HOME SUPPORTS

    Mr. Thompson. Well, we have several, sir. The Supportive 
Services program, for example, provides a variety of in-home 
services, including personal care, assistance with chores, 
transportation is one of the big elements, helping folks get to 
shopping, get to medical appointments, things such as that. We 
have the home-delivered meals program, which brings meals to 
the home of folks that can't get into a senior center for a 
meal.
    The National Family Caregiver Support Program can provide a 
range of in-home services to help the caregiver assist the 
elderly person, to help them remain in their home. Those are 
examples, sir.

                            FY 2002 REQUEST

    Mr. Sherwood. My brother was a family physician for many 
years, and we have often discussed how much better elderly 
people do in their familiar surroundings than if you have to 
institutionalize them for some reason or another; and the 
chairman and I were joking about--about aging, and I think the 
older we all get, the more secure it is to be in familiar 
surroundings. So I think anything we can do to help elderly 
people be able to maintain and stay in their own homes, we are 
certainly gaining.
    Do you think that this administration's funding request--do 
you think you will have what you need to operate with?
    Mr. Thompson. Well, we are certainly here to support the 
administration's funding request. I would----
    Mr. Sherwood. Well, we know that.
    Mr. Thompson. I would also point out that the Department's 
request for programs that benefit the aging isincreasing by 7 
percent this year from $2.8 billion to $3 billion, roughly twice that 
for total domestic discretionary spending.

                            FUNDING PROCESS

    Mr. Sherwood. Now, let me get back to the first part of my 
question.
    These funds--I realize we have the funds in the Federal 
Government and we have the programs at the local level that 
operate, but are they, normally, bid programs? How--what is 
the--give me the process, that this funding comes down to the 
local level.
    Mr. Thompson. Well, I will give you the first part of that, 
and then I think I will turn the question over to Mr. Walker 
for the more detailed part.
    With most of our programs, the funds are allocated to 
States by formula, a formula that is contained in the statute. 
As part of the State plan requirement for our program, States 
must develop an intrastate funding formula based on various 
characteristics of local planning areas and allocate the funds 
in accordance with that. These are basically to area agencies 
on aging. Area agencies on aging then engage in a variety of 
mechanisms to either provide services directly or through 
providers.
    Edwin, do you want to----
    Mr. Walker. Sure. At the local level, the area agencies 
subcontract their grant funds to local service providers. In 
cases where there may not be an adequate number of service 
providers or the quality of service has not been sufficient or 
adequate, the area agency may provide that service directly. 
But the beauty of the program is the fact that seniors 
participate in the design and the determination of the type of 
programs needed, so it is a program that is very responsive to 
the needs at the local level.
    Mr. Sherwood. Thank you very much.

                          PROGRAM FLEXIBILITY

    Mr. Regula. It sounds like you really get a great deal of 
latitude with the agency administration as to how they serve 
their public. Is that correct?
    Mr. Thompson. Yes, sir, that is correct. I think that is 
one of the beauties of the programs that we operate. The needs 
of the elderly vary all over the map, and the needs of 
community also vary, and we think it is important that States 
and local communities have flexibility to be able to design 
programs that meet their specific needs.

                              UNMET NEEDS

    Mr. Regula. Do you have any information on the unmet needs? 
I noticed you look at the demographics of the aging statistics. 
Our population is going to grow considerably; are we going to 
be able to meet the challenge?
    Mr. Thompson. Well, we are certainly trying to prepare 
ourselves to do that. You know, like you, we are concerned 
about that.
    The recent census reported currently, 35 million folks in 
the U.S., 65 years of age and older; that number is going to 
increase to 70 million, basically double by the year 2030. So 
it is very important that we think about the implications both 
in terms of the Federal response, as well as social response to 
that. We think we are doing that now.
    As I mentioned, the Department's budget includes increases 
in a variety of programs that benefit the elderly, ranging from 
biomedical research done by the National Institutes of Health 
to increases in our core programs. We think, in particular, the 
response of basic biomedical research and clinical research is 
critical, because much of the services that are required are 
driven by things like Alzheimer's disease, diabetes and a 
variety of infections that plague the elderly, and we are 
trying to attack that very vigorously.
    We are also trying to learn from these programs. For 
example, the National Family Caregiver Support Program, for us, 
is a new line of business. Historically, we provided services 
to seniors directly. With the Caregiver Support Program, we are 
providing assistance to the caregiver. I point out that in this 
country, approximately 95 percent of the care that is given to 
the elderly who need assistance is done by families and 
friends. Only about 5 percent comes in institutional settings. 
So we think it is very important to learn how to provide 
support to caregivers so that they can continue to provide the 
care and keep people in their homes and in their communities.

                       REMAINING IN THE COMMUNITY

    Mr. Regula. Would it be a fair statement that the result of 
your programs is that more people are enabled to stay in their 
homes for longer periods of time before requiring some form of 
institutionalization?
    Mr. Thompson. Absolutely, Mr. Chairman. That is the reason 
for our programs, to provide a setting for people in their 
home, in the community, and to keep them there just as long as 
possible and as long as they feel comfortable remaining there.

                    COORDINATING WITH OTHER PROGRAMS

    Mr. Regula. Well, I am quite sure that--just observing 
myself that having an aging center where people can go and get 
companionship is very important to their well-being and to 
their overall health.
    Do you coordinate with the National Institutes of Health? 
Because, as you pointed out, many programs such as Alzheimer's, 
which they do research in, have a very direct impact on 
seniors.
    Mr. Thompson. Absolutely, Mr. Chairman. One of the primary 
purposes and missions of the Administration on Aging is to take 
the research and the information that is generated by a variety 
of Federal agencies, the NIH in particular, the National 
Institute on Aging, the Centers for Disease Control and 
Prevention, the Substance Abuse Mental Health Services 
Administration, the Health Resources and Services 
Administration, and HCFA.
    We take information and the best science from those 
organizations. We look at it and we package it and try to move 
it out into our network, out into the mainstream of service 
delivery, whether it be information on Alzheimer's or any other 
situation.
    That is, what we try to do is to get information out so we 
can provide the best possible services to these folks.

                      FEEDBACK FROM AGING NETWORK

    Mr. Regula. Do you get feedback--obviously you give, in the 
aging centers, a lot of latitude on constructing programs that 
meet the needs of the culture of that community. It would 
certainly be different in the center of New York City than it 
would be in some remote, rural area.
    Do you get feedback as to what works? What innovative 
programs have been developed in a given aging center that have 
been very well received and effective? Do they communicate that 
to you so you, in turn, can add this--these ideas to the 
communications you have with the centers?
    Mr. Thompson. Yes, sir. We are in constant communication 
with States and with area agencies, as well as many national 
organizations that represent them, to learn about best 
practices, innovative programs that work and soforth.
    In addition, we also fund a variety of demonstration 
projects to test new ideas, evaluate those, figure out what 
works, and take what works and move it out to the mainstream.
    In fact, that is, for example, how the National Family 
Caregiver Support Program came about. We were funding some 
demonstration projects. We looked at some States that had very 
promising approaches to this problem. We decided this was a 
great idea, worked with the Congress to get it into legislation 
and made it into a national program.

                   AGING PROGRAMS IN OTHER COUNTRIES

    Mr. Regula. Well, my experience in my own community is that 
the seniors like these centers very much. I would be curious, 
is this a phenomenon pretty much of the United States, or do 
other countries around the world have similar programs for 
their aging population?
    Mr. Thompson. I would refer that one to you, Edwin.
    Mr. Walker. We have had a number of other countries come 
here and study the model that we have. It seems to be a very 
successful model that works here. Again, it is because of the 
bottom-up planning that is so incredibly responsive to local 
communities. And we have seen in other countries that they are 
beginning to take aspects of our program model and adapt it in 
their countries.
    Mr. Regula. I mean, this is a prototype for the Pentagon 
when you mentioned the ``bottom-up.'' .
    Mr. Sherwood, do you have any additional questions?
    Mr. Sherwood. Yes, I do.

                     HOME CARE/INSTITUTIONALIZATION

    Mr. Thompson, you used a statistic that surprised me. You 
said that 95 percent of the aging population that needs 
assistance is, you said, cared for by friends and relatives and 
family, and only 5 percent is institutionalized.
    Mr. Thompson. Yes, sir. That comes from a study--a long-
term care study that the Department conducted in 1994, and we 
believe that statistic is still valid.
    Mr. Sherwood. But my anecdotal evidence, that is shocking 
to me.
    Now, do you show everyone--do you assume that everyone over 
a certain age in those statistics needs care?
    Mr. Thompson. I don't believe so, sir. The study looked at 
care that was actually being provided to the individual. Now, 
there is a range of care. You know, obviously in a nursing home 
or other assisted care facility, you are going to have very 
intensive services. That is one end of the spectrum.
    The other end of the spectrum is where an elderly person 
may need just a few services, maybe some help with chores, 
cutting the grass, maybe some transportation services. But if 
you aggregate things across that spectrum, the study found that 
services that were being provided by family and friends for 95 
percent of those who needed assistance.
    Mr. Sherwood. What percentage of America's elderly end up 
in an institution at some time? Anecdotally, the conversation--
if you go to a senior citizen center, that is what everyone is 
worried about; and I have a mother who is 95 and lives alone 
and is very, very active, but folks worry about those things. 
And if the amount of people that come to my office looking for 
help to get in a nursing home or some type of assisted living 
facility--the 5 percent figure just doesn't ring true to me.
    Mr. Walker. The research shows that at any given time, the 
maximum percentage in an institutional setting, which includes 
hospitals, would be 15 percent of the elderly. The statistic 
that----
    Mr. Sherwood. How do you define elderly?
    Mr. Walker. Well, we have been defining it--according to 
the Older Americans Act, 60 and over. Much of the data, 
however, is at 65, so we could break that out for you.
    But the additional statistic that Mr. Thompson was 
referring to is that on a regular basis, only 5 percent of the 
elderly are in nursing facilities.

                           REDEFINING ELDERLY

    Mr. Sherwood. Would it be--is it time for us to redefine 
that age? Is that--in other words, you are putting me in a 
category I don't want to feel that I am in.
    Mr. Walker. Perhaps we could refer to ``seasoned'' people 
instead.
    Mr. Sherwood. No, no. But I mean, with better nutrition, 
better health, less--less of us work at jobs that wear us out 
physically in our lives, and I am wondering if we are--if we 
are using relevant numbers anymore.
    Mr. Thompson. I think that is an interesting question.
    We are looking at the census data that came out recently, 
and the population over 65 in the past decade increased by 
about 12 percent. The population age 85 and older increased by 
35 percent in the past decade. This just indicates the rapid 
improvements in longevity that are happening in this country.
    That is a very good question. I don't have the answer for 
you, but I think it is something that needs to be looked at.
    Mr. Sherwood. Well, of course I didn't expect an answer, 
but I wanted to put it on the record that maybe we ought to be 
thinking about it, because I just think our perception of what 
is old is changing. Although I spent part of my weekend looking 
at a very old graveyard, and the people who did live to be old 
in the early 1800s and late 1700s still lived to be old; there 
just weren't many of them.
    Thanks very much.
    Mr. Regula. Well, I think you can join AARP at 50. I 
believe----
    Mr. Sherwood. Frightening thought, Mr. Chairman.
    Mr. Regula. Well, I want to turn to the youngest member of 
this subcommittee, who has probably never even thought about 
aging.
    Mr. Kennedy.

               NATIONAL FAMILY CAREGIVER SUPPORT PROGRAM

    Mr. Kennedy. Thank you, Mr. Chairman. The youngest member 
of this committee, who has the State with the number one oldest 
population, 85 and older, of any State in the Nation. Rhode 
Island, number one.
    I told you we were number one. You didn't know what I 
meant.
    Given that, I want to dovetail with my colleague's comments 
on where the caregiving is. It is where the families are, and 
given that, I want to ask you to comment on the unmet need for 
caregiver support, given the fact that it is more cost-
effective to leverage whatever support we can to support the 
family in their efforts.
    Could you comment on the part of the budget that I should 
say requests only a modest $2 million increase, and what 
support can you provide with a 10 percent increase over last 
year's appropriated level?
    Mr. Thompson. Well, again, we don't have comprehensive 
statistics on unmet need in this program at this time. I can 
tell you anecdotally we are hearing that there is tremendous 
need and desire for help in caring for the elderly. I think 
many of us have had that experience.
    Mr. Kennedy. Yes.
    Mr. Thompson. This is a new program. This is the first year 
that we have been involved in this. The grants just went out in 
February. We think it is an important step, and we would like 
to see how this program operates, have States do their needs 
assessment, get some data that way, and then look at where we 
go from there.
    Mr. Regula. Will you yield?
    Mr. Kennedy. Yes.
    Mr. Regula. You said the grants just went out in February. 
To whom or to what agency do these grants go? In other words, 
who puts this on the ground, who puts it into effect?
    Mr. Thompson. We make the grants to the State unit on aging 
in each of the States and territories.
    Mr. Regula. And they, in turn, channel it out to the 
locals?
    Mr. Thompson. Correct.
    Mr. Regula. Thank you.
    Mr. Kennedy. Well, I can just add my own anecdotal evidence 
to the fact that especially the BBA cuts, were devastating for 
visiting nurses programs and the like, which were really 
supplemented with home care by the families themselves.
    And I think we will see--and I would really like to have 
any evidence that you could provide me, or reports that have 
been done, in the wake of the BBA cuts, on what the practical 
effect has been. Because in my State, at least anecdotally, 
more people have had to become institutionalized because there 
haven't been the support services needed to keep them in the 
community. And when we have support services, obviously, in the 
community--I am not telling you anything you don't already 
know--you are leveraging the primary caregiver; the family is 
not getting paid a nickel.
    It seems to me if you really want to do things cost-
effectively, you support the primary caregiver, who is the 
family member, and you get a lot bigger bang for your buck. 
Also you help the people stay where they would like to stay, 
and that is in the home being cared for by their loved ones. 
But their loved ones will burn out and burn out quick under the 
existing, or lack of existing, long-term care or lack of plan, 
when it comes to taking care of seniors at home.
    So to the degree you could get back to me on that, I would 
appreciate it.
    Mr. Thompson. Yes, sir. We will do that.
    [The information follows:]

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                           NUTRITION PROGRAMS

    Mr. Kennedy. And I would be anxious to keep track with you 
as to how this new program is working. I am sure it is finding 
itself very needed around the country.
    I wanted to get to this fact, that the biggest--single 
biggest concern I have been hearing from my Department of 
Elderly Affairs and from my folks back home is just the 
overwhelming success, but then there comes a double-edged sword 
here, of the nutrition program. It has been absolutely the 
hallmark.
    I mean, literally, Mr. Chairman, people survive because of 
this program; they would not otherwise. They rely on the meals 
they get every day.
    One thing that has really bothered me--and I would like you 
to comment--a recent review of the regulations by OIG would now 
permit these contributions that the seniors make to the meals, 
to be used solely to expand or increase services, but not for 
matching purposes. And the problem I see and what I have heard 
is, seniors really like to make a small contribution, because 
they think they are helping the program, and the matching 
concept is an important concept; and that OIG ruling has 
certainly caused great concern for our programs.
    Could you comment on that?
    Mr. Thompson. Yes, sir. The statute requires that 
contributions--voluntary contributions made to our programs be 
used to expand services in the program for which the voluntary 
contribution was made.
    Prior to the reauthorization of the statute late last year, 
there was perhaps some ambiguity in the statutory language, but 
with the reauthorization, the language is made very, very 
specific. As I said earlier, the statute requires the voluntary 
contributions be used by the local agencies to expand services 
within the program for which the voluntary contribution was 
made. We have no flexibility on that.
    The intent, of course, is to make those funds available to 
provide more services. And we would certainly agree that more 
services are a good thing.
    Mr. Kennedy. Well, there's really no more cost-effective 
program. These meal sites are the survival for many. You come 
up to my State, and it would just blow you away. The numbers 
are increasing dramatically. People are relying on these 
programs of course, with higher utility costs, higher 
everything costs, prescription costs. Seniors are broke. This 
is it for them in terms of eating, the budget just doesn't seem 
to me to be keeping pace with the need, whatsoever.
    Do you see the unmet need as growing out there?

                               UNMET NEED

    Mr. Thompson. Well, again, we don't have comprehensive 
statistical data on that. In discussions with States, with area 
agencies, with the national organizations, the anecdotal 
information we get is that, yes, there is unmet need. There are 
waiting lists in many areas for some of our programs, and the 
trend seems to be that those waiting lists are growing.

                       PREVENTIVE HEALTH SERVICES

    Mr. Kennedy. Well, we have in Woonsocket, Rhode Island, a 
20 percent increase in participation just in the last 5 years. 
And this has been level funded excluding inflation. So we have 
level funding for the last 5 years while there has been a 27 
percent increase. And because seniors are feeling less 
financially secure because of their prescription drugs and 
utilities, they are not making as many contributions; it has 
really gone down.
    So we are at a real break-point in my State, and I can't 
emphasize enough how important it is for you to make that the 
hallmark of your Older Americans Act, this meals program.
    I have been out, Mr. Chairman, as I would encourage you to 
go out, with these Meals on Wheels drivers all the time, and 
your heart would break, as I am sure, if you have ever seen it. 
You go into these homes, and it is the only contact these 
people have all day.
    The leverage that you, the Federal Government, gets out of 
this in terms of voluntary services is incredible. This is such 
a leveraged program.
    I know that I have really tried to make my number one 
point, and that is, keep working on that and try to figureout 
ways where we can be more useful in funding that area of your budget.
    I would like to go to prevention and how you intend to work 
to try to incorporate more preventive health service needs into 
your programs.
    Mr. Thompson. Okay. Well, as I mentioned, we have a $21 
million preventive health promotion line item, a separately 
funded program, that provides health information and screening 
and other health services in senior centers and other locations 
in the community.
    We also, again, work very closely with the health agencies 
in the Department to get the best information and the best 
science from them and get it out to the network to make it 
available to seniors. These are very important areas for us.
    In addition, you know, our core programs--as you mentioned, 
the meal program----
    Mr. Kennedy. Is prevention?
    Mr. Thompson [continuing]. Is prevention.
    Mr. Kennedy. You bet.
    Mr. Thompson. It is providing social contact, improving 
mental health. It is providing nutrition, which helps keep 
people healthier and more active.

                             MENTAL HEALTH

    Mr. Kennedy. It is absolutely the hub of all your other 
social services. They come there. They get their information 
about what else is going on. They get plugged into all these 
other programs.
    And you mentioned the real key, and that is mental health 
for many, many seniors. They have lost spouses, they have lost 
connections to the community; they have been segregated in the 
community in housing.
    Our culture doesn't value senior citizens. It would be 
depressing to anybody, and it is not surprising that last year 
the AOA specifically studied older Americans and mental health 
and found in the report that, quote, ``Approximately 20 percent 
of Americans 55 or older experienced specific mental disorder 
in any given year.'' unquote. Mental disorders represent a 
grave threat to the health and well-being of older Americans.
    So given that, what can you say you are doing in the area 
of mental health services for seniors?
    Mr. Thompson. Again, Mr. Kennedy, you have covered a lot of 
it already. We are doing screenings for mental health, but also 
the programs themselves are designed to get people into senior 
centers where they can have both social contact, as well as 
contact with professionals who can assess need.
    In most areas, our home-delivered meals program, for 
example is not just a matter of you drop the lunch off and run. 
You are providing social contact. Many of these folks who 
deliver the meals are trained to recognize signs of mental 
health or other problems with the individual and to get that 
information back to the agency so the person can receive the 
help they need.
    Many of our centers are located--collocated with other 
public service providers so that you can get sort of one-stop 
shopping with these--for dealing with these situations. And our 
caregiver support program is providing help--mental health 
support in many ways to the caregiver, as well as to the older 
person.
    Mr. Kennedy. How do you coordinate with SAMHSA?
    Mr. Thompson. We work very closely with SAMHSA. We have 
cosponsored conferences with SAMHSA. We have--we want to 
mention the--yes?
    Mr. Walker. Yes. We currently have an effort with SAMHSA to 
address the needs of older women, and we have placed funding 
with them in terms of sponsoring a conference and highlighting 
the issues of older women, particularly the mental health 
issues.
    As Mr. Thompson mentioned, we are coordinating and pushing 
for the coordination at the local level--State and local level 
of the mental health network, the primary care network and the 
aging network for the purpose of better assessing, identifying 
and then intervening when there are mental health issues 
identified.
    Mr. Kennedy. Well, I would certainly love to learn more 
about those issues specifically and how the rubber meets the 
road, because I am finding that there is a huge unmet need, and 
there is little to no plan to deal with the aging of America 
and with the mental health needs that they have. In fact, they 
overutilize the Medicare system because of undiagnosed mental 
health needs.
    Doctors aren't trained. We ought to get more primary care 
workers in this area to be trained in how to identify mental 
health disorders, how to treat them, how to get them the 
support services they need.
    So, with that, I look forward to getting some more 
information, and I certainly appreciate the work that your 
agency does. It is so vitally important, and I want to make it 
work even more effectively. So count me in.
    Mr. Thompson. Great. Thank you.
    Mr. Regula. Well, thank you for coming. I think we have had 
an excellent discussion here, and it is--I was interested that 
other countries want to replicate this, because I do think that 
probably the United States does substantially more for seniors 
than any other country in the world, and that is a credit to 
our society that provides the support.
    Mr. Kennedy. Mr. Chairman, if I could, we may be doing 
more, but our culture is not--it does not value seniors the way 
other cultures do. It is just my experience. I have traveled 
quite a bit, and I see the way families treat their elders in 
other places of the world; and believe me, my seniors in Rhode 
Island don't see their kids. They are all put in these elderly 
high-rises. It is an absolute disgrace what has happened.
    Mr. Regula. Well, it is probably a definition of valuing--
how they are valued, and I think it is probably part of our 
fast-moving society. My grandmother lived with us and, you 
know, that was a common thing in that day out in the rural 
areas, the parents would live with their children as they got 
older.
    Today, that is almost a thing of the past. But that is why 
it is important that we do have these services, and as you have 
pointed out, and Mr. Sherwood, the Meals on Wheels are their 
contact with--with society, if you will, or--and a very 
important part of it.
    Well, you have our blessing, and we will also try to 
provide some money along with the blessing. Thank you for being 
here. The committee is adjourned.
    [Whereupon, at 4:03 p.m., the subcommittee was adjourned.]
    [The following questions were submitted to be answered for 
the record:]


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                           W I T N E S S E S

                              ----------                              
                                                                   Page
Dawson, Diann....................................................   887
McMullan, Michael................................................   413
Raubach, E.M.....................................................   413
Thompson, Hon. T.G...............................................     1
Thompson, Norm...................................................  1547
Walker, E.L......................................................  1547
Williams, D.P....................................................

413, 877, 1547


                               I N D E X

                              ----------                                
        

                Department of Health and Human Services

                                                                   Page
Abstinence Funding...............................................    41
After School Program.............................................    47
Authority for State to Shift Funds Among Health Grants...........   115
CDC Budget.......................................................    18
Chairman Regula statement........................................     1
Child Care Development...........................................   123
Child Care Development Block Grant...............................    46
Child Care Program Funding.......................................   122
Chronic Disease..................................................   130
    Prevention...................................................   123
    Tracking Network.............................................   121
Community:
    Access Program...............................................   129
    Health Center................................................26, 79
Comprehensive School Reform......................................    32
Coordinated Services.............................................    16
Coordination of Pre-School Programs..............................    66
Departmental Budget..............................................    24
Departmental Regulations.........................................    34
Disseminating Health Information.................................    60
Early Reading First..............................................    47
Education and Outreach Service for Men...........................    75
Energy Employees Occupational Illness Compensation Act of 2000...    54
Family Planning..................................................   124
Funding for Breast and Cervical Cancer Screening Program.........   122
Funding Violence Against Women Act Program.......................   127
General Departmental Management Congressional Justification......   132
HCFA Program Administration......................................    56
Head Start.....................................................107, 124
Head Start and Funding of After School Programs..................    65
Health Care Financing Administration.............................    34
Health Care Worker Shortage......................................    66
Health Care Workers..............................................    67
Health Professions...............................................   128
Healthy Communities Innovation Fund..............................   120
HIV/AIDS.........................................................    44
HIV/AIDS Funding.................................................   121
HRSA Funding.....................................................   128
Immediate Helping Hand Proposal..................................51, 65
Information Technology Security and Innovation Fund..............    52
Long Term Care...................................................    69
Long Term Care Insurance.........................................28, 36
Low Income Home Energy Assistance Program...................39, 81, 130
Medicaid Waivers for the SCHIP Program...........................    72
Medical Research Grants..........................................    41
Medicare.........................................................    27
Medicare Anesthesia Care Rule....................................74, 78
Mental Health Care...............................................    20
NIH Budget.......................................................    57
NIH Increase.....................................................    49
Nurse Shortage...........................................19, 71, 74, 78
Obesity..........................................................    62
Obesity and Diabetes.............................................23, 78
Office of Men's Health...........................................    33
Office of Women's Health.........................................    33
Organ Donor Program..............................................    14
Practice Health..................................................    21
Prescription Drugs...............................................    65
Preventive Care..................................................    37
Preventive Health................................................    44
Privacy Regulations..............................................    75
Privacy Regulations and Protecting Electronic Medical Records....    72
Promising Practice Program.......................................    31
Proposals Affecting the Hard of Hearing..........................    77
Reading Curriculum for Preschool Children........................   109
Rural Health Care................................................    36
Secretary Thompson Statement.....................................     2
State Grant Flexibility Proposal.................................49, 125
Stem Cell Research............................................18, 26, 33
The PHS Evaluation Tap...........................................    53
Tobacco Product Research.........................................    29
Transfer Authority...............................................    54
Use of Restraints................................................    38

                Centers for Medicare & Medicaid Services
                 (Health Care Financing Administration)

1-800 Telephone Service..........................................   451
Adminstrative Burden...........................................458, 460
Administrative Training Budget...................................   506
Annual Performance Plan and Report..............................729-889
    Clinical Laboratory Improvement Amendments..................799-802
    Federal Administrative Costs................................844-859
    Grants to States for Medicaid/Medicaid Agencies.............780-791
    Medicare Benefits...........................................744-757
    Medicare Contractors........................................824-843
    Medicare Integrity Program..................................803-818
    Medicare+Choice User Fee....................................819-823
    Peer Review Organizations...................................758-771
    Research, Demonstration, and Evaluation.....................860-863
    Survey & Certification......................................772-779
    State Children's Health Insurance Program...................792-798
Application of AHRQ Research.....................................   470
Appropriation History Tables:
    Medicaid.....................................................   657
    Program Management...........................................   645
Anti-Psychotic Medications.......................................   448
Assisted Living Facility Surveys.................................   462
Audited Financial Statement....................................569, 675
Authorizing Legislation:
    Medicaid...................................................611, 656
    Program Management...........................................   646
BBA Changes to Payment Structure.................................   463
Balanced Budget Act:
    Program Management Request.................................570, 652
Balanced Budget Refinement Act of 1999.........................423, 653
Benefit Plan Choices.............................................   442
Benefits Improvement and Protection Act of 2000...........502, 572, 653
Benefits, Preventive Care........................................   450
Breakout of FTEs.................................................   487
Budget Authority by Activity:
    Medicaid.....................................................   611
    Payments to Trust Fund.......................................   629
    Program Management...........................................   641
Budget Authority by Object:
    Medicaid.....................................................   659
    Payments to Trust Fund.......................................   630
    Program Management...........................................   642
Budget Priorities:
    Capital Improvements.......................................542, 668
    Integrated General Ledger and Accounting System.......541, 569, 667
    Integrating the Budget and Annual Performance Plan...........   543
    Workforce Planning and Human Capital Management..............   543
Budget Request:
    Federal Administration.......................................   540
    Medicare Contractors.........................................   539
    Research, Demonstrations, and Evaluations....................   541
    Survey and Certification.....................................   540
Budget Sufficiency...............................................   502
Capital Improvements......................................502, 542, 668
Capitated Rates, Comparison with Fee-For-Service Payments........   463
Claims Processing..............................................474, 564
Claims Processing, Medicare Systems..............................   493
Claims, Unprocessable.....................................474, 555, 559
Claims Volume....................................................   563
Clinical Laboratory Improvement Amendments (CLIA) of 1988.......672-674
Community Health Priorities......................................   515
Comparison Between Capitated Rates and Fee-For-Service Payments..   463
Complaints of Denial of Care.....................................   457
Cost Effectiveness of Preventive Medicine........................   469
Coverage of New Anti-Psychotic Medications.......................   448
Criminalizing Medical Practice...................................   442
Decreases in Research Budget.....................................   449
Denial of Care, Complaints of....................................   457
Desktop Computer Service.........................................   489
Differences Between SSA Budget and HCFA Budget...................   517
Discretionary Budget Summary.....................................   533
ESRD Software System.............................................   479
Early Treatment of HIV...........................................   436
Encounter Data Collection........................................   571
Executive Summary...............................................534-545
FTE Table........................................................   495
Federal Administration.....................................431, 575-582
    Administration Summary.......................................   576
    Administration Summary Table.................................   575
    Authorizing Legislation......................................   575
    Budget Request...............................................   540
    Expenses, Fixed..............................................   576
    Expenses, Variable...........................................   578
    Funding Summary..............................................   582
    Method of Operations.........................................   575
    Rationale for Budget Request.................................   575
    Recent Legislation and New Activities........................   581
Fee-For-Service Payments, Comparison with Capitated Rates........   463
Financial Statements...........................................569, 675
Fraud and Abuse..................................................   526
Fraud Education and Training.....................................   494
Fraud, Waste and Abuse.........................................421, 676
Funding Levels...................................................   491
Funding Summary..................................................   532
Funding Through User Fees........................................   428
Government Performance and Results Act (GPRA).............415, 434, 735
Graduate Medical Education and Telemedicine......................   507
Grants to States for Medicaid..............................426, 655-665
Growth in Expenditures...........................................   517
HCFA and HUD Coordination........................................   512
HCFA Budget Summary:
    Discretionary Budget Summary.................................   533
    Executive Summary...........................................534-545
    Funding Summary..............................................   532
    FY 2002 Budget Priorities....................................   541
    FY 2002 Budget Request.......................................   539
    Recent Accomplishments.......................................   537
HCFA Integrated General Ledger and Accounting System 
   (HIGLAS)................................420, 433, 472, 541, 569, 667
HCFA Price-Based System..........................................   480
HCFA Reform......................................................   512
HCFA's Accomplishments...........................................   413
HCFA's Budget Priorities.........................................   414
HCFA's Discretionary Request.....................................   415
HCFA's Efforts to Solve Problems, Supporting.....................   444
HIPAA Administrative Simplification Procedures.................493, 623
HIPAA Privacy Regulation.......................................571, 623
HMO Loan and Loan Guarantee Fund................................634-636
    Appropriation Language.......................................   634
    Language Analysis............................................   635
HMO Reimbursement................................................   462
Health Care Fraud and Abuse Control.............................676-683
    Implementing FY 2001 and FY 2002 MIP Contracting Efforts.....   682
    Medicare Integrity Program Activities........................   679
    Proposed Changes to the Medicare Integrity Program...........   681
    Strategy to Fight Fraud and Abuse............................   676
Health Care Informatics Systems..................................   475
Health Care Support Personnel, Shortage of.......................   453
Home Health Agencies:
    Poor Performing..............................................   481
    Recertification..............................................   506
Home Health Quality Improvement System...........................   480
Homeless Access to Benefits......................................   514
Homelessness.....................................................   511
Hospice Care:
    Over-Regulation..............................................   467
    Providers....................................................   468
    Rural Area...................................................   443
Incarcerated Beneficiaries, Medicare Payments for................   476
Information Technology................................567, 573, 666-669
Justifying User Fee Proposal.....................................   473
Legislative Mandates.............................................   568
Liver Transplants................................................   478
Long-Term Care Insurance.........................................   521
Lung Volume Reduction Surgery....................................   486
Managed Care:
    For Chronic Illness and Disabilities.........................   507
    System Redesign..............................................   494
Mandated Studies.................................................   498
Mandates, Legislative............................................   568
Mandates, Unfunded...............................................   520
Market-Basket Inflation..........................................   476
Market Basket Versus Wage Index..................................   477
Medicaid:
    Advanced Appropriation.......................................   509
    Amounts Available for Obligation.............................   660
    Appropriation Language.......................................   608
    Appropriations History Table.................................   657
    Authorizing Legislation....................................611, 656
    Background of Program........................................   611
    Benefit Services and Growth..................................   613
    Budget Authority by Activity.................................   611
    Budget Authority by Object...................................   659
    Composition of Population....................................   615
    Estimates of Grant Awards....................................   662
    Growth Rate..................................................   510
    Language Analysis............................................   609
    Managed Care.................................................   612
    Medicaid Requirements........................................   658
    Obligations..................................................   481
    Payments.....................................................   509
    Proposed Legislation.......................................624, 664
    Rationale for Budget Estimate................................   617
    Reform Demonstrations........................................   616
    School-Based Services......................................475, 515
    State and Local Administration...............................   621
    State Children's Health Insurance Program....................   620
    Summary of Changes...........................................   655
    Survey and Certification.....................................   624
    Unadjusted State Estimates...................................   661
    Vaccines for Children Program..............................623, 665
Medicaid Early and Periodic Screening............................   448
Medical Savings Accounts.........................................   442
Medicare+Choice:
    Payment Rates................................................   465
    Plan Withdrawals.............................................   441
Medicare & You Handbook..........................................   454
Medicare:
    Claims Processing Systems....................................   493
    Clinical Trials..............................................   505
    Education Program...........................................687-691
    Inquiries Funding............................................   505
    Managed Care System..........................................   504
    Payments for Incarcerated Beneficiaries......................   476
    Provider Number Costs........................................   516
    Provider Numbers.............................................   516
    Systems and Reform...........................................   518
    State Certification..........................................   430
    Trust Funds, Solvency of.....................................   436
Medicare Benefits................................................   670
Medicare Contractors......................................430, 523, 557
    Appeals......................................................   565
    Appropriation History........................................   574
    Authorizing Legislation......................................   557
    Budget Request...............................................   539
    Change in Configuration......................................   649
    Crosswalk....................................................   650
    Claims Processing............................................   564
    Enterprise-Wide Activities...................................   568
    Inquiries....................................................   565
    Legislative Mandates.........................................   568
    Method of Operations.........................................   557
    Ongoing Activities...........................................   561
    Operations...................................................   567
    Program Improvements.........................................   572
    Proposed Law User Fees.....................................555, 559
    Summary Table................................................   557
    Systems Maintenance..........................................   566
Medicare Integrity Program (MIP)...............................432, 678
    Activities...................................................   679
    Contracting Efforts..........................................   682
    Funding....................................................491, 682
    Proposed Changes.............................................   681
Medications, Coverage of New Anti-Psychotic......................   448
Mental Health, Parity of Coverage................................   446
National Medicare Education Program........................571, 687-691
Non-Profit and For-Profit Nursing Homes..........................   524
Nurse Anesthetist Rule....................................445, 450, 451
Nursing Home:
    Initiative...................................................   477
    Initiative Funding...........................................   495
    Inspections................................................451, 459
    Litigation...................................................   519
    Oversight Improvement Program..........................496, 590-591
    Transition Grants..........................................497, 591
Nursing Homes, Non-Profit and For-Profit.........................   524
Nursing Staff Shortages..........................................   452
Obstacles to New Treatments/Prevention Protocol..................   470
Opening Statement:
    For the Record..............................................416-435
    Oral........................................................413-415
Organ Procurement Organizations..................................   488
Organization Chart...............................................   530
Outcome and Assessment Information Set (OASIS).................458, 461
Over-Regulation of Hospice Care..................................   467
Paperwork Burden.................................................   525
Parity for Mental Health Coverage................................   447
Parity of Mental Health Coverage.................................   446
Payment Denial...................................................   456
Payment Disparities in Rural Areas........................437, 444, 457
Payments to Health Care Trust Funds........................426, 626-633
    Amounts Available for Obligation.............................   627
    Appropriation Language.......................................   626
    Budget Authority by Activity.................................   629
    Budget Authority by Activity (Permanent).....................   633
    Budget Authority by Object...................................   630
    SMI Premium Estimates........................................   631
    Summary of Changes...........................................   628
Peer Review Organizations........................................   685
Philadelphia Regional Office Contacts............................   439
Physician Regulatory Issues Team.................................   506
Physicians Accepting Assignment..................................   455
Poor-Performing Home Health Agencies.............................   481
Prescription Drug Benefit Program................................   518
Preventive Benefits, Suggestions for Additional..................   469
Preventive Care Benefits.........................................   450
Preventive Medicine, Cost Effectiveness of.......................   469
Privacy Regulation.............................................510, 623
Program Management................................427, 547-606, 639-654
    Amounts Available for Obligation.............................   639
    Appropriation Language.......................................   547
    Appropriation Summary Table (Current Law)....................   553
    Appropriation Summary Table (Proposed Law)...................   554
    Appropriations History Table.................................   645
    Authorizing Legislation......................................   646
    Budget Authority by Activity.................................   641
    Budget Authority by Object--2 Year...........................   642
    Budget Request...............................................   539
    Change in Configuration (Medicare Contractors)...............   649
    Detail of Direct Full-Time Equivalent Employment.............   647
    Detail of Positions..........................................   648
    FY 2002 PM Request--BBA......................................   652
    FY 2002 PM Request--BBRA.....................................   653
    FY 2002 PM Request--BIPA.....................................   653
    FY 2002 PM Request--HIPAA....................................   654
    Federal Administration......................................575-582
    Language Analysis............................................   551
    Legislation Summary (Proposed)...............................   555
    Medicare Contractors........................................557-574
    Medicare Contractors Change in Configuration.................   649
    Medicare Contractors Crosswalk...............................   650
    Medicare Survey and Certification Program...................583-591
    Proposed Law.................................................   639
    Research, Demonstrations and Evaluation.....................593-606
    Salaries and Expenses........................................   644
    Summary of Changes...........................................   640
    Voluntary and Involuntary Terminations (Medicare State 
      Certification).............................................   651
Proposed Law User Fees....................................450, 555, 559
Prospective Payment System.......................................   478
Provider:
    Communications...............................................   438
    Identification Numbers.......................................   441
    Reimbursement..............................................455, 563
Recertification of Home Health Agencies..........................   506
Relationships with Other Health Agencies.........................   471
Research Budget, Decreases in....................................   449
Research Data Assistance Center..................................   498
Research, Demonstratons, Grants & Evaluations..............429, 593-606
    Authorizing Legislation......................................   593
    BBA Mandated Research Projects...............................   605
    Budget by Program Area.......................................   595
    Budget Request...............................................   541
    Method of Operations.........................................   593
    Rationale for Budget Request.................................   594
    Summary Table................................................   593
Restraints.......................................................   521
Rural Areas:
    Hospice Care.................................................   443
    Payment Disparities...................................437, 444, 457
    User Fees in.................................................   473
Rural Representation.............................................   438
Rural Teleconsultation Requests..................................   502
Screen for Life Initiative.......................................   484
Shortage of Health Care Support Personnel........................   453
Significant Items:
    House Report................................................695-704
    Senate Report...............................................704-721
    Conference Report...........................................722-728
Solvency of the Medicare Trust Funds.............................   436
State and Local Health Departments...............................   472
State Children's Health Insurance Program (SCHIP)...............692-694
    Authorizing Legislation......................................   692
    Background...................................................   692
    Funding......................................................   693
    Recent Legislative Changes...................................   693
    Summary Table................................................   692
    Waivers......................................................   439
State Survey and Certification Budget............................   459
State Grant and Demonstration Program............................   684
Suggestions for Additional Preventive Benefits...................   469
Summary of Changes:
    Medicaid.....................................................   655
    Payments to Trust Funds......................................   628
    Program Management...........................................   640
Supporting HCFA's Efforts to Solve Problems......................   444
Survey and Certification Program................................583-591
    Authorizing Legislation......................................   583
    Budget Request...............................................   540
    Direct Survey Costs..........................................   585
    Method of Operations.........................................   583
    Nursing Home Oversight Improvement Program...................   590
    Rationale for Budget Request.................................   584
    Summary Table................................................   583
    Support Contracts............................................   589
Surveys and Certifications.......................................   507
Systems and Medicare Reform......................................   518
Systems Security.................................................   492
Telemedicine:
    And Graduate Medical Education...............................   507
    As a Covered Expense.........................................   474
    Funding......................................................   485
Ticket to Work...................................................   501
Unfunded Mandates................................................   520
Unprocessable Claims......................................474, 555, 559
Upper Payment Limit Loophole.....................................   522
User Fees........................................................   522
    Funding Through..............................................   428
    Justifying Proposal..........................................   473
    Medicare Contractors.......................................555, 559
    Program Management...........................................   639
    Proposed Law.................................................   450
    Rural Areas..................................................   473
    Vaccines for Children Program..............................623, 665
Workforce for the 21st Century...................................   490
Workforce Planning System......................................504, 543
Y2K Funding......................................................   486

                Administration for Children and Families

Administrative Costs.............................................   893
Child Care and Development Block Grant...........................   905
Concluding Remarks...............................................   911
Developmental Disabilities Complaint Procedure...................   900
Early Learning...................................................   894
Early Learning Opportunities Program.............................   903
Head Start:
    Head Start Population........................................   900
    Head Start Funding.........................................896, 898
    Head Start Applications......................................   901
    Head Start Mission...........................................   908
    Head Start Partnerships......................................   903
    Head Start Performance.......................................   897
    Head Start Services..........................................   895
    Hours in Head Start..........................................   902
    Relocating Head Start at the Federal Level...................   910
Judy Centers--Co-Locating Programs...............................   907
Justification of the FY 2000 Budget Estimates....................   995
Questions and Answers for the Record.............................   913
Role of Ms. Dawson...............................................   899
Witnesses........................................................   891

                        Administration on Aging

Aging Programs in other Countries................................  1570
Coordination with other Programs.................................  1569
Feedback from Aging Network......................................  1569
Funding Process..................................................  1567
FY 2000 Request..................................................  1567
Home Care/Institutionalization...................................  1570
Impact of Balanced Budget Amendment Reductions on Home Health 
  Care...........................................................  1573
Independent Living/Cost Savings..................................  1580
Information Dissemination........................................  1565
In-Home Supports.................................................  1567
Introduction of Witnesses........................................  1533
Justification....................................................  1590
Long-Term Care...................................................  1582
Long-Term Care Ombudsman.........................................  1587
Medication Management............................................  1566
Mental Health....................................................  1576
National Family Caregiver Support Program........1563, 1571, 1582, 1584
Nutrition Programs...........................................1575, 1585
Opening Statement................................................  1556
Program Flexibility..............................................  1568
Preventive Health Services...................................1564, 1576
Redefining Elderly...............................................  1571
Remaining in the Community.......................................  1569
Staffing.........................................................  1589
State Match......................................................  1564
Summary of Opening Remarks.......................................  1553
Supportive Services..............................................  1585
Unmet Needs............................................1568, 1575, 1579
Volunteers.......................................................  1565
Waiting Lists....................................................  1566

                                

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