[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]



 
 POST KATRINA HEALTH CARE: CONTINUING CONCERNS AND IMMEDIATE NEEDS IN 
                         THE NEW ORLEANS REGION

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


                                HEARING

                               BEFORE THE

              SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 13, 2007

                               __________

                           Serial No. 110-17


      Printed for the use of the Committee on Energy and Commerce

                        energycommerce.house.gov



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                    COMMITTEE ON ENERGY AND COMMERCE

                  JOHN D. DINGELL, Michigan, Chairman

HENRY A. WAXMAN, California          JOE BARTON, Texas
EDWARD J. MARKEY, Massachusetts          Ranking Member
RICK BOUCHER, Virginia               RALPH M. HALL, Texas
EDOLPHUS TOWNS, New York             J. DENNIS HASTERT, Illinois
FRANK PALLONE, Jr., New Jersey       FRED UPTON, Michigan
BART GORDON, Tennessee               CLIFF STEARNS, Florida
BOBBY L. RUSH, Illinois              NATHAN DEAL, Georgia
ANNA G. ESHOO, California            ED WHITFIELD, Kentucky
BART STUPAK, Michigan                BARBARA CUBIN, Wyoming
ELIOT L. ENGEL, New York             JOHN SHIMKUS, Illinois
ALBERT R. WYNN, Maryland             HEATHER WILSON, New Mexico
GENE GREEN, Texas                    JOHN B. SHADEGG, Arizona
DIANA DeGETTE, Colorado              CHARLES W. ``CHIP'' PICKERING, 
    Vice Chairman                    Mississippi
LOIS CAPPS, California               VITO FOSSELLA, New York
MIKE DOYLE, Pennsylvania             STEVE BUYER, Indiana
JANE HARMAN, California              GEORGE RADANOVICH, California
TOM ALLEN, Maine                     JOSEPH R. PITTS, Pennsylvania
JAN SCHAKOWSKY, Illinois             MARY BONO, California
HILDA L. SOLIS, California           GREG WALDEN, Oregon
CHARLES A. GONZALEZ, Texas           LEE TERRY, Nebraska
JAY INSLEE, Washington               MIKE FERGUSON, New Jersey
TAMMY BALDWIN, Wisconsin             MIKE ROGERS, Michigan
MIKE ROSS, Arkansas                  SUE WILKINS MYRICK, North Carolina
DARLENE HOOLEY, Oregon               JOHN SULLIVAN, Oklahoma
ANTHONY D. WEINER, New York          TIM MURPHY, Pennsylvania
JIM MATHESON, Utah                   MICHAEL C. BURGESS, Texas
G.K. BUTTERFIELD, North Carolina     MARSHA BLACKBURN, Tennessee
CHARLIE MELANCON, Louisiana
JOHN BARROW, Georgia
BARON P. HILL, Indiana

                                 ______

                           Professional Staff

                 Dennis B. Fitzgibbons, Chief of Staff

                   Gregg A. Rothschild, Chief Counsel

                      Sharon E. Davis, Chief Clerk

                 Bud Albright, Minority Staff Director

                                 ______

              Subcommittee on Oversight and Investigations

                    BART STUPAK, Michigan, Chairman

DIANA DeGETTE, Colorado              ED WHITFIELD, Kentucky
CHARLIE MELANCON, Louisiana              Ranking Member
    Vice Chairman                    GREG WALDEN, Oregon
HENRY A. WAXMAN, California          MIKE FERGUSON, New Jersey
GENE GREEN, Texas                    TIM MURPHY, Pennsylvania
MIKE DOYLE, Pennsylvania             MICHAEL C. BURGESS, Texas
JAN SCHAKOWSKY, Illinois             MARSHA BLACKBURN, Tennessee
JAY INSLEE, Washington               JOE BARTON, Texas, (ex officio)
JOHN D. DINGELL, Michigan, (ex 
officio)

                                  (ii)


                             C O N T E N T S

                              ----------                              
                                                                   Page
Barton, Hon. Joe, a Representative in Congress from the State of 
  Texas, prepared statement......................................     9
Burgess, Hon. Michael C., a Representative in Congress from the 
  State of Texas, opening statement..............................    16
DeGette, Hon. Diana, a Representative in Congress from the State 
  of Colorado, opening statement.................................     6
Dingell, Hon. John D., a Representative in Congress from the 
  State of Michigan, opening statement...........................    18
Green, Hon. Gene, a Representative in Congress from the State of 
  Texas, opening statement.......................................    16
Jefferson, Hon. William J., a Representative in Congress from the 
  State of Louisiana, prepared statement.........................    12
Melancon, Hon. Charlie, a Representative in Congress from the 
  State of Louisiana, opening statement..........................    15
Stupak, Hon. Bart, a Representative in Congress from the State of 
  Michigan, opening statement....................................     1
Whitfield, Hon. Ed, a Representative in Congress from the 
  Commonwealth of Kentucky, opening statement....................     5

                               Witnesses

Bertucci, Bryan, M.D., coroner/family physician, St. Bernard 
  Health Center, Chalmette, LA...................................    27
    Prepared statement...........................................   129
Cerise, Fred, M.D., M.P.H., secretary, Louisiana Department of 
  Health and Hospitals, Baton Rouge, LA..........................   103
    Prepared statement...........................................   148
DeSalvo, Karen, M.D., executive director, Tulane University 
  Community Health Center at Covenant House, New Orleans, LA.....    29
    Prepared statement...........................................   130
    Answers to submitted questions...............................   136
Erwin, Donald T., M.D., president and chief executive officer, 
  St. Thomas Community Health Center, New Orleans, LA............    32
    Prepared statement...........................................   138
    Answers to submitted questions...............................   144
Fontenot, Cathi, M.D., medical director, Medical Center of 
  Louisiana at New Orleans, New Orleans, LA......................    25
    Prepared statement...........................................   154
Franklin, Evangeline R., M.D., director of Clinical Services and 
  Employee Health, City of New Orleans Health Department, New 
  Orleans, LA....................................................     3
    Prepared statement...........................................   169
Hirsch, Leslie D., president and chief executive officer, Touro 
  Infirmary, New Orleans, LA.....................................    74
    Prepared statement...........................................   183
Koehl, Thomas, director, Operation Blessing Disaster Relief 
  Medical Center, New Orleans, LA................................    23
    Prepared statement...........................................   156
Lynch, Robert, M.D., director, South Central Veterans Affairs 
  Health Care, Jackson, MS.......................................    99
    Prepared statement...........................................   157
    Answers to submitted questions...............................   161
Miller, Alan, Ph.D., M.D., interim senior vice president for 
  health sciences, Tulane University Health Sciences Center, New 
  Orleans, LA....................................................    66
    Prepared statement...........................................   164
Muller, A. Gary, president and chief executive officer, West 
  Jefferson Medical Center Marrero, LA...........................    67
    Prepared statement...........................................   167
Norwalk, Leslie, acting administrator, Centers for Medicare and 
  Medicaid Services, Washington, DC..............................    97
    Prepared statement...........................................   198
Quinlan, Patrick, M.D., chief executive officer, Ochsner Health 
  System, New Orleans, LA........................................    69
    Prepared statement...........................................   171
Rowland, Diane, executive vice president, the Henry J. Kaiser 
  Family Foundation, Washington, DC..............................    21
    Prepared statement...........................................   210
    Answers to submitted questions...............................   231
Smithburg, Donald R., executive vice president, Louisiana State 
  University, chief executive officer, Health Care Services 
  Division, Baton Rouge, LA......................................    72
    Prepared statement...........................................   176
    Answer to submitted question.................................   181
Stephens, Kevin U., Sr., M.D., J.D., director, city of New 
  Orleans Health Department, New Orleans, LA.....................   105
    Prepared statement...........................................   173
Wiltz, Gary, M.D., chairperson, Region 3 Consortium Franklin, LA.    37
    Prepared statement...........................................   233
    Answers to submitted questions...............................   246


 POST KATRINA HEALTH CARE: CONTINUING CONCERNS AND IMMEDIATE NEEDS IN 
                         THE NEW ORLEANS REGION

                              ----------                              


                        TUESDAY, MARCH 13, 2007

              House of Representatives,    
                  Subcommittee on Oversight
                                and Investigations,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 9:30 a.m., in 
room 2123 of the Rayburn House Office Building, Hon. Bart 
Stupak (chairman of the subcommittee) presiding.
    Members present: Representatives Stupak, DeGette, Green, 
Inslee, Dingell [ex officio], Whitfield, Walden, Ferguson, 
Burgess, Barton [ex officio], and Blackburn.
    Staff present: John F. Sopko, Christopher Knauer, Kristine 
Blackwood, Scott P. Schloegel, Rachel Bleshman, Lauren 
Bloomberg, Alan Slobodin, Peter Spencer, and Krista Carpenter.

  OPENING STATEMENT OF HON. BART STUPAK, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    Mr. Stupak. I will call this hearing to order.
     Today we have the hearing on Post Katrina Heath Care: 
Continuing Concerns and Immediate Needs in the New Orleans 
Area.
     It has now been over a year-and-a-half since Hurricane 
Katrina touched land on August 29, 2005. Nearly a year ago, 
this subcommittee held a hearing in New Orleans to examine 
public health care conditions in the region. What we found then 
was a system overwhelmed with far more patient demand than 
capacity. Since that time this committee has continued to 
monitor and assess the ongoing health care needs faced by those 
in the New Orleans region.
    A few weeks ago, our majority and minority committee staff 
returned from the area to report on where health care stands 
today. Unfortunately, what our staffs found is that much of the 
region's health care structure still remains crippled and major 
problems remain unresolved. In the four worst-hit parishes of 
Orleans, Plaquemines, Jefferson, and St. Bernard, the loss of 
hundreds of thousands of homes and the closure of many health 
care facilities displaced thousands of physicians, mental 
health providers, nurses, dentists, obstetricians, lab 
technicians, and other allied health professionals.
    While estimates are that approximately half of the city's 
former residents have returned, it appears that many of those 
previously employed in the health care sector have found work 
elsewhere and may not return. Many specialists and support 
staff are in high demand in other parts of the country. This 
demand continues to place significant pressure on New Orleans' 
outpatient clinics and hospitals to attract needed medical 
personnel. At the same time, the region has experienced an 
influx of construction workers and day laborers who often lack 
insurance.
    Key hospital facilities remain destroyed or closed. The 
flagship hospital for the State-run public health system in 
downtown New Orleans was known as Big Charity. Big Charity was 
the predominant source of healthcare for the large percentage 
of poor and uninsured. It will never reopen in the old 
building, and a path to building a new hospital is littered 
with controversy and obstacles. In addition, privately owned 
Methodist Hospital and Chalmette Medical Center, which provided 
hospital services for residents east of the city, are closed.
    [Slide shown.]
    This is what these two hospitals look like today. We have 
one back here. Here we go. At Chalmette, we got what, about 
four of them?
    [Slide shown.]
    That is the Wal-Mart parking lot. You can see the trailers 
that are right there. We are providing some health care right 
now.
    [Slide shown.]
    And that is Methodist Hospital. There is a fence around it. 
It is not open for business but there is a fence around. It is 
hard to see. If that was a real hospital, you would see more 
than just two cars around there. Next facility? That is it? OK.
    Hospitals that were able to remain open during the storms 
or have since reopened continue to struggle with critical 
staffing shortages, rapidly spiraling costs, and inadequate or 
delayed reimbursement. These challenges are compounded as they 
treat New Orleans' poor and uninsured who were previously 
provided for by Big Charity.
    Many of today's witnesses have made tremendous personal 
sacrifice to help their community and its medical 
infrastructure recover while they cope with the loss of their 
own homes and neighborhoods. Along the way they forged many new 
and innovative partnerships. Their courage and heroism is an 
inspiration to us all. It is clear, however, that there is so 
much more to be done and soon.
    Our hearing today will focus on what the health care 
providers believe are the most urgent health care issues that 
need to be addressed in the short term. For example, as debate 
continues about when, where, how big, or even whether to 
rebuild a charity hospital in New Orleans, there is no 
consensus on how to cost-effectively deal with the growing 
number of uninsured and underinsured patients now flowing into 
the region. Many who were once able to rely on Charity Hospital 
must now turn to either University Hospital, which has only 100 
beds, or travel to other parts of the State for treatment at 
one of the State's other public hospitals. Traveling for health 
care is impractical for many residents, particularly given the 
transportation problem still plaguing the State. Others are 
seen by the region's private hospitals. However, aside from 
loading an uninsured with complications from diabetes into an 
ambulance and delivering him or her to an emergency room, the 
most expensive avenue of treatment, there is no way to allow an 
uninsured patient to easily access private care.
    Because Louisiana State law has directed that the bulk of 
the Medicaid disproportionate share, DSH, dollars go to the 
State Public Health Care System, significant challenges remain 
about how to allow the uninsured access to existing capacity 
while providing fair compensation to the doctors and hospitals 
that provide the care.
    Given that Big Charity is no longer viable and won't be for 
at least 5 to 7 years, access to health care for the uninsured 
and poor must be resolved. And while we must find a way to 
compensate those private hospitals that are currently providing 
care, we must also ensure that private hospitals shoulder the 
full spectrum of the uncompensated care patients, not just the 
healthiest. All this must be done in a way that is reasonably 
fair to both the institution and the taxpayers.
    Another area that must be addressed immediately involves 
the many outpatient clinics now providing critical safety-net 
care. Many of these clinics, including those that make up the 
PATH network, are seeing patients that otherwise would have 
little or no access to healthcare services. These clinics are 
filling critical health care needs where there was once a 
public hospital and clinic system. They also provide ambulatory 
and preventative care that would otherwise require an expensive 
trip to the emergency room.
    Nonetheless, more needs to be done to integrate these 
important health care providers into the existing hospital 
structure and reimbursement structure. For example, if someone 
with complications from diabetes shows up at a small primary 
care clinic, there is no formal way to refer him or her to the 
surrounding hospitals, particularly a private hospital other 
than placing the patient in an ambulance and sending him to the 
emergency room. If the patient is under- or uninsured, this 
makes the effort even more daunting. As these clinics are often 
working on small budgets comprised of donations and small 
grants, a formal mechanism to reimburse them for the care they 
provide must be explored. These clinics will play a significant 
role in providing care for the region's poor for the 
foreseeable future.
    Another area that needs immediate attention is the State's 
ability to train its own health care providers. The New Orleans 
region was a significant training center for the State's future 
doctors, nurses, and other health care practitioners. Since 
both of the primary teaching facilities, the Veterans Hospital 
and Big Charity, were destroyed, the region's two medical 
schools, LSU and Tulane, have struggled to keep their teaching 
programs together. And while LSU and Tulane have managed to 
hold many of their programs together by placing their students 
around the region in other hospitals, this stop-gap measure 
will only last so long.
    As reported to this committee by officials from both 
medical schools, key programs have already lost accreditation 
and others are now threatened. Shoring up the region's medical 
schools and teaching facilities is a significant urgency, and 
this alone will be a daunting task. A solid plan must be 
developed for LSU and Tulane so they can continue to train 
much-needed health care professionals.
    I want to talk for a minute here about the model that has 
been used so far to attempt to address some of the rather 
daunting health care challenges that have faced the region 
post-Katrina.
    Last year the Secretary of Health and Human Services asked 
the State to come up with a plan to fix the region's health 
care infrastructure including some of the issues I just raised. 
That process became known what is generally referred to as the 
Collaborative, and it is a very important chapter in the State 
and Federal Government's response to the region's post-Katrina 
health care needs.
    The Collaborative plan brought together a vast array of 
stakeholders, public and private, State and local, to find ways 
to restructure health care delivery system for the area's most 
affected by the storm. This area referred to as region 1 
encompass Orleans, Jefferson, St. Bernard, and Plaquemines 
Parish. While many of the participants in the Collaborative had 
significant differences of opinion, they worked hard to achieve 
consensus on some major points.
    Last October the Governor submitted the Collaborative plan 
to the Department of Health and Human Services. What came back 
from HHS just a few weeks ago appears to be a proposal that is 
very different in both size and scope than what the State sent 
to HHS. Instead of working on the various points of consensus 
and rolling out a pilot plan for region 1, HHS answered with a 
plan to replace Louisiana's statewide public health hospital 
system with what appears to be an insurance model. Putting 
aside the various HHS plans or one view on the State's public 
health care system, HHS's plan may simply be too ambitious at 
this point in the recovery process. Applying just some of the 
concepts of the Collaborative merely to region 1 would be 
difficult enough, but having Louisiana implement a sweeping, 
statewide redesign of its complex, publicly funded hospital 
system, may simply be unworkable in the current environment. 
While HHS may have good intentions in this effort, much smaller 
bites of the apple must be taken if we are going to provide 
access to health care in New Orleans.
    Unfortunately, the State and Federal Government now appear 
to be at an impasse. Instead of breaking off pieces of a 
complex health care system and forging ahead with ways to solve 
each piece, I fear that the State and Federal Government will 
become locked in a colossal fight of dooming spread sheets and 
armies of actuaries. Answering the question whether HHS 
proposal can work or would instead obliterate the safety net 
for hundreds and thousands of low-income residents across the 
whole State as Louisiana's Secretary of Health and Hospitals 
now suggest seems less important in the amount of time and 
energy that will be expended in this fight. Perhaps rather than 
one-size-fits-all plan, the Secretaries of Health for both the 
State and Federal Government should attempt to address smaller 
portions of this problem and provide health care of all the 
citizens in region 1.
    There is an old African proverb that goes something like 
this. When elephants fight, it is the grass that suffers. I am 
afraid that is where New Orleans region finds itself with 
health care today. Tremendous energy is already gone into 
attempting to solve the health care needs of the region.
    My admiration goes out to all the witnesses that are in 
this room today, those representing small clinics, those 
representing public and private hospitals, and those 
representing both the State of Louisiana and the Federal 
Government. Each of you has greatly contributed to keeping the 
region alive through your creativity and your countless hours 
of service. Nonetheless, I fear if you do not find new ways to 
work together on these issues soon, the health care situation 
in the region may grow worse.
    Let me be clear as to why we are here today. The hearing is 
not about pointing fingers, nor is it about attacking one 
another. I understand that many of you have very valid 
philosophical differences about how to get the job done; but 
frankly, you all work too hard to allow this ongoing effort to 
be balled into a bigger exercise of blaming one another for 
poor choices. Instead, I challenge you to use today's hearing 
as the opportunity to seek common ground.
    I am looking forward to hearing from each of you about what 
problems you think need immediate focus and some proposals for 
ways we might be able to work together, the Congress, the 
executive branch, State and local government, private and 
public providers, to address the health care needs of your 
region. Too many lives are counting on your collective efforts, 
and I intend to do my best to use this committee to play our 
small part.
    Let me conclude by again thanking every witness that will 
be testifying here today. Many of you have taken great expense 
to be here and have left your practices of providing needed 
health care to the region to be here. Your input and 
willingness to be here is boldly commendable and appreciated by 
us and the people in the New Orleans region.
    Let me also thank my colleagues on the other side of the 
aisle. Mr. Whitfield, you and many of the colleagues on both 
sides of the dais have been particularly gracious with your 
time and attention to this matter. Moreover, I want to thank 
our staffs for their excellent input they have provided into 
this inquiry. I look forward to working with all of you as we 
continue to stay involved in this critical matter.
     With that, I now yield to my good friend from Kentucky, 
Mr. Whitfield; and I would just remind our witnesses, we have 
four hearings this week in Energy and Commerce Committee. Mr. 
Dingell is overworking us and underpaying us, but Members will 
be coming in and out. So you will be seeing people coming in 
and out all day.
    And with that, Mr. Whitfield, great to be with you for your 
opening statement, sir.

  OPENING STATEMENT OF HON. ED WHITFIELD, A REPRESENTATIVE IN 
           CONGRESS FROM THE COMMONWEALTH OF KENTUCKY

    Mr. Whitfield. Chairman Stupak, thank you. And I also want 
to thank those witnesses who have come from the New Orleans 
area to testify today on this important topic. I would suspect 
that if there is any group that has been overworked and 
underpaid over the last few years it is this panel of 
witnesses, in fact, all three panel of witnesses; and we 
genuinely appreciate the great effort that you all continue to 
make in the New Orleans area.
    I remember January 2006 this subcommittee came to New 
Orleans and held a hearing on the state of health care delivery 
post-Katrina. And we know as I said earlier you have met many 
challenges that have been extremely difficult, and all of us 
have been amazed at the progress that you have been able to 
make in the New Orleans area, but we also understand that you 
have a long way to go. And from the testimony that I have read 
that will be given today, access to care continues to be 
limited with critical shortages of mental health, long-term 
care, and certain surgical services, private and community 
hospitals which stepped up to cover the care gaps created after 
the various hospital closures have been operating at a deficit 
under existing apparently inflexible State and Federal 
financing system, physician and other staff shortages, coupled 
with ongoing funding obstacle for these providers impede 
further expansion of health care options. A budding community 
health center system which I believe has great promise and 
maybe can even transform access to and the quality of health 
care, not only in New Orleans but around the country is one of 
the bright, shining spots I see.
    Failure so far to shore up the system raises a risk of a 
disintegration of the graduate medical education system in New 
Orleans, historically the source of most of the State's nurses 
and physicians. And meanwhile, hospitals and other health 
providers, local, State, and Federal health officials appear to 
be at an impasse over both short- and long-term plans for the 
region at this critical juncture.
    Obviously those of us on this subcommittee do not have the 
answers. Hopefully listening to your testimony we can come up 
with some short-term solutions to maximize the opportunity for 
a great health care delivery system in the New Orleans area.
    And as Chairman Stupak said, the only purpose of this 
hearing is to try to come up with some short-term answers to 
get the train back on the track for lack of a better term.
    So I want to thank all of you for being here. We look 
forward to your testimony, and we look forward to working with 
you to help solve the significant obstacles that still stand in 
your path.
    I yield back the balance of my time.
    Mr. Stupak. I thank the ranking member. Next, Ms. DeGette 
from Colorado, 5 minutes for opening statement.

 OPENING STATEMENT OF HON. DIANA DEGETTE, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF COLORADO

    Ms. DeGette. Thank you very much Mr. Chairman, and thank 
you in the whole committee for the continuing efforts to keep 
this issue of Hurricane Katrina on top of our agenda.
    While the hurricane now was a year-and-a-half ago and while 
the country poured out its heart to those affected by the storm 
right after it was hit, attention has now been diverted to 
other issues. But for this committee and for the sake of those 
committed to rebuilding New Orleans the way it was, we have a 
duty to continue to engage on this issue.
    I have been down to New Orleans twice looking at health 
care issues. In January 2006, this subcommittee looked at the 
damage put to the health care infrastructure of the city of New 
Orleans. Put simply, and as we saw from some of the slides, the 
media did not do it justice. The interior of Charity Hospital, 
which was once the keystone of the city's health care safety 
net, was completely destroyed. Medical records were rotting, 
mold was growing on the wall, medical equipment was strewn 
everywhere, and I can honestly say I have never seen anything 
like it.
    During our field hearing the next day, I was gratified to 
hear about the efforts of some of the city's private hospitals 
to provide care to those who would otherwise seek aid at 
Charity. These hospitals, having suffered less damage and 
having insurance, were able to return to service much more 
quickly, and they stepped up to fill a need. The next time 
after that I was in New Orleans, I found that these hospitals 
were still fulfilling the need; but as that turned out, of 
course, the role these hospitals played was only temporary.
    During the first hearing, I asked the panel of the private 
hospitals if their long-term business plans included providing 
care to the population previously served by Charity; and 
everybody got a look of shock on their face and said, no, that 
was not in their business plan for assuming the care of 
Charity's patients in the long term.
    So Mr. Chairman, as we examine plans for the longer-term 
revitalization of the health care infrastructure of New 
Orleans, I look forward to hearing from our witnesses about 
putting in place a health care system that is permanently going 
to provide for health care for indigent patients. And frankly, 
while we are looking at long-term plans for New Orleans, we 
can't overlook those who are in need of health care services 
right now. Right now we have a patchwork and we have in our 
notebooks--and I know there is a map over there of the ad hoc 
system that has grown up in New Orleans. We need a thoughtful, 
long-term approach to deal with this. Otherwise, there will be 
nobody in place in 10 years to serve once the grand redesign 
has been put into place.
    Now, frankly, the city faces the chicken and egg problem 
because medical professionals are needed in the community to 
provide care to those rebuilding the city while those medical 
professionals need a place to live and get paid for the 
services they are providing.
    I want to hear from our witnesses today about how we might 
encourage physicians and nurses to return to the city and 
provide health services as they once did. Otherwise, the best 
reimbursement system will fail.
    After Hurricane Katrina hit New Orleans, the response from 
the Federal, State, and local governments was at best an 
uncoordinated mess. Public servants from all levels of 
government worked courageously to meet health care needs of 
thousands throughout the city. But policymakers failed to 
maximize resources to address the immediate needs of patients 
and did not plan for how to bring the health care system back 
on line quickly. Instead of fixing the problem now, we more 
often see our elected officials and appointees squabbling.
    And so as the chairman said, the time has come for all of 
us to put aside our differences, roll up our sleeves, and 
develop some consensus solutions. The people of New Orleans 
have suffered greatly, and it is our job to make their lives 
better.
    One thing I just want to mention, I am deeply concerned and 
have been all along about what we do about establishing a long-
term level one trauma center in New Orleans because the last 
few times I was down there they didn't have one. Now we have 
one operating, but as I understand it has only 100 beds. This 
will not suffice for the long-term future, and we are going to 
need to grapple with how we come up with a cohesive health care 
system in New Orleans that serves all the patients that need to 
be served in a rapid and technologically advanced way.
    So I hope our witnesses have some ideas on this. I want to 
thank you again, Mr. Chairman, for holding this next in a 
continuing series of hearings, and I yield back.
    Mr. Stupak. I thank the gentlewoman. Next turn to Mr. 
Barton, ranking member of the committee. Mr. Barton, I 
appreciate your continued interest in oversight investigations. 
I know you were a chair a one time, and I certainly appreciate 
your continued interest.
    Mr. Barton. Thank you. Thank you, Mr. Chairman. I will 
submit a written statement. For the record, we support this 
hearing. We had a field hearing on this issue in New Orleans in 
the last Congress. We plan to continue to work on a bipartisan 
basis.
    I will say I think you have set a record for most witnesses 
at one oversight hearing. We have 17 and I believe that beats 
the record of the last Congress, but we will get to the bottom 
of it.
    I yield back.
    [The prepared statement of Mr. Barton follows:]
    [GRAPHIC] [TIFF OMITTED] 36572.001
    
    [GRAPHIC] [TIFF OMITTED] 36572.002
    
    Mr. Stupak. It was not the number of witnesses, it is the 
number of problems we are facing.
    Next we will go to Mr. Melancon from Louisiana.
    Mr. Melancon. Thank you, Mr. Chairman. If I could, I would 
like to request by unanimous consent a statement from 
Congressman Jefferson and one from Louisiana Recovery Authority 
be added into the record?
    Mr. Stupak. Without objection it will be added.
    Mr. Melancon. Thank you, sir.
    [The prepared statement of Mr. Jefferson follows:]
    [GRAPHIC] [TIFF OMITTED] 36572.003
    
    [GRAPHIC] [TIFF OMITTED] 36572.004
    
    [GRAPHIC] [TIFF OMITTED] 36572.005
    
OPENING STATEMENT OF HON. CHARLIE MELANCON, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF LOUISIANA

    Mr. Melancon. First, I would like to welcome all witnesses 
today and thank them for the time they have taken to come to 
testify. I would also like to thank you, Mr. Chairman, for 
dedicating the committee's time and the resources to the Gulf 
Coast health care crisis.
    I am glad to see Congress take another step towards living 
up to its commitments that we have made in August 2006 on the 
Katrina-Rita Task Force Trip to the Gulf Coast.
    A year-and-a-half has passed since Hurricane Katrina made 
landfall, and south Louisiana's health care system remains in 
crisis. There is no doubt that our health care system faces 
serious long-term challenges, but today we are here to focus 
our attention on the immediate needs. Our objectives are 
simple. We want to help enhance the region's capacity to take 
care of the patients' immediate needs and want to help the 
region demonstrate a level of care and quality that will bring 
our people back.
    Achieving these objectives requires us to understand what 
resources are needed. Today's testimony will help the committee 
to grasp and meet those needs. To explain the situation in 
detail is outside the scope of this opening statement, but just 
to give you some examples, our primary caregivers are few and 
far between, hospitals are filled to capacity with many who 
have not received basic primary care in over a year, the number 
of uninsured has hit an all-time high. In a recent Times-
Picayune article, the average wait time in the emergency room 
at Touro Infirmary was 6 to 8 hours. That is about the same 
time it takes to drive from New Orleans to Houston or Atlanta. 
In Chalmette, Louisiana, there isn't even a hospital to wait 
in; rather people line up outside tents in front of the Wal-
Mart or what used to be the Wal-Mart to receive health care 
services that are still being provided.
    I hope that today's hearings help us identify our short-
term challenges. I also want to use this opportunity for all 
stakeholders in the region to sit down together and talk with 
each other, rather than at each other. I want to remain focused 
on finding common ground. Everyone in this room has been called 
to serve the people, either through medicine or public service. 
We should remain focused on the common ground of serving the 
people as we continue our conversations over the next several 
months.
    I want to again thank the witnesses who have come here 
today, and thank you for your continued and dedicated service 
in providing good health care to the people of the disaster-
ridden area. And again, I would like to thank Chairman Stupak 
for his persistence and his tenacity. He has given me assurance 
that this subcommittee will revisit the Gulf Coast health care 
crisis as many times as it may be needed until we find 
solutions.
    I look forward to working with you to resolve the important 
issues and get our health care system back running in a way 
that it should be.
    Thank you, Mr. Chairman. I yield back for time.
    Mr. Stupak. I thank the gentleman. Up next, Mr. Walden.
    Mr. Walden. Thank you, Mr. Chairman. I just wanted to 
welcome our witnesses. I don't have an opening statement this 
morning. I look forward to hearing from them, and I yield back.
    Mr. Stupak. Mr. Green from Texas, opening statement?

   OPENING STATEMENT OF HON. GENE GREEN, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF TEXAS

    Mr. Green. Thank you, Mr. Chairman. I would like to have my 
full statement placed into the record and just briefly say that 
it continues to shock us. I have a district in Houston, and 
knowing what our neighbors in Louisiana and New Orleans have 
gone through and to see that the status of the health care 
where there are no public hospitals and the number of people 
who have a disproportionate share of the private, for-profit 
hospitals weren't picking it up, obviously there has to be a 
lot of changes in it. And Mr. Chairman, I am glad we are having 
this hearing, and hopefully we will follow up with legislation. 
I serve on the Health Subcommittee, so I would like to see how 
we could deal with it. On a personal note, in Houston after 
Katrina or during Katrina, we received over 100,000 Katrina 
evacuees, in fact, estimates up to 250,000; and I was so proud 
of what our community did on very short notice, the for-profit 
hospitals, non-profit, plus our public hospitals coming 
together and working side by side when the rest of the year 
they compete every day but it worked.
    I have to admit, Mr. Chairman, we got some commitments from 
the Federal Government because Texas is not known as a high 
expense Medicaid State. In fact, our match is much more than 
what Louisiana was. We did get Federalized the State/local 
match. The problem is there were lots of commitments made on 
that Labor Day of 2005 but it didn't work out. It is 
frustrating.
    And so I hope our Oversight Committee can bring to life 
what we need to do, plus look at legislative solutions so when 
this happens again, because this year it could be Houston where 
we may be going to New Orleans, in all honesty. I hope that is 
not the case, but looking at your infrastructure, we still have 
to build a lot there.
    But there but for the grace of God goes any of us who live 
along the Gulf Coast or the east coast of the United States, so 
I am glad you are having this oversight. Thank you.
    Mr. Stupak. Thank you, Mr. Green.
    Next I go to Mr. Burgess from Texas. Mr. Burgess, opening 
statement?

OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A REPRESENTATIVE 
              IN CONGRESS FROM THE STATE OF TEXAS

    Mr. Burgess. Thank you, Mr. Chairman. Again, I thank you 
for calling this hearing today.
    We have all read a lot about what happened down in the Gulf 
Coast. We all have questions about preparedness, we all have 
questions about the adequacy of the response. Most explosive 
have been the issues surrounding the three catastrophic events 
that occurred the day that Katrina hit the Gulf Coast. We had 
the wind damage, you had damage from the surge down in 
Plaquemines and Port Chalmette, and then the levee breach that 
affected both West Jefferson and the city of New Orleans 
itself.
    Responsibility rests at every level of government. The time 
has certainly passed for fixing blame; but today in this room, 
in this committee we must focus on not only what destroyed the 
health care community, the extent to which it has recovered and 
can recover in the future, and how to prevent this from ever 
happening again.
    In October 2005 I visited both Orleans and Jefferson 
Parishes. The people there were very kind to me and welcome me 
into their community. It wasn't really an official visit, but I 
wanted to see for myself the physical damage to the buildings 
and the property; and most important to me is what was 
happening in the level of the local practitioner in the health 
care community.
    Let me put my opening statement into three principles, the 
most important is having a plan in place in case a disaster 
threatens. The case in point, I think the gentle lady from 
Colorado already addressed, the difference between HCA's 
hospital implementation of an emergency plan and essentially 
the lack of a plan across the street at Charity Hospital. 
Across the street from each other the differences and outcome 
were astronomical. One stands today, and today as we sit here 
in this committee we wonder if one of the venerable old 
institutions in medicine will ever be what it once was again, 
Charity Hospital.
    [Slide shown.]
    There is a slide up there. Actually, this is the correct 
slide. The obvious need for electronic medical records. It is 
amazing how a small electronic device can keep health records 
of thousands of individuals safe from destruction.
    [Slide shown.]
    This is a photograph from our visit, our field hearing last 
January to Charity Hospital. This is the records room; and as 
you can see because of the extent of the mold damage and water 
damage to those records, very little useful data will be able 
to be gleaned about anyone's ongoing medical care.
    This committee has the oversight capabilities to encourage 
and set regulations to move the use of medical records along, 
and I believe we should.
    And just parenthetically, Mr. Chairman, I will add that 
yesterday I was at Walter Reed Hospital here in Washington and 
the same issue came up. We all heard the great things the 
Veterans Administration is doing with their electronic medical 
records, but apparently the DOD medical records don't 
communicate with the VA medical records and that remains a 
problem for our soldiers who are on medical hold or are looking 
to get out of the military for medical reasons.
    Just after Katrina passed, many displaced individuals, 
thousands with severe medical illnesses were uprooted and moved 
to various places, some to my district in Texas. The Tarrant 
County Resource Connection in Ft. Worth where one of my 
district offices is located was a recipient for some people who 
had to leave New Orleans. We worked with the local American Red 
Cross to prepare for the busloads of citizens to arrive. When 
they did arrive, many were in quite fragile medical condition. 
You can imagine my concern when I got a call from a staff 
member who asked me if a lady had a C-section, how soon could 
she sleep on the floor. Why do we need to know this? Well, we 
have a lady here who had a C-section yesterday, and we don't 
have enough cots for her. The really bad part of that story was 
at the time, no one had any idea to the hospital to which her 
baby was evacuated. It took us several days to ascertain that.
    The medical community in north Texas did rise to the 
occasion both in Tarrant, Denton, and Dallas Counties and did a 
wonderful job with helping people; but the fact is, it should 
never have been necessary for them to respond in such an 
emergent fashion.
    The final principle is that I want to discuss in this 
hearing is actually set out a plan of action. We are focusing 
on the achievable and the desirable. We have a tendency in 
Congress to simply debate problems forever, but this hearing 
needs to be about solutions and the follow-through. 
Specifically it was well-documented that after Katrina the 
medical community in New Orleans was not recovering, the 
medical professionals were unable to care for individuals, they 
lacked funding and resources to actually assist those in need. 
The disaster medical assistance teams flown in from around the 
country did a great job. The reality was if they hadn't been 
there to set up on the grounds of some of the hospitals, the 
waits for emergency treatment were in excess of 24 hours, 
sometimes for something as minor as an ankle sprain or as major 
as a heart attack. Any major disaster, a bus crash or fire that 
might affect five or more people, would greatly benefit from a 
level one trauma center; and New Orleans lost their trauma 
center. Now that means if a bus crash occurs, the lives of many 
more could be jeopardized where they would have to go over 2 
hours to the nearest trauma center.
    The effects are ongoing, Mr. Chairman. We cannot continue 
to just debate and point fingers. This committee must make 
specific goals to instigate change. We must also accept 
responsibility to continue our oversight. I would recommend 
quarterly hearings on this subject and at least once a year in 
the city of New Orleans itself.
    As we begin today's hearing, I am hopeful that we will all 
keep in mind that this is about helping to mitigate future 
disasters and ensuring that the best health care is available 
to those in the greatest need, even in the gravest of times.
    Thank you, Mr. Chairman. I will yield back.
    Mr. Stupak. I said earlier we have about three or four 
hearings this week in committee, that you are overworking us 
and underpaying us. But I see you are here with us today. 
Thanks for coming.

OPENING STATEMENT OF HON. JOHN D. DINGELL, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    The Chairman. Mr. Chairman, you are most gracious. I want 
to commend you for the outstanding job you are doing and also 
to thank you for holding a very important hearing here today. I 
want to acknowledge also the contributions and hard work on 
this hearing made by the distinguished ranking member of this 
subcommittee, Mr. Whitfield, as well as that of our friend and 
colleague, the ranking member of the full committee, Mr. 
Barton.
    Nearly 18 months after Hurricane Katrina, major problems 
remain on how to care for the region's many residents who are 
trying to rebuild their lives or return to their homes. I fear 
we are now on the verge of turning the Nation's largest natural 
disaster into the Nation's largest man-made disaster. Private 
hospitals are bleeding red ink. There is still no agreement on 
how to or even if to rebuild Big Charity, the Nation's primary 
public hospital.
    The Department of Veterans Affairs has proposed to 
collaborate with that effort, but now there is disagreement as 
to what role they should play and where the new VA hospital 
should be located or even if they should remain a partner in 
the deal with Charity.
    If no one draws a line through the center of the city, it 
reveals that there is no functioning hospital which exists east 
of that line. Chalmette, east New Orleans, St. Bernard Parish, 
all remain without a medical facility. Residents there rely on 
a few small overworked and overwhelmed clinics where there are 
health care needs. Many nursing homes remain closed. There is 
acute shortage of nurses for the entire area. There are 
virtually no beds in the region for those needing detox 
treatment. Caring for the mentally ill remains exceptionally 
challenging as many psychiatrists and other mental health 
specialists have left the region. And at best, there are few 
beds to house such patients.
    Those doctors who are trying to remain in the region often 
encounter difficulty in obtaining reimbursements for services 
to either patients or hospitals. Many have already left but 
others may be soon forced to do likewise because they cannot 
afford to remain there because of financial problems.
    The situation here then is bleak. It is therefore to the 
third panel, the government panel, that I will direct the rest 
of my statement.
    Without a doubt you have all put significant energy into 
trying to solve these problems. Your efforts are appreciated, 
especially for the untold hours that you have dedicated to this 
cause. Nevertheless, it is clear that things are not working. 
Let me provide an example.
    Secretary Leavitt asked the State of Louisiana to provide a 
plan on how to rebuild the Nation's health care infrastructure. 
Though much of the disagreement was encountered, the difficult 
decisions were presented and made. The State and its various 
stakeholders, public and private, held up their side of the 
bargain and they produced a plan.
    That plan, known as the Collaborative, was transmitted by 
the Governor of Louisiana to Secretary Leavitt on October 20, 
2006, about 6 months ago. The State's plan called for a series 
of pilot projects in region 1 where the devastated parishes are 
located in and around New Orleans. What Secretary Leavitt sent 
back is not even a formal plan. It is a loose confederation of 
spreadsheets and bullet points. It asks the State to 
disassemble its statewide public hospital system and replace it 
with some form of insurance program, a most curious 
consequence.
    There are almost no specifics in the plan, and at least 
none are available to the public. There is not even a formal 
publication from the Secretary to the Louisiana Governor that 
this committee could review, despite the requests of this 
committee to obtain such a document; and we will again, at the 
appropriate time, ask the Secretary to make such document 
available to the committee. The State of Louisiana now counters 
that the HHS proposal will not work.
    Now, I do not bring these points up to point fingers but to 
suggest that we are now facing a deadlock between two very 
important players who are needed to solve these problems. If 
not fixed quickly, the next 6 months will be spent on dueling 
spreadsheets. Simply put, the plan proposed by Secretary 
Leavitt, regardless of your opinion of the State's system, is 
simply too large of a task to undertake at this time. Even if 
adopted, it will not address the immediate problems faced by 
patients and the practitioners in this region.
    I therefore call on the Secretary of Health and Human 
Services and the Louisiana Secretary of Health and Hospitals to 
immediately convene a series of meetings to re-energize the 
next steps on how to move forward. Both are at an impasse and a 
serious one at that. If not corrected, this situation will 
jeopardize not only progress that has been made on the ground 
but also the future of the region, and I would note that this 
committee will be having further hearings to bring the 
Secretary and others before us to explain what they are doing 
and whether progress has been made as a result of these 
hearings today.
    Mr. Chairman, I want to congratulate you and commend you 
for what you have done today. I suggest that you consider 
holding the additional hearings that are needed on this matter. 
I believe the committee can and should work with and hold 
accountable if necessary the public entities that are 
responsible for providing leadership in this important area.
    Thank you, Mr. Chairman, I appreciate your courtesy.
    Mr. Stupak. I thank the gentleman.
    Mr. Whitfield. Mr. Chairman?
    Mr. Stupak. Mr. Whitfield.
    Mr. Whitfield. Mr. Chairman, Congresswoman Blackburn 
officially became a member of the Energy and Commerce Committee 
last night, and she will be a member of the Oversight and 
Investigation Subcommittee but will not be a member until 
Thursday. And she is very much interested in the topic of this 
hearing today, so I ask your unanimous consent that she be 
allowed to participate in this hearing today.
    Mr. Stupak. Hearing no objections, that will be granted. 
Mrs. Blackburn will be allowed to participate in this hearing. 
She was actually with us in New Orleans a year ago when we had 
the hearing, so it is good to have her back.
    Earlier today Mr. Melancon asked me to put two statements 
in the record. Congressman William J. Jefferson, he is a Member 
from the New Orleans area. We will accept that statement. The 
other statement, though, on behalf of Louisiana Recovery 
Authority we cannot accept. This is oversight investigations. 
It would not be subject to any kind of cross-examination or any 
type of questioning from this panel, and each group that wants 
to put in a statement we cannot accept. It would just clutter 
the record. We want to keep ours clear.
    If the gentleman wishes to refer to it throughout or if any 
Member wishes to see it to refer to it throughout this hearing 
today to ask a question to a witness, to pose a question from 
it, we will accept it for that purpose only.
    With that, we have our first panel up. I ask the panel--
this is an Oversight Investigation Committee as I indicated. It 
is tradition here that we swear the witnesses.
    [Witnesses sworn.]
    The record should reflect all witnesses indicated positive 
that they understand they are under oath. They are now under 
oath. We will begin with our first opening statement by Ms. 
Rowland, recognized for 5 minutes for your opening statement.

STATEMENT OF DIANE ROWLAND, EXECUTIVE VICE PRESIDENT, THE HENRY 
    J. KAISER FAMILY FOUNDATION, EXECUTIVE DIRECTOR, KAISER 
    COMMISSION ON MEDICAID AND THE UNINSURED, WASHINGTON, DC

    Ms. Rowland. Mr. Chairman, members of the subcommittee, I 
am honored to participate today in this important hearing to 
assess the state of health care services in New Orleans 18 
months after Katrina and hope to help frame some of the issues 
before you today.
    Louisiana, we need to recall, before Katrina was one of the 
poorest States in the Nation with over a quarter of its 
residents living in poverty. It ranked at the bottom of most 
health statistics in terms of the States of the Union with 
higher rates of diabetes, heart disease, AIDS, infant 
mortality. It had limited public and private coverage, leaving 
one in five of its residents uninsured. But clearly, this was a 
State with severe health care needs. It provided for those 
needs through a two-tier system, private doctors and hospitals 
for the insured and a State-run charity hospital system for the 
poor and uninsured, financed largely through Medicaid 
disproportionate share hospital payments.
    That made care in New Orleans for the poor and the 
uninsured hospital-centered and based and Charity the source of 
most of the inpatient services, psychiatric services, specialty 
care for the low-income population. Katrina and the flooding 
that subsequently happened destroyed the infrastructure as well 
as the structure for care of the uninsured in New Orleans. You 
have all gone through the very many hospitals that had to 
close, the loss of the workforce.
    We have been doing survey work in New Orleans trying to 
understand what the needs of the health care population there 
are, and in October 2006 our household interview survey in the 
New Orleans area revealed continued high rates of uninsurance, 
problems with access to care, and the fact that 90 percent of 
our respondents did not feel there were enough services, 
hospitals, clinics, medical facilities in the New Orleans area 
to meet their needs and that it was one of the most troubling 
factors in their decision of whether to return to New Orleans 
or to stay in New Orleans.
    There are severe challenges to the workforce shortages and 
the limited hospital and clinic financing, critical shortages 
of mental health services, and psychiatric beds with the 
closure of Charity. There is a growing uninsured population, 
both as people have lost their job base coverage but also with 
the new labor force coming into the city. And there has been 
delayed assistance from the Federal Government to support 
community-based care and troubling negotiations that continue 
over how to rebuild the system.
    There are steps, however, that could be taken now to help 
restore some of the services to the Louisiana area and to 
improve access to care and give residents the confidence they 
need to have their health services available.
    First and foremost is to maintain the Medicaid and LaSCHIP 
coverage, the SCHIP program for children in Louisiana, and 
hopefully in your reauthorization of SCHIP, to continue to 
provide the funds there so that the children of Louisiana can 
get their care. But more importantly, immediately you can raise 
the eligibility levels or the State can move to do that, to 
provide Medicaid assistance to more of the low-income adults 
who currently don't qualify for Medicaid because the income 
eligibility level remains set at 20 percent of the Federal 
poverty level, or $3,000 a year.
    Second, you need to rebuild the capacity in the city. 
Health care coverage can help that by putting the dollars into 
the providers from the patients as they seek care, but 
additional incentive payments are needed to recruit back a 
workforce; and you can also look at provisions in the Medicare 
statute that would extend the reimbursement for extraordinary 
labor costs that can come through the Medicare program to help 
improve the financing for the hospital system.
    But most importantly as I am sure this panel will tell you, 
you need to develop secure financing for the emerging 
development of community-based care that can help move the care 
out to where the patients are and can help to provide early 
access to primary and preventative services that can deal with 
the chronic illnesses that face so many of the individuals in 
New Orleans.
    So in sum, I think you need to really look at how to put 
services in place, and financing is a very important piece of 
that. There needs to be greater flexibility over the use of the 
already-allocated DSH funds, more direct Federal assistance 
through the use of the discretionary fund that remain 
uncommitted from the Deficit Reduction Act, help build access 
to care and to support some of the community development. The 
Social Services Block Grant that has been so critical to 
extending psychiatric services is about to run out. It could be 
extended to provide additional resources there to help rebuild 
the capacity to deliver mental health services, and you may 
well need to look at supplemental appropriations to provide 
more of the on-the-ground services that are required.
    As your panelists will tell you today, the needs are real, 
the commitment to provide services is extraordinary among those 
who have been working in the trenches for so many months to 
help restore coverage, but the resources are not there on the 
ground to let them do the job they need to do.
    I hope that this hearing will help move us forward to 
address those deficits and to give the people of New Orleans 
the health care services they need and deserve.
    Thank you very much, and I will welcome your questions.
    [The prepared statement of Ms. Rowland appears at the 
conclusion of the hearing.]
    Mr. Stupak. Thank you, Ms. Rowland. Mr. Thomas Koehl, 
director, Operation Blessing Disaster Relief Medical Center. 
Sir, for 5 minutes you are recognized.
    Mr. Koehl. Thank you. I would like to show a video first.
    Mr. Stupak. Sure.
    [Video shown.]

    STATEMENT OF THOMAS KOEHL, DIRECTOR, OPERATION BLESSING 
                            DISASTER

    Mr. Koehl. My name is Thomas Koehl. I work for Operation 
Blessing, a humanitarian relief organization that responds to 
both domestic and international disasters.
    Among other activities, as you have seen, we provide a free 
medical/dental clinic in New Orleans. We presently see 75 to 
100 patients a day with a staff of volunteer doctors, nurses, 
nurse practitioners, and physicians assistants.
    In the past 11 months we have provided health care for 
15,000 patients and provided over 25,000 free prescriptions to 
these residents of the stricken city.
    These residents were pulled from the rooftops, they waded 
in water, they spent days sweltering in the heat on highway 
overpasses and in the Superdome. They are a never-before-seen 
American. Over 100,000 newly made poor, helpless, homeless, and 
marginalized. Our task, should we not forget it, yours and 
mine, is to relieve their suffering.
    When Katrina struck, it washed away their homes, their 
jobs, and their health care but did not wash away their high 
blood pressure, their diabetes, or their other chronic 
illnesses.
    The need for health care is so great that at our clinic 
every weekday morning at 3:00 to 4:00 in the morning the line 
begins. Grandmothers, single mothers with sick children, entire 
families waiting in the cold and waiting in the dark for a 
health care provider.
    The need was so great that as you saw on our video, 
Operation Blessing recently partnered with Remote Area Medical, 
International Medical Alliance, the New Orleans Health 
Department, and the Louisiana Department of Health and 
Hospitals to host this medical recovery week.
    On the very first morning of this event, I met a man named 
Mike in our triage area. He had made his way through the maze 
of tents concentrating on staying warm and keeping his place in 
line. He was one of hundreds who had arrived in the pre-dawn 
hours. I asked Mike when he had arrived. He had gotten in line 
at 10 p.m. the night before. I asked him why he was there, and 
he said, I am a diabetic and I am out of insulin. I have been 
out for months, and I can't find anyone who can help me.
    Like thousands of others returning as evacuees from the 
hurricane, Mike had returned to a city where health care was 
limited and the majority of residents are now uninsured. On 
this day, he along with 600 other patients received free 
medical care.
    We brought in more than 400 doctors, dentists, and nurses 
from across the country with a total of 891 volunteers to 
provide 9,000 medical services to more than 3,000 patients by 
week end. These services included dental work, eye exams, free 
glasses, primary health care, OB/GYN services, diabetic care, 
pediatric, and cardiology care.
    To accommodate the influx of patients, we set up 20,000 
square feet of tent space to serve as additional exam rooms.
    This is simply a larger version of what we do every day in 
New Orleans. For Mike, help was as simple as giving him one 
blood glucose meter to test his blood sugar and a vial of 
insulin. This is what he needed to survive, was a little bottle 
of insulin and he couldn't get anyone to help him.
    Our patients still, 18 months after Katrina, get in line 
before daylight every day. Over 50 percent have high blood 
pressure. 30 percent of those with high blood pressure come to 
our door in crisis with blood pressure so high they cannot be 
managed. 26 percent of our patients are diabetic. Many walk 
through the door daily with blood sugar so high they cannot be 
measured by the instruments that we have. Two to three patients 
per week come through the door and have not had their insulin 
since Katrina. They just heard about us and just showed up at 
our door because no one would help them. Patients are turned 
away from the free clinics and turned away from the hospitals 
because they are at capacity every day.
    These citizens are not what you classically think of when 
you think of indigent patients. These citizens, just 18 months 
ago, owned their own homes, worked full time, went to their 
children's band performances and volunteered in their 
community. They were just like you and your neighbors, people 
you would invite over to your home for dinner.
    Would you feel comfortable if your neighbors had to stand 
in line all night in the cold to see a doctor? Or would you 
feel comfortable if they had to be sent to a hospital in an 
ambulance where they were told they had to wait in the 
ambulance 4 to 5 hours before being admitted into the emergency 
room because the emergency room was so overcrowded? The 
question then is who is your neighbor? Who is my neighbor? Is 
it just the family whose grass meets ours or should we be 
concerned about those Americans we have not yet met?
    This population is our modern-day Job. They have lost their 
loved ones, their homes, their cars, their jobs, and their 
insurance. According to the local newspaper, we now have 
127,000 uninsured residents in greater New Orleans. They see 
others profiting from a disaster in which they lost everything, 
including their faith in a system which had promised them 
health care, insurance, pensions, and most importantly, 
protection.
    The video said that Dr. Steven's office in New Orleans has 
stated that the death rate is 48 percent higher per capita now 
than it was before Katrina. The infant mortality rate is five 
times higher now than before Katrina. And the level of 
depression is present now in rates never before seen in the 
United States. This depression and stress act to worsen and 
exacerbate the individual health care issues and disease 
process.
    We are here to discuss what needs to be done going forward. 
I would ask you to build a system where it is easier for non-
profit agencies to operate in the disaster-stricken area. 
Operation Blessing can provide its own infrastructure but many 
non-profits cannot. Please build a system where they can 
operate.
    Create a system where doctors and nurses that pass national 
boards and exams are allowed to come and practice in a State 
that is under a disaster notice. Last week, the State of 
Louisiana Board of Nursing declared they would no longer allow 
volunteer nurses from other States to come in and work. They 
said they did not need them.
    Again, our patients get in line at 3:00 and 4:00 in the 
morning. We turn away 75 patients a day when we see 100 
patients a day, and the State of Louisiana Board of Nursing 
says we are not going to let any more volunteer nurses come in. 
They need your oversight.
    Build a system that encourages for-profit providers to 
return to a region where the dollars follow the patient, where 
the uninsured have choices and can seek care and private health 
care facilities and those doctors and offices and hospitals are 
reimbursed for that care.
    Among the recommendations being considered to improve 
primary and preventative care are technology initiatives to 
track the person's medical history and to create community 
health care clinics. These community clinics would refer 
patients to specialists, manage disease care, and provide a 
consistent system for tracking care.
    And please remember that everything that was needed by the 
New Orleans is also needed by the health care system you seek 
to rebuild. Infrastructure such as housing, schools for 
doctors' and nurses' children, utilities, and people with the 
economic ability to pay for these services that are being 
offered. All of these are necessary for a sustainable health 
care system.
    To close, I would like to state that Operation Blessing has 
provided free medical and dental services to more than 15,000 
patients. We have spent $1.5 million. But because we are able 
to work with volunteers, we have delivered $11 to $12 million 
worth of medical services to these patients. We could only do 
this by partnering with other agencies and collaborative 
efforts with our volunteers and donors.
    We would like to thank all those who have made this 
possible. We are grateful for the opportunity to serve the 
residents of New Orleans and to serve the United States of 
America. Thank you.
    [The prepared statement of Dr. Koehl appears at the 
conclusion of the hearing.]
    Mr. Stupak. Thank you, Mr. Koehl.
    Dr. Cathi Fontenot, medical director, Medical Center of 
Louisiana, New Orleans. Cathi, 5 minutes, please, if you would?

 STATEMENT OF CATHI FONTENOT, M.D., MEDICAL DIRECTOR, MEDICAL 
               CENTER OF LOUISIANA AT NEW ORLEANS

    Dr. Fontenot. Good morning. I would first like to thank 
members of the subcommittee including Chairman Stupak and 
Ranking Member Whitfield and others on this committee who came 
down to visit with us and go through Charity Hospital a little 
over a year ago and actually since that time as well.
    My name is Cathi Fontenot. I am the medical director of the 
Medical Center of Louisiana at New Orleans comprised of both 
Charity and University Hospitals. I would like to take this 
opportunity for a brief visit back to New Orleans during that 
week in August 2005. We have got a 2-minute video, and I 
promise I will keep to my 5 minutes.
    [Video shown.]
    The storm effectively destroyed both facilities, University 
at Charity Hospital. That loss has been devastating to the 
community. The current status of health care infrastructure in 
New Orleans is tenuous and critically ill. We have been able to 
temporarily reopen portions of University Hospital, restoring 
approximately 140 inpatient beds including the trauma center I 
might add; but sicker patients who in many cases have lost 
their health care providers present to our emergency rooms with 
uncontrolled disease processes due to lack of primary care and 
access to medications as you have already heard.
    Cancer patients who present to our hospital with no health 
insurance have no choice but to travel 60 miles to a rural LSU 
Hospital for their chemo or radiation and back home while weak 
and miserable, and that is assuming they have transportation.
    The status of behavioral health is even more dismal with 
limited outpatient and inpatient services in the greater New 
Orleans area. In our emergency room alone there are days when 
half of our emergency department beds are occupied by 
psychiatric patients because there are no inpatient beds 
available for them.
    Solutions to the health care crisis in New Orleans are 
being developed with partners that you see here at this table 
but are constrained by availability of space and health care 
providers, both primary care and specialists. A critical 
component of the effort to restore health care services 
involves establishing and strengthening the network of 
neighborhood clinics that we refer to as PATH, the Partners to 
Access for Heath Care for the Uninsured where we serve as the 
major hospital partner and provide hospital services as well as 
specialty access. It is only this sort of collaborative effort 
that can be a real opportunity to accomplish health care reform 
as we go forward in the New Orleans area.
    The plan for the Medical Center includes the establishment 
of the community primary care clinics of our own also in 
temporary facilities so that primary care can be delivered in 
communities where the basic principles of prevention and 
disease management are best delivered. One of the major 
challenges for health care providers in the New Orleans region 
is the lack of access to specialty care, and we anticipate that 
at least to some degree we can maximize the use of the limited 
specialty care available by using telemedicine technology, 
becoming more efficient at directing patients to the right 
place for the right reason at the right time.
    A shared electronic record is critical to such a network of 
providers, in order to share information, eliminate costly 
duplication of effort. We look forward to continuing our work 
with other safety net providers because such a coalition is 
crucial to real health care reform and necessary for 
institution of a new model of health care in the region, and we 
are proud to serve as a partner in that endeavor.
    Thank you, Mr. Chairman.
    [The prepared statement of Dr. Fontenot appears at the 
conclusion of the hearing.]
    Mr. Stupak. Thank you. Next we have Dr. Bryan Bertucci, 
coroner/family physician, St. Bernard Health Center, Chalmette, 
Louisiana. Doctor?

 STATEMENT OF BRYAN BERTUCCI, M.D., CORONER/FAMILY PHYSICIAN, 
                   ST. BERNARD HEALTH CENTER

    Dr. Bertucci. Good morning. God bless you and God bless 
America.
    Disease and death know no party, and I am happy to say we 
are here for the patients' interests today; and I appreciate 
the opportunity to speak.
    My name is Dr. Bryan Bertucci. I am a family practice 
physician and the coroner of St. Bernard Parish.
    Medicine is not well in St. Bernard. One hundred percent of 
our homes, offices, and buildings were destroyed, and for the 
first time in history, FEMA declared a parish or country 100 
percent destroyed. One hundred fifty-four St. Bernard residents 
died.
    St. Bernard was flooded twice by Hurricanes Rita and 
Katrina, experienced an oil spill, liquid mud, mold, snakes, 
flies, mosquitoes, piles of trash, mice and rats. St. Bernard 
is a very difficult place to live, and despite that, our 
residents returned. You have to be tough to live in St. Bernard 
Parish.
    Our biggest hindrance is the overwhelming lack of medical 
facilities. Our 194-bed hospital was destroyed. One hundred 
fifty physicians left, and now we only have six. We have 10 
registered nurses.
    I have some slides.
    [Slide shown.]
    This is of the office building where I practiced that 
housed 20 primary care doctors. We lost all those doctors. That 
had 13 feet of water. You can just go through the slides until 
we get to the clinic.
    You are asking, what can we do? Well, first, you have 
already started by giving student loan deferments for the 
people coming out of medical school to help pay off their 
loans. That is No. 1. The biggest loss was young primary care 
doctors. That was our largest loss. We need to get those people 
back. Without the primary care, you are not going to get the 
specialist. Without the specialist, the hospitals can't support 
themselves.
    Second, SBA loans. I still cannot get an SBA loan to 
rebuild my office, so I can't imagine what the other doctors 
are trying to do. We also need loans for people who weren't 
there before, low-interest loans to help them build their 
offices. You need to have increased recompensation for those 
doctors, and you need housing. The three doctors that are 
working in my office all live in trailers. We all lost our 
homes. We have no office space available for these people to 
come back.
    The buildings that we lost, and I am sorry because we went 
through so fast, but all of those buildings are totally 
destroyed. We have no housing for our specialists.
    Mr. Stupak. We can go through them quick one more time if 
you would like?
    Dr. Bertucci. Yes, if you would.
    Mr. Stupak. Go through the slides again, please.
    Dr. Bertucci. Next?
    [Slide shown.]
    Yes, this is our neurologist's office.
    Mr. Stupak. Is that open now?
    Dr. Bertucci. No. All of these were just taken 3 days ago.
    Mr. Stupak. OK.
    [Slide shown.]
    Dr. Bertucci. This is a pediatrics office.
    [Slide shown.]
    This is an ear, nose, and throat office.
    [Slide shown.]
    That is another ear, nose, and throat office. And this is 
actually rebuilt.
    [Slide shown.]
    This is one of our two clinics at work. This is a dialysis 
unit, and obviously you see the condition of the ground 
surrounding it; but we are rebuilding ourselves. We have an eye 
doctor, too.
    [Slide shown.]
    This is our pharmacy. We actually have six pharmacies back.
    [Slides shown.]
    And the next picture, this is our mental health trailer and 
this is the trailers that we work in.
    Perhaps I think our biggest encounter and problem was 
getting funding back to rebuild our facilities. Chalmette 
Medical Center was a fee-for-service medical hospital; and as 
such, we were penalized for being privatized. We were told that 
we couldn't have any money from FEMA because we were a fee-for-
service. The Community Disaster Loan didn't qualify because we 
weren't on the parish budget, so we were penalized for being 
independent. The Stafford Act obviously didn't allow doctors 
and nurses to get paid, and the Community Block Grant money, 
$621 million went to the parish, medicine got none because we 
were fee-for-service.
    Perhaps our biggest problem is that Federal and State 
officials do not realize that St. Bernard is not part of New 
Orleans Parish. Funds that go to Orleans Parish stay in Orleans 
Parish.
    Medicine has metamorphosized itself from the DMAT teams 
which you saw pictures of, public health, to a 22,000 square 
foot trailer. We see 100 to 120 patients a day. The severity of 
the illnesses that we see are equivalent to a small emergency 
room or an urgent care center. We I&D abscesses, suture 
lacerations, stabilize MIs and congestive heart failure, and 
give IV fluids and IV antibiotics. Almost a quarter of these 
patients have no insurance and are no-pay or self-pay.
    A foundation is willing to give us 30 acres of land to 
build a new hospital that is 8 feet higher than where Chalmette 
Medical Center was located. The Franciscans has offered us 
financial and professional help to try and make these dreams 
become a reality.
    Mental health is in crisis. Fifty to 60 percent of the 
patients I see and 20 to 30 percent of the children I see are 
depressed. Drug overdose is a problem in our parish, and we 
have no substance abuse clinics or beds to put these people in; 
and the schizophrenics or psychotics due to lack of access to 
outpatient care have become a problem for our emergency rooms.
    St. Bernard is lacking significant emergency room services 
and has to ship patients 18 to 35 miles to an emergency room. 
Our parish is surrounded by water and our limited ambulances 
have to cross bridges, railroad tracks, and circumvent traffic 
jams. A routine emergency room visit takes 4 to 8 hours.
    The logical solution for St. Bernard is a permanent 
physician office building, outpatient surgery center, 
outpatient diagnostic center, and eventually a hospital.
    The medical village will assure primary care and specialty 
return. It will decrease the number of our residents who have 
to go out to emergency rooms and free up our ambulances and 
free up Orleans' emergency room beds. It will allow our elderly 
to return so that we can have nursing homes and we can have 
homes for assisted living. It will provide jobs as the hospital 
was one of the largest employers in our parish. It also had 24 
psych beds so psych beds are a possibility. If you want 
electronic medical records and a medical home, we need primary 
care doctors, we need specialists who will support that 
concept, and we need a hospital as a safety net for the 
patients who can't be controlled as an outpatient.
    We need three big things. We need the bridge money, Social 
Service Block Grant Money with an extension of the funds that 
are due to expire on July 31. We do have some allocated to us. 
We need that expanded.
    We need to make more SSBG funds available to medicine for 
permanent structures or infrastructure. We need Community Block 
Grant Funds available to us now that we have a non-profit 
institution. We are not fee for services. We are a non-profit 
so that we can have permanent building structures. And we need 
most importantly a rural designation for our Medicaid and 
Medicaid patients to help offset the cost of treating indigent 
patients for hospitals and physicians. We need some help with 
the rural reimbursement.
    What if your child had a problem and you knew what they 
needed? As a parent, what would you do? St. Bernard, America is 
your child. We need your help. We need brick and we need 
mortar. We need permanent physician office buildings and we 
need a hospital.
    As the hospitals meet later today----
    Mr. Stupak. Doctor, please summarize.
    Dr. Bertucci. I am going to finish. As the hospitals meet 
later today, leave an empty chair for St. Bernard. We had 240 
hospital beds. Imagine the pain of our residents as they hear 
the justifiable cries for help from the other hospitals and 
while you call the name for St. Bernard, you hear just silence. 
We need a hospital. We need your help. Thank you for listening.
    [The prepared statement of Dr. Bertucci appears at the 
conclusion of the hearing.]
    Mr. Stupak. Thank you. Dr. Karen DeSalvo is executive 
director of Tulane University Community Health Center at 
Covenant House.

  STATEMENT OF KAREN DESALVO, M.D. EXECUTIVE DIRECTOR, TULANE 
      UNIVERSITY COMMUNITY HEALTH CENTER AT COVENANT HOUSE

    Dr. DeSalvo. Good morning, Mr. Chairman and members of the 
subcommittee. Thank you all for having us here today. I just 
want to say it is really an honor to be on this panel with a 
lot of folks that I have rolled up my sleeves and been working 
with in the past 18 months now, some of whom I didn't even know 
before the storm.
    As you said, I am Karen DeSalvo. I am the executive 
director of the Tulane University Community Health Center at 
Covenant House which is a clinic formed in the aftermath of the 
storm to meet the urgent needs of our city's population.
    Today I am going to share with you my perspective as a 
primary care physician caring for the uninsured patients in our 
city, and I want to give you a snapshot of what it is like to 
practice medicine in New Orleans including describing our 
successes and challenges and suggest what would help improve 
access to care immediately while we debate the larger policy 
issues.
    We have come a long way in restoring care in our city 
despite the many struggles that we still have, and while much 
has been made of the divisions, an often overlooked bright spot 
has been the progress we have made in building a primary care 
network for our most vulnerable citizens.
    The Tulane Community Health Center at Covenant House is an 
example of such a success. We started as a makeshift clinic. We 
were just a post-Katrina first aid station. It was only a card 
table and basic supplies. This was in early September 2005.
    We have evolved into a prototype medical home and become a 
source of care for hundreds of patients and have seen over 
12,000 of them since opening our doors. Our medical home is 
able to provide free care. It is basic primary care for adults. 
We are a multidisciplinary team. The typical patient that we 
see is middle-aged, they are uninsured, and they have multiple 
chronic diseases.
    To serve them we have begged, bartered, negotiated, access 
to basic laboratory and diagnostic studies. We are able to use 
a sophisticated electronic medical record to help us manage our 
populations and be as cost effective as possible. We are also 
filling a training void for health professionals with the added 
benefit of exposing the next generation of clinicians to a 
patient-centered model of primary care.
    We are determined to keep our doors open to provide these 
critical services to those that otherwise have no alternatives, 
and we have received some Government support from SSBG but have 
been forced to string together other funding from a wide array 
of entities ranging from individual donors to corporations to 
the people of Cutter.
    If you could show the map, I would appreciate it.
    [Slide shown.]
    You have heard a lot today about something called the PATH 
network and while we are proud of what we are able to do for 
patients at our own medical home at Covenant House, we really 
could not do this without our community partners. We are part 
of a larger system of care that has emerged since the storm to 
fill the void left when our traditional safety net was 
essentially washed away. The projected map shows the clinical 
providers in this group, many of whom are sitting here at this 
table today. We call this the Partnership for Access to Health 
Care Path. This pre-storm entity has actually gone from being a 
simple way to connect health information to actually being a 
loose network that includes government, faith-based, not-for-
profit clinical entities.
    Every dot on the map represents a clinic of some sort. Some 
are small, school based, some are mobile units, some are still 
tents, but really many are becoming more permanent sites in 
these neighborhoods.
    Inclusion in the group by the way is open to any one who is 
willing to share in our core values of quality and cost 
effectiveness and the mission of serving the underserved.
    They worked together to fill gaps in services and develop 
models in the medical home, and altogether we are able to take 
care of about 900 patients a day, most all of whom are 
uninsured and representative of the rich diversity that is our 
new New Orleans.
    With continued support and additional resources, I believe 
that PATH could serve as the core of a future medical home 
system of care that really could transform health care in 
Louisiana.
    Despite our rosy progress, we do face many critical 
challenges that have been described already today but I will 
highlight a few. Our major limitations involve poor access to 
specialty care and diagnostic services. For example, our 
patients don't have access to colon cancer screening or 
diabetic eye care. We don't have access to urgent diagnostic 
studies for like brain imaging for example, and so we sometimes 
need to rely on sending patients to the emergency room for such 
tests which is a highly expensive alternative, or patients 
often go without, arriving eventually at the hospital with 
significant or long-term health consequences that is a much 
more expensive alternative and makes them non-productive 
members of our community.
    As you might imagine finding clinical personnel willing to 
either stay in or move to New Orleans is quite the challenge. 
They have rational concerns about long-term job security and 
find it difficult to maintain a high standard of practice in a 
broken environment. This shortage of clinicians mean that we 
are turning patients away every day.
    So what can you do? The most cost-effective means to 
rebuilding our health system I believe is to build a robust 
primary health care system. This will unclog the overwhelmed 
hospital system because it will prevent hospital admissions and 
help save money through slowing the progression of chronic 
disease.
    The three ways that I think you can help are extend the 
SSBG deadline to provide further resources for funding through 
that revenue stream as well as provide further resources 
through the deficit reduction act funding. As was mentioned, at 
the end of July, our Federal funding from SSBG will end and 
would like to request at least a 1-year extension on that 
deadline.
    I also believe that perhaps using the discretionary DRA 
funds could be a way to support and grow more primary care 
infrastructure to provide a bridge to our future health care 
system.
    Number 2, we need more financial support for clinicians to 
help with retention and recruitment in the form of loan 
repayment, malpractice support, SBA loans, as well as 
uncompensated care payments directed at physicians, and 
finally, through the expansion of coverage such as programs in 
Medicaid.
    And the third thing is I would like to ask you to assist us 
as we progress, and please hold us accountable for what we are 
doing. This hearing has been a catalyst for us locally. We have 
had better communication and coordination than we have had in 
months. It has made us all stop and clearly articulate what we 
think we need to provide the immediate care for our population.
    So we look forward to continuing to work with you. And I 
certainly want to invite you to come visit our clinics in the 
city of New Orleans.
    Thank you very much.
    [The prepared statement of Dr. DeSalvo appears at the 
conclusion of the hearing.]
    Mr. Stupak. Next we will hear from Donald Erwin, president/
CEO, St. Thomas Community Health Center. Dr. Erwin?

 STATEMENT OF DONALD T. ERWIN, M.D., PRESIDENT/CEO, ST. THOMAS 
                    COMMUNITY HEALTH CENTER

    Dr. Erwin. Good morning, Mr. Chairman. I am Dr. Donald 
Erwin, representing the St. Thomas Community Health Center in 
New Orleans.
    I would like to thank you for holding these hearings and 
for the continued interest you have shown in our community. I 
am pleased to be here to add to the discussion.
    St. Thomas Clinic is one of the PATH clinics which was 
established in 1987 by a partnership with the residents of the 
country's oldest public housing development and leaders in the 
medical and faith-based communities. These citizens simply 
wanted accessible primary care in their community.
    For 20 years, St. Thomas provided care to all patients 
regardless of ability to pay. Pre-Katrina, St. Thomas primarily 
served the immediate community. We learned at that time that 
public/private relationships such as the ones St. Thomas Clinic 
had had for years with the Ochsner Clinic Foundation are very 
valuable.
    Six weeks after Katrina, St. Thomas reopened and we 
immediately realized we had a different population of patients. 
For years the clinic had cared for patients in the nearby 
community. Post Katrina, we now saw patients from all over the 
city, many of whom had previously had health insurance through 
their work. They had been insured all their lives but were now 
uninsured because their jobs were gone. 7,000 school teachers 
alone were suddenly without insurance when the school system 
closed since 50 percent of the physicians who were practicing 
in New Orleans before Katrina have not returned. St. Thomas 
also had a substantial number of patients who had insurance but 
no physician and thus turned to us.
    This is worth emphasizing. Even patients with insurance had 
no place to go for health care because the health care system 
was and remains overwhelmed.
    As we cared for an entirely different patient population 
without funding to support this new demand, St. Thomas sought 
partners. The clinic developed partnerships with supporters who 
worked with us and with each other to maximize their support to 
our clinic.
    I am not sure of the patient numbers in the first chaotic 
months, but over the last 15 months, over 23,000 patient visits 
have occurred on our clinic's 5,200 square feet of space. 
Through one partnership, St. Thomas is now the only site in the 
city where uninsured women can receive mammography with 
appropriate follow-up care as necessary.
    As another example, a group of eight different 
organizations joined together to provide our patients care for 
cardiac disease at St. Thomas. Since Katrina, St. Thomas has 
received support from over 30 sources. The clinic now offers 
primary and preventative care as well as specialty 
consultations and six different medical and surgical 
specialties.
    Last month we leased a building to provide mental health 
care to the community. We need funds to support this 
development. As one physician mentioned, we are not seeing 
post-traumatic stress syndrome yet because the trauma is not 
yet over. We find that the relationships we have with the other 
PATH clinics benefit both of us equally.
    St. Thomas raised $1.4 million in the last 18 months. We 
had no choice but to try to do so since the needs of our 
patients were great and they had no place else to go for care. 
The country has been generous to St. Thomas. In turn, we are 
good stewards and amplify the gifts we receive.
    But St. Thomas cannot live on philanthropy. We cannot 
survive that way. The St. Thomas Clinic has no guaranteed or 
predictable funding. As the chairman mentioned, there are broad 
policy discussions going on now about the future of health care 
in Louisiana. But whatever model is ultimately accepted is 
years away from implementation.
    In the meantime, St. Thomas and PATH clinics like it will 
continue to provide major care for the uninsured. We predicted 
a financial deficit of $800,000 this year. We were relieved to 
be eligible for $755,000 from a Social Service Block Grant. 
This as a critical source but it was for only 1 year. We 
estimate another $800,000 deficit for the coming year, again to 
be covered with patchwork financing.
    St. Thomas is emblematic of several small clinics that have 
become the type of efficient and effective providers needed to 
care for large numbers of uninsured patients. But these clinics 
need help. If we would not be there, there would be long lines 
at other clinics, more overcrowded emergency room visits, and 
more expensive hospitalizations. High quality primary care is 
the least expensive way to provide the best medical care in the 
community.
    I urge Congress to develop a process to provide gap funding 
for primary care clinics like St. Thomas that have no 
guaranteed recurrent funding. Whether it is through SSBG or 
some other mechanism is not for me to postulate, but I do hope 
that you agree that St. Thomas and other clinics like it are 
essential to providing care for the uninsured; and I hope you 
will continue to support our efforts to provide care for the 
citizens of our community.
    I ask that you find a way to provide St. Thomas and other 
safety-net clinics with predictable, sustainable funding. I 
appreciate the opportunity to speak to you and thank you again, 
Mr. Chairman.
    [The prepared statement of Dr. Erwin appears at the 
conclusion of the hearing.]
    Mr. Stupak. Thank you, Dr. Erwin. Next we will hear from 
Dr. Evangeline Franklin, director of Clinical Services and 
Employee Health, City of New Orleans Health Department. Dr. 
Franklin?

STATEMENT OF EVANGELINE R. FRANKLIN, M.D., DIRECTOR OF CLINICAL 
   SERVICES AND EMPLOYEE HEALTH, CITY OF NEW ORLEANS HEALTH 
                           DEPARTMENT

    Dr. Franklin. My name is Dr. Evangeline Franklin. I am 
director of Clinical Services and Employee Health for the New 
Orleans Health Department, also a member of the Partners for 
Access to Healthcare.
    To you, Mr. Chairman, and to Ranking Member Whitfield and 
distinguished members and guests of the subcommittee, I would 
like to thank you for the opportunity to speak to you today 
about the two outdoor health clinics in New Orleans the Health 
Department recently held in the city of New Orleans.
    Mayor C. Ray Nagin and members of his administration have 
sought creative means of addressing our citizens' critical 
health needs as we work to recover from the tragedy of 
Hurricane Katrina and the subsequent flooding.
    Today I would like to describe to you a city, indeed a 
region, which continues in health crisis despite the efforts of 
all of our organizations. This crisis results from a 
combination of factors. The people of New Orleans face many 
challenges such as the difficulty of returning to rebuild homes 
and businesses, the tendency to ignore their chronic illnesses 
that these stressful distractions have caused or exacerbated, 
and the complexity of the processes to claim insurance proceeds 
or funds from the Louisiana Road Home Program, the State 
initiative to compensate homeowners for their losses in 
Hurricanes Katrina and Rita.
    All of these factors are complicated by a health care 
system that is itself damaged and under stress, further 
limiting the access to health care that even before Katrina was 
not ideal.
    In the aftermath of the hurricane, the population of the 
uninsured in New Orleans has expanded from traditionally 
uninsured groups to include many who have experienced sudden 
loss of benefits, including individuals who were laid off from 
jobs because of the destruction of their place of employment or 
due to loss of market or tax base. Many of these people 
returned to New Orleans following the floods because of 
personal or business financial commitments or because they 
simply just wanted to come home.
    The composition of our uninsured also includes persons who 
cannot speak English and those who cannot secure health 
insurance because of their migrant worker status or because 
they lack the proper immigration documentation. Many of our 
uninsured are part of the working poor who toil daily in their 
jobs but who are not offered or who cannot afford insurance.
    Hurricane Katrina and the subsequent flooding were 
responsible for the loss of many aspects of health care 
including hospitals, doctors, medical records, and pharmacies. 
It has also meant that many people lost their medications and 
let us not forget their dentures and their eyeglasses.
    This when coupled with the physical and psychological 
hazards of devastation have put patients previously stabilized 
at risk. Imagine trying to fix your house when you cannot see.
    I was assigned to coordinate two large-scale health care 
events designed to provide medical, dental, and optical 
services and to assist in organizing follow-up. Helping 
patients regain some control of health problems would enable 
our community to better manage health resources such as 
emergency room use and admission to hospitals.
    Both of these 7-day events were highly successful. 
Thousands of patients were able to proceed from each outdoor 
event with a 30-day supply of needed prescriptions as well as 
eyeglasses, dentures, immunizations, pap tests, and information 
about where to obtain follow-up medical care at many of our 
participating clinics. But this occurred only after they 
endured long lines, sometimes waiting all night in cold and 
rainy weather to be treated on a first-come, first-served basis 
by volunteers throughout the country as well as local 
professionals. Typically capacity for each day was reached 
within an hour of opening the registration. As a result, many 
of those who needed care were unable to receive it and had to 
be turned away to be seen on another day or at other locations.
    The first of these events was held in February 2006 at the 
Audubon Zoo, a location considered to be an oasis in the middle 
of destruction. Audubon Zoo made a significant contribution by 
allowing us access to their grounds to set up the clinic 
locations, by housing the volunteers who came from all over the 
United States, and by having their employees contribute their 
time for this seven-day event.
    The event was an immediate success in large part because of 
its location and accessibility by car and by bus, but many 
people also walked to the event. The zoo is located in an area 
of the city which was among the first to repopulate because of 
the lower level of damage that it sustained from flooding. FEMA 
trailers were still being installed across the city.
    Because of the magnitude of the catastrophe, very few 
safety-net clinics and pharmacies were open at the time soon 
after the flooding. Many weary patients reported that they were 
unable to locate their doctors, did not know where to go to 
have their prescriptions filled or refilled. Others offered 
poignant stories about their inability to obtain needed care, 
medications, and immunizations.
    Of the 5,212 patients who received care at the Audubon 
event, 27 were transferred to local hospitals for emergency 
care. One of those was a revived cardiac arrest. This woman was 
having her cholesterol tested, unable to get it tested at any 
other local institution; and during her visit at the Reach 2010 
at the Heart of New Orleans facility of the health fair, she 
had a heart attack. She was unable to obtain primary care but 
could be cared for after having a life-threatening emergency. 
Fortunately, she is currently doing well.
    Others were not so fortunate. One gentleman was given the 
diagnosis of metastatic cancer. He had been told at one of the 
local private hospitals that he had to pay for his diagnostic 
tests before he could receive treatment. He did not have the 
required money and was refused that treatment. Because Charity 
Hospital had not yet reopened, there is no public facility in 
the city that could provide the cancer care. Further 
complicating his situation, this man could not speak English 
and had no transportation. Despite these difficulties, we 
arranged for this gentleman to receive care at another facility 
out of town.
    Many of the volunteers during the week remarked that they 
had never seen so many people who were so very sick. All in 
all, there were 1,300 volunteers who treated the 5,200 patients 
during this event. Prescriptions were filled at no charge and 
social services, including mental health, were made available 
for interested patients. Volunteers traveled at their own 
expense. The value of the services provided was $1.9 million.
    The second event was held a year later in conjunction with 
Operation Blessing who is represented here today. This 
organization represents a clinic with medical, dental, and 
pharmaceutical services in eastern New Orleans. The week-long 
Health Recovery II was an outdoor clinic as well. The New 
Orleans East location of Operation Blessing was accessible by 
car and bus and had become an anchor by providing free care 
before Health Recovery Week II.
    This again was an idea location for the second event but 
this time because neighboring communities have shown signs of 
return and rebuilding. FEMA trailers placed in front of houses 
in New Orleans East and the sale and purchase of property for 
renovation herald the return of significant resources in terms 
of professional and business community members. In addition, 
citizens from eastern New Orleans were part of the regular 
patient population of Operation Blessing. Because the medical 
director is fluent in Spanish and Vietnamese, non-English 
speaking residents are drawn to this facility. In addition, 
this location does not interfere with the function of clinics 
and services in other parts of the city where population has 
stabilized.
    For this event, Operation Blessing invested over $500,000 
in the project for the cost of supplies, lab work, pharmacy 
services, infrastructure improvement, marketing, and food and 
lodging for the volunteers at their Slidell, Louisiana, command 
center.
    Even though more medical facilities and safety-net clinics 
had been opened in the intervening year, the story was exactly 
the same as before. Fewer patients were treated but only 
because there were fewer volunteers who could see them. Again, 
patients waited in the cold and the rain and were willing to be 
seen in tents for their medical, dental, and optical care. And 
again, citizens frequently stated that they could not find 
their doctors and did not know where to get their medications.
    The vast majority of patients seen during this health 
intervention week had never been seen at Operation Blessing, 
and many had been referred by other clinics to receive services 
that were not available there, in particular for their denture 
care and for their eye care. Of the over 3,800 patients who 
were seen in the seven-day event, 21 were transferred to local 
hospitals. As in the first Health Recovery Week, hundreds were 
turned away after the capacity of the event filled within the 
hour of its opening.
    Mr. Stupak. Doctor, can you sum up, please?
    Dr. Franklin. Yes, I would like to say that given the 
contribution of volunteer care in the city of New Orleans, I 
think attention should be made for that to continue as a 
stabilizing proposition until we can recover the system. 
Further recommendations will be provided by Dr. Kevin Stephens 
in his testimony.
    Thank you
    [The prepared statement of Dr. Franklin appears at the 
conclusion of the hearing.]
    Mr. Stupak. Thank you. Dr. Gary Wiltz is chairman, region 
3. Explain where region 3 is to us first.
    Dr. Wiltz. I will do it as I give my testimony.
    Mr. Stupak. Thank you. You may start.

  STATEMENT OF GARY WILTZ, M.D., CHAIRMAN, REGION 3 CONSORTIUM

    Dr. Wiltz. Well, good morning, Mr. Chairman, and the 
members of the committee and it is a special honor to appear 
before my Congressman, Mr. Melancon.
    Thank you for the opportunity to speak with you today about 
the very serious and continuing health consequences of 
Hurricane Katrina's aftermath. But I come before you today 
wearing many hats. First and foremost I am a practicing, board-
certified internist and the CEO and medical director of the 
Teche Action Clinic, a federally qualified community health 
center established in 1974 located at Franklin which is a 
small, rural community 100 miles southwest of New Orleans. I am 
also chairman of the Governor's appointed Region 3 Health Care 
Consortium which includes seven rural parishes located 
immediately outside the New Orleans area. I also serve on the 
Board of Directors of Louisiana Primary Care Association or the 
LPC which represents State's 21 FQHC's. And finally, I am the 
Board Secretary of the National Association of Community Health 
Centers.
    I would like to begin by telling you a little bit about my 
personal history. I was born at Charity Hospital in 1953 on the 
colored ward section of the then-segregated hospital. I earned 
a scholarship to Tulane University and later attended Tulane 
Medical School where I was fortunate enough to receive a 
National Health Service Corps Scholarship. Ironically, I did 
most of my residency training at the same institution where I 
born, Big Charity, in New Orleans. Upon completion of my 
residency, I was assigned to Teche Action Clinic in Franklin to 
serve my 3-year obligation service pay-back. Twenty-five years 
later, I am still practicing medicine at that same site.
    In speaking of the health care realities in my home State 
today, I must begin by noting the sad reality that Louisiana's 
health care system was broken pre-Katrina. Louisiana had the 
dubious distinction of having consistently ranked 49th or 50th 
among the States in the United Health Care Foundation's annual 
health status report over the past 10 years. Our health care 
system has been characterized as fragmented, expensive, and 
ineffective, producing far too many health outcomes.
    The original concept of the Charity Hospital was to 
demonstrate the compassion of the people of our State. It was 
perfectly named to fulfill its founding purpose, to provide 
charity. The flagship of this system located in New Orleans 
fast became known affectionately by the locals as The Big Free. 
Unfortunately as we all know, nothing in life is truly free. 
Pre-Katrina, the residents of the seven rural parishes that 
represent the Consortium depended on Charity Hospital. Katrina 
essentially destroyed the health infrastructure of the entire 
southeastern port of Louisiana. It also decimated the health 
care workforce by displacing more than 6,000 health care 
professionals, most of whom have not returned.
    In the immediate aftermath of Katrina, our surrounding 
parishes saw evacuees overflowing into our communities. My 
family personally housed 19 family members for many months 
after the disaster hit, and I am proud to say that Louisiana's 
health centers responded to this tragedy as best we could but 
there is still much more to be done.
    Now fast forward 18 months, and where are we today? To 
borrow a line from the play, The Music Man, ``Oh, we have got 
troubles right here in River City''. To underscore how serious 
our problems are, I give you several true-case studies. Number 
1, a 38-year-old uninsured male with a diagnosis of bipolar 
disorder is brought to the hospital emergency room by a 
Sheriff's Deputy. Family members say that he has not seen a 
psychiatrist in 18 months because of Katrina. He remains in the 
hospital emergency room for 72 hours being sedated for his own 
and everyone else's protection, only to be finally released to 
his family when no other recourse could be found.
    Second, our region's only pediatric psychiatrist has left 
the area leaving hundreds of children who were under his care 
in the hands of their primary care pediatrician. Our 
psychiatric nurse practitioner in our system alone has a 2-
month waiting list and is seeing children now, because of the 
delays are now unmedicated and have decompensated.
    Finally, a 57-year-old female with chronic neck pain that 
has caused numbness in both her arms and hands and decreased 
motor strength has Medicaid so we were able to get an MRI and 
discovered she needs a neurosurgeon. But there are no private 
neurosurgeons who accept Medicaid. With Charity now closed, the 
only neurosurgeons accepting Medicaid are located at the LSU 
charity hospital in Shreveport, a 6-hour drive from her home, 
but if only she had transportation to get there.
    So now that we see what the current landscape looks like, 
might I suggest some solutions? Let me so that while the scope 
of the problems we face in our communities are so great that 
they will require the kind of money that only the Federal or 
State government can provide. The best solutions, however, are 
not likely to be crafted out of Washington or Baton Route. Let 
me add one more important point, that simply providing health 
care insurance to the many uninsured, while that is a crucial 
step to make health care affordable, would do little or nothing 
to make health care available or accessible. We need a model 
that works, that is proven, that is cost effective, culturally 
competent, and that can serve as a medical home, a health care 
home in fact. And the beauty of it is such a model already 
exists in our Nation's community health centers.
    Expansion of health centers would quickly address both the 
needs of the underserved across our Nation and be a critical 
step in transforming our health care system. The Federal 
Government could immediately fund all the applications from 
Louisiana that are already sitting at HRSA and greatly expand 
access to care immediately. Coupled with an expansion of the 
health center's program is the need to expand the National 
Health Service Corps, the very program that brought me to the 
community in need a quarter-century ago. We need a statewide 
expansion of the Nation Health Service Corps that recognizes 
the needs of rural Louisiana.
    In closing, I leave you with the immortal words from Dr. 
Martin Luther King., Jr., that are as true today as they were 
40 years ago when he uttered them, ``Of all the forms of 
inequality, injustice in health care is the most shocking and 
inhumane.''
    Thank you once again for this opportunity, and I will be 
happy to answer any questions you might have.
    [The prepared statement of Dr. Wiltz appears at the 
conclusion of the hearing.]
    Mr. Stupak. Thank you and thank you to all of our 
witnesses. As I said earlier in my opening, your courage and 
heroism is an inspiration to all of us, but that is not going 
to solve the health care problems in New Orleans and that is 
why we are here and we are going to stay with you and we are 
going to get this thing moved, prodded, whatever we have to do 
to move this thing along.
    I said in my opening that our hearing will focus on what 
health care providers believe is the most urgent health care 
issues that need to be addressed in the short term, and I 
certainly get the impression from this panel that the dollars 
have to follow the patient. Some of you said that directly in 
your testimony, others have alluded to it. We certainly 
understand the Social Service Block Grant money, the CDBG 
money, and other issues we must come to cope with.
    If we take the money out of it for a moment, just for a 
moment, what else do we need in your opinion? Give me one thing 
you think we should do, that Congress can push to do, that 
should be done to help you out? Ms. Rowland, we will start with 
you and then proceed right down the line.
    Ms. Rowland. I certainly think acting on some of the 
recommendations that have already been put forth to the 
Department such as expanding availability of community health 
centers so that the funds can be released for that, extending 
the Block Grant was one issue, but I think really putting the 
resources of the Public Health Service together with needs on 
the ground to use every available resource that the Federal 
Government has to help build community health centers, to help 
build more mental health capacity, and as the last speaker just 
mentioned, to bring the National Health Service Corps in to 
help to establish some of the doctor needs during the time when 
you are recruiting back positions.
    Mr. Stupak. Mr. Koehl?
    Mr. Koehl. The only thing that we would ask would be this 
group push to allow our volunteer nurses to come and work. 
Without them we will only see 25, 30 patients a day. These 
nurses triage, they take vitals, they dress wounds, they assist 
the physicians in every way possible.
    Mr. Stupak. Is that more than just nurses?
    Mr. Koehl. Nurses and nurse practitioners will no longer be 
allowed to volunteer in the State of Louisiana by the end of 
this month without the Louisiana State Board of----
    Mr. Stupak. By the end of March?
    Mr. Koehl. Yes, if they will not allow them to come 
volunteer. And our nurse practitioners are providers just like 
doctors, so that will limit the number of patients that are 
being seen.
    Mr. Stupak. Any other medical profession run into the same 
thing, where they cannot volunteer?
    Mr. Koehl. No.
    Mr. Stupak. It is just the nurse?
    Mr. Koehl. Different board, different group of people 
making the decision.
    Mr. Stupak. OK. Dr. Fontenot?
    Dr. Fontenot. Unfortunately I think it ultimately comes 
down to money, but certainly helping in the recruitment efforts 
by using U.S. Public Health Service Corps. The regional 
designation for underserved community probably applies to more 
than the four-parish area that is currently designated as I 
understand it and redeveloping infrastructure, namely 
electronic means of sharing data among the partners who are now 
responsible for providing care.
    Mr. Stupak. OK. Dr. Bertucci?
    Dr. Bertucci. Well, and again, it does come to money. It 
does come to money. We need to get our primary care physicians 
back and our specialists back so that we can do medical homes. 
Without those particular individuals, it is impossible. It does 
come down to the fact that we do need dollars. In order to have 
a medical home, you have to have primary care physicians, you 
have to have specialists, and you have to have some buildings 
for these people to work in.
    Mr. Stupak. But didn't you say you have to start with the 
primary care in order to get the specialists to come in?
    Dr. Bertucci. I agree with that. We need buildings, though, 
to put those people in. Right there in our particular parish we 
are kind of unique in the fact that we do not have buildings to 
stick people in, and even if the specialists wanted to come 
right now, we wouldn't have a place to put them.
    Mr. Stupak. Right.
    Dr. Bertucci. So we need some of the SBA loans so that they 
can build.
    Mr. Stupak. Sure.
    Dr. Bertucci. We need some low-interest loans for people 
who don't qualify for SBA so they can build. So I think those 
are the biggest things, and I think the bridge money so we can 
sustain our clinics, especially the rural reimbursement, would 
help us tremendously in both maintaining our clinic and 
building a hospital.
    Mr. Stupak. Dr. DeSalvo?
    Dr. DeSalvo. You could come rip up the frayed carpet in our 
stairwells so it wouldn't be so hard for people to get up and 
down the stairs and help us slap some paint on the walls, but 
aside from that--which we will pay for the paint, by the way--I 
am a National Health Service Corps person as well. I was 
assigned to Charity Hospital and was retained, apparently, for 
all these years. And so I think it is an excellent program if 
some of the bureaucracy is weeded out so that if we know there 
are people who are using that for loan repayment and they will 
be assigned to New Orleans.
    Mr. Stupak. Let me ask you this. Let me just follow this up 
a little bit. And I know I did not want to talk about dollars, 
while I got you here I only got a few minutes left, what about 
DSH dollars going to clinics and doctors?
    Dr. DeSalvo. I am sorry?
    Mr. Stupak. What about DSH going to clinics and doctors?
    Dr. DeSalvo. I am not a DSH expert, but from what I 
understand----
    Mr. Stupak. But you are a practical expert so I want 
practical answers.
    Dr. DeSalvo [continuing.] experience is that the way we DSH 
in Louisiana it doesn't--we can't apply for that through 
matching dollars at our clinic----
    Mr. Stupak. We have to get a State or Federal waiver, 
right?
    Dr. DeSalvo. I would have to refer that to Diane.
    Mr. Stupak. Ms. Rowland, we also get a State waiver, I 
believe, if I am right.
    Ms. Rowland. The DSH funds actually flow through hospital 
and inpatient hospital care. So you would need a waiver under 
Federal law to use them for alternative sources.
    Mr. Stupak. OK. So you need State waiver and Federal 
waiver?
    Ms. Rowland. You need the State to request a Federal 
waiver. It is the Federal Government that would--
    Mr. Stupak. But the State would still have to change its 
law, though, to allow it to go other than hospitals to clinics. 
So you need a change in State law, then they have to apply for 
the Federal 1115 waiver, correct?
    Ms. Rowland. Right, and there was a previous waiver that 
was pending at the time Katrina hit that you reactivated and as 
a small point, I mean, I would say yes, we need money. We just 
need money.
    Mr. Stupak. Right.
    Ms. Rowland. But the SSBG's for example is essentially a 
no-cost extension is what we want.
    Mr. Stupak. Dr. Erwin?
    Dr. Erwin. I would like to see whatever way we could do it 
that we develop an incentive to focus on partnerships of these 
primary care clinics with specialty providers and hospitals. 
Where we have been most successful at St. Thomas has been the 
ability through collaborations and sometimes paying for the 
specialists, to be able to provide timely outpatient specialty 
services. Everybody agrees that the highest quality, most cost-
efficient care is when the physician who knows the most about 
that specific illness manages the patient. And when we get used 
to thinking of specialty care as the tertiary hospital 
specialty care, and I think there are so many instances where 
the cardiologist helps patients out of the hospital by managing 
their heart failure and the nephrologist helps prevent patients 
going onto dialysis by appropriately intervening. So I would 
really like to encourage you to help provide whatever incentive 
is possible to link the primary care clinics with specialty 
services and hospitalization.
    Mr. Stupak. OK. Dr. Franklin?
    Dr. Franklin. From our experience at Operation Blessing and 
from our experience in the health clinics in New Orleans, I 
would like to focus on cultural competence in medical 
translations being part of the practical problems that we 
actually have to approach. We have numerous individuals in the 
city who do not speak English. We have had a population of 
Hispanic and Vietnamese before the storm, but the population, 
especially of non-English speaking Hispanics, has increased. 
Since my colleagues have done such a good job of talking about 
the medical issues, DSH dollars, that sort of thing, I would 
like to focus on eyeglasses, optical care. As I said, imagine 
trying to find a job or fix your house when you can't see.
    Mr. Stupak. Dr. Wiltz?
    Dr. Wiltz. Yes. Mr. Chairman, I think you actually hit on 
it early on, the chicken or the egg; and I think the problem is 
we need both concomitantly workforce development as well as 
infrastructure. Before I left, I saw an e-mail that I don't 
know where it generated from but there was something being 
bantered about that there was a $15 million grant from DHH that 
was described as a New Orleans Health Service Corps that was 
being offered, and maybe one of the other panelists will allude 
on that. But I think something in that regard that is expanded 
for all of Louisiana, particularly in the rural communities 
outside of New Orleans that were sort of depended upon Charity 
Hospital for specialty and subspecialty care and of course the 
development of FQHC's.
    Mr. Stupak. I think that $15 million was something Mr. 
Melancon has been working on for a while. Maybe he can expand 
on that a little bit more.
    Let me ask this question here. Dr. Fontenot, if I live in 
New Orleans, I have lost my house, my job, I have no health 
insurance, and let us say I have some type of cancer and I used 
to go to a clinic at Big Charity for my chemotherapy, what do I 
do now?
    Dr. Fontenot. You probably still come to Charity, either 
through the emergency room or through its primary care clinic 
and get referred to a sister public institution about 60 miles 
away where there are oncology services available.
    Mr. Stupak. As Dr. Wiltz said, transportation isn't the 
best in New Orleans right now. So I am unemployed, don't have 
any money, I don't have a house. Well, why can't I go to one of 
the private hospitals there?
    Dr. Fontenot. Unless there is an emergency pending and you 
need emergency care through their emergency department, I 
believe they would have difficulty in referring you to a 
private oncologist in town because at that point, you would 
need diagnostic services and you would need chemotherapy which 
is quite expensive and likely would be----
    Mr. Stupak. Are there any clinics there doing chemotherapy 
or anything like that?
    Dr. Fontenot. Not for uninsured patients currently, no, 
sir.
    Mr. Stupak. If I went to emergency room at a private 
hospital, would they accept me because it is chemotherapy? Does 
that qualify as an emergency?
    Dr. Fontenot. No, sir.
    Mr. Stupak. Because it is just a continuation of treatment 
of my illness, right?
    Dr. Fontenot. Maintenance of, yes, treatment of your non-
emergent illness.
    Mr. Stupak. My time has expired and I yield to the ranking 
member for 10 minutes. Mr. Whitfield?
    Mr. Whitfield. Thank you, Mr. Stupak. All of us were quite 
moved I think by the statistics that you all presented in your 
testimony. 48 percent more people dying each month and 90 
percent of employees losing jobs at Charity University Hospital 
and so forth. And it is so overwhelming what you face it is 
really difficult to decide where to begin.
    But I would like to ask the panel, is there one entity 
within the region that all of you work with to make 
presentations to the Federal Government and the State 
government on the needs of the health care providers? Is there 
one entity that is speaking for all of you or do you do it 
separately or how is that handled?
    Dr. DeSalvo. The way we have informally developed that kind 
of communication is through the PATH network, the Partnership 
for Access to Healthcare, so that even though it is a 
federation and we don't officially lobby, we do have an 
administrative entity, the Louisiana Public Health Institute, 
that can bring us, convene us, coordinate us, send out 
information and does things like make these maps so that we can 
visually see where we need services and then look at grids of 
gaps.
    Mr. Whitfield. Right.
    Dr. DeSalvo. They also then help communicate with the State 
government for us about what future resources might be.
    Mr. Whitfield. OK. So PATH is sort of the lead agency for 
all the health care providers in the area?
    Dr. DeSalvo. Not an agency, it is a collaboration.
    Mr. Whitfield. OK. Collaboration.
    Dr. Fontenot. If I might, we actually communicate and have 
very good communication with Dr. Cerise with the Department of 
Health and Hospitals who is the Secretary of DHH. And so he is 
kept in the loop as far as especially the regional needs and 
how we work together.
    Mr. Whitfield. Dr. Bertucci.
    Dr. Bertucci. We also participate in the Recovery Council 
which has representatives from Plaquemines, Cameron, St. 
Bernard, Orleans, and St. Tammany Parishes and also East Baton 
Rouge. So we also give information to them and serve mainly as 
an information center so that we can give that out to people of 
the needs, medically, psychiatrically, et cetera, of the 
different parishes. We serve more as an informational type 
situation.
    Dr. Wiltz. We also have the Regional 3 Consortium. 
Actually, the Governor had a Health Care Commission that was 
convened pre-Katrina and we were meeting on an ongoing basis to 
address a lot of health care needs. Post Katrina, we continue 
to meet those seven rural parishes that I represent, and there 
are some other regions that are also meeting and we do present 
to Dr. Cerise on an ongoing basis.
    Mr. Whitfield. All right. Now, prior to Katrina, how many 
hospitals were there in the New Orleans region? Does anyone 
know?
    Dr. Fontenot. I believe that there were about 12.
    Mr. Whitfield. Twelve?
    Dr. Fontenot. Don't hold me to that number specifically, 
but there were about 4,400 hospital beds.
    Mr. Whitfield. OK. And how many hospitals are operating 
today?
    Dr. Fontenot. In Orleans Parish, there are four including a 
children's hospital that does not treat adults, three others 
that are operating in Orleans Parish.
    Mr. Whitfield. But in Bernard Parish there are zero, is 
that correct?
    Dr. Fontenot. Bernard has none.
    Dr. Bertucci. St. Bernard had 240 hospital beds but the 
population was 67,000. Right now we have zero beds and a 
population of 25,000 that once the elderly and the Road Home 
Funds come we assume more people will come; and in 2 years we 
anticipate about 35,000 back and are working diligently to try 
to get a 40-bed hospital.
    Mr. Whitfield. And Dr. Wiltz, out in Franklin, you have a 
hospital in operation out there now?
    Dr. Wiltz. Yes. As a matter of fact, we have a new hospital 
that is being constructed. That will be open in July, but that 
was in the works pre-Katrina.
    Mr. Whitfield. Now, in the testimony it is quite obvious 
one of the major problems that you have is primary care 
physicians, and as someone that is a little bit biased toward 
these community health centers, I mean, I really see community 
health centers as being able to provide a major role in health 
care delivery around the country myself. I may be wrong, but 
that is the way I feel.
    Mr. Whitfield. Dr. Bertucci?
    Dr. Bertucci. Well, I am a private physician and I have to 
say this. I thank and I admire the public health system, don't 
get me wrong. But don't discredit private fee-for-service 
doctors.
     We get paid and compensated much less and provide 
tremendous services very, very efficiently. We are very cost 
effective, very productive because we have to be. We don't get 
subsidized, we don't get help. And we are trying to attract 
back the private primary care and the private specialists 
because I think these people need to be there, too.
     We need the public health network as an umbrella, it is a 
safety net, and also for service for the indigent; but we as 
primary care doctors probably saw--I saw people for free all 
the time. So don't discredit the fee-for-service.
    Mr. Whitfield. Well, I appreciate your comments on that. I 
think many of us outside of these disaster situations have 
looked at the community health centers being expanded to help 
address the uninsured for lack of a better--or people who 
simply don't have access--people who go into the emergency 
rooms--keep them out of the emergency rooms. And I agree with 
you, though, that we don't need to ignore fee-for-service 
primary care physician.
    Dr. Bertucci. At our clinic and in my clinic before the 
hurricane, no patient was ever turned away for money. Now, if 
they were rude, that is a whole different story; but for money, 
it is a different thing.
    Mr. Whitfield. Right.
    Dr. Franklin. Mr. Whitfield, I would like to say that 
approximately three-quarters of the private physicians that 
were in Orleans Parish are no longer there. The Health 
Department continues to get calls from private physicians who 
want to come back to the city who are looking for employment, 
looking for an opportunity to re-establish their practices, 
knowing that we have brick-and-mortar opportunities for them to 
work.
    Mr. Whitfield. Right. Three-quarters, these are fee-for-
service that are no longer there.
    Dr. Franklin. Yes, that is correct. That is the estimate, 
yes, sir.
    Mr. Whitfield. Now, one of the things I remember from our 
hearing in January, my memory may not be accurate so you all 
can correct me but what raised this issue in my mind, Mr. 
Bertucci, you were talking about the fee-for-service providers 
were penalized by FEMA because you were a fee-for-service. You 
were not eligible for funding, is that correct?
    Dr. Bertucci. Actually, it is if the hospital was fee-for-
service.
    Mr. Whitfield. OK.
    Dr. Bertucci. And therefore every time we applied for any 
type of financial assistance, they said that you didn't qualify 
because everything is based on pre-Katrina which is fee-for-
service. And I will just leave it at that.
    Each time we ran into those dead ends, we tried to--never 
in the history of the United States they said has a fee-for-
service hospital not come back. And I said, well, they are not 
coming back right now. What do we do?
    There is no answer to that. So it is not private 
physicians, this is a hospital.
    Mr. Whitfield. Yes. I am going to ask you a question and I 
mean I know the focus of this hearing is what can we do to 
help, and all of you answered the chairman's question 
specifically and you listed about 12 or 13 things that could be 
done immediately. But I remember in that January hearing some 
of the what I will say fee-for-service hospitals, private 
hospitals, were very close to going back into operation because 
they said all of them had insurance and from the insurance 
proceeds they could build back and get back into business. The 
State-operated hospitals were self-insured and with the size of 
the catastrophe that hit, there were not enough State funds to 
get them back in operation. So at Chalmette, if that was a 
private hospital, what about the insurance proceeds?
    Dr. Bertucci. Chalmette was in a dilemma where it had just 
expanded our hospital by 17 ICU beds and 40 private beds, had 
bought Methodist Hospital and Lakeland Hospital. So they also 
lost those other facilities at the same time. I don't know 
their insurance situation, although I saw an article in the 
paper so I don't want to quote things that are not true. But 
they did list the monies that they did receive, but their 
intentions appear to be that they are not coming back to this 
area. None that I know of at this point. So we recruited a non-
profit group, the Franciscans, to help us to secure funds to 
make our dreams come true.
    Mr. Whitfield. Yes, well, Mr. Chairman, as we said, this is 
an overwhelming problem that we face, and I recognize the 
importance of fee-for-service and do everything we can to 
encourage private, paid physicians to come back. But I do hope 
that our committee, full committee as well as subcommittees, 
can work to try to provide expedited facilities and funding for 
community health centers to provide that instant primary care 
help that is needed in that area.
    I will yield back the balance of my time.
    Mr. Stupak. There might be some good questions there for 
the third panel and ranking member's thoughts. Mr. Melancon, 
from Louisiana for 10 minutes, please.
    Mr. Melancon. I want to thank you all for taking the time 
to come here. I think the more I listen, the more questions I 
start having in my mind. I am not an authority on health care, 
but I am starting to see pieces starting to fall in and coming 
to understand what is going on.
    I guess what one of the things that we want to see happen, 
and the chairman and I and others have talked about it, we 
don't want this to be you come here and testify and you go home 
and we will kind of try a couple things and we will see you 
later. What our discussions have been are to bring the facts 
out as much as we can, try and make incremental steps here at 
the beginning with recommendations from you what the Feds can 
do, what maybe we can do to prod the Department of Health and 
Hospitals or whomever to move things. But in roughly maybe 45 
days or whatever the chairman decides to come back and revisit 
that, whether it is here in Washington or back in New Orleans 
and see what we have been able to accomplish, see what you have 
been able to accomplish, see what new problems are out there. 
And I guess the question to anyone in particular, do you think 
this would help us to start that track towards getting health 
care in the southeast region of this State back going in the 
right direction, and if so, do you have any specific things, 
suggestions that we ought to be making sure that gets done? Ms. 
DeSalvo?
    Dr. DeSalvo. Mr. Melancon, I mentioned this in my testimony 
that I do think it would be helpful. I think the oversight has 
caused some coordination in the community, being a sort of 
neutral party, helps to step in. We have been meeting ourselves 
to death for 18 months, so let us just remember that when we 
are doing it. And I would also say that the funding relief 
issue is really urgent, and I am not sure we can wait 45 days. 
We spend so much time begging for dollars from foundations just 
to keep our doors open, so while we are planning things, let us 
make sure we provide some immediate funding relief in some way 
so that we can focus on the other issues.
    Mr. Melancon. Doctor?
    Dr. Erwin. Yes, sir. I would certainly second that and I 
would certainly hope that you do come to New Orleans and the 
other parishes again mainly because speaking just for myself, I 
am not involved a lot in policy. I am sort of in the forest and 
sort of laboring every day and it is easy to kind of lose 
perspective. You are just thinking about yourself and how to 
get through the day and the patients you are seeing and how can 
I get this particular person any assistance, and it is so 
beneficial when people come to town who have knowledge, who 
have an overview, and who have the ability to change direction 
and to influence decision makers in Washington and in the State 
and everywhere else. I would certainly hope that you do come 
back and keep the focus that you are showing today and have 
shown.
    Mr. Melancon. Dr. Bertucci?
    Dr. Bertucci. Yes, I think it is important that we become 
your information source so that we can tell you pluses and the 
minuses of the things that we have been able to accomplish. I 
think that is extremely important. I think we always say be 
careful what you ask for because you might get it. And the 
problem is that right now, we are asking for specific things; 
but in 6 months, I can tell you the way things change, the 
problems will be different. So I do think it is important that 
we have the opportunity to verbalize the situation to you so 
you can have good information, updated information to make 
decisions on.
    Mr. Melancon. Dr. Wiltz?
    Dr. Wiltz. I think it is critical you keep the spotlight on 
the issue. I think it is critical that outcomes be measured and 
progress be measured. I don't think it is enough to throw money 
at any situation. I think you have to have accountability, and 
it is going to be interesting. This coming week we are 
expecting to hear from HRSA if all those applications are 
pending for new access points as well as expanded medical 
capacities that have been backlogged because you all just 
passed a Continued Resolution that opened that funding up. If 
that comes to pass in the next 6 months, those applications we 
have to be a mandator to get those facilities up and running in 
the next 6 months. So it will be interesting to see if those 
monies come. You know, we can give you a progress report on how 
that went.
    Mr. Melancon. Dr. DeSalvo, let me suggest being from south 
Louisiana, hearing politicians come down there and talk and 
take pictures and come back here and forget what they saw and 
didn't follow-up in many instances, I have expressed to the 
leadership in this House that we are tired of hearings. We want 
things to start happening.
    So what I think you see here in this committee, because of 
the chairman of the full committee and the chairman of the 
subcommittee, Mr. Stupak, is an effort to do exactly what you 
are saying, is make the meetings that you have more meaningful 
and that something comes out of them. And the chairman has 
assured me that he stands by that. We have got a great staff 
here that understands the issues and I think will help us.
    I want to encourage not only you but any panel members that 
come to please stay in communication with us or the staff 
because if you are anything like me, you are going to walk out 
the door and say darn it, I forgot to talk about such and such.
    So those ideas, those thoughts, don't let them fly past. 
Make sure that we get them because we want to do whatever we 
can possible. We know that money is a necessary evil, and that 
is tough but we have got to address that as time goes. But 
those things that will move us incrementally toward 
resurrecting health care like it should be in southeast 
Louisiana and for that matter a ripple effect that is starting 
to go out into the country areas, we need to catch it now 
before it gets to be too far gone.
    Mr. Chairman, I yield back my time.
    Mr. Stupak. If I may follow-up here on one point. You 
mentioned these HRSA applications pending before HRSA. How many 
are there and how long have they been pending?
    Dr. Wiltz. We submitted them last year. There was a 
statewide strategic plan that involved most of the community 
health centers with anticipating spread and expansion.
    Mr. Stupak. When last year?
    Dr. Wiltz. I can get that information to you. I don't have 
the exact number.
    Mr. Stupak. OK. So it has been pending for a while?
    Dr. Wiltz. Yes.
    Mr. Stupak. Have they given you any indication when you can 
expect a decision?
    Dr. Wiltz. We were thinking we would hear something this 
week. There was no funding available until you all passed that 
continuing resolution. So we are expecting to hear something 
hopefully this week or next week.
    Mr. Stupak. OK. Why would they not move your application, 
approving it pending funding? Why would you use funding as an 
excuse not to do your work until----
    Dr. Wiltz. Some of them were approved without funding 
because you all didn't have a budget until the CR was passed is 
my understanding.
    Mr. Stupak. Right, but I would still think that your work 
would go on, and when the funding came in you could move it. I 
mean, you are sort of in a dire situation down there in New 
Orleans. I mean, when we were doing the CR, there was never a 
question there. The question was just how much money was going 
to be there.
    Dr. Wiltz. Yes, there is also some State legislation 
pending now that if that goes through, we may have the 
opportunity to do an even greater expansion project.
    Mr. Stupak. So if HRSA approves your applications, then the 
State may help you expand these qualified clinics?
    Dr. Wiltz. Yes.
    Ms. Rowland. Mr. Chairman?
    Mr. Stupak. Yes.
    Ms. Rowland. There is also monies in the Deficit Reduction 
Act that allowed for development of community centers and 
access to care that have not been expended yet. So there is 
additional discretionary funds----
    Mr. Stupak. Well, that was the 2005 Deficit Reduction Act I 
think was signed into law in January 2006 if I remember 
correctly.
    Ms. Rowland. And the Secretary set aside those funds and 
has not yet allocated most of them, so that would be an issue 
you could raise in your third panel.
    Mr. Stupak. Allocated because there is no request or 
allocated because they just haven't gotten around to it?
    Ms. Rowland. As I understand it, it was set aside. There 
have been obviously requests for various support for community 
health centers but have not yet designated how they are going 
to allocate those funds out from the Department.
    Mr. Stupak. But couldn't the current health centers that we 
see before us here today access that money then, the Deficit 
Reduction Act of 2005 which was approved in January 2006?
    Ms. Rowland. One would assume they could under the terms of 
the Deficit Reduction Act.
    Mr. Stupak. I mean, that is 12, 14 months from here and we 
got money sitting here, it appears to be.
    Ms. Rowland. Well, I certainly think one of the things this 
committee can help do is to look at where there have been snags 
in resources that were intended to be utilized quickly that 
have not been yet utilized, changes that could be made to flow 
the funds. While it is not about money, it actually is about 
the money to develop the resources.
    Dr. Wiltz. I am just told that there are 287 new access 
point applications pending nationwide.
    Mr. Stupak. Well, they don't have to wait until the 287th 
one approved. If they did the first 10, you could move those 
out, roll them out, get them moving, right?
    Dr. Wiltz. I agree, and as our middle name indicates in our 
clinic, it is called Teche Action Clinic, and we are ready to 
roll. If we had the money, we could expand within 6 months.
    Ms. Rowland. One of the things we learned from the Katrina 
experience is that we don't have very effective emergency 
crisis management policies in any of our programs, whether it 
is Medicaid to just quickly be able to extend coverage to 
people who lose their homes and their insurance or to move the 
community health center applications through the bureaucratic 
hurdles. And so I think one thing to really look at is how can 
we simplify or set up streamlined procedures that in a case 
like this can relieve the DSH funds and move them quickly from 
being hospital-based to community-based or to cover people or 
to set up ways to get these community health center funds----
    Mr. Stupak. Sure but an emergency declaration is supposed 
to move that red tape quickly so you can respond quickly to the 
needs of the people who are devastated, and there has been no 
greater devastation of any natural disaster in this country 
than this one. So I would think that once you have a disaster 
declaration, that the critical needs such as health care 
certainly would be moved and go through this red tape a little 
quicker.
    Ms. Rowland. Right, and just as Mr. Green noted, there is 
no way that if it happened to Houston this year the procedures 
would be any better or any quicker.
    Mr. Stupak. Yes. Go ahead and then I got to get back 
because they want us to be out of here by 3 o'clock, and at the 
rate I am going we will never get to 3 o'clock. We will still 
be on this panel and we have got two more to go. Go ahead, Dr. 
Bertucci.
    Dr. Bertucci. Just one example of finding problems is that 
when the Social Service Block Grant came out, there was $110 
million. $30 million of that went to medicine, and our numbers 
got cut from $10 to $7.5 to $5 to $3.2 million and this is 
medicine. Now, I mean we are talking--we need access to funds 
for running our facilities but also we need some to build 
facilities. And we are not a public health clinic, so we need 
help, too, in order to build ourselves so that we can handle 
the volume that we need to handle in our parish.
    Mr. Stupak. Next we will go to Mr. Burgess of Texas for 
questions. Ten minutes, Mr. Burgess.
    Mr. Burgess. Thank you, Mr. Chairman. Dr. Bertucci, let me 
speak with you for just a minute and then we will go to some of 
these other things that have come up, particularly the snags in 
the facilitation. Now, your hospital is Port Chalmette 
hospital, is that right?
    Dr. Bertucci. The hospital is Chalmette Medical Center.
    Mr. Burgess. Chalmette Medical Center? And I visited that 
in October 2005. Of all of the things that I saw when I was 
down there that October, that hospital was probably the one 
about which I will have nightmares the rest of my life because 
it looked exactly like my community hospital in Texas, and I 
could well imagine what would happen to my community in Texas 
if suddenly three feet of mud, snakes, rodents, all the things 
that you talked about, the oil spill. I mean, you didn't need 
to just see the devastation, you could smell it and taste it in 
the air still 5 or 6 weeks later. And my understanding is that 
hospital no longer exists?
    Dr. Bertucci. Six feet of water came up in 45 minutes. I 
was actually there with 54 patients. And 6 feet of water came 
up in 45 minutes and 1 foot an hour to 13 feet. So this 
hospital got destroyed that day. 200 evacuees came over the 
railings and were housed in the center of the hospital in the 
hallways and all had to be evacuated by boat. The hospital was 
irreparable, and it is a total destruction, yes.
    Mr. Burgess. Well, let me ask you a question because when I 
was there obviously you couldn't even get into the area unless 
you signed a form for FEMA that you wouldn't hold them 
responsible for what happened to you. Are people repopulating 
the area now? I noticed they were when we were there, even with 
those restrictions.
    Dr. Bertucci. The most amazing thing is we have increased 
to 25,600. There are 11,000 houses that are being built. We had 
28,000 before, but 11,000 according to the newspaper, the last 
article I saw, are being built. We had 1,400 businesses, now we 
have 372 and people go, that is not very good. I said, when you 
started at zero, that is fantastic. We actually now have 
grocery stores, we have coffee shops, we have restaurants. We 
have no retail stores to buy clothes still, but people are 
coming back. The people of St. Bernard were the sheetrock 
hangers, the painters, the roofers. If they get their Road Home 
money, they will do this themselves; but they have got to get 
that money, and right now the Road Home is holding us up big 
time.
    Mr. Burgess. Let me ask you a question because this is a 
little different from the Ninth Ward question. This area was 
hit by the surge or the storm surge, is that correct? Not the 
levee breaks?
    Dr. Bertucci. Actually, the water that I saw, and I saw 
water coming that looked like it came from the industrial canal 
area, and then we had the break over by Lake Borgne. So there 
were two areas that flooded. The water that came in did not 
come as a wave. I saw just the parking lot fill up and then 
like I said, it gradually rose. I mean, 45 minutes is pretty 
fast.
    Mr. Burgess. Yes.
    Dr. Bertucci. But it went up to 6 feet so it wasn't like a 
wave that came and took the hospital down.
    Mr. Burgess. Do you have a place to rebuild? If you talk 
about bricks and mortar, do you have a place to build that is 
higher in elevation or will you have to raise that site up?
    Dr. Bertucci. Well, in order to coax the hospital back, we 
actually got 30 acres of land donated that is right on St. 
Bernard Highway. It is 8 feet higher than the other one. The 
hospital will be built up. The St. Bernard Highway--we wanted 
access after a storm to our hospital facility because you need 
it. St. Bernard Highway in 2 or 3 days and you could drive back 
and forth all along St. Bernard Highway. So the water receded 
very quickly. St. Bernard Highway had 5 feet of water. If you 
build up 8 feet and it is already 8 feet higher than where 
Chalmette Medical Center is, the hospital should be able to 
survive any type of flooding situation if they do the levee 
systems the way they say.
    Mr. Burgess. Well, obviously, the fundamental safety 
question is one that I think we take very seriously. How 
helpful has the Small Business Administration been to you when 
you are on this effort to try to rebuild?
    Dr. Bertucci. We have a civil group there that does help 
quite a bit, and they are working diligently with the 
Franciscans. I am a doctor, and I am trying to do my medicine 
along with recruiting the funds. So I can't say that Small 
Business and I have been in contact that often.
    Mr. Burgess. OK. Ms. Rowland, let us talk for just a 
minute. You referenced right in reference to the chairman's 
follow-up questions about the snags and facilitation of getting 
the funds. Now, when we received a number of displaced persons 
in the Dallas-Ft. Worth area, Secretary Leavitt came and said 
he was declaring a public health emergency because of the 
persons who were displaced by the hurricane and that funds 
would be made available. However, in Texas I know the mayors of 
Dallas and Ft. Worth have had some concerns because they have 
difficulty getting the money that has come to the State, they 
have had difficulty getting money from the State then to filter 
back to the municipal level. Has that been an issue where you 
are as well?
    Ms. Rowland. Well, I think that when we did some evaluation 
of the waivers that were granted to help the Medicaid patients 
to be covered and to provide some uncompensated care funds, the 
funding for that was actually delayed until the Deficit 
Reduction Act could be enacted to provide the funding.
    Mr. Burgess. Wait a minute. Let us back up for a minute 
because we passed a supplemental appropriation bill of I think 
it was $100 billion during the fall of 2005 after Katrina hit. 
It was almost like we were force-feeding Louisiana dollars, so 
I guess I am a little bit--I don't understand why the Deficit 
Reduction Act is coming into it even because those were monies 
that were appropriated several weeks before we did the Deficit 
Reduction Act.
    Ms. Rowland. But it was actually through the Deficit 
Reduction Act that the funding for those Medicaid waivers was 
actually put in place and where the uncompensated care funds 
were. So it was that that helped fund the services that were 
received in Texas. And a lot of it is just there were 
administrative steps that had to be gone through so that 
individuals showing up at a hospital could be enrolled in the 
Medicaid program. They had to refer back to Texas, and then a 
lot of the people who came to your facilities were uninsured 
people who were not on Medicaid, and that required the 
uncompensated care funds to flow.
    Mr. Burgess. Yes, separate out the Texas part for now. I am 
talking strictly of what was happening in Louisiana. Out of 
$100 billion that we passed in the fall of 2005, no dollars 
were available for patient care until we passed the Deficit 
Reduction Act in January 2006?
    Ms. Rowland. Well, certainly the Medicaid funds for those 
who were covered by Medicaid were available and then the 
Supplemental and the Deficit Reduction Act provided the 
additional financing to cover the State's share of those funds. 
So there were Federal funds flowing but additional funds came 
through the Deficit Reduction Act.
    Mr. Burgess. Do you have any ideas as to the dollar figure 
of Federal funds that have come to Louisiana? Does anyone on 
the panel have a concept?
    Mr. Melancon. If the gentleman yields?
    Mr. Burgess. No, in fact, let me get you--you can share 
that with me later. I wanted to ask Dr. Wiltz before I run out 
of time about the health centers that you have that are in the 
pipeline. That 287 was a figure for the entire country?
    Dr. Wiltz. Right.
    Mr. Burgess. You have at least 10 that are on line for your 
area, region 3?
    Dr. Wiltz. In region 3 we have four that are pending that 
right now.
    Mr. Burgess. That are pending? The applications are 
pending?
    Dr. Wiltz. They actually received the initials for in the 
90's on the initial applications.
    Mr. Burgess. And how long does it take then for HRSA to 
respond with funding if you received that high score?
    Dr. Wiltz. We are hoping as I said at the hearing, the next 
few weeks. Now, once we get the funds, we have a mandated time 
to get up and running.
    Mr. Burgess. Were those applications in process before 
Katrina hit?
    Dr. Wiltz. Yes.
    Mr. Burgess. They were? What is the timeline from when the 
need was recognized and those applications were initiated to 
where we are today where we are perhaps on the brink of getting 
funding?
    Dr. Wiltz. Maybe a year.
    Mr. Burgess. Well, Katrina was 18 months ago.
    Dr. Wiltz. As I said earlier, we had a Health Care 
Commission that they had a statewide strategic plan pre-
Katrina. So we knew there was a shortage of community health 
centers in the State already and it put in the pipeline for 
this expansion pre-Katrina. And then when Katrina hit, all that 
got put on hold so more recently----
    Mr. Burgess. It got put on hold?
    Dr. Wiltz. We had to resubmit it last year.
    Mr. Burgess. That was HRSA's requirement that you resubmit 
those clinics that you already knew you needed before you had a 
health care disaster of this proportion.
    Dr. Wiltz. I am trying to remember the timeline again, but 
we get the initial score and then we didn't get funding, I know 
that.
    Mr. Burgess. I am not being critical. It goes back to the 
issue of the snags and the facilitation. Again, $100 billion 
that we sent from here to you and Mississippi and to some 
extent Alabama, and where is the help for the people? That is 
what is frustrating me so much. Has it been more difficult to 
get those applications processed since Katrina with HRSA?
    Dr. Wiltz. I wouldn't say more difficult.
    Mr. Burgess. It was 18 months.
    Dr. Wiltz. We transmitted them. I mean, as far as them 
getting them? No, I think they have gotten them.
    Mr. Burgess. It is 18 months and your mortality rate is 
twice what it was with half the people, we saw on the video, so 
I mean that to me would qualify for a sense of urgency.
    Dr. Wiltz. Yes.
    Mr. Burgess. If we were ever to have a Federal agency 
recognize a sense of urgency, it seems that 18 months seems 
unconscionably long to me, particularly if those applications 
had already been in process before. Can you identify where it 
is that this snag is occurring, where this hold-up is 
occurring? Is it just with HRSA, is it something that is 
happening at the local level?
    Dr. Wiltz. No, I don't think it is at the local level. I 
think we all recognize that model is one that can work, and we 
have to get letters of approval and support from all the local 
folks. So we have gotten those. I don't know why. I could not 
answer that, where the snafu is.
    Mr. Burgess. OK. Mr. Chairman, I hope we are able to devote 
some time to winnowing that question down.
    Mr. Stupak. Hopefully the third panel. Next, Ms. DeGette 
from Colorado for 10 minutes.
    Ms. DeGette. Thank you very much, Mr. Chairman. If we can 
have the map of operating clinics and hospitals put up on the 
screen?
    [Slide shown.]
    Ms. DeGette. This is my question. We hear everybody--and by 
the way, everybody here is so dedicated. Some of you I have 
been working with for a long time, ever since this terrible 
tragedy; and I am always struck by the commitment of all the 
health care professionals, in particular the front-line 
providers, the doctors, the nurses, everybody that is out 
there. It is extraordinary to see.
    But my question is this. In the 18 months since Hurricane 
Katrina, what we have seen is a number of clinics springing up, 
and we have heard the success stories of some of them today. 
Each one seems to be pursuing different sources of funding with 
varying degrees of comparative success and working together at 
some level. Maybe I will start with Dr. Franklin with this 
question. Are these clinics springing up primarily because a 
need is seen by some group and then the group pursues funding 
or is there some coordination of these clinics and if not or if 
it is minimal, could we have better coordination so that the 
clinics that we are getting are really being used to respond to 
patient needs?
    Dr. Franklin. Ever since I returned from Dallas as an 
evacuee, we have been working together on a regular basis, 
sometimes twice a week as a group to coordinate our location 
based on the availability of facilities because remember that 
we have a number of facilities that were just simply destroyed.
    Ms. DeGette. Right.
    Dr. Franklin. The city of New Orleans, for instance, had 
more than 10 operating locations and is now down to four. I 
don't want to speak for Dr. DeSalvo, but I know that Covenant 
House was a location that was under negotiation early on, had 
to be worked through in terms of it as a permanent location. So 
we have spent a lot of time working together to organize the 
types of services we are going to provide, the communities we 
are working in, et cetera, et cetera.
    Ms. DeGette. But it still seems to me that we have huge 
unmet needs and everything from psychiatric care to chronic 
long-term care for cancer patients and diabetics and anybody 
with long-term chronic issues. What kinds of plans are being 
made to have a comprehensive system that is going to address 
all of those issues? Dr. DeSalvo, did you want to talk to that?
    Dr. DeSalvo. I do. We are trying to think beyond tomorrow 
as you say, and so for example, we are trying to move beyond 
sharing services like mammography, for example, where he is 
doing that for us and think about how we systematize what we 
are doing to create a medical home system of care, not just a 
bunch of little medical homes that talk to each other.
    Ms. DeGette. And how are you doing that, Doctor?
    Dr. DeSalvo. We are doing that through PATH which is our 
umbrella organization. So it is not a single entity, it is not 
a governmental agency, it is a not-for-profit agency that is 
run by the Louisiana Public Health Institute through which we 
all participate. We have leadership there, administrative 
leadership, but we don't really have the funds to systematize 
ourselves. That is an issue which we are working on and sorting 
that out.
    But for example, sharing health information about patients 
so that if a patient is at Vanges Clinic normally and works 
maybe near my clinic and needs to pop in to get a follow-up, I 
can access that record and the patient doesn't have to go back 
to the clinic by their home. So really, we are making it easier 
and more accessible for the patients.
    We are also working together to begin to measure how well 
we are doing care, what is the quality of care, how acceptable 
are we so we have some idea of where the gaps are and how we 
could improve.
    And then we estimate. For example, we are running some 
numbers we think that based upon the number of uninsured in the 
city that just for that population alone we need to add another 
30 physicians or so to get up to about 66 physicians. And we 
are putting some price on that and trying to sort that out. 
Where would we find that money and how could we grow together?
    Ms. DeGette. Doctor you wanted to add to that?
    Dr. Bertucci. Right now we are trying to set up medical 
homes in our clinic also. Of course, with three and now soon to 
be four physicians, that is extremely difficult. Part of the 
problem is that we are not computer savvy, so we have four 
physicians to treat 25,000 people. That comes out to one doctor 
in about 5,000 people. So it is kind of hard to learn to use a 
computer, and the computer actually slows us down initially 
because it is a 2-year learning curve for this. You are going 
to slow down five to seven patients a day. And with that it is 
difficult for us to incorporate it when you are the only 
doctors there. Where do we send those five to seven patients 
that we are not going to be able to see?
     But we did partner up with LSU as far as trying to get 
some specialty help. At least they are trying to. This is the 
plan, that we are doing investigations for a medical home, we 
are trying to get a computer system and we have some 
specialists to back up if we can do that.
    Ms. DeGette. Dr. Fontenot, do you want to add to that?
    Dr. Fontenot. Just to say that we have as the PATH group 
surfaced sort of as the primary care group with its hospital 
partner which historically has been Charity Hospital. But we do 
include mental health providers and to provide true medical 
homes, we are coming up with the same idea which is to look at 
outcomes. Funding needs to follow the patient, but it really 
needs to be predicated on outcomes and accountability. And I 
think the group of people you see here in front of you, 
including Dr. Bertucci, are really intent on proving that we 
are providing quality care.
    Ms. DeGette. Dr. Fontenot, I wanted to ask you another 
question. I have got an article from Times-Picayune called 
``Hospitals Run Out of Space, Emergency Room Patients Wait 
Hours for Beds to be Available''. And this article is from last 
week. I mean, it is not like from a month after the hurricane. 
And it says things like Jack Fin says we are in crisis in New 
Orleans, there is not a bed anywhere in the city, that it is 
getting worse. As soon as a bed opens up it gets filled. I 
wonder if you can talk to me why this is still going on and why 
it is getting worse?
    Dr. Fontenot. Well, in my humble opinion, part of the 
problem is lack of access to primary care. Many of our patients 
are showing up at our emergency department and our hospital 
sicker with chronic medical problems because they have lost 
access to their primary health care and primary care provider. 
So part of the problem is certainly a lack of access to primary 
care. We are trying to be part of the solution to that, 
actually initiated our own primary care clinics in November 
2005, have had some FEMA reimbursed trailers sitting on our 
parking lot because of local bureaucratic red tape that are 
intended to be placed in community settings as temporary at 
least but to increase primary care access. These guys have been 
doing a yeoman's job and doing the best they can, but they are 
certainly at capacity; and I think if there is one thing we 
could do immediately is open up additional primary care. But 
the second step for that is when Dr. Bertucci identifies a 
cardiology problem or an oncology problem, he has to have a 
place to send those patients. And so specialty access is almost 
as important or equally so.
    Ms. DeGette. Yes, Dr. Bertucci?
    Dr. Bertucci. I think the one other thing is that as we see 
them in the physician's office, instead of them going through 
the emergency room, we can make them direct admits. We can do a 
history, physical, write the orders, and have that person 
admitted. Sometimes it is just for observation. But we can 
alleviate that emergency room admission so to speak by directly 
admitting them to the hospital for observation with a 
specialist that we have contact with. It is difficult. I mean, 
we see very, very sick people right now. These are not the 
normal people that we were seeing. The physicians, the primary 
care doctors, we are out of our element a little bit in what we 
are handling; but we are doing it because we are the only 
people there. And when you go to send somebody to a specialist, 
whether it be a bladder doctor, an orthopedist, whatever, they 
are not there. You are talking about a 30- to 60-mile drive; 
and we need to set up some type of coordinated system to get 
the specialist back, along with the primary care, so we can do 
the medical homes, we can do the electronic medical records, et 
cetera.
    Ms. DeGette. Are you all working under some kind of a 
jointly--I know there was a plan developed which was submitted 
to Secretary Leavitt and then he kind of rejected it and said 
he wanted to go to this insurance program. But other than that, 
is there any kind of long-term plan that you are all operating 
on to--it seems to me what we need to do, we need to fully 
develop the primary care system so that people don't have to 
wait in line. Then we need a whole system of specialty care for 
folks so they can have a place to be referred, and then we 
still need to--and I am going to talk about this with the next 
panel--we still need to get a safety-net hospital system in 
place in the absence of Charity. So with all of that, is there 
some kind of plan to do that, Dr. Fontenot?
    Dr. Fontenot. Yes, I believe there is, and I think you have 
described it quite articulately because you need the primary 
care, specialty care, you need hospital partners to provide the 
hospital-based services, the expense of MRIs, the CAT scans, 
the surgical procedures that need to be done. And I think that 
with PATH as a chassis that we can certainly build on that and 
go forward. But we are certainly planning, have been, even 
prior to the storm actually the PATH group existed. I have to 
tell you at that point, it was a much looser coalition with 
different agendas. I think that one of the bright spots of the 
storm is that it has caused a coalescence I think of a group of 
those of us who are committed to provide services to this 
patient population.
    Ms. DeGette. And just one last question. Do you think that 
the primary thing the Federal Government can do is provide the 
funding streams that you have all talked about or do we also 
need to break some bureaucratic and regulatory barriers as well 
to help you realize that plan?
    Dr. Fontenot. I think you have hit it on the head. I think 
additionally is to try to help figure out some incentives and 
recruitment. I know that Dr. Cerise will probably be talking 
later today about recruitment efforts and how we can increase 
that because you will hear I think a person on this panel that 
we really need providers.
    Ms. DeGette. Thank you.
    Dr. Wiltz. Can I summarize that? Local problems deserve 
local solutions by local people using Federal money, if you can 
send it.
    Ms. DeGette. That is not always the way the Federal 
Government feels, but thank you for sharing your view.
    Mr. Stupak. Mr. Ferguson, 10 minutes, please. Dr. Bertucci?
    Dr. Bertucci. I have to say this or I can't go back to my 
parish. When you asked about the storm surge, the MR-GO was one 
of our biggest problems, and obviously that is being addressed. 
If I don't say that, they won't let me back in that parish.
    Dr. Fontenot. Then you will only have three doctors.
    Dr. Bertucci. Then we will only have three doctors, you are 
right. So I just want you to know, we are working on that 
issue. The storm surge that came, our levee system on the MR-GO 
was 18 feet, supposed to be, high. Of course, erosion had made 
it some 15. The wave that came through the MR-GO was 21 feet 
high. Now, what happened was that wave came, yes, there was a 
storm surge, but eventually it eroded through our levee system. 
Thank you.
    Mr. Stupak. Mr. Ferguson for 10 minutes.
    Mr. Ferguson. Thank you, Mr. Chairman. I want to thank all 
of our witnesses for your testimony today and your work to shed 
some light on some of the challenges that we all face together 
with regard to particularly the health care challenges post-
Katrina. I, like many, many other people, had an opportunity to 
spend several days over that Labor Day weekend following the 
storm just volunteering. We spent our time in Baton Rouge where 
so many of the folks had been brought out. We actually worked 
in a First Baptist Church in Baton Rouge where many moms and 
their newborns who had been airlifted out of the city were 
brought and there was--we have four little ones at home, so it 
was a nice opportunity to help some folks with their newborns 
and their little children and their families.
    We also did some work at the River Center Shelter just 
distributing clothes with some of the Red Cross volunteers. But 
it really, for me just thinking back, just to that personal 
experience, highlights really some of the health care 
challenges that you all are working to try to help solve; and I 
appreciate you sharing some of your experiences with us today.
    I just want to pick up on a couple of comments that a 
couple of my colleagues here have made and questions they have 
asked, and I wanted to ask Dr. DeSalvo, if you could perhaps 
elaborate a little bit further on the concept of the medical 
home. I know Ms. DeGette talked about this a little bit, and I 
am familiar with some of what you talked about in your 
testimony; but could you maybe expand on that a little bit 
further and maybe talk about specifically what you are doing at 
Tulane with regard to this concept, this medical home concept?
    Dr. DeSalvo. Medical home has actually become a buzzword in 
health care nationally at a time when we needed something like 
that to describe what we wanted to do post-storm. Before the 
storm we all really had an approach to this through the 
hospital-based care and very siloed care. So physician, and 
then you needed mental health, and then you referred elsewhere.
    A medical home is really a change in that approach. It is 
an approach to care where multidisciplinary teams that are 
generally led by a physician have a relationship with the 
patient. And so the values that that medical home has for 
things like patient-centeredness which includes cultural 
competency but also quality and helping patients self-manage 
their chronic disease and then using health information 
technology to support care. So to share health information with 
all the other providers, taking care of that patient, with the 
patient themselves so they can understand their medical issues, 
and then to do things like clinical decision support so that if 
we forget to order something that is evidence based and 
preventive, the computer if you will helps us remember and work 
with the patient to make them better. So it has some essential 
components of team-based care management supported by health 
information technology, and it also encompasses this idea that 
it is very accessible to the patients; and for us in New 
Orleans, that definitely means geographically accessible, hence 
the map. We have been using these maps since the early days to 
really visually see where we actually have placed care in our 
city, where the lights are coming back on and people are coming 
home, and where we think we might need to put new medical 
homes. It is insufficient by itself. They have to be linked to 
each other and then to secondary level care, specialty care, 
and then to a hospital when necessary. But it really should be 
the multidisciplinary entry point for the patient into the 
system.
    Mr. Ferguson. Chairman Stupak was talking a little bit 
before about the funding that is available through the Deficit 
Reduction Act and that some of those monies are still there. 
They are sitting there, they are not spent yet. In your 
estimation, what things can we be doing to help folks like you 
and your colleagues access some of these funds?
    Dr. DeSalvo. On our back-of-the-envelope calculations that 
we have been doing at home, we think there is sufficient money 
in the Deficit Reduction Act's allocation, and there is a 
category 5 the GAO reports about which is--at least when the 
report came out was about $136 million that could be used to 
restore health care services, but I don't have any policy 
experience. It seems to me that that is a sort of bucket of 
money we could use, and it would go a really long way because 
primary care is incredibly inexpensive. And that sort of money 
has already been allocated if you will and there are already 
providers over here trying to do the right thing, and we just 
need to put them together. In fact, we even have the mechanisms 
for the money to flow because of the SSBG, the Social Services 
Block Grant. We spent many months making contracts and 
relationships from the HHS to the States to a quasi-
governmental agency which then allocated it to the PATH network 
through the LPHI so that each of the clinics could then benefit 
from funding based upon a pretty rigorous budget that we put 
together. So there is already a mechanism through which we 
could allocate those funds.
    And if I could, I think the idea is if we don't do that, if 
we don't provide some bridge support for these clinics, we are 
going to go away. We are going to crash. And then we are going 
to go back to a system that was not working well for us which 
was using a lot of emergency rooms for care. And so it is a 
really important opportunity.
    Mr. Ferguson. It also seems like you have got a model that 
seems to be working. We have some funding available which could 
help it work, continue to work well. It would be tragic if we 
couldn't get our act together here collectively. Did you want 
to add something to that?
    Dr. Bertucci. Yes. I saw a sign and it said get well soon. 
And it said, we prefer, stay healthy longer. So I think that 
preventative medicine is a big thing.
    The only problem I saw with the medical home because I am a 
dinosaur primary care doctor who was raised by, see a patient, 
make some money, see a patient, make some money. And it is hard 
now to break into the system that the idea of this is that you 
are not paid by patient contact but by outcome, by trying to 
prevent the patient from coming in the hospital. You save 
money, everybody makes more money. It is difficult for me to 
conceive.
    The second problem is that primary care doctors, we are 
people doctors. We like seeing patients. If somebody sat there 
and said you don't have to see 40 patients anymore, I would 
say, I like seeing 40 patients. I mean, I like people and I 
like patients. So it is hard for me to delegate that out to 
other ancillary people, but that has to be learned.
    You have an opportunity now as you change the medical 
schools and everything else to train these people number one, 
with electronic medical records. I never used the computer 
until the hurricane, and I am much better at it. I actually 
made a power point but I got it here too late. But you can 
learn. We are teachable, OK? But the students come and these 
are the people that you have got to teach these concepts if you 
want them to work. The only thing I fear and let me tell you, I 
am a firm believer in patients taking responsibility for their 
illness; and when you get so many ancillary people involved, 
sometimes I worry that the patients start to depend on them and 
not take responsibility for their disease. So that is just 
something we can watch and we can learn, too.
    So I see a good benefit to the medical home, I see a great 
benefit to the electronic medical record, and I think it will 
work but we need to really start with a training situation and 
bringing the people out and training the primary care as they 
come in.
    Ms. Rowland. Mr. Ferguson, I think it is important to note 
that while everyone is talking about building capacity, putting 
community health centers in, that those centers rely on 
financing and ultimately just sending appropriated dollars to 
run those centers isn't what keeps them going. What actually 
keeps them going is to provide health care coverage that some 
of the patients in those centers actually have health insurance 
paying for their care.
    Today the average community health center receives more of 
its revenues from the Medicaid program than from the Public 
Health Service Grant dollars because they are seeing about 
three-quarters of their patients with Medicaid coverage and a 
quarter who are uninsured.
    So I think looking at the Louisiana situation as just an 
issue of putting public health resources on the table is not 
going to sustain these clinics over the long run. They really 
also need to address their tremendously high rate of 
uninsurance.
    Mr. Ferguson. I have got a minute-and-a-half. Go ahead.
    Dr. Franklin. The short term issue is so critical, I would 
like to remember everyone in this room the importance of the 
short-term issue. Our health fairs would not have been such a 
success, Operation Blessing would not be as busy as it is 
unless we had thousands of people who needed health care today, 
tomorrow, the next day. So a one-size-fits-all solution is not 
where we need to be today, tomorrow, and the next day.
    Clearly we have all worked to goals to improve our ability 
to respond to outcomes, provide information regarding outcomes, 
et cetera, but you can see before you a number of different 
types of health care providers, different times in our careers, 
different skill sets in terms of providing the care to 
patients, different solutions for different organizations.
    And so I would like to emphasize to this committee just 
having a community health center approach is not enough. We 
need all levels of approaches to the solution.
    Mr. Ferguson. Thank you very much. I yield back, Mr. 
Chairman.
    Mr. Stupak. Mr. Walden.
    Mr. Walden. Thank you, Mr. Chairman.
    Mr. Koehl, you indicated in your opening remarks that you 
have seen a 48 percent increase in the death rate in New 
Orleans.
    Mr. Koehl. Those numbers come from Dr. Kevin Stephens' 
office, a 48 increase per capita in the death rate post-
Katrina.
    Mr. Walden. Now, I guess the question that comes to mind is 
a lot of people fled New Orleans and did not come back. Is part 
of the reason there is a higher death rate is those who were 
sickest couldn't leave and are there? I mean, what are the 
contributing factors? That is such an astounding increase in 
the death rate.
    Mr. Koehl. Lack of primary care seems to be the major 
issue, and without the lack of primary care, you don't have a 
doctor a year ago telling you that you had high blood pressure.
    Mr. Walden. Right.
    Mr. Koehl. So what happens is you present yourself in a 
clinic situation with a heart attack when a year ago one 
prescription of a diuretic possibly and another hypertensive 
medication would have prevented that heart attack. So the lack 
of primary care for the last 18 months has exacerbated this 
problem greatly.
    Mr. Walden. So the makeup of the population has remained 
similar?
    Mr. Koehl. For the most part except this population is now 
uninsured and doesn't have anywhere to go for primary care.
    Mr. Walden. They don't have the access.
    Dr. Bertucci. I think the other thing you have to realize 
the amount of stress these people were living under.
    Mr. Walden. I can't, no.
    Dr. Bertucci. Stress will exacerbate every disease entity 
you have got, whether it be diabetes, coronary artery disease, 
it makes no difference. As we loaded people off the roof of the 
hospital into the boats, they didn't say boo. When we put them 
in helicopters, they were all in shock. And as you sit and see 
patients now, even the stoic patients--I mean, these are guys 
that worked in business offices, lawyers, everybody, they are 
getting depressed because they are exhibiting what I call 
emotional fatigue.
    Mr. Walden. Sure.
    Dr. Bertucci. They used up all their reserve energy and now 
they can't handle and cope anymore. So I think stress is a big, 
big part besides lack of access to care. Stress and dealing 
with everything that--they have got to deal with insurance 
companies, they have got to rebuild their homes, they have got 
to get a new job, they have got to handle--all their families 
are displaced. When you sit down with a family, all these 
families live together now. You go and you say, well, where is 
your mom? Well, they all moved. They are all over. I mean they 
are in four different spots when they used to be within two 
blocks of each other.
    Mr. Walden. I had to step out of the room for a few 
minutes, and I don't know if you answered this but you raised 
an issue, Dr. Bertucci is it about your inability to get an SBA 
loan. Why? That is what I don't understand.
    Dr. Bertucci. What had happened is my partner would not 
come back. So when I went to the SBA, they said, well, your 
partner has to sign that he will take the SBA loan, too. I 
said, well, he is not coming back. And I said, so what do I do 
about that? I had to go get his name removed and everything 
else. Then when I reapplied, again this is what I was told. I 
am not a bad credit risk. I was number one. I don't owe any 
money, and sometimes these SBA loans are forgiven. And I said, 
well, I don't want it forgiven, I just want a low-interest loan 
so I can rebuild my office. And this has been five appeals 
worth and the papers must be this high. We have jumped through 
every hoop that they have asked us to do, and we don't have 
that money.
    Now, I am working with the Franciscans, and I am very happy 
with them so I don't want them to think I am going to go build 
an office and move away. But the reality, and I am sure other 
doctors are going through this same situation, and we need that 
monies and we also need some monies for people that weren't 
there before the storm that may want to come back, some low-
interest loans to help them build a building, not just the ones 
that were there before. And they need to speed it up. The red 
tape is a killer.
    Mr. Walden. I guess that is what stuns me in the course of 
this hearing today is the fact you still have people, I assume 
from these videos, that are showing up the night before or 5 in 
the morning or whatever and waiting in lines and yet don't I 
recall that there was a lot of money sent out before the DRA 
for DSH payments like to Charity Hospital? I think Dr. Burgess 
indicated it is like a quarter-of-a-billion dollars was sent to 
Louisiana? What has happened to that money to help in this?
    Dr. Fontenot. Well, remember that the DSH money that flowed 
to the hospital only flows if service is provided, not a free 
check.
    Mr. Walden. I got you.
    Dr. Fontenot. So having been out of the hospital business 
for a period of months, immediately post storm we reopened 
clinics, started the tents that you saw in the parking lots, 
and talked with CMS about whether there would be some 
reimbursements because these are not licensed facilities.
     Remember, we have never been through this before. These 
were medical tents.
    Mr. Walden. Hard to have joint commission come and do their 
evaluations I assume?
    Dr. Fontenot. Exactly. Then we actually got back into the 
inpatient business temporarily for the trauma facility and a 
leased facility in an adjacent parish and actually just opened 
portions of University Hospital in November. Some of those DSH 
monies now over the last year have flowed to other hospital 
institutions who have been providing care. So there has been 
DSH money flowing, it is just not all been directed to the 
public hospital system.
    Mr. Walden. OK. And I guess what I would like to sort out, 
too, I mean, we have obviously voted to send a lot of money. I 
have. I am from Oregon. We don't get hurricanes thankfully. We 
have forest fires and a few things, but they are not as 
devastating to people and communities generally. I guess what I 
am trying to figure out, we have allocated a lot of money. What 
sort of impediments do you have to be able to access that and 
do some of those--are there issues like that the State needs to 
do something, ask for something that are holding up 
distribution of the money?
    Dr. Fontenot. I think that in panel 3. Dr. Cerise is going 
to be speaking to you about that----
    Mr. Walden. All right.
    Dr. Fontenot. And that probably would be better left to him 
for discussion.
    Mr. Walden. So none of the rest of you have any ideas on 
that? Dr. DeSalvo? You are smiling. You just don't want to say. 
Dr. Bertucci maybe?
    Dr. Bertucci. I think that we need more access to the 
Louisiana Recovery Authority so that we can get some of our 
community block grant money for buildings and structures. The 
infrastructure seems to be a taboo. Everybody says don't ask 
for this, don't ask for that. You are asking us what we need, 
and so we have said we need funding and we need buildings and 
we need a hospital in St. Bernard. The infrastructure, when you 
come to buildings, brick and mortar, everybody goes don't do 
that----
    Mr. Walden. But if we get back to what Dr. Fontenot said, 
you don't get DSH payments without a facility in effect, right? 
So you don't get the money to pay for the services if you don't 
have the bricks and mortar for the physicians to come back to 
and the nurses and everybody else that we need. Seems to me the 
first thing you do is establish some sort of physical facility 
so you can call it a hospital and then be able to practice 
medicine. You know, we do this in other emergencies around the 
world. If it is tents, it seems like you would call out the 
National Guard. I don't know.
    Dr. Fontenot. Or begin to allow DSH money to cover formerly 
unallowable costs, specifically physician costs. Those 
historically have not been covered for the public hospital, nor 
for any other health care provider. So that certainly is an 
option.
    Mr. Walden. OK. Ms. Rowland?
    Ms. Rowland. You know, often it sounds like the DSH program 
is a block grant which has flexible spending under it; but the 
DSH program actually was set up to provide additional payments 
for public hospitals when the Medicaid reimbursement formula 
was changed. So it has to be at least linked to direct-patient 
care. And I think you are right that one of the things we could 
look at as a better way of dealing with emergencies such as 
this is to have some more flexibility in terms of how quickly 
DSH funds could be reallocated. But the real funds that we keep 
talking about are discretionary, both the Social Services Block 
Grant and then in the DRA there were additional funds set up 
that were discretionary funds that could have been used.
    Mr. Walden. And where are those monies now?
    Ms. Rowland. Those have not yet been expended according to 
the recent report that just came out from the GAO. Those funds 
have been set aside and not yet expended.
    Mr. Walden. By whom?
    Ms. Rowland. By the Department of Health and Human 
Services.
    Mr. Walden. So DHS has those monies that we authorized, and 
they have not gotten to Louisiana?
    Ms. Rowland. It was $2 billion and they used about $1.5 
billion to allocate out for the Medicaid waivers that were 
given to the States where people were evacuated to and to 
Louisiana itself, but they also had a section V they call it 
which allowed for grants to be made to develop access to care 
and resources, and those have not been fully expended.
    Mr. Walden. $1.5 billion of the $2 billion has been?
    Ms. Rowland. And those were paying for the medical care 
costs of individuals either on Medicaid in Louisiana, 
Mississippi, Alabama, and the evacuees or for uncompensated 
care in those States.
    Mr. Walden. OK. One final question because again, I get 
asked this stuff in my district and I have supported the 
emergency relief and all. But one of the questions that 
consistently comes up is, are you spending our tax money to 
rebuild buildings that are going to get blown away in the next 
hurricane or flooded out? What is the answer I should give? I 
know at Charity Hospital I think I heard this morning that--or 
maybe it was you, Dr. Bertucci, that said somebody was offering 
ground that would be 8 feet higher but don't I recall the flood 
of your building was 13 feet? So you are still 5 feet under 
water.
    Dr. Bertucci. Well, yes. Actually what is going to happen 
is it is 8 feet higher, and the hospital will be built up 8 
feet. So you are talking about 16 feet. So I think that is No. 
1. Second, the floods that have occurred, if you look, 
obviously are on a 40-year type of a term. Well, you had the 
what, 1927 flood, rise in tide. You had Betsy in 1965, and then 
you have Katrina. I am not saying that we don't want to prepare 
for that, but the reality is that we can--if they fix the MR-
GO--we didn't flood from the hurricane, we flooded from the 
levies breaking. So if we could fix the MR-GO, raise the levies 
up to what they said they were going to fix, we should be able 
to weather those type of storms. Now, there is no guarantee. 
That is why I think it is hard to recruit people to this area, 
number one, to live in what were are living in, two, to 
practice in the situation we are practicing in. Without 
facilities, it is impossible. The people, though, amazingly, 
multigenerational, they want to come home. And with the 
hospital you are going to get your elderly people back, you are 
going to get your specialists back--you can't get the 
specialists without the hospital and without the old people, I 
mean, nice old people.
    Mr. Walden. Mr. Chairman, I know my time has expired. I 
just wanted to say thank you for what you do in your 
communities. The commitment you all must be adhering to is hard 
for us to really fully appreciate I think unless we were on the 
ground there. So thank you and your colleagues for what you do 
to try and improve the health care and the lives of the people 
of Louisiana and the Gulf Coast. Thank you, Mr. Chairman.
    Mr. Stupak. Thank you. Mrs. Blackburn, I understand you 
want to pass on this panel until next panel? One question? Go 
ahead.
    Mrs. Blackburn. Thank you, Mr. Chairman, and I want to 
thank all of you. I appreciated the attendance and the interest 
when we did our first hearing in Louisiana last year to follow 
up on this issue. And Mr. Walden was on the line of questioning 
where I want to go, and I do have questions for Dr. Cerise when 
he comes about the funding. And I want to clarify that I am 
understanding right. Ms. Rowland, you are saying $2 billion was 
appropriated, $1.5 billion has been spent?
    Mrs. Rowland. Well, $1.5 billion was actually allocated out 
and the States are filing claims against it, so it hasn't 
totally been spent but it was allocated to the States.
    Mrs. Blackburn. All right. And the section V money is not 
fully expended is what you were saying?
    Ms. Rowland. Correct.
    Mrs. Blackburn. OK. I wanted to seek clarification on that, 
and then Dr. Bertucci, I think you said the LRA, you all were 
having trouble accessing the funds via that?
    Dr. Bertucci. Actually I met with the LRA subcommittee, and 
again I am not supposed to get controversial but what I was 
told was that medicine was not a priority when we met. They sat 
down and a survey in the beginning of the hurricane and said, 
what are the needs? What would make you come back?
    Mrs. Blackburn. OK.
    Dr. Bertucci. Now, what made them come back were levies, 
jobs, housing. So that is very important. So they did put those 
ahead of us--police, schools, churches, fire, medicine. So we 
were told as we met that the reason that we had not been there 
was that medicine was not a priority. Now, I am assuming we are 
a priority now, and I am hoping after this meeting we get some 
access to them. The problem comes that we are being told now 
that maybe the infrastructure monies that they had were already 
delegated out to other hospitals and different other 
situations.
    And I want to say one thing real quick. Thank the United 
States of America and all of you and everybody who sent 
donations down here to help us through this. Louisiana greatly 
appreciates it.
    Mrs. Blackburn. OK. And then of you all who are practicing 
medicine, how many of you are practicing in a brick-and-mortar 
facility? OK. All right. And then the Operation Blessing, is 
that in a brick-and-mortar yet?
    Mr. Koehl. No, it is not.
    Mrs. Blackburn. It is not? OK. So that is still in a 
temporary or a tent?
    Mr. Koehl. No, it is mobile units brought together----
    Mrs. Blackburn. In the Wal-Mart?
    Mr. Koehl. No, we are not in the Wal-Mart.
    Mrs. Blackburn. OK.
    Mr. Koehl. We are East Orleans on Reed Boulevard.
    Mrs. Blackburn. All right. Thank you.
    Dr. DeSalvo. Mrs. Blackburn, for clarification, our clinic 
was a men's dorm that we are renovating. It is not really a 
clinic though we are in it and we have air-conditioning.
    Mrs. Blackburn. Now, has the Health Care Authority in 
Louisiana going to change their process on how they permit? I 
know they were giving permits even though you all had your 
generators and your storage in the basements, and they were not 
supposed to be doing that. They were supposed to be on the 
fourth floor. Have they changed the way that they are going 
about giving the permitting? Does anybody know?
    Dr. Wiltz. The State enacted a new building code to all new 
construction, so all new construction has to meet----
    Mrs. Blackburn. New construction, right?
    Dr. Wiltz. Yes.
    Mrs. Blackburn. OK. Thank you for that.
    Dr. Fontenot. At Charity Hospital it is important to 
remember that our switchgear is still in the basement. FEMA 
will not allow you to rebuild anything that is not out of the 
flood plain without mitigation, et cetera. But they do require 
with our repair of University Hospital back to its previous 
status that we provide some asset protection which will include 
a little flood wall to keep water from getting into the 
basement. But again, they only allowed that because it is 
considered a temporary facility.
    Mrs. Blackburn. OK. I know the State of Louisiana was self-
insuring. Have they changed that process so that they are no 
longer self-insuring their infrastructure? Dr. Wiltz, do you 
know that? If not, I will ask Dr. Cerise on panel three.
    Dr. Wiltz. No, I do not know that.
    Mrs. Blackburn. Nobody knows? OK. Thank you, Mr. Chairman.
    Mr. Stupak. Thank you. On behalf of the full committee, 
thanks for being here today and helping us out. We look forward 
to continuing to work with you. This will not be the last 
hearing. It will not be a year. We will keep the pressure on, 
and you will be seeing a lot of us. Thank you for coming.
    Dr. Wiltz. Thank you.
    Mr. Stupak. We are looking forward to hearing from our next 
panel. Dr. Alan Miller, interim senior vice president for 
Health Services, Tulane University Health Sciences Center; Mr. 
Gary Muller, president/CEO, West Jefferson Medical Center; Dr. 
Pat Quinlan, CEO, Ochsner Health System; Mr. Leslie Hirsch, 
president/CEO, Touro Infirmary; and Mr. Donald Smithburg, 
executive vice president/CEO, Louisiana State Health Care 
Services Division. If those folks would please come forward?
     Gentlemen, as you know, this is Oversight and 
Investigations hearing of the Energy and Commerce Committee. We 
swear-in all of our witnesses.
    [Witnesses sworn]
    Mr. Stupak. Thank you. The witnesses are now sworn. We will 
start with Dr. Miller. We have your testimony. If you would try 
to summarize it there in 5 minutes that would be of great help 
to us, and thank you for being here.

  STATEMENT OF ALAN MILLER, PH.D., M.D., INTERIM SENIOR VICE 
    PRESIDENT FOR HEALTH SERVICES, TULANE UNIVERSITY HEALTH 
                        SCIENCES CENTER

    Dr. Miller. Thank you for the opportunity to speak about 
the state of health care in the New Orleans region 18 months 
after Katrina, and Tulane University's role in the recovery.
    Since Hurricane Katrina, we have seen enormous progress in 
some areas, in other critical areas we have seen shockingly 
little progress resulting in a stalemate that will make reform 
more difficult and threaten the existence of our training 
programs.
    I want to thank the committee members for your support for 
the region. I am Alan Miller. I represent Tulane University, an 
institution of higher education that not only provides health 
care but also trains our future doctors. The past year-and-a-
half has been challenging for everyone in New Orleans, 
especially those of us trying to rebuild the broken health care 
system, provide care, and train physicians. Tulane University 
Health Sciences Center suffered losses of greater than $200 
million in property damage, lost research assets, and revenue. 
Through the storm and since, Tulane, the largest employer in 
Orleans Parish, has continued to do exactly what it has done 
since 1834, provide health care, educate physicians, and 
advance medical knowledge.
    When Katrina struck, it left our medical students, 
residents, faculty, and staff scattered across the country. In 
3 weeks, a medical school for Tulane students taught by Tulane 
faculty was up and running at the Baylor College of Medicine, 
and our residents were placed in training sites in Texas, 
Louisiana, and throughout the country.
    By July 2006, there was a 51 percent reduction in the total 
number of physicians filing claims in region 1. Loss of 
clinical faculty at Tulane and LSU not only decreased the 
available physician workforce but reduced the clinical faculty 
needed to teach future physicians. With the public hospitals 
down, care for the uninsured has been assumed by private 
hospitals and physicians. State Medicaid DSH has historically 
been directed to the safety-net hospital system. With the 
closure of Charity, there remains a major gap in funding that 
care. Since Katrina, Tulane faculty has provided $6.8 million 
in uncompensated care, and we have absorbed $5 million in 
unreimbursed training costs. Despite this, Tulane has retained 
faculty by guaranteeing salaries through June 2007. In effect, 
a private, non-profit educational institution has been using 
its impaired and limited financial resources to underwrite 
health care and graduate medical education and help preserve 
the health care workforce. Tulane cannot continue to do this 
and survive.
    In order to preserve the physician workforce, we need 
immediate funding for providing care. Approximately $30 million 
per year is needed to provide basic reimbursement to area 
physicians for uncompensated care. We ask that you consider a 
mechanism to provide funding directly to providers. We ask that 
Congress consider a grant program to provide incentives to 
recruit clinical faculty to teaching institutions in the 
hurricane-affected region, for loan forgiveness, relocation, 
and bridge funding.
    Additionally, there must be a focus on the future of GME. 
This is a long-term issue but requires immediate attention. 
Teaching faculty and residents provided a large portion of the 
care for most underinsured patients in the U.S. Moving medical 
education to the front burner of health care redesign is 
critical. Some look at medical residents as moveable parts that 
could be rearranged to maximize CMS reimbursement. This is far 
from the truth. Issues of program interrelationship, critical 
mass, and quality educational experience must be considered or 
accreditation will be at risk.
    Pre-Katrina, Tulane trained 520 residents. At any one time, 
240 of those residents were on rotation at Charity. Today 
Tulane trains a total of 327 residents. Special CMS waivers 
were required to allow residents to continue their training at 
new sites. Protracted negotiations took place requiring Tulane 
to hire outside counsel simply to navigate the process. This 
should not be allowed to happen in future disasters.
    Katrina revealed a major flaw in the way we fund GME. When 
Katrina hit, the medical schools were left with the 
responsibility for resident-in-training and salaries but were 
unable to seek reimbursement from closed hospitals and most 
cases the hospitals that accepted them.
    For the protection of all but most critically that of the 
trainee, medical schools must have greater control over both 
training and funding when a disaster results in total or near 
total closure of a teaching hospital. We ask that the 
committees consider a hearing to specifically deal with the 
issues surrounding GME. In addition, Tulane offers to host a 
panel of all stakeholders to re-evaluate resident training and 
financing when disruption of training occurs.
    Of critical importance to our medical schools is the New 
Orleans VA Hospital. Pre-Katrina, Tulane faculty and 100 
residents provided 70 percent of the patient care at the VA. 
Outpatient clinics have reopened in the downtown location where 
there are 26 Tulane residents and visits are up to 75 percent 
of pre-storm. It is essential to re-establish a hospital in 
downtown New Orleans. Veterans have expressed a strong desire 
to have their care resumed by their physicians and the system 
that has served them well. The facility must remain proximal to 
the medical schools so that highly skilled Tulane and LSU 
physicians can provide state-of-the art care.
    The gridlock we find ourselves in is destructive, both 
short and long term for our hospitals, medical schools, and the 
public we serve. The time has come for all to set aside their 
differences, share vital data, and have an objective party lead 
constructive negotiations.
    We have many challenges to overcome. With the support of 
the American people and leaders such as yourselves, we will 
recover.
    Thank you again for your time and support.
    [The prepared statement of Dr. Miller appears at the 
conclusion of the hearing.]
    Mr. Stupak. Thank you, Dr. Miller. Mr. Muller, please, for 
5 minutes.

  STATEMENT OF A. GARY MULLER, PRESIDENT/CEO, WEST JEFFERSON 
                         MEDICAL CENTER

    Mr. Muller. Mr. Chairman and members of the committee, I am 
Gary Muller, president and CEO of West Jefferson Medical 
Center. I am grateful the committee has expressed a continued 
interest in the worsening state of the health care system in 
the New Orleans region.
    West Jefferson Medical Center, located 10 miles from 
downtown New Orleans, is a 451-bed public community hospital 
and health system with programs and services across a complete 
continuum of care. West Jefferson was one of three hospitals 
that did not close after Hurricane Katrina and is now one of 
the eight safety-net hospitals serving all patients.
    Pre-Katrina we were projecting an $8 million profit in 
2005. When I testified before this committee January 2006, we 
had incurred operating losses of $30 million. I come to you 
this time with a heavier burden of $48 million in operating 
losses.
    Recruiting nurses and physicians has become a near 
impossibility, and the supply and demand of the entire health 
care workforce has reached a crisis. Prior to Hurricane 
Katrina, we spent a total of $2 million annually on agency 
nurses. Currently we are forced to spend $1.1 million each 
month which was $13 million in 2006. It is extremely difficult 
even to have a physician visit our city for the possibility of 
working there.
    Certain financial commitments are necessary to sustain 
hospital operations in our area. The 2007 Wage Index update 
that was effective October 2006 was based on wage data from 
Medicare Cost Reports beginning during fiscal year 2003. Thus, 
there was almost a 3-year lag between the data being used to 
develop the wage index and the actual implementation of the 
wage index that incorporates the data. Under the CMS 
methodology for incorporating changes, our index will not begin 
to reflect the changes we have experienced in labor costs until 
October 2008. I am requesting that you consider a special wage 
index adjustment for hospitals in the affected area to help 
offset some of the losses.
    West Jefferson is supportive of the CMS Medicaid proposed 
rule on intergovernmental transfers and certified public 
expenditures. As we understand the proposed rules, CMS will 
require States to direct Federal funds directly back to 
governmentally operated health care providers. This certainly 
seems aligned with how the Federal Government intended these 
funds to be used in the first place. For West Jefferson, we 
believe this will result in equitable distribution of funds 
directly to our hospital without going through the State. We 
worked diligently to offer language to the Stafford Act that 
would qualify hospitals as eligible recipients of the community 
disaster loan program. With hard work of our entire delegation, 
we were successful in securing that funding. It was vital for 
our hospital in the few months following the storm, and we 
incurred substantial financial losses.
    Both the House and Senate appear to be on the verge of 
floor action to permit the forgiveness of CDL which has been 
the practice pre-Katrina. I strongly ask for your support to 
give these loans their currently obligated payback and we 
cannot do that.
    We have implemented an operations improvement action plan 
whereby approximately $8 million of savings or revenue 
enhancements have been identified at West Jeff. Most of the 
cost savings center on reducing agency nurse costs which 
included only two nurses pre-Katrina and grew to 92 agency 
nurses that we employ presently. We have also improved 
efficiencies so that the emergency room can flow better with 
the increase in patient volumes. West Jeff also supports two 
federally qualified health centers in our service area to 
support the medical home model that you have heard about 
earlier.
    One day last week, we were simply overwhelmed with 32 
admissions waiting in our emergency department. Simply put, 
every available bed in our hospital, which was 55 more than 
pre-Katrina, was occupied; and we had 32 admitted patients 
waiting on stretchers in the hallway of the emergency 
department. Our ambulances and our paramedics routinely wait 
with these patients which takes these guys and ladies off the 
streets to serve the patients in need.
    Unfortunately this is quickly becoming the norm as there 
are simply not enough staffed beds in the New Orleans region to 
care for the volume of patients. We put in a phone call to the 
Department of Health and Hospitals, and the next day the 
Secretary, Dr. Cerise, was at our hospital offering assistance 
and potential solutions. He has also been helpful with his 
support of the uncompensated care pool that was developed at 
the State level to offset some of our growing indigent care 
costs. He is also responsive to West Jefferson's plan to open 
12 more mental health beds by funding them. Nevertheless, the 
shortage of beds, particularly psychiatric and acute care, is 
at a critical point; and more funds would allow us to open more 
beds.
    However, I remain optimistic that our issues will 
eventually be resolved by both public and private hospitals, 
community clinic providers, payers, and governmental officials 
at the State and Federal levels to provide a united solution in 
the new model that will improve care for all citizens of 
Louisiana. I have great faith that our Federal and State 
leaders will not abandon us. Together we can make a difference.
    Thank you very much for your time and your interest.
    [The prepared statement of Mr. Muller appears at the 
conclusion of the hearing.]
    Mr. Stupak. Thank you, Mr. Muller. Dr. Quinlan.

   STATEMENT OF PAT QUINLAN, M.D., CEO, OCHSNER HEALTH SYSTEM

    Dr. Quinlan. Thank you, Mr. Chairman. I want to thank you 
and the committee and other Members of Congress who have 
actually come to New Orleans. You have to see it to begin to 
understand it. Seeing is beginning to believe. I want to remind 
everyone, whatever you have seen, you have only seen a small 
part of it; but we appreciate your interest.
    Particularly after speaking with your staff, I think this 
effort will make a difference; and I personally am very 
hopeful. There is much to be done. Many people have worked 
together to answer the kind of questions that you have raised 
here.
    I would like to tell you a little bit about us. We are 
Ochsner Health System, an independent, non-profit organization 
made up of seven hospitals and 32 clinics, employing about 
8,400 people. We are the largest private employer in the State 
of Louisiana. We have as a result borne much of the brunt of 
this storm. It is also of historic interest I think for you to 
know that Alan Ochsner, our namesake, made the first connection 
between smoking and lung cancer; and for that he was ridiculed 
by the medical establishment.
    We are one of only three hospitals. Our other two sister 
hospitals in Jefferson Parish took care of the patients during 
the storm. We have been on the point since the beginning. We 
have done this despite ongoing interruption of our care during 
and after Katrina, and we have cared for everyone who came 
through the doors. Importantly we are located just a few 
hundred yards from Orleans Parish border, so sometimes the 
discussion gets a little misleading for people who don't know 
the geography.
    We made the decision to stay open because simply that is 
our public duty to do it. Since Hurricane Katrina, Ochsner 
professionals have quietly gone about the business of taking 
care of thousands of people despite the fact of receiving 
significant damage to our facilities. We have been diligent in 
restoring our facilities and moving ahead with the idea we will 
just keep going until we run out of gas because so many people 
depend on us.
    We also had to provide food and shelter for our staff as 
well as pay them for their increased long hours during this 
time. Our extensive disaster preparations played a major role 
in our ability to mitigate its damages and our ability to 
provide full services, even under emergency conditions, and 
this preparedness allowed us to continue to meet the needs of 
the community. As short-handed as they are, I think it would 
have been much worse if we had not been prepared.
    We have had numerous and extensive financial losses that I 
think were, for the purpose of brevity, were covered in our 
submitted testimony.
    I would like to tell you about clinical care. It is 
something that I think is at the heart of the question here. We 
currently employ over 600 physicians and about 130 mid-levels. 
That is about 750 people who take care of people directly and 
importantly receive no direct care for taking care of patients. 
That is one reason we bear a disproportionate share because we 
have this large group.
    We don't seem to fit the standard stereotype I think what 
you think of in medicine. We are basically everything. We are a 
large academic institution. We are a large ambulatory system 
and we are also a hospital system. Basically our Government is 
not prepared to deal with organizations like that, the kind of 
organizations actually you need most during a crisis.
    We are one of the largest private, non-university based 
academic institutions in the country with over 350 residents 
and fellows. We have about 70 guest residents from Tulane and 
LSU. We provide advanced research, translational research, and 
conduct hundreds of clinical trials. In addition, we provide 
training for over 400 allied health students. These are the 
folks who make hospitals run--as well as over 700 medical 
students from both LSU and Tulane with little or no funding to 
support that mission.
    The importance of Ochsner's graduate medical education 
program has increased greatly since Katrina because we are the 
only fully functional academic center in New Orleans right now. 
We currently have done everything we can to support our 
schools. We want them to come back. They are important for our 
future as a State. We know that a significant number of 
physicians locate to practice where they train, and we are 
training the next generation with our colleagues.
    The sad reality is we are bleeding red ink as a result of 
holding this fragile health care system and medical education 
system together. We are caught in the middle of an inflexible 
bureaucracy. Basically we have State, local, and Federal 
Governments living off of our balance sheets at the moment; and 
we can't do it much longer.
    Simply put, well-intended money to help us as providers is 
not reaching us on a timely basis; and when it does, it is 
insufficient to meet our needs. Basically, we put the company 
on the line to do the right thing and the bet is still out. 
Despite our efforts at retention, we had no layoffs; we have 
laid off no one. We still lost over 2,000 employees and more 
than 100 physicians after the storm because people just decided 
they had had enough. As a result, we are experiencing a 
shortage of highly trained physicians, nurses, and support 
staff. Recruitment and retention continues to be a major issue 
for us. We are spending $20 million annually in employment 
agency fees to staff critical areas to stay open. We are losing 
money to stay open and meet the public need. Our wages have 
increased close to 11 percent. While our health care system 
costs have increased almost 11 percent, the Medicare wage index 
decreased almost four percent; and the difference is something 
we cannot sustain.
    To attract talent, we need to cooperate, to operate, and to 
increase our profitability as wages increase as well; and we 
have been unable to do that. A permanent fix, as Gary 
mentioned, to the Medicare wage index would be most helpful in 
addressing this issue of sustainability.
    In 2006 the Ochsner Clinic was forced to increase physician 
salaries by $6 million or 5 percent, and we anticipate a 
similar increase this spring.
    In addition, we are often forced to pay significant 
recruitment bonuses to attract staff at all levels. We are 
committed to remaining full capability until the end.
    Ochsner Health Systems also faces a $4.4 million in 
outstanding unemployment claims despite the fact that we had no 
layoffs. This is an issue between the State and us and the 
Federal Government, and in my submitted testimony, we have a 
suggestion in mind.
    Funding for uncompensated care is also an issue for us. 
Ochsner has done more than its fair share for caring for the 
uninsured in the region. We have seen over 40,000 patients in 
our system, and our inpatient costs alone cost over $25.5 
million. We have been reimbursed about $12 million for that. 
Please note that I am referring to costs and not charges, and 
these refer to hospital services only and does not address our 
clinic load.
    With over 1 million clinic visit a year and over half of 
our revenue coming from physician services, our approach is 
simply not understood by government at all levels. We are more 
than a hospital system, we are a medical system. Our uninsured 
and Medicaid volumes have increased 50 percent from pre-Katrina 
levels. The time between providing the care and receiving 
reimbursement has become excessive. We recommend that money for 
reimbursement for the care of the uninsured follow the patient 
directly and not go through multiple parties in order to 
expedite these funds receiving providers of all kinds on a 
timely basis. Predictable funding is absolutely essential to 
predicable access for patients as you heard from the previous 
panel. And access is at the core of good medical care.
    I would like to talk about our efforts to expand capability 
and the retention of health professionals.
    Mr. Stupak. Could I ask you to summarize a little bit 
there? We are way over.
    Dr. Quinlan. Yes.
    Mr. Stupak. Thanks.
    Dr. Quinlan. OK. Basically we have a lot to do. We have 
acquired new hospitals, some of which were in the news for 
failing and we will need some help in restoring those to make 
sure for the next crisis that they will be there. And also for 
the professionals who depend upon them for the livelihood. They 
will have a place to work and a place to stay.
     I would like to say just in closing, I think the promise 
of ongoing supervision and collaboration with this committee 
will make all the difference between what we had before and 
what we will get in the future. Thank you for your efforts.
    [The prepared statement of Dr. Quinlan appears at the 
conclusion of the hearing.]
    Mr. Stupak. Thank you, Doctor. Mr. Smithburg, please, for 5 
minutes.

STATEMENT OF DONALD R. SMITHBURG, EXECUTIVE VICE PRESIDENT/CEO, 
   LOUISIANA STATE UNIVERSITY, HEALTH CARE SERVICES DIVISION

    Mr. Smithburg. Chairman Stupak, Ranking Member Whitfield, 
members of the subcommittee, I am Don Smithburg, CEO of the LSU 
Health Care Services division which comprises most of the State 
public hospitals and clinics that serve as the public teaching 
system in Louisiana. I also represent the facilities that Dr. 
Fontenot showed you in her brief video during the first panel. 
Many members of this subcommittee, as well as a delegation led 
by Representative Clyburn, took time out to travel to New 
Orleans several times to survey the devastation. I have had the 
privilege personally spending quality time with each of you and 
your staff in the field and very much appreciate that and your 
commitment to our region and its people.
    Ms. Blackburn asked of the previous panel a few question 
about bricks and mortar, so let me tell you very briefly our 
story in that regard. Immediately after Katrina destroyed our 
buildings, we established limited clinic and urgent care 
services in 10 hospitals, then in the Convention Center. We 
operated a major clinic in a vacated department store right 
next door to the Superdome, and in November 2006, just a few 
months ago, we reopened part of our University Hospital. FEMA 
indeed funded this renovation, provided the facility would be 
operated only on a temporary basis. This small interim hospital 
now operates 20 clinics which is in stark contrast to the 160 
clinics that existed on the campus before Katrina. LSU plans to 
open seven neighborhood clinics in the area as soon as permits 
are finally granted by the city.
    With the destruction of Charity Hospital, our flagship, the 
region lost its only level one trauma center as noted by 
Representative DeGette and other members. LSU then leased space 
at a suburban Ochsner facility and began providing trauma 
services there in April 2006. Trauma moved back to the interim 
hospital just last month.
    Also, LSU has indeed entered into formal collaboration with 
the VA to build and operate a joint facility to permanently 
replace public and VA hospitals. While this innovative project 
will not be realized for a few years, the partnership and the 
promise of a state-of-the-art academic health center does help 
us resolve some of our short-term challenges, such as 
attracting and retaining LSU and Tulane faculty and 
researchers, not to mention the thousands of jobs and 
significant value to the region's economy. And let me be clear. 
LSU sees this project, this VA collaborative, as a meaningful 
step toward health reform, not the same old Charity model. We 
more than everyone want to get away from the so-called two-
tiered financing of health care.
    And pre-Katrina, 70 percent of the practicing doctors in 
Louisiana completed all or part of their training at Charity 
and University Hospitals. But our educational programs are in 
grave jeopardy as noted by Mr. Whitfield. We lost our radiology 
and surgery program and most of our orthopedic surgeons. We no 
longer have trainees in oncology or rheumatology. Other key 
programs are still relocated far out of town. Surgeons are 
under increased strain because of the manpower shortages and 
enormous trauma demands.
    Just a word about reimbursement. Public hospitals rely 
heavily on the Medicaid DSH program in Louisiana and across 
this Nation. Unfortunately, CMS considers costs associated with 
payment of non-faculty positions to be unallowable under DSH. 
They are not regarded as hospital costs. We have been working 
to address this rule since 1999, and now would be an ideal time 
to address it.
    Another Medicaid financing issue is CMS's proposed Medicaid 
regulation that will cut billions from the program. We simply 
are in no position to absorb these additional cost cuts.
    Mental health. There has been a significant loss of 
capacity in the mental health system as a result of Katrina. 
Only about 40 of the 400 lost psych beds have been restored in 
the area so far. There has indeed been an exponential increase 
in mental illness. ER's are under strain because of the volume 
of the patients whose conditions require special facilities and 
expertise not currently available. ER's weren't designed to 
accommodate the needs of these patients and certainly not in 
the volume we see today. According to press reports, police 
often are unable to find a hospital able and willing to accept 
mentally ill citizens. They are booking many of them in jail.
    Emergency room overcrowding existed prior to Katrina but 
has been significantly exacerbated since then. Several 
panelists have already noted that. One way to alleviate the 
situation is implementation of the medical home clinic concept 
promoted by the State and its health care Collaborative 
referenced by the chairman in his comments as well as other 
panelists before me. This medical home will be the Holy Grail 
of recovery and reform for it will address issues such as 
electronic record interoperability that Dr. Verges noted in his 
remarks.
    And then lastly, workforce. There has been a mass exodus of 
physicians and other medical personnel from New Orleans. They 
are in huge and gravely short supply. As you know, members, our 
challenges are great. We must overcome political in-fighting 
and self-interest so that the interests of the patients are not 
lost. Our task is to finally level the playing field of the 
entire health care community to arrive at solutions that 
transcend parochialism on behalf of the patient. As noted in my 
written testimony, we cannot accomplish our mission without 
additional Federal assistance in the form of increased funding 
and regulatory changes, not just for recovery but for reform.
    It is my hope that the attention this subcommittee can help 
facilitate a productive dialog and produce positive changes for 
the citizens of our region.
    Thank you so much.
    [The prepared statement of Mr. Smithburg appears at the 
conclusion of the hearing.]
    Mr. Stupak. Thank you, Mr. Smithburg. Mr. Hirsch, please, 
for 5 minutes.

 STATEMENT OF LESLIE D. HIRSCH, PRESIDENT/CEO, TOURO INFIRMARY

    Mr. Hirsch. Thank you, sir. Chairman Stupak, Ranking Member 
Whitfield, and members of the subcommittee, thank you for 
inviting me to testify today and for continuing to keep New 
Orleans and post-Katrina health care a national priority.
    I am here today to speak about a number of issues that 
continue to plague Touro and other hospitals in New Orleans. I 
am the president and CEO of Touro Infirmary. Thank you for your 
support of New Orleans in the 18 months since Katrina 
devastated our city. We are grateful for your continued 
interest.
    The delivery of health care in New Orleans today is a much 
greater challenge than it was in the first few months following 
the storm. Conditions have worsened and continue to do so as 
more individuals return to New Orleans and as the demands on 
the health care system increase. Health care is a core 
requirement of the city's recovery, and the current system is 
in jeopardy. Additional Federal support is desperately needed 
to help stabilize and improve the situation.
    Touro Infirmary was founded 154 years ago and is a faith-
based community, not-for-profit organization. It wasn't until 
Hurricane Katrina struck that Touro would confront its greatest 
challenge ever. For only the second time in its history, Touro 
Infirmary closed on September 1, 2005, as we were forced to 
evacuate 238 patients as well as hundreds of staff and family 
members. We are very proud to be the first hospital to reopen 
in the city just 27 days later and to be a critical part of New 
Orleans' recovery, along with our colleague institutions that 
have also shouldered a great burden.
    Touro's reopening was critical to the city being 
repopulated, and since then we have played a safety-net 
provider role; and this has occurred at a huge financial cost. 
Katrina caused over $60 million in property damage and business 
interruption losses. We have had substantial operating deficits 
since the storm, and the Touro Governing Board recently 
approved the deficit budget for 2007. We continue to erode our 
cash reserves at a rapid pace and endure the impact of 
resulting changes in our bond and credit ratings.
    The situation as you have heard today in Orleans Parish is 
particularly challenging as the number of acute beds in 
operation remains dangerously low at about 500 to serve a 
population estimated at 200,000.
    With 2,000 employees, Touro is presently staffed for 280 
beds. There are a significant number of issues that have had a 
negative impact on the operation of hospitals in the New 
Orleans metro area and the health care delivery system. The 
amount of uncompensated care provided by area hospitals and in 
the increased percentage of population that is uninsured is 
unprecedented and exceeds national levels. There is also a 
significant portion of the population that is underinsured.
    Touro's charges for uncompensated care have skyrocketed 
from $17 million pre-Katrina to $41 million in 2006, an 
increase of 141 percent. Our emergency department has seen a 
dramatic increase in volume post-Katrina from approximately 
20,000 visits a year to 30,000. Uninsured patients originating 
in Touro's emergency department are responsible for about 90 
percent of Touro's uncompensated care. This is an unsustainable 
position for Touro and is an unfunded mandate that we willingly 
accept but must be addressed in terms of the financial 
viability of our hospital.
    There has been a steep rise in the cost of labor, excessive 
reliance on contract labor, and shortages of critical health 
care personnel to fill both direct care and support positions. 
The national nursing shortages exacerbated in post-Katrina New 
Orleans, and salary rates have risen significantly. The use of 
contract or agency labor particularly with respect to 
registered nurses is a large component of the labor shortage 
issue. At Touro, the cost for each man-hour paid increased 20.4 
percent from 2005 to 2006 driven largely by the cost of 
temporary labor which increased nearly 500 percent. Annually, 
the cost of a full-time equivalent registered nurse provided 
via a staffing agency is $50,000 higher than the cost for a 
similar nurse with salary and benefits employed by the 
hospital. 17 percent of our labor costs last year was for 
contract labor and amounted to nearly $14 million.
    Graduate medical education. Post-Katrina Touro and other 
hospitals expanded their residency training programs to absorb 
as many residents as possible, thereby supporting and 
protecting the future of graduate medical education in New 
Orleans. We increased from 18 to 52, however because of this it 
has been very costly in that the Federal rule does not permit 
Federal full reimbursement in the first year. Instead, costs 
must be averaged over a 3-year period; and in effect, we are 
being penalized. This rule did not envision the hardship 
created by Katrina. Our incremental costs associated with this 
for the 3 years of the averaging will be $9 million, and of 
this amount, $4.5 million is related to the 3-year averaging 
requirement.
    Property and casualty has also skyrocketed. We are up 374 
percent. At the same time, our coverage has declined. We have 
taken a number of steps to help ourselves, but yet some of 
these measures have not been seen fit to be funded by FEMA 
which I could elaborate on in greater detail.
    Our recommendations are simply to implement health care 
redesign that provides participants with freedom of choice to 
obtain health care services and assures that funding follows 
the patient and is not institution specific. Approve cost-based 
reimbursement for the next 3 years for hospitals in hurricane-
affected parishes, and particularly, for hospitals located in 
the hardest-hit area, region 1. Treat our hospitals as critical 
access hospitals similar to what has been done for rural 
institutions or those institutions in rural areas.
    As noted before, approve a Medicare wage index now that 
reflects the current conditions and don't wait 3 years for the 
rates to catch up. Increase funding for uncompensated care and 
consider special grants for those hospitals most affected. 
Approve waivers for graduate medical education so the problem 
that I described before will not affect those institutions that 
stepped up, and also approve additional family practice 
residency training slots to increase the supply of primary care 
physicians and waive the administrative barriers that are in 
front of adding those programs.
    Increase access to physical rehabilitation services. 
Physical rehab service particularly for brain injury patients 
are in short supply; and at no cost to Medicare, rehab 
hospitals could be permitted to change status to become 
rehabilitation units of general hospitals without the current 
1-year reduced payment penalty. Approve additional funding to 
increase health manpower and revise existing programs to 
incentivize physicians and others, nurses, et cetera, to come 
to New Orleans for perhaps a 3-year period with grant support. 
Designate us an underserved area for this purpose, and provide 
hospitals with direct funding to provide similar incentives.
    Deploy Federal resources to help relieve pressure on 
emergency rooms in the area. DMAT teams were very useful after 
the storm but left well before the population returned. DMAT's 
should be reconsidered and redeployed to help alleviate the 
excessive delays in treatment and overcrowding that currently 
exists in hospital emergency rooms. Finally, please consider 
additional funding to offset the cost increases in property and 
casualty insurance that I noted before.
    I thank you again for the opportunity to be here.
    [The prepared statement of Mr. Hirsch appears at the 
conclusion of the hearing.]
    Mr. Stupak. Thank you and thank you to all the witnesses 
for being here. We will start with the questioning, 10 minutes 
for each.
    You know, you all put in countless hours and energy and 
your talent to try to solve the health care problems that New 
Orleans faces, especially in region 1. And yet the health care 
system, as we have seen today, seems to be deteriorating and 
not getting much better.
    I asked the other panel, but let me ask this a little 
differently because of the makeup of this panel. Give me one 
thing that is breaking down in the Government and the private 
or public sector's ability to solve some of your challenges. 
Mr. Hirsch concluded with his. I talked with him about DMAT. I 
don't know if that is something we should do right now or 
anything we could do right now to help alleviate the problems; 
but Dr. Miller, let us start with you and we will go right down 
the line and give Mr. Hirsch a chance to think about that one. 
What could we do? Give me one thing we could do right now that 
you need the Government to put some pressure on--besides the 
dollar part. We understand dollars.
    Dr. Miller. Certainly one of the greatest challenges for us 
as a training institution which will affect the current and 
future supply of physicians is the difficulties related to our 
graduated medical education programs, being able to move 
residents from the hospital where they trained prior to that 
hospital going down to new locations; and as Mr. Hirsch pointed 
out, those new locations getting adequately paid for those 
residents so that they can reimburse the medical schools. And 
we are all under very careful scrutiny by our accrediting 
agencies, and we have to make sure that the quality of the 
educational experience and the interaction between medicine, 
surgery, pathology, all of those trainings are intact.
    So certainly we need flexibility within CMS and we need a 
clear understanding of what the criteria are for acceptable 
training sites.
    Mr. Stupak. Mr. Muller?
    Mr. Muller. Access to nurses. We simply could open more 
beds if we had more nurses. Every hospital in town could open 
more beds if they had more nurses.
    Mr. Stupak. You have the physical space?
    Mr. Muller. Oh, absolutely. We have the physical space. We 
have the support staff basically. But the nurses are not there. 
We cannot go on paying agency nurses because they cost like we 
have been told twice as much.
    Mr. Stupak. What is the barrier? Just no nurses in the 
area? Is that just it?
    Mr. Muller. Yes. Well, there are many barriers but the main 
one, there are no nurses in the area.
    Mr. Stupak. And that is housing or----
    Mr. Muller. People really don't want to move back for 
various reasons, schools, levees, housing, other things. In 
fact, when you compare living and working in New Orleans to 
living and working in Austin, TX, Ann Arbor, MI, there is no 
choice for quality of life at this point. It is really nice to 
come to a city where the streets are clean and thing are going 
on like it is in Washington. You cannot attract nurses to come 
back to an environment like this.
    Now, another answer, though, is we received volunteer 
Veterans Administration nurses at West Jefferson for about 6 
months. They were wonderful. They enjoyed doing it, they had 
jobs. I think something needs to be done I believe at that 
level that will cost less. We cannot hire agency nurses 
forever.
    Mr. Stupak. OK. Mr. Quinlan?
    Dr. Quinlan. It lapses a little bit into the financial 
piece, but I think if we could make reimbursement reflect 
current costs, I think some of that is by design that makes 
sense in ordinary circumstances. But if we could review some of 
these administrative rules to recognize that this is an 
unprecedented situation and it should reflect current reality, 
I think it would put us on a different footing because 
sustainability is how you make your plans going forward, and in 
the absence of predictable revenue stream, you have to think 
differently.
    Mr. Stupak. Give me a specific on your reimbursement you 
are talking about, such as critical access hospitals?
    Dr. Quinlan. Well, that would be huge if we could do that, 
but I remember about in the first week saying, if we could have 
a critical access designation, this would be tremendous for us.
    Mr. Stupak. And how long would that have to stay for? There 
is always a concern that once you do it, it never goes back.
    Dr. Quinlan. Pick a number.
    Mr. Stupak. A year? Two years?
    Dr. Quinlan. We can live with anything to tell you the 
truth. It is taking I think a year-to-year or a biannual sort 
of thing where you would judge it against certain criteria. It 
would allow us to have that sort of wherewithal to deal with 
this.
    Mr. Stupak. Mr. Smithburg?
    Mr. Smithburg. First I agree with the comments made by my 
colleague panelists. I am going to add another one. Everything, 
Mr. Chairman, seems to touch money in one way or another.
    FEMA has already been budgeted, and as I appreciate 
appropriated and authorized dollars. And so in the case of the 
publics, it is a matter of dislodging funding to fit within the 
FEMA center lane. And in the case of the mental health crisis, 
while we have tried to find several facilities to lease, at the 
end of the day we have finally landed on one that will work so 
that we can stand up a mental health hospital to support the 
community, but it requires FEMA's approval and that is an issue 
that we continue to have trouble getting across.
    Mr. Stupak. FEMA approval for what, for allow more cost 
or----
    Mr. Smithburg. No, FEMA approval to replace that which was 
destroyed by Katrina in the form of mental health beds. And we 
have a beat on leasing a facility that requires renovation that 
should be eligible by FEMA. And I think that would help the 
community greatly.
    Mr. Stupak. OK. Has FEMA resolved your money yet for Old 
Charity? The last time we had a hearing that was a big point of 
contention, and they were going to do it right away they told 
us. So what ever happened there?
    Mr. Smithburg. It is still being evaluated, Mr. Chairman. 
They did bring in another team, the fourth different evaluation 
team is now in to Big Charity to adjudicate that claim if you 
will. But FEMA has helped us get into University Hospital as a 
temporary facility.
    Mr. Stupak. What is the dollar difference we are at yet?
    Mr. Smithburg. I don't know. The last official dollar 
difference is the same place we were before which was $225 
million. But I think they have a new group in there that is 
looking at it a little more objectively.
    Mr. Stupak. OK. Mr. Hirsch?
    Mr. Hirsch. A couple of ideas. It was mentioned earlier 
about the frustrations in New Orleans and Louisiana among the 
different groups, the State, the Federal Government, as well as 
of other interested parties. And I don't know to the degree 
that this is practical or realistic, but to the degree that 
Congress or someone can play a role in mediating or trying to 
arbitrate the situation so to speak. There are a lot of people 
working with a lot of good intentions, in some cases, frankly, 
at cross-purposes; and people need to get together and have 
what I would call a real conversation and try to reach a middle 
ground and compromise. That has been a big part of the problem. 
I don't think that the parties are all speaking with each 
other.
    Mr. Stupak. Mr. Dingell has asked the Secretaries of HHS, 
FEMA, some of the others, to sit down as a group. Would you be 
supportive of that?
    Mr. Hirsch. Absolutely, as well as all representatives or 
representative constituencies of the industry, the private----
    Mr. Stupak. Well, that is why our first panel was so big. I 
know I was harassed a little bit because of the size of the 
panel. But we didn't feel like we could exclude anybody because 
you all have a stake in it. We want to get you together and get 
you talking.
    Mr. Hirsch. And I think that would be wonderful and that 
is--I think that situation is what is going on there and that 
is a big roadblock is if the parties aren't speaking.
    The other thing, some of the comments that were made 
earlier about the requirements of DSH, some of those 
requirements preclude for instance, say, Don's organization and 
us at Touro, we at Touro, from potentially contracting for 
services and not having to have patients go 60 miles, not 
having backlogs as well. So that is something that I think is 
real. It ought to be considered.
    And finally, one of the recommendations that I noted in 
terms of access to physical rehabilitation services. We think 
that is an easy lift. We are a hospital within a hospital now, 
and if we could convert without a 1-year penalty, we believe we 
could get certain economies and increase access. So that is 
something that we are working on.
    Mr. Stupak. Let me ask this question. We have talked a lot 
about dollars following the patient, and that has been 
throughout both sides of this dais today talking about it. 
However, the fear that sort of comes out is as the dollars 
follow the patient, the private hospitals if you will, will 
only take the healthiest patient and the less healthy, those 
with HIV's, the prisoner patient, would be left then to the 
public. And as we try to work this out, it is not just this 
committee, but 435 of us in the House of Representatives alone, 
it is a hard built-in bias, whatever you want to call it, to 
break. People are afraid that if we do that, some people will 
skim off the healthiest patients and leave the poorest. Care to 
comment on that, Mr. Muller?
    Mr. Muller. We are taking them right now and would be glad 
to.
    Mr. Stupak. That is what we are hearing from your lost 
revenue and things like that.
    Mr. Muller. That is correct. We are a public hospital. Our 
mission is to take care of people. We have patients lined up 
every day to come to West Jefferson. We have a continuum of 
care. If the money followed the patient, it is a win-win. It is 
not a problem with us.
    Mr. Stupak. And your comment, Mr. Quinlan?
    Dr. Quinlan. Yes, I would just reiterate the same thing. We 
are already doing this, and I think what we really need to do 
is allow people to vote with their feet and I think it is very 
important that they do that. It helps us all keep better--there 
is a degree of competition that is healthy, and I would say 
that is true in any walk of life, including medicine, and trust 
the common sense of patients to take care of themselves best.
    I would like to add one thing. Taking care of this primary 
care network is probably the most important thing you can do to 
take care of hospitals because let people do what each does 
best and no more than that.
    Mr. Stupak. Mr. Smithburg, you want to comment on that?
    Mr. Smithburg. Well, there is no doubt that the not-for-
profit, faith-based and private institutions are carrying their 
heavy loads since the storm. There is no doubt about that. And 
after the storm, we lost all of our employees, and our budget 
was cut by about $200 million. A good amount of that was 
actually redeployed to help support my colleague--institutions 
and caring for those patents that would have otherwise been 
cared for in our institution. You see, New Orleans has a 
tradition whereby between 90 and 95 percent of the uninsured 
got their care at the Charity Hospital, and the balance of the 
uninsured, the remaining five to 10 percent, was spread around 
all of the other community facilities. Katrina turned that 
upside down. And I don't know that she leveled the playing 
field but she certainly changed the playbook.
    And so to the extent that rules, regulations can be 
addressed to allow for what heretofore were non-allowable costs 
to be allowable, at least for an interim period of time, I 
think that helps the entire environment.
    Mr. Stupak. Thank you. Thank you again to the entire panel. 
Mr. Whitfield, for 10 minutes, please?
    Mr. Whitfield. Thank you, Mr. Chairman. Thank you all for 
taking time to come and be with us today. As I was listening to 
your testimony, I know Dr. Quinlan, you made the comment that 
we can't do this much longer and we are committed until the 
end. I think, Mr. Hirsch, you talked about operating deficit 
and eroding cash reserves; and I am assuming that all of you 
representing the institutions you represent are in that same 
boat. Am I accurate in that? I mean, are the eroding cash 
reserves in a deficit situation and your emergency rooms are 
being overrun; and that is why I know in the first panel so 
much emphasis was being placed on this primary care or getting 
that going which would be of some assistance to you. But Dr. 
Quinlan, if things continue to go the way they are going now, 
how much longer can you operate?
    Dr. Quinlan. That is a good question. What we have done is, 
unlike trying to make a statement, we realize that we are just 
not going to put the patients in the middle. We are approaching 
the point where we will have to restrict our policies because 
if we go under, we can't help anybody. And due to the size of 
our organization, the impact of that failure would be huge and 
the impact would be felt by our colleague institutions 
throughout.
    The difficulty is that it is all related. I think the key 
to us would be that as we cut back, what we would have to do is 
probably not keep up with wages and benefits; and this vicious 
cycle we are in in losing personnel would be accelerated. And 
when that starts to happen, that is what we are afraid of. You 
know, cycles, you are either getting better or you are getting 
worse. And I feel we are sort of hovering right now.
    Mr. Whitfield. Yes. And do all of you face significant 
unemployment claims that you are liable for?
    Mr. Hirsch. Yes.
    Mr. Whitfield. OK. And you, Dr. Miller?
    Dr. Miller. I am just not aware because a University is in 
a different situation than a hospital.
    Dr. Quinlan. Well, to your point, as I understand it, there 
was significant relief from Congress for unemployment relief, 
but it did not apply to not-for-profits.
    Mr. Whitfield. Oh, it did not apply?
    Dr. Quinlan. It did not apply for not-for-profits. And in 
our case it is particularly irritating because the unemployment 
claim we feel was unfounded in the first place. So we didn't 
get the relief but we got the bill. That is a tough one to 
take.
    Mr. Whitfield. Right. Chairman Stupak and I were talking 
during your testimony about the critical access hospital 
designation which means you are reimbursed at cost plus. That 
would be a tremendous help to all of you making it happen 
immediately, correct?
    Dr. Miller. Yes, sir.
    Mr. Whitfield. That would really be a significant help, 
wouldn't it?
    Dr. Miller. I just think one thing--and certainly not to 
minimize the issues of the hospitals because that is very 
critical. We can't forget the physicians in the equation.
     To every extent, we all represent physicians as part of 
our organizations, but as little as it has been, there has been 
some relief for the hospital but there has really been no 
relief for the physicians. So a patient is admitted through the 
emergency room and there is a potential for the hospital to 
gain some reimbursement for it. But that patient has to be seen 
by a physician or perhaps several physicians, and they are not 
getting reimbursed for it. And the threat there is that we lose 
more physicians. It has been stated earlier today that we are 
down to about 50 percent of our pre-Katrina physicians in 
region 1. It is significantly more severe than that in Orleans 
Parish; and I am sure as you know in St. Bernard, it is even 
more so. And unless we fix the physician situation while we fix 
the hospital situation, we will wind up with wonderful 
hospitals and no doctors to take care of the patients.
    Dr. Quinlan. I would concur with that, but I would add that 
with our new hospitals that we have acquired that were in 
trouble, when physicians come in--these are voluntary staff--
come in to see patients, we pay them Medicare rates because we 
are trying to do everything we can to keep them afloat.
    If you do work, you need to get paid. I think that is not a 
bad policy in general for the Government to observe.
    Mr. Whitfield. Mr. Muller.
    Mr. Muller. Yes. If I could, we feel the same way about 
physicians. We have actually gained physicians at West 
Jefferson, most from St. Bernard, some from Orleans Parish 
because we ended up being dry.
    But we have done a couple things, one is to share what we 
could back to the physicians in terms of what we could legally 
to keep their offices open, like Dr. Bertucci is trying to do. 
Second, we are paying them for uncompensated care now in the 
emergency room; but that is coming out of the hospital's budget 
which makes our deficit worse. So additional money for 
physicians is good.
    Mr. Whitfield. Part of the responsibility of this 
subcommittee is to come up with proposals, and I know that we 
have a gentleman from Louisiana on the committee now who is 
certainly focused on this issue. And I hope that as a result of 
this hearing we can come forth with four or five proposals like 
critical access hospital and something related to community 
health centers and other things to try to expedite something 
through.
    And many of you were talking about the nursing situation, 
the shortage of nursing; and yet Mr. Koehl I believe talked 
about that in Louisiana, the State had made a decision that 
they would not allow nurses to come in from outside this State 
unless they were licensed. Help me with this. Is that right or 
did you hear his comment or did you know anything about that.
    Dr. Quinlan. I heard his comment. I am not familiar with 
the issue.
    Mr. Whitfield. Well, maybe the next panel could address 
that because it does seem a little bit odd that with such a 
shortage that the State would, at least from the testimony from 
that witness, be an obstacle to bringing more nurses in.
    And then another thing that concerns me I think in 
someone's testimony and I forgot who, it mentioned in the 
testimony that on 9/11, 2001, that the Federal Government 
stepped in immediately and provided some immediate assistance 
to hospitals in the New York area as well as the Washington, DC 
area. And would anyone want to elaborate about that? Mr. 
Muller.
    Mr. Muller. I would be glad to. We received a DMAT 12 days 
after the storm. The DMAT went from positioned in Tennessee, 
State of Mississippi, didn't do anything, went back to Baton 
Rouge, didn't do anything, and we got it and we were the first 
DMAT. Now, there is more that the Government could have done. I 
don't want to go back, but some of the things going forward 
could be more grants for health care personnel.
    Dr. Quinlan. I think perhaps you are alluding to the HRSA 
grants that after 9/11 hospitals closed--largely took people 
out in anticipation of a wave of casualties that didn't occur. 
That sort of thing would be great for us and would also be 
important for the future where--how else can the Federal 
Government get funds to hospitals? They need to keep them 
afloat virtually.
     That is the kind of thing that would help because I have 
run into so many people who would like to help but were unable 
to for a host of reasons that you know all too well, and the 
HRSA grant possibility is giving the kind of flexibility to 
assess what the need is and meet it in a timely fashion.
    Mr. Whitfield. Yes, because I mean, the key thing now is 
being able to be flexible.
    Dr. Quinlan. That is right.
    Mr. Whitfield. And one of the frustrating things is health 
care is so complex that it seems like every time you try to do 
anything, your hands are tied or it is this regulation or that 
regulation. It is micromanaged so it is very frustrating. And 
then our staff had looked up on the DRA money for example, and 
I am not being critical of the State of Louisiana because with 
the catastrophe the size of the catastrophe, but it is my 
understanding DRA money that the State of Louisiana has is $140 
million left still unspent, SSBG money $142 million left 
unspent, DSH money currently $250 million unspent. I won't even 
get into the uncompensated care poor or the CDBG monies.
    So hopefully this hearing will focus on some of these 
things, and we can come forth with some sort of legislative 
proposal to help move it along. But thank you all very much for 
being here. Listening to everyone you can see why the 
depression rate is up in Louisiana because it is so 
frustrating. Thank you very much.
    Mr. Stupak. Ms. DeGette for 10 minutes.
    Ms. DeGette. Thank you, Mr. Chairman. I want to follow up 
on some of the questions that the chairman was asking. We have 
been talking about this notion of having some of the State's 
DSH money reprogrammed to follow the patients, and I have got 
to say for the gentlemen who are here from the private 
hospitals, and I say this a lot but I will say publicly again, 
thank you, because your hospitals treated so many of these 
patients and are continuing to do so now with minimal 
reimbursements. And it really has been an extraordinary 
community effort.
    Dr. Quinlan, I have been in your hospital and seen some of 
the work that you are doing. I am wondering if the three of you 
gentlemen, Dr. Miller, Mr. Muller, and Dr. Quinlan, can tell me 
about what would need to be done to reprogram the State's DSH 
monies to follow these patients and what rules would we need to 
change at the State and Federal levels. Dr. Miller?
    Dr. Miller. Well, again, currently the way that the State 
DSH dollars are used, they basically are centered around 
patient care that has been delivered in the safety-net hospital 
system with a small amount going to other hospitals that 
provide significant amounts.
    Ms. DeGette. Believe you me, I know how DSH works. What I 
am asking you is what Federal rules and State rules would need 
to be changed to reprogram these dollars?
    Dr. Miller. Again, I am going to let the hospital CEOs talk 
for the hospitals, and I will talk for the physicians because 
again, we have a group of 200 physicians at Tulane University. 
And the rules need to be changed to allow DSH payments go 
directly to health care providers other than facilities, and 
that may be physicians, nurse practitioners, and other health 
care providers.
    Ms. DeGette. How long a period would you think that that 
reprogramming would need to occur?
    Dr. Miller. Well, it certainly needs to occur until we have 
a stable health care system back up in the region and decisions 
are made about what we are going to have in terms of a safety-
net hospital, how big it is going to be, and when it is going 
to be available. And so that during the period of time when we 
are between where we are now and where we are going, there 
needs to be some type of alternative system.
    Ms. DeGette. Two to 3 years is what they have been saying 
to me.
    Dr. Miller. And again, that will depend on how quickly we 
can get the system stabilized.
    Ms. DeGette. Mr. Muller, would you have anything to add?
    Mr. Muller. Absolutely. There is a lot of money. The DSH 
money in Louisiana is large. The reason we are saying let it 
follow the patient is because it is there now.
    Ms. DeGette. You know, again, I understand. What specific 
regulations would we need to change?
    Mr. Muller. My testimony had actually two things, one is 
the Medicaid proposed rule that would allow the funds that were 
certified by--now, the certification is done by the public 
hospitals. And so the certified funds are matched with Federal 
funds that come in. We are asking the Federal rule to come 
directly to the provider. Don't go to the State. That is 
already a proposed rule.
    The other thing is a certification of the public 
expenditures, needs to be something that comes back directly to 
the provider; and then we can deal with the physician. I think 
if we get a lot of that money, which in our case would be 
multi-millions, we would share more of the physicians.
    Ms. DeGette. And I will ask you the same question I asked 
Dr. Miller. For what period of time do you think that funding 
arrangement should occur, that the DSH money should go directly 
to the hospitals and then onto the providers?
    Mr. Muller. I support having a major teaching hospital in 
New Orleans. It will take 6 to eight 8 to have that come up. 
You got others that will tell you other dates but----
    Ms. DeGette. So you are saying the same thing he does as 
long--for the period until that public safety-net hospital gets 
built, you think that that should happen?
    Mr. Muller. Until we have a fully functioning safety-net 
system outside of my hospital and Dr. Quinlan's and others, we 
should have those funds come directly to our hospitals.
    Ms. DeGette. And for that period of time, would your 
hospital commit to serving all of the safety-net patients 
including the ones Mr. Stupak was talking about like the 
severely mentally ill and people with a plethora of conditions 
and so on?
    Mr. Muller. West Jefferson has a continuum of care. We are 
doing it today, we will do it until we run out of money.
    Ms. DeGette. Dr. Quinlan?
    Dr. Quinlan. With regard to the proposed changes, what I 
would like to do is give you a written response so it could be 
most helpful.
    Ms. DeGette. That would be excellent. Thank you.
    Dr. Quinlan. Yes. The second piece on the timing, it should 
be an event-based decision, not a calendar-based decision. 
Decide what things need to be dealt with and then if there are 
certain benchmarks or milestones that need to be reached----
    Ms. DeGette. But what event would you base the decision on?
    Dr. Quinlan. I think the health care we designed--I have 
been involved with this committee since its inception, and that 
I think that is an important piece to determine what is the 
best way to do this in an ongoing fashion, rather than trying 
to look backward, how do we look forward and meet the needs of 
patients. And that is----
    Ms. DeGette. What event is that, I am sorry?
    Dr. Quinlan. Excuse me?
    Ms. DeGette. What event would you base--you said it needs 
to be an even-based decision.
    Dr. Quinlan. OK. Well, the event for example would be do we 
have a written plan that is acceptable for all the major 
stakeholders how we are going to deal with health care in the 
next year or two.
    Ms. DeGette. Would that include LSU?
    Dr. Quinlan. Of course.
    Ms. DeGette. OK. And do you support the concept of the 
rebuilding of a major safety-net hospital?
    Dr. Quinlan. Yes, I do.
    Ms. DeGette. Mr. Smithburg, I want to ask you, from your 
perspective, do you think a temporary reprogramming of DSH 
monies can be developed in a way that won't prevent LSU from 
building a public hospital in downtown New Orleans?
    Mr. Smithburg. You know, you used the term, let the dollar 
follow the patient.
    Ms. DeGette. It was actually Dr. Quinlan's term that I 
adopted.
    Mr. Smithburg. Indeed. Thank you for the clarification. It 
is a much bandied-about term in Louisiana and I know in other 
States as well. I think what has evolved is that through the 
Collaborative that some of us served on, the Governor's 
Collaborative on Health Care Redesign, it tried to actually 
define what that is because one of the fears, of course, is 
that what happens to the patient when the dollar isn't 
following them?
     Do they fall back on a safety-net system that has 
historically in the New Orleans region also been one of the 
primary academic flagship institutions? And so the 
collaborative that we worked on collaboratively came up with a 
plan that said, there just isn't enough DSH money for, based on 
actuarial studies, for there to be enough money to follow all 
of the uninsured patients in the market. In fact, it would cost 
another half-a-billion dollars conservatively estimated. And 
then of course, Secretary Leavitt came through the State and 
proposed another plan after he and Governor Blanco had 
commissioned the Collaborative; and it called for an insurance 
plan that did away with the safety-net hospitals, use those 
funds to insure about 40 percent of the uninsured. So it was 
kind of a perfect storm as far as we were concerned in the 
public teaching hospital arena.
    So at the end of the day, clearly, Representative DeGette, 
something needs to be done to protect the business plans of the 
community hospitals that are doing an outstanding job. But I 
fear that if it is a 3-year window or a 5-year window, when we 
get our permanent LSU VA Tulane hospital up and running in 5 to 
7 years, whatever it is, if then we say, OK, they are the 
safety net, they are going to go back to taking care of 95 
percent of the uninsured as was the case pre-Katrina, we are 
right back to the two-tiered funding system again and we will 
not have advanced the ball in terms of health care reform and 
perhaps quality and the like.
    So I think it is a dangerous proposition to enter into, 
without some very tight accountability expectations and with an 
expectation that we are still working toward a real reform of 
the system, not your grandmother's Charity Hospital system 
again.
    Ms. DeGette. I agree with that and I think these things can 
be worked out because on the one hand, I think everyone agrees 
we need to--and Mr. Chairman, maybe this is why we brought 
everybody here together because I think everybody agrees we 
need to reimburse the private hospitals who have been treating 
these patients. On the other hand, I think everybody, including 
the private hospitals agrees we need to rebuild Charity and not 
in the same footprint. The very concept of disproportionate 
share hospital, which is actually an issue Mr. Whitfield and I 
have worked on extensively together, is a hospital that treats 
a disproportionate share of uninsured patients. So that 
wouldn't qualify for, except for maybe lately, some of the 
private hospitals. So the very concept of these monies would be 
that it would go to a public safety-net hospital. So whether 
the way we reimburse the private hospitals is through DSH or 
some other method and the way we think about Charity going down 
the road is not through a two-tier system. We have still got to 
work this thing out, and I would think we should be able to.
    So I appreciate all of you working on it, and I neglected 
to say hello to my old friend Mr. Hirsch who used to work at 
St. Joseph's Hospital in Denver, Colorado.
    Mr. Hirsch. Thank you.
    Ms. DeGette. So anyway, I think this can be done, and I 
think a lot of what is trying to be done by Congress and by the 
providers and the local governments is trying to figure out a 
reimbursement method that fits. It is sort of a square peg into 
a round hole or vice versa, a scenario where you are trying to 
think of these pots of money and how can you get them. But I 
don't think anybody, and Dr. Quinlan and the others can correct 
me if I am wrong, I don't see DSH money as a long-term solution 
to how we treat these uninsured patients.
    Dr. Quinlan. No, and I think what you are saying is exactly 
correct. We have to make sure that this is a comprehensive 
plan, not reactionary or piecemeal because each one of these 
major factors affects the others. This is a variable equation 
with no constants. We have got to get something that we can 
build from and have a plan that is sustainable, and I don't 
think it is just about DSH money and it is not just about 
primary care, it is about how do we weave together a health 
care system that is coherent?
    Ms. DeGette. And that health care system has to include an 
up-to-date public safety-net teaching hospital and a clinical 
system with all of the things we have talked about, electronic 
records----
    Dr. Quinlan. But the order in which you do that is very 
important. I don't believe we start out with a hospital and 
then figure out the primary care network that supports it and 
all the things that go with that. I think it is how do we 
decide what our goals are, what caliber of education do we want 
in that region, what caliber of care do we want for patients. 
Is it going to be something they can walk to, bus to, or 
bicycle to, and will they be connected in a way that you can 
actually manage the health of the population as opposed to 
individuals on a sporadic basis? And we need to spend the time 
to do it right up front, rather than rushing to just do 
something on a very large scale. Now, I do think the short-term 
needs are immediate and really need to be dealt with; but that 
is not a substitute for a planned-for approach to a 
comprehensive solution.
    Ms. DeGette. I agree. On the other hand, it has been 18 
months, and so we need to start to come up with that plan 
pretty darned quick.
    Mr. Hirsch. May I just add that I think it is important to 
remember that some of this also depends on the socioeconomics 
of an area, specific locations. We have a lot of people in our 
area that are underinsured as opposed to other parts of the 
country. And take Touro, for instance. We are right in the 
heart of the city, so we are an urban center; and people will 
vote with their feet. And so we have to I think keep in mind 
that even before the storm as well as after the storm certainly 
that much worse, all these private hospitals and some more than 
others have been providing a lot of free care; and I think it 
is important to think about DSH or some other mechanism well 
into the future, and I certainly support the rebuilding of an 
academic medical center. I look at it that way as opposed to 
just a safety net because the health sciences are so important 
to our city. But I think for a long time to come, hospitals in 
urban areas, especially New Orleans, will be affected by the 
uninsured some more disproportionately than others.
    Mr. Melancon [presiding]. Thank you, Ms. DeGette. I think 
Dr. Burgess is next up for 10 minutes.
    Mr. Burgess. I thank you and let me just start out with 
this observation. In October 2005, I did visit New Orleans as a 
guest of East Jefferson and West Jefferson Hospitals, Ochsner 
Hospital. They asked me to come down there because they had a 
plan that they had worked out with their medical staffs to stay 
open, keep their bondholders happy in New York, and it hinged 
around shaking some money loose from the Federal Government. 
And the hospitals were going to function as the intermediary 
through which that money flowed, not only to keep the hospitals 
open, keep the nursing staff employed, but also to reimburse 
the physicians for the patients that they were seeing. At this 
point, when I talked to doctors down there, they had not had 
any mailed delivered in 2 months' time, their accounts 
receivable were a shambles, and they were basically living off 
of their kids' college funds in order to keep their practices 
open. I thought it was a very insightful, responsible way to 
deal with a crisis the likes of which none of us had ever seen 
before. And it is with some pain that I acknowledge we were 
never able to deliver what seemed to be a very reasonable 
request by the hospitals that stayed open through the storm and 
were still standing after all of the trouble that occurred in 
the days after the storm.
    So let us go back for just a moment to the DSH funds. My 
understanding is there is about a billion dollars a year in 
disproportionate share hospital funds for the Louisiana area? 
Now, the $250 million that we always talk about, is that the 
money that was from the last quarter of 2005 that wasn't spent 
because Charity no loner existed and is there an ongoing stream 
of DSH funds that are coming through the State for 
administration of care for insured individuals and underinsured 
individuals?
    Mr. Smithburg. Dr. Burgess, I will take a crack at that, 
but that may be a good question to ask of State officials on 
the next panel as well.
    But of the billion dollars roughly speaking about $600 
million of that goes to the public hospital system, the State 
public hospital system, or it did before the storm. Right now 
it is about $450 million. And then a good chunk of it goes to 
the State psychiatric facilities and for rural hospitals. The 
breakdown could be provided by the State officials, however.
    Mr. Burgess. So those dollars are now distributed to other 
State facilities outside of New Orleans?
    Mr. Smithburg. In the case of the LSU public hospitals, 
again we had a pretty significant reduction in our DSH dollars 
after the storm and then some that we previously had in New 
Orleans that remain, we redeployed to some of our other 
hospitals that picked up the slack in Baton Rouge, Lafayette, 
Home Louisiana, and then outright cut.
    Mr. Burgess. I don't now whether you noticed but it is a 
recurring theme with me that I am just astounded by the amount 
of dollars that have been pumped into a problem and again, we 
don't seem to have helped anyone on the ground. You know, I 
haven't been in public service that long, but it is enormously 
frustrating to me. I get criticized at home because we are 
spending so much money on this, and then at the same time, we 
have not helped anyone in the process. So I do wonder what 
happens to $100 billion in appropriations that we sent down in 
2005. I wonder what happens to $2 billion we sent to the DRA. I 
wonder what happens to $2 billion a year that is available in 
DSH funds. And at some point, I hope someone can give me some 
type of spreadsheet that will give me some insight into that to 
at least give me some comfort. Someone, and I don't remember 
who, talked about some of the barriers for the critical access 
hospitals, but that seemed to me when that discussion was going 
on, very similar to the plan that was outlined by East 
Jefferson, West Jefferson, Ochsner Hospitals in October 2005. 
So I think it was actually Chairman Stupak who asked the 
question, what can we do at this level to see that those funds 
actually go into those critical access hospitals and are there 
for immediate distribution? Does anyone have an insight into 
that?
    Dr. Quinlan. You will need to change the definition of 
eligibility. They are size-limited. I think they can only have 
25 inpatients. It depends on how you define critical access. It 
was defined with a rural environment in mind.
    Mr. Burgess. Well, perhaps we could denote a special 
category for a special, once-in-a-lifetime catastrophe.
    Dr. Quinlan. I agree with you. It is called flexibility, 
and that is what has been absent in all this.
    Mr. Burgess. Well, you are right on that.
    Mr. Muller. Dr. Burgess, can I follow up and show you what 
could be done? West Jefferson is about eight miles from a 
critical access hospital. St. Charles Parish is right next to 
Jefferson Parish on the west bank. St. Charles Parish has a 
critical access hospital. West Jefferson is not, of course.
    Mr. Burgess. Since you volunteered that information, Mr. 
Muller, let me ask you a question about the nursing. You said 
that you are spending a lot more money on agency nurses than 
what you would spend on nurses who were salaried and on your 
staff?
    Mr. Muller. About twice as much, yes.
    Mr. Burgess. Where does the agency get their nurses?
    Mr. Muller. All over the world. They get them from 
California, Michigan, and everywhere else; and they fly in, we 
pay for them.
    Mr. Burgess. The question that Mr. Whitfield brought up 
about the licensure issue, is that something that concerns you? 
Is that going to be a problem with the agency?
    Mr. Muller. We have not had that issue with our agency 
nurses, no.
    Dr. Quinlan. I believe that was referring to volunteers.
    Mr. Burgess. Just to volunteers? But if you have a nurse 
from Dublin, Ireland, who is licensed to practice nursing in 
Ireland----
    Dr. Quinlan. That is a different story altogether. That is 
a visa question which is something we could receive help on 
certainly. We are planning on pouring a large number of nurses 
from out of the country as well to meet this need, about 100, 
and we have been shepherding this with the help of our 
delegation actually, shepherding their immigration along. But 
that is the sort of complexity we are--if we could address 
that--because we are in the midst of a national shortage that 
is just exacerbated by our particular situation.
    Mr. Burgess. But even if you are able to steal nurses from 
Detroit, Michigan, are you going to have the licensure issue 
that comes up in a month's time?
    Mr. Muller. No, I don't believe so.
    Mr. Burgess. How does the agency get around that?
    Mr. Muller. They work out the requirements with the State 
Board of Nursing.
    Mr. Burgess. So there is a reciprocity agreement?
    Dr. Quinlan. They are travelers and these are people that 
do this for a living basically, at least for a period in their 
lives. So they have licenses at different States as well.
    Mr. Burgess. One of the other issues that came up was that 
we are not able to reimburse CRNA's and physicians under some 
CMS rules, that those funds have to go directly to an 
institution and not to a provider.
    Dr. Quinlan. Right.
    Mr. Burgess. Again, is there some flexibility that we can 
provide you that we are not that would allow you to pay these 
providers and keep them in the area?
    Mr. Smithburg. Hi, Dr. Burgess. I will be one of those to 
take a crack at that. In fact, when I was your constituent in 
north Texas, I worked for a hospital system where CRNA costs 
were indeed considered allowable by the fiscal intermediary 
which is the same fiscal intermediary that oversees Louisiana 
as well. So there seems to be some variability in 
interpretation of those allowable rules in different regions of 
the country.
    So it is one of the reasons why I feel very strongly it is 
something we need to pursue.
    Mr. Burgess. So that must be a question for the third 
panel.
    Dr. Quinlan. We will get you a written response as well to 
see if we can help you with your options.
    Mr. Burgess. Very good. Dr. Quinlan, just in the time I 
have left, you talked about a coalition for the uninsured, your 
overall health care redesign and developing a plan for the 
delivery of that health care. Can you kind of just give us some 
insight as to where that is in the development process, who is 
involved, and where it is going?
    Dr. Quinlan. Yes, actually there are a number of players, 
many of whom--it is a sort of a reconstitution of the previous 
redesign plan that we just wanted to get back together and pose 
an alternative to what we see basically--I shouldn't say 
happening, just not happening--and many of the critical players 
on the ground including the PATH group that you saw, many of 
the hospitals including Tulane and East Jefferson and West 
Jefferson, most of the major players, Dwayne from Charity. We 
are trying to come together in a way saying--I think the key 
piece for us is to do a pilot program that involves only region 
1. That is the area that took the brunt of the damage. It is 
something that gets away from what was alluded to as dueling 
spreadsheets. The smaller the area, the more precise you can be 
with the information about the number of the uninsured, where 
they in fact live, where the clinics need, and so forth--
logistical questions around how do you actually get the care to 
people. And that is what we have been focusing on. I think by 
the end of this month we probably should have something that is 
a good start on an alternative system, and I would ask 
everyone's patience. Designing health care systems for 
coalition of people who have day jobs is a difficult task but I 
think one that, given our areas of expertise, that we can come 
up with a framework of a credible alternative.
    Mr. Burgess. Let me just for one final thought if I could, 
we have been focusing on the inflexibility at the Federal 
level, primarily through HHS and CMS. Are there any areas where 
you can help us with the problem of flexibility that you are 
having more at the local or the State level? Are there areas 
there where perhaps we need to be focusing some effort, some 
energy?
    Dr. Quinlan. There is a recent, relatively small 
development but is another bottleneck. What we are all trying 
to do is find bottlenecks and resolve them. As I understand it, 
our own State Licensing Board for physicians has outsourced 
that function, and we have noticed there has been a significant 
delay now in getting the people we finally were successful in 
recruiting into the State, getting them licensed. Our most 
recent was a neurosurgeon who is on the payroll but can't get 
his license. And he trained at LSU, incidentally, and he came 
from Texas.
    Mr. Burgess. Now wait a minute. We need him back.
    Dr. Quinlan. I know. I will swap you in two draft choices, 
maybe.
    Mr. Burgess. Mr. Smithburg, you alluded to something about 
a cap that is on the reimbursement for public hospitals under 
some of the reimbursement. But that is largely a State-imposed 
cap, is that not correct?
    Mr. Smithburg. Dr. Burgess, that is correct. There is a 
State-imposed cap on Medicaid. There is a public program and a 
private program, if you will, or all other----
    Mr. Burgess. I know my time has expired, but if we work on 
flexibility from our end, will you help us work on flexibility 
at the State level as well?
    Mr. Smithburg. You can count on it. Yes, sir.
    Mr. Burgess. Thank you.
    Mr. Melancon. Thank you, Dr. Burgess. I recognize Mrs. 
Blackburn.
    Mrs. Blackburn. Thank you, Mr. Chairman. I thank you all 
for your patience and your endurance today.
    I am going to start out with a homework question for each 
of you, and please understand, going back to the first hearing 
that we did in New Orleans following Katrina where we were told 
if we can just get some money, if you will just get us some 
money down here, we can take care of this. And now we are 
hearing from you we can't find the money, we don't know where 
the money is. I feel like we are playing a game of Where is 
Waldo at some point. So pencils and papers, here we go for the 
homework, and then if you will submit this to us we want to be 
certain that you all have access to the funds you need, that 
you are able to do the work that you need to do. But I think we 
also have to--we are not having a hearing on the implosion of 
the Mississippi health care system, we are having one on the 
implosion of the Louisiana and New Orleans, and so help us work 
through this with finding where the money is.
    The DRA money, you all were appropriated $2 billion to 
Katrina-affected areas. Louisiana got $918.2 million of that. 
They have spent $778.7 million. There is $140 million left 
unspent. How much have you applied for, how much have you 
received, and how much are you waiting to hear from?
    SSBG money. You got $220.9 million. $78 million has been 
spent, $142 million is left. Same question, what did you apply 
for, what did you receive, how much have you not heard about?
    DSH, money. You are getting about a billion a year, $250 
million has been unspent, and then what are your outstanding 
balances with DSH.
    Workforce recruitment money. And Dr. Quinlan, I know you 
are probably using this on some of those nurses that you are 
bringing from----
    Dr. Quinlan. We are not. I21Mrs. Blackburn. OK. I thought 
with all of these nurses that you were bringing from around the 
world from places like Michigan, down south you might need an 
interpreter for them, right?
    Dr. Quinlan. Right.
    Mrs. Blackburn. OK. Workforce recruitment money, Louisiana 
has gotten $15 million. They have been sent $15 million. And 
then the uncompensated care pool, $120 million has gone to 
Louisiana.
    So kind of help us as a committee get our hands around, out 
of that money what have you applied for, what have you 
received, what have you not heard from, so we have a better 
idea of what is outstanding. Now, the CDBG money, I know 
Louisiana--LSU has a $300 million request in on that I do 
believe, and those are specific to you all with LSU.
    So anyway, those first five areas, answer those. Mr. 
Smithburg, let me come to you quickly. I want to get these in 
before we go to vote, so I am going to speed it up, Mr. 
Chairman, and see if we can get through this.
    LSU is looking at seven neighborhood clinics in New Orleans 
as soon as you get through the zoning and the red tape. Can you 
not get somebody with the city of New Orleans to help speed 
that process along for you all? What is the barrier there? Can 
you articulate that for me?
    Mr. Smithburg. I wish I could, and the next panel may have 
a panelist that might be in a better position to answer that. 
It has been an arduous process. We are riding a game plan along 
with way with many of these issues, but I am hoping that we are 
within 100 days of being able to deploy these mobile clinics 
that have actually been sitting in our parking lot for some 8 
months.
    Mrs. Blackburn. Seven or 8 months the clinics have been 
sitting there and all the other hospitals, out of the goodness 
of their heart, are soaking up this care and the city of New 
Orleans is not approving these clinics, am I stating that 
properly?
    Mr. Smithburg. Yes, ma'am.
    Mrs. Blackburn. All right. Do we know if the problem is 
primarily with the State or with the city?
    Mr. Smithburg. Oh, I know it is not with the State, and I 
believe it is at a point now where an ordinance has been passed 
to grant a temporary zoning variance. So we may be a few months 
off now.
    Mrs. Blackburn. OK. On page 4 of your testimony, you talked 
about the VA and moving forward on that. This is an issue that 
has been highlighted time and again with us, so speak for the 
record briefly about how you all are meeting the needs of the 
existing VA population.
    Mr. Smithburg. Well, again, I think on the next panel you 
will have a representative from the Gulf Coast on that.
    Mrs. Blackburn. OK. Do you care to make any further 
comment?
    Mr. Smithburg. I would note, and thank you for the 
question, that the VA LSU Tulane collaborative is really one of 
the most exciting, innovative propositions to come before our 
market or really any in a long, long time; and should we be 
able to receive the CDBG infrastructure funding to get that 
launched, I think that is going to be good for preserving, 
protecting, and growing medical education as well as of course 
re-engaging more beds for the community.
    Mrs. Blackburn. OK. I want to go to your comments about the 
DSH payments on page 6 and you talked about the methodology. 
And reading this, my thought was when you look at Louisiana's 
health care system, are you saying that it had some specific 
strains and stresses and some amount of brokenness pre-Katrina 
and then this has exacerbated the problem? And I would like to 
hear how you would respond to that, and then I concur with 
Congressman Burgess in looking at what we do to address the 
financing situation that you all are dealing with. You know, 
the state of the system pre-Katrina and then if there was an 
exacerbation of that situation, what degree you would place 
with that?
    Mr. Smithburg. Clearly before the storm, there were broken 
parts of the health care delivery system across the entire 
delivery spectrum; and it boiled down to, of course, money, in 
my view anyway, that there were not enough resources to cover 
the needs of the uninsured, the underinsured.
    We are a small business State. Ninety-five percent of our 
businesses have 50 or fewer workers. So almost by definition 
there is going to be a huge uninsured population. And while 
there is a structure I believe in place, a knitted together 
fabric of safety-net facilities, it is desperately under funded 
and since Katrina and the fact that those antiquated facilities 
were wiped out, my brethren here at the table have had to pick 
up the slack. And so it is exacerbated indeed.
    Mrs. Blackburn. Well, we find it amazing that you are not 
able to get approval in the city of New Orleans when your 
brethren at the table have been picking up that slack. And to 
find that just having been down there in the city holding these 
hearings and then to see that there still has not been a real 
solution to that issue, it is a touch of a head-scratcher, if 
you will, especially with the mobile clinics being sitting in 
New Orleans. I mean, it makes you wonder, is there a still 
permitting problem? Are we still trying to figure out who is 
going to have a hospital that is permitted? So, we are 
concerned about that.
    I have two more questions that I wanted to get to. I am 
going to submit these to you. One deals with your outpatient 
facilities and your long-term care beds, the other is going to 
deal with the mental health component that you have mentioned. 
We will submit those to you, and I am going to yield my time 
back so you can get your questions in before we vote.
    Mr. Melancon. I thank the gentle lady from Tennessee. Let 
me start by asking I guess everybody that is sitting at the 
table. Has anybody from the Department of Health and Human 
Services come and said to you, ``I am here to help you. Tell me 
what it is that you need for us to do so that we can help you 
get back up and running?'' At all? Anywhere?
    Mr. Muller. I can start. Six days after the storm, actually 
Secretary Leavitt, Dr. McClellan, Dr. Gerberding flew into New 
Orleans, met with I believe Dr. Quinlan and myself and a 
representative of East Jefferson; and that was the start. I 
think since then, we have had large meetings. I really haven't 
gotten into the details of those, Congressman, but no one has 
come to West Jefferson if that is your question.
    Mr. Melancon. OK. Anyone else?
    Mr. Smithburg. Yes, Mr. Chairman. I would like to note on 
the upside, actually, right after the storm the U.S. Public 
Health Service, a component of USHHS, has been on the ground 
since the storm, is still on the ground, and they have been 
miracle workers in my view anyway. And also CMS, right after 
the storm, worked with Tulane and LSU to deal with some of the 
graduate medical education vagaries as a result of our 
facilities being wiped out.
    There are numerous other issues that we have enumerated, 
but there has been some help, yes.
    Mr. Hirsch. Mr. Chairman, after the storm, when Touro 
closed and as we were starting to reopen, we actually had the 
help of the Public Health Service, we had the 82d Airborne 
which was invaluable, we had some National Guard. We also had 
others to help us, and from FEMA, we had the DMATs. I think 
part of the problem was they left before the population came 
back but they were helpful while they were there. But that was 
way, way, way before we had population. Colleagues mentioned 
some of the other aspects with Secretary Leavitt and some of 
the other issues; and then I think just recently with the staff 
of this committee coming, and I think once before there was 
another group that came in to interview us and that is at least 
for me why I am here today.
    Mr. Melancon. Well, if I remember correctly, we are over 18 
months since the storm and so what I am gathering here is that 
immediately they came in and said we are here to help you but 
you really haven't seen any help since that. Would that be an 
honest expression?
    Mr. Hirsch. Well, I think people----
    Dr. Quinlan. Are hard at work but they are stuck.
    Mr. Melancon. OK.
    Dr. Miller. The one agency, Congressman, that needs to be 
lauded, it is not directly related to our patient care mission 
but certainly health care in general is the National Institutes 
of Health who were there from the beginning, have supported the 
academic missions of Tulane, LSU, and the other institutions 
that do research including Ochsner have been at the forefront, 
they have been there for us, and they have come through. So I 
want to make sure they get credit for that.
    Mr. Melancon. Dr. Quinlan, you said they were stuck. Can 
you elaborate on that?
    Dr. Quinlan. Well, we have been to a number of meetings in 
which many of the principals were at the table with the express 
purpose of bringing resolution to some of the problems we had, 
but it was unfortunately a continuing story of why they 
couldn't do things as opposed to how they would get it done and 
that is--this idea of flexibility, the idea of having rules 
which are appropriate to the situation as opposed to generic 
national rules. I think they were as frustrated as we are by 
the process, and that is where the idea of the goal of bringing 
people together in a non-partisan way, that there are some 
solutions that need to be crafted with the administration and 
Congress working together to make sure that these rules that 
were created years ago are actually appropriate for today's 
problems.
    Mr. Melancon. Yes, and I think if my understanding is 
correct the way the system works the Secretary of the 
Department has the ability to waive rules in special instances. 
Of course the inference that I have been getting is this sets a 
precedent. The precedent has been set. The storm was a 
precedent.
    Dr. Quinlan. Yes. If that isn't a precedent-setting event, 
I don't know what is.
    Mr. Melancon. Yes, I agree with you. And I am going to 
submit into the record some numbers that came from--Gulf Coast 
recovery numbers--some of the frustration, so that my committee 
members will know, there was some legislation in some of these 
appropriations that provided that no State could get more than 
54 percent of the monies that were appropriated regardless of 
the fact whether we had 80 percent or not. There is monies that 
I think people need to understand, there are three words, one 
is appropriated, one is allocated, and the other is expended. 
Appropriated and allocated are the most common you hear, 
expended is the one you hear least. As of February 5, out of 
$110 billion, about $52.8 billion, and this is across the board 
from the Federal Government from our appropriation, has hit the 
ground where it counts, and that is where the people are 
struggling. We have done disaster cleanup, we have--Small 
Business Administration--do you want to hear some really poor 
statistics? Dr. Bertucci was talking about it. SBA has received 
224,000-plus applications, 102,000 and some change of which 
were declined, 87,000 loans have been approved, and only 62,000 
loans have been disbursed, totaling $2,932,000 since the storm, 
and SBA was allocated $1.7 billion.
    Let us talk about the Collaborative if we can real quick. 
The three private hospitals. Each of you suggested that one way 
to solve the health care access in the region is to reprogram 
the disproportionate share monies. How can we do this 
specifically, and we can't go on long because of time 
constraints. But how can this be done and what rules or laws 
need to be changed at both the State and the Federal levels in 
order for us to accomplish this?
    Mr. Muller. Let me just start and again emphasize the 
Medicaid proposed rule to come directly to the providers, us 
certify the uncompensated indigent care, and have the money 
come direct, don't go through the State. That would be real 
easy to do.
    Mr. Melancon. OK. Would you all have any problem--as I 
appreciated this $250-$300 million are getting left on the 
table because of Big Charity being down. Let me walk through 
this thought. I don't want to take away the money and then have 
some of the concerns that have been expressed here. But if 
there is someway to put a sunset over a period of time and 
allocate only that money for the use, with that sunset coming 
and of course if the time is passed and everything is gone--
what I am trying to figure out is how do I get this Big Charity 
building off the table so that we can move forward with health 
care and planning for an education facility and a safety-net 
facility, whatever it may be? And that is where I am trying to 
get. I don't want to take control over the State legislature or 
the Governor, whoever he or she may be, and start dictating 
what they need to do in the State of Louisiana. So is that some 
commonsensical or is that a problem? Mr. Smithburg, let me 
start with you because you got the most at stake here.
    Mr. Smithburg. Well, certainly I am continuing to get 
traction on that VA Collaborative is, I think, paramount in 
addition to--and I agree with Dr. Quinlan--getting primary care 
system up and running. For some reason, health care redesign 
has been morphed into what do we do with the Big Charity 
Hospital and the system therein? They are two totally separate 
issues.
    Mr. Melancon. Right.
    Mr. Smithburg. And I think to the extent you can keep those 
separate as you have suggested, I think the better for all of 
us.
    Mr. Melancon. I thank you. Any other comments on that? And 
I agree. And that is where I am trying to get. I think that is 
the way we make these incremental steps is to put that big 
building, because that seems to be the problem or the mindset, 
off on the side as we work on the immediate problems.
    It looks to me like restructuring the State's 
disproportionate share monies will funnel at least some 
resources away from the State's charity system in the near 
term, and I have that concern as I have expressed that your 
hospitals may not pick up your fair share of the truly sick, 
even if the DSH dollars follow the patient. Of course, the 
expression of cherry pick has been put out there. I am new to 
the health care arena, but I am starting to understand; and I 
need a firm commitment that you are not going to be turning 
away people if we work out the DSH dollars and the services 
that need to be applied in the area.
    Mr. Muller. I will make that commitment for West Jefferson. 
I can't speak for anyone else, but we are doing it, our board--
and I know Dr. Quinlan said here they are here but until we run 
out of money, we are going to be there taking care of every 
patient that walks in the door.
    Mr. Hirsch. I will just say for Touro, we have been doing 
it for 154 years, we will continue to do it; and we do it by 
the laws of morality. When people come into the emergency room, 
our doctors treat them irrespective of their ability to pay and 
will continue to do it. And plus, it is the law of the land. 
But we do it because it is the right thing to do.
    Mr. Melancon. The ER room is different.
    Mr. Hirsch. Right, but if there is a system of care in 
place that we can participate in, absolutely, we will 
participate.
    Mr. Melancon. Then can I ask, is there some method that we 
can document and track this money over time so that we are 
making sure that we keep all the players honest.
    Dr. Quinlan. We have to do that to be credible but I--the 
dollars follow the patient is such a nice phrase, but I would 
like to add it has to be enough dollars follow the patient 
because what we don't want is this----
    Dr. Quinlan. Well, it is an idea where it looks good and 
let us walk away from it. If there aren't enough dollars, then 
all this begins to fall apart.
    Mr. Melancon. Yes. My time is running out. We have got 
votes I think we have got to go take. But let me ask you. You 
had the Collaborative. It was sent, it was supposed to deal 
with region 1 of the State of Louisiana, and what we were going 
to do to try to get that area of the State back up. If I 
understand it, all of you were at the table participating in 
that original Collaborative, butted heads, knock-down, drag-
out--I have got a nodding no. But the Collaborative went to 
DHH. So what you are saying is no, you weren't involved in 
the----
    Dr. Quinlan. We weren't butting heads, it was a very 
collegial approach. It was a clear----
    Mr. Melancon. Well, I----
    Dr. Quinlan. No, I am serious. We often think that it was 
some sort of conflict. The need was so great and our common 
interests were so great--yes, we wrung our hands because the 
question is do we have enough to get the job done. And we were 
not given the task with enough information to address the 
broader question. That is why it ended up being a medical home 
issue. And it did become--our direction became something that 
had to work with the State and as we reconstituted this, we 
wanted to go back to region 1 and have something that we could 
be more specific about.
    Mr. Melancon. Yes, and I have got some further questions 
but we need to go and vote. I want to thank you all for being 
here; and if there is any contact or expressions that you need 
to make to myself or staff, please do not hesitate. We are 
going to try and work through this thing over a period of time.
    I will turn the chair back over.
    Mr. Stupak [presiding]. As Mr. Melancon said, we do have to 
vote on the floor. We have 7 minutes left to vote, so we are 
going to recess for one-half hour before our last panel.
    Thank you all for coming. We will see you all back in about 
half-hour.
    [Recess.]
    Mr. Stupak. The subcommittee will come to order.
    We are ready for the next panel. The Honorable Leslie 
Norwalk, Acting Administrator, Centers for Medicare and 
Medicaid Services, Washington, DC; Dr. Fred Cerise, secretary 
of the Louisiana Department of Health and Hospitals; Dr. Robert 
Lynch, director of the South Central Veterans Affairs Health 
Care Network; and Dr. Kevin Stephens, director, City of New 
Orleans Health Department.
    As is customary for the Subcommittee on Oversight 
Investigations of the Energy and Commerce Committee, I will ask 
you all to rise and take the oath.
    [Witnesses sworn.]
    All witnesses answered in the affirmative. We will start 
with Ms. Norwalk, Acting Director for Centers for Medicare and 
Medicaid, for 5 minutes, for an opening statement,

STATEMENT OF LESLIE NORWALK, ACTING ADMINISTRATOR, CENTERS FOR 
                 MEDICARE AND MEDICAID SERVICES

    Ms. Norwalk. Thank you, Mr. Chairman, members of the 
subcommittee. On August 29, 2005, Hurricane Katrina struck the 
Gulf Coast just east of New Orleans near Gulfport, Mississippi. 
The storm's tremendous impact was exacerbated by the failure of 
the Lake Pontchartrain levee around New Orleans on August 30. 
With the added blow of Hurricane Rita on September 23, 2005, 
more than 4 million people were evacuated, tens of thousands of 
businesses, and over 100,000 homes were destroyed. Over 685,000 
families were forced to relocate, and at least eight hospitals 
were ruined. Over 1,400 people died.
    While the storms were devastating and tragic, Louisiana has 
the opportunity to embark upon implementing the most far-
reaching improvements in their health care system since the 
charity system was created hundreds of years ago in the early 
1700's. The heath care system in New Orleans is in essence two 
systems, one for the insured and one for the uninsured. There 
have been a series of reports and studies both pre- and post-
Katrina that address the deficiencies of the health care system 
in Louisiana. There may be debate on the detail, but I would 
say that most everyone agrees the system is broken and needs 
attention. It is time to level the playing field and provide 
the poor and uninsured the same opportunities that those 
fortunate enough to be insured have, the ability to receive 
quality care and choose their own health care provider.
    The infrastructure, economics, and premise of the way the 
poor are served in the charity system is outdated and no longer 
aligns with today's health care environment. What better way to 
roll out a new system of care than to start in the great city 
of New Orleans and then extend it to the entire State? This 
will require a major educational effort and cultural change, 
but I believe as many others do that all Louisiana citizens 
will benefit from a new health care system.
    The public health and medical crisis across the Gulf Coast 
required immediate action to prevent the further loss of life. 
Medicare and Medicaid are health insurance programs, however, 
and were not designed for disaster relief. This, combined with 
the extent of devastation in the region, posed significant 
challenges. On August 31, 2005, Secretary Leavitt declared a 
Federal public health emergency for the Gulf Coast region 
permitting CMS to waive program requirements to ensure the 
region's health care needs could be met. CMS proposed to--
proceeded to waiver modify certain Medicare and Medicaid 
conditions of participation, certification requirements, and 
pre-approval requirements which enabled the remaining health 
care infrastructure to deliver vital services.
    CMS also quickly established a special multi-State Medicaid 
demonstration to help ensure continuous access to health care 
services for displaced hurricane victims. Individuals 
contemporarily enroll in Medicaid or SCHIP in host State and 
receive benefits for up to 5 months. In addition, the Deficit 
Reduction Act gave CMS authority to pay the non-Federal share 
of regular Medicaid and S-CHIP expenditures in certain counties 
and parishes.
    Finally, States were able to participate in an 
uncompensated care pool to help cover medically necessary 
services for evacuees without health insurance coverage.
    By January 31, 2006, CMS had granted approval to a total of 
32 States or territories to participate in these 
demonstrations. Of those, eight were also approved for the 
uncompensated care pool.
    Turning now to funding, HHS has made available more than 
$2.8 billion in Katrina-related funding in fiscal year 2006 to 
help respond to the health-related needs of people affected by 
the disaster. This includes $2 billion appropriated by the DRA 
for payments to eligible States. To date, over $1.75 billion 
has been made available to 32 States for a range of health care 
items and services, associated administrative costs, 
uncompensated care costs, and Medicaid and S-CHIP costs in the 
immediately affected Gulf Coast region.
    Last month, HHS also made available an additional $160 
million for payments to facilities facing financial pressure 
because of regional wage changes not reflected in Medicare 
payment systems. Finally, on March 31, just a couple of weeks 
ago, CMS provided a $15 million grant to promote professional 
health care work force sustainability in the greater New 
Orleans area.
    I want to emphasize that when we distributed these funds 
among the States we first consulted with them on their needs 
and provided funding based on their requests. Specifically we 
have provided $831.6 million to Louisiana. Of this amount, 
Louisiana used $130.9 million to pay providers for claims under 
its uncompensated care pool. The vast majority of funds 
provided to Louisiana, nearly $700 million, was through section 
6201 of the DRA. This money was used by Louisiana to pay its 
matching obligation under the State Medicaid Program. By 
relieving Louisiana of its Medicaid obligation, it is 
effectively freeing up the mountain of State funds.
    Although the challenges of addressing Louisiana's immediate 
and longer-term health care needs have been daunting, they 
present real opportunities. Working together, we have the 
opportunity to transform the Louisiana health care system. A 
recent Public Affairs Research Council describes the system as 
``outdated and uncommon, a system that begs for reform.''
    The great tragedy and challenges brought by Katrina 
galvanized a unified movement to improve health care for the 
people of Louisiana. CMS has been an active partner in this 
effort from the outset providing dedicated staff, technical 
advisors, access to data, and other assistance to assist 
Louisiana in a health care redesign collaborative and 
developing a practical blueprint for evidenced-based, quality-
driven health care system in Louisiana.
    The Collaborative unveiled its blueprint with a concept 
paper on October 20, 2006, and CMS has been working steadily 
with them since that time to clarify key elements. CMS and HHS 
have pledged support for a large-scale Medicaid waiver and 
Medicare demonstration to bring about the Collaborative goals, 
provided they are consistent with our mutually agreed-upon 
principles for rebuilding.
    CMS will continue to engage the State in discussions over 
how the demonstrations and waivers might be structured and make 
expertise available to assist in their efforts.
    Thank you and I look forward to answering whatever 
questions you might have.
    [The prepared statement of Ms. Norwalk appears at the 
conclusion of the hearing.]
    Mr. Stupak. Thank you, Ms. Norwalk. Dr. Lynch, please, for 
5 minutes.

   STATEMENT OF ROBERT LYNCH, M.D., DIRECTOR, SOUTH CENTRAL 
              VETERANS AFFAIRS HEALTH CARE NETWORK

    Dr. Lynch. Mr. Chairman and members of the committee, I 
want to start by thanking you for the universal support the 
U.S. Congress has given to the Department of Veterans Affairs 
in its rebuilding and recovery efforts not only in southeastern 
Louisiana but along the entire Gulf Coast region. Through that 
support, our veterans and the VA employees living along the 
Gulf Coast continue to make great strides along the road to 
recovery.
    Hurricanes Katrina and Rita challenged our country with two 
of its greatest natural disasters. While Hurricane Rita did 
little permanent damage to VA's infrastructure, Hurricane 
Katrina, on the other hand, produced unprecedented damage to 
its medical center in New Orleans. Our medical center, the 
community we serve, and the homes of veterans and employees 
sustained destruction on a monumental scale.
    Today I will describe our ongoing and planned health care 
restoration efforts in New Orleans. I will speak first to VA 
health care recovery activities and its future plans in New 
Orleans. Next I will address the Memorandum of Understanding 
that was signed between VA and the Louisiana State University 
System and actions associated with it. Finally I will discuss 
VA's relationship with LSU and the State of Louisiana as the 
State of Louisiana progresses in its analysis of State health 
care reform.
    Forty-eight hours following Hurricane Katrina's landfall, 
as quickly as weather conditions permitted, the VA damage 
assessment team was dispatched to the Gulf Region to survey the 
eight facilities at New Orleans, Louisiana, Biloxi, 
Mississippi, and Gulfport, Mississippi. At New Orleans, the 
team found the VA facility initially weathered the storm with 
minimal damage. However, following the hurricane, water from 
the breached levees flooded the entire medical district and the 
medical center. Flooding of the basement and the sub-basement 
in the main building of the VA Medical Center rendered it 
inoperable as these areas housed the facilities, major 
electrical, mechanical, and dietetics equipment.
    The Medical Center's longstanding academic partner, the LSU 
Health Care Services Division, had Charity and University 
Hospital sustain similar types of damage. While University 
Hospital has reopened, Charity is permanently closed.
    In the immediate aftermath of Hurricane Katrina, VA's 
commitment to the Gulf Coast region's veterans remains 
steadfast. VA deployed a system of 12 mobile clinics, in 
coordination with local authorities, to provide urgent and 
emergent care to include first aid, immunizations, and 
prescriptions. Specifically in Louisiana, mobile clinics 
provided care at Baton Rouge, Hammond, Jennings, Kinder, 
Lafayette, Lake Charles, Laplace, and Slidell. Those VA mobile 
clinics treated 5,000 veterans and over 11,000 non-veterans in 
the aftermath of Hurricanes Katrina and Rita.
    To address the health care of veterans in the greater New 
Orleans area, the VA expanded the capacity of its existing 
community-based outpatient clinic, or CBOC, in Baton Rouge. We 
converted the ninth and 10th floors of the Medical Center, 
formerly the Nursing Home in New Orleans, into exam rooms and 
began offering primary care services there in December 2005. 
Three months later, in March 2006, limited specialty care 
clinics were also added to those units.
    Temporary facilities located in Laplace, which is in St. 
John's Parish, and Slidell were leased as an alternative--as 
alternative sites of care. Tents were erected in Hammond to 
provide basic services.
    With the support of Congress, the VA was authorized to 
accelerate the activation of community-based outpatient clinics 
where part of our capital asset--long-term capital asset plan 
and opened a permanent clinic in Hammond in August 2006. We 
remain in leased space in Slidell and plan to construct a 
permanent clinic there in 3 to 5 years. The St. John's 
community-based outpatient clinic is anticipated to open in 
October 2007.
    Basic outpatient mental health services are provided at 
each of the clinic locations. Currently inpatient mental health 
services is coordinated with the Alexandria, Louisiana VA 
Medical Center. Dental clinic services were re-established in 
April of 2006 by leasing space in Mandeville, Louisiana. In 
Baton Rouge, we leased the old clinic building there in 2006 
and are using that facility to house the medical center's 
clinical laboratory as well as select administrative support 
functions.
    As a result of these actions, the southeast Louisiana 
veterans' health care system, formerly known as the New Orleans 
VA Medical Center, served over 29,000 veterans in fiscal year 
2006. This is 72 percent of the previous year's workload in the 
year before Hurricane Katrina. In fiscal year 2007, workload to 
date is growing at an annualized rate of 10 percent over last 
year and is expected to increase as housing is restocked in the 
area.
    To help our staff and support the community, VA worked with 
its academic affiliates, Tulane University School of Medicine 
and the LSU School of Medicine to place VA faculty, medical 
staff, residents, and student trainees at VA medical centers 
throughout our Business 16 network. With the VA's inpatient 
units shut down, 102 medical center employees that includes 
nurses, health technicians, medical support assistance, 
operating room technicians, and certified registered nurse 
anesthetists and radiology technologists were temporarily 
deployed in July 2006 under a FEMA task order to provide 
critically needed staff to support local health care 
institutions.
    In terms of future VA services in New Orleans, we continue 
to explore our long-term options for re-establishing surgical 
capabilities and inpatient services in New Orleans. In the 
interim, these services are coordinated through sister VA 
medical centers in Louisiana, Mississippi, and Texas, as well 
as selective referrals to community hospitals in the New 
Orleans area at VA expense. We are actively pursuing options 
for expanding our outpatient mental health services as well to 
meet both current and future veteran needs.
    Projects for the re-establishment of radiology and 
outpatient pharmacy services on the grounds of the old medical 
center are under way and expected to be completed later this 
calendar year. In preparation for the construction of a 
replacement medical center, VA has initiated its space planning 
process. Interviews of architecture and engineering firms to 
design the new facility are complete. A selection is expected 
this spring. The replacement medical center is expected to 
provide acute medical, surgical, mental health, and tertiary 
care services as well as long-term care.
    As required by Public Law 109-148, VA compiled and 
presented its long-term plans for the construction of a 
replacement hospital in New Orleans in February 2006. That 
report is entitled ``Report to Congress on Plans for Re-
establishing a VA Medical Center in New Orleans''. In that 
report, VA identified its principal objectives regarding the 
New Orleans area as being not only to restore services to 
Veterans in the most cost-effective manner but also to assist 
in the restoration of health care and medical education in New 
Orleans. Recognizing the successful history for sharing and 
collaboration between VA and LSU health care services division, 
as well as the potential for future efficiencies, the report 
included the construction of facilities on a single campus with 
support services shared with LSU was the preferred option.
    As a result of the report, VA and LSU leadership signed a 
Memorandum of Understanding agreeing to jointly study state-of-
the-art health care delivery options in New Orleans. This MOU 
established the foundation for developing a collaborative 
approach to operating a replacement facility.
    From that, a group of experts from both organizations, 
called the Cooperative Opportunity Study Group, or COSG, was 
charged with determining if any mutually beneficial sharing 
could occur between the two organizations. In the group's June 
2006 report delivered to the former VA's Under Secretary for 
Health, it concluded that both organizations could leverage 
their strengths, provide significant operating efficiencies, 
and allow us to better serve our beneficiaries. Congress 
subsequently authorized VA to pursue the project to replace the 
New Orleans facility as a collaborative effort consistent with 
the COSG report.
    In September 2006, the Collaborative Opportunities Planning 
Group, or COPG, was established to develop an operational plan 
for sharing between the organizations based on the foundations 
of the COSG. The COPG is co-led by VA and LSU representatives, 
representatives of the Tulane University School of Medicine and 
the State of Louisiana Division of Administration are also part 
of this group and its planning discussions.
    A critical component of the charge of the COPG is to 
determine if the proposed sharing options identified in the 
regional COSG report are viable, and if they are, to begin the 
work of developing timelines and formulating the framework for 
space planning and design for a joint replacement facility. To 
date, the COPG has made significant progress by reviewing 
literally dozens of clinical and administrative functions to 
determine if the function would best be provided via a sharing 
arrangement, between VA and LSU, or independently owned and 
operated by both entities.
    The final report of the COPG is to be presented this 
September.
    Mr. Stupak. Doctor, can you summarize, please?
    Dr. Lynch. Yes, please. VA remains excited about the MOU 
with the LSU in the context of health care redesign in 
Louisiana. We support all the principles behind it. At the same 
time, health care redesign seems to face some obstacles and 
delays in Louisiana. Because of this, we are committed to 
exercising due diligence to our veteran beneficiaries and to 
the taxpayers and are concurrently exploring other options for 
initiating reconstruction of our VA Medical Center in southeast 
Louisiana. In furtherance of this, we plan to begin a site 
search to identify alternative locations in the near future 
while we continue our work with LSU on our collaborative plans.
    In conclusion, Mr. Chairman, we consider the committee and 
Louisiana delegation to be partners with VA and seeing the 
southeast Louisiana veterans continue to receive high-quality 
health care that they have come to expect and deserve. Congress 
appropriated over $1.2 billion supplemental funding for 
recovery and rebuilding efforts in VA. This includes $625 
million for the construction of our placement medical center in 
New Orleans.
    Our commitment to outstanding health care for veterans will 
continue as well our collaboration/exploration with LSU.
    Thank you for the opportunity to be here today. I 
appreciate it, and I will take the opportunity to answer any 
questions.
    [The prepared statement of Dr. Lynch appears at the 
conclusion of the hearing.]
    Mr. Stupak. Thank you. Dr. Cerise.

STATEMENT OF FRED CERISE, M.D., SECRETARY, LOUISIANA DEPARTMENT 
                    OF HEALTH AND HOSPITALS

    Dr. Cerise. Thank you, Mr. Chairman, and members of the 
subcommittee for the opportunity to testify today on the 
continuing concerns and immediate health care needs in the New 
Orleans region.
    Let me start by saying I have heard Congressman Dingell's 
directive earlier this session and commit to you that I will 
call Secretary Leavitt's office upon leaving here today and 
discuss follow up of this discussion that we are having here.
    You have heard much about the loss of compassion in the 
health care delivery system in the New Orleans region, from 
preventative services to acute care, hospital services to post-
acute and long-term care services.
    Our challenge is twofold, to first meet immediate needs 
while second, ensuring that in the process we support the 
rebirth of a better overall system of care, particularly in the 
Katrina and Rita affected areas. This vision is for a system to 
replace the loss capacity. It is one that adheres to the aims 
set forth by the Institute of Medicine. It is a patient-
centered system predicated on access to primary care 
coordinated among providers, supported by a system of 
electronic medical records to improve safety, quality, and 
efficiency.
    The current gaps in the delivery system created by Katrina 
have provided the opportunity for that type of system's change. 
As we move forward with the health care reform for Louisiana, 
we must also ensure that the New Orleans region can recover to 
meet our citizens' health care needs today.
    My testimony today will focus on the short-term health care 
needs in the New Orleans region. Louisiana appreciates the 
assistance Congress has provided for health care. For example, 
$680 million in Medicaid relief and $134 million in 
uncompensated care reimbursement which came at a critical 
juncture in early 2006 as the State was implementing budget 
cuts in almost all programs including health care. The State 
actually had a rule that we had issued cutting reimbursement 
payments to Medicaid providers by roughly 10 percent across the 
board.
    Subsequently the State has been able to provide assistance 
including $52 million in uncompensated care for community 
hospital services rendered during fiscal year 2006, $120 
million in uncompensated care for community hospital services 
during State fiscal year 2007, $38 million to increase Medicaid 
payments to hospital and in an attempt to sustain capacity for 
post-acute care, direct service workers caring for elderly and 
individuals with disabilities in the Medicaid program received 
a $2 an hour salary increase at an annualized cost of $110 
million.
    Still more assistance is needed to meet the extraordinary 
needs that we are faced with. I am going to summarize a few 
areas. You have heard about these earlier today as well.
    Primary care capacity. Using Federal standards, we have a 
shortage of 49 primary care physicians in the New Orleans 
region available to serve the Medicaid uninsured population 
which is affecting all other components of the system. We 
propose to establish primary care capacity in a manner 
consistent with the redesigned system of care envisioned by the 
Health Care Redesign Collaborative by sustaining operational 
support provided by SSBG funds to safety-net clinics and by 
funding new medical homes of sufficient size and scope to meet 
the needs of the uninsured population.
    Still roadblocks to increasing access to outpatient care 
include the inability to use disproportionate share, or DSH, 
funding for non-hospital based care and the inability to use 
DSH to reimburse for physician services remains an issue. In 
order to receive DHS funds today, health care services must be 
funded through a hospital. While the State has created great 
capacity in a clinic system associated with public hospitals, 
current DSH rules limit flexibility and development of further 
outpatient capacity.
    We propose that the State be allowed flexibility to use DSH 
funds to support non-hospital based clinic care and allow DSH 
funds for physician services. This solution does not require 
additional Federal funding, just flexibility.
    In terms of workforce recruitment retention, you have heard 
a lot about this already. The New Orleans region is 
experiencing shortages of physicians, behavioral health 
providers, nurses, other professional staff, and competition 
for workers is high including rising labor costs, lengths of 
stay in hospitals are increasing. I would point to two 
solutions. You have heard about one in terms of the Medicare 
wage index. The Medicare calculations do not account for the 
unforeseen labor cost increases seen in the region post-
Katrina. HHS awarded Louisiana $71 million one-time grant to 
address this. That is certainly helpful. Hospitals and skilled 
nursing facilities estimate this is about one-third of the need 
to address this increased wages relevant to the Medicare 
program.
    Second, to date the State has received a $15 million grant 
from HHS to fund the Greater New Orleans Health Services Corps 
to provide incentives for physicians, dentists, nurses, and 
other professional staff to meet the needs in the region. We 
requested funding for this program. We think that program would 
cost--our estimates are $120 million to fully supply and meet 
the needs in the region today, and so we would ask for that 
support. In exchange for the financial support, providers must 
commit to serve in that region for 3 years.
    And then finally in the area of behavioral health, the 
shortage of community services that we had prior to Katrina was 
exacerbated by the hurricane resulting in greater reliance on 
an already-crowded hospital emergency infrastructure. In 
addition, we have lost psychiatric beds in the area. We propose 
funding and implementation of a 5-year plan for behavioral 
health services and expending Medicaid coverage to people with 
severe mental illness. This 5-year plan would include direct 
treatment dollars for the full continuum of behavioral health 
care as well as continued funding of the existing FEMA disaster 
relief grant for crisis counseling.
    The concept paper put forward to HHS also included a 
request to include those individuals with serious mental 
illness as a Medicaid eligible population. This would allow us 
to provide broader access to services for these individuals.
    I have outlined other needs in my written testimony, 
including such things as support for implementation of 
electronic records as was pointed out earlier today, as well as 
section 8 housing vouchers to be used with permanent supportive 
housing for people with developmental disabilities.
    I appreciate your continued interest in the recovery of the 
greater New Orleans region. The State has worked 
collaboratively with Federal the city officials as well as 
community providers, and I have heard your directive earlier 
today and commit to continue this work to address those 
critical needs highlighted today.
    Thank you for the opportunity to testify.
    [The prepared statement of Dr. Cerise appears at the 
conclusion of the hearing.]
    Mr. Stupak. Thank you and thank you Dr. Cerise. I noticed 
you have been here all day, so I appreciate that. Dr. Stephens?

 STATEMENT OF KEVIN U. STEPHENS, SR., M.D., DIRECTOR, CITY OF 
                 NEW ORLEANS HEALTH DEPARTMENT

    Dr. Stephens. I am Dr. Kevin Stephens, the director for the 
New Orleans Health Department. To Chairman Stupak and the 
Ranking Member Whitfield, and distinguished members of the 
Subcommittee on Oversight and Investigations, thank you for 
inviting me here today to speak on the state of health care in 
New Orleans. Mayor C. Ray Nagin and his administration welcome 
dialog, and we are hopeful that this hearing will spur positive 
change as we work not only to rebuild our city's infrastructure 
and neighborhoods, but also to develop a state-of-the art, 
modern health care delivery system.
    I would like to acknowledge and thank Secretary Michael 
Leavitt who was represented by Ms. Norwalk, for all the support 
that the Department of Health and Humans Services has given to 
the City Health Department specifically. And in fact, Secretary 
Leavitt--I first met him on August 24, 2005, less than 1 week 
before Hurricane Katrina. We both visited the Pontchartrain 
Senior Citizen Center and spoke with community leaders and 
senior citizens about Medicare. We developed a professional 
relationship which has continued in the aftermath of Hurricane 
Katrina, and additionally I would like to thank Dr. Cerise for 
his support of this city as well as Dr. Lynch of the Veterans 
Affairs; and we are looking forward to having a long, 
productive relationship with the Veterans Affairs and we are 
looking to strengthen our partnership with them.
    I want to just three or four things here, talk about the 
pre-existing problems and Katrina's impact on it, the role of 
the New Orleans Health Department, mental health, and some 
recent mortality trends that we have observed.
    Since the storm and floods, only four of the eight 
hospitals in the parish have reopened at decreased capacity. 
The City Health Department which employed more than 200 health 
professionals lost more than 60 percent of its staff and closed 
eight of its clinics. Yet, as traumatic as this devastation 
was, it has given us a unique opportunity to redesign and 
rebuild a model health care delivery system that corrects the 
gaps and failures of the past.
    The New Orleans population, which was more than 450,000 
people before Hurricane Katrina is now estimated to be between 
230,000 and 250,000 citizens. Even with this temporarily 
reduced population, approximately 20 percent of our citizens or 
more than 30,000 people are uninsured. The city has a rapidly 
increasing indigent worker population, some of which speak no 
English. In providing health care services, these citizens has 
placed such a tremendous burden on our health care providers of 
the surrounding parishes and those that are in New Orleans.
    Another challenge has been the decrease in the number of 
health care providers. According to a 2006 Blue Cross/Blue 
Shield report, New Orleans had 2,038 physicians pre-Katrina and 
only 510 physicians post-Katrina. This is a 72 percent decrease 
which highlights the relative loss of medical professionals. 
Other evidence can be found in a study conducted by the 
Louisiana State Department of Health and Hospitals where out of 
202 primary physician who responded, only 154 were still 
practicing, and only 73 accepted patients dependent on Medicaid 
as a source of payment. Clearly, more providers are needed in 
Orleans Parish, particularly those who care for the uninsured 
and underinsured.
    There is a similar story as it pertains to the capacity of 
Orleans Parish hospitals. According to the 2006 report by 
PriceWaterhouseCooper, New Orleans had 2,258 beds before 
Katrina and according to a recent report by Metropolitan 
Hospital Association, Orleans Parish now has 625 staffed beds, 
a reduction of 75 percent.
    Fortunately, our neighboring Jefferson Parish, they have 
lost far less capacity; and with its number of hospital beds 
decreasing from 1,922 to 1,636, Jefferson Parish hospitals have 
been responsive in absorbing patients from Orleans Parish. But 
this not negate the critical need for more hospital beds to 
open in Orleans Parish and to meet the needs of our ever-
increasing population.
    The City of New Orleans Health Department must play a 
significant role in improving the health of the residents of 
our city. We need to full staff our clinics and expand the 
offering to include all preventative and primary care services. 
Since health outcomes are largely controlled by personal 
lifestyle choices, public health professionals must play a 
critical role in educating the public about health risk and 
behavior modification. We think this is the ultimate solution 
because that is how you really decrease primary care--and 
hospital beds is by getting people to change their personal 
lifestyle choices.
    Mental health, the provision of mental health services pose 
a particular challenge in this region, an that has experienced 
severe loss, death, and destruction. And so we think that 
despite this need, it has fewer than 50 hospital beds for 
inpatient psychiatric care, about 17 percent pre-Katrina 
capacity.
    And finally, the mortality rates, as a doctor and health 
care provider, I noted a dramatic increase in the number of 
death notices in the newspaper. This observation was supported 
by further deaths of two of the staff people of my own 
department within a short period of time and anecdotal accounts 
of families going to more funerals than ever. Due to the lack 
of State data for this problem, we engaged in a count of death 
notices in the Times-Picayune and compared it to a parallel 
period before Hurricane Katrina.
    To validate our methodology, we compared the number of 
deaths notices printed in the newspaper in 2002 and 2003 
compared to the published State data from death certificates. 
In both cases, we noted the difference between the two was not 
statistically significant. In 2003 we averaged 924 deaths per 
month according to death notices. In contrast, for the first 6 
months in 2006 we averaged 1,317 death notices per month. This 
means that approximately 7,902 citizens expired within the 
first 6 months of 2006 as compared to 5,544 for the first 6 
months in 2003. The observations as well as the severity of 
health problems treated in our Health Recovery Week strongly 
suggest that our citizens are becoming sick and are dying at a 
more accelerated rate than prior to Hurricane Katrina.
    We believe these findings are significant, but the city has 
reached it limits as to its ability to research this important 
issue. It is critical that the State and Federal agencies 
immediately study these trends as well as the cause of death. 
This information can be used to develop appropriate 
intervention.
    In conclusion, clearly the health care system in New 
Orleans is far from normal, and we are working diligently to 
make improvements. The City of New Orleans Health Department 
has three proposals to comprehensively and systematically 
rebuild our health care system.
    Number 1, all citizens should have immediate access to 
primary, preventative, and mental health care services. People 
are suffering now and we must respond.
    Number 2, the city needs more hospital beds. The shortage 
of hospital beds has reached a crisis proportion and on some 
days ambulances have to wait hours on emergency room ramps to 
offload patients.
    Number 3, we must receive the resource to rebuild the New 
Orleans Health Department. Our Health Department is a necessary 
partner in the repair and reconstruction of the city's health 
care delivery system.
    Our health system has serious inadequacies and gaps prior 
to Hurricane Katrina, but the storm ruptured it to a point that 
many more of our citizens have lost access to health care 
services.
    I would like to thank you for your attention to New 
Orleans, and we look forward to working with you to solve these 
problems.
    [The prepared statement of Dr. Stephens appears at the 
conclusion of the hearing.]
    Mr. Stupak. Thank you, Dr. Stephens. Doctor, if I may, you 
indicated and I was a little surprised by the statement that 
the number of deaths since Hurricane Katrina was not 
statistically significant, yet we have had another panel say 
they are up about 48 percent. I think if you look at the Times-
Picayune newspaper obituaries before Hurricane Katrina, you had 
about 30 a day. Now you are averaging about 60, 61 a day. That 
is a rather significant increase in the number of deaths per 
month since Hurricane Katrina.
    Dr. Stephens. Yes, and I said they have been significant. I 
didn't say they were insignificant.
    Mr. Stupak. Then I must have misunderstood you. My 
apologies if I did. Let me ask you this. In the Times-Picayune, 
there was an article, Friday, March 10, about the trailers that 
came 9 months ago. There are eight exam rooms that were 
supposed to be strategically deployed around the city and we 
are still waiting for a permit. Can you tell me what is the 
status of that?
    Dr. Stephens. Well, the permitting is not in the prevue of 
the Health Department----
    Mr. Stupak. I realize that.
    Dr. Stephens. I can tell you what I know.
    Mr. Stupak. OK.
    Dr. Stephens. In the city council meeting a week ago they 
passed the zoning variance they needed for the placement of the 
trailers in the school zone.
    Mr. Stupak. We are all set to put those trailers out there?
    Dr. Stephens. Well, I am not sure where they are in the 
process. I know they got the biggest hurdle which is getting it 
through city council. But as I reflect back upon it, a couple 
things, one----
    Mr. Stupak. You have to provide a certificate as public 
health?
    Dr. Stephens. No.
    Mr. Stupak. OK.
    Dr. Stephens. I have nothing to do with that process at 
all. But when it came to my attention, I did go and ask what we 
could do to help.
    Mr. Stupak. Dr. Cerise, there was a question earlier or a 
statement earlier about the nurses, volunteer nurses coming in. 
I think it was with Operation Blessing where at the end of the 
month they can that be resolved between now and then end of the 
month?
    Dr. Cerise. Listening to the earlier testimony, I checked 
with the Board of Nursing and the process--and they are not 
aware--they are not denying nurses access to the area. Unless 
there is a credentialing problem, inability to verify 
credentials or something like that, they are not doing that; 
and they told me that they don't have plans to do that.
    Mr. Stupak. Would you get Mr. Koehl after this and get this 
thing----
    Dr. Cerise. We will make sure we make clarify that. And if 
I could on the death rate, we did our office of Vital 
Statistics did look at this a little bit over a year after 
Katrina, and it is tough to come to a rate when you don't know 
the population for sure. And so we were able to do some 
comparison before in 2004-05 and 2005-06 and the number of 
deaths of people from New Orleans who are residing in 
Louisiana, where we would have a death certificate on them, was 
about 41 percent of the deaths in a prior year period. We also 
have that broken down by cause of death and we----
    Mr. Stupak. Right, but I understand we have less people now 
in New Orleans than we did before. So if it was 31 deaths 
before with a full New Orleans and now we got half of New 
Orleans and we got 60 deaths, that is a tremendous----
    Dr. Cerise. That is where I said the difficulty is with a 
moving population, but looking at absolute numbers, it was 
about 41 percent a year after.
    Mr. Stupak. Would you work with Dr. Stephens to get that 
one resolved? Ms. Norwalk, in your testimony on page 4 you 
indicate CMS established a special 1115 Demonstration Waiver 
Program to help insured, continuity of health care services for 
victims of Hurricane Katrina, basically the evacuees, correct?
    Dr. Cerise. Absolutely.
    Mr. Stupak. Why can't we put a program----
    Ms. Norwalk. That is the way that the DRA funds work it----
    Mr. Stupak. Why can't we do a special demonstration 
project, waiver 1115 for all of New Orleans right now? We have 
a number of things besides money. We have community health 
centers that have been applications pending before Hurricane 
Katrina struck still not approved. We have got the volunteer 
nurse issue which I think we might have resolved. We have an 
underserved area, we need health information technology, we 
need PATH to specialty services, workforce development, you 
name it, we got a number of problems. Why can't we get together 
and do a special demonstration project because things are not 
very well here in New Orleans?
    Ms. Norwalk. Well, that is what we have been working with 
the State to do, in fact, is to work both on a Medicaid waiver 
as well as doing Medicare demonstration.
    Mr. Stupak. OK. But you rejected The Cooperative plan which 
is really for region 1, wasn't it?
    Ms. Norwalk. Well, it was a concept paper that was 
submitted by the State on behalf of the Collaborative. I 
wouldn't say that we rejected it. We had been working with the 
State to figure out what it is that the State wants to submit. 
I can ask Fred if that was a waiver that was submitted or 
merely concept paper that----
    Mr. Stupak. Well, wasn't the Collaborative--wasn't that 
really sort of like to put a pilot program in region 1, those 
four parishes we have been talking about today to try to get 
health care delivery system as quickly as possible up in New 
Orleans?
    Ms. Norwalk. We submitted our paper.
    Dr. Cerise. What we were asked to submit was a concept 
paper by October 20 which we submitted for the New Orleans 
area. I think some of the earlier discussion has been in terms 
of the rejection of that. We are still in discussion with CMS 
on this issue.
    Mr. Stupak. What are the issues that have to be resolved? 
Our goal here is to get, like yours, is to get health care back 
to--what else has to be done here to get this region 1 
Collaborative effort going here? What has to be done? What 
waivers do we need at both the State level and then we will go 
to the Federal level?
    Dr. Cerise. We have stepped back--the State has--look, we 
put forth a concept paper and I apologize going into some 
detail but it is rather complex. We put forward a concept paper 
working in cooperation with CMS that said this is how you could 
insure the population in this region. And by using Medicaid 
savings, restructuring Medicaid, and shifting DSH funds to an 
insurance product.
    Mr. Stupak. OK. This was region 1, these four parishes?
    Dr. Cerise. That is correct.
    Mr. Stupak. And HHS did not accept that?
    Dr. Cerise. In discussions after October 20th we were told 
they would not do a region-specific demo----
    Mr. Stupak. But a statewide demo?
    Dr. Cerise. It would be statewide. So we started working on 
a statewide number.
    Mr. Stupak. We shouldn't be worried about statewide 
situation right now.
    Ms. Norwalk. Actually there are a couple points I would 
like to make to that. First in doing this--in fact it was 
Secretary Leavitt's initial proposal to do this on a region 1 
specific basis or greater New Orleans basis.
    Mr. Stupak. Answer me this. The Secretary can't be happy 
with the health care system being delivered in these four 
parishes.
    Ms. Norwalk. Absolutely. That is correct.
    Mr. Stupak. So why would you reject the Collaborative and 
come up with a statewide plan?
    Ms. Norwalk. Actually we haven't and in my opening 
statement----
    Mr. Stupak. All right. You haven't rejected it, you haven't 
approved it.
    Ms. Norwalk. They haven't submitted a waiver to us. They 
have submitted a concept.
    Mr. Stupak. Have you told them they have to submit a waiver 
with this Collaborative?
    Ms. Norwalk. I think it is without question known that they 
need to submit a formal waiver.
    Mr. Stupak. Have you told the State that?
    Ms. Norwalk. Yes, absolutely.
    Mr. Stupak. OK. Today or earlier?
    Ms. Norwalk. Oh, this has always been the issue since we 
have been down there for a year-and-a-half that the State would 
need to submit a waiver to us formally as they do for other 
waivers that they have submitted to the Agency.
    Mr. Stupak. OK. Dr. Cerise did they tell you you have to 
submit a waiver to get this Collaborative effort in?
    Dr. Cerise. We are aware that to get a waiver that there is 
a formal application process.
    Mr. Stupak. OK. Have you submitted that application?
    Dr. Cerise. No, we haven't.
    Mr. Stupak. Do you anticipate submitting that application?
    Dr. Cerise. What we anticipated doing was getting to a 
level of agreement so that we know when we would submit a 
waiver it would be an acceptable waiver. There is a lot of work 
that goes into that piece. And we were working with CMS to try 
to get to that point. It became clear to us in that process 
that the dollars needed to do what we were comfortable with, 
and that was insuring a significant portion of the population 
with existing funds, with no new funds. We are going to be much 
more than we had in existing funds. We were working through a 
number of assumptions with CMS. In about mid-December, those 
discussions stopped until we received essentially the set of 
spreadsheets that you referred to earlier in January.
    Mr. Stupak. So you are getting into an actuarial battle 
then, right, on cost, pennies, and things like this, right?
    Dr. Cerise. That is correct.
    Mr. Stupak. That is what we don't have time for, right?
    Dr. Cerise. That is correct.
    Mr. Stupak. OK. Here is what I am going to do on this 
Collaborative. We are going to ask HHS to provide us all 
documents going back and forth. The committee has been trying 
to get our hands on it. So you can expect the document request 
from this committee on that. And so we ask you to preserve the 
documents and statements along those lines there.
    Ms. Norwalk. If I can make just one comment, Mr. Chairman, 
about the issue about the issue of region 1 only.
    Mr. Stupak. Sure.
    Ms. Norwalk. While it makes a great amount of sense to 
start in region 1, I want to note the disparities that would 
occur if that were the case. In region 1, if you said let us do 
this proposal and cover those who are 200 percent of the 
poverty level or below that would mean a family of four could 
be earning $41,000.
    Mr. Stupak. That is fine.
    Ms. Norwalk. It is great.
    Mr. Stupak. It is fine with me.
    Ms. Norwalk. However, in region 5 that has been hit by Rita 
and actually a number of other regions, that same family of 
four could only earn $2,600 in order to qualify for Medicaid 
under the same thing. That disparity is something that concerns 
us if it is long term. So when working with a statewide, 
appreciate rolling it out, region 1 is of what is critical 
importance to deal with New Orleans, there are issues that the 
State is going to need to consider because you wouldn't want an 
influx of people to New Orleans when the system is not yet 
ready to handle that from an infrastructure perspective. Not 
that it wouldn't be great medium term----
    Mr. Stupak. Well, my concern is region 5 has health care, 
region 1 does not. My concern is also there is a 115 waiver 
waiting, according to Dr. Wiltz, for 287 health care clinics 
that were before Hurricane Katrina and they are still not 
approved, right?
    Ms. Norwalk. I don't now if that is a 115 waiver on----
    Mr. Stupak. Well, there is a waiver pending. I might have 
my number wrong.
    Ms. Norwalk. I can check with staff. There may be something 
pending elsewhere.
    Mr. Stupak. Here is my concern. 9/11 hits New York, they 
have their waiver pending, that is approved, no questions 
asked, no further documentation. New Orleans, we have been 
waiting 18 months, even more than that, and we still have 
waivers pending before HHS not approved. When I was down in New 
Orleans a year ago and we asked the question about waiver that 
they needed then, I think it was for the GME, for graduated 
medical, and were told they filled out the wrong form. But you 
never told the people that. We are getting a little frustrated.
    Ms. Norwalk. We actually did the GME in a rule so they 
wouldn't need a waiver for the future, and we have solved that 
problem for the next 3 years. So from a GME perspective, we 
have been verifying----
    Mr. Stupak. What can we do that is going to be unique? Why 
can't we demonstrate a project here? There is a great need here 
for health care.
    Ms. Norwalk. Absolutely.
    Mr. Stupak. Why can't we get with HHS, get with the State, 
the city, and provide the reimbursements they need, the nurses, 
the clinics, and get this thing moving?
    Ms. Norwalk. The other piece that I think is important to 
note is----
    Mr. Stupak. No, how about answering my question.
    Ms. Norwalk. In answer to that question I am more than 
happy to sit down with you at any point in time.
    Mr. Stupak. I want you to sit down with the State, the city 
and them. I don't know about New Orleans.
    Ms. Norwalk. We do that on a continual basis. We have been 
working with the State for pretty much every day. We have 
people embedded at the----
    Mr. Stupak. Very good. You want to make a statement there, 
though?
    Ms. Norwalk. Yes, I did actually want to point out that the 
$2 billion in DRA funding, the $164 billion went to cover the 
evacuees and the State share as well as those who are impacted 
within Louisiana. Over the last month we have distributed $175 
million across the Gulf Coast region. $71.6 million went to 
address the Medicare wage index's disparity with hospitals----
    Mr. Stupak. You can spare us the stats because all the 
other panelists told us there is not enough in the system. They 
are not getting the money. And you could have released $2.8 
billion but it all didn't go to health care, it went to many 
other places. Our concern is get health care up and running.
    Ms. Norwalk. Just one other point is that there is some 
additional funds from the DRA. We anticipate about $170 million 
as we collect that back from the other States that did not 
spend the DRA funds on impacted individuals and evacuees. We do 
intend as we can under the DRA to reallocate those funds, much 
like we did with the initial $175 million so that we do hope to 
support a number of the concerns that they have in terms of 
short-term needs.
    Mr. Stupak. I am sure you saw the article. It has been 
referred to repeatedly today in the Times-Picayune about 
hospitals running out of space, they don't have bed space. You 
have heard that all over the place.
    Ms. Norwalk. Absolutely.
    Mr. Stupak. So all those numbers are fine but they don't 
solve the problem. We need these things resolved. We need them 
now.
    Ms. Norwalk. And if I might add to that, not only do the 
problems that we have to resolve that issue is far beyond the 
health care fund. They need housing, they need education, they 
need to be sure they are safe and secure.
    Mr. Stupak. Absolutely.
    Ms. Norwalk. They have population shifts, difference with 
income, so this is more than just making sure that the health 
care system dollars are there. It is actually far beyond that 
so that the staff can come into New Orleans and help support 
that. And that is really----
    Mr. Stupak. But we need cooperation from everyone, the 
Federal Government, State, local.
    Ms. Norwalk. Absolutely.
    Mr. Stupak. And next time I would appreciate your testimony 
before 7:00 so our staffs have a chance to go through it.
    Ms. Norwalk. No problem.
    Mr. Stupak. And with that, let me turn it over to ranking 
member, Mr. Whitfield.
    Mr. Whitfield. Thank you, Mr. Chairman, and I want to thank 
the panel for being here. Prior to your testimony, we heard the 
testimony of 13 health care professionals in the area; and 
every one of them pointed out the many problems that they face, 
the shortage of primary care providers, a shortage of 
specialty, a shortage of hospital beds, a shortage of 
psychiatric help. All of those are problems, and it has been a 
year-and-a-half since Katrina hit. There have been millions of 
dollars appropriated and sent to New Orleans and when you hear 
reasons why we have not done a better job of having an 
effective health care delivery system in place today, you can--
health care is so micromanaged you can always come up with, 
well, this waiver wasn't given or the poverty level was too 
high here or poverty level too low here or whatever, whatever, 
whatever. But Ms. Norwalk, you are very familiar with all these 
regulations, and Mr. Cerise, you are familiar with all these 
regulations, so I would just ask the two of you what could be 
done to expedite this? I mean, I know that each one of you 
could go on and give 30 minutes of reasons why we haven't done 
a better job of providing primary care when you consider the 
money given. But from your perspective, Ms. Norwalk, what is 
the problem? Why can't we do a better job at this?
    Ms. Norwalk. Well, there are a number of different issues. 
First of all, I would note that particularly Medicare is not 
really set out to help with disaster relief and recovery. So 
the first issue that we have when we say, oh, what can we do to 
help? I think we have done a fair amount to try and help where 
it is that we can, given that this is a national program.
    The second issue is Medicaid. Medicaid is a State-run 
program where the State is in partnership with the Federal 
Government, and the Federal Government provides matching funds. 
But the State has the lead. And the fact of the matter is much 
as you reference in terms of micromanagement, the Federal 
Government does not want to do micromanagement of what happens 
in Louisiana. It is not appropriate. It is their health care 
system. And that was one of the key principles, and when we 
first sat down with the State in September and October 2005, 
that is--not just the State but the entire community, that was 
really the number one key. So when working with the State and 
the Collaborative, I think that we have a very good framework 
to move forward. And there is no doubt that there will continue 
to be debate about the numbers internally. There always is 
between the States and CMS whenever you are looking at Medicaid 
programs. But I think that those are things that we can get 
beyond in order to make sure that people in Louisiana have 
insurance or a medical home or stop going to emergency 
departments to receive care, for example, which helps--which 
exacerbates the emergency department overcrowding problem that 
we have. I think there are a lot of things that we can do and 
are doing with our short-term needs and additional DRA funds to 
help support getting back recruitment and retention. So getting 
physicians back, helping with mental health, helping with long-
term care, again to get people out of the hospital.
    Mr. Whitfield. You know, my understanding the insurance is 
not a problem, having the providers provide care is the 
problem.
    Ms. Norwalk. Well, I think you got--well, that may be the 
case. I think you may have--you have got a long-term issue. If 
you want people to come back to New Orleans, physicians and 
other staff, direct service workers, to come back to New 
Orleans, they are going to need to know that they have a large 
patient base and can actually earn a living; and to do that, I 
suspect that more of them would be interested if they had a 
wider base, i.e. more insured.
    Mr. Whitfield. Mr. Cerise, from your perspective, what is 
frustrating about this for you? What needs to be done?
    Dr. Cerise. Well, we have a difference of opinion on how we 
would attract providers back into the area.
    Mr. Whitfield. Well, if you have a difference of opinion, 
who makes the final decision?
    Dr. Cerise. Well, we were engaged in a collaborative 
process. The Collaborative put forth this concept that focused 
heavily on the delivery system and said that we have lost a lot 
of capacity. We would like to put the pieces together in a way 
that is a more coordinated system of care, and we brought that 
concept in September to CMS and made this case. We have got a 
lot of capacity needs. If we could put some--a stake in the 
ground, put a significant capacity, primary care providers, 
organized in a particular way so that whether they are seeing 
insured people, uninsured people, they are reimbursed not for 
episodes of care, not for episodes of illness, but to manage 
the population, to attract people with chronic disease, to be 
connected with electronic records, to make a significant impact 
of a new system of care in a devastated area, create a new 
model of care delivery. And what--the reaction that we got from 
Dennis Smith at CMS was essentially go back and bring us back 
an insurance model that moves DSH dollars to cover people 
with--to insure the population.
    We went back and worked on that. I can tell you, what you 
heard earlier today was a cry to say can you support, with some 
certainty, some income for these clinic sites so that we can 
bring enough capacity back into the region because I don't 
think as the initial step--we can--it is an interesting debate 
and we can talk about whether swapping DSH funds for insurance 
is a smart thing to do long term and cover for more people. But 
for the immediate impact, I think that swap is not going to 
make the same impact as funding some delivery sites throughout 
the city where you have got a huge gap in capacity.
    Mr. Whitfield. You know, you get the impression just 
listening to this that there is so much emphasis being placed 
on the Collaborative and what the health care system in 
Louisiana is going to look like in the future, that taking 
steps to get a primary health care system, delivery system into 
place to take care of the needs today was placed on the back 
burner. Would you disagree with that?
    Dr. Cerise. I think that that is a fair assessment. We have 
tried to take the approach of while we have a broken system, 
put the pieces back together in a way that is good for the 
future, that makes sense for the future. But there is critical 
capacity that we have to replace today, and I think we have----
    Mr. Whitfield. It sounds like we need to focus more on just 
meeting the needs today and then talk about the future later 
from our perspective. One other question. Dr. Cerise, it is my 
understanding that nearly $250 million in DSH monies are 
currently not being utilized and will expire at the end of the 
fiscal year if not used. What can and needs to be done to use 
these funds today?
    Dr. Cerise. Well, actually we have less than that 
available. The States got a DSH cap of a little bit over $1 
billion, and we project that we will spend about--a little bit 
more than $950 million or somewhere in that range of DSH. And 
so the limiting factor on the State drawing down DSH funds for 
now is State match, putting up 30 cents on the dollar and match 
to draw that down and having the allowable costs to spend that 
on. In the prior years we were not at our DSH cap but we are 
getting very close to our DSH cap right now and certainly there 
is not $250 million unspent DSH available this year.
    Mr. Whitfield. OK. Mr. Chairman, I yield back the balance 
of my time.
    Mr. Stupak. Ms. DeGette from Colorado for 10 minutes?
    Ms. DeGette. Thank you, Mr. Chairman. Ms. Norwalk, I want 
to explore the Secretary's health insurance proposal a little 
further because I am a little unclear about some of the ideas 
in the concept. From what I understand, is the general concept 
of this plan is that you would take DSH monies and rather as 
happens now in Louisiana where the DSH monies go directly 
through the charity system, what would happen under this plan 
is that the DSH monies would be given out to the uninsured to--
they would be used to purchase private insurance for those 
individuals, is that correct?
    Ms. Norwalk. That is part of the concept, that is correct.
    Ms. DeGette. What is the rest of the concept?
    Ms. Norwalk. The way that the proposal is structured really 
is intended to focus on what the State needs are first, and 
there is no question that the State has raised a concern that 
there be DSH funds remaining so they continue to have a safety 
net. So part of that is redirection of some DSH dollars.
    Ms. DeGette. OK. Is there any sense through the Secretary 
what percentage of the DSH dollars would be needed to purchase 
this private insurance for the uninsured individuals and what 
amount would be reserved for the other individuals?
    Ms. Norwalk. It really is up to the State, but it depends 
on a number of different options. And one of the things we have 
done is provide the State with a tool to help figure out if you 
have dialed up or down certain things such as the number of 
people you want to cover, the poverty level that you cover, the 
benefit package that is provided and the like.
    Ms. DeGette. The reason Mr. Stupak was cutting you off and 
the reason I am cutting you off, and I apologize, and you can 
certainly supplement your answers in writing is we only have 10 
minutes to question the witnesses. So I guess the answer would 
be that you don't have a firm answer about percentages because 
it would depend on a lot of variables.
    Ms. Norwalk. Correct.
    Ms. DeGette. Thanks. Now, is this plan similar to the 
Massachusetts connector plan?
    Ms. Norwalk. Again, it is really up to the State in terms 
of what they want to put together, but there are a number of 
things that both Massachusetts, California, Indiana, Michigan--
a number of States have looked at this type of model. Each plan 
is different.
    Ms. DeGette. In fact, Massachusetts plan covers everybody, 
not just the uninsured.
    Ms. Norwalk. Correct.
    Ms. DeGette. It engages the employers and it engages the 
insurance company.
    Ms. Norwalk. That is correct.
    Ms. DeGette. So what you are saying is Louisiana could do 
something like that but you are not giving them the details, 
you just think--here is a pot of money for DSH. You guys could 
use it to insure uninsured people.
    Ms. Norwalk. One of the concerns they have is to have DSH 
dollars go to physicians and clinics, for example. 
Traditionally, DSH does not go to physicians. Disproportionate 
share hospital payments go to hospitals.
    Ms. DeGette. Yes, as I said before I am very familiar with 
DSH.
    Ms. Norwalk. Right. I apologize. So appreciating that 
issue, wanting to be sure if you were going to divert that 
money in some other way that we can do much as Dr. Cerise has 
suggested is necessary, and much of the testimony here has been 
we need to have funds, we need to provide care in an ambulatory 
setting outside of the hospital. And so this allows the money 
to follow the person to seek care wherever he or she needs it.
    Ms. DeGette. Has anybody in HHS done modeling on what this 
would look like? Have you talked to the insurance companies?
    Ms. Norwalk. Yes.
    Ms. DeGette. Do you have information you can supplement 
your response? What was their response?
    Ms. Norwalk. I think that in fact there are people here 
today from insurance companies in Louisiana who were very 
interested in this proposal.
    Ms. DeGette. OK. So people said they would be interested?
    Ms. Norwalk. Yes.
    Ms. DeGette. And did you get some statistics from them how 
much this would cost?
    Ms. Norwalk. Again, it is going to depend a lot on the 
benefit package and the poverty level and the like.
    Ms. DeGette. And you think that should be established by 
the State?
    Ms. Norwalk. Yes, I think it is appropriate for the State.
    Ms. DeGette. And they would have to then apply for waiver?
    Ms. Norwalk. Correct.
    Ms. DeGette. OK. And so really, the benefits package, the 
special needs that people had, chronic long-term needs, so 
something like that, that would all be established in your view 
by the State and they would come to you with a waiver?
    Ms. Norwalk. Correct.
    Ms. DeGette. And then would it be guaranteed coverage of 
somebody was uninsured or how would that work?
    Ms. Norwalk. Again, that is up to the State to determine 
whether or not they have guaranteed coverage as I noted 
earlier. They may want to keep some DSH funds so that if people 
aren't uninsured--so for example, I know one of the issues they 
have is a very large migrant population that might not be 
covered under State subsidies but may yet be required to be 
covered in hospital----
    Ms. DeGette. So it is really for them to decide.
    Ms. Norwalk. Correct.
    Ms. DeGette. So I guess it would be fair to say that this 
idea about covering the uninsured with DSH funds rather than in 
the other ways we have discussed is from the Secretary's view 
more a concept than a plan? Because the plan would have to be 
developed by the State and then submitted to the Department for 
waivers, correct?
    Ms. Norwalk. Yes, that is correct.
    Ms. DeGette. OK. Now, Dr. Cerise, what do you think about 
all that?
    Dr. Cerise. The challenge of moving DSH for insurance which 
I think everyone would love to have everyone in your population 
insured. If you look at health care spending in Louisiana, in 
2004 we spent $19.4 billion. The focus of much of this 
conversation is that roughly $600 million of DSH that is in the 
public system today, around 3 percent of the health care 
spending. We have got 18 percent or so uninsured in the State. 
It is not a simple move of DSH funds to insurance, those DSH 
funds are buying services today, and if we are going to move 
that to insurance, we have got to be comfortable that we are 
insuring the critical mass of the population because if you 
don't have--when you move them, you are moving them from your 
safety net, so you do not have those funds to support your 
safety net. And that is the challenge that we are presented 
with and in our discussions.
    Ms. DeGette. And have you been given any information to 
indicate that you could insure those uninsured individuals with 
DSH funds while--have you been given any modeling or anything 
by that by HHS?
    Dr. Cerise. We were given a model in January, the tool that 
Ms. Norwalk referred to, that showed that we could insure 
319,000 people using existing DSH funds that were dedicated to 
the hospitals in the State.
    Ms. DeGette. OK. And then how many uninsured do you have?
    Dr. Cerise. We have somewhere around 700,000 uninsured in 
the State. That is a number of debate but I think that is a 
safe number.
    Ms. DeGette. So you would be covering somewhat less than 
half of the people?
    Dr. Cerise. We feel like the 319,000 is an optimistic 
projection. I feel comfortable that it would be less than half.
    Ms. DeGette. And what would happen to the hospitals and 
other facilities that that DSH money is going to? Would that be 
all the DSH money?
    Dr. Cerise. The remaining DSH funds that we pulled aside 
earlier in the discussion were for three groups, one, the rural 
hospitals. Here is about $85 million that funds care in rural 
hospitals, the State psychiatric hospitals, which is about $100 
million, and then $80 million for GME, that actually funds GME. 
But the remainder of those care dollars would be moved, and so 
those would not be available for those systems to take care----
    Ms. DeGette. And the money that would stay, would that be 
sufficient in the State's view to preserve those programs, 
those DSH programs?
    Dr. Cerise. No.
    Ms. DeGette. OK. And what would happen to the other 400,000 
roughly who didn't get covered with the DSH money?
    Dr. Cerise. There would be no organized system of care 
funded for the remaining uninsured. They could get a hospital-
based services. They could show up in the emergency room and 
hospitals have to take care of those people. They are not 
funded to take care of them, but they would have to be seen but 
there would be no coordinated outpatient----
    Ms. DeGette. There would be no funding for it. Now, what 
about under that modeling that was given to you by HHS. What 
would happen about a teaching hospital?
    Dr. Cerise. Well, we did carve out the DSH funds for GME 
and so there are funds that would be either supplanted, if 
those programs were moved to other hospitals and those costs 
would end up covered through Medicare or some other mechanism. 
That is a whole other discussion, but the hospital, for 
example, LSU Shreveport Hospital relies very heavily on those 
DSH funds, not only for GME but for service delivery, and they 
would have real problems.
    Ms. DeGette. That would be gone. So would it be fair to 
characterize the State's position to the Secretary's proposal 
as something that you don't think would be workable for 
Louisiana?
    Dr. Cerise. That is correct. Without substantial additional 
funds, that swap does not work for us.
    Ms. DeGette. Do you have any ballpark figure how many 
additional funds?
    Dr. Cerise. I think--we have done a lot of modeling. I 
would say it is north of a billion dollars.
    Ms. DeGette. A billion dollars?
    Dr. Cerise. A billion for the whole State.
    Ms. DeGette. That would be per year, right?
    Dr. Cerise. Correct.
    Ms. DeGette. Now, this is why we are having this hearing, 
so we can bring everyone in.
    Ms. Norwalk. The PriceWaterhouseCooper's report says that 
40 percent of the uninsured in Louisiana have over 200 percent 
of the poverty level. So not all the 700,000 would have 
qualified in any event under the report. Now, I haven't seen 
the latest statistics from the census bureau that looks at 
that, but that is the first point I wanted to make. The second 
point is if you assume that you don't have a medical home 
system of care and instead are getting treatment in an 
emergency department or a hospital outpatient department, it 
absolutely is more expensive.
    Ms. DeGette. Well, let me just stop you real quick because 
this 200 percent of poverty level, we were talking to actually 
a lady from my district last week under our S-CHIP hearings and 
the problem we have is a lot of uninsured that Dr. Cerise is 
talking about who will get treated anyway at the emergency 
rooms are as you say people over 200 percent of poverty level. 
They are the working poor, and they cannot afford to buy 
insurance. So I guess what his point would be that, OK, sure 
you are going to insure people who are under 200 percent of 
poverty level through this proposal, but they are still going 
to be whole bunches of people who don't have insurance, who 
can't buy insurance out of their pockets, and they are going to 
be showing up at the doors of these emergency rooms. So where 
do we pay for that?
    Ms. Norwalk. Well, there are a number of things that the 
State could do, like a sliding scale for example of care. So if 
they wanted to provide subsidies on a sliding scale, that is 
one way that they could structure it. Moving care from the 
hospital outpatient department and the emergency department 
into a medical home system, which is part of the Collaborative 
approach, also I think would save a lot of money.
    Finally, the concern is from an LSU system, there is at 
least $160 million on the table because LSU only has 10 percent 
of their patients in Medicare, at least traditionally they did 
before pre-Katrina. There is a lot of Medicare DSH and Medicare 
GME dollars that aren't being spent because of the patient mix 
that was at the LSU system pre-Katrina. If they built a new 
hospital for example, I think their patient mix would change 
and the number of beds they have for the uninsured in Medicaid 
would also change, consequently the entire system. Those funds 
I would imagine would need to move around in any event because 
of the changing nature of how the system prepares----
    Ms. DeGette. Well, let me say my time has well expired. I 
appreciate the comity of the Chair. I think it is urgent that 
we continue these talks between the State and Federal 
Government, and I think that the State needs to work on trying 
to put together some kind of a system and submitting the 
waivers. But I also think, and the chairman said, he is willing 
to bring the Secretary in here. I think that the Department 
needs to look much more broadly because the State doesn't think 
this is going to work, and I don't think the economies are real 
great.
    So anyway, thank you, Mr. Chairman, for your comity.
    Mr. Stupak. I thank the gentle lady. Mrs. Blackburn, 
questions?
    Mrs. Blackburn. Thank you, Mr. Chairman. Dr. Stephens, I 
want to start with you. I have got this March 3 article from 
the Times-Picayune which basically says the hold-up that Mr. 
Smithburg talked about earlier is due to a problem between the 
city council and the Mayor and getting the approval for these 
mobile clinics. And it is absolutely beyond me how you can have 
the situation that you have. You are depending on as Mr. 
Smithburg put it earlier, the kindness of his brethren at the 
table to help care for those that are in need of health care 
and you cannot get this approved.
    Now, is the city willing to allow these mobile clinics--
they have been there for 7 or 8 months waiting to be used to 
relieve some of the pressure that is there. Are you willing to 
see that through to completion immediately?
    Dr. Stephens. Yes. Thank you. A couple of things, one, the 
one problem we had is that they were placed in a residential 
area. A solution would have been to place it in an area that 
was zoned commercial.
    Mrs. Blackburn. That is not what I asked. Are you willing 
to see it through to get a solution immediately? You need it to 
where people can get to the health care and stubbornness is not 
going to solve the problem, hesitation is not going to solve 
the problem. Action is going to solve the problem. Being an 
outsider looking in, knowing that there is a tremendous amount 
of money and you were sitting in the room when I listed the 
money that has been sent, the money that has been spent. How 
can you not resolve this issue when you have a solution sitting 
there for 7 or eight 8 and you have chosen not to act on it?
    Dr. Stephens. First thing, the city council did pass the 
ordinance to give a waiver so that they can move forward with 
the project. And No. 2 as I mentioned earlier is that the 
residential area was a problem and not the commercial area. 
They had adjacent commercial areas that they could have placed 
them. And number three, they could have restricted only to kids 
at the schools, and that could have been open today if it was 
only to be used by the kids on schools.
    Mrs. Blackburn. Dr. Stephens, sounds like some excuse-
making and I think it would be helpful to see some action on 
that immediately and not just at some point in the coming 
months. I think it would be difficult if they sat there for a 
full year without being utilized and without being used.
    Dr. Cerise, I would like to come to you with a couple of 
questions if I may, please. I want to go back to Dr. Fontenot. 
I asked her about the permitting and the licensing on these 
hospitals and what we had found when we were there in New 
Orleans and some questions that came from that. With your 
generators and your emergency supplies, being in the basement 
we found out that there were evacuation plans but there was no 
implementation plan for those and just--it seemed to be a lot 
of blame going around and it was Dr. Guidry who had given us 
that information. What is your association--how do you work 
with him?
    Dr. Cerise. He is in my office. He is a State Health 
officer.
    Mrs. Blackburn. OK. Great. Are you still permitting these 
hospitals--we just heard that switchgear is still in the 
basement but there is some kind of system of walling them off. 
You want to--we are coming up on hurricane season soon again. 
What are you doing to say if we have a difficult situation, how 
do we get ourselves out of this? So just a couple of seconds on 
that.
    Dr. Cerise. Right. There are two pieces, one is how to 
mitigate and the other one is with the planning, is to make--if 
we get in a situation--we have worked very cooperatively with 
HHS and they have provided a lot of assistance in going to 
individual facilities, hospitals, nursing facilities to look at 
who is able to evacuate, how you would evacuate, what the 
capacity is, what Federal assistance we would need. And so we 
do have very detailed plans of which each facility's capacity 
would be.
    Second, on the mitigation piece, we have a group that has 
recently completed its work, extensive surveying, of hospitals 
and nursing homes to develop building code issues, and that 
will tie in evacuation plans. If you have certain things in 
place in certain areas, your plan would be to leave or you 
would shelter in place.
    Mrs. Blackburn. Do you have an implementation strategy so 
that you can move people? This time around, do you have that? 
Last time around you did not.
    Dr. Cerise. Yes, we do.
    Mrs. Blackburn. You do?
    Dr. Cerise. Yes, ma'am.
    Mrs. Blackburn. Excellent. I want to go to the insurance 
issue and the 1115 waiver because there is a lot of talk about 
that, and you all have a State mandate for health care access 
to all Louisianans, and my question to you on this 1115 waiver, 
are you looking at Arizona and Tennessee and some of the other 
States that have had an 1115 waiver and looking at the lessons 
learned?
    Dr. Cerise. We are aware of things that other States have 
done in order to cover more people, be able to reallocate 
funds, to not only pick up the full freight but to share costs 
with employers and individuals. I am not sure if that is what 
you are referring to.
    Mrs. Blackburn. I am asking if you are looking at those 
States, their program, their implementation, their delivery 
systems and seeing the mistakes that are there and viewing 
those as lessons learned and asking them for best practices.
    Dr. Cerise. We are aware of some of the problems that 
Tennessee had with the large move to a coverage model from an 
access model with DSH funds. It is one of the reasons that--
honestly, we are being very careful about the assumptions going 
into this, and the reason we have been hesitant to accept, for 
instance, a per member per month of $157 for childless adults 
as a way to insure people because if those estimates are wrong, 
the State is going to be on the line for providing that 
coverage with State funds if we don't get an amendment to the 
waiver from CMS.
    Mrs. Blackburn. And you all are already spending just under 
30 percent of your State budget on health care, is that not 
correct?
    Dr. Cerise. That is probably about right.
    Mrs. Blackburn. Are you looking at anything like refundable 
tax credits or new insurance products or health reimbursement 
accounts, health savings accounts, thing of that nature to put 
that into your mix?
    Dr. Cerise. The short answer is for this particular 
initiative, we have looked at the ability to provide an 
insurance product for people with existing funds. We have not 
gotten into the details of what that would be.
    Mrs. Blackburn. OK. And one more quick question. You have 
gotten $15 million on the workforce recruitment money, but you 
think it is going to take $120 million to rebuild your 
workforce, is that correct?
    Dr. Cerise. That is correct.
    Mrs. Blackburn. All right. Thank you. I will yield back, 
Mr. Chairman.
    Mr. Stupak. I thank the gentle lady from Tennessee. Mr. 
Melancon for 10 minutes questions, please.
    Mr. Melancon. Thank you, Mr. Chairman. Ms. Norwalk, let me 
ask--maybe this is the dumbest question I am going to ask, but 
we are 18 months out since the storm's occurrence. Why are we 
here today? Isn't the Department of Health and Hospitals able 
to work with the States to try and provide health care to work 
through the problems? Why does the Congress have to bring a 
Department here and all these people from Louisiana here to try 
and solve what should have been solved by the Agencies 
themselves.
    Ms. Norwalk. We certainly have been working very diligently 
to make sure that health care is being provided in the area. I 
think the needs have--the short-term needs, we have continued 
to work with them. They continue to be exacerbated as 
populations return, as the populations change. For example, the 
number of migrant workers that are coming into the area often 
do not have health insurance and may have workers' comp issues.
    Mr. Melancon. And that is correct because we haven't done a 
thing. We haven't taken any incremental steps forward. We are 
worrying about the Charity Hospital and the big building that 
everybody doesn't want. That is what we are worried about. We 
are not worried about the teaching facilities for the State of 
Louisiana, we are not worried about the hospitals in the public 
sector--private sector going broke, we are not worried about 
people that we have to give health care to, we are worried 
about the politics of some building in south Louisiana. The 
State Collaborative. How many weeks was it between the time--
maybe Dr. Cerise--between the time that you all submitted it to 
the Feds, then they started talking to you again. It was about 
a 6-week period or was it longer than that?
    Dr. Cerise. We submitted it October 20. We had regular 
discussions for--beginning early November until mid-December, 
and then there was a 6-week gap before the proposal or the tool 
was presented to us by CMS.
    Mr. Melancon. Well, if I remember correctly, it was a 
concept paper for a redesigned health care system for region 1 
for a CMS submittal. Prior to a statewide rollout, the State 
will assess the benefits of the current rural safety net 
comprised by merely small rural hospitals and the rural health 
clinics. One of the most important consideration, present 
implementing the new system of care, its affect on rural 
communities. Local rural communities face many unique 
challenges which have not often been addressed in the 
Collaborative process, as region 1 is primarily an urban area. 
These challenges include significant shortages of health care 
professionals. The role of rural hospitals is critical safety-
net providers and limited financial resources.
    Now, they brought you a rock and then 6 weeks later, after 
they brought you the rock that you asked them to bring, you 
tell them that is not the rock you want to take it back and 
start over again. So where we are now at month 18 is they don't 
want to continue filling out application forms that you are 
going to tell them you are not going to accept?
    Ms. Norwalk. I actually would characterize it differently. 
I have a log of all the contacts we had since November say 
through February, and there were significant conversations long 
even after they submitted the proposal after October 20.
    Mr. Melancon. Why were you all silent for 6 weeks?
    Ms. Norwalk. We weren't silent for 6 weeks. That is my 
point. We were silent the week of Christmas and for a few days 
after New Year's. That is true. I apologize. I am sure people 
were on vacation. So other than that vacation schedule, I 
have--I can tell you calls that were made, e-mails that were 
sent back and forth about financial modeling, about all sorts 
of issues that relate to this, and we have been----
    Mr. Melancon. Thank you. Dr. Cerise.
    Dr. Cerise. We had regular staff calls throughout the month 
of November and until mid-December. We had no staff calls 
working through budget neutrality, these technical pieces that 
we have to work through. CMS cancelled the call the week after 
my visit to your office, December 12. That next call was 
cancelled, and the next information I would get on this would 
be from the Secretary's office, and that is true, I got that. 
But it was in January and it was the night before a very public 
release of this tool.
    Mr. Melancon. Was that when we had the----
    Dr. Cerise. It was not a discussion point at that point.
    Mr. Melancon. Is that when we had the Irish kilts playing 
music with your announcement in New Orleans?
    Dr. Cerise. No, that was the beginning of the process.
    Mr. Melancon. That was just another pie in the sky. We have 
heard from the hospitals earlier that they had only gotten a 
portion of their cost for uncompensated care from the State. 
What can you tell me about that element of the Collaborative?
    Dr. Cerise. The uncompensated care is one piece of the 
hospitals' problems right now. It is an important piece. But as 
you have heard, they have got a number of other issues. The DRA 
provided funds for uncompensated care for a period immediately 
after the hurricanes. There was about $134 million allocated 
for that, about $100 million of that went to hospitals. For the 
remainder of that fiscal year--and that was time-limited. It 
expired at the end of January 2006. Between February and July 
2006, the remainder of the State fiscal year, the State 
appropriated $52 million in uncompensated care for hospitals in 
the region. This current fiscal year of 2006, there was $120 
million in uncompensated care appropriated to the hospitals 
that don't normally get this appropriation but it was in 
recognition of the fact that the care had shifted from Charity 
Hospital. $120 million was a number that we and the Governor 
decided upon because our calculations thought it would be an 
amount appropriate to cover the full costs of the uncompensated 
care in the impacted region. It turns out through discussions 
with the Hospital Association, they preferred to spread those 
dollars to other parts of the State as well. There was less 
available for the New Orleans region, and based on the formula 
that was put into the Appropriations Act, we don't expect to 
expend the entire $120 million. I have been in discussions with 
some of the hospitals with the division of the administration, 
looking at how we might go back to do that, but I want to be 
clear because there has been a lot of discussion about these 
dollars not flowing. There have been uncompensated care dollars 
going to--it has been the State's intention--when we discussed 
this $120 million with the Hospital Association during the 
appropriations process, it was our preference to concentrate 
those dollars in the New Orleans area and cover full what we 
put forward was 90 percent first dollar uncompensated care 
costs for all hospitals in the impacted region, which is a 
different formula.
    Nonetheless, when the existing formula that is in the 
appropriations bill, we expect there will be money left over 
and are committed to going and looking at how to do that. We 
just made the first half-year payment on this, and the way this 
works is you have got to show the cost to be able to get the 
reimbursement. And based on that first half-year payment, we 
expect that the entire pool will not be spent.
    Mr. Melancon. Thank you. Where I am right now, and Ms. 
Norwalk, I know this is just something you have got to do as 
part of your job today, but I am living this down in south 
Louisiana. There are other people down there. They are tired. 
They are frustrated. And if we can't get this government to 
work for them, then we need to find some people that will. And 
I am not yelling at you, I am yelling at your Department, 
please. You know, there has been so much going back and forth, 
finger-pointing at each other, and nothing getting done. And it 
started the day after the storm when the Governor of Louisiana 
was told she didn't ask for the right things from the Federal 
Government. And it has gone downhill ever since.
    I didn't think, and having worked previously in State 
government and worked with the Federal agencies--usually those 
people that worked in those departments were there to help 
guide us and give us assistance and tell us what I's to dot and 
what T's to cross and how to make it work and not put a stone 
wall up and try and make us climb over it every time or change 
the rules every time we came.
    So I would ask you to go back to Mr. Leavitt and tell him 
that this committee is meeting because his agency has not 
performed the duties and responsibilities they were charged 
with. And I am going to ask the chairman, you have asked for 
the records. I would like to have every detailed record, phone 
calls, e-mails, the whole works. And if we got to spin them, we 
spin them. If the people of Louisiana are wrong, then we are 
going to prove them wrong. If the Heath Department is wrong, 
then we are going to prove them wrong. But I am not going to 
continue having hearings at infinitum when the people in the 
Gulf Coast of this country are suffering as they are.
    Now, I would like to ask one last question. During the 
issues with the Collaborative, during the issues with the going 
back and forth, during your testimony and the drafting of your 
testimony today, was there any member of our delegation that 
may have had input or made phone calls on a regular basis, his 
office or others, about what was going on and what the 
Department----
    Ms. Norwalk. In my testimony?
    Mr. Melancon. No, from your Department from someone in our 
delegation?
    Ms. Norwalk. No one influenced my testimony.
    Mr. Melancon. That is influenced. I asked you if you have 
had any contacts with people within the Congress that are----
    Ms. Norwalk. I personally have not. Whether or not--there 
may have been contacts within the Department. I really have no 
idea. But my own testimony was testimony that we wrote, and as 
far as I know, no one influenced my written or oral testimony 
in any way, shape, or form that was not within CMS.
    Mr. Melancon. Thank you. I would ask you if you would ask 
the people that you work with in the Department. Thank you, Mr. 
Chairman. I yield back.
    Mr. Stupak. Thank you, Mr. Melancon. Dr. Burgess, 10 
minutes.
    Mr. Burgess. Thank you, Mr. Chairman. It has been a long 
day, I have heard a lot of stuff. I will address Mr. Melancon's 
soliloquy when I get to the end of my questioning. But there 
are a few things I still want to try to drill down on.
    Ms. Norwalk, in HHS, there is a proposed rule CMS 2258-P. 
It is my understanding the goal of this regulation would be to 
allow the money to follow the patient. We have heard that 
several times today that that is a goal that several people 
have said that they share. And allow the money to be received 
by the health care provider without having to stop at the State 
capital. Can you tell us what the status is of this proposal 
and when it might become effective?
    Ms. Norwalk. Well, the rule you are referring to is the 
rule on certified public expenditures and/or Medicaid. It is 
currently out of proposed form. The comment period closes next 
Monday, March 19. It will take us inevitably some time to go 
through these quite voluminous number of comments we have, 
particularly from public hospitals and States around the 
country and other providers that are concerned about this. We 
will go through those. Once we put out a finalized rule, it 
will effective 60 days after it is published. I don't know the 
timing because I would hate to guess----
    Mr. Burgess. OK, so this is not just for Louisiana then?
    Ms. Norwalk. That is correct.
    Mr. Burgess. Was there any sort of special rule or special 
designation because of the Gulf Coast area being so harshly 
stricken?
    Ms. Norwalk. No, we actually have been working with 
Louisiana on these related issues to DSH funds and certified 
public expenditures, making sure that the States have access--
the public hospitals have access to the funds that they should 
receive through, say, DSH for example and other governmental 
transfers.
    Mr. Burgess. Well, Mr. Melancon's concern--forgive me for 
interrupting but I am going to run out of time and we are going 
to be kicked out of here. But Mr. Melancon is concerned about 
the length of time that it takes for money that is generated 
here to get to where it is needed, and I sympathize with that. 
I probably have a different perspective than him. I do think 
that there is a hold up and it may well be the State capital; 
and if that is the case, can we eliminate that from the chain? 
Can we just remove that as an obstacle, or is there legislative 
language that you need from us to remove that obstacle going 
forward? We are 18 months into this. Heaven help us if we are 
another 18 months into it and we are still having these same 
arguments.
    Ms. Norwalk. No, the overall issue is in fact a statutory 
issue, so inasmuch as--because Medicaid is a State-Federal 
partnership, those funds do flow through the State. I don't 
believe there is a way that we could change that without 
statutory change, but we will have to ask our counsels.
    Mr. Burgess. And what about the DSH funds that we have 
heard so much about today?
    Ms. Norwalk. A lot of the DSH funds again flow through the 
State.
    Mr. Burgess. Can we make that not happen?
    Ms. Norwalk. No, I will have to go back to counsel's office 
but I don't think that we could do that without a statutory 
change. Not to say that we couldn't change the allocation of 
how those funds are--but even so, they would run through the 
State.
    Mr. Burgess. But we have heard from 13 or 14 fine 
individuals here today who all have good ideas on how to spend 
the money, and if the problem is that wherever the roadblock 
is, if we can eliminate one stop to get the money to these fine 
individuals to get them up and working and get them up and 
running, I think we should do that.
    Dr. Cerise, let me ask you about the suggestion that 
Louisiana expand its capability for dealing with uncompensated 
care. So what do you think can be done on the Federal level to 
expand the--make those Federal dollars that we generate here, 
make them more available to the practitioners on the ground?
    Dr. Cerise. Well, for the DSH component, it is a State-
Federal partnership. There is a State share. The State has to 
put up its share to draw down the Federal funds and----
    Mr. Burgess. Let me interrupt you then because we heard 
from Mr. Smithburg. He said when he was in Texas, he could get 
a provider paid but under his current regime he can't because 
those DSH funds are prohibited from going to providers as 
opposed to institutions.
    Dr. Cerise. I think what he was referring to was the fact 
that--two things, one, those funds have to go through a 
hospital, a hospital that is eligible to receive 
disproportionate share funds. Those funds then, they can fund 
clinic activity and--but they have to go through the hospital 
first. And that hospital is not eligible to get physician cost 
reimbursed with the----
    Mr. Burgess. All right. Well, what do you need to make that 
happen? Dr. Quinlan was here and testified for us. What do you 
need for us to be able to just write the check to Dr. Quinlan?
    Dr. Cerise. I probably have a different answer than Leslie. 
We think it is just interpretation of DSH statute. In fact, we 
have a--there is a fifth circuit decision in Louisiana dealing 
with rural hospitals that says that those costs are allowable 
for physicians, but the Department's position has been that 
those costs are not allowable for the State.
    Mr. Burgess. Yes, well, we did hear that testimony, that 
the hospital in the parish next to Jefferson Parish was a 
critical access hospital and would fit that criteria. I would 
suggest--there probably is something you can do, either at the 
State level or at the HHS level and for heaven's sakes, let us 
get that done so we don't continue to be up here and have to 
beat each other over the head about this stuff.
    Now, Ms. Norwalk, did you have some staff members in Baton 
Rouge to help with this process that we heard about, the 
Collaborative process?
    Ms. Norwalk. We did have someone there through the end of 
February and we have had people go down periodically. The 
Secretary has been down eight times, I have been down, I don't 
know, half-a-dozen times, a number of staff people go down a 
number of times a month in order to help facilitate 
communications between the State and the Federal Government, as 
well as dealing with some of the issues that we have seen in 
other regions. We had someone on the ground full time dealing 
with health care provider issues. He has since gone back to the 
regional office of Texas, so it really depends on the timing, 
but yes, we have had people in Baton Rouge and New Orleans.
    Mr. Burgess. Well, has that full-time staffer, has that 
been helpful to have that person on the ground?
    Ms. Norwalk. I heard many accolades from health care 
providers who found it very useful to make sure whatever 
certification issues they might have or other problems they 
might have in dealing with the Department on a more regular 
basis could help make sure that we could speed up the access to 
clinics that were brand new, for example, or whatever--there is 
one in St. Bernard's parish I believe that we helped facilitate 
that getting paid as quickly as possible, filling out the forms 
and any--walking those providers through whatever processes 
were required so that people could get the care they needed as 
quickly as possible.
    Mr. Burgess. So are you going to continue that, to keep 
that staff available?
    Ms. Norwalk. Well, they are absolutely available to go back 
to the region as is necessary.
    Mr. Burgess. It sounds like it is necessary. Dr. Cerise, 
have you found having a full-time HHS staff there has been 
helpful?
    Dr. Cerise. There have certainly been some issues that they 
have been able to facilitate, no question about it. The 
fundamental issues I think here this committee is raising are 
not the kind, at the level, that would be addressed by the 
people on the ground.
    Mr. Burgess. I don't know. I would disagree. I would think 
any help, any help at all, that you could get would be 
beneficial. Again, we have heard from 13 or 14 wonderful 
American heroes today and the difficulty they have jut doing 
the most basic parts of their job. And that is troubling to me.
    Dr. Stephens, before I get too wrapped up in this, let me 
just ask you, because you made the statement that the New 
Orleans Health Department will have to rebuild. Now, the 
responsibility for rebuilding the New Orleans Health 
Department, is that our responsibility at the Federal level, is 
that Ms. Norwalk's responsibility, Dr. Cerise's responsibility, 
Mayor Nagin's responsibility? Whose responsibility is that to 
rebuild the New Orleans Health Department?
    Dr. Stephens. I think it is all the above.
    Mr. Burgess. Dr. Stephens, with that, I am running out of 
time. With all due respect, as you know, if you got too many 
bosses, no one is in charge. I would submit that you better 
take responsibility for that. Tell us what you need from us, 
but please take the leadership on that and get that done. Mrs. 
Blackburn referenced the primary care trailers that were up and 
ready to go but required a city ordinance to--that should not 
be hard. Let us do that. Mr. Melancon waxed eloquently about 
the failures to the extent that they rest with the Federal 
agency. I suspect the Federal agency is willing to take 
responsibility for that. At the same time, they are hardly the 
only persons involved in this; and my personal opinion, 
although I do not have the facts to back it up, but my personal 
opinion is there is a big logjam at the State level, and I 
would suggest to this committee that we do everything we can to 
get those dollars to the hands of the people who are going to 
provide the care and take care of the sick people in New 
Orleans, Louisiana, and let that bypass Baton Rouge if it has 
to happen. I frankly do not understand, yes, we should hold a 
Federal agency accountable and we should hold DHH accountable, 
but for the life of me, not one single elected official who has 
stood for re-election since this hurricane, has been turned out 
of office. And I find that frankly astounding. It just defies 
belief with the amount of problems that you have had, yes, I 
think you need to hold some people accountable and I think 
those people you need to hold accountable are your elected 
officials. That is only way something is going to happen, and I 
really make those comments to the 13 or 14 people who testified 
earlier because again, I just cannot tell you of the personal 
pain it has caused me to be unable to get this situation any 
better than what we find it today.
    Thank you, Mr. Chairman. I will yield back.
    Mr. Stupak. Thank you, Mr. Burgess. OK. That just about 
concludes our hearing today. We have come up with several 
issues that can--I think believe can be addressed between the 
State, Federal, and local governments, and I ask you all to go 
back in the next couple of weeks and try to work on them.
    This committee will follow up with each and every one of 
you to insure that the commitments that are made are going to 
be kept. As I said earlier, this will be the first of many 
hearings that we are going to handle, and we want to get back 
to you for a progress report, and I promise you, we are going 
to keep the subcommittee moving forward.
    Ms. Norwalk, I mentioned to you about the CMS and Dr. 
Wiltz's application. It is not CMS, it is HRSA.
    Ms. Norwalk. Thank you.
    Mr. Stupak. So who is the person in HRSA?
    Ms. Norwalk. Betty Duke is the administrator of HRSA.
    Mr. Stupak. Betty Duke?
    Ms. Norwalk. I am more than happy to bring that back to 
her.
    Mr. Stupak. Please do because she will be getting an invite 
from us to appear before the committee, along with Mr. Dennis 
Smith on the Collaborative plan. And Dr. Lynch, we still want 
to hear more about the VA and Big Charity's goal there, so we 
may ask you to come back. Unfortunately with the limited time 
and as you can see we are being pushed out of here, so we are 
going to have to clear here quite quickly. I want to thank each 
and every one of you for coming.
    Mr. Melancon, you had one more thing?
    Mr. Melancon. Ms. Norwalk, I need to apologize to you. I am 
a little rough today. I don't think it was your department that 
has the problem with the delegation. Mr. Lynch, would you look 
into what is going on with the VA LSU statements and let me 
know if there is anybody that is in there manipulating the 
statements or trying to manipulate the deal? It is my 
understanding that the VA is saying now they are going to pull 
out of the deal with LSU, and I think there is--that might be a 
basis for another good hearing.
    Mr. Burgess. Mr. Chairman, if I may, I would just say that 
I would welcome some input from the Louisiana delegation into 
this process. I think it is necessary.
    Mr. Melancon. Yes, I have been looking for them, too.
    Mr. Stupak. OK. The record is going to be open for 30 days. 
Mr. Stephens, thank you for moving those trailers. Dr. Cerise, 
thank you for looking at the nurses. Let us keep moving in a 
positive direction. We got two down and only 2,000 more to go. 
Thank you all.
    [Whereupon, at 4:25 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]

                   Testimony of Bryan Bertucci, M.D.

    My name is Dr. Bryan Bertucci. I am a Family Physician and 
Coroner of St. Bernard Parish. Medicine is not well in St. 
Bernard. 100 percent of our homes, offices and buildings were 
destroyed and for the first time in history FEMA declared a 
parish or county 100 percent destroyed. 154 St. Bernard 
residents died in Hurricane Katrina.
    St. Bernard was flooded twice by Hurricanes Katrina and 
Rita, experienced an oil spill, liquid mud, mold, snakes, 
flies, mosquitoes, piles of trash, mice and rats. St. Bernard 
is a very difficult place to live and despite that our 
residents continue to return.
     Our biggest hindrance is the overwhelming lack of medical 
facilities. Our 194 bed hospital is gone. Of 150 physicians 
only 6 remain. Only 10 registered nurses remain. To see certain 
specialists residents are often required to travel 30-60 miles.
    We encountered one financial roadblock after another as we 
attempted to rebuild. Because Chalmette Medical Center was a 
fee for service hospital we received no funds. We were 
penalized for being privatized. Because we were not on the 
parish budget we received none of the Community Block Grant 
monies. We were penalized for being independent. The Stafford 
Act prevented FEMA form assisting with physician and nurses 
salaries. The parish received $621 million of Community Block 
Grant money for infrastructure repairs--medicine received none.
    Perhaps our biggest problem is that Federal and often State 
officials do not realize that St. Bernard Parish is not part of 
Orleans. Funds given to Orleans Parish stay in Orleans Parish.
     Medicine has metamorphisized itself from DMAT teams, to 
Public Health, to our present 22,000 sq. ft. temporary trailer. 
We see 100-120 patients a day. The severity of the illnesses in 
our patients is similar to those seen in a small ER or Urgent 
care. We I&D abscesses, suture lacerations, stabilize MI and 
congestive heart failure patients, and give IV fluids and 
antibiotics. Almost a quarter of these patients have no 
insurance coverage and are ``self pay'' or ``no pay''.
    A foundation is willing to donate 30 acres of land eight 
feet higher than the land Chalmette Medical Center was located 
on. We would like to thank the Franciscan Missionaries of Our 
Lady Health System, Mobile Oil Refinery, and Social Service 
Block Grant have donated funds but this is not adequate
    Mental Health is in crisis with 50-60 percent of adults and 
20-30 percent of children depressed, drug overdoses on the 
rise, and the chronically ill psychotics and schizophrenics are 
decompensating due to lack adequate counselors, psychiatrists, 
and psych beds. Charity Hospital Crisis Intervention Unit 
destroyed.
    St. Bernard lacking significant emergency room services has 
to ship patients 18-35 miles for emergency care .Our parish is 
surrounded by water and our limited number of ambulances has to 
cross bridges, railroad tracks, and circumnavigate traffic jams 
depending on the time of day. An ambulance ride can vary from 
15 minutes to an hour depending on delays encountered. A 
routine ER wait is 4-8 hours. These patients are occasionally 
housed in ambulances making vehicles unavailable for hours.
    The logical solution for St Bernard Parish is a medical 
village consisting of a permanent physician office building, 
out patient surgery center, and out patient diagnostic center 
and eventual hospital.
    This medical village will assure the resurrection of 
Primary Care Physicians and subsequent return of our 
Specialists. It will decrease number of our residents needed to 
be transferred to hospital ER's as we can treat them locally 
and free up our Ambulances. It will allow our Elderly to return 
as Nursing Homes, Homes for Assisted Living are built. Some 
elderly will rebuild their Homes. It will supply Jobs as the 
former hospital was one of the largest employers in the parish. 
Could provide Psych Beds as our former hospital had 24 psych 
beds prior to Katrina. With a hospital and medical facilities 
we can begin work on Electronic Medical Records and Medical 
Homes.
     To make these dreams a reality we need three things.

    1. Bridge Money--as soon as possible
    A. Social Service Block Grant Money

     we need an extension on funds we were allocated 
due to expire July, 31-2007
     make more SSBG funds available to medicine in our 
area for infrastructure.

     B. Community Block Grant Funds--since we have a non profit 
group now, we need to make funds available to build permanent 
medical structures to replace our present trailer.
     C. Rural Designation for St. Bernard--for Medicaid and 
Medicare patients to help offset costs of treating indigent 
patients for hospitals and physicians.
    2. Medical Village--need money for brick and mortar. Once 
our out patients facilities are built it will allow access to 
quality medical care while our hospital is being built.
    3 Hospital--the ultimate cure. We have over 25,000 
residents. As our elderly return and others receive the ever 
evasive ROAD Home money to rebuild we will approach the 35,000 
we need to support a 40-60 bed hospital. Since it will take 18-
24 months to build a hospital we need to begin. Now.

    If funds are available I ask that they be earmarked for St. 
Bernard Village and Hospital Specifically and not to the State 
or local funding pools as we continue to find them 
inaccessible.
    I have refused to wear a white coat again until medicine in 
St. Bernard is whole again. To wear a white coat would be like 
waving a white flag and surrendering to the unacceptable 
situation that presently exists in medical care.
    Thank you for allowing me to voice our Parish dilemma to 
such a knowledgeable, distinguished, and concerned group. Thank 
you for listening.
                              ----------                              


                  Testimony of Karen B. DeSalvo, M.D.

     Mr. Chairman and members of the subcommittee: Thank you 
for the opportunity to speak today about post-Hurricane Katrina 
health care recovery in New Orleans.
     I am Dr. Karen DeSalvo, the Executive Director of the 
Tulane University Community Health Center at Covenant House, a 
clinic formed in the aftermath of the storm to meet the urgent 
needs of the population of city. Since September 2005, I have 
been active in efforts to restore immediate health care 
services and in planning groups focused on the longer term 
vision of a redesigned health system.
     Before I begin my testimony, I want to thank all the 
members of the committee for the opportunity to review the 
progress we have made. Health care is not a partisan topic and 
many have contributed to our progress, including the city, 
State and Federal officials you will speak with later. All 
deserve recognition for working earnestly towards resolution of 
a uniquely difficult situation for our nation. Your assistance 
is needed now to help health care recovery efforts in New 
Orleans continue to progress so that people who are currently 
uninsured, and without access to essential primary and 
preventive care receive the care they need.
     Today I will share with you my perspective as a primary 
care physician trying to care for the uninsured patients on our 
city. I hope to give you a snapshot of what it is like to 
practice medicine in that environment, the challenges we face, 
what would help improve access to care in the short run, and 
how we might go forward to ensure that we provide support for 
the New Orleans safety-net primary care system while deciding 
the larger policy issues.

          II. Primary Care Recovery: What We Have Accomplished

     We have come a long way towards restoring health care 
services in the 18 months since the flood waters receded. Much 
has been made of the divisions in New Orleans, of our struggles 
in surviving the storm and its aftermath, and in beginning the 
process of rebuilding from it. A much overlooked bright spot in 
those efforts has been the progress we have made as a community 
in building a care network for our most vulnerable citizens. 
The community has pulled together in unprecedented ways to 
overcome overwhelming challenges to restore services and define 
a better health system.
     We described this Louisiana vision for our re-engineered 
health system through the reports of several planning groups. 
Health and Human Services provided critical support for much of 
this work beginning with the United States Public Health 
Service support of the ``Framework for a Healthier New 
Orleans'' and culminating in the Louisiana Health Care Redesign 
Collaborative Concept Paper (Concept Paper). While we have been 
planning the future, we have been living in the present, all 
the while trying to keep within the vision of a distributed 
ambulatory care system that can make primary care more 
accessible.
     Historically, our safety-net system has been the Charity 
hospital and associated clinics which were staffed by 
physicians from both Louisiana State University and Tulane 
University. An estimated 250,000 people received care, 
including primary care, through that system. Before the storms, 
smaller, community-based providers were increasingly working in 
concert with the Charity system, but their share of safety-net 
care provision was small.
     The flooding caused by Hurricane Katrina destroyed much of 
the bricks and mortar of the safety-net system in New Orleans 
and the surrounding area. Affected institutions included the 
Charity system and all other safety-net providers. Even though 
we had a successful evacuation of New Orleans, many of the 
sickest and poorest patients remained behind and needed care. 
These people were those being pulled out of flood homes where 
they had been for many days without access to their medications 
or health care. First responders and others coming to 
reconstitute our city were also in need of care.
     In response to that need, Tulane University resident 
physicians came to New Orleans in the second week of September 
2005 when the waters in most of the city had receded and there 
were dry places to set up temporary care sites. These 
physicians-in-training partnered with the police to establish 
first aid stations and provide general primary care at 6 
makeshift sites around town. Most of these clinics were started 
with meager provisions: a willing physician, a stethoscope, and 
a few donated, portable supplies. The providers generally 
worked without power, potable water, or sanitary systems. Some 
of these health sites were on the sidewalk under tents, some in 
hotel ballrooms, and others in police station dispatch rooms.
     In addition to providing much needed care for patients, 
these makeshift operations stimulated a culture change in our 
primary care community. As academic physicians working at 
Charity, we had provided a major portion of the safety net care 
for the city through the Charity Hospital based clinics. For 
those patients who could get an appointment with us, the 
quality was good. However, we also knew that 12 month waiting 
periods for new patients to get in to see us, and the lack of 
sufficient after hours access was preventing us from reaching 
many.
     Creating primary health care from scratch in the post-
Katrina environment, gave us first hand experience with a new 
paradigm of care and an unexpected opportunity to rebuild a 
better system. Included in this health care culture change was 
an understanding of the essential role of teams and 
partnerships, the synergistic value of collaboration, and the 
benefits a multi-disciplinary approach to care. Also included 
in this paradigm shift was attention to developing patient-
centered models of care. The makeshift clinics were established 
in response to where the patients were. For example, we 
identified new sites of care based upon scouting the streets of 
recently opened zip codes. We then set up our clinics as near 
to the patients as we could. We worked side-by-side with 
volunteers from all disciplines. To access care, patients only 
had to walk up to the card table and ask to be seen.
     Over the course of the ensuing weeks, open tent structures 
were replaced by mobile vans and a few clinics landed space in 
available buildings such as empty store fronts and dormitories. 
Eventually, the restoration of utilities moved us back in to 
these more traditional venues which we generally welcomed. 
However, we wanted to retain some of the elements of our new 
paradigm from our ``street based'' primary care as we moved 
ahead.
    From a care table to a neighborhood-based medical home: 
Tulane Community Health Center at Covenant House
     One of the early temporary care sites opened in early 
September 2005 when Tulane trainees and faculty set up a card 
table as temporary care site on the sidewalk in front of the 
community center. At the height of need, we served 150 patients 
a day. Desiring to maintain this new neighborhood health 
clinic, Tulane partnered with Covenant House and Johnson & 
Johnson to develop a permanent neighborhood clinic nested 
within a community center (www.tucovenanthealthcenter.org). We 
had, by default, become a medical home for many in the city, 
particularly those in the neighborhoods near us and were 
committed to continuing to that public service.
     The Tulane Community Health Center at Covenant House 
started as a makeshift, post-Katrina first aid station that 
developed into a permanent primary care clinic. Since 
transitioning from a card table to a permanent primary care 
clinic, we have become a source of primary care for hundreds of 
patients and have seen over 12,000 since opening our doors 18 
months ago. This medical home is able to provide basic primary 
care for adults including care through a multi-disciplinary 
health care team. We have access to basic laboratory and 
diagnostic studies. We also serve as a training site for house 
staff and medical students and other health professionals so 
that the next generation of clinicians are exposed to a 
patient-centric model of primary care. We have a sophisticated 
electronic health record that allows us to manage our 
population of patients proactively and provide decision-support 
for clinicians to improve the quality and cost-effectiveness of 
care.
     We developed a fragile patchwork of referral patterns for 
laboratory, diagnostic and specialty services. We have a 
sophisticated electronic health record that allows us to manage 
our population of patients proactively and provide decision-
support for clinicians to improve the cost effectiveness of 
care.
     To support the ongoing delivery of primary care from 
clinic, we have been aggressively seeking funding so that we 
can expand our ability to provide health care to this uninsured 
population. We have strung together our funding from an array 
of entities including the government, corporations, individual 
donors, and foreign nations. Specifically, we are supported 
through the Social Services Block Grant, foundation support 
from the Avon Foundation, Americares, the American Refugee 
committee and a generous gift from the People of Qatar.
     If we adhere to our budget and expectations, we could 
provide basic care to 4200 patients at a cost of $360 per year 
per person for the next 3 years. In the near future, we are 
implementing business processes to collect reimbursement from 
available sources and plan to secure a more stable funding 
stream. We may request the subcommittee's support as we move 
forward.
    The Partnership for Access to Healthcare (PATH): A 
Collaborative Prototype for Medical Home System of Care
     Though we are focused on meeting the immediate health care 
needs of the population we serve, we are also working towards 
creating a neighborhood based-medical home that can not only 
serve as a potentially replicable model but help to transform 
the New Orleans health care system. The concept of a medical 
home has been well described by national groups and our 
Louisiana Health Care Redesign Collaborative Concept Paper. It 
emphasizes health promotion, preventive health and primary 
care, supplemented by peer education and support. The health 
team is multi-disciplinary and includes social services and 
mental health support.
    Our clinic is one in a newly developed, broader system of 
care that has emerged since the storm to fill a void left when 
the traditional safety net was displaced by the flooding. This 
network of safety net clinics represent service, called the 
Partnership for Access to Health Care (PATH) (www.pathla.org), 
represents a broad group of clinics working cooperatively to 
provide access to care for the uninsured and under-insured. 
These partnerships bring together public and private entities, 
academia, consumer groups and corporations into a common goal 
of filling the need. In the aggregate, these clinics serve 900 
patients a day, an estimated 50,000 covered lives. An estimated 
90 percent are uninsured and represent the rich racial, ethnic 
and cultural diversity of post-Katrina New Orleans. Inclusion 
in the group is open to providers willing to share in the core 
values of quality and cost-effectiveness. Current participating 
PATH clinical entities include:

    Clinical Providers participating in the Partnership for 
Access to Healthcare
    Algiers Community Health Clinic (New Orleans Health 
Department/EXCELth Inc.)
    Common Ground Health Clinic St. Cecilia Clinic (Daughters 
of Charity Services of New Orleans/EXCELth, Inc.)
    DCSNO at Causeway Clinic (Daughters of Charity Services of 
New Orleans)
    Jefferson Community Health Centers, Inc Marrero (Jefferson 
Parish)
    Jefferson Community Health Centers, Inc, Avondale 
(Jefferson Parish)
    University Hospital (Medical Center of Louisiana at New 
Orleans)
    Hutchinson Clinic (Medical Center of Louisiana at New 
Orleans)
    Ida Hymel Health Clinic (New Orleans Health Department/
EXCELth, Inc.)
    Edna Pilsbury Health Clinic (New Orleans Health Department)
    Healthcare for the Homeless (New Orleans Health Department)
    McDonough 35 High (New Orleans Health Department)
    St. Charles Community Health Center
    St. Charles Community Health Center (Lulling)
    St. Thomas Community Health CenterTulane Community Health 
Center at Covenant House
    Tulane University Pediatric Clinic and Adolescent Drop in 
Center at Covenant House
    New Orleans Science & Math High (LSU HSC Adolescent School 
Health Initiative)
    Eleanor McMain High (LSU HSC Adolescent School Health 
Initiative)

     These providers have deliberately set out to create a 
distributed system of neighborhood based clinics that will 
provide more accessible care for the returning New Orleans 
population.
     These partners have worked collaboratively to identify and 
fill gaps in primary care services, develop the model of the 
medical home, and find ways to link their patients into 
specialty care and other services. With continued support and 
additional resources, PATH could serve as the core of a future 
model medical home system of care that could transform medical 
care in Louisiana. I88III. Primary Care Delivery: The 
Challenges
     The primary care community struggling to provide care for 
a growing number of uninsured and underinsured individuals 
faces many challenges. The health system's ``short term'' 
needs, which we presumed would be long behind us, continue to 
dominate our minds, conversations, and energies. The generous 
support of corporations, foundations and citizens has been a 
critical bridge, but will be insufficient to rebuild and 
sustain the primary care safety-net system.
     For our part, the major limitations involved poor access 
to specialty care and diagnostic services. On a daily basis, 
this means my ability to provide evidence-based care for a 
typical patient is limited. For example, we do not have access 
to colon cancer screening and diabetes eye care. We also do not 
have access to urgent diagnostic studies such as brain imaging 
or endoscopy. As a result, we sometimes need to rely on sending 
patients to emergency rooms for such tests. Worse, patients 
sometimes go without arriving at the hospital with significant 
or long term health consequences that prevent him from being a 
productive member of our community.
     Like many other clinics in the city, we have an 
insufficient number of clinical providers at our site. For our 
part, if we could have more staff, we have the bricks and 
mortar capacity to expand services and hours. However, as you 
might imagine, finding physicians and other clinical personnel 
willing to move to New Orleans is a challenge. There are 
concerns about long term job security and frustrations about 
trying to maintain a high standard of practice in a broken 
environment. One of my physicians has been so frustrated with 
the difficulties of providing basic care for his patients that 
he has considered returning to Liberia to practice.
     Complicating matters is the high burden of chronic disease 
for the uninsured, low literacy and the rapidly expanding 
population of Spanish-speaking immigrants. Adoption of best 
practices, the use of care management and health information 
technology will help with the care of those with chronic 
disease. A strong social services infrastructure can help 
support those with extensive social service needs. The 
immigrant population poses its own unique set of challenges for 
us. The low income workers in this group are likely to not be 
eligible for coverage if they are undocumented immigrants. We 
will eventually also need to leverage existing Federal programs 
to care for these populations.
     Congress and the Administration can play a major role in 
expanding and sustaining access to primary care for our 
community. We are still in desperate need of additional 
assistance. Our short term problems are largely not those of 
bricks and mortar. Instead we are under-resourced and have a 
short time window until the existing resources we do have will 
end.

             IV. Primary Care: The Opportunities and Needs

     New Orleans and its surrounding region cannot recover 
without adequate health care services. Sufficient 
infrastructure and accessibility are essential if we are to 
retain and attract business and industry, tourism, and have a 
productive workforce. The most cost-effective means of 
rebuilding focuses resources on the primary care 
infrastructure. A robust system of primary care is also 
critical to unclog an overwhelmed hospital system. If we build 
a highly functional and accessible system, people will need to 
use emergency rooms less. Good primary care prevents hospital 
admissions for illnesses such as asthma, heart failure and 
diabetes. Patients would be better served prevention, proactive 
care management and empowering themselves.
     We will continue to seek your help in our ongoing efforts 
to revive the primary care services in the city and region. I 
understand that Congress faces many issues related to Gulf 
Coast recovery, and that spending must be done wisely and with 
an eye toward what will offer the greatest benefit to the most 
people. Preventing and intervening early in the process of 
chronic disease saves money. Nothing is more critical to the 
renewal of New Orleans than health care.
     There are three ways that the subcommittee can help us 
provide immediate access to health care and prevent us from 
reverting back to relying on emergency rooms for care.
    1. Increase access to primary care in New Orleans for the 
uninsured through extending the SSBG deadline and providing 
further resources through the Deficit Reduction Act funding
     We need to move forward with implementing core components 
a medical home system of care model that will provide access to 
care immediately to the nearly 180,000 estimated low income 
uninsured in our area. The most cost-effective and patient-
centered means for doing this is to support and sustain 
existing primary care resources and add new services to fill 
gaps until longer term policy decisions can be made.
     While our community debates the best way to expand health 
insurance coverage for our uninsured population, we need to 
support the continued development of the medical homes and a 
supportive delivery system of care. This is essential to ensure 
continued progress rather than returning to a reliance on 
emergency rooms for care. The PATH network has all the makings 
of a medical home system of care but it is a fragile system 
that could dissipate without sufficient support to provide a 
bridge to the future health system.
     Most of these primary care clinics, now medical homes, 
have been sustained on cobbled together funding from a variety 
of sources including public funds, such as the Social Services 
Block Grant (SSBG) funds. On July 31, 2007, the SSBG funding is 
scheduled to end. For a variety of reasons, there were delays 
in getting the SSBG funds available to the providers. Fearing 
that their expenses wouldn't qualify for reimbursement, many 
clinics have avoided using the SSBG funding instead relying on 
other resources and on limiting services to their patients. We 
are now scrambling to spend the money by the deadline for 
spending all the allocated money. If we do not, the funding 
will be returned to the Federal Government. Providers in our 
community have repeatedly requested an extension of the 
deadline so that we can more effectively use the Federal 
dollars we've been granted.
     An additional option for transitional financial support 
would be to allocate the discretionary Deficit Reduction Act 
funds could be used for just such a purpose. It could fund a 
pilot to assess the impact of a medical home system of care on 
improving patient health, care quality and lowering overall 
cost. If successful, we could transfer these best practices to 
the rest of our State and potentially the nation.
    2. Provide financial support for clinicians to help with 
retention and recruitment
     The need for health care professionals and other staff is 
acute. Staff shortages cause many clinics to turn away 
patients. Increasingly, recruitment is hampered by care 
professionals' rational concerns about the long term financial 
viability of the health care system in New Orleans and the lack 
of mechanisms to reimburse them for services. To recruit and 
retain health care professionals, resources are needed that 
will pay qualified providers for services, support educational 
loan repayment and defray malpractice costs. HHS and DHH have 
been working towards this goal, but the allocated resources are 
not likely to be enough. Additionally, application processes 
are complex and time consuming. The busy clinicians in this 
system need streamlined and accessible mechanisms through which 
they can apply for the financial support. Payment for services 
rendered could be accomplished through expansion of coverage 
and though uncompensated care payments directed at physicians.
    3. Assist us as we progress and hold us accountable for our 
commitments
     The subcommittee would do this effort a great service by 
providing assistance and guidance as we move ahead. This 
hearing has been quite a catalyst for us locally.-- We have had 
been better communication and coordination than in months.-- 
All of us have been forced to stop and clearly articulate what 
would improve access to care immediately.-- Such future 
hearings would help hold us accountable for our promises and 
allow us to inform the committee members of ongoing success and 
continuing needs.

                         VI. Concluding Remarks

     While we work towards agreement on the long term financing 
structure of our health care system, we need your help right 
now to ensure access to primary care for our citizens. With the 
support of the American people and through our public leaders 
such as those of you on this Sub-committee, we can restore, 
expand and sustain primary care services to our population--
particularly those who are uninsured.
     New Orleans survived the hurricanes and the subsequent 
flood. But survival, alone, is not the goal of our citizens and 
is not a suitable objective for the nation. To thrive, to be 
anything close to the city that it was, New Orleans needs a 
health care system that all of its citizens can rely upon. The 
storm has given us a great opportunity to demonstrate the 
health system of the future--one built around the needs of 
patients, one readily accessible to all citizens and one that 
promotes health rather than simply treating illness.
     Thank you.
    [GRAPHIC] [TIFF OMITTED] 36572.006
    
    [GRAPHIC] [TIFF OMITTED] 36572.007
    
                   Testimony of Donald T. Erwin, M.D.

                            I. Introduction

     I would like to thank the chairman and the members of the 
committee for their interest in the health of our citizens, and 
for holding these hearings. Your commitment to understanding 
how we might all work to improve their care is appreciated.

                 St. Thomas Community Clinic Pre Katrina

     The St. Thomas Clinic was established in 1987 by a 
partnership between the residents of one of New Orleans's 
largest public housing developments (St.Thomas Housing 
Development), and concerned leaders in the medical and faith-
based communities. The citizens of this neighborhood wanted 
accessible primary and preventive care within a reasonable 
distance of their home, with reasonable wait times, and 
continuity of their care with the same doctor or group of 
providers. The elected leadership of the predominately African 
American housing development also insisted that both the clinic 
board, and its providers, understand the dynamics of 
institutionalized racism and its impact on healthcare for 
people of color.
     Over the last 20 years this clinic has provided low cost, 
efficient care to the uninsured and underinsured through 
public/private sources of funding. I was one of the founders of 
the St. Thomas Clinic and served as president of the board for 
16 years. I was also Chairman of the Department of Medicine at 
Ochsner Clinic Foundation much of that time. Ochsner leadership 
was very supportive of the relationship with St. Thomas. 
Providing appropriate primary, preventive and basic specialty 
care to outpatients helped minimize hospitalizations and 
emergency room visits. St.Thomas Clinic has been an important 
site for the training of Medical Students, Internal Medicine 
Residents, Family Practice Residents, Nurse Practitioners, and 
Doctor of Pharmacy students from LSU, Ochsner, Xavier and 
Tulane. It has been an attractive training site because of its 
position in a vibrant community setting and its commitment to 
try to reduce health disparities. In addition to Ochsner, 
St.Thomas has had innovative partnerships with private 
providers such as the EENT Foundation, Touro Infirmary Hospital 
and the former Mercy Hospital in New Orleans. These private 
providers all recognized the value of the relationship with a 
community based clinic trying to address the needs of a large 
uninsured population. We all learned that the collaborations of 
these public and private entities provided high quality, lower 
cost care to the community, while at the same time reducing 
emergency room visits and hospitalization rates that burden the 
rest of the healthcare delivery system. While receiving grants 
from State, city and Federal programs, St.Thomas has remained 
independent, not for profit, and is not under the governance of 
the State or Federal healthcare clinic systems.

             St. Thomas Community Health Center Post Katrina

     My physician wife, who had been medical director at 
St.Thomas for 12 years and is now on faculty of the LSU School 
of Public Health, returned with me to New Orleans in mid-
September after the Hurricane of August 2005. We attended some 
of the initial planning meetings for the re-establishment of 
health services as the city repopulated. I was soon approached 
by faculty and residents from LSU School of Medicine who were 
concerned about patients they had treated pre-Katrina at the 
Medical Center of Louisiana at New Orleans (MCLNO), and in many 
instances they had continued to see while the patients were in 
emergency shelters around the State. Many of these patients, 
who had evacuated to safer sites, were now returning to New 
Orleans and had little access to medical care. Having begun and 
operated St.Thomas Clinic before, we were able to relatively 
quickly re-open as the St.Thomas Community Health Center and 
find supporters who were already familiar with the clinic and 
the community. Neighbors immediately appeared with brooms and 
mops to help with the clean up. The Baldwin County Baptist 
Builders, from Baldwin County, Alabama, were onsite within days 
to begin repairing the roof and rebuilding the flooring of the 
clinic. Building supplies were extremely scarce, so the 
AmeriCares Corporation loaded a tractor trailer with building 
supplies in Connecticut and had them at St.Thomas when the 
Baptists Builders arrived. For clinical services, it was 
necessary to begin anew. Along with clinics such as Covenant 
House, we were one of the first primary care clinics to open in 
the city. We are, and always have been, open to all patients 
regardless of ability to pay.
     We have found that the patient population at St.Thomas has 
changed since Katrina. The clinic's current patients include 
those patients living in a cycle of poverty that St.Thomas has 
traditionally cared for, but the clinic now has a large 
population of patients who, prior to Katrina, had health 
insurance, but lost it when their employer's business failed. A 
third population of patients is those now coming to St.Thomas 
because they have lost their local physician. At least 50 
percent of the physicians practicing in New Orleans pre-Katrina 
have not returned. This group of patients who lost their 
physicians includes some who have insurance and/or the ability 
to pay all, or part of, their bill, calculated on a sliding 
scale which is based on Federal poverty guidelines. We now find 
that 25 percent of St.Thomas patients can pay for some or all 
of their care. Even for those with health insurance in our 
community, there are simply not enough physicians to take care 
of the patients. While the presence of insured patients helps 
St.Thomas be somewhat self sufficient, it also strains our 
resources. But the message is clear that the health issues in 
New Orleans are not just about the indigent or the uninsured.
     Partly because of our history in the community, and partly 
because of the dire straits of the city, St.Thomas has received 
very generous support from agencies and partners who have 
joined with us. Since Katrina, we have received over $1.4 
million in grants and contributions, having come from more than 
30 separate sources since the storm. Contributions have ranged 
from $200 to $500,000. Due to the chaos in our environment, we 
do not know precisely how many patients we saw in the first 2-3 
months that we were open, but we do know that in the last 15 
months we have had approximately 23,000 patient visits. We 
average 70-80 patients per day in primary care, with another 30 
patients seen who come for breast and pelvic exams including 
mammography, and another 20 patients seen for eye exams and 
treatment in Optometry. Thus, in the relatively limited space 
of 5500 square feet, we are providing care for approximately 
120 patients per day.
     Any provider working in New Orleans can attest to the fact 
that there are few ``brief'' patient visits. The patients have 
virtually all sustained losses, in many cases almost 
unimaginable, and providing adequate care involves 
understanding how the patient can manage their medical 
condition within their current life circumstances.
    It is impossible not to be impressed with the resiliency of 
the people and their determination to put their lives back 
together. Most of the patients deal with their stress by 
themselves. However, many simply cannot, and we hope to provide 
help in other ways, specifically through opening a community 
mental health program in space we have just leased.
     The list of donors to St.Thomas since Katrina is 
impressive. But more important, to us, was the way we were able 
to leverage their donations by having donors collaborate with 
other donors to help us. We found donors interested in common 
issues and were able to combine donations in a complementary 
fashion for greater effect. Some of these are described below.
     Like other safety net providers left standing after 
Katrina, we at St.Thomas realized we were now being called on 
to fill huge gaps in the delivery of service. These were 
daunting problems, but we often found support from unexpected 
sources. The clinic's earliest support came from faith based 
institutions, but we also had significant support from public, 
private, State and Federal sources that we could not have 
anticipated.
     While the media frequently reports of what is wrong in New 
Orleans, there have been some remarkable collaborations and 
partnerships that helped us continue serving our community . 
The clinic has been blessed with resources and has tried to be 
a good steward of them. Many of our collaborative efforts did 
not exist before Katrina. These safety net partnerships and 
collaborative efforts provided such positive results, that we 
feel they should be maintained the future health care design.
     The following are some brief descriptions of a few of the 
ways that donations of time and support have been leveraged by 
complementary collaborations between St.Thomas and its donor 
partners.

               (1) Repairing Storm Damage to the Building

     Immediately after the storm, neither construction workers 
nor building supplies were available locally. We asked friends 
from the Baldwin County Alabama Baptist Builders to plan with 
the AmeriCares Corporation in Connecticut, and the result was 
the timely arrival of both building supplies and construction 
crews within days of our asking for their help. They were able 
to make the necessary repairs so the clinic could re-open. The 
cost for these repairs, if we could have found someone to do 
them, would have been in excess of $100,000. It is just one 
example of the self-sufficiency that St.Thomas and our sister 
clinics showed in getting into service quickly.

              (2) Resumption of Clinic Medical Operations

     The National Episcopal Church and the Louisiana Diocese of 
the Episcopal Church soon after Katrina declared themselves to 
be partners with St.Thomas. The church repeatedly worked with 
us over the last 18 months to arrange to hire providers and 
persuade other donors to partner with us. The church provided 
St.Thomas the initial funds to pay LSU School of Medicine for 
our initial medical staff and resident trainees. As we set 
about to hire permanent staff, the church provided bridge 
financing to assure the salaries of 3 full time physicians who 
are also jointly on the faculty of LSU Medical School. When 
St.Thomas was offered the unique opportunity to provide 
cardiology specialty consultations in the clinic, the Diocese 
agreed to underwrite the necessary renovations of the space for 
cardiology as we sought other grants. Most recently, the clinic 
has been able to lease space to begin a community mental health 
center. Once again, the Episcopal Diocese of Louisiana 
recruited benefactors from out of State to agree to underwrite 
the building renovations and hiring of staff.
     In great part due to the promise of secure funding by the 
church, St.Thomas now has three full time adult primary care 
providers, all of whom are jointly on the faculty of the LSU 
School of Medicine and /or the LSU School of Public Health. We 
have a full time pediatrician who joined us from the community. 
We have 5 part time specialty care providers. Specialty 
services St.Thomas offers now include cardiology (see below), 
gynecology (by a community gynecologist), pulmonology and 
rheumatology (from their respective departments at LSU School 
of Medicine), optometry, (funded by the EENT foundation), and 
nephrology (from a volunteer working at another State medical 
facility). Each of the rheumatology, pulmonology and nephrology 
specialty providers, while very beneficial in reducing 
emergency room visits and avoiding hospitalization of our 
patients, costs St.Thomas approximately $25,000 annually and 
visit the clinic one half day per week.
     3) Breast and Cervical Disease Prevention and Management:
    The LSU School of Public Health recognized that St.Thomas 
could provide the site for them to maintain operations of their 
Louisiana Breast and Cervical Health program, which is 
sponsored by the Centers for Disease Control and Prevention. 
Recognizing this possibility, the School of Public Health 
helped St.Thomas develop a consortium of funders that includes 
the Avon Corporation, Komen Foundation, and the United Way. 
This collaboration provided over $530,000 to St.Thomas. The 
medical outcome of this collaboration is that St.Thomas 
Community Health Center is the only site in the city where 
uninsured women can receive breast cancer screening complete 
with both screening and diagnostic mammography, breast 
biopsies, and follow up care arranged with providers who will 
care for our breast cancer patients for the Medicaid rate we 
can provide.

           (4) Specialized Cardiology Consultations and Care

    One of the most remarkable and unexpected collaborations 
has resulted in St.Thomas being able to offer cardiac 
consultative tests and specialized patient management. At the 
suggestion of Dr Keith C Ferdinand, a nationally recognized New 
Orleans cardiologist, The Association of Black Cardiologists 
(ABC) approached the Morehouse School of Medicine on behalf of 
St.Thomas to provide cardiac care to the community. The ABC 
knew of St.Thomas from the clinic's previous work dealing with 
health care disparities. Cardiac care was an urgent issue for 
our uninsured community, as patients requiring elective cardiac 
evaluations and diagnostic testing had to travel either 60 or 
80 miles away to one of the open Charity Hospitals. 
Spearheading the effort, the ABC and the Morehouse School of 
Medicine helped develop a group of providers, manufacturers and 
professional organizations who all agreed to help St.Thomas 
meet the need for cardiac care in the uninsured community. This 
collaboration now includes not only ABC and Morehouse, but also 
professional groups including the National Board of the 
American College of Cardiology, the Louisiana Chapter of the 
American College of Cardiology, the Ochsner Clinic Foundation 
Department of Cardiology, the New Orleans Medical Foundation, 
and corporations such as Astra Zeneca, Cardiac Science, and the 
Toshiba Corporation. Providing direct care to St.Thomas, a 
community cardiologist (Dr Gary Sander), and Ochsner Clinic 
Foundation Cardiologists come to St.Thomas 2 half-days a week 
to see our patients and supervise testing. This diagnostic 
testing now includes standard EKGs, echocardiograms, 24 hour 
Holter monitoring and interpretation, and most recently, stress 
echocardiography. We are currently negotiating for hospital 
support when Invasive catheterization and surgery is necessary. 
Our physicians are certain that having these diagnostic and 
management services available in the clinic, especially having 
cardiologists help with the management of complex patients, has 
resulted in a reduction of both hospitalizations, and visits to 
the emergency room for our patients with heart disease.
     The volume of patients who are seen in cardiology or any 
of the other specialty areas at St.Thomas, are not just from St 
Thomas Clinic alone. We have invited all of our sister clinics, 
i.e. Daughters of Charity, Common Ground, St Charles CHC, and 
Covenant House, to use these any of these specialty 
consultations.
     We are very pleased that the Medical Center of Louisiana 
at University Hospital is now open and also providing cardiac 
specialty care. This is a great step forward for our community. 
We hope to continue to partner with, and augment State and 
local efforts, and the community is hopeful additional beds 
will soon open for interventional cardiac care for the 
uninsured.

                    (5) Enhanced Systems Development

     The Partners for Access to Health Care, (PATH) a 
subsidiary of the Louisiana Public Health Institute has 
provided hardware, software and licensing support for an 
Electronic Medical Record for the St.Thomas clinic. Once this 
became available, both public and a private support came to 
St.Thomas to maximize our systems of registration, billing, 
coding and collection. Blue Cross Blue Shield Foundation of 
Louisiana is able to provide sophisticated business support and 
personnel, and they are joining with one of our sister clinics, 
the Saint Charles Community Health Center to assist in applying 
this expertise to the every day operations at St.Thomas. As we 
become more efficient with our different systems, we feel we 
can increase the number of patients seen significantly, thus 
not only increasing the number of patients seen, but also 
reducing the cost of care per patient borne by St. Thomas .
    (6) Another partnership that has been made available to us 
is an alliance with the Eye Ear Nose and Throat Foundation. 
This foundation provides support for St.Thomas patients with 
Eye or Ear Nose and Throat disease. These patients can be seen 
in the private sector once they have been screened by 
St.Thomas. This has been crucial to protect the vision of our 
diabetic patients at risk for serious diabetic eye diseases. 
Several local hospitals, and private Eye, Ear, Nose and Throat 
physicians, have agreed to see our patients for the Medicare 
rate fees the EENT Foundation provides. This has been 
especially important since the public hospital ENT programs are 
still located in Baton Rouge and will be for the foreseeable 
future.
    (7) Another very important ally has been the Bush Clinton 
Katrina Fund, which gave us our largest donation to date, 
$500,000. While critically important, like so many of our 
grants, this is a one time only grant, and must be spent within 
one year of receipt.
    (8) The last source of support to highlight is the Social 
Service Block Grant, which was made available by the Federal 
Government to safety net clinics. As these funds were being 
negotiated and the grant programs developed, the Louisiana 
State Department of Health and Hospitals, led by Dr Fred Cerise 
and Ms Kristi Nichols, aggressively fought for funds for safety 
net providers like St.Thomas and sped up the negotiations 
necessary to get the funds to these providers. St.Thomas 
received an SSBG grant of $755,000 in the second year of our 
post Katrina operations. The estimated operating deficit of the 
clinic for that year was $800,000, demonstrating how critical 
the timely distribution of those funds was for St.Thomas. Like 
the Bush Clinton Katrina Relief Fund, our gratitude for this 
funding is great. Nonetheless, one time grants highlight our 
need to identify and secure stable funding to sustain 
operations.
     In addition to the above contributions, we have received 
generous support from other charitable and relief 
organizations, including the National Association of Free 
Clinics, Robert Wood Johnson Foundation, Operation USA, Direct 
Relief International, individual Presbyterian churches and 
Episcopal parishes, the Acadiana Foundation, the Area Health 
Education Foundation, and individual, sometimes anonymous, 
donors.
     One of the important reasons for the collaborations among 
these clinics is that enhanced primary care is clearly the best 
way to provide convenient, high quality care with provider 
continuity. This is important to patients, but it is also the 
most effective way to reduce emergency room visits and 
hospitalizations. The community clinics that make up the PATH 
organization all want to continue to have linkage to the 
academic specialty services at Medical Center of New Orleans, 
and we are pleased to see how effectively Dr. Dwayne Thomas, 
Dr. Cathi Fontenot and other members of the management of 
University Hospital at the Medical Center of Louisiana have 
been at getting the hospital open and specialty services 
brought back. But in spite of their effectiveness, there are 
still limited beds in the University Hospital that are just not 
yet resolved.
     There exists within the PATH organization a sub group of 5 
clinics that are similar in that they are all independent, not-
for-profit, clinics. None are part of the City of New Orleans 
Clinics, or the Medical Center of Louisiana at New Orleans. The 
critical services provided by these clinics have become more 
important since Katrina, but they have no guaranteed recurrent 
funding. They include St.Thomas Community Health Center, St. 
Charles Community Health Center, Common Ground Clinic, Covenant 
House Clinic, and Daughters of Charity Health Center. We share 
common goals, and try to support each other, and have learned 
the value of sharing resources, even if limited. Thus, 
St.Thomas Clinic shares all the specialty services we have 
listed above with each of these five clinics, and each of them, 
in turn, has provided varied useful resources to St.Thomas. We 
are currently seeking shared support based on the premise that 
funders might well be more receptive to helping us in order to 
support the development of a network to improve our efficiency 
and effectiveness as we maximize our community support 
services.

                               Conclusion

    The funding for St. Thomas Community Health Center has been 
substantial but it is a patchwork of organizations that have 
been generous to us. It has taken resourcefulness, prayer, and 
extensive community relationships to develop support from more 
than 30 partners who help St. Thomas provide the level of 
service it provides. Many of the grants to the clinic have been 
related to Katrina, and are one time only events. While 
appreciative of the generosity of our partners, the quest for 
ongoing funding is constant.
     As we consider funding the future of St. Thomas, a major 
issue is timing. Most experts agree that even if, as we hope, 
the Medical Center of Louisiana at New Orleans can be rebuilt 
in a way that adequately addresses the need for primary care, 
prevention, specialty care and hospitalization for the 
uninsured, at the earliest, the process will take years. The 
St. Thomas Clinic was begun by citizens asking for community 
based, accessible and patient centered care. The clinic 
provided that over the years and now, thanks to generous 
funding, is doing it on a larger scale and is also meeting some 
of the specialty care needs that is currently limited or non 
existent at the State hospital. It is likely that the services 
we provide will be needed for the foreseeable future as the 
health care system is being rebuilt. The St. Thomas Community 
Health Center, and others like it, arose from a need before and 
after Katrina to address issues of healthcare for the uninsured 
in New Orleans. We would ask that Congress consider assisting 
these clinics to continue to provide these services with gap 
funding, and to provide consultative support to help us 
structure a sustainable clinic network.
     Whether they be called medical homes or community based 
clinics, we feel that clinics like St. Thomas and our sister 
clinics in PATH organization provide important resources for 
health care in the future. We provide not only compassionate, 
skilled, and readily available care, but we have also learned 
how to develop our collaborative efforts to leverage the care 
that any and all of us are able to provide independently. What 
we need is on site assistance in formal network development, 
and strategic suggestions on building sustainable funding.
     There is considerable debate at present about the specific 
health care program that should be developed for the future of 
the State of Louisiana. I would not want anyone to construe my 
testimony before you, to be an endorsement of one group over 
the other, private versus public. I can honestly say that after 
30 years in on part or another of the health system in New 
Orleans, I have been very heartened at the energy and 
determination of my colleagues at Charity Hospital (MCLNO), the 
commitment and sincerity of the leaders of the State Department 
of Health and Hospitals, and also physicians in the private 
sector, all of whom are trying to address this overwhelming 
challenge of providing basic healthcare to the uninsured and 
underinsured members of our community. We appreciate the 
importance of the patient having choice in any health care 
system. We also appreciate the quality and care benefits that 
come from a medical home in which one can find both primary 
care and access to specialty services and hospitalization when 
necessary. We want to continue to develop efficiencies and the 
other components of a true medical home. We feel this is the 
best way to provide comprehensive primary care to the 
community.
     Our experience at St. Thomas is that this community 
desires respectful and readily accessible access to care. They 
want, and deserve, timely evaluation and treatment for diseases 
found in the primary care setting. All our citizens deserve to 
have the opportunity to prevent chronic diseases and to detect 
problems such as coronary heart disease and cancer before they 
cause lifelong disability or death. We know that timely, 
appropriate specialty care in the outpatient setting is an 
integral part of comprehensive care. Management of patients by 
the collaboration of primary care providers, and specialists 
when appropriate, provides the most cost effective, highest 
quality care while it simultaneously lowers emergency room 
visits and hospitalizations.
     What we have done over the years at St. Thomas, and 
particularly since Hurricane Katrina, has been to try, on a 
small scale, to provide both primary and preventive care, with 
specialty consultations as possible. The opportunities, 
collaboration, and generosity of the American people following 
Katrina has allowed St. Thomas to do more than ever before.
     The St. Thomas Community Health Center, and our group of 
health clinics that have shouldered the majority of care for 
the last 18 months, now seek the help of this committee to be 
able to continue these services while fully supporting the 
restoration of services at MCLNO. We also urge that clinics 
with proven track records in the community such as ours be 
considered to be integral parts of whatever plans are 
ultimately developed for the long term.
    Our current mission:

    (1) To continue to provide primary care to all patients, 
regardless of their ability to pay.
    (2) To provide services to those who, in spite of their 
ability to pay, cannot find a physician.
    (3) To continue to develop outpatient specialty 
consultative services and to make them available to other 
primary care providers, to improve outcomes and reduce reliance 
on the emergency rooms and hospitals.
    (4) To develop and provide a community based mental health 
center, focusing on youth, and families, who are dealing with 
the continuing stress related to the loss of their community 
caused by Katrina.
    (5) And most important, to develop the appropriate 
networking infrastructure and efficiencies to enhance and 
sustain the services we deliver.

     Our most pressing needs for the immediate future include:

    (1) Stable, dependable, gap funding until the new self-
sustaining health care model is in place.
    (2) Available specialty consultations for complicated 
patients, (for the management of cancer, gastro-intestinal 
diseases and other complex conditions, and surgical specialty 
care such as urology, and orthopedics).
    (3) Mental health providers, including inpatient mental 
health beds and ongoing outpatient mental health services.
    (4) Improving our systems support to maximize the numbers 
of patients we can effectively and appropriately see.

    I would once again thank the chairman and the members of 
the committee for the opportunity to participate in this 
hearing.

    [Dr. Erwin's answers to submitted questions from Mr. 
Whitfield follow:]
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[GRAPHIC] [TIFF OMITTED] 36572.011

             Testimony of Frederick P. Cerise, M.D., M.P.H.

     Mr. Chairman and members of the committee thank you for 
the opportunity to testify today on the continuing concerns and 
immediate health care needs in the New Orleans region. I am Dr. 
Fred Cerise, Secretary of the Louisiana Department of Health 
and Hospitals, the leading State agency for health care in 
Louisiana.
    Background: Louisiana struggles with the same health care 
delivery system issues affecting the rest of the country. Our 
fragmented system that operates largely in a fee for service 
environment results in a health care system characterized by 
uneven quality of care, rising costs and inequitable access to 
care. In 2004, Louisiana spent $19.4 billion on health care 
services in Louisiana\1\ and from 2000-06 health care premiums 
for Louisiana families grew nearly 5 times faster than 
earnings.\2\
    In many areas, capacity and utilization in Louisiana are 
well above the national average. A snapshot of the status in 
Louisiana prior to Hurricanes Katrina and Rita shows the 
following:

     Overall Medicare spending per capita\3\ K--1st
     Hospital beds per capita--9th
     Medicare hospital days--2d
     Overall hospital admissions--4th
     Overall emergency department visits--4th
     Medicare home health, number served per capita--
1st
     Medicare home health, number of visits per person 
served\4\
     Overall prescriptions filled for children and 
elderly--3d
     Overall Medicare quality ranking\5\--50th

    Louisiana is further characterized by a high uninsured 
rate, a high level of poverty, and poor health status. The 
uninsured consume far less care than those with insurance,\6\ 
they are not the driving force behind the above statistics.
    The largest provider of care for the uninsured is 
Louisiana's State operated system run by the Louisiana State 
University (LSU) Health Care Services Division (HCSD) and 
Health Sciences Center (HSC). This system is comprised of 10 
hospitals and over 250 outpatient clinics statewide. LSU-HCSD, 
which includes New Orleans, had nearly 900,000 outpatient 
visits, including 626,000 clinic visits during the 2005-06 
fiscal year.\7\
    Reimbursement for these services is primarily funded by 
utilizing disproportionate share hospital (DSH) funds. The DSH 
program was created to provide funding to hospitals that served 
a ``disproportionate share'' of Medicaid and uninsured patients 
and is a component of the Medicaid program. Subsequently, it is 
jointly funded by the State and Federal Governments. 
Louisiana's ``State match rate'' is approximately 30 percent--
so for every 30 cents the State puts forward, the Federal 
Government matches it with 70 cents. Additionally, each State 
has a DSH cap. The total DSH available for Louisiana in fiscal 
year 2007 is $1.05 billion.
    DSH funds in Louisiana are primarily allocated to the LSU 
system and community hospitals. Although DSH funds are a key 
source of funding for the uninsured in Louisiana, there are 
some limitations to the program. For example, only hospitals 
can be reimbursed with DSH funds. This means that only 
hospital-based clinics can receive reimbursement through the 
DSH program. This is less of an issue for the LSU system, since 
it is an integrated system with both hospitals and clinics. 
However, the DSH program inadvertently supports high-cost 
emergency department care when primary care through a clinic 
might be more appropriate. Furthermore, DSH funds are used for 
reimbursing health care services--but cannot be used to 
reimburse a physician or other health care professionals that 
provide care to the uninsured.
    Louisiana is not unique in the existence of this type of 
safety net; we are unique in that it is organized as a 
statewide system. Through this system, people who are unable to 
afford health care can access services, including primary, 
preventive and specialty care as well as hospital services. 
While variable across the State, access to many services is 
constrained by available funding.
    Considering the high utilization, rising costs, uneven 
quality, and lack of equitable access to health care in 
Louisiana, the State's approach to health care reform, both 
pre- and post-Katrina has been aimed at making systemic 
changes.
    Louisiana Health Care Redesign Collaborative: After 
Hurricane Katrina, the Louisiana Health Care Redesign 
Collaborative was created through a legislative resolution to 
respond to the health care issues in the New Orleans region 
(Jefferson, Orleans, Plaquemines, and St. Bernard parishes). 
The Collaborative was a forty member group charged with 
creating recommendations for a health care system for New 
Orleans driven by quality and incorporating evidence-based 
practices and accepted standards of care. The Collaborative 
adopted the following vision: Health care in Louisiana will be 
patient-centered, quality-driven, sustainable and accessible to 
all citizens. The backbone of a redesigned system of care put 
forward by the Collaborative is the ``medical home.''
    The proposed medical home system is consistent with 
recommendations made by a number of professional societies such 
as the American Academy of Pediatrics, the American Academy of 
Family Physicians, and the American College of Physicians. It 
also has qualities and expectations consistent with those of a 
high performing health system as described by the Commonwealth 
Fund and of a redesigned system as characterized by the 
Institute of Medicine.
    This new system will provide health promotion, disease 
prevention, health maintenance, behavioral health services, 
patient education, and diagnosis and treatment of acute and 
chronic illnesses. The medical home is the base from which 
other needed services are managed and coordinated in order to 
provide the most effective and efficient care. This includes 
specialty care, inpatient care, community preventive services 
and medical home extension services for complex care needs. The 
center of the medical home is a primary care provider who 
partners with the patient to coordinate and facilitate care. 
The medical home does not restrict patient access to services--
rather it helps ensure that the patient receives the right 
services.
    Ensuring the coordination and comprehensive approach of the 
medical home model over time will improve the efficiency and 
effectiveness of the health care system and ultimately improve 
health outcomes.
    The other three main components of the redesign concept 
are:

     Health Information Technology (HIT)--HIT is the 
key to creating ``system-ness'' and can allow the seamless 
sharing of electronic information to improve efficiency and 
patient safety. Additionally, HIT can be used to inform 
clinical practices and facilitate data reporting which are key 
components of a quality agenda.
     Louisiana Health Care Quality Forum (LHCQF) ``The 
LHCQF will function as a ``learning system'' that will monitor 
population health measures across providers and payer systems 
and actively engage with health care organizations to implement 
quality improvements, increase cost-effectiveness, and achieve 
better outcomes statewide. It will improve the quality of 
health and health care throughout Louisiana in a cost effective 
and transparent manner in a safe, peer protected environment.
     Coverage for Services - Another major concept is 
the creation of a mechanism (the Connector) which would match 
individuals needing health insurance to affordable insurance 
options, thus offering affordable health insurance coverage to 
an expanded number of uninsured individuals in the State.

    In response to the Collaborative's concept, the Federal 
Department of Health and Human Services put forward a proposal 
that is consistent with the President's Affordable Choices 
Grants proposal that was announced in the 2007 State of the 
Union address. HHS proposed a statewide coverage expansion that 
would insure 319,000 uninsured through private insurance. This 
proposal would be financed by savings from better managing 
Louisiana's Medicaid program and by redirecting $770 million in 
disproportionate share hospital (DSH) funds currently spent in 
the safety net system.
    While appreciative of the effort to insure more 
individuals, the State recognizes serious gaps in the proposal. 
Through our analysis, the HHS proposal would leave 300,000 to 
400,000 citizens without insurance coverage. Additionally, 
current funding ($770 million) for the safety net would be 
eliminated if the State were to implement the CMS proposal. The 
use of incorrect cost projections, the omission of high-cost 
populations, and the use of unrealistic managed care discounts 
in the HHS proposal suggests that coverage would be expanded to 
fewer than the projected 319,000.
    Louisiana has learned from those that have traveled this 
road before. Massachusetts, which is breaking ground with its 
mandate for health insurance coverage, spent many years working 
towards this goal. If Louisiana were to cover half of its 
uninsured as optimistically described above, we would end where 
Massachusetts began just prior to its 2006 reform legislation--
about 10 percent uninsured but without a safety net system of 
care. As a State with nearly 18 percent uninsured and 45 
percent of its population at 200 percent of the Federal Poverty 
Level or below,\8\ we understand that we must lay the 
groundwork before we can make such great leaps. The groundwork 
includes efforts aimed at both insuring more people, and also, 
very importantly, improving our safety net and the delivery 
system in general.
    John Wennberg, Director of the Center for the Evaluative 
Clinical Services at Dartmouth Medical School, and others have 
demonstrated that in healthcare, capacity is a strong driver 
for demand. As a result of Katrina, the New Orleans region lost 
a large amount of capacity. However, capacity is tied to other 
important pieces of the utilization equation, such as how care 
delivery is coordinated and how it is reimbursed.
    Those system design changes have not occurred; therefore we 
should not expect a smooth transition to a lower capacity 
system. Further, in most areas, capacity is now well below 
national norms. The lower capacity and specifically, the lack 
of ready access to coordinated primary care or post-acute care, 
has resulted in the stressed medical environment we are 
experiencing today in New Orleans.
    So our challenge is twofold. We must first meet immediate 
needs while ensuring that, in the process, we support the 
rebirth of a better overall system of care. The vision for a 
system to replace the lost capacity is one that adheres to the 
aims set forth by the Institute of Medicine: safe, effective, 
patient-centered, timely, efficient, and equitable. It is a 
patient-centered system predicated on access to primary care 
that provides evidence-based preventive services and tracks 
those with chronic disease to ensure appropriate management. It 
provides ready access to appropriate services and information 
when necessary and is convenient for patients, coordinated 
among providers along the continuum of care, and supported by a 
system of electronic medical records to improve safety, quality 
and efficiency.
    The current gaps in the delivery system have provided the 
opportunity for systems change. We will continue to move 
forward with health care reform for Louisiana--but we must also 
ensure the New Orleans region can recover to meet our citizen's 
health care needs today. My testimony today will focus on the 
immediate and short-term health care needs for the New Orleans 
region of Louisiana.
    Post-Katrina Health Care in the New Orleans Region: 
Hurricane Katrina caused a significant disruption in the health 
care delivery system in New Orleans. Prior to Katrina, care for 
the uninsured in the New Orleans region was delivered primarily 
in the public hospital system and clinics and to a lesser 
extent, federally qualified health centers (FQHCs). 
Uncompensated care for the community hospitals in the region 
was less than 4 percent. According to the 
PricewaterhouseCoopers Report on Louisiana HealthCare Delivery 
and Financing System, the region had an oversupply of short-
term acute care hospital beds and an undersupply of long-term 
care beds.
    Immediately after the storm, only 7 of 21 acute care 
hospitals were open with staffed beds at less than half of the 
pre-Katrina total. The nursing home capacity was reduced from 
4,954 to 2,735 beds. The largest health care system for the 
uninsured, the LSU-HCSD system, was not operational.\9\ The 
closure of the LSU-HCSD hospital in New Orleans also eliminated 
their Level I trauma center, which was one of only two in the 
State. In addition to the impact on the infrastructure, the 
evacuation of people from the area led to the largest efflux of 
health care providers in U.S. history.
    The University of North Carolina at Chapel Hill estimated 
that almost 6,000 active, patient-care physicians along the 
Gulf Coast were dislocated by the storm. Over two-thirds--
4,486--of those were in the three central New Orleans area 
parishes that were evacuated. The study also estimates that 
over 35 percent of these dislocated physicians were primary 
care physicians. The loss of medical manpower in hurricane-
affected areas created a critical shortage of physicians all 
across south Louisiana. Similar shortages have occurred with 
nurses and other licensed and trained health care providers.
    There have been a number of efforts over the past year and 
a half to ameliorate the situation in the New Orleans region. 
The Federal Deficit Reduction Act appropriated $2 billion to 
States affected by Hurricane Katrina. As a result, the State 
implemented a Katrina 1115 waiver to provide coverage to our 
citizens that evacuated to other States and to provide payment 
to providers within the State for uncompensated care (UCC). 
This provided $132,091,048 in much needed relief to providers 
for uncompensated care between August 2005 and January 2006.
    Additionally, the State was able to use approximately 
$680,569,383 to supplement State funding for its Medicaid 
program. The Medicaid funding relief came at a critical 
juncture in early 2006 as State revenues had sharply declined, 
all State agencies were implementing budget reductions, and the 
State had issued an emergency rule reducing Medicaid 
reimbursement rates to providers by roughly 10 percent.
    Hospitals: Recognizing that the usual source of inpatient 
care for the uninsured in the Orleans region was not 
operational and that the Katrina UCC pool was time limited, the 
State created a mechanism to pay community hospitals for UCC 
rendered for the remainder of the State fiscal year, between 
February and June 2006. A total of $52,494,904 was reimbursed 
to community hospitals. Currently, physician costs are not 
considered an allowable cost and cannot receive reimbursement 
through the DSH program. A request to receive Federal match to 
pay physician UCC during this period was requested but not 
approved.
    Two payment increases were subsequently approved by the 
2006 Louisiana Legislature. First, Medicaid payments for 
hospitals were increased by $38 million. Second, a Community 
Hospital DSH Pool was established, allocating $120 million for 
UCC for community hospitals from July 2006 through June 2007. 
Although a proposal was put forward by the State to reimburse 
hospitals in the Katrina and Rita affected parishes at 90 
percent of uncompensated care costs, the hospital association 
preferred an approach that provided less funding to the Katrina 
and Rita affected regions and spread the UCC funds more thinly 
across the State to potentially include all hospitals in the 
State, including those not in the affected regions and not 
significantly impacted by evacuees.
    To date, $37,995,972 has been paid to the community 
hospitals; it is likely that the full $120 million will not be 
expended according to the formula adopted in the State 
appropriations bill.
    Primary Care and Behavioral Health: Access to primary care 
and behavioral health has been limited post-Katrina. This is 
particularly true for those without insurance. Approximately 
$16.5 million of the Social Services Block Grant (SSBG) funding 
was dedicated to restoring primary care in the New Orleans 
region after Hurricane Katrina to restoring critical primary 
and preventive health care services. This funding expires 
August 2007. In addition to utilizing this funding for direct 
service delivery, SSBG funding also has been used to enable 
these clinics to prepare to become future medical homes 
delivery sites. The State targeted a portion of SSBG funding to 
the implementation of electronic medical records, quality 
improvement initiatives and the development of networking 
capabilities across clinic sites to achieve interoperability 
and system-wide patient education and outreach.
    SSBG funds are also being used to restore and expand mental 
health services, substance abuse treatment and prevention, and 
developmental disability services for children, adolescents and 
adults in need of care in these areas. Through this funding, 
efforts are also being targeted at the creation of more 
appropriate community based treatment options to prevent 
unnecessary or inappropriate institutional care.
    Federal Emergency Management Agency (FEMA) and Substance 
Abuse and Mental Health Services Administration (SAMHSA) funds 
have been used to:

     provide psychological debriefing and stress 
management interventions to the public sector workforce;
     expand the number of addiction counselors in the 
State; and
     develop and implement the ``Louisiana Spirit--
Immediate Crisis Services Program, which is designed to deliver 
crisis and mobile counseling to persons impacted by the 
hurricanes.

     The State has also provided funding to open 45 beds for 
behavioral health for adults and children.
    Health Care Workforce: The Redesign Collaborative 
identified a number of short-term issues and made requests to 
HHS for assistance, including one to establish the Greater New 
Orleans Health Services Corps (GNOHSC). A major challenge 
remains the inability to retain a medical workforce. HHS 
awarded Louisiana with a workforce grant of $15 million in 
February 2007.
    The grant, through the GHNOHS, will provide salary, 
relocation costs, bonuses, and premium payments for medical 
malpractice for providers that commit to practice in the region 
for the next three years. Eligible providers include 
physicians, dentists, physician assistants, nurse 
practitioners, nurse midwives, dental hygienists, 
psychologists, counselors, social workers and pharmacists.
    New workforce competition, as a result of Katrina, has 
highlighted traditionally low salaries of direct care 
professionals for the elderly and people with disabilities. The 
average salary for direct support professionals in Louisiana is 
$6.68, which is below the national average. The State is 
increasing the wages for these workers by $2/hours to help 
retain these critically needed workers. The annual cost to 
Medicaid will be $110 million.
    Another short-term request from the Collaborative to HHS 
was for an adjustment to the Medicare wage index to reflect 
current costs. The wage index typically lags three years. 
Hospitals estimated the cost to be $67.7 million a year for 
three years. A $71 million grant to hospitals and skilled 
nursing facilities was received from HHS.
    Health Information Technology: Louisiana received a $3.7 
million contract from the Office of the National Coordinator 
for Health Information Technology (ONCHIT) to develop a 
prototype for health information exchange, which has since been 
successfully demonstrated. This contract is part of the Gulf 
Coast Digital Recovery Effort. The State assisted in the 
establishment of the Gulf Coast Health Information Technology 
Task Force that the Southern Governor's Association convened. 
Other HIT efforts include the launch of KatrinaHealth.org which 
allowed providers to access prescription drug information for 
evacuees.
    Current Status of the System: Combined, these efforts have 
significantly improved health care in the New Orleans region. 
However, issues remain. Over time, the impacted area has seen 
slight increases in bed capacity, but there remains a shortage 
of acute care beds compared to national standards. The current 
plan in the LSU-HCSD hospitals is to phase-in an additional 75 
beds by July 2007. The staffing and reimbursement for hospitals 
continue to pose problems.
    Today, there are 26 safety net primary health care sites 
that are providing services in the New Orleans region. These 
sites include federally qualified health centers, Tulane 
outpatient clinics, LSU-HCSD outpatient clinics, mobile 
clinics, city and parish health service sites, hospital 
outpatient clinics, rural health clinics and non-profit 
community-based practices. However, based on the current 
population, there remains a shortage of primary care providers. 
Increased demand for primary care providers will likely occur 
as the region continues to repopulate.
    The region also suffers from a significant shortage of 
specialists. While LSU-HCSD has been able to resume a number of 
specialty services as space and staff have become available, 
there remains the lack of some essential specialty services to 
support the primary care sites serving Medicaid and the 
uninsured. The area is still below national norms for nursing 
facility beds.
    Immediate Health Care Needs for the New Orleans Region: The 
health care system is still challenged today. The actions taken 
over the past year and a half have helped to improve access to 
care, workforce issues and infrastructure--but problems remain. 
Access to care, particularly for the uninsured, is difficult. 
Rising costs, due to contract labor and higher property and 
casualty insurance costs are impacting providers. The average 
length of stay in hospitals is above pre-Katrina averages. 
These are among the immediate needs to be addressed in the New 
Orleans region.
    Broadly, the immediate continuing needs fall into one of 
three categories: access to care, workforce recruitment and 
retention, and infrastructure requirements. The specific needs 
are outlined below:
    Primary Care Capacity: Currently, there is a shortage of 
primary care providers in the New Orleans region that is 
affecting all other components of the system. Based on HRSA 
standards, we have a shortage of 49 primary care providers who 
are available and willing to serve the Medicaid and uninsured 
populations. Hospitals across the region report seeing a 
population with more advanced disease than pre- Katrina, more 
patients without a regular source of care, and even more 
limited options for discharge and follow-up care in the 
communities.
    Solution: Establish sufficient primary care capacity in a 
manner consistent with the redesigned system of care envisioned 
by the Collaborative by sustaining operational support provided 
by SSBG funds to safety net clinics and by funding ten new 
medical homes. Medical Homes of sufficient size and scope to 
meet the needs of the uninsured population will be established 
in a fashion consistent with the principles outlined by the 
Collaborative. The medical home criteria would include not only 
quality expectations but also care coordination and access 
expectations to ensure timely care is available outside of 
emergency departments through after hours clinics.
    The above approach will have the effect of providing 
assurances of income necessary to attract and retain providers, 
while relieving the burdens of fixed costs. This will foster 
the growth of what is designed to be a high performance 
delivery system.
    Workforce Recruitment and Retention: Louisiana facilities 
now have to employ increasing amounts of contract labor to 
sustain staffing needs. The added complexity of inadequate and 
short supply of desirable housing for health care professionals 
continues to result in a lack of physician staff, mental health 
professionals, dentists, nurses, and others willing to remain 
in or locate in the greater New Orleans area. The ability to 
expand capacity to meet the health care needs in the region is 
hindered by the lack of available workforce.
    Solution: Fully implement the Greater New Orleans Health 
Services Corps Program. Initially, Louisiana requested $120 
million to support health care workforce recruitment and 
retention. Fifteen million dollars have been granted to the 
State--which will allow the State to institute the program. 
However, we continue to estimate that it will cost $120 million 
to fully implement the program. This will provide for 
incentives for physicians, dentists, nurses, and other 
professional staff. In exchange for the financial support, 
providers must commit to serve in the region for three years.
    Behavioral Health: Lack of access to necessary community 
based services and housing supports for individuals with mental 
illness and other behavioral health needs shifts care to more 
acute services. The shortage of community services for this 
population, a situation only exacerbated after Hurricane 
Katrina, results in the reliance for services on the hospital 
emergency departments, an area already strained due to the lack 
of adequate primary care in the area. In addition, the loss of 
psychiatric care beds in the area from 274 to 180 post-Katrina 
and the slow return of the community based mental health 
services only furthers the lack of access to care.
    Solution: Develop, implement, and fund a five year 
redevelopment and mitigation/prevention plan for behavioral 
health services; and expand Medicaid coverage to people with 
severe mental illness. The State requests a partnership with 
FEMA and other governmental entities in the development and 
implementation of a point by point plan along with secure 
funding for a five years. This plan allows for the 
reestablishment of a competent mental health system in the 
greater New Orleans region and other contiguous parishes.
    This five year plan, estimated at $170,000,000 would 
include crisis counseling under the existing FEMA Disaster 
Relief, as well as direct treatment dollars for services 
including psychiatric hospitalization, crisis intervention, 
suicide prevention, substance abuse treatment and long-term 
ambulatory treatment of psychiatric conditions. This funding 
and support from FEMA will stabilize the behavioral health 
system for the Orleans region.
    Further, the concept paper the State put forward to HHS 
included a request to include individuals with serious mental 
illness as a Medicaid eligible population. This would allow the 
State to provide broader access to services for these 
individuals.
    Medicare Wage Index: The short supply of health care 
providers is resulting in increased competition among providers 
for professional and non-professional staff. The effect is a 
significant rise in labor costs. Compounding the problem is the 
increase in the length of stay that hospitals are reporting. 
This rise in costs is not reflected in the prices established 
by the Medicare fixed payment system.
    Solution: Provide funding for costs related to the Medicare 
wage index. HHS awarded Louisiana a $71 million grant for 
hospitals and skilled nursing facilities to address the 
increased costs providers are experiencing as a result of the 
rising labor costs. While very helpful, this one time grant 
does not address the entire three year lag in the Medicare wage 
index calculation. The fiscal estimate for 2 years is $67 
million/year for hospitals and $6.9 million/year for skilled 
nursing facilities.
    DSH Flexibility: Two significant roadblocks to increasing 
health care capacity and access to health services in the New 
Orleans region are (1) the inability to use DSH funding for 
non-institutional care and (2) the inability to use DSH to 
reimburse for physician services. In order to receive DSH funds 
today, health care services must be funded by a hospital. While 
the State has created great capacity in a clinic system 
associated with public hospitals, this limits flexibility in 
development of outpatient capacity. Further, while physician 
costs are an essential component of delivering health care, 
they are not reimbursable through DSH.
    Solution: Allow the redirection of DSH funds to support 
non-institutional care; and allow DSH funds for physician 
services. The DSH redirection will provide great relief by 
creating a funding mechanism to reimburse physicians for 
treating the uninsured and by supporting clinics that provide 
primary and preventive care. The State also proposes to 
redirect DSH funds in the New Orleans region for a pilot to 
reduce the cost of private insurance for small employers and 
their low-income employees. Ultimately, redirecting the DSH 
funds will allow the groundwork for creating an integrated 
system of care for the New Orleans region. This solution does 
not require additional funding.
    Health Information Technology (HIT): Hurricane Katrina 
highlighted the importance of interoperable HIT. After the 
storm, providers had difficulty communicating with each other 
across the State and the vast majority patients who were 
displaced as well as the providers caring for them did not have 
access to patient records. While HIT is an important component 
of hurricane preparedness, it creates value everyday by 
improving patient safety and health system efficiency. As 
physician practices recover, and as we support providers in 
settings to care for the uninsured, it makes sense to implement 
a modern system of health information exchange into the 
process. The devastation in the New Orleans region provides an 
unprecedented opportunity to make a significant imprint of HIT 
in a large metropolitan area.
    Solution: Support electronic medical record (EMR) adoption 
and continue to support the Louisiana Health Information 
Exchange (LaHIE) project. The Office of the National 
Coordinator for Health Information Technology contracted with 
Louisiana immediately after Hurricane Katrina to develop a 
health information exchange, as part of the Gulf Coast Digital 
Recovery effort. This $3.7 contract will expire at the end of 
this month. Continued support of LaHIE will cost approximately 
$1 million per year. The other essential component is the 
adoption of EMRs by providers. The State estimates that it will 
cost $17.7 million over a five year period for the New Orleans 
region primary care providers to fully adopt EMRs. The State is 
would like to continue and expand this successful partnership 
with the Federal Government.
    Developmental Disabilities: The ongoing need for community-
integrated housing that can support those with significant 
disabilities is critical for the recovery and for the 
healthcare delivery system in south Louisiana. Prior to 
Hurricanes Katrina and Rita, people with disabilities were 
disproportionately represented among the homeless and faced 
extraordinary barriers in accessing and maintaining access to 
affordable housing. As a result of the disaster, many more have 
been rendered homeless or have been unable to move from what 
should have been temporary shelter in institutions and other 
restrictive settings because of a lack of affordable housing 
coordinated with supportive services. This also affects the 
ability of healthcare providers to discharge individuals from 
acute care settings, and housing instability often leads to a 
revolving door of reentry into emergency and acute care 
services.
    Solution: Provide, through the U.S. Department of Housing 
and Urban Development, an equal number of Section 8 project-
based Housing Choice Vouchers to be used in conjunction with 
the 3,000 units of Permanent Supportive Housing (PSH). 
Louisiana has made a commitment to develop 3,000 units of 
Permanent Supportive Housing as part of the recovery effort. 
The State has worked closely with local and national advocates 
who are strongly in favor of this commitment to PSH. These 
vouchers will ensure that the housing designated for PHS will, 
in fact, be affordable to individuals with disabilities, many 
of whom live on SSI and have incomes at and below 20 percent of 
Area Median Income. In order for this recovery to be accessible 
to all Louisianans, the Federal Government's provision of 3,000 
section 8 project-based Housing Choice Vouchers specifically 
for use in providing PHS as defined in the Louisiana Road Home 
Plan is essential.
    PSH integrates affordable, mainstream rental housing with 
the supportive services needed to help people with disabilities 
access and maintain stable housing in the community. This model 
is a nationally recognized, cost-effective model for preventing 
and ending homelessness and unnecessary institutionalization 
among low-income people with serious, long-term disabilities 
including mental illness, developmental disabilities, physical 
disabilities, substance use disorders, chronic health 
conditions like HIV/Aids, and chronic conditions and frailty 
associated with aging.
    Thank you for the opportunity to testify today.

    \1\ PricewaterhouseCoopers, ``Report on Louisiana 
Healthcare Delivery and Financing System,'' 2006.
    \2\ Families USA, ``Premiums Versus Paychecks: A Growing 
Burden for Louisiana's Workers,'' December 2006.
    \3\ S.F. Jencks, et al, ``Change in the Quality of Care 
Delivered to Medicare Beneficiaries,'' JAMA, 2003.
    \4\ Kaiser Family Foundation, State Health Facts--
Louisiana, available at: www.statehealthfacts.org (accessed 
March 9, 2007).
    \5\ Jencks
    \6\ J.R. Graham, ``Don't blame the uninsured,'' Chicago 
Tribune, March 2007.
     \7\ LSU-HCSD, ``LSU-HCSD Fiscal Year 2005-2006 Utilization 
Report,'' May 2006.
     \8\ Kaiser Family Foundation, State Health Facts--
Louisiana, available at: www.statehealthfacts.org (accessed 
March 9, 2007).
    \9\ PricewaterhouseCoopers, ``Report on Louisiana 
Healthcare Delivery and Financing System,'' 2006.
                              ----------                              


                   Testimony of Cathi Fontenot, M.D.

     I would first like to thank members of the subcommittee, 
including Chairman Stupak and Ranking Member Whitfield, who 
have taken time out of your busy schedules to travel to New 
Orleans to witness first hand the destruction wrought by 
Hurricane Katrina. Thank you for your attention and for this 
opportunity to share our current state of affairs and plans for 
the future to support the health care infrastructure in New 
Orleans.
     I am medical director of the Medical Center of Louisiana 
at New Orleans (MCLNO), which is comprised of both Charity and 
University Hospitals. MCLNO is part of a State-wide system of 
public hospitals and clinics with a principal mission to 
provide access to care for the uninsured. MCLNO and LSU's other 
hospitals also play an integral role in health care education 
in Louisiana, housing the vast majority of residency training 
slots in the State. The strong linkage of graduate medical 
education and care for the uninsured has been a signal feature 
of Lousiana's health policy for many years.
     Prior to August 29, 2005, MCLNO provided approximately 
270,000 outpatient clinic visits which spanned primary care to 
specialties, such as nerve surgery and cardiothoracic surgery. 
It housed one of the largest HIV outpatient clinics in the 
country and provided 130,000 outpatient emergency room visits. 
It was one of only two Level 1 Trauma Centers in the State of 
Louisiana, the other being in the northern part of the State in 
Shreveport, and served as a primary training site for both LSU 
and Tulane Schools of Medicine. In addition to future 
physicians, the Medical Center was responsible for training 
multiple other health care providers, including nurses and 
allied health providers such as physical therapists, 
occupational therapists and respiratory therapists. The Medical 
Center had a capacity of about 550 beds, including almost 100 
psychiatric beds, with occupancy that hovered between 90 
percent to 100 percent. You will rarely see such a full census 
in any hospital, except in urban public hospitals.
     The storm effectively destroyed both MCLNO facilities. The 
loss of Charity and University Hospitals has been devastating 
to the community. The current status of health care 
infrastructure in New Orleans is tenuous and critically ill. 
Although we were able to temporarily re-open a portion of 
University Hospital, restoring approximately 180 inpatient 
beds, the total number of beds in New Orleans is less than half 
of pre-Katrina numbers. The population loss, while high within 
New Orleans city limits, is actually close to pre-Katrina 
levels in the metropolitan area overall. Many have simply 
relocated to higher ground but remain in the market. Sicker 
patients, who in many cases have lost their health care 
providers, present to our emergency rooms with uncontrolled 
disease processes due to lack of primary care and access to 
medications. Because of the loss of clinic space and cancer 
providers, patients who present to our hospital with cancer and 
no health insurance have no choice but to travel 60 miles to a 
rural LSU hospital for their chemotherapy or radiation 
treatments and back 60 miles home while weak and miserable (and 
that's assuming they have transportation).
     The status of behavioral health is even more dismal with 
limited outpatient and inpatient services in the greater New 
Orleans area. Emergency rooms across the city are bearing the 
brunt of this shortage with anywhere from 10 to 20 psychiatric 
patients occupying acute emergency beds on any given day. In 
our emergency room alone there are days when half of our 
available Emergency Department beds are occupied by psychiatric 
patients because there are no inpatient beds available for 
them. This situation is unsafe and certainly not in the best 
interest of the patients or our employees. It also results in a 
major obstacle to Emergency Department through-put for acute 
care. Local emergency rooms are already overwhelmed with 
patients who seek primary care inappropriately through the 
Emergency Department because of loss of health care providers 
in the area, and the addition of behavioral health patients to 
this mix is simply not good medicine.
     Solutions to the health care crisis in New Orleans are 
being developed but are constrained by availability of space 
and health care providers (both primary care and specialty 
providers). A critical component of the effort to restore 
health care services involves establishing and strengthening a 
network of neighborhood clinics. MCLNO has continued our 
collaborative coalition with the group of primary care clinics 
known as PATH, Partners for Access to Healthcare for the 
Uninsured, where we serve as the major hospital partner and 
provide hospital services as well as specialty access. It is 
this sort of collaborative effort that can be a real 
opportunity to accomplish health care reform as we go forward. 
Additionally, the plan for the Medical Center includes 
establishment of community primary care clinics in temporary 
facilities so that primary care can be delivered in communities 
where the basic principles of prevention and disease management 
are best delivered. One of the major challenges for health care 
providers in the New Orleans region is the lack of access to 
specialty care. We anticipate that at least to some degree, we 
can maximize the use of the limited specialty care available by 
utilizing telemedicine technology and becoming more efficient 
at directing patients to the right place at the right time for 
the right reason. Additionally, a shared electronic record is 
critical to such a network of providers in order to share 
information and eliminate costly duplication of effort.
     We look forward to continuing our work with other safety 
net providers because such a coalition is crucial to real 
health care reform and necessary for institution of a new model 
of health care in the region.
     Thank you for the opportunity to share our information 
with you today.
                              ----------                              


                       Testimony of Thomas Koehl

    Chairman Stupak and distinguished members of Congress and 
guests. Thank you for the opportunity to speak to you today.
    My name is Thomas Koehl and I work for Operation Blessing, 
a humanitarian relief organization that responds to both 
domestic and international disasters. Among other activities, 
Operation Blessing provides a free medical and dental clinic as 
well as a pharmacy in New Orleans. We presently see 75 to 100 
patients a day with a staff of volunteer doctors, nurse 
practitioners, and physicians assistants. In the past 11 months 
we have provided healthcare to over 15,000 patients and 
dispensed 25,000 free prescriptions to the residents of this 
stricken city.
    They were pulled from roof tops, they waded in water, and 
spent days sweltering in the heat on highway overpasses and in 
the superdome. They are a never before seen American, over 
100,000 newly made poor, hopeless, homeless and marginalized. 
Our task--yours and mine--is to relieve their suffering.
    When Katrina struck, it washed away people's homes, jobs 
and health insurance, but not their high blood pressure, 
diabetes, and other chronic illnesses.
    The need for healthcare is so great that our patients begin 
standing in line at three and four o'clock in the morning every 
week day in order to see a healthcare provider. Grandmothers, 
single mothers with sick children, entire families sleeping in 
the cold to wait to see a doctor. They are uninsured, working 
for employers that do not provide benefits, and not old enough 
to qualify for Medicare or not accepted by the States' Medicaid 
program.
    Operation Blessing recently partnered with Remote Area 
Medical, International Medical Alliance, the New Orleans Health 
Department and the LA Department of Health and Hospitals to 
host Medical Recovery Week for the greater New Orleans Area.
    On the first morning of this event I met Mike in our triage 
area. He made his way though a maze of tents, concentrating on 
staying warm and keeping his place in line. He was one of 
hundreds who had arrived in the frigid pre dawn hours in the 
hopes of seeing a doctor. Mike had been in line since 10 pm the 
night before. I asked Mike why he was there and he said, ``I 
need insulin, I have been out for months and haven't found 
anyone that could help.''
    Like thousands of returning hurricane evacuees, Mike had 
returned to a city where health care was limited and the 
majority of residents are now uninsured. ``This was a new 
reality check for me,'' Mike said. ``My insurance is gone, my 
job is gone, and my home is gone.''
    On this day, however, he along with nearly 600 other 
patients received free medical care during Operation Blessing's 
Medical Recovery Week.
    More than 400 doctors, dentists and nurses flew in from 
across the country to volunteer for the event, providing more 
than 9,000 medical services to more then 3,000 patients by the 
week's end. Services included dental work; eye exams and 
glasses; primary healthcare; OBGYN services, diabetic care, 
pediatrics and cardiology.
    To accommodate the influx of patients, we set up 20,000 
square feet of tent space to serve as additional exam rooms 
outside the Operation Blessing medical and dental clinics--
which have been providing free medical care to more than 15,000 
Katrina victims since April 3, 2006.
    This was simply a larger version of what we do everyday in 
New Orleans. For Mike, help was as simple as receiving a new 
meter to test his blood sugar and several vials of insulin.
    It's not uncommon day-after-day to hear people sit and cry 
and say, I worked across the street at the hospital 24 years. I 
had insurance, I had retirement, and its gone. The population 
that we are serving is not just those who were poor before 
Katrina, but tens of thousands of newly-made poor . . . people 
who had jobs, cars, homes, and health insurance.
    Our patients still, 18 months after Katrina, get in line 
before daylight every weekday to receive healthcare. Over 50 
percent of these patients have High Blood Pressure and a third 
of those are in crisis when they arrive at our door. 26 percent 
of our patients have diabetes and many blood sugars are so high 
when they walk through our door that they cannot be measured. 
We still see two to three patients a week that have not had 
their insulin since Katrina and have just heard about our 
clinic.
    These citizens are not what you would classically think of 
when you think of indigent patients. These citizens just 18 
months ago owned their own homes, worked fulltime, went to the 
children's band performances and volunteered in their 
community. They were people just like your neighbors. People 
you would have invited to your home for dinner.
    Would you feel comfortable if your neighbors had to stand 
in line all night in the cold to be seen by a doctor? Or be 
sent to a hospital and have to wait in an ambulance for 4 hours 
before they can be seen in the emergency room. The question 
then is who is our neighbor. Is it just the family whose grass 
meets ours or should we be concerned about those Americans that 
we have not yet met.
    This population is our modern day Job. They have lost loved 
ones, their homes, their cars, their jobs, and their insurance. 
We have 127,000 uninsured residents in the city of New Orleans. 
They see others profiting from a disaster in which they lost 
everything, including their faith in a system which had 
promised them health insurance, a pension and, most 
importantly, protection.
    Today the mortality rate in New Orleans is 48 percent 
higher per capita then it was before Katrina. I am not talking 
about traumatic injury but death caused by heart attack, 
diabetes, and stroke. The infant mortality rate in New Orleans 
is five times higher than it was before the storm. The level of 
depression is present at rates never before seen in the United 
States of America. The depression and stress act to worsen and 
exacerbate individual healthcare issues and disease processes.
    We are here to discuss what needs to be done going forward.
    Build a system where it is easier for non-profit agencies 
to operate in disaster stricken areas. Operation Blessing can 
provide its own infrastructure, but not all non-profits are 
able to provide buildings and appropriate utilities so they can 
care for the victims of disaster.
    Build a system that encourages for profit providers to 
return to the region, where ``the dollars follow the patient,'' 
where the uninsured have choices and can seek care in private 
health care facilities and those doctor's offices and hospitals 
are reimbursed for that care. The charity hospitals would have 
to compete with private hospitals to survive and would raise 
the overall level of patient care in the region.
    Among the recommendations being considered to improve 
primary and preventive care are technology initiatives to track 
a person's medical history and to create community clinics, 
health centers and other neighborhood facilities to coordinate 
care for those who depend on the State for services. The 
community clinics would refer patients to specialists, manage 
disease care and provide a consistent system for tracking care.
    Please remember that everything that is needed by the city 
of New Orleans is also needed by the healthcare system that you 
seek to rebuild. Infrastructure such as housing, schools for 
the doctors and nurses children, utilities, and people with the 
economic ability to pay for the service that is being offered. 
All of these are necessary for a sustainable healthcare system.
    Since April 3, 2006, Operation Blessing has provided free 
medical and dental services to more than 15,000 residents 
devastated by Hurricane Katrina and filled over 25,000 
prescriptions free-of-charge. We can only do this by partnering 
with other agencies and with the financial support of our 
donors. I would like to thank all who have made it possible for 
Operation Blessing to care for the residents of New Orleans. We 
are truly grateful for the opportunity to serve.
                              ----------                              


                   Statement of Robert E. Lynch, M.D.

     Mr. Chairman and members of the committee, I want to start 
by thanking you for the universal support the United States 
Congress has given to the Department of Veterans Affairs (VA) 
in its rebuilding and recovery efforts not only in southeastern 
Louisiana but also the entire Gulf Coast region. Through that 
support, our veterans and the VA employees living along the 
Gulf Coast continue to make great strides along the road to 
recovery.
     Hurricanes Katrina and Rita challenged our country with 
two of its greatest natural disasters. While Hurricane Rita did 
little permanent damage to VA's infrastructure, Hurricane 
Katrina, on the other hand, produced unprecedented damage to 
its medical center in New Orleans. Our medical center, the 
community we serve, and the homes of veterans and employees 
sustained destruction on an monumental scale. Today I will 
describe our ongoing and planned health care restoration 
efforts in New Orleans.
     I will speak first to VA health care recovery activities 
and its future plans in New Orleans. Next, I will address the 
Memorandum of Understanding that was signed between VA and the 
Louisiana State University (LSU) System and actions associated 
with it. Finally, I will discuss VA's relationship with LSU as 
the State of Louisiana progresses in its analysis of State 
health care reform.

            New Orleans Recovery Activities and Future Plans

     Forty-eight hours following Hurricane Katrina's landfall, 
as quickly as weather conditions permitted, a VA damage 
assessment team was dispatched to the Gulf Region to survey VA 
facilities at New Orleans, LA; Biloxi, MS; and Gulfport, MS. At 
New Orleans, the team found that the VA facility initially 
weathered the storm with minimal damage. However, following the 
hurricane, water from the breached levees flooded the entire 
medical district and the medical center. Flooding of the 
basement and sub-basement in the main building of the VA 
Medical Center (VAMC) rendered it inoperable as these areas 
housed the facility's major electrical, mechanical, and 
dietetics equipment. The medical center's long standing 
academic partner, the Louisiana State University Health Care 
Services Division at Charity and University Hospital, sustained 
similar types of damage. While University Hospital has re-
opened, Charity Hospital is permanently closed.
     In the immediate aftermath of Hurricane Katrina, VA's 
commitment to the Gulf Coast Region veterans remained 
steadfast. VA deployed a system of 12 ``mobile clinics,'' in 
coordination with local authorities, to provide urgent and 
emergent care to include first aid, immunizations, and 
prescriptions. Specifically in Louisiana, mobile clinics 
provided care at Baton Rouge, Hammond, Jennings, Kinder, 
Lafayette, Lake Charles, LaPlace, and Slidell. VA mobile 
clinics treated 5,000 veterans and 11,000 non-veterans in the 
aftermath of Hurricanes Katrina and Rita.
     To address the health care of veterans in the greater New 
Orleans area, VA expanded the capacity of its existing 
Community Based Outpatient Clinic (CBOC) in Baton Rouge. We 
converted the ninth and tenth floors of the medical center, 
formerly the nursing home in New Orleans into exam rooms and 
began offering primary care services there in December 2005. 
Three months later in March 2006 limited specialty care clinic 
services were added to those units. Temporary facilities in 
LaPlace (St. John's Parish), and Slidell were leased as 
alternate care sites. Tents were erected in Hammond to provide 
basic services.
     With the support of Congress, VA was authorized to 
accelerate the activation of CBOCs proposed under CARES and 
opened a permanent clinic in Hammond in August 2006. We remain 
in leased space in Slidell and plan to construct a permanent 
clinic there in three to five years. The St. John CBOC is 
anticipated to open in October 2007.
     Basic outpatient mental health services are provided at 
each of the clinic locations. Currently, inpatient mental 
health care is coordinated with the Alexandria (LA) VA Medical 
Center. Dental clinic services were re-established in April 
2006 by leasing space in Mandeville, Louisiana. In Baton Rouge, 
we leased the old CBOC building in 2006 and are using that 
facility to house the medical center's clinical laboratory, as 
well as select administrative support functions.
     As a result of these actions, the Southeast Louisiana 
Veterans Health Care System (SLVHCS), formerly known as the New 
Orleans VA Medical Center, served over 29,000 veterans in 
fiscal year 2006. This is 72 percent of the previous year's 
workload. Fiscal year 2007 workload to date is growing at an 
annualized rate of ten percent over last year and is expected 
to increase as housing is restocked in the area.
     To help our staff and support the community, VA worked 
with its academic affiliates, The Tulane University School of 
Medicine and the LSU School of Medicine, to place VA faculty, 
medical staff/residents, and student trainees at VAMCs 
throughout our VISN 16 Network.
     With the VA's inpatient units shut down, 102 medical 
center employees that included nurses, health technicians, 
medical support assistants, operating room technicians, 
certified registered nurse anesthetists, and radiology 
technologists were temporarily deployed in July 2006 under a 
Federal Emergency Management Agency (FEMA) task order to 
provide critically needed staff support to local health care 
institutions.
     In terms of future VA services in New Orleans, we continue 
to explore our long-term options for re-establishing surgical 
capabilities and inpatient services in New Orleans. In the 
interim, these services are coordinated through sister VA 
medical centers in Louisiana, Mississippi, and Texas, as well 
as through selective referrals to community hospitals in the 
New Orleans area at VA expense. We are actively pursuing 
options for expanding outpatient mental health services to meet 
current and future veteran's needs.
     Projects for the re-establishment of radiology and 
outpatient pharmacy services on the grounds of the old medical 
center campus are underway and expected to be completed later 
this calendar year.
     In preparation for the construction of a replacement 
medical center, VA has initiated its space planning process. 
Interviews of architecture and engineering firms to design the 
new facility are complete. A selection is expected this spring. 
The replacement medical center is expected to provide acute 
medical, surgical, mental health and tertiary care services, as 
well as long-term care.

             Memorandum of Understanding between VA and LSU

     As required in Public Law 109-148, VA compiled and 
presented its long-term plans for the construction of a 
replacement hospital in New Orleans in its February 2006, 
``Report to Congress on Plans for Re-establishing a VA Medical 
Center in New Orleans.' In that report, VA identified its 
principal objectives regarding the New Orleans area as being 
not only to restore services to veterans in the most cost 
effective manner, but also to assist in the restoration of 
health care and medical education in New Orleans. Recognizing 
the successful history for sharing and collaboration between VA 
and the LSU Health Care Services Division, as well as the 
potential for future efficiencies, the report concluded that 
construction of facilities on a single campus with support 
services shared with LSU was the preferred option.
     As a result of the ``Report to Congress,'' VA and LSU 
leadership signed a Memorandum of Understanding (MOU) agreeing 
to jointly study state-of-the-art health care delivery options 
in New Orleans. This MOU established the foundation for 
developing a collaborative approach to operating a replacement 
facility. From that a group of experts from both organizations, 
called the Collaborative Opportunities Study Group (COSG) was 
charged with determining if any mutually beneficial sharing 
could occur between the two organizations. In the group's June 
2006 report delivered to the former VA's Under Secretary for 
Health, it concluded that both organizations could leverage 
their strengths, provide significant operating efficiencies, 
and allow us to better serve our beneficiaries. Congress 
subsequently authorized VA to pursue the project to replace the 
New Orleans facility as a collaborative effort consistent with 
the COSG report.
     In September 2006, the Collaborative Opportunities 
Planning Group (COPG) was established to develop an operational 
plan for sharing between the two organizations based on the 
foundation work of the COSG. The COPG is co-led by VA and LSU 
representatives. Representatives of the Tulane University 
School of Medicine and the State of Louisiana Division of 
Administration are also part of this group and its planning 
discussions.
     A critical component of the charge of the COPG is to 
determine if the proposed sharing options identified in the 
original COSG report are viable and if they are, to begin the 
work of developing timelines and formulating the framework for 
space planning and design for a joint replacement facility. To 
date the COPG has made significant progress by reviewing 
literally dozens of clinical and administrative functions to 
determine if the function would best be provided via a sharing 
arrangement between VA and LSU or independently owned and 
operated by both entities. The COPG's final report is to be 
presented by September 30, 2007.

                   VA's Future Relationship with LSU

     The VA remains excited about its MOU with LSU in the 
context of health care redesign in Louisiana. We support all of 
the principles behind it. At the same time, health care 
redesign seems to face some obstacles and delays in Louisiana. 
Because of this, we are committed to exercising due diligence 
to our veteran beneficiaries and to the tax payers, and are 
concurrently exploring other options for initiating 
reconstruction of the Southeast Louisiana Veterans Health Care 
System's medical center within Southeast Louisiana. In 
furtherance of this, we plan to begin a site search to identify 
alternative locations in the near future while we continue to 
work with LSU on our collaborative plans.
     Mr. Chairman, we consider the committee and the Louisiana 
delegation to be partners with VA in seeing that southeast 
Louisiana veterans continue to receive the high quality health 
care that they have come to expect and deserve.
     Congress appropriated to VA $1.2 billion in supplemental 
funding for recovery and rebuilding efforts. This includes $625 
million to replace the New Orleans Medical Center. These 
efforts have enabled VA to provide timely access to care in New 
Orleans' surrounding communities through strategies such as 
leasing medical office space and establishing three new CBOCs.
     The commitment to uncompromised excellence in health care 
and service to the community has resulted in bodies such as the 
Collaborative Opportunities Planning Group rethinking 
previously established relationships and identifying new 
strategies to improve operational efficiency and quality of 
care in areas such as academic medicine, use of electronic 
medical records, subspecialty care, and joint emergency 
preparedness planning. VA's construction of its new medical 
center will be an important part of improving healthcare 
services for veterans in New Orleans.
     Thank you for the opportunity to be here today. I will be 
pleased to answer any questions you may have.
[GRAPHIC] [TIFF OMITTED] 36572.012

[GRAPHIC] [TIFF OMITTED] 36572.013

[GRAPHIC] [TIFF OMITTED] 36572.014

                Testimony of Alan M. Miller, Ph.D, M.D.

     Mr. Chairman and members of the committee: Thank you for 
the opportunity to speak to you all about the state of health 
care in the New Orleans region eighteen months after Katrina 
and about Tulane University's role in the recovery. Since 
Hurricane Katrina devastated our city--and our healthcare 
system--in August 2005, we've seen enormous progress in some 
areas despite almost overwhelming challenges. In other, 
critical areas, we have seen shockingly little progress 
resulting in a situation that now appears to pit the Federal 
Government against the State of Louisiana. Such an impasse will 
only make reform more difficult and the ensuing delays in the 
decision making process could threaten the very existence of 
our medical training programs. As you can see, we still have a 
long way to go before health care for the citizens of our 
region approaches anything near what we used to deem 
``normal.''
     First, I want to thank members of the committee for your 
support for the region over the last eighteen months. Many of 
you have been to New Orleans and have seen firsthand both the 
devastation and the progress. For those of you who have who 
have not yet been to the region, I urge you to come at your 
earliest opportunity. Through efforts such as this hearing and 
the spotlight it continues to shine on the challenges of our 
region, it is my hope we can move toward a system that provides 
equal access to quality care for all our citizens while also 
training a qualified and committed physician workforce that 
will assure the future of care in our State and region. At the 
end of the day, this is all about access to care for all our 
citizens, now and in the future.
    My institution is somewhat different from those of my 
colleagues on this panel. I represent an institution of higher 
education whose mission includes not only providing healthcare 
to the citizens of the region but also training future 
physicians. Today, I'd like to focus my comments on four key 
areas:

     Tulane University's efforts in the immediate 
aftermath of the storm;
     Our continuing efforts to train the future 
physicians and provide clinical care;
     The immediate needs for retention of a qualified 
workforce; and,
     Long-term needs associated with maintaining and 
growing an adequate physician workforce to meet patient needs.

                   Tulane University: After the Storm

    The past year and a half has been extremely challenging for 
everyone in New Orleans, but especially for those of us trying 
to assess healthcare needs, rebuild a broken healthcare system, 
continue to provide care for all New Orleanians who need it, 
and continue to train young physicians. The Tulane University 
Health Sciences Center suffered losses of greater than $200 
million in property damage, lost research assets and lost 
revenue. Through the storm and since, despite seemingly 
overwhelming challenges Tulane--the largest employer in Orleans 
Parish--has continued to do exactly what it has done since its 
creation in 1834: providing health care, educating physicians, 
and advancing medical knowledge through research and discovery 
in New Orleans and Louisiana. Over the next few minutes I would 
like to update you on Tulane's current activities, our place in 
the recovery of health care in the New Orleans area, and our 
concerns for the future.
    When Hurricane Katrina struck in August 2005 it left our 
620 medical students, 520 residents and most of our faculty and 
staff scattered across the country. Our IT system was 
inoperable, all communications systems had failed and our 
student and personnel records were trapped in flooded buildings 
in New Orleans. At that point Tulane University consisted of 30 
people working out of a Houston hotel suite.
    What was accomplished in the weeks after Katrina is nothing 
short of remarkable. Faced with a self-imposed target date of 
September 26 to resume classes and training for our medical 
students and residents, in three short weeks of long workdays 
we set up a medical school at the Baylor College of Medicine 
with our displaced students using Tulane's curriculum and 
taught by Tulane faculty. We received critical life support 
from, and will always be indebted to, four Texas institutions 
that formed the South Texas Alliance of Academic Health 
Centers: Baylor College of Medicine, The University of Texas 
Medical School at Houston, Texas A&M University System Health 
Science Center College of Medicine and the University of Texas 
Medical Branch at Galveston.
    At the same time, back in New Orleans, a small but 
determined group of physicians and residents remained steadfast 
in their mission to provide care to those who remained in our 
devastated city--both citizens and first-responders. Tulane 
University provided care at six sites, 7 days a week in Orleans 
Parish, seeing approximately 500 patients per day and becoming 
the largest ambulatory care provider in the parish. In October 
2005, Tulane faculty and residents began to concentrate 
activities at Covenant House on Rampart Street. Since that 
time, more than 8,000 adult patients have been seen and 
currently 45 patients a day are being cared for. A separate 
pediatric drop-in clinic at the same site has seen close to 
1,500 babies, children and young adults. At the drop-in center 
annex, mental health services have been provided to more than 
141 clients for 536 visits since July.
    In addition, Tulane Pediatrics, in partnership with the 
Children's Health Fund, has operated a Mobile Medical Unit 
treating patients at a variety of locations in New Orleans and 
in St. Bernard Parish. Since January, 850 adults and 1,000 
children have received primary care services from Tulane 
Pediatric and Med/Peds faculty and residents in the mobile 
unit.

                     Training Our Future Physicians

    Well-educated and trained physicians are essential elements 
in assuring access to quality healthcare services not only in 
New Orleans but throughout our country. Tulane's healthcare 
mission and medical education mission are intimately 
intertwined. Teaching faculty, supervising medical residents, 
provide a large portion of the care for most there. Today, a 
total of 327 Tulane residents and fellows are being trained in 
40 programs, approximately 63 percent of the number being 
trained pre Katrina. Each year that Tulane and the other major 
medical school in New Orleans, LSU, train a reduced numbers of 
residents, will have long-term implications for the supply of 
physicians in Louisiana.
    In the 2005-06 academic year Tulane and LSU required 
special waivers from the Centers for Medicare & Medicaid 
services (CMS) in order to allow their residents to continue 
their training in multiple hospitals throughout Louisiana as 
well as outside of the State. In order for this to occur, 
protracted negotiations between the medical schools, the 
hospitals and CMS occurred. In the event of another major 
disaster where major teaching hospitals may be forced to close, 
a better solution is needed to deal with the disruption in 
medical training. Despite the waivers granted by CMS, Tulane 
still absorbed unreimbursed costs of approximately $3 million 
related to graduate medical education (GME) for the 2005-06 
academic year. Even with reduced numbers of residents and 
redistribution of residents to new locations, we anticipate an 
additional loss of $2 million for the current year. It is not a 
financial burden we are able to carry much longer.
    In addition to GME costs, with the city's public hospitals 
down, the burden of care for the uninsured has been assumed by 
the city's private hospitals and private physicians. The 
State's Medicaid Disproportionate Share (DSH) payment system 
has historically been directed to the State's safety net 
hospital system. With the closure of the largest components of 
that system there was a major gap in funding the care of those 
patients. The Federal Government has taken steps to assist 
hospitals in the care of this patient population. In March 
2006, CMS allocated $384 million for the uncompensated care 
pool to help hospitals that were caring for the uninsured. 
While appreciated, these funds have not been sufficient to 
compensate hospitals, and none of these funds were allocated 
directly to physicians and other healthcare providers. Tulane 
faculty physicians will have provided $6.8 million in 
uncompensated patient care between September 2005 and June 
2007. Tulane University has been able to retain the majority of 
its physician faculty by guaranteeing salary through the end of 
June 2007--in effect, a private nonprofit educational 
institution has been using its dramatically impaired and 
limited financial resources to help underwrite healthcare in 
the State and help preserve the healthcare workforce. Having 
suffered losses of approximately $500 million in Katrina--$300 
million in addition to the losses at the Health Sciences 
Center--Tulane cannot continue to do this and survive.
    If we are to preserve the physician workforce both at our 
teaching institutions and in the general medical community, 
there needs to be immediate funding for providing care to our 
citizens. If this does not occur, New Orleans physicians will 
continue to abandon their practices and leave the community, 
and we will not be able to recruit replacements. Those that 
suffer will be the patients who cannot find adequate care. It 
has been calculated that approximately $30 million per year is 
needed to provide basic reimbursement to physicians for 
uncompensated care. A mechanism to providing funding directly 
to providers must be considered in order to reimburse 
physicians for care provided in the past 18 months and for 
ongoing support of care.
    Another important component of both the patient care and 
graduate medical education missions of our medical schools has 
been the New Orleans Veteran's Affairs Hospital (VA). Pre-
Katrina, Tulane faculty physicians provided approximately 70 
percent of the patient care at the VA and 100 resident 
physicians were on rotation at that facility. Since Katrina the 
hospital has remained closed, with inpatients being sent to 
other VA facilities, predominantly out of State. Outpatient 
clinics have reopened and visits are up to 75 percent of the 
pre-storm numbers. Currently, the VA is supporting 26 Tulane 
residents who are involved in the outpatient care. In order to 
provide optimal care to Louisiana's veteran population, keep 
them close to home and to return another important piece to the 
medical education pie it is essential to re-establish a VA 
hospital in downtown New Orleans. It is critical for Veterans 
that this facility be easily accessible from main 
transportation arteries and to the Tulane and LSU training 
programs. The VA must also be proximal to the medical schools 
so that the highly skilled faculty of those schools are 
available to provide state-of-the-art care, and foster the 
training of the physician workforce that is so important to the 
long-term future of health care in the region. It is also 
important for the economic development of downtown New Orleans 
that the VA be part of the growth of the Biomedical District. 
Tulane has been an integral partner with the New Orleans VA and 
desires to remain such in the facility's re-establishment.

             Immediate needs: a Stable Physician Workforce

    According to the Louisiana Department of Health and 
Hospitals there were 617 primary-care physicians in New Orleans 
prior to Katrina. By April 2006, that number had dropped to 
140, a decrease of 77 percent. In July 2006, Blue Cross Blue 
Shield of Louisiana reported a 51 percent reduction in the 
total number of physicians filing claims in Region I. nearly 
all of this reduction--96 percent--was from Orleans Parish. The 
loss of additional clinical faculty at Tulane as well as LSU 
will not only decreases the available current physician 
workforce, but reduces the clinical teaching faculty needed to 
teach the next generation of physicians for the region and the 
State.
    In addition to laying the groundwork for the future, there 
must be an immediate focus on the future of our Graduate 
Medical Education programs. According to a report prepared by 
the healthcare redesign collaborative, ``The medical workforce 
situation has quantifiably deteriorated, but it could get worse 
before it gets better unless the State's internal engine of 
physician supply is rebuilt and modified for the new demands of 
a redesigned healthcare system. That engine is graduate medical 
education (GME), a rich source of newly minted physicians in 
any State but particularly in Louisiana. Among the States, 
Louisiana ranked No. 2 in the number of its doctors having 
trained within the State, and No. 17 in retention of 
residents.''
    In a sense, this is a long-term issue, but it requires 
immediate attention. I would request that Congress consider a 
time-limited grant program that would provide incentives to 
encourage clinical faculty candidates to come to one of the 
teaching institutions in the Gulf Region. Recently, $15 million 
was made available for recruitment and retention of primary-
care physicians. The Louisiana Department of Health and 
Hospitals is currently working on the details of how those 
funds will be distributed. But those funds do not apply to 
highly trained specialists needed to staff academic medical 
centers and training programs and provide care and educate the 
future physician work force. We would request that additional 
funding be made available for recruitment of qualified clinical 
faculty to the region's institutions, including loan 
forgiveness, relocation and bridge funding to allow adequate 
time for physicians to establish a practice.

Long-term needs: Rethinking Graduate Medical Education & Establishing a 
                        Stable Healthcare System

    As stated earlier, the gridlock in which we now find 
ourselves is destructive in the short and long term for 
systems, hospitals, medical schools and most importantly the 
public we serve. The time has come for all parties to set aside 
their differences, share vital information and data and have an 
objective party lead constructive negotiations. As a partner in 
MCLNO and as a member of the administrative board with 
legislatively madated fiduciary responsibility, Tulane would 
welcome direct involvement in the current business plan 
development process for the proposed new facility. To this 
point, we have not yet been asked to participate nor have we 
been privy to any information beyond what was presented in 
November, 2006.
    The experience of Katrina revealed a major flaw in the way 
we fund Graduate Medical Education in this country, at least 
under the circumstances of a major disaster that results in the 
closure of teaching hospitals. The slots in which residents 
train are allocated to hospitals by CMS, and the reimbursement 
for the educational efforts of those residents is paid by CMS 
to those hospitals. In many cases, like those of Tulane and 
LSU, the responsibility for training those residents is held by 
major medical schools. To provide the optimal educational 
experience these medical schools will rotate residents through 
a variety of hospitals. In order to provide the residents with 
a stable pay source the medical schools function as a common 
paymaster, paying the residents directly and receiving 
reimbursement from the hospitals.
    When Katrina hit and MCLNO and other training hospitals 
closed, the medical schools were left with the responsibility 
of guaranteeing the resident training and payment of salaries, 
but it left us unable to seek reimbursement from closed 
hospitals. Other hospitals came to the fore and provided 
training opportunities, but in most cases were unable to 
provide payment to the medical schools, which continued to pay 
the salaries of all the residents. Temporary waivers were 
finally received from CMS that allowed the residents to 
continue their training, but these did not go far enough to 
protect the medical schools, and created a complex system of 
documentation on the already strained systems of the medical 
schools and the closed hospitals. To simply comply with the 
burdensome paperwork required, Tulane was forced to hire 
outside counsel to navigate the process and complete the 
documentation. Some look at residents as movable parts that can 
be rearranged to maximize CMS reimbursement. This is far from 
the truth, issues of program interrelationship, critical mass 
and quality of educational experience must be considered or 
accreditation will be at risk.
    This system must be reviewed and revised before another 
disaster hits one of our nation's training institutions, be it 
flood, fire, earthquake or an act of terrorism. In Louisiana, 
medical schools must have greater flexibility and control over 
slots not being used by the parent hospitals due to full or 
partial closure. Current arrangements for the redistribution of 
closed or partially closed hospitals--unused slots require the 
hospital to enter into affiliation agreements annually with the 
``receiving'' hospital, and then for the medical schools to 
reach financial agreements with those receiving hospitals to 
repay the resident costs of the school. This arrangement puts 
the resident, the medical school and the receiving hospital at 
risk if the ``home'' hospital changes those arrangements or 
fails to execute affiliation agreements. For the protection of 
all, but most critically that of the trainee, medical schools 
must have greater control over both training and funding when a 
disaster results in total or near total closure of a teaching 
hospital. We now face a system that is uncertain and the 
instability created by the absence of our traditional training 
sites requires that we reconsider how these slots are 
distributed and by whom.
    Tulane University and all the groups represented here today 
have many challenges still to overcome. But with the support of 
the American people and through our public leaders such as 
those of you on this committee, we will recover. And through 
our recovery we will provide our citizens with the best 
possible health care and a highly trained and committed 
workforce that will be a cornerstone to the long-term 
revitalization of the city of New Orleans.
    Specifically, we ask your consideration in taking the 
following actions:
     We request this committee consider convening a hearing to 
specifically deal with the issues surrounding Graduate Medical 
Education and possible solutions to preserve the quality of our 
training programs in the State. In addition, Tulane would like 
to host a panel that would include representatives from the 
committee, area medical schools and hospitals, as well as CMS 
and the AAMC to re-evaluate how resident training, and payment 
is dealt with in a disaster or other circumstances when the 
home hospital is either completely or partially closed, 
disrupting the training of those residents.
     Provide funding for reimbursement of physicians for 
providing care to the uninsured. It is estimated that $30 
million per year is needed.
     Create funding to assist medical teaching institutions in 
the Gulf Coast region recruit qualified specialty teaching 
faculty to train the future physician workforce.
     Support the re-establishment of the New Orleans VA 
Hospital in downtown New Orleans, in proximity to the medical 
schools to allow for optimal patient care, medical training, 
and economic development of the New Orleans Biomedical 
District.
    While it is our job to create a healthcare system that will 
provide the citizens of New Orleans and the State of Louisiana 
with highest quality care, I would ask that you strongly 
encourage all of the parties to consider an objective party to 
lead us to consensus and that we mutually agree upon a deadline 
for making the broader decisions regarding moving forward. Once 
again, I thank you for allowing me to speak to members of this 
committee today. With your help, we will continue to bring 
health care in our city and region not just back to where it 
was, but into an even better future.
                              ----------                              


                        Testimony of Gary Muller

    Mr. Chairman and members of the committee:
    Thank you for inviting me to testify on behalf of West 
Jefferson Medical Center. I am grateful that the committee has 
expressed a continued interest in the worsening state of the 
healthcare system in the New Orleans region. I also would like 
to take this opportunity to thank Co-Chair, Congressman 
Melancon, for your dedication and hard work on behalf of the 
people of Louisiana.
    West Jefferson Medical Center, located 10 miles from 
downtown New Orleans, is a 451 bed community hospital and 
health system with programs and services across a complete 
continuum of care. West Jefferson was one of three hospitals 
that did not close after Hurricane Katrina and is now one of 
the eight safety net facilities serving all patients. Pre-
Katrina we were projecting an $8 million profit for 2005. When 
I testified before this committee last year we had incurred 
operating losses of $30 million I come to you this time with a 
heavier burden of $48 million in operating losses. To put it in 
health care terms, prior to the storm we were a healthy 
patient. Now we are critically ill.
    Financial survival has become the top priority for WJMC and 
we have focused efforts to explore every regulatory or 
legislative mechanism that might assist us. The Post Katrina 
story is complex as we embrace challenges continually. 
Providers of all types are experiencing significant financial 
losses as we struggle to retain health care workers and deliver 
care.
    Recruiting nurses and physicians has become a near 
impossibility and the supply and demand of the entire 
healthcare workforce has reached a crisis. Prior to Hurricane 
Katrina we spent a total of $2 million annually on agency 
nurses. Currently, we are forced to spend $1.1 million each 
month, which was $13 million in 2006. It is extremely difficult 
to simply have a physician visit our city for the possibility 
of working here.
    The region's labor and operating expenses have inflated 
dramatically without corresponding payment increases. Hospitals 
have also experienced a dramatic rise in uncompensated care. I 
would like the opportunity to discuss both of these issues with 
the committee.
    Certain financial adjustments are necessary to maintain 
hospital operations in our area.
    The 2007 wage index update that was effective as of October 
2006 was based on wage data from Medicare cost reports that 
began during Federal fiscal year 2003. Thus, there is almost a 
three-year lag between the data being used to develop the wage 
index and the actual implementation of the wage index that 
incorporates the data. Under the CMS methodology for 
incorporating changes to the wage index, our wage index will 
not begin to reflect the changes that we have experienced in 
labor costs until October 2008. We just can't wait that long. I 
am requesting that you consider a special wage-index adjustment 
for hospitals in the affected area to help offset some of the 
losses attributable to the added cost of operating in the post 
Katrina environment.
    WJMC is a public service district hospital and we are 
supportive of the CMS Medicaid Proposed Rule on 
Intergovernmental Transfers (IGTs) and Certified Public 
Expenditures (CPEs) issued on January 12, 2007. As we 
understand the proposed rule, CMS will require States to direct 
Federal funds back to governmentally operated healthcare 
providers. This certainly seems aligned with how the Federal 
Government intended these funds to be used in the first place. 
For WJMC, we believe this will result in equitable distribution 
of funds to our hospital.
    West Jefferson Medical Center has worked closely with our 
Congressional Delegation to identify existing Federal 
legislation that could provide us financial relief. We worked 
diligently to offer language to the Stafford Act that would 
qualify hospitals as eligible recipients of the Community 
Disaster Loan Program. With the hard work of our entire 
delegation we were successful in securing that funding. That 
funding from CDL was vital for our hospital in the few months 
following the storm when we incurred substantial financial 
losses. Both the House and Senate appear to be on the verge of 
Floor action to permit the Forgiveness of CDL loans, which has 
been the practice pre-Katrina. I strongly ask for your support 
to forgive these loans our hospital is currently obligated to 
pay back.
    Please be reassured that we have taken all steps possible 
to become more cost-effective and efficient in our day-to day 
operations. We have implemented an Operations Improvement 
Action Plan (OIAP) whereby approximately $8 million of savings 
or revenue enhancements have been identified. Most of the cost 
savings center on reducing agency nurse costs which included 
only two agency nurses pre-Katrina and grew to 92 agency nurses 
presently. We have also improved efficiencies (per length of 
stay and discharges) so that the emergency room can flow better 
with the increase in patient volumes. WJMC also supports two 
federally Qualified Health Centers (FQHC) in our service area 
to support the medical home model of delivering primary care in 
clinics rather than in our emergency room.
    Let me take this opportunity to provide you with a snapshot 
of our ED situation. One day last week we were overwhelmed with 
32 admissions waiting in our emergency department. Simply put, 
every available bed in our hospital was occupied and we had 32 
admitted patients waiting on stretchers in the hallway of the 
emergency department. Our ambulances and paramedics routinely 
wait with these patients which takes them off of the streets to 
serve other patients in need. Unfortunately, this is quickly 
becoming the norm as there are simply not enough staffed beds 
in the New Orleans region to care for the volume of patients. 
We put a phone call into the Department of Health and Hospitals 
expressing this concern. The next day the secretary of the 
department, Dr. Fred Cerise, was at our hospital offering 
assistance and potential solutions. He has also been helpful 
with his support of the Uncompensated Care Cost pool that was 
developed at the State level to offset some of our growing 
indigent care costs. Nonetheless, the shortage of beds, 
particularly psychiatric and acute care beds, is at a critical 
point.
    I remain optimistic that, as discouraging as our problems 
may seem, our issues will eventually be resolved by both 
private and public hospitals, community clinic providers, 
payors and government officials presenting a united solution in 
a new model that will improve care for all citizens of 
Louisiana. I have great faith that our Federal leaders will not 
abandon us. Together, we can make a difference. Thank you for 
your time and interest.
                              ----------                              


                 Testimony of Evangeline Franklin, M.D.

    I am Dr. Evangeline Franklin, Director of Clinical Services 
and Employee Health for the New Orleans Health Department. To 
Chairman and Congressman Bart Stupak, Ranking Member and 
Congressman Ed Whitfield and distinguished members and guests 
of the Subcommittee on Oversight and Investigations of the 
United States House of Representatives Committee on Energy and 
Commerce: Thank you for the opportunity to speak with you today 
about two health clinics that the New Orleans Department of 
Health recently held in the City of New Orleans. Mayor C. Ray 
Nagin and members of his administration have sought creative 
means of addressing our citizens critical healthcare needs as 
we work to recover from the tragedy of Hurricane Katrina and 
the subsequent flooding.
    Today I would like to describe to you a city, indeed a 
region, which continues in health crisis despite the valiant 
efforts of our organizations. This crisis results from a 
combination of factors. The people of New Orleans face many 
challenges, such as the difficulty of returning to rebuild 
homes and businesses, the tendency to ignore chronic illness 
that these stressful distractions have caused or exacerbated, 
and the complexity of the processes to claim insurance proceeds 
or funds from the Louisiana Road Home Program, the state 
initiative to compensate homeowners for their losses in 
Hurricanes Katrina and Rita. All of these are complicated by a 
healthcare system that itself is damaged and under stress, 
further limiting the access to healthcare that even before 
Katrina was not ideal.
    In the aftermath of Hurricane Katrina, the population of 
the uninsured in New Orleans has expanded from traditionally 
uninsured groups to include many who have experienced sudden 
loss of benefits. This includes individuals who were laid off 
from jobs due to the destruction of their place of employment 
or the loss of market or tax base. Many of these people 
returned New Orleans following the floods because of personal 
or business financial commitments or because they simply wanted 
to come home. The composition of our uninsured also includes 
persons who cannot speak English and those who cannot secure 
health insurance because of their migrant worker status or lack 
of the proper immigration documentation. Many of our uninsured 
are part of the working poor, who toil daily in their jobs but 
are not offered or cannot afford health insurance.
    Hurricane Katrina and the subsequent flooding were 
responsible for the loss of much of the health care 
infrastructure, including hospitals, doctors, medical records 
and pharmacies. It also meant that many people lost their 
medications, dentures and eyeglasses. This, when coupled with 
the physical and psychological hazards of the devastation, has 
put patients who were previously stabilized at great risk.
    In the past year, was assigned to coordinate two large 
scale healthcare events designed to provide medical, dental and 
optical services, and to assist in organizing follow-up. By 
helping patients regain some control of health problems, the 
healthcare community could better manage medical resources such 
as emergency room use and admission to hospitals.
    Both of these 7-day events were highly successful. 
Thousands of patients were able to leave each outdoor event 
with a 30-day supply of needed prescriptions, as well as 
eyeglasses, dentures, immunizations, PAP tests and information 
about where to obtain follow-up medical care. Unfortunately, 
this occurred only after they endured long lines, sometimes 
waiting all night in cold and rainy weather to be treated on a 
first-come, first served basis by volunteers from throughout 
the country and local professionals. Typically, capacity for 
each day was reached within an hour of opening the 
registration. As a result, many who needed care were unable to 
receive it and had to be turned away to be seen on another day 
or at other locations.
    The first of these events was held in February 2006 at the 
Audubon Zoo, a location considered by the planning committee to 
be an oasis in the middle of destruction. Audubon Zoo made a 
significant contribution by allowing us access to their grounds 
to set up the clinic locations, by housing volunteers and by 
having their employees contribute their time for the seven-day 
event.
    This event was an immediate success, in large part because 
of its location and accessibility to the many patients who did 
not have cars. Many came by bus or walked to the event. The zoo 
is located in an area of the City which was among the first to 
repopulate because of the lower level of damage.
    Because of the magnitude of the catastrophe, very few 
safety net clinics and pharmacies were available to residents 
so soon after the storm. Many weary patients reported that they 
were unable to locate their doctors and did not know where to 
go to have their prescriptions filled. Others offered poignant 
stories about their inability to obtain needed care, 
medications and immunizations.Of 5,212 persons who received 
care at the Audubon event, 27 were transferred to local 
hospitals for emergency care. One of those was a revived 
cardiac arrest. This woman was having her cholesterol level 
tested during her visit to the Reach 2010 at the Heart of New 
Orleans facility when she had what later was determined to be a 
heart attack. While she was unable to obtain primary care, she 
could be cared for after having a life threatening event. She 
is currently doing well.
    Others were not so fortunate. One gentleman was given a 
diagnosis of metastatic cancer. He had been told at one of the 
local private hospitals that he had to pay for his diagnostic 
tests before he could receive treatment. He did not have the 
required money and was refused treatment. Because Charity 
Hospital had not yet reopened, there was no public facility in 
the city that could provide cancer care. Further complicating 
his situation, this man could not speak English and had no 
transportation. Despite these difficulties, we arranged for 
this gentleman to go to another facility to receive care.
    Many of the volunteers during the week remarked that they 
had never seen so many people who were so very sick. In all, 
1,313 volunteers treated 5,212 patients during this seven-day 
event. In addition, prescriptions were filled at no charge and 
social services, including mental health, were made available 
for interested patients. Volunteers traveled to New Orleans at 
their own expense.
    The second event was held a year later in conjunction with 
Operation Blessing, a faith-based organization supported by the 
Christian Broadcasting Network. Operation Blessing operates a 
clinic with medical, dental and pharmaceutical services in 
eastern New Orleans. The weeklong Health Recovery Week II was 
took place in tents. The New Orleans East location of Operation 
Blessing was accessible by car and bus and had become an anchor 
by providing free care even before Health Recovery Week II.
    This was an ideal location for the second event because the 
neighboring communities have shown signs of return and 
rebuilding. FEMA trailers placed in front of houses and the 
sale and purchase of property for renovation herald the return 
of significant resources of the professional and business 
community. In addition, citizens from eastern New Orleans were 
part of the regular patient population at Operation Blessing. 
Because the medical director is fluent in Spanish and 
Vietnamese, non-English speaking residents are drawn to this 
facility. In addition, this location does not interfere with 
the function of clinics and services in the part of New Orleans 
where the population has stabilized.
    For this event, Operation Blessing invested nearly $500,000 
for the cost of supplies, lab work, pharmacy services, 
infrastructure improvement, marketing, and food and lodging for 
volunteers at their Slidell, Louisiana Command Center.
    Even though more medical facilities and safety net clinics 
had opened in the intervening year, the story was exactly the 
same as before. Fewer patients were treated but only because 
there were fewer volunteers who could see them. Again, patients 
waited in the cold and the rain and were willing to be seen in 
tents for their medical, dental and optical care. And again, 
citizens frequently stated that they could not find their 
doctors and did not know where to get their medications.
    The vast majority of patients seen during the health 
intervention week had never been to Operation Blessing. Many 
had been referred to obtain services that they could not 
receive in their regular clinics. Of the 3,800 patients seen at 
this seven-day event, 21 were transferred to local hospitals. 
As in the first Health Recovery Week, hundreds were turned away 
after the capacity of the event filled within an hour of its 
opening. Among those transferred to the hospital, one patient 
was experiencing cardiac arrest and, like deja vu, a man with a 
terminal cancer told the story of being unable to obtain care. 
Many diabetics did not have their medications and many people 
were diagnosed for the first time with hypertension and 
diabetes. Women who needed preventive care, such as Pap tests, 
also were identified. The medical, dental and optical services 
provided were valued at $1.1 million.
    Again there were many non-English speaking patients who 
told of their fear of receiving health care because they might 
be identified for deportation.
    These events highlight the urgency of our healthcare crisis 
in New Orleans and demonstrate that we need assistance to 
expand our capacity. When the Governors Emergency Order 
permitting health professional volunteers from out of state to 
practice in our city is lifted in the next few months, we will 
no longer be able to accommodate the medical, dental and 
optical volunteers who want to help and whose help we will 
still need.
    Thank you for your consideration of what I have shared with 
you. These events and their large numbers indicate that the 
current solutions are insufficient to meet the needs of 
returning citizens and the new workforce. Our situation is 
urgent and we look forward to working with you.
                              ----------                              


                 Testimony of Patrick J. Quinlan, M.D.

    Mr. Chairman, members of the subcommittee, thank you for 
this opportunity to appear before the Subcommittee to update 
you on the impact of Hurricane Katrina and its aftermath on the 
Ochsner Health System. First, I would like to thank the many 
Members of Congress, including members of this subcommittee, 
who have traveled to the Gulf Coast over the past 19 months to 
see for themselves the overwhelming devastation wrought on our 
City and our State as a result of the disasters associated with 
Hurricanes Katrina and Rita. Your personal presence and 
concerns are certainly appreciated by our citizens.
    Ochsner Health System is an independent non-profit 
organization made up of seven hospitals and thirty-two clinics 
employing over 8,400 people. Ochsner is the largest private 
employer in Louisiana. Ochsner Medical Center was one of only 
three hospitals to keep its doors open despite the ongoing 
interruption of its business, during and after Katrina to care 
for all patients. We made this decision despite the fact that 
physical damage to our facilities caused us to suffer a 
significant interruption of our business both during and after 
the storm. Since Hurricane Katrina, Ochsner's professionals 
have quietly gone about their work of providing high quality 
healthcare to everyone--regardless of their ability to pay. We 
experienced significant physical damage to our facilities as a 
result of Hurricane Katrina. Ochsner has exercised due 
diligence to rebuild its property and mitigate the damage done 
to its business because of Hurricane Katrina. Nevertheless, we 
experienced significant additional costs and lost revenues as a 
result of this damage and the consequent interruption of 
business. The hospital also had to provide food and shelter for 
staff, as well as pay them for long hours at increased 
compensation. Ochsner's extensive disaster preparations played 
a major role in the ability to mitigate its damages, and to 
provide services for patients in the entire region under 
emergency conditions. That preparedness ultimately allowed 
citizens that evacuated to return home with the assurance that 
their healthcare needs could be met.
    Hurricane Katrina caused property damage losses of 
approximately $23 million to Ochsner facilities, but with the 
application of deductibles; only about $11 million is covered 
by insurance. FEMA has paid a minimal amount to date. In 
addition, business interruption losses caused by Hurricane 
Katrina and its property damage have been over $57 million. Our 
business interruption deductible, however, is approximately $11 
million. We continue to have issues with our primary insurer 
with resolving our claim. Total payments from insurance to date 
have been only about $23 million.
    Currently Ochsner employs over 600 physicians and more than 
120 licensed mid-level health providers who receive no payment 
for the care of the uninsured. This acts as a significant drain 
for our Health System because of lack of funding for both 
hospital and Ochsner physicians.
    We are one of the largest private non-university based 
academic institutions in the country with over 350 residents 
and fellows, proven research including bench research, 
translational research and clinical trails. In addition, we 
provide training for approximately 400 allied health students 
and over 700 medical students from LSU and Tulane with little 
funding to support this mission. The importance of Ochsner's 
graduate medical education program has increased greatly since 
Katrina because we are the only fully functional academic 
center in the greater New Orleans area. We know that a 
significant number of physicians locate to practice where they 
train, so we are training the next generation of medical 
doctors for the area.
    The sad reality is that we are bleeding red ink as a result 
of holding this fragile healthcare system and medical education 
system together and are caught in the middle of excessive 
bureaucracy in both the public and private sectors. Simply put, 
well-intended money to help us as providers is not reaching us 
on a timely basis. And when that money does reach us it is 
insufficient to meet our needs.
    Despite our efforts at retention we lost over 2000 
employees and more than 100 physicians during and after the 
storm who decided to leave the area. As a result we are 
currently experiencing a shortage of highly-trained physicians, 
nurses and support staff. Recruitment and retention continue to 
be a major issue. We are spending over $20M annually in 
employment agency fees to staff critical areas throughout our 
hospitals. Wages have increased 10.65 percent as a result. 
While Health System wage costs increased almost 11 percent, the 
Medicare Wage Index decreased almost 4 percent. To attract the 
talent we need to continue to operate, the pressure to increase 
wages continues. A permanent fix to the Medicare Wage Index 
would be most helpful in addressing this issue as well as 
financial support to help in recruiting and retaining key 
personnel especially physicians and nurses. In October 2006 
Ochsner Clinic was forced to increase physician salaries by $6M 
or 5 percent above pre-Katrina levels to retain and recruit 
physicians to the New Orleans market. In addition, we are often 
forced to pay significant recruitment bonuses to attract the 
necessary staff.
    Ochsner Health System also faces $4.8 million in 
outstanding unemployment claims, which arose in conjunction 
with Executive Orders issued by the Governor that granted 
benefits to individuals unemployed as a result of the storm and 
suspended many of the normal requirements for obtaining 
unemployment benefits. While the Federal Government provided 
$400 million in assistance to help pay for these claims, the 
Louisiana Department of Labor allocated all of the Federal 
relief funds to for-profit employers, leaving most non-profit 
and governmental employers that are self-insured to pay an 
enormous and potentially damaging amount of claims. In 
response, the Louisiana State Legislature enacted legislation 
that defers the payment of these claims until July 1, 2007 in 
an effort to identify solutions to the problem which could 
include an amendment to this Disaster Unemployment Assistance 
(DUA) Fund or an appropriation to the Louisiana Unemployment 
Trust Fund for the benefit of governmental and non-profit 
institutions from the Federal Unemployment Trust Fund.
    Funding for uncompensated care is an issue for us. Ochsner 
has done more than its fair share of caring for the uninsured 
in the region. We have seen 24,731 uninsured patients since 
Hurricane Katrina at a cost of $25.5M and we have been 
reimbursed only $12.1M; that's less than 50 cents on the dollar 
for our costs. Please note that I am referring to our costs not 
charges and these refer to hospital services only and do not 
address our clinic load. With over one million clinic visits 
per year, the effects on the Institution are simply not 
understood by the traditional approaches of government at all 
levels. Our uninsured and Medicaid patient volumes have 
increased 50 percent from pre-Katrina levels. The time between 
providing care to the uninsured and receiving reimbursement has 
become excessive. We recommend that money for reimbursement for 
the care of the uninsured follow the patient directly and not 
go through multiple third parties to expedite funds reaching 
providers on a timely basis. Predictable funding is absolutely 
essential to predictable access for patients. And access is at 
the core of good medical care.
    As part of its ongoing contributions to the recovery of the 
greater New Orleans region, Ochsner purchased three community 
hospitals in Orleans and Jefferson Parishes in October 2006 
from Tenet Healthcare Corporation that were temporarily closed 
and significantly disabled in the aftermath of Katrina. These 
hospitals, as well as Ochsner Medical Center, require extensive 
disaster related infrastructure improvements at a cost of 
$17.5M to retrofit and harden facilities in preparation for 
future storms. These essential preparations include raising 
transformers, relocating transfer switches, buying emergency 
generators, drilling additional wells and replacing flooded 
equipment.
    We experienced significant additional costs and lost 
revenues. Extraordinary costs are included in all emergency 
situations as adjustments are made for the circumstances that 
develop. Volumes and related revenue are down but expenses are 
up significantly. There is precedent for the Federal Government 
to help in similar disasters. After the September 11, 2001 
attacks on New York and Washington, aid was provided to 
hospitals for similar reasons. We ask for the same 
consideration today. We stepped up without reservation--we bet 
the company and ask for your help today.
    Finally, more flexibility in the Health Resources and 
Services Administration grant process would be helpful in 
addressing some of the issues I have just described to you. 
Anything you can do to streamline the process as well as 
providing significant funds to address the shortfalls we have 
experienced would be most helpful.
    We need your help if we are to survive long term as the 
largest healthcare provider in the State of Louisiana and to 
give us the ability to respond to future disasters 
successfully.
                              ----------                              


            Testimony of Kevin U. Stephens, Sr., M.D., J.D.

    I am Dr. Kevin U. Stephens, Director of the City of New 
Orleans Health Department. To Chairman Bart Stupak, Ranking 
Member Ed Whitfield, and distinguished members and guests of 
the Subcommittee on Oversight and Investigations of the U.S. 
House of Representatives' Committee on Energy and Commerce: 
Thank you for inviting me here today to speak on the state of 
healthcare in New Orleans. Mayor C. Ray Nagin and his 
administration welcome dialogue and are hopeful that this 
hearing will spur positive change as we work to not only 
rebuild our city's infrastructure and neighborhoods, but also 
to develop a state-of-the-art, modern healthcare system.
    I would like to acknowledge and thank Secretary Michael 
Leavitt, represented on the panel by Leslie Norwalk, for all 
the support the Department of Health and Human Services has 
given to the City of New Orleans Health Department. Secretary 
Leavitt and I first met on August 24, 2005, less than one week 
before Hurricane Katrina, when we both visited the Ponchratrain 
Senior Center and talked with community leaders and senior 
citizens about Medicare. We developed a professional 
relationship which has continued in the aftermath of Hurricane 
Katrina. Additionally, I would like to thank Dr. Fred Cerise, 
Director of the Louisiana Department of Health and Hospitals, 
for his support to our city. Finally, I would like to 
acknowledge Dr. Robert Lynch of South Central Veterans Affairs 
Health Care. New Orleans has had a long relationship with the 
local Veteran's Affairs hospital, and we look forward to 
strengthening our partnership with it.

                         Our Health Challenges

    Louisiana has historically ranked among the country's 
lowest in health outcomes. For more than 10 years, Louisiana 
has been either 49th or 50th in state health rankings according 
to the United Health Foundation's America's Health: State 
Health Rankings.The report uses nine risk factors to support 
the rankings, such as the percentage of smokers in the State, 
and eight health outcomes, such as cancer deaths per 100,000 
residents. In addition to the high risk factors in the state, 
citizens without the means to purchase private health care have 
suffered from a lack of medical resources and facilities, 
contributing to significant health problems. This highlights 
the necessity for a stronger, proactive local healthcare 
delivery system.
    Charity Hospital has long been the primary source of 
healthcare for the indigent and uninsured in New Orleans. In 
1992, Charity and University Hospitals merged to form the 
Medical Center of Louisiana at New Orleans (MCLNO). The complex 
developed a reputation as one of the best Level I Trauma 
Centers in the country--the only one along the Gulf Coast--and 
as an excellent training facility for health professionals. 
Many without private health insurance relied on its clinics as 
their main source for primary healthcare.
    Recent severe budget cuts forced the MCLNO to close walk-in 
clinic, some operating rooms and some hospital beds. These cuts 
translated into decreased access to primary and preventive 
healthcare services for those who had few alternatives.
    The City's 13 health clinics as well as other state and 
non-profit clinics also provided services to our citizens. 
However they lacked the capacity to meet the community's entire 
need for healthcare.

               Problems Exacerbated by Hurricane Katrina

    While the situation was dire, it was soon to reach crisis 
level. Hurricane Katrina, which struck on August 29, 2005, was 
the largest and most costly natural disaster in American 
history. More than 1,400 Louisiana residents lost their lives. 
Katrina also produced the first mandatory evacuation in New 
Orleans history, and the largest displacement of American 
citizens in U.S. history--1.3 million people. More than 200,000 
New Orleanians remain displaced.
    It is estimated that New Orleans sustained 57 percent of 
all the damage in Louisiana. Pre-Katrina, there were 215,000 
housing units, 188,251 of which were occupied. More than 70 
percent of the occupied units--134,344 units--sustained 
reportable damage, and 105,155 were severely damaged. 
Residential damage in New Orleans was $14 billion. In addition, 
every hospital and medical facility in Orleans Parish was 
closed.
    Since the storm and floods, only four of the eight 
hospitals in the parish have reopened, all at decreased 
capacity. The City's Health Department, which employed more 
than 200 health professionals, lost more than 60 percent of its 
staff and closed eight of its 13 clinics. Yet, as traumatic as 
this devastation was, it has given us a unique opportunity to 
redesign and rebuild a model healthcare delivery system that 
corrects the gaps and failures of the past.
    New Orleans' population, which was more than 450,000 before 
Hurricane Katrina, is now estimated to be between 230,000 and 
250,000 citizens. Even with the temporarily reduced population, 
approximately 20 percent of our citizens, more than 38,000 
people, are uninsured. The City also has a rapidly increasing 
indigent worker population. Providing healthcare services to 
these uninsured citizens has placed a tremendous burden on the 
healthcare providers of the surrounding parishes and those in 
New Orleans that have reopened since the storm.
    Another challenge has been the significant decrease in the 
number of healthcare providers in the parish. According to a 
2006 Blue Cross/Blue Shield report, Orleans Parish had 2,038 
physicians Pre-Katrina; only 510 physicians are on their 
network now. This 72 percent decrease highlights the relative 
loss of medical professionals in Orleans Parish.Other evidence 
can be found in a study conducted by the Louisiana Department 
of Health and Hospitals. Of 202 primary care physicians who 
responded to the survey, only 154 were still practicing and 
just 73 accepted patients dependent on Medicaid as their source 
of payment. Clearly, more providers are needed in Orleans 
Parish, particularly those who care for the uninsured and 
underinsured.
    There is a similar story as it pertains to the capacity of 
Orleans Parish hospitals. According to a 2006 report from 
PriceWaterhouseCooper, New Orleans had 2,258 hospital beds 
before Katrina. According to a March 2007 report from the 
Metropolitan Hospital Association, Orleans Parish now has 625 
staffed beds, a reduction of 75 percent.
    Fortunately, neighboring Jefferson Parish lost far less of 
its capacity, with its number of hospital beds decreasing from 
1,922 to 1,636. Jefferson Parish hospitals have been responsive 
in absorbing patients from Orleans Parish. But this does not 
negate the critical need for more hospital beds to open in 
Orleans Parish to meet the needs of our ever-increasing 
population.
    It should be noted that many parts of this region which had 
the greatest impact from Katrina have no access to significant 
healthcare facilities. These areas include the Lower Ninth Ward 
and New Orleans East in Orleans Parish, as well as Chalmette 
and other parts of St. Bernard Parish.
    The difficulty in obtaining services was highlighted by the 
number of citizens who attended Health Recovery Week II. Along 
with Operation Blessing, Remote Area Medical, the Mayo Clinic 
and International Medical Alliance, the City hosted the outdoor 
clinic providing medical, dental and optical services during 
the last week of January. In seven days, we provided free 
medical services to more than 3,800 citizens, but given the 
need, we could have served far more people.We opened at 6 a.m. 
daily and by 7 a.m., we were filled to capacity for the day. 
Many who received health care services had serious illnesses 
that were not being controlled and were life-threatening.

        Post-Katrina: City of New Orleans Health Department Role

    The City of New Orleans Health Department must play a 
significant role in improving the health of the residents of 
our City. We need to fully staff our clinics and expand their 
offerings to include all preventative and primary care 
services. Since health outcomes are largely controlled by 
personal lifestyle choices, public health professionals must 
play a critical role in educating the public about health risks 
and behavior modification. These professionals also must ensure 
that we conduct the ongoing research necessary to understand 
our shifting healthcare climate.

           Efforts to Repair and Renew the Healthcare System

    Following Hurricane Katrina, the Bring New Orleans Back 
Commission, a group of City leaders convened by Mayor Nagin to 
design a comprehensive plan for the city's recovery, met to 
debate and decide on the future of the city's delivery of 
essential services to citizens. Commission members proposed 
policy recommendations for the rebuilding of the city's 
healthcare system. Mayor Nagin approved the following 
recommendations:
    Create an area-wide healthcare and human services 
collaborative that would develop a system of care for all 
segments of the population, provide primary care centers linked 
to hospitals and shift the focus of healthcare delivery away 
from institutional care toward ambulatory care and preventative 
medicine;
    Develop comprehensive emergency preparedness plans for 
hospitals and collect the necessary resources to implement 
those plans;
    Maintain a university teaching facility in New Orleans;
    Empower all New Orleans citizens to play an active role in 
their access to healthcare services, i.e. promoting the usage 
of electronic medical records.
    Once the commission made its recommendation, the city's 
needs became clear but we lacked the resources to implement 
them. In the spring of 2006, the One New Orleans Committee 
convened to discuss how we could effectively implement the 
recommendations of the Bring Back New Orleans Commission. The 
Healthcare subcommittee cited the need to lobby for state funds 
to assist private hospitals in the care of indigent and 
uninsured patients.
    The subcommittee also identified the need to amend state 
policy to include reimbursements for uninsured patients 
permitting the healthcare dollars to follow the patient and not 
the institutions.
    During the summer of 2006, the state led the Louisiana 
Health Redesign Collaborative (LHRDC), which was comprised of 
local and state stakeholders. Its key recommendations were:

     Develop a medical home model system of care
     Develop a health insurance connector
     Establish a Louisiana Healthcare Quality Forum
     Provide premium subsidy for uninsured children
     Expand coverage to pregnant women
     Give choice of coverage models, including private 
insurance
     Provide coverage for individuals with mental 
illness and addictive disorders

                             Mental Health

    The provision of mental health services poses a particular 
challenge in a region that has experienced severe loss, death 
and destruction. According the 2006 Quality of Life Survey 
submitted by the University of New Orleans Survey Research 
Center, 20 percent or more of residents in both Orleans and 
Jefferson parishes are experiencing severe levels of stress and 
depression. This is not surprising given the obstacles our 
residents face in reestablishing their lives in a changed 
environment.
    Despite this increased need, the city has fewer than 50 
hospital beds for inpatient psychiatric care--about 17 percent 
of pre Katrina capacity. We estimate that only 20 of the 200 
psychiatrists who were working in New Orleans before the storm 
have returned to continue their practices. The city has 
diligently collaborated with the LSU Health and Sciences Center 
Department of Psychiatry and the Metropolitan Human Services 
District to identify more mental health resources. New Orleans 
has an urgent need for more inpatient psychiatric beds, as well 
as new community mental health centers.

                            Mortality Rates

    As a doctor and healthcare provider, I began to note a 
dramatic increase in the number of death notices in the 
newspaper since Hurricane Katrina. This observation was 
supported further by the deaths of two staff people in my own 
department within a short time and anecdotal accounts of 
families going to more funerals than ever. Due to the lack of 
current state data concerning this problem, the City's Health 
Department engaged in a study to count the death notices posted 
in the Times-Picayune newspaper and compared it to a parallel 
period before Hurricane Katrina.
    In order to validate our methodology, we compared the 
number of death notices printed in the newspaper in 2002 and 
2003 to the published state data from death certificates. In 
both cases, the difference between the two was not 
statistically significant. In 2003, we averaged 924 deaths per 
month according to death notices. In contrast, for the first 
six months in 2006, New Orleans averaged 1,317 death notices 
per month. This means that approximately 7,902 citizens expired 
in the first six months of 2006, as compared to approximately 
5,544 in the first 6 months in 2003.These observations, as well 
as the severity of health problems treated during our Health 
Recovery Week, strongly suggest that our citizens are becoming 
sick and dying at a more accelerated rate than prior to 
Hurricane Katrina.
    We believe these findings are significant, but the city has 
reached the limits of its ability to research this important 
issue. It is critical that state and federal agencies 
immediately study these trends as well as the causes of death. 
This information can then be used to develop appropriate 
interventions.We would also recommend that the federal 
government establish an electronic National Death Registry 
system to track mortality rates after any disaster that 
involves massive evacuation and mobilization of people across 
state lines. In the case of Hurricane Katrina, New Orleans 
residents were required to evacuate to more than 40 states.
    Clearly, the healthcare system in New Orleans is far from 
normal, but we are working diligently to make improvements. The 
City of New Orleans Health Department has three proposals to 
comprehensively and systematically rebuild our healthcare 
system.
    1. All citizens should have immediate access to primary, 
preventative and mental health care services. People are 
suffering now and we must respond.
    2. New Orleans needs more hospital beds.The shortage of 
beds has reached crisis proportions, and on some days 
ambulances have to wait for hours on emergency room ramps to 
offload patients.
    3. We must receive the resources to rebuild our city Health 
Department.Our Health Department is a necessary partner in the 
repair and reconstruction of the City's healthcare system.
    Our healthcare system had serious inadequacies and gaps 
before Hurricane Katrina, but the storm ruptured it to a point 
that many more of our citizens are have lost access to 
healthcare services. Thank you for your attention to New 
Orleans. We look forward to working with you to solve these 
problems.
                              ----------                              


                    Testimony of Donald R. Smithburg

    Chairman Stupak, Ranking Member Whitfield, members of the 
subcommittee, I represent the LSU Health Care Services 
Division, which comprises most of the state public hospitals 
and clinics that have traditionally served as the public-
teaching system in Louisiana. I must begin by expressing my 
sincere gratitude for the time and attention that you and your 
colleagues have devoted to understanding our plight in New 
Orleans and extending your support and assistance. Many members 
of this subcommittee, as well as a delegation led by Rep. 
Clyburn, took time out of their hectic schedules to travel to 
New Orleans to survey the suffering and devastation. These were 
fact-finding missions. They also were gestures of goodwill. But 
to those of us on the front lines of providing health care to 
the city's residents, these visits were much more. They 
reassured us that we will not have to go it alone and 
reinforced Congress' commitment to helping us stabilize and 
strengthen the health care delivery system. Today's hearing is 
one manifestation of that commitment. We are grateful for this 
opportunity and pledge to partner with you and with others 
testifying today to meet our obligations.
    My testimony will briefly outline steps we have taken since 
Katrina to stand up some semblance of a health care delivery 
system. I then will add to the chorus of voices describing the 
current status of health care in New Orleans. In most respects, 
words are insufficient, but I will attempt to provide some 
clarity by concentrating on five key issues. I will offer 
suggestions for addressing the challenges we face in the short 
term. Some solutions require Federal action. Others simply 
require dialogue and partnership at the state and local levels. 
With oversight, guidance, and support from Congress, steps we 
take in the short term can provide a solid foundation for 
successful efforts well into the future.

                             Interim Steps

    Immediately after Katrina, LSU Health Care Services 
Division established limited clinic and urgent care services in 
tent hospitals created in partnership with the U.S. military 
and the U.S. Public Health Service. We operated a ``Spirit of 
Charity'' clinic in the vacated Lord and Taylor department 
store next to the SuperDome. In November 2006, we reopened part 
of University Hospital as the ``LSU Interim Hospital.'' FEMA 
provided $64 million in Federal funds for this renovation 
provided the facility would be operated on a temporary basis. 
The Interim Hospital offers all of the services that were 
available at Charity and University Hospitals before the storm, 
with the exception of psychiatry and inpatient rehabilitation. 
It has approximately 180 beds today `` about 31 percent of its 
pre-storm capacity.
    The Interim Hospital now operates 20 clinics in three 
buildings, which is in stark contrast to the 160 clinics that 
existed before Katrina. LSU plans to open seven neighborhood 
clinics in the New Orleans area as soon as zoning variances are 
in place and the necessary permits are finally granted by the 
city.
    With the destruction and closure of Charity, the region 
lost its only level I trauma center. For months, trauma 
patients had to be transported hundreds of miles away to 
Shreveport and Houston. LSU leased space at the suburban 
Elmwood facility and began providing trauma services there in 
April 2006. Those services were moved to the Interim Hospital 
in February 2007.
    LSU has entered into a collaboration with the Department of 
Veterans Affairs for construction of joint facility to replace 
the neighboring LSU and VA hospitals that were destroyed. While 
this innovative and cost-saving project will not be realized 
for as long as five years, the partnership and the promise of a 
new, state-of-the-art academic health center does have a 
positive impact on helping us resolve some of our short-term 
challenges, such as attracting and retaining faculty and 
researchers.

                       Five Key Areas of Concern

    1. Medical education. Pre-Katrina statistics indicate that 
nearly 70 percent of practicing medical professionals in 
Louisiana completed all or part of their residency requirements 
at LSU and Tulane University. Prior to Katrina, the Medical 
Center of Louisiana at New Orleans (MCLNO) housed the anchor 
inpatient facilities for graduate medical education in 
Louisiana, hosting residency programs for both LSU and Tulane. 
LSU has temporarily repositioned its residency programs in 
other facilities throughout the state; however, this situation 
is inconsistent with the standards of ACGME and unattractive to 
academically superior medical students seeking residency slots 
in top-quality teaching hospitals. Thus, it is, at best, a 
temporary solution and is not sustainable in the long term.
    Many of our training programs already are in jeopardy. LSU 
lost its radiology program, and this impacts other programs 
that require direct interaction with radiology for purposes of 
proper diagnosis and treatment. We are operating with a 
drastically reduced number of orthopedic surgeons. We have no 
trainees in oncology or rheumatology. LSU's urology and ENT 
programs are still relocated out of town. General surgeons are 
under increased strain because of the manpower shortages and 
the enormous trauma demands. Because the entities that accredit 
residency programs have certain volume and case complexity 
requirements which cannot be achieved when residents are 
dispersed among a multitude of smaller, private institutions, 
nearly all programs are in some degree of trouble.
    Possible solutions to this crisis include:

     Commitment to a new academic health center which 
will restore a core facility requirement for both LSU and 
Tulane medical training programs;
     Authority to hire and obtain reimbursement for 
private physicians to alleviate the shortage of in-house 
academic medical faculty;
     Funding for recruitment and retention of students, 
residents, and faculty;
     A summit of all stakeholders in the medical 
education field in order to devise longer-term solutions.

                            2. Reimbursement

    LSU safety net hospitals rely heavily on the Medicaid 
Disproportionate Share program. This source of revenues is 
critical to the system, but at the same time, CMS limitations 
on the use of funds for physician services and state-imposed 
disparities in the payment methodology for public and private 
providers diminishes our ability to fulfill our mission to 
provide care to the uninsured.
    Unallowable Costs. CMS considers costs associated with 
payment of physicians and CRNAs to be ``unallowable'' under 
DSH. They are not regarded as ``hospital'' costs, and yet, like 
safety net systems across the nation, physician services in 
clinics are a critical component of service to the uninsured. 
This CMS policy is especially deleterious to the capacity to 
expand primary care and ultimately is more costly in terms of 
resulting inpatient utilization.
    As a safety net system, especially one heavily involved in 
graduate medical education, LSU must support a massive base of 
physicians to provide care in the hospitals and clinics. The 
unreimburseable status of these major costs represents an 
exceedingly significant issue for any safety net health care 
system. For the LSU system of hospitals, which depends on the 
uncompensated care program for the uninsured or on direct state 
funding for nearly 60 percent of its revenues, the lack of a 
funding stream for physicians and CRNAs has created a gaping 
hole that must be filled by diverting revenues from 
reinvestment in infrastructure or by tapping short-term or one-
time internal funding sources. The necessity of employing such 
strategies has done significant long-term damage to our 
facilities and has diminished their capacity to perform their 
health care and medical education missions.
    Disparity of Payment Methodologies. The Legislature limits 
the authorized Medicaid revenues of the LSU hospitals but does 
not limit the Medicaid revenues of any other individual public 
or private facilities.
    State funds appropriated in the DHH Budget for state match 
for Medicaid hospital services are divided between the 
categories of ``public'' (10 state public hospitals) and 
``private'' (approximately 120 nonstate hospitals).\1\
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    1 For fiscal year 2005 the appropriated amounts of state funds for 
public and private hospital categories for services to Medicaid 
recipients were approximately $192.9 million and $1.02 billion 
respectively.
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     Since the LSU hospitals are the only acute care facilities 
in the ``public'' group, they are effectively ``capped'' with 
respect to the amount of Medicaid revenues they can earn, and 
hence the amount of costs they can incur in delivering services 
to Medicaid patients.\2\
---------------------------------------------------------------------------
    2 While the appropriation bill does not identify the maximum 
Medicaid revenues for individual LSU facilities, that detail is 
specified in effectively binding documentation associated with it and 
communicated by DHH, which manages the Medicaid budget.
---------------------------------------------------------------------------
    At the same time, individual community hospitals are not 
limited with respect to payments for any services they provide 
to Medicaid patients. While there is a fixed amount of state 
funding in the Department of Health and Hospitals budget for 
Medicaid match for the broad category of ``private'' hospitals, 
no maximum dollar amount of Medicaid revenues is communicated 
to nonstate facilities as it is to the LSU hospitals.
    These differences have significant consequences as they 
play out in the operation of state and nonstate hospitals:
    State Public Hospitals. The LSU hospitals in recent years 
have experienced a demand for services by Medicaid eligible 
patients at a level that has exceeded their appropriated 
Medicaid revenue limits. In this situation, if a hospital were 
to serve all the Medicaid patients projected to utilize it, the 
facility would incur costs that Medicaid would not reimburse 
once the cap were reached. Unlike community hospitals, the LSU 
hospitals do not have a sufficient base of patients with third 
party payers to whom they can shift unreimbursed costs, even if 
desired, and strategies are required to avoid incurring these 
costs at all.
    Specifically, with an appropriated Medicaid revenue limit 
below the level of actual demand, administrators have faced the 
necessity of implementing early-in-the-year steps to reduce 
services to Medicaid eligibles. \3\
---------------------------------------------------------------------------
    3 In practice in some years, budget adjustments have been made 
through the year-end BA-7 process to increase Medicaid spending 
authority when the hospitals were generating Medicaid volume above the 
appropriated level. If this course of action were routinely followed, 
it would solve the problems described above, but it would also 
demonstrate that the cap was unnecessary in the first place. A BA-7 is 
optional, however. It cannot be presumed that matching funds will be 
available or that the legislature will agree to a budget change, and 
the hospitals must proceed to implement service reductions when faced 
with a projected Medicaid revenue shortfall.
---------------------------------------------------------------------------
     Control of the volume of Medicaid services, however, 
requires control of the volume of all services. Since it is not 
possible to target Medicaid patients only, such general steps 
as closing beds and curtailing clinic and Emergency Department 
hours are required. These actions do reduce Medicaid volume, 
but they also reduce the number of patients in all other payer 
categories as well. The result is (1) loss of revenues from 
other sources, (2) reduction of care to the uninsured, and (3) 
the reduction of service volumes upon which training programs 
depend. \4\
---------------------------------------------------------------------------
    4 The reduction in care available to the uninsured occurs as both a 
direct and indirect result of curtailing Medicaid revenues and 
services. The direct effect is through the general reductions in 
service to all patients, as indicated. In addition, however, an 
indirect effect on the uninsured results from the lost opportunity to 
spread overhead costs more broadly over a larger group of Medicaid 
patients. When such a payer class as Medicaid (and also Medicare and 
private insurance) is enlarged, there is less overhead that must be 
covered by the UCC payments for the uninsured. Consequently, a larger 
share of the total cost of services to these uninsured patients 
consists of payments for direct patient services. The implication of 
this is that to the extent that the state public hospitals can increase 
its mix of patients with third party payers, it can deliver more care 
to the uninsured with no additional cost to the state.
---------------------------------------------------------------------------
    Nonstate Hospitals. Since the total appropriation to 
private facilities does not function as a cap on individual 
facilities, community hospital administrators are not faced 
with the same service adjustment decisions required of their 
LSU counterparts. Community hospital administrators can and do 
treat Medicaid as a payer source like private insurance that 
can be depended upon to pay the agreed upon rate for whatever 
volume of patients is encountered. \5\
---------------------------------------------------------------------------
    5 If the State were to face a mid-year budget problem necessitating 
cuts in Medicaid payments to private hospitals, it is possible to 
adjust the rates paid for services.
---------------------------------------------------------------------------
    The practice of legislating separate limits on Medicaid 
payments to public and private hospitals--and especially 
requiring only the state hospitals to remain below an arbitrary 
cap--serves no good purpose for the State. It adds no assurance 
beyond the total appropriation of state funds for match to DHH 
that Medicaid program expenditures will be constrained within 
the appropriated level. In fact, since Medicaid is an 
entitlement program and a recipient unable to access the state 
public hospitals is free to utilize other providers, the public 
cap could increase per recipient costs as those with a Medicaid 
entitlement are driven away from the LSU hospitals and into 
higher cost systems for services.
    Another Medicaid financing issue that could adversely 
impact our ability to fulfill our safety net mission is CMS' 
proposed Medicaid cost limit regulation. On January 18, 2007, 
CMS issued a proposed rule that would: 1) cap Medicaid 
reimbursement to public providers at the provider's cost of 
delivering Medicaid-covered services to eligible recipients; 2) 
greatly restrict the sources of state match funding through 
intergovernmental transfers (IGTs) and certified public 
expenditures (CPEs) obtain through public providers; and 3) 
require public providers to receive and retain the full amount 
of Medicaid payments earned. The rule adopts a more restrictive 
definition of ``public provider'' than what exists in current 
law. While the Administration contends that the rule would cut 
$3.87 billion from the Medicaid program over five years, survey 
information from public hospitals across the country indicates 
that the initial impact will be far greater.
    The fact that many nonstate hospitals that currently make 
IGTs would no longer be permitted to do so under the rule will 
leave a gaping hole in the State's Medicaid budget. This will 
lead to lower reimbursements and reductions in services.
    As important as what the proposed rule specifies is what it 
leaves open-ended. The rule does not define ``costs.'' There is 
a real threat that graduate medical education costs will not be 
included or allowed. This could mean a loss of more than $50 
million per year to LSU alone.
    Possible solutions to these reimbursement problems include:

     Require CMS to allow public hospitals to claim 
physician and CRNA costs as allowable costs under DSH;
     Ask the administration to withdraw the proposed 
Medicaid regulation;
     Organize a ``summit'' on hospital reimbursement in 
Louisiana to develop equitable and realistic solutions that 
ensure proper reimbursement to all providers without 
destabilizing the safety net.

                            3. Mental health

    There has been a significant loss of capacity in the mental 
health system as a result of Katrina. It is a system that 
already was under stress before the storm, and inpatients from 
the region, especially those without funding, were being 
transferred across the state to any available facility.
    Post-Katrina, the city lost over 400 mental health beds--
100 at our Charity Hospital facility and only about 40 of these 
have been restored in New Orleans. The Crisis Intervention unit 
at that public hospital was closed, along with all the services 
of the entire safety net facility.
    The crisis we continue to face is manifested in multiple 
ways. At the clinical level, there is an exponential increase 
in mental illness. Emergency Departments have been impacted and 
are under strain because of the volume of patients whose 
symptoms require special handling, facilities, and expertise 
not currently available. A practice of rotation of behavioral 
health patients among EDs in both Orleans and Jefferson 
parishes has been implemented, and these patients and the type 
of care they require have contributed to ED overcrowding in the 
area. Emergency Departments were not designed to accommodate 
the special needs of these patients, and certainly not in the 
volume now experienced. According to one press report, police, 
who reportedly answer an average of 185 mental health calls 
each month, often are unable to find a hospital able and 
willing to accept mentally distressed citizens. They can and do 
book many of these mentally ill people into jail, but that does 
not guarantee proper treatment. One prison spokesperson 
reported that the jail spends $10,000 to $12,000 per month--21 
percent of its total pharmaceutical budget--on psychiatric 
medicine. However, the jail has only one full-time, board-
certified psychiatrist and two part-time psychiatrists to treat 
2,000 inmates. It is no place to treat the seriously and 
persistently mentally ill. Just this past Thursday, a mentally 
ill patient who was roaming the New Orleans streets at night 
with a rusty BB gun was shot by a patrolling National 
Guardsman.
    Potential solutions to the mental health crisis 
include:Funding to open additional inpatient mental health 
beds. LSU is working to establish 30-40 behavioral beds at a 
vacated hospital on a lease basis. Renovation of the space will 
be necessary, as will support from FEMA. But more capacity is 
needed in the region.Funding for long-term care beds. More 
efficient use of short-term inpatient beds requires the ability 
to transfer appropriate patients to a long-term setting.
    Funding for outpatient facilities. Improving the 
availability of outpatient services will provide alternatives 
to inpatient and ED admissions and overall reduce the stress on 
hospitals. Funding for telepsychiatry. This technology would 
enable the state to extend the reach of limited psychiatric 
resources.Incentives and funding for recruitment and retention 
of mental health professionals. The cadre of mental health 
professionals was decimated by Katrina. Proper staffing is 
essential to restoring both inpatient and outpatient clinical 
capacity.
    4. Primary care delivery system. Emergency Department 
overcrowding existed prior to Katrina, but it has been severely 
exacerbated post-Katrina, particularly in light of reduced 
primary care capacity. Many patients present to the ED for 
minor ailments that are more appropriately addressed in an 
outpatient primary care setting. This reliance on the ED 
stresses limited resources, is inefficient and costly, and does 
not provide the patient with a coordinated, holistic approach 
to care. A recent article in The Times-Picayune reported on the 
crisis in New Orleans EDs. Hospitals in Orleans and Jefferson 
parishes have run out of space in their emergency rooms and are 
lacking sufficient numbers of acute care beds. ``There is not a 
bed available anywhere in the city,'' said Jack Finn, president 
of the Metropolitan Hospital Council. The waiting time in EDs 
is now seven to eight hours-- approximately the time required 
to drive to Dallas or Atlanta. Patients remain inside 
ambulances or wait in hallways on gurneys until they can be 
seen. Physicians believe that lack of swift access to primary 
care is part of the problem.
    Insufficient primary care capacity causes other patients to 
delay seeking care until their condition worsens and becomes 
severe and very expensive to treat. The likelihood of a poor 
outcome only increases.
    LSU is committed to a model of health care delivery that 
emphasizes primary care clinics located closer to where 
patients live. Primary care clinics are well-positioned to 
encourage better patient access, facilitate care coordination, 
and provide patient education. In a multi-specialty clinic 
environment with a vigorous disease management program, it is 
much easier to consider and treat the patient in a holistic 
context. The popularity of the ``Medical Home'' concept for 
health care reform is based on an understanding of these 
principles. As envisioned by the Louisiana Health Care Redesign 
Collaborative, the Medical Home Model calls for improved 
communication, information exchange, and care coordination 
(guided by evidence-based protocols). Such a model holds 
significant promise for improving care, increasing patient 
satisfaction, and controlling costs.
    LSU strongly endorses the Medical Home concept. LSU's 
chronic care and disease management initiatives are consistent 
with the model and have produced demonstrable results in 
reducing the incidence of care in expensive settings and 
improving quality. We must now expand and strengthen the 
network of community health centers and neighborhood clinics in 
New Orleans in order to build upon these successes and optimize 
the benefits of the Medical Home model of care.
    LSU already has offered to devote resources to community 
clinics, including a mobile ophthalmology unit made possible by 
a $300,000 donation from Pfizer and New York Hospital 
Association. AstraZeneca donated $1 million for a telemedicine 
project to be located in clinics that will facilitate diagnosis 
and specialty consultations. CLIQ is a data repository that 
allows sharing of laboratory and radiology information and is 
in operation at MCLNO and in PATH clinics. We have offered to 
implement a clinic referral system that will assign patients 
presenting at our hospitals to a community clinic for primary 
care services and follow-up based on the patient's zip code. 
All of these efforts demonstrate our resolve to bolster primary 
care clinics and better integrate them into the state's health 
care delivery system. Contrary to some fears that may exist, we 
have absolutely no interest in driving community health centers 
and clinics out of business. There is no upside to such a 
shallow strategy. We firmly believe that our success in 
delivering quality health care is dependent upon a strong and 
vibrant network of community clinics. We pledge to do all we 
can to support primary care clinics in the state and continue a 
productive collaboration with the coalition in greater New 
Orleans that is evolving.
    Obviously, the availability of additional funding is 
central to our ability to increase primary care capacity 
through community clinics and implement the Medical Home 
approach. Funding should be directed in the following areas:
     Physician and other related medical services. As described 
in detail below, the Centers for Medicare and Medicaid Services 
(CMS) does not allow us to claim physician, certified 
registered nurse anesthetist, and other ``non-hospital'' costs 
under DSH. Rendering these very real and critical costs 
``unallowable'' suppresses the ability of the safety net to 
provide the extent of timely clinic and other physician 
services that a Medical Home model requires. It is not possible 
to both implement a Medical Home structure and go unpaid for 
some of the most basic services that patients require. If CMS 
is not willing to change its policy, additional funding is 
needed to compensate for these services.
     Infrastructure. A significant expansion of the network of 
community health centers and clinics requires an infusion of 
funds to acquire the necessary zoning changes and permits, 
build new facilities, lease space where appropriate, and 
provide increased staffing levels.
     Information technology. The Medical Home model requires 
the ability to share patient medical information throughout the 
health care network. Thus, funding to develop electronic 
medical records and ensure interoperability is essential.

                              5. Workforce

    There has been an exodus of physicians and other medical 
personnel from New Orleans post-Katrina. Physician specialists 
are in short supply, particularly orthopedists, neurosurgeons, 
ENTs, interventional and other radiologists, anesthesiologists, 
and ophthalmologists. We also are experiencing a shortage of 
registered nurses and medical laboratory technicians. According 
to Louisiana Department of Health and Hospitals officials, 
there are currently about 450 primary care physicians in the 
New Orleans area, down from about 1,500 prior to Katrina. There 
simply are not enough mental health professionals to meet the 
growing need. The nursing shortage is so severe that annual 
wage and benefit costs have topped $120,000 in some cases. We 
also have had difficulty filling administrative/managerial 
slots, as well as openings for maintenance workers, 
electricians, and carpenters.
    The reasons for the workforce shortage include hospital 
closures, the slow and uncertain recovery of the region, lack 
of affordable housing, and deficiencies in basic public 
services, such as schools and police protection. With the 
closure of Charity Hospital, medical faculty are being lured to 
academic health centers in other states, and this has had a 
serious adverse impact on our ability to attract and retain 
medical students and residents and maintain robust medical 
education programs.
    Possible solutions include:

     State and Federal funding that will enable 
hospitals to offer financial incentives to meet workforce 
needs;
     Federal housing assistance; and
     Commitment to a new LSU academic health center. 
While this facility will not be built immediately, the 
political wrangling and attempts by some to halt the process 
are exacerbating an already uncertain environment that 
threatens to choke off supply of future medical professionals 
in the state. Widespread community support for a new facility 
will allay concerns and help all hospitals recruit physicians, 
nurses, and other medical staff.

                               Conclusion

    As you know, our challenges are great. But they are not 
insurmountable as long as political infighting and self-
interest are set aside in favor of the interests of patients. I 
think we all agree on the problems. Our task is to marshal the 
intellectual capital of the entire health care community in New 
Orleans to arrive at sensible solutions that transcend 
parochial interests. If we do that, we will be well on our way 
to recovery. However, we cannot accomplish our mission without 
additional Federal assistance in the form of increased funding 
and regulatory changes as outlined above. It is my hope that 
the interest, attention, and influence of this subcommittee can 
help facilitate a productive dialogue and produce positive 
change for the citizens of New Orleans.

            Answer to Submitted Question from Mrs. Blackburn

    1. Regarding the mental health crisis in New Orleans, you 
recommend a variety of funding options, such as funding for 
outpatient facilities and long-term care beds, to alleviate the 
crisis.
    Who should pay for these additional beds and services? 
Federal and/or State government?
    With the ``brain drain'' occurring in New Orleans, who will 
care for these patients once you have more beds?

    Prior to Katrina, the Medical Center of Louisiana at New 
Orleans (MCLNO) operated 100 acute psychiatric beds on the 
Charity Hospital Campus. Charity is closed, and there currently 
are no psychiatric beds in the LSU interim facility, which is 
partially open with 179 acute beds. There were just over 500 
total beds at MCLNO prior to Katrina.
    As indicated in testimony, LSU is working to open about 40 
psychiatric beds in a vacated hospital on a leased basis. As 
temporary replacement beds, FEMA funding for necessary 
renovation will be requested.
    Plans for the construction of a replacement hospital for 
MCLNO in conjunction with the Veterans Administration should 
address the need for acute psychiatric beds on a permanent 
basis. The Community Development Block Grant will partially 
fund the hospital, with the remainder provided by bonds and 
FEMA replacement funds. Ongoing operation of the psychiatric 
beds in a new hospital is anticipated to be supported by state 
and Federal Medicaid funding, by Medicare and by various 
private insurance sources.
    Recruitment of psychiatrists and other professional staff 
is problematic today and will require both continued state and 
Federal efforts to encourage successful recruitment of health 
care professionals to the area and the rebuilding of New 
Orleans generally. Financial incentives, such as through the 
Greater New Orleans Health Service Corp which offers grants to 
physicians who return and practice for at least three years, 
will be critical to success.
    Availability of psychiatrists and other specialists is a 
complicating issue over and above facility needs. It is 
impossible to determine the pace at which the ``brain drain'' 
problem in New Orleans will be resolved, but a solution must go 
hand-in-hand with other efforts to restore our health care 
system and community in general.
    MCLNO is attempting to open seven primary care clinics in 
various areas of metro New Orleans. While we continue to await 
city enactment of its zoning variance ordinance, it is 
estimated that these clinics will support 52,000 to 70,000 
patient visits annually. While the clinics will not be 
providing specialty psychiatric services, they clinics will be 
able to screen for such problems and direct care to settings 
other than the Emergency Room. Such enhancement of the primary 
care delivery system will be important in unclogging Emergency 
Rooms and making them more accessible for emergent problems of 
all types. It is important to maintain focus on repairing the 
health care system as a whole in order for it to effectively 
address various kinds of specialized care.
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      Diane Rowland Answers to Submitted Questions from Mr. Green

     Your testimony referred to the Disaster Relief Medicaid 
Program for New York after the tragedy of September 11, 2001, 
and how a different approach--the waiver process--was utilized 
to address Medicaid issues as a result of Hurricane Katrina. 
There is no question that the Federal response was more 
effective in New York, so I would like to explore why CMS did 
not build on that experience to respond more effectively to 
Katrina.
    In your opinion, what factors contributed to the use of a 
waiver approach, and did you sense a lack of political will to 
respond in a manner similar to the response after the attacks 
of September 11, 2001?
    Additionally, what legislative changes would you suggest we 
make to ensure that the Medicaid program can effectively 
respond to a disaster and provide real help to Americans during 
a public health emergency?

     On September 19, 2001, 8 days after the terrorist attacks, 
New York Governor George Pataki announced a program called 
Disaster Relief Medicaid. The state had received Federal 
approval to implement a program to address the challenges 
Medicaid administrators faced as they attempted to operate with 
computer systems rendered defunct in the wake of the attacks. 
The program also addressed the health needs of New York 
residents by providing temporary Medicaid coverage beyond the 
scope of coverage available prior to September 11th. In the 
four months between the terrorist attacks and the end of 
January 2002, when New York's Disaster Relief Medicaid closed 
to new enrollees, over 350,000 New Yorkers signed up for the 
program. \1\
---------------------------------------------------------------------------
    1 K. Haslanger, ``Radical Simplification: Disaster Relief Medicaid 
in New York City,'' Health Affairs 22(1):252-8, January-February 2003.
---------------------------------------------------------------------------
    Included in New York's Disaster Relief Medicaid were 
administrative simplifications that made it easier for New 
Yorkers to apply for coverage and expanded eligibility levels 
for Medicaid, particularly for adults. The state shifted from 
an eight-page Medicaid application to a single page and 
dramatically reduced the amount of documentation applicants 
were required to present. Eligibility interviews lasted about 
fifteen minutes and determinations were made on the spot, 
reflecting a change in procedure that appealed to low-income 
residents who could leave the interview with an assurance of 
immediate coverage.\2\
---------------------------------------------------------------------------
    2 M. Perry, ``New York's Disaster Relief Medicaid: Insights and 
Implications for Covering Low-Income People,'' Kaiser Commission on 
Medicaid and the Uninsured and the United Hospital Fund, pub No. 4062, 
August 2002.
---------------------------------------------------------------------------
     The state also increased eligibility levels for adults in 
New York City that had been approved but not put into operation 
as part of the state's Family Health Plus waiver in 1999, and 
it administratively implemented a New York Court of Appeals 
decision that required Medicaid to enroll all legal immigrants 
in the state, regardless of whether they arrived before or 
after 1996.
    The State and Federal Government quickly partnered to 
implement New York's Disaster Relief Medicaid, putting in place 
within weeks a solution for those still grappling with the 
health and emotional aftershocks of the terrorist attacks. 
Simplified documentation requirements and application materials 
as well as expanded eligibility enabled more individuals to 
apply for and enroll in public coverage. An extensive outreach 
campaign, aided by private philanthropy and fed by the positive 
experiences applicants had with New York's Disaster Relief 
Medicaid, helped link vulnerable residents with health coverage 
and services.
    In their September 2006 article in the Journal of the 
American Medical Association, Jeanne Lambrew and Donna Shalala 
reflect upon the Federal health policy response to Hurricane 
Katrina and provide suggestions to improve the Federal response 
to future disasters.\3\
---------------------------------------------------------------------------
    3 J. Lambrew and D. Shalala, ``Federal Health Policy Response to 
Hurricane Katrina: What It Was and What It Could Have Been,'' JAMA 
2006;296:1394-7.
---------------------------------------------------------------------------
     To mitigate against future harmful delays in the Federal 
health response to disasters, Lambrew and Shalala recommend 
that Congress consider enacting a permanent emergency Medicaid 
authority that could build upon the program's existing 
eligibility and payment systems to address health coverage 
needs after disasters. Fully-funded, temporary expansions to 
broad or targeted groups could be triggered by legislative 
criteria or an executive agency designation. Lambrew and 
Shalala also point out that Congress and the executive branch 
can employ budget policy to appropriate funds for public health 
programs, such as through the Public Health and Social Services 
Emergency Fund. A reserve for use in disasters could be 
retained in this fund, which would revert to the Treasury if 
unspent.
    In the face of the massive destruction to the Gulf Coast, 
and especially the New Orleans region, in the aftermath of 
Katrina there was no ready mechanism to extend coverage to the 
displaced, uninsured population and assist the providers trying 
to meet their health needs. Having emergency authority to 
extend Medicaid coverage and provide full Federal financing in 
disasters from a disaster reserve fund would provide an 
important safety net for the needy in times of crisis.

     The witnesses on the hearing's second panel shared 
different views about the effect of CMS' proposed rule on 
Medicaid financing and limitations to cost. Given that the 
public hospital infrastructure has been crippled due to 
Hurricane Katrina and the private hospitals have taken on the 
bulk of uncompensated care, can you address the likely effect 
of this proposed rule on New Orleans' ability to shoulder 
uncompensated care costs?

     This question seems to arise from Gary Muller's testimony 
stating: ``as we understand the proposed rule, CMS will require 
states to direct Federal funds back to governmentally operated 
healthcare providers. This certainly seems to be aligned with 
how the Federal Government intended these funds to be used in 
the first place. For WJMC, we believe this will result in 
equitable distribution of funds to our hospital.''
    It seems that there is a misunderstanding about how the 
regulation would affect hospitals and providers and some 
confusion with this regulation and the way the state currently 
distributes Medicaid disproportionate share hospital payments 
(DSH). DSH is the primary mechanism used to support 
uncompensated care in Louisiana and the majority of Medicaid 
DSH funds are now targeted to the Charity Hospitals. This rule 
does not impact or affect the distribution of DSH payments.
    The proposed rule would place new restrictions on 
reimbursement for government providers and limit the definition 
of a public hospital which restricts a states' ability to use 
intergovernmental transfers and certified public expenditures 
to fund their programs. The American Hospital Association, the 
National Association of Public Hospitals and the American 
Health Lawyers Association have all submitted comments to CMS 
to request that the rule not be implemented or significantly 
changed because of the impact of the regulations on safety-net 
providers and on how states fund their Medicaid programs. 
Ultimately, these changes could leave states with less funding 
available for safety-net providers which could further hinder 
efforts to support uncompensated care. Because Louisiana has in 
the past relied on intergovernmental financing arrangements to 
fund the charity system more heavily than other states, the 
proposed rule could have a larger impact on safety-net 
financing in Louisiana compared to other states. If the rule is 
implemented, it could also limit the state's ability to use 
similar financing arrangement with other public providers in 
considering options to restructure the health care delivery 
system.
    For more specific comments about the regulation see the 
following:

    http://www.aha.org/aha/letter/2007/070315-cl-cms2258p.pdf
    http://www.naph.org/naph/advocacy/NAPHCommentLetter.pdf
    http://www.gwumc.edu/sphhs/healthpolicy/chsrp/downloads/
AHLA--medicaid--IGT--030907.pdf
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            Gary Wiltz, M.D. Answers to Submitted Questions

                 Question Submitted by Hon. Gene Green

    I am a strong proponent of health centers and understand 
the tremendous job the do to serve the uninsured. The cities of 
Houston and New Orleans both have high levels of uninsured with 
too few FQHCs to meet the need. So, I appreciate the challenges 
you face.
    I understand that you have worked with Governor Blanco to 
craft a proposal for health center construction. Can you 
provide the committee with additional details on that proposal 
and explain how it will be utilized to leverage additional 
health care financing?
    Additionally, with health centers saving three Medicaid 
dollars for every one federal dollar spent on them, there is no 
question that FQHCs are a good use of scarce health care 
dollars. As we look at rebuilding health care in New Orleans, 
can you on what role FQHCs will--or should--play in the 
reconstruction of the health care system?

     For the first time in Louisiana Federally Qualified Health 
Center's (FQHC) history, a one time special capital outlay set 
aside has been allocated with the Governor's budget to expand 
existing site and service expansion initiatives. Louisiana 
Primary Care Association (LPCA) is currently working with 
Capital Link, Inc. to develop a capital funding program for 
FQHCs that would leverage New Market Tax Credits (NMTC) funding 
and HRSA or USDA Loan Guarantee Programs to maximize funding 
available for FQHC infrastructure development. The program 
under consideration would require a state investment of $55 
million in CDBG or other state funds to leverage approximately 
$38 million in NMTC, private sector investments and $33 million 
in HRSA or USDA guaranteed low-cost loans. This pool of $126 
million would fund the expansion and new site development of 58 
health centers and the acquisition of 11 electronic medical 
record (EMR) systems. The health center expansion and new 
access point initiative is projected to provide health care to 
an additional 180,000 Louisianans.
    Subsequent to the tragedies of Hurricanes Katrina and Rita, 
health officials within the state have deemed FQHCs as a viable 
option for public and private partnering as Louisiana 
reengineer its fragile health care infrastructure. Louisiana 
currently ranks 50th in the nation in poor health indicators, 
and the cost of health care is spiraling upward due to 
unwarranted emergency room visits to Louisiana's charity 
hospitals. The average cost per ER visit is $383. Nevertheless, 
the average cost to see that same patient in one of Louisiana's 
Health Centers is $130. Louisiana's Governor Kathleen Blanco 
has expressed on several occasions the need for a better 
community based system of care. The Louisiana's Health Care 
Redesign Collaborative has echoed the same sentiment proposing 
the ``medical home'' concept as the model for redesigning 
Louisiana's health care system. The medical home concept 
includes four basic components which are similar to the 
federally qualified health center's model--access to a primary 
care physician (PCP), an insurance connector, a Quality Forum 
and a health information technology system.
     Most importantly, Louisiana's FQHCs are staffed by PCPs 
and nurse practitioners. Louisiana's FQHCs provide dental and 
mental health services, access to prescription assistance 
programs and the 340B program which provides for lost cost and 
in some cases free prescription drugs. The majority of 
Louisiana's FQHCs are Certified Medicaid Application Centers 
which serves as an ``insurance connector''. FQHCs are governed 
by a 51 percent consumer majority board similar to that of the 
Quality Forum--the establishment of a forum to oversee the 
quality of the care provided by the Medical Home. Additionally, 
many of Louisiana's FQHCs are JCAHO accredited or are applying 
for re-accreditation.

                Question Submitted by Hon. Ed Whitfield

    Ms. Diane Rowland stated that pre-Katrina New Orleans had 
only two federally qualified health centers (FQHCs). Can FQHCs 
play a larger role in New Orleans? If so, what impediments do 
you see to the expansion of FQHCs at the federal, state, and 
local level?

     There are two Federally Qualified Health Center 
organizations in New Orleans. One is the New Orleans Health 
Department Healthcare for the Homeless Program and the other is 
EXCELth, Inc. which operates the EXCELth, Inc. Primary Care 
Network (the EXCELth Network). The Health Care for Homeless 
program takes in more than its traditional population as a 
result of the effects of Katrina. As a network, the EXCELth 
Network has multiple sites in Orleans, Jefferson and East Baton 
Rouge Parish. Two sites are operated by the Daughters of 
Charity Services of New Orleans in Orleans Parish and one more 
in Jefferson. Two EXCELth Network sites are operated by the New 
Orleans Health Department in Orleans Parish. There is another 
EXCELth clinic in East Baton Rouge, as well as, two mobile 
medical units operated by EXCELth, Inc. in New Orleans and East 
Baton Rouge (that goes mainly FEMA trailer sites).
     However, there are additional FQHCs in the New Orleans 
Metro area. Jefferson Community Health Care Centers (JCHCC) is 
an FQHC in adjoining Jefferson Parish. St. Charles Community 
Health Care Center (St. Charles) operates in St. Charles Parish 
and in Kenner, LA, part of Jefferson Parish.
     In post-Katrina Metro New Orleans, the collaboration 
between the FQHC organizations has been remarkable in that they 
have worked together to expand services by sharing their 
resources. The organizations regularly meet among themselves 
and other safety net providers to plan services to assure that 
gaps are addressed. A case in point is the March of Dimes 
Mobile Pre-Natal Van (The MOM Van). Collectively the EXCELth, 
JCHCC, Daughters of Charity and St. Charles Health Centers 
submitted a successful proposal to the national March of Dimes 
to operate the Mobile unit to outreach underserved communities 
in the combined Orleans and Jefferson area. Each has taken 
different roles to assure coordination and comprehensive care 
of this population at particular risk due to the loss of pre-
natal providers in the area.
     In this respect, the best solution for addressing the 
needs of the New Orleans area is to support the existing 
organizations that have bonded together and increased their 
capacity to provide community solutions. Additional, support to 
these organizations will increase their collective capacity and 
the opportunity for success.
    Impediments that affect these health centers are generally 
the difficulties in quick resolution to financial and policy 
needs at Federal and state levels. Most have seen increased 
uncompensated costs (uninsured rates have increase to 80 
percent in some sites of service). While block grants have 
helped, the limited and unpredictable length of their existence 
impedes practical planning of service delivery and response. 
Additionally, long term support for increasing workforce 
availability is also critical.

                                 
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