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




 
        THE LACK OF HOSPITAL EMERGENCY SURGE CAPACITY: WILL THE 
      ADMINISTRATION'S MEDICAID REGULATIONS MAKE IT WORSE? DAY TWO

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

                                HEARING

                               before the

                         COMMITTEE ON OVERSIGHT
                         AND GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                              MAY 7, 2008

                               __________

                           Serial No. 110-73

                               __________

Printed for the use of the Committee on Oversight and Government Reform


  Available via the World Wide Web: http://www.gpoaccess.gov/congress/
                               index.html
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              COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

                 HENRY A. WAXMAN, California, Chairman
EDOLPHUS TOWNS, New York             TOM DAVIS, Virginia
PAUL E. KANJORSKI, Pennsylvania      DAN BURTON, Indiana
CAROLYN B. MALONEY, New York         CHRISTOPHER SHAYS, Connecticut
ELIJAH E. CUMMINGS, Maryland         JOHN M. McHUGH, New York
DENNIS J. KUCINICH, Ohio             JOHN L. MICA, Florida
DANNY K. DAVIS, Illinois             MARK E. SOUDER, Indiana
JOHN F. TIERNEY, Massachusetts       TODD RUSSELL PLATTS, Pennsylvania
WM. LACY CLAY, Missouri              CHRIS CANNON, Utah
DIANE E. WATSON, California          JOHN J. DUNCAN, Jr., Tennessee
STEPHEN F. LYNCH, Massachusetts      MICHAEL R. TURNER, Ohio
BRIAN HIGGINS, New York              DARRELL E. ISSA, California
JOHN A. YARMUTH, Kentucky            KENNY MARCHANT, Texas
BRUCE L. BRALEY, Iowa                LYNN A. WESTMORELAND, Georgia
ELEANOR HOLMES NORTON, District of   PATRICK T. McHENRY, North Carolina
    Columbia                         VIRGINIA FOXX, North Carolina
BETTY McCOLLUM, Minnesota            BRIAN P. BILBRAY, California
JIM COOPER, Tennessee                BILL SALI, Idaho
CHRIS VAN HOLLEN, Maryland           JIM JORDAN, Ohio
PAUL W. HODES, New Hampshire
CHRISTOPHER S. MURPHY, Connecticut
JOHN P. SARBANES, Maryland
PETER WELCH, Vermont
------ ------

                     Phil Schiliro, Chief of Staff
                      Phil Barnett, Staff Director
                       Earley Green, Chief Clerk
               Lawrence Halloran, Minority Staff Director


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on May 7, 2008......................................     1
Statement of:
    Chertoff, Michael, Secretary of Homeland Security............    31
    Leavitt, Michael O., Secretary of Health and Human Services..    10
Letters, statements, etc., submitted for the record by:
    Chertoff, Michael, Secretary of Homeland Security, prepared 
      statement of...............................................    33
    Davis, Hon. Tom, a Representative in Congress from the State 
      of Virginia:
        Prepared statement of....................................     8
        Wall Street Journal artical dated April 4, 2008..........    44
    Leavitt, Michael O., Secretary of Health and Human Services, 
      prepared statement of......................................    13
    McCollum, Hon. Betty, a Representative in Congress from the 
      State of Minnesota, various statements.....................    57
    Sali, Hon. Bill, a Representative in Congress from the State 
      of Idaho, letter dated May 12, 2008........................    65
    Waxman, Chairman Henry A., a Representative in Congress from 
      the State of California:
        Information concerning I-35W bridge collapse.............    62
        Prepared statement of....................................     3


        THE LACK OF HOSPITAL EMERGENCY SURGE CAPACITY: WILL THE 
      ADMINISTRATION'S MEDICAID REGULATIONS MAKE IT WORSE? DAY TWO

                              ----------                              


                         WEDNESDAY, MAY 7, 2008

                          House of Representatives,
              Committee on Oversight and Government Reform,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 9:31 a.m., in 
room 2154, Rayburn House Office Building, Hon. Henry A. Waxman 
(chairman of the committee) presiding.
    Present: Representatives Waxman, Cummings, Tierney, Norton, 
McCollum, Van Hollen, Murphy, Sarbanes, Davis of Virginia, 
Shays, Issa, and Sali.
    Staff present: Phil Barnett, staff director and chief 
counsel; Karen Nelson, health policy director; Karen Lightfoot, 
communications director and senior policy advisor; David 
Rapallo, chief investigative counsel; Andy Schneider, chief 
health counsel; John Williams, deputy chief investigative 
counsel; Sarah Despres, senior health counsel; Steve Cha, 
professional staff member; Earley Green, chief clerk; Zhongrui 
``JR'' Deng, chief information officer; Leneal Scott, 
information systems manager, Kerry Gutknecht, William Ragland, 
Miriam Edelman, and Jennifer Owens, staff assistants; Sheila 
Klein, office manager/general assistant to the staff director; 
Larry Halloran, minority staff director; Jennifer Safavian, 
minority chief counsel for oversight and investigations; Keith 
Ausbrook, minority general counsel; Christopher Bright, Jill 
Schmaltz, Benjamin Chance, and Todd Greenwood, minority 
professional staff members; Patrick Lyden, minority 
parliamentarian and member services coordinator; and Ali Ahmad, 
minority deputy press secretary.
    Chairman Waxman. The meeting will please come to order. 
Today we are holding the second of 2 days of hearings on the 
impact of the administration's Medicaid regulations on the 
ability of our Nation's emergency rooms to respond to a sudden 
influx of casualties from a terrorist attack.
    On Monday we heard from the leading experts that the 
emergency rooms in our Nation's premier trauma centers have 
little or no surge capacity. We learned from them that many 
Level I trauma centers do not have the capacity to respond to a 
terrorist bombing like the one that happened in Madrid in 2004. 
And we learned that the administration's new Medicaid 
regulations are expected to make these problems worse by 
cutting off crucial funding.
    The hearing left us with a number of important questions, 
which we hope to answer this morning. Why would the Department 
of Health and Human Services, knowing that the Nation's 
emergency care system is already stretched to the breaking 
point, withdraw billions of Federal dollars from the hospitals 
that provide the most comprehensive emergency care to the most 
seriously injured? Why would the Department of Health and Human 
Services take this drastic step without first considering the 
impact of its actions on emergency preparedness, or consulting 
with the agency with lead responsibility for homeland security? 
Why would the Department of Homeland Security, which is the 
Federal agency with lead responsibility for protecting the 
Nation from terrorist attacks, stand by while local emergency 
surge capacity is compromised?
    The impact of the Medicaid regulations on our health care 
safety net is not a partisan issue. Last month Republicans in 
the House joined with Democrats in passing bipartisan 
legislation that would postpone the regulations and give 
Secretary Leavitt and Secretary Chertoff an opportunity to 
reevaluate their implications for homeland security.
    The issue we are considering today is one that concerns all 
Americans: how to ensure that we have a robust response 
capacity in our emergency rooms. If the unthinkable happens, 
and we have learned that the unthinkable can happen, lives will 
be lost unless emergency care is immediately available. If a 
major city experiences a terrorist bombing like the one that 
occurred in Madrid, there will be a golden hour, an hour in 
which the fate of those who are injured will be determined, 
whether the most severely injured survive or die. The Federal 
Government's job is to do everything possible to ensure that 
emergency care resources are ready during that golden hour.
    Certainly our government should not be taking actions that 
undermine the prospect of an effective emergency response. That 
is why we are having this hearing today, and that is why I look 
forward to the testimony of the two men in charge, Secretary 
Chertoff and Secretary Leavitt.
    [The prepared statement of Chairman Henry A. Waxman 
follows:]

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    Chairman Waxman. But before we go on, I want to recognize 
Mr. Davis for an opening statement.
    Mr. Davis of Virginia. Well, thank you, Mr. Chairman. As 
you said, we are here today to discuss two issues, Medicaid 
reimbursement regulations and the hospital surge capacity in 
response to predictable, some say inevitable, mass-casualty 
events. And we are fortunate to have two very distinguished 
witnesses to inform our discussion. Welcome Secretary Leavitt 
and Secretary Chertoff. We appreciate their taking their 
valuable time to be with us today.
    As we learned from Monday's testimony on these same 
subjects, the nexus between Medicaid payments to hospitals and 
emergency preparedness may seem intuitive, but it is not by any 
means proven. Extrapolating directly from daily emergency 
department utilization rates to catastrophic surge capacity 
overlooks complex and interrelated factors that differentiate 
single-facility financial management from the broader resources 
needed to mount a coordinated regional disaster response. But 
extrapolate the committee did in releasing a 1-day snapshot of 
hospital emergency room occupancy in seven major cities and 
concluding it painted a complete picture of surge capacity.
    Consulting the issues of Medicaid reimbursement and 
terrorism preparedness simultaneously oversimplifies and 
obscures both issues. I happen to agree with Chairman Waxman: 
we ought to know more about the impact of the administration's 
proposed regulation changes before exacting further cost 
savings from an already stressed health care system. But 
wrapping that issue in the mantle of terrorism creates the 
false impression that solving the problem of emergency room 
capacity on Tuesday means we are ready for doomsday. It does 
not. As one peer-reviewed study put it, surge capacity planning 
involves ensuring the ability to rapidly mobilize resources in 
reaction to such a sudden, unexpected increase in demand, 
regardless of baseline conditions.
    It is just too simple and fiscally untenable to say there 
can never be cost savings in Medicaid as long as we are not 
ready for a Madrid-style attack. Both Medicaid efficiencies and 
preparedness need to be pursued; not one pitted against the 
other. So I hope we can move beyond limited snapshots and talk 
about the dynamic range of factors, in addition to baseline 
facility funding, that make up real surge capacity: 
organization, leadership, standards of care, medical education 
and training, interoperable communications, transportation 
coordination and information technologies.
    Finally, we appreciate the fact that our witnesses made a 
tough choice to be here today. As we speak, the Federal 
Government is conducting a national continuity of operations 
exercise, testing many of the response elements needed to treat 
a surge of trauma patients. I hope the exercise goes well in 
their absence, and trust the committee's approach to these 
issues will continue to be constructive and supportive of 
executive branch efforts to prepare the Nation for catastrophic 
events. Thank you.
    Chairman Waxman. Thank you very much, Mr. Davis.
    [The prepared statement of Hon. Tom Davis follows:]

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    Chairman Waxman. Because of time constraints, we will leave 
the record open for all Members to insert an opening statement 
in the record.
    But we will go right to our very distinguished witnesses, 
and we are privileged to have both capable Secretaries with us 
today with distinguished careers in public service.
    Secretary Michael Chertoff served as the Secretary of 
Homeland Security since February 2005. That capacity is a 
challenge. He has a challenging and critical responsibility to 
lead the Nation's efforts to prepare for, protect against, 
respond to and recover from terrorist attacks, major disasters 
and other catastrophic emergencies, whether man-made or natural 
disasters, that affect our homeland. And before taking the helm 
at the Department of Homeland Security, Secretary Chertoff 
served as a judge on the Third Circuit Court of Appeals. Prior 
to that, he served as Assistant Attorney General of the 
Criminal Division at the Department of Justice.
    Secretary Michael Leavitt has been the Secretary of the 
Department of Health and Human Services since January 2005. As 
Secretary of HHS, he is responsible for managing a daunting 
array of medical, public health and human services programs. 
HHS is the lead Federal agency for public health and medical 
preparedness and response. And before coming to HHS, Secretary 
Leavitt was the Administrator of the Environmental Protection 
Agency. He also served as Governor of Utah for three terms, and 
during his 11 years as Governor, Utah was recognized six times 
as one of America's best-managed States. We are pleased to have 
both of you here with us.
    I don't know which one of you wants to go first. Secretary 
Leavitt--both of your prepared statements will be in the record 
in full. We would like to ask you to make your oral 
presentation to us now.

STATEMENT OF MICHAEL O. LEAVITT, SECRETARY OF HEALTH AND HUMAN 
                            SERVICES

    Secretary Leavitt. Good morning, Mr. Chairman. And thank 
you very much, Ranking Member Davis and other members of the 
committee. I am very pleased to discuss HHS leadership role in 
the public health and medical emergency preparedness efforts, 
as well as HHS and CMS efforts to ensure that Medicaid pays 
appropriately for services that are delivered to Medicaid 
recipients.
    As you know, local, State and Federal agencies have a 
shared responsibility for ensuring that the Nation is prepared 
for emergencies. In that context, permit me to briefly discuss 
a few of the emergency preparedness efforts that are currently 
being led by HHS.
    On October 18, 2007, President Bush signed the Homeland 
Security Presidential Directive 21 [HSPD-21]. It established a 
new national strategy for public health and medical 
preparedness. HSPD-21 mandates the development of an 
implementation plan. HHS chairs the interagency writing team 
that drafted the implementation plan that is currently in the 
process of being finalized.
    As part of the implementation plan, HHS is implementing an 
Emergency Care Coordinating Center. This new center will serve 
as a coordinating focal point for emergency care as an 
enterprise. The ECC, as we have come to know it, charter is 
being finalized, and we anticipate having the center up and 
running by the end of this year.
    The National Response Framework Emergency Support Function, 
or ESF 8, titled the Public Health and Medical Services 
Function, provides a mechanism for coordinating Federal 
assistance to State, tribal and other local resources in 
response to a medical disaster.
    The Secretary of Health and Human Services leads all of the 
Federal public health and medical response to public health 
agencies. The Secretary of HHS also coordinates, through his 
Assistant Secretary or ASPR, all of the ESF 8 preparedness, 
response and recovery actions. The National Disaster Medical 
System [NDMS], transferred from the Department of Homeland 
Security to HHS and remains the tip of the spear, if you will, 
as the Federal disaster health care response capacity.
    Over the past 5 years, the Hospital Preparedness Program 
has provided more than $2.6 billion to fund the development of 
medical surge capacity at the State and local level. As part of 
our pandemic planning, we have asked grantees to report 
participating hospitals' ability to track beds electronically 
and to report to the grantee's emergency operations center 
within 60 minutes of a request.
    From 2002 to 2007, the Public Health Emergency Preparedness 
Program has provided $5.6 billion to State, local, tribal and 
territorial public health departments. This program has greatly 
increased the preparedness capabilities of the public health 
departments.
    Now turning briefly to Medicaid, it is important to 
remember that Medicaid is fundamentally a Federal-State 
commitment to provide health care for Medicaid beneficiaries. 
First and foremost, our responsibility is to assure that these 
low-income children, pregnant women and people with 
disabilities are able to receive high-quality and appropriate 
care when they need it.
    The package of recent Medicaid regulatory activity will 
help enable, or to ensure rather, that Medicaid is paying 
providers appropriately for services delivered to Medicaid 
recipients, and that those services are effective, and that 
taxpayers are receiving the full value of the dollars that are 
spent through Medicaid.
    GAO and the Office of Inspector General at HHS have 
provided policymakers with numerous reports on various areas in 
which States inappropriately engage in activities that maximize 
Federal revenues. These rules address these types of abuses 
head on. They address them by ensuring that the Federal 
Medicaid dollars are matching actual State payments for actual 
Medicaid expenses to actual Medicaid beneficiaries. Medicaid is 
already an open-ended Federal commitment for Medicaid services 
for Medicaid recipients. It should not become a limitless 
account for State and local programs and agencies to draw 
Federal funds for non-Medicaid purposes.
    In conclusion, as I have mentioned earlier, HHS is working 
diligently to improve our Nation's emergency preparedness and 
our medical surge capacity, and we have made extensive funding 
available to hospitals through the States specifically to this 
end.
    Medicaid, however, is fundamentally a partnership that 
relies on both States and the Federal Government to contribute 
their share of the cost of the program. Allowing for the 
continuation of abusive practices that shift costs to the 
Federal Government is not an appropriate way to ensure our 
Nation's preparedness. We are committed through our emergency 
preparedness efforts to continue to make progress and to make 
funding available to States, while acting through these 
Medicaid rules, to provide greater stability in the program and 
equity to the States. And I want to thank you for the 
opportunity of being here to testify.
    Chairman Waxman. Thank you, Secretary Leavitt.
    [The prepared statement of Secretary Leavitt follows:]

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    Chairman Waxman. Secretary Chertoff.

 STATEMENT OF MICHAEL CHERTOFF, SECRETARY OF HOMELAND SECURITY

    Secretary Chertoff. Thank you, Mr. Chairman. Good morning, 
Ranking Member Davis and other members of the committee.
    Let me just take a few moments now, since my full statement 
will be in the record, to put into perspective what the role of 
the Department of Homeland Security is with respect to the 
issue of preparedness and response, one dimension of which, but 
only one dimension of which, is the issue of mass care in the 
event of some kind of a terrorist attack or natural disaster. 
But I also underscore the fact that the planning and execution 
of a response to an attack, particularly with respect to the 
issue of mass care, would implicate not only HHS, but would 
also require the participation of the Department of Defense and 
Department of Veterans Affairs. They have a major role to play 
in furnishing the resources and capabilities necessary to 
respond to a medical emergency, and their capabilities are 
built into our plan. So it is not merely a matter of HHS.
    Basically what I would like do is describe the role that we 
play in any kind of a response and, therefore, what role we 
play in planning in the lead-up to the possibility of a 
response. As you know, under the National Response Framework 
and the National Incident Management System, the Department of 
Homeland Security plays the role of incident coordinator/
incident manager. That does not mean that we are exercising 
command and control over other departments and agencies. That 
would be prohibited as a matter of law.
    What we do is bring to the table the agencies that will 
play a role. There is a lead agency designated for particular 
functions; in the case of mass terrorists, the Department of 
Health and Human Services. That is a designation that is both 
prescribed by statute as well as by HSPD 5 and HSPD 21. Our 
role then would be to coordinate and deconflict the various 
capabilities that we bring to the table and the roles and 
responsibilities of the lead agency and other agencies. For 
example, in the case of an attack, let's say a conventional 
attack, we would obviously have to coordinate the law 
enforcement response, although the lead agency there would be 
the Department of Justice. There might well be a security 
response, in which case we would be coordinating with the 
Department of Defense and the National Guard. And to the extent 
there was a mass casualty response, the mission assignment for 
carrying that out would be to HHS, but there would be support 
provided by the Department of Veterans Affairs and the 
Department of Defense. This is all done under the rubric of 
what we call Emergency Support Function 8, and the actual 
undertaking would be coordinated through the National Response 
Coordination Center.
    As part of the preparation for this, we engage in a variety 
of planning exercises. And with respect to the issue of mass 
care, again we look to the Department of Health and Human 
Services to take the lead with respect to identifying what the 
gaps are with respect to potential surge capability, what the 
available resources are, and what are the most efficacious ways 
to provide those resources. That is done with the understanding 
that the initial response obligation lies upon State and local 
public health officials. Therefore, they must participate in 
the planning, and it is their responsibility to make sure that 
they are planning in a way that is synchronized with us.
    We also recognize, however, that these capabilities would 
likely be overwhelmed in 24 hours, or maybe 48 hours. That is 
why we have capabilities such as the National Disaster Medical 
System, which is run by HHS. We would look to the Department of 
Defense to provide mobile field hospitals and other kinds of 
medical capabilities, which we would move into the arena as 
quickly as possible. The National Guard would obviously play a 
major role. And, again, if there were some particular issue 
like a chemical attack or a dirty bomb attack, there would be 
specialized capabilities by the military that would be called 
into play.
    So that is the general role that we play in coordinating 
these issues. We have engaged in planning, strategic planning, 
on a number of scenarios, including some with medical 
dimensions, again looking to HHS as the principal lead in 
identifying what the requirements are, identifying where the 
gaps are, and formulating a way in which those gaps can be 
plugged.
    Thank you, Mr. Chairman.
    Chairman Waxman. Thank you very much.
    [The prepared statement of Secretary Chertoff follows:]

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    Chairman Waxman. Without objection, we are going to begin 
questioning with 10-minute rounds, first controlled by the 
Chair and second controlled by Mr. Davis. After that we will go 
back to the 5-minute rule.
    I am going to start off the questions myself.
    Secretary Leavitt and Chertoff, we are here to answer the 
very simple question--if we had a terrorist attack like what 
happened in Madrid, with conventional bombs or suicide bombers, 
which most terrorist experts say is most likely, not the 
unthinkable weapons of mass destruction, but if the 
unthinkable, unlikely terrorist attack using conventional 
weapons occurred, would we be prepared to deal with it?
    Now, many experts have told us that if we had something 
like an attack on a commuter train where, as in Madrid, 177 
people were killed and more than 2000 were injured, we wouldn't 
have the surge capacity in some of our major cities to deal 
with those people in the Level I trauma centers or even in the 
emergency rooms.
    Secretary Chertoff, do you think we have the capacity to 
deal with such an attack?
    Secretary Chertoff. I do, Mr. Chairman. Now, I want to note 
that HHS is currently engaged in a systematic survey of 
capacities and plans across the country, so there is going to 
be a definitive answer to this. And there is no doubt some 
communities are better prepared than others. But I don't have 
to speculate about it.
    I remember we had a bridge collapse in Minneapolis some 
months ago. That was exactly the kind of event that you are 
talking about. It was not a terrorist event, but it was one 
which certainly posed challenges to casualties. My 
understanding is that in Minneapolis things worked very well.
    Chairman Waxman. Thirteen people went to the emergency room 
under those circumstances. We could have hundreds, if not 
thousands, of people rushed into emergency rooms.
    Secretary Chertoff. We have had air crashes, we have had 
other disasters. I can't give you a definitive statement with 
respect to a particular city. What I can tell you is I am not 
sure that the day-to-day capacity rates of emergency rooms is a 
prediction of the capability of the emergency system to deal 
with a disaster.
    Chairman Waxman. Have you delegated that to HHS?
    Secretary Chertoff. HHS has a principal responsibility, to 
my understanding.
    Chairman Waxman. Well, let me read to you what your Chief 
Medical Officer Jeff Runge told the House Appropriations 
Committee last month. He said, ``I don't think anybody who has 
looked would be under the mistaken notion that we are 
adequately prepared for a hospital surge. We have squeezed all 
the capacity out of the hospitals' budgets, and it's just not 
there.''
    He went on to say, ``We frankly don't have a lot of 
solutions for it. Surge capacity does just not exist in the 
world of hospitals.''
    Mr. Runge did say the Federal assets could be brought to 
the scene of a bombing, as did you earlier, but that could take 
some period of time, maybe a day or more, which may be too long 
for many critically injured victims.
    So your own expert does not think we are prepared. Why, do 
you disagree with Dr. Runge's assessment?
    Secretary Chertoff. I wasn't here for the testimony. I 
think it depends on the number of people. If there are--I can 
certainly imagine an attack of a dimension that would overwhelm 
local resources. That is the very premise of what our position 
is with respect to planning. It is the recognition that the 
Federal Government would have to step in and surge. And 
obviously since we are doing a gap analysis, I am going to be 
the first person to tell you there are undoubtedly gaps that 
need to be plugged, some of which are planning, and some of 
which are capability gaps.
    What I can't tell you is that this is simply a matter of 
emergency rooms. I think it is a much more complicated issue 
than that. I will also obviously acknowledge I am awaiting more 
precision in the results of the HHS study with respect to the 
country as a whole.
    Chairman Waxman. Well, I don't doubt it is more complicated 
than one factor or another, but what I fear, and what the 
experts told us a couple days ago, is if we go ahead with these 
Medicaid cuts, withdrawing billions of dollars from hospitals 
that have Trauma I centers and emergency rooms, we will be 
making the problem worse. We will make it less sure that we can 
even meet the response that we found so inadequate in our 
survey on March 25th. At that time the staff called Los 
Angeles, and three of the five Level I hospitals that were so 
overcrowded, they simply shut their doors. There wasn't even a 
terrorist attack. They shut their doors and said divert these 
people somewhere else. And Washington, DC, both Level I trauma 
centers surveyed are over capacity and treating patients in 
hallways and waiting rooms.
    So if, in the middle of this inadequate capability of our 
emergency rooms to deal with ordinary problems, we had a 
terrorist attack, I just think that if we go ahead with the 
billions of cuts in Medicaid funds for those institutions, we 
are making the problem worse. The first thing at the Federal 
level is at least not do any harm. I think a lot of people can 
ask how is it possible that 6 years since 9/11, nearly 3 years 
after Hurricane Katrina, we have spent billions of taxpayer 
dollars on homeland security, and yet our emergency systems are 
not in place?
    I don't doubt that you have very good intentions and a lot 
of helpful initiatives, but the problem is that the positive 
effect of these programs, which involve grants of millions of 
dollars, are going to be overwhelmed when we pull out billions 
of dollars in some of these Medicaid cuts.
    We were told Monday that the Medicaid regulations will 
cripple hospital emergency rooms. The head of Virginia's 
emergency response program said if you take away significant 
Medicaid funding, it is going to be disastrous. An expert from 
UCLA said the regulations would cripple emergency care in Los 
Angeles.
    Secretary Leavitt, do you think these experts are wrong?
    Secretary Leavitt. Mr. Chairman, I think we are dealing 
with two fundamentally different assumptions. They are 
fundamentally different assumptions in two areas. The first is 
the way surge capacity works, and that we would have to rely on 
hospitals as the bed for surge capacity. The second is that the 
mission of Medicaid is the assurance of emergency preparedness.
    Let me deal with the first one, surge capacity and the way 
it works.
    Chairman Waxman. I am asking about the Medicaid, the 
Medicaid cuts by these new regulations. I know we contacted you 
and your Department, and we asked for every document that you 
might have that would indicate that you--if you--did an 
analysis to find out what the impact would be of these Medicaid 
regulations. And I think we might have even sent the same 
request to the Department of Homeland Security. And we found 
that there was not a single analysis of the effects of the 
Medicaid regulations on our Nation's emergency rooms. If that 
is the case--maybe we haven't received it, but if that is the 
case, no analysis has been done. I just think that is 
irresponsible.
    Secretary Leavitt. Mr. Chairman, we have exercises on a 
regular basis, and the people from CMS sit at the same table as 
those from our Assistant Secretary for Preparedness and 
Response. Medicaid's mission, however, is not emergency 
preparedness; it is to provide health care to people, not to 
support institutions. Now, at HHS we have a very important 
Assistant Secretary for Preparedness and Response who is tasked 
with that responsibility. We have made substantial investments 
in developing surge capacity.
    Chairman Waxman. Did he do an analysis of what the impact 
would be of the Medicaid regulations that withdraw money from 
these institutions?
    Secretary Leavitt. He manages emergency response, not 
Medicaid. The analysis on Medicaid was based on the fact that 
the funds were being drawn for purposes that we believe were 
inappropriate under the mission of Medicaid, which we believe 
to be helping people, not supporting institutions.
    Chairman Waxman. Well, they help people by supporting 
institutions. Our public hospitals are absolutely dependent on 
the Medicaid dollars. They have so many people that come into 
emergency rooms that have no insurance, and the hospitals then 
have to shift the cost. And then if they find that Medicaid is 
not going to pay them for graduate medical education or other 
functions that they serve, they just have to give up the 
expensive things like Level I trauma centers. That is what they 
are telling us. But it looks like they never told you because 
they were never asked the question of what the impact would be 
with these Medicaid cuts.
    Secretary Leavitt. Mr. Chairman, it probably won't surprise 
you that I hear similar expression from those who run schools, 
who say, we need to have more money for our schools, and if we 
can find a way to get Medicaid money to support our school 
effort, it will help our schools. I hear a similar thing from 
those who run child welfare programs; if we could just get some 
Medicaid money, it would help us, and they stretch it over to 
health care. Medicaid was not intended to be our emergency 
response mechanism.
    Chairman Waxman. It wasn't intended, but, in fact, it is.
    Secretary Chertoff, you are head of the Homeland Security. 
You have designated this issue of health care functioning to 
HHS, and yet they are saying that they don't know what the 
impact is going to be of these cuts.
    Congress always holds hearings after the fact. After 
Hurricane Katrina and that disaster, we held hearings, and we 
asked, how could this happen? This is a hearing to find out if 
we are prepared. I don't want it on my conscience years after a 
terrorist attack, God forbid, that we realize that we didn't do 
what was necessary because the bureaucracies weren't 
functioning the way they should, the planning wasn't taking 
place, that there was money being withdrawn so that the whole 
system, which is all very fragile in this country for health 
care, wasn't able to function when it came to emergency care or 
preparedness for a surge of victims of a terrorist attack. I 
don't want it on my conscience.
    Do you feel that you can tell us today that your conscience 
would say that we are doing all that we need to do, Secretary 
Leavitt and Secretary Chertoff?
    Secretary Leavitt. Mr. Chairman, I share with you the worry 
about surge capacity. It is a responsibility that I have and we 
have at HHS. I also worry about the long-term sustainability of 
Medicaid. Medicaid was not designed nor intended to be the 
source of money that we use to design an effective surge 
capacity strategy in this country. We do have a means by which 
that should be done. If Congress in its wisdom believes that 
more money is needed for more surge capacity, we need to use 
the intended vehicle. We need to apply it to a logical, 
thoughtful strategy. That logical and thoughtful strategy will 
not include emergency rooms being the only place where surge 
capacity takes place. There is not an emergency room in America 
for which you can't build a scenario that will blow the doors 
off in a very short period of time.
    Chairman Waxman. So you feel good about the situation?
    Secretary Leavitt. No, that is not what I said at all, Mr. 
Chairman. I said I don't feel good about the situation, but I 
don't believe Medicaid is the way to solve it.
    Chairman Waxman. And you think we ought to give other 
money, but we haven't been asked to give other money for this 
purpose.
    Secretary Chertoff, how do you feel?
    Secretary Chertoff. I actually agree with Secretary Leavitt 
on this. I think that I am the last person to tell you I think 
we are done. I think that we aren't--and I have been involved 
in more specifically looking at the issue of emergency response 
in the Gulf States. But more generally I think we need to be 
identifying gaps based on planning done at a Federal, State and 
local level. And then if we need to plug the gaps with money, 
the money ought to be targeted to plug the gaps.
    Although I am seeing a bit of a disconnect, I have no 
reason to believe that giving more Medicaid money to hospitals 
is going to result in that money being spent specifically on 
those items which would be required to deal with a surge 
situation. Nor is it obvious to me that the only solution in 
this surge situation is the emergency rooms.
    So the question to me would be, do they need to have 
additional beds in storage? Do they need to have additional 
ventilators or medication or things of that sort? And if, in 
fact, there is a gap, that ought to be directly funded, but 
with the understanding that money is going to be spent on those 
issues. I have no reason to believe that Medicaid funding in a 
hospital is necessarily going to be dedicated to emergency 
response as opposed to something else.
    Chairman Waxman. A lot of it is being dedicated to this 
now, and that money is going to be withdrawn, and it is a 
sizable amount of money.
    I have taken up 13 minutes, and I am going to give 13 
minutes to Mr. Davis.
    Mr. Davis of Virginia. Thank you, Mr. Chairman.
    Secretary Leavitt, let me start with you. Thanks for being 
here. Regardless of one's views on the regulation, I am 
concerned about using Medicaid reimbursement to support 
emergency medical preparedness because it is an imperfect 
financial tool. In my experience, hospitals use additional 
revenues created through reimbursement policy. They can be 
reinvested in ways that may not improve emergency capacity, as 
Secretary Chertoff just noted. For example, hospitals may more 
regularly reinvest in expanding capacity for profitable 
services, orthopedics for example.
    Do you think that additional Medicaid reimbursement 
necessarily results in improved emergency surge capacity?
    Secretary Leavitt. There is no evidence that it does.
    Mr. Davis of Virginia. Thank you very much.
    I mean, Medicaid is the fastest-growing part of the Federal 
budget. It is the fastest-growing part of States' budgets as 
well. And to allow this to continue without tampering and 
looking at ways that we can improve service, but at the same 
time cut back costs means there won't be money for a lot of 
other things in the budget downstream.
    Let me ask you this, Secretary Leavitt. For the Homeland 
Security Presidential Directive 21, it is my understanding that 
there is a stakeholder group that is working on the different 
financial levers available to improve preparedness. The group 
is looking at Medicare, Medicaid, private payer, grant funding 
and market forces. How does this group's work inform future 
funding decisions made at the Department?
    Secretary Leavitt. That group is looking at that question 
as well as many, many others to inform this question. Until I 
receive their report, I don't know what they will say. I think 
it is clear that homeland security is everyone's second job. We 
all have a primary job. The job of Medicaid is to take care of 
people who are poor or indigent or disabled, and States are 
using ambiguities in the law to try and tap that fund for many 
different reasons.
    Mr. Davis of Virginia. Because it is the largest part of 
their budget?
    Secretary Leavitt. And they have determined----
    Mr. Davis of Virginia. Even in economic downturns when 
their revenues are less, the Medicaid costs are going up.
    Secretary Leavitt. In fact, Mr. Davis, I would make the 
point that Medicaid is the single greatest influence on State 
budgets right now.
    Mr. Davis of Virginia. I agree.
    Secretary Leavitt. And if you wanted to see why States were 
not investing and why they were looking for ways in which they 
could divert Federal funds into schools and to child welfare 
and to public health and public safety, it is because Medicaid 
is pushing all those things out and crowding them out. Their 
capacity to do that is being compromised by the fact that the 
program is growing so fast.
    Mr. Davis of Virginia. And understand this, 10, 12 years 
ago it was really not a factor in State governments the way it 
is today.
    Secretary Leavitt. I was elected Governor in 1993, and I 
would have to check this, but I believe it was in the 
neighborhood of 6 percent of the State budget. Today, again, I 
would have to check, but I am guessing it is like every other 
State in that it is close to 20 percent. That means every one 
of those dollars is crowding out education, it is crowding out 
higher education, it is crowding out public response and 
preparedness, all of the things we are talking about.
    Mr. Davis of Virginia. So in point of fact, putting more 
money into this may have the opposite effect?
    Secretary Leavitt. Well, it has had the opposite effect.
    Mr. Davis of Virginia. The Homeland Security Presidential 
Directive 21 requires that the group review financial 
incentives that improve preparedness without increasing health 
care costs. There are economic reasons that hospitals have not 
increased emergency department capacity or the number of 
inpatient beds. How does the health system increase capacity 
without increasing costs?
    Secretary Leavitt. Well, I want to emphasize in this 
process the whole concept of an all-perils response. Everything 
we do to prepare, for example, for a pandemic helps us for a 
bioterrorism event. Anything we can do that will use the same 
assets for multiple things allows us to expand capacity without 
expanding costs. The idea of sharing assets.
    The way our surge capacity is designed to work, we know 
that there is a scenario for every hospital, no matter how big, 
no matter how well funded, no matter how sophisticated, that 
the capacity will exceed their ability to deal with that. And 
therefore every hospital and every community needs to have a 
surge capacity plan that allows them to use schools that may, 
in fact, have been mothballed. Or I have seen plans where 
shopping centers are converted into surge capacity. I have 
actually witnessed during Katrina convention centers being 
turned into hospitals, and very good hospitals, in the context 
of 24 hours.
    So surge capacity is about using existing assets to convert 
to hospital capacity very quickly. It is not simply using the 
emergency room. If you were to look at any emergency room in 
this country, you would see that at least half of what is there 
at any given moment would not be considered absolutely 
critical. And if we turn into an emergency, those will be moved 
away or asked to be deferred, and we will have substantial 
capacity that would not have been evident in the snapshot that 
was taken that the chairman referred to.
    Mr. Davis of Virginia. Thank you.
    I would like to ask unanimous consent that a Wall Street 
Journal article, Nonprofit Hospitals Once for the Poor Strike 
It Rich, be included in the hearing record.
    Chairman Waxman. Without objection.
    [The information referred to follows:]

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    Mr. Davis of Virginia. Thank you.
    The majority staff report on the status of emergency 
departments looked at 34 hospitals and found that many were 
operating at or above capacity. Three hospitals were diverting 
ambulances, including one hospital that is undergoing a major 
expansion that includes the recent purchase of 3 million pounds 
of travertine imported from Tivoli, Italy, and 569 flat-panel 
TVs. Another hospital that, according to the majority report, 
had patients in overflow spaces and borders has also undergone 
a significant expansion that included a new women's hospital 
with marble in the lobby, and flat-screen TVs, and birthing 
rooms. Both of these hospitals are nonprofits and it appears 
that they have sufficient resources to invest in marble and 
TVs, but not enough to invest in emergency departments.
    Is this typical, and is this appropriate in your view?
    Secretary Leavitt. Well, it is not appropriate, in my mind. 
I don't know how typical it is. I think the point you are 
making is a good one, and that is many times the lack of 
emergency room capacity is because the administration of the 
hospital has chosen not to invest there because it didn't, in 
fact, assist their business model.
    Mr. Davis of Virginia. And, in fact, raising Medicare 
reimbursement and diverting that money to pay for marble floors 
and flat-screen televisions really doesn't go anywhere to solve 
this problem, does it?
    Secretary Leavitt. You made the point earlier that there is 
no assuredness or no guarantee that money coming from Medicaid 
would go into emergency preparedness, and there is no direct 
link.
    Mr. Davis of Virginia. The question is, if we want to look 
at surge capacity, perhaps Medicaid is not the best way to look 
at that.
    Secretary Leavitt. Indeed, Mr. Davis, it is not. I want to 
emphasize I believe that there are deficiencies in our surge 
capacity. I just don't believe Medicaid dollars is the source 
of funds that ought to be directed or looked to to link to that 
solution.
    Mr. Davis of Virginia. Thank you.
    Secretary Chertoff, thanks for being with us today. Does 
DHS have the expertise to determine the appropriateness of any 
of the following matters as it relates to Medicaid? Let me go 
through them. Whether public providers should be limited to 
cost in Medicaid reimbursement.
    Secretary Chertoff. No, we rely on HHS. Frankly, the whole 
issue of Medicaid is not actually within our purview. So the 
short answer is no, we don't have the expertise.
    Mr. Davis of Virginia. Do you have the expertise to 
determine the appropriateness of the definition of unitive 
government for health providers that treat Medicaid patients?
    Secretary Chertoff. No.
    Mr. Davis of Virginia. How about the appropriateness of 
graduate medical education payments in Medicaid?
    Secretary Chertoff. No.
    Mr. Davis of Virginia. How about the scope of 
rehabilitation services?
    Secretary Chertoff. No.
    Mr. Davis of Virginia. How about the appropriateness of the 
administrative claims for schools?
    Secretary Chertoff. No.
    Mr. Davis of Virginia. The definition of the scope of 
outpatient services?
    Secretary Chertoff. No.
    Mr. Davis of Virginia. The definition of the scope of 
targeted case management services.
    Secretary Chertoff. No.
    Mr. Davis of Virginia. Thank you.
    The National Response Framework encompasses a broad array 
of functions and entities.
    Secretary Chertoff. Correct.
    Mr. Davis of Virginia. For example, transportation, 
communication, roads, utility and public work infrastructure 
may all be heavily used in an emergency; however, these 
facilities also have important functions unrelated to disaster 
response or homeland security. Therefore it seems imprudent to 
describe any service that might have a role in an emergency as 
a homeland security activity.
    How do you determine what functions are primarily related 
to homeland disaster compared to those that are tangentially 
related?
    Secretary Chertoff. Well, I agree with you. The key 
philosophy is what is directly related, and the way we go about 
that is we put together a plan. We analyze what are the core 
capabilities that we have to have to respond effectively. We 
then identify and survey whether there are gaps in those 
capabilities, and then we determine what is the best way to 
plug those gaps.
    Mr. Davis of Virginia. Thank you.
    Mr. Shays.
    Mr. Shays. Thank you both for being here, and thank you, 
Mr. Chairman, for having this hearing.
    I am wrestling with the fact that I think we are really 
dealing with two issues. We are dealing with the health care 
issues and the needs of our hospitals, and we are dealing with 
a potential catastrophic event and a surge capacity. I would 
like to know from each of you who has the responsibility? 
First, has there been a study done that looks at the entire 
United States to say how many Trauma I, Trauma II and Trauma 
III centers we need and ideally where they should be located?
    Secretary Leavitt. Mr. Shays, with respect to emergencies, 
we are currently doing a study right now under the matter that 
was referred to earlier.
    Mr. Shays. Can you move the mike a little closer?
    Secretary Leavitt. Yes. We are currently doing a study 
under HSPD 21, the group that was referred to earlier. However, 
I can also tell you that we are asking and requiring grantees 
of HHS for pandemic preparedness to give us information about 
their surge capacity plan. Between those two, we will have a 
very good idea in the future as what the capacity is and where 
our gaps are.
    I would also like to make the point----
    Mr. Shays. When do you think that would be done?
    Secretary Leavitt. We expect it to be done by the end of 
this year so that we can make the report before the end--
conclusion of this term.
    But I would like you to know that we already have the 
capacity at any given moment to determine where rooms and beds 
are available anywhere in the country within a reasonably short 
period of time. During Katrina I was constantly updated as to 
how many beds we had anywhere in a region that we could move 
patients to. This is an important part of the way surge 
capacity works. We are discussing surge capacity today as to 
what you can put into an emergency room at any given hour. That 
is not the way surge capacity works.
    Mr. Shays. I want to make sure that my colleague has time. 
I would like a brief comment from both of you as to who is 
ultimately responsible for this issue, because it seems to me 
like when two people are, no one is.
    Secretary Leavitt. I think we both agree HHS has 
responsibility for any matter related to medical response in a 
disaster.
    Mr. Shays. And so it would be your job, not DHS, to 
determine how many Trauma I, II and III units we need around 
the country.
    Secretary Leavitt. Well, it will be our determination to 
determine how many we have, what our gap is and how best to 
respond to that.
    Mr. Shays. Thank you.
    Mr. Issa. Thank you.
    Governor, I will continue along that line. With 259 trauma 
centers in the country, 5 in San Diego, 4 in Utah, it is very 
clear that in San Diego we have as much capacity for our 2 
million people in a relatively small area as Utah has in a huge 
area. For all practical purposes, in the case of disasters of 
any sort, take the Northridge earthquake, aren't we essentially 
always assuming for homeland security that they are going to be 
in high-risk areas, where ultimately the people of Utah or 
Oklahoma or Wyoming could just as easily have a huge disaster 
affecting thousands of people over an area that could not 
possibly concentrate the types of hospitals that we have in Los 
Angeles or San Diego? So ultimately isn't the planning for 
major disasters more about the essential planning and training 
and ability to move people than it ever will be about having 
operational extra spaces in one location?
    Secretary Leavitt. Yes. There is no one area of the country 
capable of handling their own surge in an event of sufficient 
size to require that kind of capacity.
    Chairman Waxman. Mr. Davis, your time has expired.
    Ms. McCollum.
    Ms. McCollum. Mr. Chairman, the report conducted by the 
committee highlights serious challenges confronting hospital 
emergency rooms, and crowding is a serious problem. The 
American College of Emergency Physicians released a report last 
month that addresses the crowding issue. The report asks what 
causes crowding, and it responds, ``Over the years the reasons 
for crowding have included seasonal illnesses, visits by the 
poor and the uninsured who have nowhere else to turn except the 
safety net provided by emergency departments. This country can 
continue to expand the capacity of emergency rooms, to serve as 
a provider of last resort for the uninsured and the mentally 
ill, or Congress can work to provide universal health care for 
all Americans. The choice is ours.''
    Mr. Chairman, I don't know about the situation in New York, 
Washington, Chicago, Houston, Denver or Los Angeles. I have 
never visited an emergency in any of those cities, so I will 
take this report's findings as accurate. But I live in 
Minnesota, and I need to set the record straight.
    First, the report inaccurately states that Minneapolis is 
hosting the 2008 Republican Convention. The convention will 
take place in St. Paul, MN, my congressional district, with 
Minneapolis accommodating many of the visitors. This 
distinction is important, especially for the St. Paul 
officials, first responders, health care professionals involved 
in preparing to meet the needs of 40,000 visitors, including 
the President of the United States and Republican nominee for 
President.
    Second, the report examines Hennepin County Medical Center, 
which is an excellent hospital and a Level I trauma center 
located in Minneapolis. In the event of an emergency at the 
national Republican convention, Regions Hospital in St. Paul, 
an excellent facility, will be the primary responder, with the 
hospital examined in the report providing support.
    What concerns me about this report is it examines 
Minneapolis solely as the presence of the national convention, 
yet it evaluates emergency room capacity on a random day, March 
25, 2008. During the 4 days in September when the Republicans 
gather in St. Paul, there will be significant additional 
resources available to ensure a safe, enjoyable convention. 
There will also be an emergency plan and considerable assets in 
place to respond to any foreseen event.
    The Department of Homeland Security designated the national 
party conventions as a national special security event. This 
Congress appropriated $50 million to each host city to ensure 
coordination is seamless between Homeland Security, Secret 
Service, local and State law enforcement and their first 
responders.
    Finally, while I fully understand the use of Madrid 
terrorist attacks as a standard for assessing casualty 
preparedness, real American tragedies like the Oklahoma City 
bombing, Hurricane Katrina, Virginia Tech shooting could also 
have been used as models.
    In the Twin Cities we don't need to investigate emergency 
room capacity using a telephone survey. Our first responders 
were forced to respond to an emergency in real time. Only 9 
months ago on August 1, 2007, at 6:05 during rush hour, 8 lanes 
of traffic on Interstate 35W, the bridge, it collapsed into the 
Mississippi River. That night 13 people died, many my 
constituents. And more than 110 patients required emergency and 
medical attention. The bridge collapsed due to structural 
failure. It just as easily could have been the result of a 
terrorist attack, but the disaster tested the very hospital in 
the committee's report.
    Hennepin County Medical Center and hospitals from the 
entire Twin Cities metropolitan area responded heroically, 
professionally and efficiently. Their response was not a 
simulation or a blind phone survey, it was real. And people are 
alive today because of that response.
    Mr. Chairman, I have statements from Hennepin County 
Medical Center, Regions Medical Center, St. Paul's chief of 
police, Minnesota Hospital Association, and there are more to 
come that I will submit to the record later. And I would like 
to have the committee's permission to enter these into the 
committee report.
    Chairman Waxman. Without objection, that will be the order.
    [The information referred to follows:]

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    Chairman Waxman. The gentlelady's time has expired. We will 
be pleased to have the rest of her statement in the record.
    [The information referred to follows:]

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    Chairman Waxman. Mr. Sali.
    Mr. Sali. Thank you, Mr. Chairman.
    Secretary Chertoff, border security is an important issue 
affecting Idahoans, and the need for secure travel documents I 
think they consider equally as important. Do you have any 
security concerns specifically with the use of matricula 
consular cards, passport cards, NEXUS and Sentry and PASS 
cards?
    Secretary Chertoff. First, Mr. Chairman, I guess I do have 
to observe when I was invited here, I thought the topic was 
going to be medical surge. It is hard for me to see the 
correlation here, so I have to ask you whether you want me to 
answer this. But if you do, I will go ahead and answer.
    Chairman Waxman. Well, the rules allow each Member to ask 
questions.
    Secretary Chertoff. On any topic.
    Well, the short answer is I think certainly our NEXUS cards 
and Sentry cards, our PASS cards which are about to be issued 
by the Department of State are secure. They reflect a 
substantial step forward in improving the security of our 
documentation. Likewise our laser border-crossing cards.
    The matricula consular is not an American-issued card, so I 
can't warrant or vouch for the security of that. We don't rely 
upon that for purposes of allowing people to come across the 
border.
    Mr. Sali. I think there is a relation here. I hear concerns 
for many areas of the country that part of the problem in 
hospitals is that they are overrun with illegal aliens in 
specific places. And part of the problem in dealing with the 
problem of illegal aliens is making sure that we have legal 
ways for people come to our country that are secure in fact.
    Was there a recall on the NEXUS, Sentry or PASS cards 
during the last year or two?
    Secretary Chertoff. Not that I am aware of.
    Chairman Waxman. Mr. Sali, it is your time to ask 
questions, but you are off the topic for which we have invited 
the Secretaries to speak, I guess Secretary Chertoff will have 
to decide whether he is prepared to respond. But----
    Mr. Sali. Well, Mr. Chairman----
    Secretary Chertoff. I could find out. I didn't come 
prepared to talk about it.
    Mr. Sali. Perhaps the Secretary would be willing to respond 
to some of these questions in writing----
    Secretary Chertoff. Sure.
    Mr. Sali [continuing]. If I submit them to the committee.
    [The information referred to follows:]

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    Mr. Sali. And if I may continue, do you share the concern 
that the presence of illegal aliens in our country is affecting 
the ability of our hospitals to respond in a surge situation?
    Secretary Chertoff. Well, I don't know if I would connect 
it to a surge, but I would agree that I am aware that the 
presence of people who are in this country illegally does 
strain emergency rooms on a day-to-day basis, because often 
these people don't have health care through their employers, so 
they are relying on the emergency room as a kind of primary 
care facility. And that is one of the things we hoped to 
address when we took up the issue of comprehensive immigration 
reform, but as everybody now knows, that didn't take off in the 
Senate. So in the meantime our approach is to enforce the 
existing laws as vigorously as possible.
    Mr. Sali. Secretary Leavitt, let me ask you the same 
question. Do you share that concern about the presence of 
illegal aliens, overwhelming at times, on the emergency room 
and hospital capabilities in our country, and if you do, what 
is your office doing to relieve that situation?
    Secretary Leavitt. Again, there is no connection 
necessarily between surge capacity. But there is little 
question that many of those who go to emergency rooms to be 
treated are here without proper documentation. Our Department 
does provide substantial assistance to hospitals to pay for 
those, but there is no question about the fact that it is a big 
part of the problem.
    Mr. Sali. How much does your agency pay for treatment for 
illegal aliens each year?
    Secretary Leavitt. That is not a number I have off the top 
of my head. It is a big number.
    Mr. Sali. You will get that for me, though?
    Secretary Leavitt. I would be happy to respond in writing, 
to the degree we have that information.
    Mr. Sali. I have heard both of you say today that the 
presence of illegal aliens is not directly related to the 
surge, and yet both of you have said that illegal aliens use 
emergency rooms as their primary care doorway, if you will, 
into the health-care system.
    Secretary Leavitt. This is an important point, and I want 
to clarify it. On a day-to-day basis, in an emergency room, 
there are many people who are there for what essentially could 
be a clinic, not necessarily an emergency. In such a setting, 
they would be asked to take their health-care problem or defer 
it for another time, and that capacity would be used for the 
surge. Virtually any emergency room would have somewhere 
between 30 to 50 percent of its capacity used in that way.
    So when we say that they are overflowing, they are not 
overflowing necessarily with people who are in life-and-death 
situations. Surge capacity would clear those out in the kind of 
emergency we are talking about, to be treated in another way or 
on a different day.
    Chairman Waxman. The gentleman's time has expired.
    Mr. Sarbanes.
    Mr. Sarbanes. Thank you, Mr. Chairman.
    On that last point, we had testimony on Monday that 
suggested that a relatively small percentage of the ED volume 
is from non-urgent kinds of care. So I think that is a red 
herring. We are really talking about people coming into 
emergency rooms that need emergency care.
    We had a number of hearings on the effect of these Medicaid 
regulations. Going back last year, in June, we were told by a 
panel of experts that the emergency rooms are at the breaking 
point and the ability of emergency department personnel to 
respond to a public health disaster is in severe peril.
    In November, the American College of Emergency Physicians 
said that if the regulations we are discussing today went into 
effect, ``The Nation's public hospitals and emergency 
departments will sustain a devastating fiscal blow from which 
recovery may be impossible.''
    And the National Association of Public hospitals--and, by 
the way, public hospitals are the ones really getting hit 
between the eyes. We had a description of a nonprofit hospital 
engaged in some purchases, which I am not sure I would 
necessarily defend myself, but let's not get off on that 
tangent. We are talking about the impact largely on public 
hospitals, which are the ones that would suffer the most from 
implementation of this regulation. The Association of Public 
Hospitals said, ``These regulations have the potential to 
devastate essential safety-net hospitals and health systems in 
many parts of the country.''
    So what is it that these experts understand that the two of 
you don't understand about the impact these regulations are 
going to have?
    Secretary Leavitt. Mr. Sarbanes, let me describe for you, 
as a former Governor, what is happening with respect to public 
hospitals and where I believe we ought to be turning to remedy 
this.
    It is not unusual at all, in our public hospital setting, 
we agree to pay public hospitals an increment more than what we 
do normal hospitals. Many States are taking that increment more 
and essentially taking it off the table, putting it into their 
general revenues, and then using that increment more to pay the 
match that they are supposed to be paying for Medicaid.
    This is essentially a dispute between partners. We are 
saying to the States, we want you to put up real dollars, not 
our dollars recycled, so that you don't have to put up as much 
money.
    Mr. Sarbanes. Let me take that line of thinking and move it 
slightly in a different direction.
    First of all, I want to challenge a premise that I thought 
I heard in your testimony, that perhaps hospitals are not at 
the center of any kind of disaster response. And you talk about 
these other things, convention centers being set up on a short-
term basis or schools or so forth.
    But you both agree that when there is an emergency or a 
disaster, hospital emergency rooms are where people go, are 
they not?
    I mean, I represented hospitals for 16 years. Any kind of 
disaster or occurrence in the community that created pressure, 
the first place they come, the first place they come, because 
they can't think of any other place to go, is to the emergency 
room. True?
    Secretary Leavitt. Mr. Sarbanes, there is no hospital in 
America that can keep enough spare capacity warm all the time 
just in case we have a major catastrophic event.
    Mr. Sarbanes. Let me ask you this question.
    Secretary Leavitt. You can develop a scenario that will 
blow the doors off any emergency room in America----
    Mr. Sarbanes. The doors are already blown off. This is the 
thing. There is this notion that we are waiting for these surge 
situations. But as a practical matter, we have a surge already. 
When you look at the boarding that is going on, the diversions 
that are going on, the fact that the beds in the hospitals for 
inpatient admissions are completely full, we are talking about 
a surge happening right now.
    Now, let me ask you this question: If a hospital is 
underfunded, understaffed and underequipped in its main 
operations and main functions, is it better or less prepared 
for a surge, in your view?
    Secretary Leavitt. This question ought to be directed to 
those who administer and invest in the hospital. Most of the 
hospitals----
    Mr. Sarbanes. I am just asking your personal opinion. If a 
hospital in its core function is underfunded, underequipped and 
understaffed, is it better or less prepared for an emergency in 
a surge?
    Secretary Leavitt. Obviously they are less prepared.
    Mr. Sarbanes. They are less prepared. Well, that is the 
situation many of the hospitals are in.
    So this fascinating but, I think, largely false distinction 
between funding that is going just for a surge as opposed to 
funding that is going to what Medicaid core functions should 
be, it is sort of--this is a red herring, at best.
    And we have to strengthen the underlying core function and 
structure and infrastructure of our public hospital system and 
other parts of our health-care system if we are going to be 
able to respond to this surge.
    Thank you.
    Chairman Waxman. And we shouldn't be cutting money out of 
it if they are already not prepared to deal with the problems.
    Mr. Issa, you are recognized.
    Mr. Issa. Well, thank you, Mr. Chairman.
    And I certainly think that it has been good to wait a 
little while to go today, because I think Mr. Sali's questions, 
although they seemed to start on a tangent, finished pretty 
cogently.
    Secretary Chertoff, the link that you did agree exists 
between our inability to either stop illegal immigration or the 
absence of their having an alternate insurance plan that would 
put them into the normal front-door of hospital and urgent care 
and other places rather than emergency rooms and trauma centers 
is a significant part of the overcrowding and the underfunding 
today.
    From your side, Homeland Security, you seem to very much 
agree that part of the problem you face when looking at surge 
capacity today is can you get those centers freed up in time of 
emergency?
    So my question to you is, do you feel comfortable that even 
though a nonscientific, partisan telephone survey found that, 
lo and behold, these seven trauma centers were overcrowded on a 
given day, or emergency rooms, that those would be reasonably 
free-upable for the kind of catastrophic emergencies we might 
have in the case of a dirty bomb or some other terrorist 
attack?
    Secretary Chertoff. Well, I agree with Secretary Leavitt. 
My understanding--of course, the expertise really resides with 
his Department, but it certainly makes sense to me. My 
understanding is that, in a true emergency, people who are in 
the emergency room using it for primary care or for something 
less than an emergency would be asked to leave, and many of 
them would.
    I also agree with Secretary Levitt there is probably some 
point at which no emergency center, no matter how well-funded, 
is going to be able to handle what would be a truly mass event. 
And that is why we have these backup systems in place.
    There is no question that a catastrophic event is going to 
be bad. It is not going to be pleasant. But I think that we 
would expect the emergency room to clear out all but the 
priority cases in order to handle them.
    Mr. Issa. I certainly agree. And certainly there are 
doctors who have been serving in capacities other than urgent 
care whose experience in surgery and other areas would quickly 
be brought in post-triage to do it.
    Governor Leavitt, you know, the title of this hearing today 
I think is significant, because it starts off and it says, 
``The Lack of Hospital Emergency Surge Capacity: Will the 
Administration's Medicare Regulations Make It Worse?''
    Yesterday, or the day before yesterday, I asked the panel--
who all felt that overcrowding was a problem and so on but 
differed on whether they could handle emergencies. Virginia 
said, ``We did handle emergencies. We believe we are well-
organized, even here in the District,'' while other areas did 
not.
    One of the interesting things was, I said, ``Here is a 
billion dollars. How would you spend it? Would you spend it on 
training and preparation for an emergency, or how else would 
you spend it?'' To a person, the panel said, ``I would spend it 
on day-to-day, routine costs. I would simply absorb a billion 
dollars.''
    Governor, certainly you have the background to understand 
that $1 billion is a lot of money. But the cost of injuries in 
America today is estimated to be $300 billion in medical costs. 
A billion, $2 billion, $3 billion, if it is not used for 
preparation training, emergency facilities and planning, even 
$3 billion or $4 billion added into the system, will it in fact 
increase surge capacity if it is simply spent on a daily basis?
    Secretary Leavitt. Our significant concern with moneys that 
we give to States is that they are focused on increasing surge 
capacity. We have put nearly $7 billion, through different 
departments other than Medicaid, into emergency preparedness 
and specifically into surge capacity. And I believe that if we 
were just to send Medicaid money, it would be absorbed into the 
hospital overhead.
    Mr. Issa. And, Governor, following up, because the time is 
limited, essentially aren't we dealing exactly with that here 
today? That if, in fact, we don't carefully make sure that 
these funds do not get diverted and do not cover up for 
problems, including illegal immigration, to quote the other 
Member, but all kinds of problems of the underinsured, aren't 
we, by definition, making ourselves less capable if we don't 
take action to ensure that it goes into planning and training 
and preparation, rather than absorbing what clearly appears to 
be an everyday problem in America that was neither created by 
September 11th nor would be rectified by a few billion more 
dollars here or there?
    Secretary Leavitt. Every community needs a plan, every 
community needs to train, every community needs to exercise. 
And that is what much of our money goes to, and should.
    Mr. Issa. Governor, my time is short, but you did deal with 
the problems of illegal immigration. You dealt with the problem 
of your emergency rooms and the impact of the underinsured.
    Isn't that a separate issue that we should concentrate on 
finding solutions for but not mix it with today's hearing on 
surge capacity directly related to 9/11-type events?
    Secretary Leavitt. We have dealt with three specific and 
different issues today: surge capacity, the effect of illegal 
immigration, and Medicaid regulations. All three are separate. 
All three are important issues.
    Mr. Issa. Thank you.
    Thank you, Mr. Chairman.
    Chairman Waxman. Secretary Leavitt, could you furnish for 
the record how that $7 billion you claimed is going to help the 
hospitals?
    Secretary Leavitt. What I said, Mr. Chairman, was we have 
spent nearly $7 billion on local and emergency preparedness, 
including surge capacity in hospitals. And, certainly, we can 
provide how that has been spent.
    Chairman Waxman. And how much of that has been surge 
capacity?
    Secretary Leavitt. That is not a figure I have.
    Chairman Waxman. If you could give it to us for the record, 
we would appreciate it.
    We now have Mr. Murphy.
    Mr. Murphy. Thank you very much, Mr. Chairman.
    Welcome, Secretary Leavitt and Secretary Chertoff.
    For the last 4 years, before I came to Congress, I was the 
chairman of Connecticut's Public Health Committee in our 
legislature charged with this very issue, making sure that we 
had appropriate surge capacity and everyday capacity in our 
hospitals.
    And, Mr. Leavitt, I was reading through your testimony, and 
it is dazzling, at some level, the amount of bureaucracy and 
commissions that we have created around this issue: ACD, NVSB, 
ECCC, ASPR, NRF. And I am sure these are worthy commissions; I 
am sure they are looking at important questions. But as 
somebody who is doing this on the ground floor, this is all new 
to me.
    As a State policymaker, we knew that Medicaid was not just 
about supporting people, it was about supporting institutions 
as well. They are one and the same. You can't help people 
unless you have institutions that are there and willing to do 
the work. So the distinction, I guess, is a little bit 
troubling to me.
    But we also didn't know too much about these grants that 
were coming to us, because we really knew that in order to keep 
these hospitals up and running, in order to keep capacity 
working, we needed Medicaid. We couldn't do it with grants 
alone.
    Mr. Leavitt and Mr. Chertoff, if the staff has it ready, I 
would like to just draw your attention to a chart. And this, I 
think, gets at Chairman Waxman's question about the amount of 
money that is going to hospital preparedness grants. This is, I 
think, a fair representation of, over the last several years, 
the amount of money that has been going into hospital 
preparedness grants, starting at $498 million in 2003, dropping 
now to a proposed $362 million in the proposed budget for the 
coming fiscal year--a pretty sharp decrease. And $362 million 
over 50 States spreads pretty thin.
    The real rub here is when you compare it to the Medicaid 
cuts, if we can put that chart up now. Now, this is the grant 
money that States are getting, $362 million proposed in the 
next year, compared to the impact of the Medicaid cuts.
    Now, this is the State Medicaid director's estimates. If 
you take the CBO estimates, you are still talking about five 
times the amount of Medicaid cuts as you are talking in grant 
money to hospitals. And I think every State appreciates that 
grant money, but it is a drop in the bucket compared to what 
hospitals are going to face with regard to these Medicaid cuts.
    I guess I ask this to you, Secretary Leavitt. Do you have 
concerns that these grants, dwindling year by year, are going 
to be dwarfed by the size of these cuts? And though those cuts 
are going to obviously see their way through the entirety of a 
hospital's operation, no doubt much of it is going to end up in 
the emergency room.
    Do you have a concern that these cuts, these Medicaid 
cuts--you say they are to support individuals; they inevitably 
have to support institutions in order to support the 
individuals--are going to dwarf those grants?
    Secretary Leavitt. Mr. Murphy, the distinction on 
institutions and people is not one that we have arbitrarily 
made. It is in the statute.
    Over time, States have inappropriately claimed Medicaid 
dollars in a number of categories, which had the direct 
impact--I know you know this as a State legislator--of crowding 
out all of the other activities, including the development of 
public health and emergency systems.
    Medicaid was not designed, nor is it intended, to support 
institutions. Money should be directed to people. We support 
people. We support poor people, pregnant mothers and the 
disabled. This is not intended to be a hospital entitlement.
    Now, I understand that they have come to rely on it, in 
some cases. That is precisely the reason that we are pushing 
back to the fee-based consultants who are driving this on the 
basis of their getting a piece of the action to push Medicaid 
into every area of State government. It is not just emergency 
preparedness. It is in schools. It is in child welfare. It is 
in all the places that the States are not adequately funding, 
they are trying to get a garden hose into the Medicaid fund.
    Mr. Murphy. But we are not talking about those places 
today. We are talking about institutions that are indisputably 
linked to health care, which are hospitals.
    And the fact is you say it is about supporting individuals, 
but the money doesn't go to individuals. It goes to 
institutions. It goes to doctors. It goes to hospitals. It goes 
to outpatient clinics. Because we know we need those places up 
and running.
    So let me just shift to a related question, and this is 
building off of Mr. Sarbanes's questions.
    You talk about the fact that ultimately this isn't going to 
happen in emergency rooms. If something enormous happens, you 
are going to have to build something outside of the emergency 
room. But doesn't that capacity, whether it exists in the 
physical confines of the emergency room or not, rely on the 
assets that exist right now in those emergency rooms?
    If we are gutting the capacity of hospital emergency 
delivery systems, in terms of equipment, in terms of personnel, 
in terms of expertise, it seems to me, Mr. Leavitt and Mr. 
Chertoff, that this directly impacts your ability to then move 
that capacity offsite, even if it isn't onsite at the hospital 
grounds.
    Secretary Leavitt. Again, this is a very important point, 
Mr. Murphy. We are bringing capacity in. In the first 24 hours 
of an emergency, we are dependent upon local assets. And that 
is where you clear out the emergency room, you take anyone who 
is nonessential out of the hospital. You make capacity.
    Within 24 hours, we have the NDMS system there. We have as 
many as 6,000 beds we can bring from all over the country. We 
then go to another phase where we start taking patients into 
capacity. At any given moment, we know how many hospital beds 
are available in the area.
    We are not dependent upon the hospital facilities, except 
for that 24-hour period. And that is why we exercise and train 
for all of the other aspects on surge capacity.
    Mr. Murphy. And I appreciate that. I know enough about how 
these things work to know that they still do draw upon local 
resources, they still do draw upon other hospitals, upon other 
capacity in the system. And, as Mr. Sarbanes and others have 
suggested here today, we have maxed out both the emergency and 
nonemergency capacity of our health-care systems to the point 
that extra capacity, even in the 48 and 72-hour window, simply 
doesn't exist.
    Now, you can fly it from in from all over the country, but 
I think this problem exists across the board. Our medical 
technicians, our emergency medical personnel, are working 24/7 
just to handle existing capacity right now, never mind being 
able to move over to an emergency when it does happen.
    My time has expired, Mr. Chairman.
    Chairman Waxman. Thank you, Mr. Murphy.
    Mr. Duncan.
    Mr. Duncan. Thank you, Mr. Chairman.
    Secretary Leavitt, I have to be very quick because they 
have a vote going on. But a few days ago, we were given figures 
that, in the 10 years leading up to 2006, Medicaid payments to 
Tennessee hospitals went up from $245 million to $607 million.
    I am sure that you have no idea of what those exact figures 
are, but do you think that every State has received similar-
type increases, more than doubling over the last 10 years?
    Secretary Leavitt. Well, States have clearly seen dramatic 
increases. We have seen a dramatic increase in the overall 
program. Tennessee may have been somewhat unique because of 
TennCare.
    Mr. Duncan. And would it be fair, then, to say that, in 
those 10 years, inflation has averaged around 3 percent a year, 
so those payments to hospitals have gone up several times above 
the rate of inflation? Do you think that is fair?
    Secretary Leavitt. Medicaid is growing at two to three 
times inflation.
    Mr. Duncan. Two to three times the rate of inflation. So 
payments to the hospitals have gone way up over the past 10 
years?
    Secretary Leavitt. The Medicaid money going to hospitals 
has dramatically increased over the past decade.
    Mr. Duncan. All right. Thank you very much.
    Chairman Waxman. Mr. Tierney.
    Mr. Tierney. Thank you, Mr. Chairman.
    Thank you, gentlemen, for being here today.
    Secretary Chertoff, I want to ask you a little bit about 
your role or your involvement in these Medicaid rules that were 
issued. In your testimony, you said that, ``Medical surge 
capacity is a critical element of our local, State and national 
resiliency.''
    But I don't see any evidence, I don't think we have been 
able to find any evidence of your Department expressing any 
concern about these Medicaid rules to anybody, and particularly 
with respect to the impact they might have on emergency rooms 
or the ability to respond to an attack or a natural disaster.
    Did you consult with Secretary Leavitt about these rules 
before they were issued?
    Secretary Chertoff. No, because I don't think that these 
Medicaid rules are particularly closely connected to the 
question of whether there is surge capacity necessary to meet 
an emergency.
    Mr. Tierney. So you were aware of them but just chose not 
to get involved, or you weren't even aware that they were being 
considered?
    Secretary Chertoff. I don't think I was particularly aware 
of it, nor would I have expected to be made aware of it.
    Mr. Tierney. The staff interviewed Dr. Runge from your 
staff, your Chief Medical Officer. It is his role, apparently, 
to coordinate between the Department of Health and Human 
Services, to make sure that hospitals and the medical system 
are prepared for a disaster or for an incident.
    They asked Dr. Runge if he had reviewed or commented on the 
regulations, and he also said he had no communications with 
anyone at HHS about it. And he said that there was no 
discussion within the Department of Homeland Security about the 
rules.
    That is pretty consistent with your testimony, as well, on 
that?
    Secretary Chertoff. It is.
    Mr. Tierney. If he supposed to be the point person for 
medical preparedness, I just don't understand how he completely 
ignores rules which are certainly going to have some impact? Or 
is it your position they are absolutely going to have no impact 
at all on emergency rooms?
    Secretary Chertoff. Here is where I think we are having 
some disagreement. Everything has impact on everything. So, in 
some sense, the economic health of the country has an impact on 
homeland security. But if I used that logic, I would be 
involved also in the subprime mortgage crisis, because that 
affects State budgets; I would be involved in gas tax and 
gasoline prices, because that has an impact. Even for a 
Department which has sometimes been accused of having too broad 
mandate, that goes several bridges too far.
    Our focus, with respect to working with HHS, is to assure 
that there is a planning effort under way, that we are 
identifying gaps, and that we are coming up with specific 
measures that will plug the gaps.
    And I have to say I agree with Secretary Leavitt; I don't 
think that Medicaid funding and reimbursement rules have 
anything more than a very indirect connection with this issue. 
And if I took the position that every indirect impact on 
homeland security made it my business, we would become the 
Office of Management and Budget instead of the Department of 
Homeland Security.
    Mr. Tierney. I do think there is a disconnect between what 
we are talking about here. I have a difficult time thinking 
that you don't see a more direct relationship between the 
status of our hospitals' capacity and emergency rooms' capacity 
to deal with these things than a mortgage. There is a bit of a 
difference there between the two, and I would hope you would 
get that distinction.
    Secretary Chertoff. No, I don't say that I don't think 
emergency care and the health-care system isn't more connected. 
I think that Medicaid reimbursement, which is not specifically 
targeted to putting money away for emergencies, is, I think, 
several degrees of separation from the kinds of much more 
specific issues that we are focused on, in terms of getting 
ready for emergencies.
    Mr. Tierney. But I find it interesting that your Department 
didn't even look at the prospect that reducing Medicaid funding 
might have an impact on hospitals' overall operations, 
including the impact on emergency rooms and capacity in case of 
a surge incident. I would think that is the type of thing that 
you are assigned to do and Dr. Runge is assigned to do, to at 
least raise the issue and think about it and move on from 
there.
    The staff asked Dr. Runge how he justified this lack of 
communication with HHS about the rule. What he said was, ``We 
are focused on threats that can kill hundreds of thousands, not 
hundreds.'' A little insensitive, I would think, to----
    Secretary Chertoff. Well, I wasn't there for the interview; 
I can't read his mind. But I think what he was trying to draw a 
distinction between is the very real issue of day-to-day 
capability of the medical system to deal with day-to-day kinds 
of issues, which is a perfectly important and significant 
matter but not one that falls within the purview of my 
Department, as compared to dealing with the issues that do rise 
to the level or do specifically involve homeland security, like 
a pandemic flu or a major catastrophe, where we do focus on the 
issue of surge.
    But our main focus is on those matters that have a direct 
relationship. Are we stockpiling enough? Do we have a plan? Do 
we have a delivery mechanism? Do the localities have a plan? 
And there we do interface with HHS, not only Dr. Runge, but I 
personally talk to Secretary Leavitt about these issues. But 
much more tightly related to the specific need to have an 
emergency preparedness capability than Medicaid funding, which 
has to do with the overall economic health of the medical 
system, which is, frankly, a much broader issue than my 
Department's focus.
    Mr. Tierney. Well, I guess it could be seen that way, but 
it could be narrowed down to when there is a serious, severe 
cut in financing, it will affect the operations of a hospital, 
including those that you are directly concerned with. I would 
like to think your Department gets involved at that capacity. 
That is not indirect; that is pretty direct.
    My time is up, and I yield back. Thank you.
    Chairman Waxman. The gentleman's time has expired.
    Ms. Norton.
    Ms. Norton. Thank you, Mr. Chairman.
    I want to thank both these witnesses for being here.
    I am particularly grateful for this hearing, because I am 
afraid I am more deeply implicated than some because of my 
representation of the District of Columbia. I have worked 
closely, of course, in my work on the Homeland Security 
Committee with Secretary Chertoff.
    Secretary Leavitt, I worked with your predecessor on 
something called ER-1. I am particularly concerned about this 
place, not only because I represent 600,000 people here, but 
because all of official Washington is here, 200,000 Federal 
workers, and because this is a prime target for terrorism.
    This discussion about trying to separate out Medicaid from 
other money is important because we want money used for what it 
is intended. But you certainly can't treat a hospital as if it 
were not an organism with core functions that treat private and 
poor patients alike, as if you could collapse the part that 
treats Medicaid patients. And I think that is what some of us 
have been trying to get at.
    I want to ask you about the hospitals here. We have three 
trauma centers here. Two of them were surveyed in this survey, 
and they were extensively above capacity. No available 
treatment spaces in the hospital. Only six had intensive care 
unit beds. One could not participate in the survey because it 
was so overcrowded that it had to stop taking, accepting new 
patients at all.
    My good friends on the other side of this dais cite the 
Washington Hospital Center emergency room as a model for the 
country. It is a very good emergency room. That is what I 
worked with on so-called ER-1. I will get to that in a minute.
    But since they cite the Washington Hospital Center, I went 
to the head of the emergency room, Dr. Mark Smith, and Dr. 
Smith confirmed the findings of the survey and, in addition, 
said he had twice as many patients as he did treatment spaces. 
They are putting them in the corridors and administrative 
offices. They are putting them in waiting rooms. And he said he 
had a major problem with preparedness.
    Now, I understand triage. I also hope we are not ever in 
the position of what I would believe would be chaotic triage, 
if everybody surged in one place. For that reason, here in the 
Nation's Capital, I have been working with the administration--
actually we have almost gotten it through several times--on at 
least one hospital that would have surge capacity, so that 
everybody would know in advance, don't put all these Federal 
workers close to the nearest hospital. This is the one that is 
prepared. It has huge capacity--it would have a huge capacity. 
A lot of private money would go into this, some Federal money.
    Now, my question is this: If you cut billions of dollars of 
what amounts to safety-net funding from hospitals, you are also 
including these trauma centers here in the Nation's Capital. 
Can you assure this committee that, even with such very severe 
Medicaid cuts, the hospitals in the Nation's Capital are 
prepared for a mass event here and to accept patients in the 
event of a mass event here?
    I would further ask Secretary Leavitt if he supports ER-1.
    First, I want to know, are you saying to this committee, in 
the face of a survey that you are aware of, that in the event 
of a major or mass event here, that the hospitals, even with 
the cuts that are on the table, could, in fact, manage that 
event?
    Secretary Leavitt. Ms. Norton, I will tell you that the 
Washington, DC, area engages in regular planning exercises I 
think as well as any place in the country. I want to restate: 
Am I saying that surge capacity is acceptable everywhere in the 
country? No.
    Ms. Norton. I am not asking about that. I am asking about 
the place where Members of Congress, the President of the 
United States, where members of the Cabinet, where 600,000 
residents are here, where 200,000 workers are here, three 
traumas centers--I am being very specific. I am not focusing on 
elsewhere. I am focusing on target No. 1.
    Can you say you are prepared?
    Secretary Leavitt. I am not the person to answer that. The 
person in my Department would be Rear Admiral Vanderwagen, who 
was not invited to the hearing today. And I am sure he would be 
happy to meet with you and give you his reaction to the 
preparedness.
    Ms. Norton. I have to indicate that, as the Secretary, I 
would think you would know whether or not the Nation's Capital 
is prepared for a mass event.
    Secretary Leavitt. I live here, just like you do, and I am 
anxious for that to be the case.
    Ms. Norton. And that troubles me, both as a member of the 
Homeland Security Committee and as a member of this committee, 
that you cannot answer that question.
    Do you support ER-1 surge capacity?
    Secretary Leavitt. Is the project at George Washington?
    Ms. Norton. It is the project at Washington Medical Center.
    Secretary Leavitt. I am aware of the project by title. I do 
not know enough about it to respond at this hearing. If you 
would like, I would be pleased to respond in writing.
    Ms. Norton. I very much appreciate it.
    And thank you, Mr. Chairman.
    Chairman Waxman. Thank you, Ms. Norton.
    Mr. Cummings.
    Mr. Cummings. Thank you very much, Mr. Chairman.
    Secretary Leavitt, perhaps the thing that most confuses me 
about your actions is why you did not consider the impact of 
your Medicaid regulations on emergency preparedness.
    Last June, the committee had a hearing on the state of 
emergency medical care in the United States. At the hearing, 
concerns were raised about the effect of the Medicaid 
regulations on hospital emergency rooms. As a result, the 
committee wrote to the Centers for Medicare and Medicaid 
Services to ask whether CMS, which issued the rules, had 
consulted with the Assistant Secretary for Preparedness, who is 
the official in your Department in charge of emergency 
response.
    Astonishingly and unbelievably, CMS responded that it, 
``did not specifically request input from the Office of the 
Assistant Secretary for Preparedness because that office is not 
likely to have expertise in Medicaid financing.''
    The committee wrote you again in November. In this letter 
the committee specifically requested, ``all documents relating 
to the potential impact of the Medicaid regulations on 
emergency care and trama services.'' In February, the 
Department responded to the committee's request. I want to read 
to you from this letter. And it says, ``The Department has not 
found responsive documents.''
    According to this letter, your staff searched for 
responsive documents in five different parts of the Department: 
the Office of the Secretary, the Office of the Assistant 
Secretary for Preparedness, the Health Resources and Services 
Administration, the Centers for Disease Control, and CMS. Yet 
not one of those offices had done any analysis of the impact of 
the regulations on emergency care.
    Secretary Leavitt, how can you possibly explain this? 
Hospitals across the Nation are telling us that your 
regulations will devastate their emergency rooms, yet you did 
not even consider this issue, according to what I just read.
    Secretary Leavitt. The rule change we are proposing is not 
about surge capacity or hospital health. It is about States who 
have been claiming inappropriately funds that they are using to 
recirculate to pay their fair share with Federal funds.
    Medicaid is not a program to support hospitals. Medicaid is 
a program to support people who are poor, people who are 
pregnant and people who are disabled. It was not intended nor 
is its purpose, nor should it be managed, to be the source of 
funds for surge capacity.
    Mr. Cummings. Let me just go a little bit further. You were 
specifically asked to consider the impacts of your rules on 
trauma centers and emergency rooms. Over a year ago, Chairman 
Waxman and over 150 other Members of Congress wrote to you to 
urge you to consider these issues.
    Let me read to you from our letter: ``We are writing to 
request that you withdraw the proposed rule. The proposal would 
threaten the capacity of safety-net hospitals to deliver 
critical but unprofitable services, such as trauma centers, 
burn units and emergency departments.''
    Yet, still, you prepared no analysis. This appears to be a 
case of willful blindness. Perhaps it would be better stated if 
I said it appears to be ``eyes wide shut.'' It seems that you 
are deliberately ignoring the impacts that your rules will have 
on emergency care and preparedness in our Nation. That is 
irresponsible, and, to be frank with you, it is quite 
dangerous.
    Secretary Leavitt, the preamble to the proposed Medicaid 
regulations read, ``With respect to clinical care, we 
anticipate this rule's effect on actual patient services to be 
minimal. While States may need to change reimbursement or 
financing methods, we do not anticipate that the services 
delivered by governmentally operated providers or private 
providers will change.''
    In response to these regulations, your Department received 
over 400 written comments, all of which expressed opposition to 
the rule or to portions of the rule. And I would like to read 
just a sample of one of those. It is from the Society of 
Academic Emergency Medicine.
    And it says, ``This proposal will jeopardize the viability 
of public and other safety-net hospitals. It will also 
jeopardize the viability of our emergency medicine teaching 
programs, which has long-reaching downstream effects on the 
quality of emergency care in this country. We believe that 
Medicaid cuts of this magnitude projected under this proposed 
rule will adversely affect access and the viability of our 
Nation's safety-net providers.''
    So I am just wondering, do you have a comment on that?
    Secretary Leavitt. Yes, I do. This rule is about States not 
paying their fair share, and it is a dispute between partners. 
We are mutually committed. If States will step up and do their 
share, we will ours. But this is about paying for people, not 
for institutions.
    We are following the law. We are trying to push back where 
people or States and other programs within State governments 
are trying to make up for deficiencies that have occurred in 
State governments by tapping Medicaid funds. And someone needs 
to do it, because the Medicaid program is unsustainable in its 
current course; I made the point earlier.
    Many of the programs in States are being crowded out by 
Medicaid. And it is being crowded out because we continue to 
use it for virtually every aspect of State government. Anyone 
in State government who thinks they can find some connection to 
Medicaid is attempting it. And we have to do this in a way to 
keep the integrity of the fund, so that we know we are paying 
for health care for people, not for institutions, and we are 
not making up for States who aren't doing their share.
    Mr. Cummings. I see my time is up.
    Chairman Waxman. Secretary Leavitt, with all due respect, I 
think you are ignoring reality. You are saying that you want to 
cut back on a system that is getting Federal dollars 
inappropriately, and they should make up the money at the State 
and local level. They are not going to be able to make up that 
money in a recession. The income is not coming into the States.
    And you never asked your partners, the States, what the 
impact would be to make these kinds of withdrawals of the 
Federal share of the Medicaid funds that go to the 
institutions, especially public hospitals that are funded 
exclusive by the taxpayers. At the minimum, I would have 
thought that you would have wanted to ask the question of what 
the impact would be, so you would know.
    You insist that is not going to have this kind of impact. 
Yet, when you put our rules, the Society for Academic Emergency 
Medicine said, ``This proposal will jeopardize the viability of 
public and other safety-net hospitals. It will jeopardize the 
viability of our emergency medicine teaching programs.''
    Parkland Hospital in Texas said they received Medicaid 
payments of $90 million annually and that, without this 
funding, Parkland may be forced to drastically scale back their 
services in the Trauma I center, the level Trauma I center.
    You have all these others--the president of the University 
of California, the University of California academic medical 
centers. You have all these comments. And we looked at the 
rulemaking record; the fact is you ignored these comments. You 
didn't adjust the policy in response to these comments in the 
final rule, and you did prepare an analysis to the effect of 
the Medicaid regulations would be minimal impact on care being 
provided by the States.
    How can that be? Isn't that irresponsible?
    Secretary Leavitt. Mr. Chairman, it is responsible for me 
to follow the law and assure that the States are doing their 
job. Otherwise, we are not being a wise steward of limited 
Medicaid funds.
    This is a dispute between partners, between the Federal 
Government and the States. And the Federal Government is 
saying, you can't take money we have given you extra for these 
hospitals, put them back into your general fund, and then use 
them to pay your share. Just give us real money, give us value, 
give us--for real patients.
    This is not about surge capacity. It is about a 
relationship between the States and the national Government----
    Chairman Waxman. The consequences will be the institutions 
that provide the safety net to the very poor in our society 
will not be able to continue to function and provide those 
services.
    It just seems to me you are judging your actions on an 
ideology without having established the record. You didn't come 
to Congress and ask for those changes. You are trying to put 
them into effect on your own.
    Fifty Governors have asked us to at least put a halt on 
this so they can be studied, which they should have been 
studied before they were put into place. An overwhelming 
majority of the House of Representatives has put a hold on 
these regs until we can look at them further.
    I think that you ought to withdraw these regulations and 
let's see what the impact will be. Let's know that we are not 
doing any harm to the ability for hospitals around the country 
to deal with the problems that they may face, not just day to 
day, but in a terrorist attack.
    Secretary Leavitt. It is not surprising to me that you can 
unite 50 Governors around the proposition that the Federal 
Government should pay their share. And that is essentially what 
this amounts to.
    Many States have improperly used money that has come from 
the Federal Government for the purpose of supporting the 
hospitals we are talking about, have taken it off the table, 
and then used it to pay their share.
    This is about States not paying their fair share. And I 
would think we would all be united in saying, if we are going 
to have a partnership, then everyone ought to pay real dollars 
for real value for real patients.
    Chairman Waxman. Did you consult with Secretary Chertoff to 
tell him that there may be some impact around the country on 
the ability to deal with a terrorist attack?
    Secretary Leavitt. This is a dispute between the Federal 
Government and the States on Medicaid financing.
    Chairman Waxman. You didn't inform Secretary Chertoff of 
that?
    Secretary Leavitt. We regularly consult on the larger 
strategic issues related to our joint mission. This is not one 
of them.
    Chairman Waxman. Did you do an evaluation to know what the 
impact would be on these hospitals if these regs went into 
place?
    Secretary Leavitt. Medicaid is not intended to support 
institutions. It is intended to support people.
    Chairman Waxman. But it does support these institutions, 
because people without insurance go to these hospitals. People 
who are injured go to these hospitals. If you withdraw the 
money from the hospitals because you have a theory that the 
States ought to come up with more money, it means, as we were 
told by Dr. Roger Lewis, who is an emergency room physician at 
UCLA, a nationally recognized expert in hospital emergency 
preparedness, he said, ``Those of us who work on the front 
lines of the medical care system believe it is irrational that 
an emergency care system that is already overwhelmed by the 
day-to-day volume of acutely ill patients would be able to 
expand its capacity on short notice in response to a terrorist 
attack.'' He said, ``If a bomb went off in Los Angeles and 
injured hundreds or thousands, LA would not have the emergency 
room capacity to care for the wounded.''
    In your statement to the Congress, you emphasize the 
support the Federal Government is giving States and localities 
to improve this emergency preparedness. And we asked Dr. Lewis, 
and he said they were getting $433,000 in a preparedness grant, 
and he was very grateful for it, but the cost of these Medicaid 
changes would mean they would go without $50 million. He said 
that is 100 times more than the Medicaid cuts they would get on 
these preparedness grants, and they are going to be in very, 
very sad shape.
    Do you take what he had to say seriously? Do you think he 
is just fronting for the States because they want to rejigger 
their money around?
    Secretary Leavitt. Mr. Chairman, over the course of the 
last 3 years, I have been in virtually every State and met with 
the emergency community, and the record is replete with my 
statements of concern about surge capacity. It is not at the 
level we want it to be. We have many areas in which we can 
improve. But Medicaid is not the source of funds to do that.
    If the Congress of the United States views that there is a 
need for more dollars, we have ways in which we can funnel 
directly to the hospital funds that are necessary to improve 
their surge capacity.
    Medicaid was intended to be for people, not for 
institutions. And every institution I know would like to drag a 
garden hose over into the Medicaid fund and be able to tap it, 
because their fund isn't what they would like it to be.
    We need to be disciplined. We need to ensure that these 
disputes are resolved between the States and the Federal 
Government so that we have a true partnership, not just one 
that relies entirely on the Federal Government.
    Chairman Waxman. Well, I must say, with all due respect, 
your actions make absolutely no sense. The tiny grants you are 
giving to hospitals can't possibly offset the impact of cutting 
billions of dollars from those programs.
    I must say, as we conclude this hearing, I find it very 
discouraging. We know the Nation's emergency rooms are already 
at the breaking point. We know a terrorist bombing is a 
predictable surprise. We know that local emergency room 
capacity is critical to saving lives in that golden hour 
following an attack. We know that public and teaching hospitals 
operate many of our Nation's most critical emergency rooms and 
trauma centers.
    We know that the Medicaid regulations will reduce funding 
to these institutions by hundreds of millions of dollars each 
year. We know that these cuts will further undermine the 
ability of these hospitals to respond to a terrorist bombing. 
We know that these regulations will go into effect in 3 short 
weeks.
    And yet the Secretaries that are in the position to avoid 
this harm will not take any action. I think it is regrettable.
    I must say, this is not just a disagreement. I think it is 
a substantial breach in what I think is our mutual 
responsibility to make sure that we can deal with a homeland 
security attack, which could amount to a tragedy.
    I thank you both for being here. We hear the bells; there 
is a vote on the House floor.
    I do want to ask unanimous consent that the record be held 
open for Members to ask further questions and get responses in 
writing.
    We stand adjourned.
    [Whereupon, at 11:15 a.m., the committee was adjourned.]

                                 
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