[Congressional Record Volume 145, Number 83 (Monday, June 14, 1999)]
[Extensions of Remarks]
[Page E1237]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

[[Page E1237]]



    PROHIBITING HMO'S FROM USING TAXPAYER MONEY TO LOBBY FOR HIGHER 
                           MEDICARE PAYMENTS

                                 ______
                                 

                        HON. FORTNEY PETE STARK

                             of california

                    in the house of representatives

                         Monday, June 14, 1999

  Mr. STARK. Mr. Speaker, Medicare HMOs are lobbying Congress, saying 
they are not being paid enough. The following memo shows that we are in 
fact overpaying most HMOs, largely due to the fact that most of them 
are enrolling much healthier than average Medicare beneficiaries.
  Nevertheless, a number of HMOs are recruiting enrollees to send in 
form letters to Members of Congress urging higher payment rates. What 
is annoying is that they are spending some Medicare money on this 
lobbying.
  They can lobby out of their profits and their CEO salaries if they 
want, but I don't think they should finance their lobbying out of 
taxpayer-Medicare payments. The enclosed letter from the Office of the 
Inspector General describes the problem.
  I am introducing legislation to correct the problem identified by the 
OIG. The bill will save the taxpayer from financing lobbying to spend 
more taxpayer money. It might also cause some of those lobbying HMOs to 
spend money on health care rather than lobbying. That would be nice.

                                              DEPARTMENT OF HEALTH


                                               HUMAN SERVICES,

                               Washington, DC, September 11, 1998.
     Hon. Fortney H. (Pete) Stark,
     Subcommittee on Health, Committee on Ways and Means, House of 
         Representatives, Washington, DC
       Dear Mr. Stark: This responds to your letter of August 25, 
     regarding a news report that the American Association of 
     Health Plans (AAHP) was urging its member HMO's to compile 
     lists of enrollees, one purpose of which was to encourage 
     enrollees to write letters to Congress regarding pending 
     managed care legislation. You raised concerns about the 
     rights of the approximately 5 million Medicare beneficiaries 
     enrolled in managed care plans.
       Your first question asks whether it is ``legal or 
     appropriate under Medicare's patient privacy provisions to be 
     contacting beneficiaries for purposes of lobbying?'' While we 
     share your concern about the appropriateness of contacting 
     Medicare beneficiaries to encourage them to lobby Congress, 
     the practice itself does not appear to be illegal. As long as 
     no Federal funds themselves are used to support lobbying, we 
     are aware of no restriction in the Medicare law on what a 
     plan, provider, or supplier may communicate to a Medicare 
     beneficiary.
       Your second question asks, ``are the companies which are 
     participating in this lobbying campaign assigning any part of 
     the cost of the Medicare program?'' Specifically, you ask 
     whether the administrative costs of lobbying are included in 
     the adjusted community rate (ACR) of the Medicare plans. 
     Under the current ACR process, such costs might indeed be 
     included in a plan's ACR proposal, since the proposal is 
     based upon amounts that would be charged if the plan 
     furnished the Medicare covered services package to its 
     general membership. The law does not restrict a plan from 
     including costs in its ACR proposal that would be considered 
     unallowable under Medicare principles or the Federal 
     Acquisition Regulations. In a recent audit report (Review of 
     the Administrative Costs Component of the Adjusted Community 
     Rate Proposal, A-14-97-00205), we have raised concerns about 
     the present system's inclusion of such costs, especially 
     including lobbying costs, in the ACR proposal. The effect of 
     including these additional administrative costs may be to 
     limit the amount by which enrollees' premiums would be 
     reduced, the amounts of extra noncovered Medicare benefits 
     afforded enrollees, or amounts otherwise credited to the 
     program.
       Again, we share the concerns raised in your letter. If you 
     would like additional information about our work with regard 
     to Medicare managed care, please let us know.
           Sincerely,
                                                 June Gibbs Brown,
                                                Inspector General.


           CURRENT MEDICARE OVERPAYMENTS TO MANAGED CARE PLANS
                  [Prepared by Rep. Pete Stark's staff]
------------------------------------------------------------------------
    Source of overpayment       Cost of Medicare     Source of analysis
------------------------------------------------------------------------
Overpayments due to BBA       $800 million in 1997  Congressional Budget
 change that removed HCFA's   $8.7 billion over 5    Office.
 ability to recover            years.
 overpayments when health     $31 billion over 10
 care inflation is lower       years.
 than expected.
Overpayments due to lack of   5-6% overpayment to   Physician Payment
 risk adjustment.              HMOs per              Review Commission
                               beneficiary who is    (now MedPAC) 1996
                               enrolled.             Annual Report.
Overpayment due to inflation  More than $1 billion  HHS Office of
 of Medicare's share of plan   annually.             Inspector General
 administrative costs.                               July 1998.
Overpayments doe to           7% annual             HHS Office of
 inclusion of fraud, waste     overpayment.          Inspector General
 and abuse dollars from FFS   Annual savings with    Sept. 11, 1998.
 payments. Managed care        a corrected 1997
 plans should better           base year would be:.
 ``manage'' and therefore       $5 billion in 2002
 avoid such fraud, waste and    $10 billion in
 abuse.                        2007.
------------------------------------------------------------------------


                                H.R. --

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. DISALLOWING COSTS THAT ARE UNALLOWABLE UNDER 
                   MEDICARE PRINCIPLES OR THE FEDERAL ACQUISITION 
                   REGULATION IN COMPUTING THE ADJUSTED COMMUNITY 
                   RATE FOR MEDICARE+CHOICE PLANS.

       (A) In General.--Section 1854(f) of the Social Security Act 
     (42 U.S.C. 1395w-24(f)) is amended by adding at the end the 
     following new paragraph:
       ``(5) Exclusion of certain costs in determining adjusted 
     community rate.--In determining the adjusted community rate 
     for an organization, there shall not be included any costs of 
     the organization which would not be allowable costs under 
     cost-reimbursement principles applied under this title or 
     under the Federal Acquisition Regulation. Specifically, in 
     carrying out this paragraph, the Secretary shall not permit 
     inclusion of costs of lobbying, political contributions, or 
     communications with plan members to urge them to lobby or to 
     carry out other political activities.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     applies to determinations of adjusted community rates made 
     after June 14, 1999.

     

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