Ex-HCFA chiefs call for funding boost, agency overhaul

The Health Care Financing Administration (HCFA) received unprecedented support on Capitol Hill Thursday from four former agency administrators who recommended boosting the agency's budget and retooling its organization. The agency, responsible for operating the Medicare and Medicaid programs, has long been overworked and underfunded, the former administrators said at a joint hearing of the House Energy Subcommittee, the Commerce Health and Oversight and Investigations subcommittees.

The Medicare program covers 39 million seniors and is expected to distribute $240 billion in benefits in fiscal 2001. Medicaid covers 34.3 million people. While administered mostly at the state level, federal outlays for the program total nearly $140 billion. But HCFA's budget for administering Medicare and Medicaid is only about $2 billion per year. "Current resources are inadequate for HCFA to do its job the way Congress and the agency staff want it to," said Nancy-Ann DeParle, who ran the agency from November 1997 to October 2000. For instance, DeParle noted that the Balanced Budget Act of 1997 had 335 provisions requiring HCFA to make substantial changes to nearly every Medicare program. During 1998, the peak year of implementing those changes, the agency had 3,942 full-time equivalent employees, compared to 4,961 in 1980. The subcommittees' members, who more often criticize the agency for missing regulatory deadlines than praise it, also appeared sympathetic to the agency's plight. Republicans and Democrats alike supported the Bush administration's call to boost HCFA's administrative budget by 5 percent. "As it is now, we want HCFA to run on a hope and a prayer," said Rep. Sherrod Brown, D-Ohio. Beyond boosting resources, the former administrators said the agency needs to be restructured. This is especially true if Congress and the administration overhaul Medicare, adding a prescription drug benefit, said Gail Wilensky, head of HCFA during the first Bush administration. Wilensky currently chairs a commission that advises Congress on Medicare policy. "If HCFA is to run a modernized fee-for-service program, the organization will need to be more responsive, more pragmatic and more creative that it has been in the past," she said. She suggested streamlining the process for issuing regulations and for making changes to Medicare payment policies. It would also make sense to separate into two offices oversight of the traditional fee-for-service Medicare program and the so-called Medicare+Choice program, which allows seniors to join a managed care plan, she said. Wilensky was also supportive of pulling non-Medicare related activities out of the agency, an idea being discussed in the Bush administration. The four administrators also urged Congress to give the agency more flexibility in hiring contractors who process the nearly 900 million claims submitted to it each year. By law, only insurance companies can act as contractors; there are about 50 today. Nearly every HCFA administrator for the past few years has asked for more flexibility to reduce the number of contractors and broaden the pool to such processing firms as VISA and American Express. Secretary of Health and Human Services Tommy Thompson has made it a priority as well. The administration's nominee to lead the charge on HCFA reform, Thomas Scully, is no stranger to these issues. Scully spent the last six years running an association of for-profit hospital companies. Prior to that, he was a health care attorney with the Washington law firm Patton Boggs. During the previous Bush administration, Scully oversaw health care budgetary issues at the Office of Management and Budget. His confirmation hearing is scheduled for May 17.

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