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FAX COVER SHEET
Health Division
Executive Office of the President
Office of Management and Budget
OEOB, Room 262
Washington, D.C. 20503
Diana
DATE:
4/21/95
CC: Fortuna
TO:
Lavarne Burton
AGENCY:
Chris 5/
FAX NO:
612-5405 6+2- 5405
Jan Klein-
FROM: Nancy-Ann Min
This is FYI
Associate Director for Health and Personnel
note the cover
Phone number (202) 395-5178
memo - wine
Fax number (202) 395-7289
on for the
Number of pages (including cover) 05
3rd. New
COMMENTS: Triza to read you
to discuss - See my cover
new! new
EXECUTIVE OFFICE OF THE PRESIDENT
21-Apr-1995 03:40pm
Lavanne Burton
TO:
Alice M. Rivrin
FROM:
Nancy-Ann E. Min
Office of Mgmt and Budget, HP
SUBJECT: HHS REBO II Rollout
We had a REGO II Steering Committee meeting today to discuss a
number of pending issues, including the HHS Rollout. Alice,
Elaine, John Koskinen, and Bob Stone decided that:
1. The attached "Fact Sheet" represents the decisions that
have been made, and that can go forward on May 3rd, with the
exception of two things they want us to add: PHS Performance
Partnerships (even though it is in the 96 budget, they want it to
be mentioned), and the HCFA regulatory reform items. Barry
Clendenin is drafting paragraphs on these and will send them to
you, perhaps as early as tonight--but I wanted you to have this
ASAP.
2. There was concern about the level of savings being very
low compared with other departments that have been announced--the
others have met their outyear targets. People realize that most
of the original savings we had came from Medicare and from LIHEAP.
Therefore, they are willing to let this go--but we have increased
the FTE savings from OASH/OS consolidation to reflect a higher
number, 400 instead of 190. It was felt that this number could be
taken (i.e., an additional 200) from the leftover 628, with the
remainder being reallocated within HHS.
3. The President will probably talk about the fraud demos
in his remarks to the Aging Conference on the morning of May
3--the current thinking is that the Secretary could then brief on
the remainder of the REGO package that afternoon. Elaine is
coordinating with White House Communications and the First Lady's
Office. I imagine there will be a meeting on this next week that
would involve the Department.
4. They have asked us to come up with some numbers of how
many dollars can be saved from the program integrity stuff. We
are trying to determine how much is already in the baseline--since
this is just a reclassification, the savings would just be the
additional dollars over that baseline, based on some
formula--presumably your 8:1. We will be back to you on this on
Monday.
Xr induding the demos, of am
5. The items that aren't included in the package should
not be mentioned (i.e., HRSA/HCFA/SAMHSA consolidation) because
they have not been approved for release. We will need to discuss
how you handle the consolidation because that will surely be
raised, as a result of the leak to the Post.
6. For the announcement, OMB/NPR will draft a press
release from the White House, which we will share with you next
week. HHS should draft one page descriptions of each of the
proposals that you could give out at the Secretary's briefing; we
will need to review these.
That's all for now. Please call me.
Missing:
Perf. Partnerships
HCFA items Regulating
DRAFT
FACT SHEET
DEPARTMENT OF HEALTH AND HUMAN SERVICES (HHS)
NATIONAL PERFORMANCE REVIEW, PHASE II
The Department and its Mission
The Department of Health and Human Services (HHS) is the Federal Government's principal
agency for providing essential human services and furthering the health of all Americans. With
approximately programs, HHS has the largest budget among all domestic Federal
departments, accounting for
percent of all federal spending. With the departure of the Social
Security Administration on March 31, 1995, HHS now employs roughly
FTEs.
HHS' mission is to protect and promote the health and economic security of all Americans and in
particular those least able to help themselves children, the elderly, persons with disabilities, and
the disadvantaged by helping them and their families develop and maintain healthy, productive,
and independent lives. In partnership with States, tribes, localities and other important
community institutions, HHS attempts to accomplish this mission in a way that provides the
highest qualify of service to the American people, assures fairness and equity to all people, and
protects the public investment in our programs.
The HHS/National Performance Review Process
HHS has systematically assessed and applied the National Performance Review (NPR) decision
tree to each of its activities. Each Assistant Secretary and agency head personally reviewed their
agencies and programs, and presented the results to an internal group made up of senior staff
from across HHS. That group also conducted a departmental-wide review, starting initially by
identifying the key federal roles that HHS must perform, and critically examining the agency
specific reviews in that light. The effort was guided on a daily basis by the Deputy Secretary, and
by a Policy Group consisting of HHS Assistant Secretaries and others at the policy level,
including the Secretary. Nothing was "off the table" in these reviews.
The process has yielded great dividends and bold proposals to: eliminate non-core functions;
eliminate an entire organizational layer; consolidate major programs to better serve the public;
offer more flexibility to our partners in state, local and tribal governments; cut administrative
overhead; and enhance the government's ability to detect and prevent health care fraud and abuse.
Summary of Major NPR Proposals
HHS' NPR Phase II proposals would result in savings of about $420 million and reductions of
about 2,380 FTE over five years. These savings come from the major departmental restructuring
and the elimination, consolidation and privatization of activities highlighted below. Some of these
proposals can be accomplished administratively, and some will require legislation which HHS will
submit to Congress by July 4, 1995.
April 21. 1995
DRAFT
Create a Streamlined HHS Corporate Structure: HHS would develop a single HHS
corporate structure by eliminating the Office of the Assistant Secretary for Health (OASH)
and merging its functions with the Office of the Secretary (OS). Currently OASH has
1,153 FTEs and OS has 1,276 FTEs. By FY 2000, the new HHS corporate structure will
have 58 percent fewer FTEs than in FY 1993.
Consolidation of Surveys and Development of Data Standards: HHS would fix the
following major problems with its current data information systems: inefficient and
overlapping survey efforts, high burden on respondents, and inadequate survey data.
Through this REGO proposal, HHS plans to improve vastly the analytic capacity of HHS
programs, fill in major data gaps, and establish a survey consolidation framework--
highlighted by the integration of the national Health Interview Survey and the National
Medical Expenditures Survey--in which HHS data activities are streamlined and
rationalized.
Consolidate Certain Aging Programs: HHS would consolidate programs for seniors in
the Administration on Aging and in other parts of HHS to achieve more coordinated
service delivery. Exploratory discussions are underway with other Federal Departments to
determine whether additional program consolidations are possible and can lead to service
improvements for seniors. Under the consolidation, State and local communities would be
granted increased flexibility to determine the types of aging services that are most useful
locally, in exchange for greater accountability for program results."
Consolidate Internal HHS American Indian/Alaska Native Programs:
This
is
out
for now
Strengthen Medicare Program Integrity: HHS will take a two-step approach to prevent
fraud and abuse in Medicare. First, Secretary Shalala will initiate a demonstration program
led by the HHS Inspector General in five key states - Texas, California, Florida, Illinois
and New York - where health care fraud is of particular concern. Second, HHS will be
proposing a new funding source for Medicare fraud and abuse activities. This source will
ensure that funding for these activities is maintained at sufficient levels to help protect the
Medicare trust funds.
Privatizing National Institutes of Health (NIH) Clinical Center Management: HHS
proposes to begin a 24-month phase-in toward contracting out the replacement of the
facility and non-research operations of the NIH clinical center.
Other Privatizations: HHS proposes to privatize certain other functions including {the
Federal Employees Occupational Health (FEOH) program, pending DPC guidance},
Clinical Practice Guidelines, and Technology Assessment.
Food and Drug Administration (FDA) Regulatory Reform: The reforms announced on
March 16, 1995 for FDA's regulation of foods, drugs, biologics, and medical devices are
2
April 21. 1995
DRAFT
expected to yield savings for the regulated industries and the agency.
Additional Proposals: HHS also proposes to reduce management control positions at
NIH and FDA and to merge the Agency for Toxic Substances and Disease Registry
(ASTDR) with the Centers for Disease Control (CDC)
HHS Estimate of Total 5-year Savings:
$420 million
HHS Estimate of Total FTE Savings:
2,380
Office Closings:
Some, pending further HHS study
3
April 21. 1995
April 20, 1995
Health Division
Office of Management and Budget
Executive Office of the President
Washington, DC 20503
Please route to:
Nancy-Ann Min
Decision needed
XX
Please sign
Ken Apfel
Per your request
Please comment
For your information
Through:
Barry Clendenin
13c
With informational copies for: BW, KF,
RT, MM
Subject:
HHS REGO II Rollout -- Decision
Needed: Proposals to be Included in the
Rollout -- Let's Meet Today to Discuss
From: Chris Jordan eg
Phone:
202/395-4926
Fax:
202/395-3910
Room:
#7025
We understand that HHS' REGO II proposals are scheduled for a May 3, 1995 rollout.
The Budget Review Division requested that the MAX REGO II database be updated by April
19th. We were unable to meet that deadline due to incomplete savings estimates from HHS.
To get back on schedule and complete the items listed at Attachment A, the following steps
need to be taken:
By today, a decision by OMB policy officials on which HHS proposals will be in the
rollout. At Attachment B is a summary of each of the HHS proposals. This document
will be used as the basis for preparing any other materials.
By Friday, HD and HRD examiners must update the MAX REGO II database to reflect
these decisions. As of April 19th, we have received savings estimates from HHS that
are incomplete and differ from the FY 1996 Budget. At Attachment C is the HHS
savings estimate table and a table that was used for the meeting with the Vice President
with HHS' new estimates immediately under the earlier estimate for each proposal.
By Tuesday, April 25th, finalize with HHS the information in the database and the
information for a fact sheet and a one-page highlights document. Attachment D is a
draft Fact Sheet that is consistent with our understanding of which HHS proposals will
be included in the rollout.
By Thursday, April 27th, HHS ( or Larry Haas?) prepares draft HHS press materials.
OMB/White House prepares White House press materials.
Outstanding Issues
You also need to be aware of the following issues:
Savings estimates are down. The memo from the Vice President to the President
(March 17, 1995) highlighted HHS' savings estimates of $2.5 billion over five years
and 2,400 FTEs by FY 2000. Based on our understanding of Nancy-Ann's earlier
comments, HHS savings estimates would only be approximately $500 million over five
years (savings associated with Program Integrity and MTS would not be included).
Also, of the 2,400 FTEs, approximately 1,800 are associated with the contracting out of
the management of the NIH Clinical Center.
Some HHS proposals cost money. HHS estimates that the Inspector General
demonstration project under Program Integrity will cost $7.9 million over two years.
OMB estimates the Data Integration Proposal will cost $62 million above the amount in
the FY 1996 Budget over five years.
HHS staff is not aware of REGO II decisions. The HHS savings estimates table we
received yesterday included the HCFA/HRSA/SAMHSA merger proposal, the
termination of the Office of Consumer Affairs, and $396 million in annual savings from
the Program Integrity proposal. HHS staff believes that these items are still under
consideration.
None of the consultations with other agencies on HHS' cross-agency proposals are
completed.
We recommend meeting today to discuss the HHS REGO II situation. Only after
we meet will we be able to update the MAX database and initiate the process toward the
HHS REGO II rollout.
Attachments
Attachment
A
Steps that Must be Completed Prior to the HHS Rollout
1)
Decisions by OMB Policy Officials
2)
HHS Savings Estimates must be made consistent with Policy
Officials' decisions
3)
MAX Database Updated
4)
Fact Sheet
5)
One-page Highlights Paper
6)
OMB/White House Press Materials
7)
Agency Press Materials
Attachment
B
HHS REGO II Proposals for Roll-out
Notes:
Savings were last estimated by HHS April 19th. HHS will be updating some of
these estimates. These savings estimates are from OBRA baseline. Any known
costs associated with those proposals expected to require additional resources
have been included.
BRD has requested updates to the MAX system reflecting final savings
estimates by COB April 19th. We have not been able to complete that exercise.
Per earlier comments from Nancy-Ann, items that she would not include in the
roll-out have been indicated.
Items that could or would require legislation to implement, are so noted. Items
that have cross agency implications are also noted.
[Not included by NEM.] Improving Services to Children, American Indians/Native
Alaskans, and the Aged. Currently, services for children, Native Americans, and senior
citizens are fragmented in several HHS agencies as well as across the Federal government.
To relieve the burden on customers and improve the effectiveness of these programs, HHS
proposes to consolidate programs along population lines.
Children's Programs: Convene an HHS governing board to develop a unified
budget and policy strategy for all HHS programs affecting children.
In
Out
American Indians/Native Alaskans: Consult with tribes regarding the concept of
merging all Native American programs in HHS under one umbrella. HHS will
discuss the possible inclusion of some Interior Department activities into HHS with
Secretary Babbitt and with tribal organizations.
Portion of this proposal is a cross-agency issue.
Could require legislation to implement.
In
Out
1
Aging: Consolidate into Performance Partnerships many programs in HHS and
other agencies affecting senior citizens. HHS discussed this proposal with affected
agencies (DOT, HUD, USDA, Labor) on April 19th. It was the first time any of the
agencies, other than DOL, had been informed of this proposal.
Cross-agency issue.
Could require legislation to implement.
In
Out
HHS estimate of 5-year Savings:
$19 million
HHS Estimate of Total 5-year FTE Reduction:
9
Office Closings:
Contracting Out NIH Clinical Center Management. HHS proposes to begin a 24-month
phase-in toward contracting out the replacement of the facility and non-research operations
of the NIH Clinical Center. HHS proposes issuing an RFP for a contractor to build and
lease back to the government a 250-bed hospital on the NIH campus in Bethesda,
Maryland, and issuing a long term contract for management of the existing and new
hospital. HHS estimates first year (FY 1997) FTE savings of approximately 300-500
positions from downsizing staff and contracting out. Additional FTE savings will occur in
the outyears through this contracting out process.
Could require legislation to implement.
HHS estimate of 5-year Savings:
$87.2 million
HHS Estimate of Total 5-year FTE Reduction:
1,800
Office Closings:
In
Out
[Not included by NEM.] Privatize the FEOH. HHS proposes to privatize the Federal
Employee Occupational Health (FEOH) program, which provides reimbursable health
Chanwl
consultation and services to over 4,000 departments, agencies, and offices. HHS estimates
that this proposal will result in 100 Federal FTE savings by FY 2000.
Elaine
HHS estimate of 5-year Savings:
HHS Estimate of Total 5-year FTE Reduction:
100
Office Closings:
In
Out
2
Privatizing Clinical Practice Guidelines. Currently, HHS' Agency for Health Care Policy
and Research develops clinical practice guidelines. HHS proposes establishing four private-
sector guideline centers to develop multiple guidelines simultaneously, allowing economies
of scale, efficiencies in process, and improvements in product consistency. The centers
will also be available to develop guidelines for private-sector customers (professional
societies, managed care organizations, etc.).
Could require legislation to implement.
HHS estimate of 5-year Savings:
$14.8 million
HHS Estimate of Total 5-year FTE Reduction:
5
Office Closings:
In
Out
Privatizing Technology Assessment. Currently, HHS' Agency for Health Care Policy and
Research reviews and assesses new technologies under consideration for reimbursement by
Federal agencies. HHS proposes to shift technology assessments to the private sector
through collaborative arrangements with health care organizations, payers, manufacturers,
clinicians, and assessors. HHS projects a 50% savings over a five year period by
downsizing and streamlining current activities and leveraging private sector funding.
Could require legislation to implement.
HHS estimate of 5-year Savings:
$3.3 million
HHS Estimate of Total 5-year FTE Reduction:
3
Office Closings:
In
Out
OS/OASH Consolidation. HHS' current extended management structure does not integrate
Human Services and Health functions. This proposal would eliminate the Office of the
Assistant Secretary for Health (OASH) and merge its functions with the Office of the
Secretary (OS), developing a single HHS corporate structure. Currently OASH has 1,153
FTEs and OS has 1,276 FTEs. By FY 2000, the new HHS corporate structure will have
58% fewer FTEs compared to the OS/OASH base for FY 1993. This reflects streamlining
changes from REGO I and FTE reductions in the FY 1996 Budget, as well as the merger
proposed in the current option.
3
The merger itself proposes outright elimination of 190 FTEs. Another 698 FTEs would be
privatized, franchised, or devolved to HHS operating components. How many of these 698
FTEs would result in bottom line FTE savings is not certain. To the extent that larger HHS
FTE savings are desirable, some or all of these 698 FTEs could be used.
HHS estimate of 5-year Savings:
$69.4 million
HHS Estimate of Total 5-year FTE Reduction:
190
Go back to HHS
Office Closings: 1 (or more depending on HHS)
400 FTES?
In
Out
Program Integrity and HHS OIG Fraud and Abuse Demo. Currently, HHS spends
nearly $400 million per year to prevent fraud, waste and abuse. HHS believes that there is
substantial evidence that investing in these activities has significant returns in reduced
program costs. Two options to prevent fraud and abuse in Medicare are being proposed:
(1) Per Nancy-Ann's decision of April 18, Secretary Shalala will initiate a demonstration
R&D
program led by the HHS Inspector General in several key states -- Texas, California,
piomoney
Florida, Illinois, New York where health care fraud is of particular concern. Next steps
include HHS development, and submission to OMB, of an apportionment request, including
a detailed financial plan linked to performance measures as well as responses OMB
questions on the demo (submitted to HHS on April 13th).
(2) The HHS will propose a more reliable funding source for program integrity activities to
Budget
better protect the Medicare trust funds. Per Nancy-Ann's recommendation, next steps
neutral
include discussions between her, the Director and Elaine Kamarck concerning options for
No Medicare
the type of funding source to be created under this proposal.
cuts to pay
for this.
Would require legislation to implement.
t existing $ 5
HHS estimate of 5-year Costs: $7.9 million in mandatory spending for the OIG demo.
HHS Estimate of Total 5-year FTE Reduction:
?
In
Out
why not shifting
FTES
Projected recapture ? They say 8 to /.
$ 56 M Fraudulent A
- want PR person to go with each team
$ 20,000 for media travel
What are you diverting this $ 4 from - - not pay go but on mandatory
side
Why trust Fund ?
Why not using discretionary
Funds 7
[Not included by NEM] PHS Consolidations. The President's FY 1996 Budget proposes
to consolidate 107 Public Health Service (PHS) programs into 6 Performance Partnerships
and 10 consolidated clusters to give states and local communities more flexibility in
administering PHS grants. FTE savings of 723 by FY 2000 were proposed in the FY 1996
Budget.
Already
Would require legislation to implement.
in hudget
HHS estimate of 5-year Savings:
$218 million (Included in the FY 1996 Budget)
HHS Estimate of Total 5-year FTE Reduction:
723 (Included in the FY 1996
Budget, but below the HHS
October Streamlining Plan)
Office Closings:
In
Out
[Not included by NEM.] Health Care Financing Administration, Medicare
Transaction System (MTS). Ample opportunity exists within the Medicare program to
streamline administration and reduce costs by utilizing new technologies and reducing
duplication in the claims processing environment. HHS proposes to continue developing
the Medicare Transaction System (MTS), begun in 1991 as a single, integrated Medicare
claims processing system replacing the 11 systems and 60 operating sites currently
processing Medicare claims.
NOTE: The savings estimate is HHS' current "best guess" of the level of efficiency
achieved in claims processing through implementation of MTS. The estimate is not
measured against any existing budget baseline and does not include start-up and transition
costs, which are likely to offset any savings in FY97, FY98 and FY99. Therefore, we
believe that HHS should not show any savings for this proposal.
HHS estimate of 5-year Savings:
$320 million
HHS Estimate of Total 5-year FTE Reduction:
Office Closings:
In
Out
5
Reduction of Management Control Positions -- NIH and FDA. HHS proposes to
increase the proportion of its already planned FTE reductions from management control
positions (as defined by NPR). Dollar savings from this proposal are a pricing-out of the
existing HHS streamlining plan and are assumed in the FY 1996 Budget, and an additional
savings of 130 FTEs from NIH control positions, below the streamlining plan. Also, the
savings estimate doubled for this proposal in HHS' April 19th estimate.
HHS estimate of 5-year Savings:
$105.7 million
HHS Estimate of Total 5-year FTE Reduction:
130
Office Closings:
In
Out
Integration of Surveys and Development of Data Standards. HHS spends nearly $250
million per year on multiple program-specific and all-purpose surveys. These efforts are
generally inefficient and overlapping and do not always result in timely availability of
reliable health information. HHS proposes to solve these problems by integrating HHS
survey activities, establishing an HHS data and statistics entity and creating an HHS data
council to coordinate health data standards development.
NOTE: This initiative will increase spending for health survey related activities at HHS by
nearly $62 million above the FY 1996 President's budget, between FY 1996 and FY 2000.
The proposal also needs to be integrated with the federal statistical crosscut REGO proposal
being coordinated by Kathy Walman in OIRA.
HHS estimate of 5-year Cost:
$62 million
HHS Estimate of Total 5-year FTE Reduction:
Office Closings:
In
Out
CDC/ATSDR Merger. Merges two Public Health Service agencies, the Agency for Toxic
Substances and Disease Registry (ATSDR) and the Centers for Disease Control and
Prevention (CDC), both with headquarters in Atlanta and currently headed by the Director
of CDC. Consolidates CDC's and ATSDR's environmental expertise and gives ATSDR
better access to CDC's relationships with State and local governments. HHS estimates the
merger will result in $2 million and 40 FTE in annual administrative savings to HHS.
HHS estimate of 5-year Savings:
$8 million
HHS Estimate of Total 5-year FTE Reduction:
40
Office Closings:
In
Out
6
[Not included by NEM.] National Training Accounts. Medicare payments are not
always managed with clear direction for health professions training priorities and goals,
contributing to support for unneeded types of providers and facilities. Similar to last year's
Health Security Act, the HHS proposal pools Medicare's resources into two National
Training Accounts to rationalize and align federal resources with national purposes and the
general public benefit. These accounts would direct support to institutions and training
most needed (e.g., primary care health providers) on a national basis.
HHS estimate of 5-year Savings:
HHS Estimate of Total 5-year FTE Reduction:
Office Closings:
In
Out
FDA Regulatory Reform. Proposals to reform FDA's regulation of foods, drugs,
biologics, and medical devices were annnounced on March 16, 1995. These reforms are
expected to yield savings for the regulated industries and for FDA. This proposal provides
no net FTE savings and only modest dollar savings because the savings from the reforms
Point
are recycled within FDA.
but to
The substance of this item was included in reg. reform. However, no savings were
chris
associated with this proposal as part of that process. Therefore, HHS is counting the
savings here.
HHS estimate of 5-year Savings:
$ 37.1 million
HHS Estimate of Total 5-year FTE Reduction:
Office Closings:
In
Out
7
[We understand that these items were not included in the materials sent
from the Vice President to the President on March 17, 1995. HHS has
included the proposals as part of their April 19th savings estimate]
Consolidation of SAMHSA, HCFA, HRSA. HHS proposes to consolidate activities in the
Substance Abuse and Mental Health Services Administration (SAMHSA), the Health Care
Financing Administration (HCFA), the Health Resources and Services Administration
(HRSA), and perhaps other HHS units into a single health services and financing agency.
HHS' proposal would coordinate Federal funding streams to States, institutions in States
and beneficiaries to streamline administration of health, mental health and substance abuse
Chris
delivery systems. These consolidations would facilitate state efforts to reform their own
health care systems and would better leverage Federal funds to assure continued health care
access for vulnerable populations even as the market place is increasingly dominated by
managed care. HHS estimates that this proposal will achieve 200 Federal FTE savings by
FY 2000. These are in addition to FTE reductions already agreed to as part of streamlining
and FY 1996 budget cuts.
HHS estimate of 5-year Savings:
$38.1 million
HHS Estimate of Total 5-year FTE Reduction:
200
Office Closings:
In
Out
Terminate Smaller HHS Programs. HHS proposes to eliminate the following programs
(Total: $27 million/yr.):
--Public Health Service
Pacific Basin Initiative (Health Services) ($1 million/yr.)
Trauma Care ($5 million/yr.)
Chris
Payments to Hawaii (Hansen's Disease) ($3 million/yr.)
Native Hawaiian Health Care ($4 million/yr.)
Prostate Cancer Screening (CDC) ($4 million/yr.)
HEAL
HRSA support for HUD's 242 Program (Cross-agency)
Hansen's Disease (Carville?) ($8 million/yr.)
--Office of Consumer Affairs ($2 million/yr.)
HHS estimate of 5-year Savings:
$114 million
HHS Estimate of Total 5-year FTE Reduction:
13
Office Closings:
In
Out
8
Attachment
C
04/19/95
12:55
202 690 6896
ASMB BUDGET OFC. +++ OMB
002/002
DRAFT
REGO Proposals
$'S in Millions
1997
1998
1999
2000
ERSA/SAMESA/ECFA
-3.5
-7.2
-11.4
-16.0
Survey and Data Standards
-
-
-
-
Population-based Initiatives
Children
-
-
-
-
Native Americans
-
-
-
-
Aging-AoA
-4.4
-4.4
-4.4
-4.4
STILL VEDATE
05/0ASE Consolidation
-7.5
-15.2
-23.2
-23.5
Consolidations
PHS
-23.0
-29.0
-41.0
-50.0
CDC/ATDSR
-2.0
-2.0
-2.0
-2.0
Terminations
OCA
-1.8
-1.8
-1.8
-1.8
STILL REQUIRE/DRICUME SIFDATE
HEAL Phase-out
-
-
-
-
Privatizs/Franchise
ACHPR Clinical Guidelines
-1.3
-2.9
-4.5
-6.1
PHCPR Technology Assessment
-0.3
-0.5
-1.0
-1.5
NIH Clinical Center
-2.8
-25.3
-29.0
-30.1
Hansen's Disease
-7.8
-8.0
-8.2
-8.5
Fed. Employ. Occup. Health Pro
-
-
-
-
HRSA 242 Program
Management Improvements
FDA Regulatory Reform
-7.1
-14.6
-15.4
FDA Management Cnt'l Positions
-1.5
-3.2
-6.7
-7.0
NIH Management Cntl' Positions
-9.8
-20.4
-12.7
-44.4
Program Integrity
-396.3
-396.3
-396.3
-396.3
STILL REQUIRES DISCLINE UPDATE
Medicare Transaction System
-70.0
-100.0
-150.0
STILL REQUIRES DUCLINE UPDATE
REGO Totals
$
(462)
$ ( (593.3)
$ (656.8)
$ (757.0)
66
1973
2,60.
361
4/19
DRAFT
(127)
(160)
(iii)
130
pm
62.5
119.8
19-Apr-95
09:16 PM
Department of Health and Human Services
Reinventing Government - Phase II
(in millions of dollars)
Preliminary
Actual
Actual
Net Savings
FY 1993
FY 1994
FY 1995
FY 1996
FY 1997
FY 1998
FY 1999
FY 2000
FY 97-2000
Freeze Discretionary BA at the FY 1996 level*
29,494
32,133
32,556
33,960
33,960
33,960
33,960
33,960
FY 1996 President's Budget Discretionary BA
--
--
--
33,960
33,128
32,519
31,944
31,384
Difference: Final FY 1996 Budget less Freeze
--
--
--
--
-832
-1,441
-2,016
-2,576
-6,865
REGO Savings in the FY 1996 Budget
-
-
--
-15
-38
-44
-56
-65
-218
April 19 HHS estimate
-23
-29
-41
-50
Other Savings Required
-
--
--
--
-794
-1,397
-1,960
-2,511
-6,647
Agency Recommendations (1)
Option 1: Combine HCFA/HRSA/SAMHSA
--
--
--
-
-3
-7
-11
-16
-38
April 19 HHS estimate
-4
-7
-11
-16
-38
Option 2: Consolidate Health Surveys and Data
-
--
--
--
-
--
-
-
0
April 19 HHS estimate
-
-
-
-
0
Option 3: Consolidate programs by population served
--
-
--
-
-5
-5
-5
-5
-19
April 19 HHS estimate
-4
-4
-4
-4
-18
Option 4: Streamline management structure
-
-
--
-
-6
-14
-21
-22
-63
April 19 HHS estimate
-8
-15
-23
-24
-69
Option 5: Terminate non-critical functions
--
--
-
--
-19
-20
-21
-21
-82
April 19 HHS estimate
-2
-2
-2
-2
-7
Option 6: Consolidations incl. Performance Partnerships
-
--
--
--
-2
-2
-2
-2
-9
April 19 HHS estimate
-2
-2
-2
-2
-8
Option 7: Privatize and franchise certain functions:
--
--
--
--
-12
-36
-43
-47
-138
April 19 HHS estimate
-12
-37
-43
-46
-138
Option 8: Management Improvements.
--
--
--
--
-420
-513
-573
-665
-2,172
April 19 HHS estimate
-408
-497
-530
-613
-2,048
Total Agency Recommendations
--
--
--
--
-500
-665
-761
-872
-2,798
Total, April 19 HHS Estimate
-439
-564
-616
-707
-2,326
Proposed FTE Savings
2,383
*
Does not include trust fund transfers from HCFA to SSA or other non-HHS entities. Does not include funds from the VCRTF.
1) Savings estimates associated with Agency recommendations were provided by HHS. Savings estimates are changes from the OBRA baseline.
Attachment
D
FACT SHEET
DEPARTMENT OF HEALTH AND HUMAN SERVICES (HHS)
NATIONAL PERFORMANCE REVIEW, PHASE II
The Department and its Mission
The Department of Health and Human Services (HHS) is the Federal Government's
principal agency for providing essential human services and furthering the health of all
Americans. With approximately programs, HHS has the largest budget among all
domestic Federal departments, accounting for percent of all federal spending. With the
departure of the Social Security Administration on March 31, 1995 employs roughly
FTEs.
HHS' mission is to protect and promote the health and economic security of all Americans
and in particular those least able to help themselves -- children, the elderly, persons with
disabilities, and the disadvantaged -- by helping them and their families develop and
maintain healthy, productive, and independent lives. In partnership with States, tribes,
localities and other important community institutions, HHS attempts to accomplish this
mission in a way that provides the highest qualify of service to the American people,
assures fairness and equity to all people, and protects the public investment in our
programs.
The HHS/National Performance Review Process
HHS has systematically assessed and applied the National Performance Review (NPR)
decision tree to each of its activities. Each Assistant Secretary and agency head personally
reviewed their agencies and programs, and presented the results to an internal group made
up of senior staff from across HHS. That group also conducted a departmental-wide review,
starting initially by identifying the key federal roles that HHS must perform, and critically
examining the agency specific reviews in that light. The effort was guided on a daily basis
by the Deputy Secretary, and by a Policy Group consisting of HHS Assistant Secretaries
and others at the policy level, including the Secretary. Nothing was "off the table" in these
reviews.
The process has yielded great dividends and bold proposals to eliminate non-core functions;
eliminated an entire organizational layer; consolidated major programs to better serve the
public; offer more flexibility to our partners in state, local and tribal governments; and cut
administrative overhead.
Summary of Major NPR Proposals
HHS' NPR Phase II proposals would result in savings of ($.4-$1 billion) and reductions of
about (1800-2400) FTE over five years. These savings come from the major departmental
restructuring and the elimination, consolidation and privatization of activities highlighted
below. Some of these proposals can be accomplished administratively, and some will
require legislation which HHS will submit to Congress by July 4th, 1995.
Departmental Restructuring
Consolidate Programs Serving Seniors into Performance Partnership Grants: HHS
would consolidate programs serving seniors into Performance Partnership Grants
(PPGs). Programs include all Administration on Aging (AOA) programs within
HHS, as well as those serving seniors in the Public Health Service, the Department
of Agriculture, Department of Treasury, Department of Transportation, Department
of Housing and Urban Development, EPA and the Corporation for National Service.
These programs were appropriated a total of $ in FY 1995.
These categorical and formula grant programs would be brought under the umbrella
of the AOA. The proposal creates one Federal focal point for social services and
applied research related to the elderly and their caregivers, resolving longstanding
problems articulated by States about the fragmentation and lack of coordination of
multiple Federal programs. State and local communities would be granted increased
flexibility to determine the types of aging services that are most useful locally, in
exchange for greater accountability for program results.
[List of included agencies still to be determined]
Merge all HHS Native American Activities: To relieve administrative burden on
customers and improve program effectiveness, HHS would consolidate all activities
serving Native Americans under one umbrella. [HHS would also consult with tribes
and Secretary Babbitt about the inclusion Department of Interior programs serving
native Americans in HHS.]
Create a Streamlined HHS Corporate Structure: HHS would develop a single HHS
corporate structure by eliminating the Office of the Assistant Secretary for Health
(OASH) and merging its functions with the Office of the Secretary (OS). Currently
OASH has 1,153 FTEs and OS has 1,276 FTEs. By FY 2000, the new HHS
corporate structure will have 58 percent fewer FTEs compared to the OS/OASH
base for FY 1993.
Consolidation of Surveys and Development of Data Standards: HHS would
consolidate survey activities, establish an HHS data and statistics entity, and create a
HHS data council to coordinate health data standards development.
Consolidate Health Services Provided Through Medicaid and Public Health Clinics:
HHS proposes to consolidate activities in the Substance Abuse and Mental Health
Services Administration (SAMHSA), the Health Care Financing Administration
(HCFA) and the Health Resources and Services Administration (HRSA) into one
health services and financing agency. The proposal would coordinate Federal
funding streams to States, institutions in States, and beneficiaries to streamline
administration of health, mental health and substance abuse delivery systems.
Convene an Unified Children's Program Board: HHS would convene a governing
board to develop a unified budget and policy strategy for all HHS programs
affecting children.
Consolidations/Eliminations/Privatizations
Strengthen Medicare Program Integrity: HHS will take a two-step approach to
prevent fraud and abuse in Medicare. First, Secretary Shalala will initiate a
demonstration program led by the HHS Inspector General in five key states -- Texas,
California, Florida, Illinois and New York -- where health care fraud is of particular
concern. Second, HHS will be proposing a new funding source for Medicare fraud
and abuse activities. This source will ensure that these activities are maintained at
sufficient levels to ensure the protection of the Medicare trust funds.
Privatizing National Institutes of Health (NIH) Clinical Center Management: HHS
proposes to begin a 24-month phase-in toward contracting out the replacement of the
facility and non-research operations of the NIH clinical center.
Other Privatizations: HHS proposes to privatize other certain functions including the
Federal Employees Occupational Health (FEOH) program, Clinical Practice
Guidelines and Technology Assessment.
Public Health Service (PHS) Consolidations: The President's FY 1996 Budget
proposes to consolidate 107 PHS activities into six Performance Partnerships and 10
consolidated performance-based clusters to give states and local communities more
flexibility in administering PHS grants.
Develop a Medicare Transaction System (MTS): HHS proposes to continue
developing the Medicare Transaction System (MTS), an integrated Medicare claims
processing system that will eventually replace 11 systems and 60 operating sites
currently processing Medicare claims.
Food and Drug Administration (FDA) Regulatory Reform: The reforms announced
on March 16, 1995 for FDA's regulation of foods, drugs, biologics, and medical
devices are expected to yield savings for the regulated industries and the agency.
Additional Proposals: HHS also proposes to reduce management control positions at
NIH and FDA; merge the Agency for Toxic Substances and Disease Registry
(ASTDR) with the Centers for Disease Control (CDC); and eliminate the Health
Education Assistance Loan (HEAL) and HUD 242 medical facility construction
program within the Health Resources and Services Administration (HRSA).
HHS Estimate of Total 5-year Savings:
$.4--$1 billion
HHS Estimate of Total FTE Savings:
1800-2400
Office Closings:
Some, pending further HHS study
April 17, 1995
Health Division
Office of Management and Budget
Executive Office of the President
Washington, DC 20503
Please route to:
Nancy-Ann Min
Decision needed
X
Please sign
Per your request
-
BC
Please comment
For your information
Through:
Barry Clendenin
Mark Miller
With informational copies for:
HD Chron, Mike Dost, Alison Eydt, Joe
Wholey , (J, > HF13 Cluar
Subject:
HHS' OIG Demonstration Project
Phone: 202/395-7831
From:
of
Fax: 202/395-3910
Tim Hill
Email: [email protected]
Room: #7026
Secretary Shalala has requested OMB approval of HHS's "Health Care Anti-Fraud
Demonstration Project". The Secretary is seeking to finance the demonstration through a direct
tap on the Medicare trust funds, rather than through OIG or HCFA appropriations. We met, on
April 10th, with HHS staff from the Office of the Inspector General, HCFA, AoA and ASMB to
discuss the proposal in greater detail. We have also received input from OIRA staff and Joe
Wholey on various aspects of the proposal. On April 12th, we requested HHS' response to
several questions that address some issues, which are noted in this memorandum.
Secretary Shalala would like to move forward with this proposal as soon as possible, as the
tentative date for the HHS REGO II "rollout" is May 3rd. In addition to the concerns outlined in
this memorandum, we believe there are two outstanding issues:
If this project is approved, is it appropriate to finance it through HHS'
demonstration authority, i.e. using apportioned trust fund resources?
Does this project merit involvement of the White House thus requiring a
Presidential event before implementation?
Background
This proposed demonstration is one piece of the HHS REGO II proposal to combat health care
fraud, waste and abuse. HHS transmitted, on March 31st, a letter to the Director seeking OMB
approval of the proposed project in advance of sending OMB a formal apportionment request.
See Tab A for a copy of the HHS letter and Tab B for a short description of the demonstration.
The HHS request is for $7.9 million over two years. The project officer is HHS Inspector
General June Gibbs Brown. The demonstration will be in addition to, and will complement,
HHS' continuing efforts to combat health care fraud through Medicare contractor payment
safeguard activities and other existing IG programs.
The demonstration is authorized under HHS' general demonstration authority (section 402(a),
PL90-248,) which contemplates demonstrations in areas such as payment and coverage policy, as
well as fraud and abuse prevention. However, the particular authority for a fraud and abuse
demonstration (402(a)(1)(J)) has not been used since passage of the amendments in 1967.
Analysis
Funding Issues. The budget for the demonstration is $7.9 million in new Medicare trust fund
spending to pay for OIG, HCFA and AoA travel (for media events and investigatory activities),
equipment, contractor employees, medical record review, and office space. Generally, this
spending will not support development of innovative methods for the investigation and
prosecution of fraud. The mandatory Medicare funds will be used to increase current OIG and
HCFA investigation and prosecution activities, typically funded through the OIG and HCFA
appropriations. This demonstration merely represents a new funding stream for these activities.
HHS IG staff as much as conceded this position in our discussions of the proposal.
In addition, HHS expects, but has not identified, that some existing federal resources (such as DoJ
investigative and Medicare contractor) will be allocated to the project and that States will
contribute resources in the form of state Medicaid agency participation. HHS has also not
clarified the number of FTEs to be allocated from each of the participating federal entities.
Performance Measurement and Evaluation. HHS has not provided a clear set of hypotheses, a
clear evaluation design, nor clear criteria for success or failure of the demonstration. The
proposal should more clearly specify the input, process, output, outcome, and impact measures to
be used to assess project performance. The measures should include both quantitative measures
(such as rate of return or the time it takes to conclude cases) and qualitative measures (such as
descriptions of the provider reaction and behaviors in the health care industry). The proposal
should also include a set of comparisons (for example, between the five projects states and other
states) over a multi-year time period and plan for analyzing the resulting data.
Management. HHS has not provided a very clear description of the demonstration's
management structure and management plan, including performance measures to be used; data
sources in demonstration and non-demonstration states; and management actions to be taken to
keep the project on track, produce the types of results intended, and test whether the results are
different from the results that would have been achieved without the demonstration project.
Congressional Concerns. House and Senate appropriations committees have been reluctant to
look favorably on such funding proposals in the past, preferring that HHS simply ask for the
funds that they think they will need. Given the current state of the Medicare Trust Funds, it is
also likely that Congress will closely scrutinize any activities, including this demonstration, that
may increase trust fund expenditures.
Deliverables. HHS has not set a deliverable schedule allowing for thorough, ongoing evaluation
of the demonstration.
Decisions Needed
Issue 1: Approval of the demonstration and apportionment of funds. HHS is requesting
approval of the demonstration program which requires OMB apportionment of $4.9 million
in the first year and $3.0 million in the second year from the Medicare trust funds. (Note: A
financial plan that includes a breakdown of the funds by fiscal year has not been made
available to OMB.) The following options relate to the apportionment.
Option A: Do not approve the demonstration. HHS should conduct its payment
safeguard activities using the organizational/management systems that achieve the
greatest return on investment. These activities should be funded through current
discretionary resources.
Option B: Approve the demonstration, and apportion according to a detailed financial
plan with performance measures. As a condition of approval, HHS will provide
information that satisfies the OMB concerns discussed above. This is an approach
taken with other demonstration activity at HHS (see Tab C).
Option C: Approve the request with no restrictions.
Issue 2: If we agree with the HHS demonstration proposal, does it merit a Presidential
announcement? Concern was raised that the President not announce the HHS Program
Integrity proposal, which is similar to this demonstration in that they are each merely creating
new funding mechanisms for existing program. If we agree with the HHS demonstration
proposal, should HHS:
Option A: Include this proposal as part of a broader Presidential HHS REGO II
announcement; or
Option B: Have Secretary Shalala initiate this project without a White House event?
Please let us know how you would like to proceed.
Attachments (3)
c:
Official File (HFB)
EXECUTIVE OFFICE OF THE PRESIDENT
DO Records
OFFICE OF MANAGEMENT AND BUDGET
Nancy-Ann Min
WASHINGTON, D.C. 20503
Barry Clendenin
HD Chron
HD/HFB/THill/dy/4-18-95
MEMORANDUM FOR ALICE RIVLIN
File Name: I:HDIMHill.T\Kamark
FROM:
Nancy-Ann Min
SUBJECT:
Discretionary Offset Options for HHS REGO II Program Integrity
Spending
This memorandum follows up on our recent conversations regarding the HHS REGO
II program integrity initiative. I specifically want to raise to you a concern raised by Elaine
Kamarck.
Background: As you recall, HHS originally proposed to "terminate" their
discretionary Medicare program integrity program and create a new mandatory program in
its place. HHS proposed PAYGO offsets (Medicare MSP savers) so that they could claim
3/5/7/9 "credit". However, we are reluctant to use Medicare savings to pay for this
proposal at this time.
Therefore, another way to accomplish HHS' objective--moving program integrity
activities to the mandatory "side" of the budget---is to use existing authority within the
Budget Enforcement Act (BEA) allowing us to "reclassify" discretionary activities as
mandatory. As you know, the BEA permits such conceptual changes as long as the
discretionary caps are lowered one-for-one by the amount of new mandatory spending. In
this case, the reductions, approximately $400 million per year, will come from the HHS
discretionary budget. However, under this method, HHS will not be able to claim 3/5/7/9
credit.
Elaine Kamarck's Concern: As I mentioned, I have described the above proposal
to Elaine Kamarck and she agrees it makes sense. However, Elaine has suggested that
HHS' proposal be structured so that program integrity spending could increase more or less
automatically in the out-years. Her suggestion is rooted in the observation that since there
is such a high return to the Trust Funds for these activities (HHS argues 8:1), we.might
wish to increase our investment in the outyears to yield greater savings for the Medicare
program as a whole.
Options to Structure "Reclassified" Spending for Program Integrity: I have
consulted with Barry Anderson and believe that there are three options to authorize any
new "reclassified" mandatory spending, two of which could increase spending in the out
years.
1. "Capped Entitlement". New mandatory spending for program integrity
will be "capped" and be paid for by reducing the discretionary caps by the amount
of new entitlement spending. Mandatory spending levels will remain at roughly
$400 million per year, the current amount of HHS discretionary spending for
program integrity activities. (This is what we assumed would be the proposal.)
2. "Formulaic Entitlement". New mandatory spending will be adjusted in
the out-years by a formula created in the authorizing legislation. The discretionary
caps will be reduced each year by the projected amount of new spending. For
example, growing the HHS FY 1996 request for program integrity ($396 million) by
inflation and the growth in beneficiaries using services achieves mandatory spending
levels of nearly $500 million per year by FY2000.
Growing spending in such a manner means that HHS will need to put
forward larger discretionary cuts than the $400 million per year needed under the
"capped" approach in order to do this, i.e allow the mandatory program to "grow" in
the outyears on a budget neutral basis. In short, HHS could be required to take
deeper cuts in discretionary spending than they are willing to take.
3. Direct Spending--An Open Ended Entitlement. New mandatory spending
will be authorized as direct spending, a la Social Security. In this case, at the time
the law is passed OMB and CBO would estimate the amount of anticipated program
integrity spending for the budget window and the discretionary caps would be
reduced by that amount.
Obviously, this option allows for significant increases in spending for
program integrity in the years beyond the budget window, depending upon CBO and
OMB projections. However, the Administration will not know by how much the
discretionary caps will need to be reduced, and consequently by how much HHS
will need to reduce their spending, until OMB and CBO score the proposal.
Some general observations for each of these options: Creating a new, possibly
open-ended entitlement in the current Congressional environment may not be feasible.
Congress could easily ask the question "why not just rearrange priorities within current
discretionary spending levels?", arguing that creating a new mandatory program is
fundamentally a budget gimmick, as no new activities are being performed.
Recommendation: If we move forward with the initiative, I recommend structuring
it as a "capped entitlement" with spending at $400 million per year. If HHS wishes to
increase funding in the outyears, they will need to finance it by reducing other discretionary
spending or by producing Medicare or Medicaid offsets.
This approach does not allow program integrity spending to grow in an open-ended
fashion, or according to a formula. However, it does permanently stablize funding for
program integrity activities at at least $400 million per year.
I think we should discuss this with Elaine. Please let me know if you need
additional information.
April 20, 1995
Health Division
Office of Management and Budget
Executive Office of the President
Washington, DC 20503
Please route to:
Nancy-Ann Min
Decision needed
XX
Please sign
Ken Apfel
Per your request
Please comment
For your information
Through:
Barry Clendenin
With informational copies for: BW, KF,
RT. MM
Subject:
HHS REGO II Rollout -- Decision
Needed: Proposals to be Included in the
Rollout -- Let's Meet Today to Discuss
From: Chris Jordan
eg
Phone:
202/395-4926
Fax:
202/395-3910
Room:
#7025
We understand that HHS' REGO II proposals are scheduled for a May 3, 1995 rollout.
The Budget Review Division requested that the MAX REGO II database be updated by April
19th. We were unable to meet that deadline due to incomplete savings estimates from HHS.
To get back on schedule and complete the items listed at Attachment A, the following steps
need to be taken:
By today, a decision by OMB policy officials on which HHS proposals will be in the
rollout. At Attachment B is a summary of each of the HHS proposals. This document
will be used as the basis for preparing any other materials.
By Friday, HD and HRD examiners must update the MAX REGO II database to reflect
these decisions. As of April 19th, we have received savings estimates from HHS that
are incomplete and differ from the FY 1996 Budget. At Attachment C is the HHS
savings estimate table and a table that was used for the meeting with the Vice President
with HHS' new estimates immediately under the earlier estimate for each proposal.
By Tuesday, April 25th, finalize with HHS the information in the database and the
information for a fact sheet and a one-page highlights document. Attachment D is a
draft Fact Sheet that is consistent with our understanding of which HHS proposals will
be included in the rollout.
By Thursday, April 27th, HHS ( or Larry Haas?) prepares draft HHS press materials.
OMB/White House prepares White House press materials.
Outstanding Issues
You also need to be aware of the following issues:
Savings estimates are down. The memo from the Vice President to the President
(March 17, 1995) highlighted HHS' savings estimates of $2.5 billion over five years
and 2,400 FTEs by FY 2000. Based on our understanding of Nancy-Ann's earlier
comments, HHS savings estimates would only be approximately $500 million over five
years (savings associated with Program Integrity and MTS would not be included).
Also, of the 2,400 FTEs, approximately 1,800 are associated with the contracting out of
the management of the NIH Clinical Center.
Some HHS proposals cost money. HHS estimates that the Inspector General
demonstration project under Program Integrity will cost $7.9 million over two years.
OMB estimates the Data Integration Proposal will cost $62 million above the amount in
the FY 1996 Budget over five years.
HHS staff is not aware of REGO II decisions. The HHS savings estimates table we
received yesterday included the HCFA/HRSA/SAMHSA merger proposal, the
termination of the Office of Consumer Affairs, and $396 million in annual savings from
the Program Integrity proposal. HHS staff believes that these items are still under
consideration.
None of the consultations with other agencies on HHS' cross-agency proposals are
completed.
We recommend meeting today to discuss the HHS REGO II situation. Only after
we meet will we be able to update the MAX database and initiate the process toward the
HHS REGO II rollout.
Attachments
Attachment
A
Steps that Must be Completed Prior to the HHS Rollout
1)
Decisions by OMB Policy Officials
2)
HHS Savings Estimates must be made consistent with Policy
Officials' decisions
3)
MAX Database Updated
4)
Fact Sheet
5)
One-page Highlights Paper
6)
OMB/White House Press Materials
7)
Agency Press Materials
Attachment
B
HHS REGO II Proposals for Roll-out
Notes:
Savings were last estimated by HHS April 19th. HHS will be updating some of
these estimates. These savings estimates are from OBRA baseline. Any known
costs associated with those proposals expected to require additional resources
have been included.
BRD has requested updates to the MAX system reflecting final savings
estimates by COB April 19th. We have not been able to complete that exercise.
Per earlier comments from Nancy-Ann, items that she would not include in the
roll-out have been indicated.
Items that could or would require legislation to implement, are so noted. Items
that have cross agency implications are also noted.
[Not included by NEM.] Improving Services to Children, American Indians/Native
Alaskans, and the Aged. Currently, services for children, Native Americans, and senior
citizens are fragmented in several HHS agencies as well as across the Federal government.
To relieve the burden on customers and improve the effectiveness of these programs, HHS
proposes to consolidate programs along population lines.
Children's Programs: Convene an HHS governing board to develop a unified
budget and policy strategy for all HHS programs affecting children.
In
Out
American Indians/Native Alaskans: Consult with tribes regarding the concept of
merging all Native American programs in HHS under one umbrella. HHS will
discuss the possible inclusion of some Interior Department activities into HHS with
Secretary Babbitt and with tribal organizations.
Portion of this proposal is a cross-agency issue.
Could require legislation to implement.
In
Out
1
Aging: Consolidate into Performance Partnerships many programs in HHS and
other agencies affecting senior citizens. HHS discussed this proposal with affected
agencies (DOT, HUD, USDA, Labor) on April 19th. It was the first time any of the
agencies, other than DOL, had been informed of this proposal.
Cross-agency issue.
Could require legislation to implement.
In
Out
HHS estimate of 5-year Savings:
$19 million
HHS Estimate of Total 5-year FTE Reduction:
9
Office Closings:
Contracting Out NIH Clinical Center Management. HHS proposes to begin a 24-month
phase-in toward contracting out the replacement of the facility and non-research operations
of the NIH Clinical Center. HHS proposes issuing an RFP for a contractor to build and
lease back to the government a 250-bed hospital on the NIH campus in Bethesda,
Maryland, and issuing a long term contract for management of the existing and new
hospital. HHS estimates first year (FY 1997) FTE savings of approximately 300-500
positions from downsizing staff and contracting out. Additional FTE savings will occur in
the outyears through this contracting out process.
Could require legislation to implement.
HHS estimate of 5-year Savings:
$87.2 million
HHS Estimate of Total 5-year FTE Reduction:
1,800
Office Closings:
In
Out
[Not included by NEM.] Privatize the FEOH. HHS proposes to privatize the Federal
Employee Occupational Health (FEOH) program, which provides reimbursable health
consultation and services to over 4,000 departments, agencies, and offices. HHS estimates
that this proposal will result in 100 Federal FTE savings by FY 2000.
HHS estimate of 5-year Savings:
HHS Estimate of Total 5-year FTE Reduction:
100
Office Closings:
In
Out
2
Privatizing Clinical Practice Guidelines. Currently, HHS' Agency for Health Care Policy
and Research develops clinical practice guidelines. HHS proposes establishing four private-
sector guideline centers to develop multiple guidelines simultaneously, allowing economies
of scale, efficiencies in process, and improvements in product consistency. The centers
will also be available to develop guidelines for private-sector customers (professional
societies, managed care organizations, etc.).
Could require legislation to implement.
HHS estimate of 5-year Savings:
$14.8 million
HHS Estimate of Total 5-year FTE Reduction:
5
Office Closings:
In
Out
Privatizing Technology Assessment. Currently, HHS' Agency for Health Care Policy and
Research reviews and assesses new technologies under consideration for reimbursement by
Federal agencies. HHS proposes to shift technology assessments to the private sector
through collaborative arrangements with health care organizations, payers, manufacturers,
clinicians, and assessors. HHS projects a 50% savings over a five year period by
downsizing and streamlining current activities and leveraging private sector funding.
Could require legislation to implement.
HHS estimate of 5-year Savings:
$3.3 million
HHS Estimate of Total 5-year FTE Reduction:
3
Office Closings:
In
Out
OS/OASH Consolidation. HHS' current extended management structure does not integrate
Human Services and Health functions. This proposal would eliminate the Office of the
Assistant Secretary for Health (OASH) and merge its functions with the Office of the
Secretary (OS), developing a single HHS corporate structure. Currently OASH has 1,153
FTEs and OS has 1,276 FTEs. By FY 2000, the new HHS corporate structure will have
58% fewer FTEs compared to the OS/OASH base for FY 1993. This reflects streamlining
changes from REGO I and FTE reductions in the FY 1996 Budget, as well as the merger
proposed in the current option.
3
The merger itself proposes outright elimination of 190 FTEs. Another 698 FTEs would be
privatized, franchised, or devolved to HHS operating components. How many of these 698
FTEs would result in bottom line FTE savings is not certain. To the extent that larger HHS
FTE savings are desirable, some or all of these 698 FTEs could be used.
HHS estimate of 5-year Savings:
$69.4 million
HHS Estimate of Total 5-year FTE Reduction:
190
Office Closings: 1 (or more depending on HHS)
In
Out
Program Integrity and HHS OIG Fraud and Abuse Demo. Currently, HHS spends
nearly $400 million per year to prevent fraud, waste and abuse. HHS believes that there is
substantial evidence that investing in these activities has significant returns in reduced
program costs. Two options to prevent fraud and abuse in Medicare are being proposed:
(1) Per Nancy-Ann's decision of April 18, Secretary Shalala will initiate a demonstration
program led by the HHS Inspector General in several key states -- Texas, California,
Florida, Illinois, New York -- where health care fraud is of particular concern. Next steps
include HHS development, and submission to OMB, of an apportionment request, including
a detailed financial plan linked to performance measures as well as responses OMB
questions on the demo (submitted to HHS on April 13th).
(2) The HHS will propose a more reliable funding source for program integrity activities to
better protect the Medicare trust funds. Per Nancy-Ann's recommendation, next steps
include discussions between her, the Director and Elaine Kamarck concerning options for
the type of funding source to be created under this proposal.
Would require legislation to implement.
HHS estimate of 5-year Costs: $7.9 million in mandatory spending for the OIG demo.
HHS Estimate of Total 5-year FTE Reduction:
In
Out
4
[Not included by NEM] PHS Consolidations. The President's FY 1996 Budget proposes
to consolidate 107 Public Health Service (PHS) programs into 6 Performance Partnerships
and 10 consolidated clusters to give states and local communities more flexibility in
administering PHS grants. FTE savings of 723 by FY 2000 were proposed in the FY 1996
Budget.
Would require legislation to implement.
HHS estimate of 5-year Savings:
$218 million (Included in the FY 1996 Budget)
HHS Estimate of Total 5-year FTE Reduction:
723 (Included in the FY 1996
Budget, but below the HHS
October Streamlining Plan)
Office Closings:
In
Out
[Not included by NEM.] Health Care Financing Administration, Medicare
Transaction System (MTS). Ample opportunity exists within the Medicare program to
streamline administration and reduce costs by utilizing new technologies and reducing
duplication in the claims processing environment. HHS proposes to continue developing
the Medicare Transaction System (MTS), begun in 1991 as a single, integrated Medicare
claims processing system replacing the 11 systems and 60 operating sites currently
processing Medicare claims.
NOTE: The savings estimate is HHS' current "best guess" of the level of efficiency
achieved in claims processing through implementation of MTS. The estimate is not
measured against any existing budget baseline and does not include start-up and transition
costs, which are likely to offset any savings in FY97, FY98 and FY99. Therefore, we
believe that HHS should not show any savings for this proposal.
HHS estimate of 5-year Savings:
$320 million
HHS Estimate of Total 5-year FTE Reduction:
Office Closings:
In
Out
5
Reduction of Management Control Positions -- NIH and FDA. HHS proposes to
increase the proportion of its already planned FTE reductions from management control
positions (as defined by NPR). Dollar savings from this proposal are a pricing-out of the
existing HHS streamlining plan and are assumed in the FY 1996 Budget, and an additional
savings of 130 FTEs from NIH control positions, below the streamlining plan. Also, the
savings estimate doubled for this proposal in HHS' April 19th estimate.
HHS estimate of 5-year Savings:
$105.7 million
HHS Estimate of Total 5-year FTE Reduction:
130
Office Closings:
In
Out
Integration of Surveys and Development of Data Standards. HHS spends nearly $250
million per year on multiple program-specific and all-purpose surveys. These efforts are
generally inefficient and overlapping and do not always result in timely availability of
reliable health information. HHS proposes to solve these problems by integrating HHS
survey activities, establishing an HHS data and statistics entity and creating an HHS data
council to coordinate health data standards development.
NOTE: This initiative will increase spending for health survey related activities at HHS by
nearly $62 million above the FY 1996 President's budget, between FY 1996 and FY 2000.
The proposal also needs to be integrated with the federal statistical crosscut REGO proposal
being coordinated by Kathy Walman in OIRA.
HHS estimate of 5-year Cost:
$62 million
HHS Estimate of Total 5-year FTE Reduction:
Office Closings:
In
Out
CDC/ATSDR Merger. Merges two Public Health Service agencies, the Agency for Toxic
Substances and Disease Registry (ATSDR) and the Centers for Disease Control and
Prevention (CDC), both with headquarters in Atlanta and currently headed by the Director
of CDC. Consolidates CDC's and ATSDR's environmental expertise and gives ATSDR
better access to CDC's relationships with State and local governments. HHS estimates the
merger will result in $2 million and 40 FTE in annual administrative savings to HHS.
HHS estimate of 5-year Savings:
$8 million
HHS Estimate of Total 5-year FTE Reduction:
40
Office Closings:
In
Out
6
[Not included by NEM.] National Training Accounts. Medicare payments are not
always managed with clear direction for health professions training priorities and goals,
contributing to support for unneeded types of providers and facilities. Similar to last year's
Health Security Act, the HHS proposal pools Medicare's resources into two National
Training Accounts to rationalize and align federal resources with national purposes and the
general public benefit. These accounts would direct support to institutions and training
most needed (e.g., primary care health providers) on a national basis.
HHS estimate of 5-year Savings:
HHS Estimate of Total 5-year FTE Reduction:
Office Closings:
In
Out
FDA Regulatory Reform. Proposals to reform FDA's regulation of foods, drugs,
biologics, and medical devices were annnounced on March 16, 1995. These reforms are
expected to yield savings for the regulated industries and for FDA. This proposal provides
no net FTE savings and only modest dollar savings because the savings from the reforms
are recycled within FDA.
The substance of this item was included in reg. reform. However, no savings were
associated with this proposal as part of that process. Therefore, HHS is counting the
savings here.
HHS estimate of 5-year Savings:
$ 37.1 million
HHS Estimate of Total 5-year FTE Reduction:
Office Closings:
In
Out
7
[We understand that these items were not included in the materials sent
from the Vice President to the President on March 17, 1995. HHS has
included the proposals as part of their April 19th savings estimate]
Consolidation of SAMHSA, HCFA, HRSA. HHS proposes to consolidate activities in the
Substance Abuse and Mental Health Services Administration (SAMHSA), the Health Care
Financing Administration (HCFA), the Health Resources and Services Administration
(HRSA), and perhaps other HHS units into a single health services and financing agency.
HHS' proposal would coordinate Federal funding streams to States, institutions in States
and beneficiaries to streamline administration of health, mental health and substance abuse
delivery systems. These consolidations would facilitate state efforts to reform their own
health care systems and would better leverage Federal funds to assure continued health care
access for vulnerable populations even as the market place is increasingly dominated by
managed care. HHS estimates that this proposal will achieve 200 Federal FTE savings by
FY 2000. These are in addition to FTE reductions already agreed to as part of streamlining
and FY 1996 budget cuts.
HHS estimate of 5-year Savings:
$38.1 million
HHS Estimate of Total 5-year FTE Reduction:
200
Office Closings:
In
Out
Terminate Smaller HHS Programs. HHS proposes to eliminate the following programs
(Total: $27 million/yr.):
--Public Health Service
Pacific Basin Initiative (Health Services) ($1 million/yr.)
Trauma Care ($5 million/yr.)
Payments to Hawaii (Hansen's Disease) ($3 million/yr.)
Native Hawaiian Health Care ($4 million/yr.)
Prostate Cancer Screening (CDC) ($4 million/yr.)
HEAL
HRSA support for HUD's 242 Program (Cross-agency)
Hansen's Disease (Carville?) ($8 million/yr.)
--Office of Consumer Affairs ($2 million/yr.)
HHS estimate of 5-year Savings:
$114 million
HHS Estimate of Total 5-year FTE Reduction:
13
Office Closings:
In
Out
8
Attachment
C
04/19/95
12:55
202 690 6896
ASMB BUDGET OFC. OMB
002/002
DRAFT
REGO Proposals
$'S in Millions
1997
1998
1999
2000
!
HRSA/SAMESA/HCFA
-3.5
-7.2
-11.4
-16.0
Survey and Data Standards
-
-
-
-
Populntion-based Initiatives
Children
-
-
-
-
Native Americans
-
-
-
1
Aging-AoA
-4.4
-4.4
-4.4
-4.4
STILL REQUIRES DATELINE UPDATE
05/0ASE Consolidation
-7.5
-15.2
-23.2
-23.5
Consolidations
PHS
-23.0
-29.0
-41.0
-50.0
CDC/MCDSR
-2.0
-2.0
-2.0
-2.0
Terminations
OCA
-1.8
-1.8
-1.8
-1.8
STILL REQUIRES DASCURE UPDATE
HEAL Phase-cut
-
-
-
-
Privatiza/Franchise
ACH?R Clinical Guidelines
-1.3
-2.9
-4.5
-6.1
PHCPR Technology Assessment
-0.3
-0.5
-1.0
-1.5
NIH Clinical Center
-2.8
-25.3
-29.0
-30.1
Hansen's Disease
-7.8
-8.0
-8.2
-8.5
Fed. Employ. Occup. Health Pro
-
-
-
-
HRSA 242 Program
Management Improvements
FDA Regulatory Reform
-7.1
-14.6
-15.4
FDA Management Cat'l Positions
-1.5
-3.2
-6.7
-7.0
NIH Management Cntl' Positions
-9.8
-20.4
-12.7
-44.4
Program Integrity
-396.3
-396.3
-396.3
-396.3
STILL REQUIRES DAUCLINE UPDATE
Medicare Transaction System
-70.0
-100.0
-150.0
STILL REQUIRES DAUGUME UPDATE
REGO Totals
$
(462)
$ (593.3)
$ (656.8)
$ (757.0)
66
1973
2,60.
361
4/19
DRAFT
(160)
(iii)
(127)
130
pm
62.5
119.8
19-Apr-95
09:16 PM
Department of Health and Human Services
Reinventing Government - Phase II
(in millions of dollars)
Preliminary
Actual
Actual
Net Savings
FY 1993
FY 1994
FY 1995
FY 1996
FY 1997
FY 1998
FY 1999
FY 2000
FY 97-2000
Freeze Discretionary BA at the FY 1996 level*
29,494
32,133
32,556
33,960
33,960
33,960
33,960
33,960
FY 1996 President's Budget Discretionary BA
--
--
--
33,960
33,128
32,519
31,944
31,384
Difference: Final FY 1996 Budget less Freeze
--
--
:
--
-832
-1,441
-2,016
-2,576
-6,865
REGO Savings in the FY 1996 Budget
--
--
--
-15
-38
-44
-56
-65
-218
April 19 HHS estimate
-23
-29
-41
-50
Other Savings Required
--
--
--
--
-794
-1,397
-1,960
-2,511
-6,647
Agency Recommendations (1)
Option 1: Combine HCFA/HRSA/SAMHSA
--
--
--
--
-3
-7
-11
-16
-38
April 19 HHS estimate
-4
-7
-11
-16
-38
Option 2: Consolidate Health Surveys and Data
--
--
--
--
-
-
-
-
0
April 19 HHS estimate
-
-
-
-
0
Option 3: Consolidate programs by population served
--
--
--
--
-5
-5
-5
-5
-19
April 19 HHS estimate
-4
-4
-4
-4
-18
Option 4: Streamline management structure
--
-
--
--
-6
-14
-21
-22
-63
April 19 HHS estimate
-8
-15
-23
-24
-69
Option 5: Terminate non-critical functions
--
--
--
--
-19
-20
-21
-21
-82
April 19 HHS estimate
-2
-2
-2
-2
-7
Option 6: Consolidations incl. Performance Partnerships
--
--
--
--
-2
-2
-2
-2
-9
April 19 HHS estimate
-2
-2
-2
-2
-8
Option 7: Privatize and franchise certain functions:
--
--
--
--
-12
-36
-43
-47
-138
April 19 HHS estimate
-12
-37
-43
-46
-138
Option 8: Management Improvements
-
--
--
--
-420
-513
-573
-665
-2,172
April 19 HHS estimate
-408
-497
-530
-613
-2,048
Total Agency Recommendations
--
--
--
--
-500
-665
-761
-872
-2,798
Total, April 19 HHS Estimate
-439
-564
-616
-707
-2,326
Proposed FTE Savings
2,383
.
Does not include trust fund transfers from HCFA to SSA or other non-HHS entities. Does not include funds from the VCRTF.
1) Savings estimates associated with Agency recommendations were provided by HHS. Savings estimates are changes from the OBRA baseline.
Attachment
D
FACT SHEET
DEPARTMENT OF HEALTH AND HUMAN SERVICES (HHS)
NATIONAL PERFORMANCE REVIEW, PHASE II
The Department and its Mission
The Department of Health and Human Services (HHS) is the Federal Government's
principal agency for providing essential human services and furthering the health of all
Americans. With approximately
programs, HHS has the largest budget among all
domestic Federal departments, accounting for percent of all federal spending. With the
departure of the Social Security Administration on March 31, 1995 employs roughly
FTEs.
HHS' mission is to protect and promote the health and economic security of all Americans
and in particular those least able to help themselves -- children, the elderly, persons with
disabilities, and the disadvantaged -- by helping them and their families develop and
maintain healthy, productive, and independent lives. In partnership with States, tribes,
localities and other important community institutions, HHS attempts to accomplish this
mission in a way that provides the highest qualify of service to the American people,
assures fairness and equity to all people, and protects the public investment in our
programs.
The HHS/National Performance Review Process
HHS has systematically assessed and applied the National Performance Review (NPR)
decision tree to each of its activities. Each Assistant Secretary and agency head personally
reviewed their agencies and programs, and presented the results to an internal group made
up of senior staff from across HHS. That group also conducted a departmental-wide review,
starting initially by identifying the key federal roles that HHS must perform, and critically
examining the agency specific reviews in that light. The effort was guided on a daily basis
by the Deputy Secretary, and by a Policy Group consisting of HHS Assistant Secretaries
and others at the policy level, including the Secretary. Nothing was "off the table" in these
reviews.
The process has yielded great dividends and bold proposals to eliminate non-core functions;
eliminated an entire organizational layer; consolidated major programs to better serve the
public; offer more flexibility to our partners in state, local and tribal governments; and cut
administrative overhead.
Summary of Major NPR Proposals
HHS' NPR Phase II proposals would result in savings of ($.4-$1 billion) and reductions of
about (1800-2400) FTE over five years. These savings come from the major departmental
restructuring and the elimination, consolidation and privatization of activities highlighted
below. Some of these proposals can be accomplished administratively, and some will
require legislation which HHS will submit to Congress by July 4th, 1995.
Departmental Restructuring
Consolidate Programs Serving Seniors into Performance Partnership Grants: HHS
would consolidate programs serving seniors into Performance Partnership Grants
(PPGs). Programs include all Administration on Aging (AOA) programs within
HHS, as well as those serving seniors in the Public Health Service, the Department
of Agriculture, Department of Treasury, Department of Transportation, Department
of Housing and Urban Development, EPA and the Corporation for National Service.
These programs were appropriated a total of $ in FY 1995.
These categorical and formula grant programs would be brought under the umbrella
of the AOA. The proposal creates one Federal focal point for social services and
applied research related to the elderly and their caregivers, resolving longstanding
problems articulated by States about the fragmentation and lack of coordination of
multiple Federal programs. State and local communities would be granted increased
flexibility to determine the types of aging services that are most useful locally, in
exchange for greater accountability for program results.
[List of included agencies still to be determined]
Merge all HHS Native American Activities: To relieve administrative burden on
customers and improve program effectiveness, HHS would consolidate all activities
serving Native Americans under one umbrella. [HHS would also consult with tribes
and Secretary Babbitt about the inclusion Department of Interior programs serving
native Americans in HHS.]
Create a Streamlined HHS Corporate Structure: HHS would develop a single HHS
corporate structure by eliminating the Office of the Assistant Secretary for Health
(OASH) and merging its functions with the Office of the Secretary (OS). Currently
OASH has 1,153 FTEs and OS has 1,276 FTEs. By FY 2000, the new HHS
corporate structure will have 58 percent fewer FTEs compared to the OS/OASH
base for FY 1993.
Consolidation of Surveys and Development of Data Standards: HHS would
consolidate survey activities, establish an HHS data and statistics entity, and create a
HHS data council to coordinate health data standards development.
Consolidate Health Services Provided Through Medicaid and Public Health Clinics:
HHS proposes to consolidate activities in the Substance Abuse and Mental Health
Services Administration (SAMHSA), the Health Care Financing Administration
(HCFA) and the Health Resources and Services Administration (HRSA) into one
health services and financing agency. The proposal would coordinate Federal
funding streams to States, institutions in States, and beneficiaries to streamline
administration of health, mental health and substance abuse delivery systems.
Convene an Unified Children's Program Board: HHS would convene a governing
board to develop a unified budget and policy strategy for all HHS programs
affecting children.
Consolidations/Eliminations/Privatizations
Strengthen Medicare Program Integrity: HHS will take a two-step approach to
prevent fraud and abuse in Medicare. First, Secretary Shalala will initiate a
demonstration program led by the HHS Inspector General in five key states -- Texas,
California, Florida, Illinois and New York -- where health care fraud is of particular
concern. Second, HHS will be proposing a new funding source for Medicare fraud
and abuse activities. This source will ensure that these activities are maintained at
sufficient levels to ensure the protection of the Medicare trust funds.
Privatizing National Institutes of Health (NIH) Clinical Center Management: HHS
proposes to begin a 24-month phase-in toward contracting out the replacement of the
facility and non-research operations of the NIH clinical center.
Other Privatizations: HHS proposes to privatize other certain functions including the
Federal Employees Occupational Health (FEOH) program, Clinical Practice
Guidelines and Technology Assessment.
Public Health Service (PHS) Consolidations: The President's FY 1996 Budget
proposes to consolidate 107 PHS activities into six Performance Partnerships and 10
consolidated performance-based clusters to give states and local communities more
flexibility in administering PHS grants.
Develop a Medicare Transaction System (MTS): HHS proposes to continue
developing the Medicare Transaction System (MTS), an integrated Medicare claims
processing system that will eventually replace 11 systems and 60 operating sites
currently processing Medicare claims.
Food and Drug Administration (FDA) Regulatory Reform: The reforms announced
on March 16, 1995 for FDA's regulation of foods, drugs, biologics, and medical
devices are expected to yield savings for the regulated industries and the agency.
Additional Proposals: HHS also proposes to reduce management control positions at
NIH and FDA; merge the Agency for Toxic Substances and Disease Registry
(ASTDR) with the Centers for Disease Control (CDC); and eliminate the Health
Education Assistance Loan (HEAL) and HUD 242 medical facility construction
program within the Health Resources and Services Administration (HRSA).
HHS Estimate of Total 5-year Savings:
$.4--$1 billion
HHS Estimate of Total FTE Savings:
1800-2400
Office Closings:
Some, pending further HHS study
EXECUTIVE OFFICE OF THE PRESIDENT
May- 1995 01:29pm
TO:
(See Below)
FROM:
Jason S. Goldberg
Office of Cabinet Affairs
SUBJECT:
PRESIDENT LAUNCHES ATTACK ON MEDICARE, MEDICAID FRAUD 5/3
THE WHITE HOUSE
Office of the Press Secretary
For Immediate Release
May 3, 1995
PRESIDENT LAUNCHES ATTACK ON MEDICARE, MEDICAID FRAUD
Initiative a Product of Vice President's Effort to Reinvent
Government
President Clinton announced today a three-pronged crackdown
on fraud and abuse in Medicare and Medicaid - - an outgrowth of
Vice President Gore's effort to reinvent government.
"These initiatives are the right way to control health care
costs and protect Medicare for our senior citizens, " the
President said. "They will help ensure that Medicare dollars, on
which SO many of our seniors rely, go to the people who deserve
them.
"
These initiatives represent a fundamental change in how the
federal government targets fraud and waste in Medicare and
Medicaid, the government's two main health care programs.
While they intensify the government's efforts to prosecute
wrongdoers, the initiatives also enhance the incentives for
investigators to attack fraud by allowing them to reinvest a
portion of the recoveries they collect to finance future fraud
investigations. In addition, they create a more stable funding
source for Medicare program-integrity activities in order to
prevent fraud and abuse before it occurs.
HHS estimates that each $1 spent on anti-fraud activities
will recover $6-$8 for the federal government and deter fraud
that could be worth millions of dollars more.
"Cracking down on fraud and abuse will save millions of
taxpayer dollars and protect Medicare for senior citizens, " the
Vice President said. "There could be no more important result of
our efforts to create a government that works better and costs
less. "
Of the three initiatives:
First, Health and Human Services Secretary Donna Shalala,
with the help of Attorney General Janet Reno, will launch a
partnership of federal and state agencies to crack down on
Medicare and Medicaid fraud, waste, and abuse associated with
home health agencies, nursing homes, and durable medical
equipment suppliers.
The anti-fraud project, "Operation Restore Trust, " will
first focus on five states - - New York, Florida, Illinois, Texas,
and Florida - - where nearly 40 percent of all Medicare
beneficiaries live.
This operation builds on the success of an anti-fraud effort
in Medicare that last year generated the largest federal health
care settlement in history, with $379 million in government
savings. It involved efforts by a team of HHS and Justice
officials, state representatives, and Medicare contractors to
investigate illegal treatments of patients at psychiatric
hospitals across the nation.
Second, HHS will create a new, more stable budget mechanism
to fund Medicare program-integrity activities, such as the
Medicare secondary payer program, medical reviews, and audits.
And third, the HHS Office of Inspector General (IG) will
receive enhanced authority to retain a portion of its recoveries
from Medicare and Medicaid fraud and waste activities to support
and enhance future investigations and prosecution activities.
Currently, the HHS IG spends an estimated $18 million a year
on health care fraud investigations. The new "Health Care Fraud
Reinvestment Fund" will add about $2 million a year.
Distribution:
TO:
[email protected]@INET
TO:
APAVEN @ INTERGATE.DOT.GOV@INET
TO:
[email protected]@INET
TO:
[email protected]@INET@EOPMRX
TO:
Jeremy D. Benami
TO:
Elizabeth C. Bowyer
TO:
[email protected]@INET
TO:
[email protected]@INET
TO:
Phillip M. Caplan
TO:
[email protected]@INET
TO:
[email protected]@INET
TO:
[email protected]@INET
TO:
[email protected]@INET
TO:
[email protected]@INET@EOPMRX
TO:
Paul A. Deegan
TO:
Michael D. Deich
TO:
Julie E. Demeo
TO:
[email protected]@INET
TO:
[email protected]@INET@EOPMRX
TO:
[email protected]@INET
TO:
[email protected]@INET
Jen: FYI-Rego II Info Badk-up
Please do Not distribute
-Chris
\
HHS REGO II Proposals for Roll-out
Notes:
Savings were last estimated by HHS April 19th. HHS will be updating some of
these estimates. These savings estimates are from OBRA baseline. Any known
costs associated with those proposals expected to require additional resources
have been included.
BRD has requested updates to the MAX system reflecting final savings
estimates by COB April 19th. We have not been able to complete that exercise.
Per earlier comments from Nancy-Ann, items that she would not include in the
roll-out have been indicated.
Items that could or would require legislation to implement, are so noted. Items
that have cross agency implications are also noted.
[Not included by NEM.] Improving Services to Children, American Indians/Native
Alaskans, and the Aged. Currently, services for children, Native Americans, and senior
citizens are fragmented in several HHS agencies as well as across the Federal government.
To relieve the burden on customers and improve the effectiveness of these programs, HHS
proposes to consolidate programs along population lines.
Children's Programs: Convene an HHS governing board to develop a unified
budget and policy strategy for all HHS programs affecting children.
In
Out
Right
In
American Indians/Native Alaskans: Consult with tribes regarding the concept of
merging all Native American programs in HHS under one umbrella HHS will
discuss the possible inclusion of some Interior Department activities into HHS with
Secretary Babbitt and with tribal organizations. fout
Portion of this proposal is a cross-agency issue.
Could require legislation to implement.
In
X
Out
NEM-OUT
NPR-in
1
SOFA Jeft
Aging: Consolidate into Performance Partnerships many programs in HHS and
other agencies affecting senior citizens. HHS discussed this proposal with affected
agencies (DOT, HUD, USDA, Labor) on April 19th. It was the first time any of the
agencies, other than DOL, had been informed of this proposal.
Cross-agency issue.
Could require legislation to implement.
In
X
Out
HHS estimate of 5-year Savings:
$19 million
HHS Estimate of Total 5-year FTE Reduction:
9
Office Closings:
Contracting Out NIH Clinical Center Management. HHS proposes to begin a 24-month
phase-in toward contracting out the replacement of the facility and non-research operations
of the NIH Clinical Center. HHS proposes issuing an RFP for a contractor to build and
lease back to the government a 250-bed hospital on the NIH campus in Bethesda,
Maryland, and issuing a long term contract for management of the existing and new
hospital. HHS estimates first year (FY 1997) FTE savings of approximately 300-500
positions from downsizing staff and contracting out. Additional FTE savings will occur in
the outyears through this contracting out process.
Could require legislation to implement.
HHS estimate of 5-year Savings:
$87.2 million
HHS Estimate of Total 5-year FTE Reduction:
1,800
Office Closings:
x
In
Out
[Not included by NEM.] Privatize the FEOH. HHS proposes to privatize the Federal
Employee Occupational Health (FEOH) program, which provides reimbursable health
consultation and services to over 4,000 departments, agencies, and offices. HHS estimates
that this proposal will result in 100 Federal FTE savings by FY 2000.
HHS estimate of 5-year Savings:
HHS Estimate of Total 5-year FTE Reduction:
100
Office Closings:
(tor now X -) wait for 2 Blaine's cut.)
In
Out
Clinical Practice Guidelines. Currently, HHS' Agency for Health Care Policy
arch develops clinical practice guidelines. HHS proposes establishing four private-
guideline centers to develop multiple guidelines simultaneously, allowing economies
scale, efficiencies in process, and improvements in product consistency. The centers
will also be available to develop guidelines for private-sector customers (professional
societies, managed care organizations, etc.).
Could require legislation to implement.
HHS estimate of 5-year Savings:
$14.8 million
HHS Estimate of Total 5-year FTE Reduction:
5
Office Closings:
In
Out
Privatizing Technology Assessment. Currently, HHS' Agency for Health Care Policy and
Research reviews and assesses new technologies under consideration for reimbursement by
Federal agencies. HHS proposes to shift technology assessments to the private sector
through collaborative arrangements with health care organizations, payers, manufacturers,
clinicians, and assessors. HHS projects a 50% savings over a five year period by
downsizing and streamlining current activities and leveraging private sector funding.
Could require legislation to implement.
HHS estimate of 5-year Savings:
$3.3 million
HHS Estimate of Total 5-year FTE Reduction:
3
Office Closings:
x
In
Out
OS/OASH Consolidation. HHS' current extended management structure does not integrate
Human Services and Health functions. This proposal would eliminate the Office of the
Assistant Secretary for Health (OASH) and merge its functions with the Office of the
Secretary (OS), developing a single HHS corporate structure. Currently OASH has 1,153
FTEs and OS has 1,276 FTEs. By FY 2000, the new HHS corporate structure will have
58% fewer FTEs compared to the OS/OASH base for FY 1993. This reflects streamlining
changes from REGO I and FTE reductions in the FY 1996 Budget, as well as the merger
proposed in the current option.
3
merger itself proposes outright elimination of 190 FTEs. Another 698 FTEs would be
privatized, franchised, or devolved to HHS operating components. How many of these 698
FTEs would result in bottom line FTE savings is not certain. To the extent that larger HHS
FTE savings are desirable, some or all of these 698 FTEs could be used.
HHS estimate of 5-year Savings:
$69.4 million
HHS Estimate of Total 5-year FTE Reduction:
190 400
Office Closings: 1 (or more depending on HHS)
In
Out
per conversation up Alice Riulin. Remainder used
Program Integrity and HHS OIG Fraud and Abuse Demo. Currently, HHS spends
individual
nearly $400 million per year to prevent fraud, waste and abuse. HHS believes that there is
tranking
substantial evidence that investing in these activities has significant returns in reduced
program costs. Two options to prevent fraud and abuse in Medicare are being proposed:
(1) Per Nancy-Ann's decision of April 18, Secretary Shalala will initiate a demonstration
program led by the HHS Inspector General in several key states -- Texas, California,
Florida, Illinois, New York where health care fraud is of particular concern. Next steps
include HHS development, and submission to OMB, of an apportionment request, including
a detailed financial plan linked to performance measures as well as responses OMB
questions on the Ain demo (submitted to HHS on April 13th).
(2) The HHS will propose a more reliable funding source for program integrity activities to
better protect the Medicare trust funds. Per Nancy-Ann's recommendation, next steps
include discussions between her, the Director and Elaine Kamarck concerning options for
the type of funding source to be created under this proposal.
Re-classification.
Would require legislation to implement.
HHS estimate of 5-year Costs: $7.9 million in mandatory spending for the OIG demo.
HHS Estimate of Total 5-year FTE Reduction:
In
Out
- will call La Varne. UM ment
Let frust fund Spending.
4
[Not included by NEM] PHS Consolidations. The President's FY 1996 Budget proposes
to consolidate 107 Public Health Service (PHS) programs into 6 Performance Partnerships
and 10 consolidated clusters to give states and local communities more flexibility in
administering PHS grants. FTE savings of 723 by FY 2000 were proposed in the FY 1996
Budget.
Would require legislation to implement.
HHS estimate of 5-year Savings:
$218 million (Included in the FY 1996 Budget)
HHS Estimate of Total 5-year FTE Reduction:
723 (Included in the FY 1996
Budget, but below the HHS
October Streamlining Plan)
Cfice Closings:
In
X
Out
Included by NEM.] Health Care Financing Administration, Medicare
Tection System (MTS). Ample opportunity exists within the Medicare program to
stone administration and reduce costs by utilizing new technologies and reducing
duron in the claims processing environment. HHS proposes to continue developing
thricare Transaction System (MTS), begun in 1991 as a single, integrated Medicare
clarocessing system replacing the 11 systems and 60 operating sites currently
prg Medicare claims.
None savings estimate is HHS' current "best guess" of the level of efficiency
act, claims processing through implementation of MTS. The estimate is not
me gainst any existing budget baseline and does not include start-up and transition
cos are likely to offset any savings in FY97, FY98 and FY99. Therefore, we
be HHS should not show any savings for this proposal.
Hete of 5-year Savings:
$320 million
Hetc of Total 5-year FTE Reduction:
Of
In
X
Out
5
Reduction of Management Control Positions NIH and FDA. HHS proposes to
increase the proportion of its already planned FTE reductions from management control
positions (as defined by NPR). Dollar savings from this proposal are a pricing-out of the
existing HHS streamlining plan and are assumed in the FY 1996 Budget, and an additional
savings of 130 FTEs from NIH control positions, below the streamlining plan. Also, the
savings estimate doubled for this proposal in HHS' April 19th estimate.
HHS estimate of 5-year Savings:
$105.7 million
HHS Estimate of Total 5-year FTE Reduction:
130
Office Closings:
X
In
Out
Integration of Surveys and Development of Data Standards. HHS spends nearly $250
million per year on multiple program-specific and all-purpose surveys. These efforts are
generally inefficient and overlapping and do not always result in timely availability of
reliable health information. HHS proposes to solve these problems by integrating HHS
survey activities, establishing an HHS data and statistics entity and creating an HHS data
council to coordinate health data standards development. Budget nuetral.
NOTE: This initiative will increase spending for health survey related activities at HHS by
nearly $62 million above the FY 1996 President's budget, between FY 1996 and FY 2000.
The proposal also needs to be integrated with the federal statistical crosscut REGO proposal
being coordinated by Kathy Walman in OIRA.
HHS estimate of 5-year Cost:
$62 million
HHS Estimate of Total 5-year FTE Reduction:
Office Closings:
X
In
Out
CDC/ATSDR Merger. Merges two Public Health Service agencies, the Agency for Toxic
Substances and Disease Registry (ATSDR) and the Centers for Disease Control and
Prevention (CDC), both with headquarters in Atlanta and currently headed by the Director
of CDC. Consolidates CDC's and ATSDR's environmental expertise and gives ATSDR
better access to CDC's relationships with State and local governments. HHS estimates the
merger will result in $2 million and 40 FTE in annual administrative savings to HHS.
HHS estimate of 5-year Savings:
$8 million
HHS Estimate of Total 5-year FTE Reduction:
40
Office Closings:
X
In
Out
6
[Not included by NEM.] National Training Accounts. Medicare payments are not
always managed with clear direction for health professions training priorities and goals,
contributing to support for unneeded types of providers and facilities. Similar to last year's
Health Security Act, the HHS proposal pools Medicare's resources into two National
Training Accounts to rationalize and align federal resources with national purposes and the
general public benefit. These accounts would direct support to institutions and training
most needed (e.g., primary care health providers) on a national basis.
HHS estimate of 5-year Savings:
HHS Estimate of Total 5-year FTE Reduction:
Office Closings:
In
Out
FDA Regulatory Reform. Proposals to reform FDA's regulation of foods, drugs,
biologics, and medical devices were annnounced on March 16, 1995. These reforms are
expected to yield savings for the regulated industries and for FDA. This proposal provides
no net FTE savings and only modest dollar savings because the savings from the reforms
are recycled within FDA.
The substance of this item was included in reg. reform. However, no savings were
associated with this proposal as part of that process. Therefore, HHS is counting the
savings here.
HHS estimate of 5-year Savings:
$ 37.1 million
HHS Estimate of Total 5-year FTE Reduction:
Office Closings:
In
Out
7
[We understand that these items were not included in the materials sent
from the Vice President to the President on March 17, 1995. HHS has
included the proposals as part of their April 19th savings estimate]
Consolidation of SAMHSA, HCFA, HRSA. HHS proposes to consolidate activities in the
Substance Abuse and Mental Health Services Administration (SAMHSA), the Health Care
Financing Administration (HCFA), the Health Resources and Services Administration
(HRSA), and perhaps other HHS units into a single health services and financing agency.
HHS' proposal would coordinate Federal funding streams to States, institutions in States
and beneficiaries to streamline administration of health, mental health and substance abuse
delivery systems. These consolidations would facilitate state efforts to reform their own
health care systems and would better leverage Federal funds to assure continued health care
access for vulnerable populations even as the market place is increasingly dominated by
managed care. HHS estimates that this proposal will achieve 200 Federal FTE savings by
FY 2000. These are in addition to FTE reductions already agreed to as part of streamlining
and FY 1996 budget cuts.
HHS estimate of 5-year Savings:
$38.1 million
HHS Estimate of Total 5-year FTE Reduction:
200
Office Closings:
In
Out
Terminate Smaller HHS Programs. HHS proposes to eliminate the following programs
(Total: $27 million/yr.):
--Public Health Service
Pacific Basin Initiative (Health Services) ($1 million/yr.)
Trauma Care ($5 million/yr.)
Payments to Hawaii (Hansen's Disease) ($3 million/yr.)
Native Hawaiian Health Care ($4 million/yr.)
Prostate Cancer Screening (CDC) ($4 million/yr.)
HEAL
HRSA support for HUD's 242 Program (Cross-agency)
Hansen's Disease (Carville?) ($8 million/yr.)
--Office of Consumer Affairs ($2 million/yr.)
HHS estimate of 5-year Savings:
$114 million
HHS Estimate of Total 5-year FTE Reduction:
13
Office Closings:
In
Out
8
D:202-395-6148
FEB 26'95
23:20 No. 001 P.01
EXECUTIVE OFFICE OF THE PRESIDENT
LRM NO: 478
URGENT
OFFICE OF MANAGEMENT AND BUDGET
Washington, D.C. 20503-0001
FILE NO: 504
2/27/95
LEGISLATIVE REFERRAL MEMORANDUM
Total Page(s): 13
TO: Legislative Lialson Officer See Distribution below:
FROM: Janet FORSGREN
Assistant Director for Legislative Reference
OMB CONTACT:
Melissa COOK 395-3924
Legislative Assistant's line (for simple responses): 395-7362
(for) BURGENT
SUBJECT: HEALTH AND HUMAN SERVICES Proposed Testimony on Reinventing Government II
DEADLINE: C.O.B. Monday, February 27,1995
In accordance with OMB Circular A-19, OMB requests the views of your agency on the above subject before
advising on Its relationship to the program of the President.
Please advise us if this Item will affect direct spending or receipts for purposes of the
"Pay-As-You-Go" provisions of Title XIII of the Omnibus Budget Reconciliation Act of 1990.
COMMENTS: Attached is Secretary Shalala's Testimony for the 3/1 hearing before the H. Subcommittee on
Human Resources and Intergovernmental Relations.
AGENCIES:
EOP:
-- EOP Review Only. See Distribution
Nancy-Ann Min
Barry Clendenin
Mark Miller (3)
Richard Turman (3)
Barry White
Doug Steiger
Keith Fontenot
Jack Smalligan
Carter Dutch
Naomi Tinklepaugh
Richard Green
Edwin Lau
Bob Damus
Margaret Yao
Jonathan Breul
Joe Wholey
Ed DeSeve
Wendy Zenker
Shannah Koss
Allison Eydt
Laura Oliven
Steve Semenuk
John Kamensky
Jeremy Ben-Ami
Chris Jennings
Jennifer Klein
Clarissa Cerda
Chuck Konigsberg
Jim Murr
Janet Forsgren
Connie Bowers
Bob Pellicci
ID 202-395-6148
FEB 26'95
23:20 No. 001 P.02
RESPONSE TO
LRM NO: 478
LEGISLATIVE REFERRAL MEMORANDUM
FILE NO: 504
If your response to this request for views is simple (e.g., concur/no comment), we prefer that you respond by e-mail or
by faxing us this response sheet.
If the response is simple and you prefer to call, please call the branch-wide line shown below (NOT the analyst's line)
to leave a message with a legislative assistant.
You may also respond by:
(1) calling the analyst/attorney's direct line (you will be connected to voice mail if the analyst does not answer); or
(2) sending us a memo or letter.
Please Include the LRM number shown above, and the subject shown below.
TO: Melissa COOK 395-3924
Office of Management and Budget
Fax Number: 395-6148
Branch-Wide Line (to reach legislative assistant): 395-7362
FROM:
(Date)
(Name)
(Agency)
(Telephone)
CUDJECT. HEALTH AND HOMAN GENVIOLO Proposed Tostimony on Relationing Dovernment "
The
following
is
the
see proposed edits 8h pages
Other:
FAX RETURN of
pages, attached to this response sheet
ID:202-395-6148
FEB 26'95
23:21 No.001 P.03
v
6
DRAFT TESTIMONY
DONNA E. SHALALA
SECRETARY OF HEALTH AND HUMAN SERVICES
SUBCOMMITTEE ON HUMAN RESOURCES AND
INTERGOVERNMENTAL RELATIONS
COMMITTEE ON GOVERNMENT REFORM
AND OVERSIGHT
U.S. HOUSE OF REPRESENTATIVES
MARCH 1, 1995
ID: 202-395-6148
FEB 26'95 23:21 No 001 P.04
GOOD MORNING MR. CHAIRMAN, MEMBERS OF THE SUBCOMMITTEE:
I am very pleased to be here, Mr. Chairman, and participate
in your subcommittee's effort to make government more effective
and efficient.
We believe that one of the keys is working together--and We
look forward to doing just that with you and your colleagues on
the subcommittee.
We believe that government must focus on the everyday needs
of the American people.
We believe that local communities know what their problems
are and are best able to fix them.
We believe that some jobs now done by the Federal government
should be turned back to the states.
But we also believe some issues cross state boundaries and
require leadership at the federal level.
By its very definition, the mission of the Department of
Health and Human Services promotes the health and well-being of
every single American.
Our mission includes everything from ground-breaking
research at NIH, to assuring the safety of Americans' food and
ID:202-395-6148
FEB 26'95 23:21 No 001 P.05
2
drugs, to providing a Head Start for our children, to enhancing
the Medicare program for America's seniors.
These are crucial duties, Mr. Chairman, and they demand
world-class performance for government. That is our
responsibility to the American people.
We must be tough, disciplined and responsive to the American
public. We must learn to do more with less.
The Reinventing Government initiative, led by Vice President
Al Gore, is part of our effort to be more responsive and more
efficient. We are just now beginning the second phase of
Reinventing Government.
We are re-looking at everything we do with a view toward
anewering the fundamental questions that President Clinton and
Vice President Gore asked every Department and agency to address:
Are our programs or functions critical to the agency's
mission based on "customer" input?
Can the program or function be done as well or better
at the State or local level?
Is there a way to cut cost or improve performance by
ID:202-395-6148
FEB 26'95 23:22 No.001 P.06
3
introducing competition?
+
Can the program be improved by putting customers first,
cutting red tape and empowering employees?
We are using this second phase to focus on what the
Department should be in the business of doing, and what
activities we should no longer do.
I have challenged my senior staff to develop bold options
for changing what we do. This is a collaborative process, and we
meet regularly with the Administration's National Performance
Review team, which includes representatives from OMB and the
Domestic Policy Council.
For the past several weeks, a number of senior staff have
been devoted to a round-the-clock process to ensure that each of
our proposals not only achieves substantial gains in
effectiveness and efficiency, but also serves the customer
better. These proposals will be presented to Vice President Gore
later this month.
Although we have not reached the end of the second phase, I
can talk about our successes, our ongoing initiatives, and the
challanges we $00 ahead.
ID:202-395-6148
FEB 26'95 23:22 No.001 P.07
4
First, we have accomplished A great deal in reducing the
size of the Department.
Every Department and agency was required to develop a
streamlining plan to achieve its share of the government-wide
reduction of 272,000 full-time employees by 1999. our plan will
realize our target by reducing our workforce by more than 7,000
employees.
In addition, legislation passed last year removes the Social
Security Administration from the Department and establishes it as
an independent agency in the Executive Branch, effective March 31
of this year.
I am very pleased with the leadership of my senior officials
-- especially Social Security Administration Commissioner Shirley
Chater -- who have worked effectively to create what history will
record as a resounding success. The GAO agrees with this
assessment.
At the same time we are streamlining our operations, we are
also taking on major new national initiatives and strengthening
existing programs.
Consider the President's Childhood Immunization Initiative.
our goal is to raise the pre-school immunisation rate for the
ID 202-395-6148
FEB 26'95 23:23 No 001 P.08
5
most basic vaccines up to 90 percent by 1996, and we are starting
to see real results. Between 1992 and 1993 alone, the
immunisation rates for two-year-old children for the initial and
most crucial vaccines rose from 55 percent to 67 percent.
That's the best rate in American history.
We're also improving and expanding the Head Start program.
with bipartisen support, last year we passed the most
comprehensive Head start agenda in history.
we've worked hard to improve the quality of services at Head
start centers, and now over 90 percent of Head Start grantees
meet our quality performance standards. We've given grantees
more flaxibility BD the projects are more responsive to local
needs. And we have made the program more responsive to the
special needs of working families.
We have made big gains in breast cancer research,
prevention, and treatment -- including the landmark
implementation of the National Action Plan on Breast Cancer.
And recently, we learned that breast cancer mortality rates
declined 5 percent among all women -- and by 18 percent since
1987 among women in their thirties.
Breast cancer screening rates are at their highest levels in
ID:
:202-395-6148
FEB 26'95
23:23 No 001 P.09
6
history, due, in part, to increased funding for the CDC National
Breast and Cervical Cancer Program and the National Cancer
Institute's education and outreach efforts.
one reason for these accomplishments is that we are
committed to thinking about all of our programs and services from
our customers' perspective.
Let me tell you about just a few of the strong measures that
we have taken to put the American people first:
We are waging an all-out attack on waste, fraud, and abuse.
In 1994, our Inspector General helped recover and save 5.4
billion dollars in Medicare and Medicaid. And, across the entire
Department, we recovered and saved more than 8 billion dollars --
that's the largest amount ever by HHS in one year!
We are also working to promote efficiency and consolidate
services, and doing more with less.
We believe firmly in the concept of "performance
ID
:202-395-6148
FEB 26'95
23:24 No.001 P.10
7
We are working on innovative approaches for getting our work
done faster, smarter, and better. One example of that is the
Health Care Financing Administration's overhauling of its claims
processing system for Medicare.
The new privately-run system will answer questions more
quickly and accurately, and will reduce regional inconsistencies
in the acceptance and denial of claims. once this project is
completed, we will provide more effective service -- and we will
cut administrative costs.
We are working to change the way Medicare and Medicaid work,
to improve quality, promote efficiency, lower costs, and give the
American people more health choices.
More and more states are taking advantage of new
opportunities to offer managed care programs under Medicaid.
And, more and more health plans and individuals are choosing the
managed care option under Medicare.
Last year, Medicaid had a 63 percent increase in the number
of Americans enrolled managed care plans -- from 4.8 million in
1993 to 7.8 million in 1994,
The number of seniors choosing managed care through the
Medicare program grew by 16 percent -- from about 2.7 million
ID:202-395-6148
FEB 26'95 23:24 No.001 INVIDIO P.11
8
people in 1993 to more than 3.1 million in 1994. And we expect
it to grow another 20 to 25 percent this year.
This customer perspective has been fundamental in planning
the White House Conference on Aging. In preparation for this
event, we asked seniors from across the country about their ideas
on better government and better customer service.
We are also demanding more leadership and creative thinking
from our smployees. At HHS, we established a Continuous
Improvement Program that involves the entire Department in the
process of change.
One workgroup conducted an in-depth review of the regulatory
development process and proposed major reforms which will out in
half the average time to publish a regulation.
Mr. Chairman, I would now like to speak about the challenges
before us.
one is to respond to the charge given us by President
Clinton and vice President dore in the second phase of the
reinventing government initiative to re-think all that we do in
HHS.
That is an enormous task -- but it is also easier in some
ID:202-395-6148
FEB 26'95 23:24 No.001 P.12
9
ways than the other challenge I see ahead, because it is fairly
well-defined.
In my view, the more formidable challenge is to change the
culture of government--and not necessarily Federal government
alone.
The essence of that change is to move government away from
its traditional, buresucratic mode of operation -- that 15,
working from the top-down to manage the activities of field
staff, other levels of government and the public as well.
Rather, government must operate in a manner that fits with
the information-age: It must work from the bottom-up through
staff who deal with and understand what customers want. It must
listen and respond rather than direct and control.
We must work in partnership with other levels of
government -- especially the States, the private sector, and
local communities to help communities meet their own needs.
We do not have any options or choice in whether or not we
will move in this direction, Mr. Chairman.
Às Vice President dore said when he spoke to government
executives a few weeks ago about the reinventing government
ID:202-395-6148
FEB 26'95
23:25 No .001 P.13
10
initiative, "If America is to regain trust in her government,
America's government must reinvent itself based on trust. That
is what the government of the future is all about: trust and
opportunity."
I appreciate being asked to appear before you today, and I
will be happy to answer any questions you may have.