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For Immediate Release: Friday, April 25, 2008
Contact: CMS Office of Public Affairs


CMS Acting Administrator Kerry Weems

Remarks to the

National Conference of State Legislatures Spring Forum

April 24, 2008


Thank you for the opportunity to be here.  It’s important to touch base every so often, to let you know how much we appreciate the fact that you’ve rolled up your sleeves and worked hard for people with Medicare and Medicaid.


I’m talking about our joint, continuing efforts to locate people who could get help from the prescription drug low-income subsidy.  The truth is, we haven’t found everybody—yet—but 80 percent of the people we think are eligible for the low-income subsidy are now receiving prescription drug coverage, including the more than nine million who have drug coverage from Medicare.


Together, I’m confident we’ll be able to reach hundreds of thousands of additional people over this coming year. Our efforts will be undiminished until we’ve enrolled everyone who is eligible.


I’m talking about your work with the National Family Caregiver Support program.  People who care for Medicaid and Medicare beneficiaries are going to need access to counseling, training, respite care, and other support services in greater and greater numbers, not only because we baby boomers are caring for our parents, but also because boomers are growing older as well. CMS is getting its own caregiving initiative ready, and we want to work with you to leverage the gains you’ve already made.


I’m talking about our longstanding partnership surveying and certifying the nation’s nursing homes. 


Today, the CMS Nursing Home Compare website, will post, for the first time, the list of Special Focus Facilities.  These are nursing homes that have a history of serious quality of care problems, and yo-yo in and out of compliance. Currently, 134 nursing homes are on this list, out of 16,000 nationwide. 


This morning’s Wall Street Journal quoted consumer groups who said the CMS Nursing Home Compare site is the single most complete national resource for information about nursing homes.   Now the public will have access to Special Focus Facility information, alongside other substantive nursing home information, including whether or not nursing homes have sprinklers, or whether or not they provide vaccinations.


This is an extraordinarily fragile and vulnerable population.  They—and an even larger number of their family members and friends—must be able to count on nursing homes to provide reliable care of consistently high quality. Your leadership, and your partnership, has been vitally important.



Both CMS and states should be encouraging health care that’s safe, effective, efficient, timely, equitable, and patient-centered—the Institute of Medicine’s principles of quality care. 


A commitment to value in health care is the reason that Medicare is moving to pay for performance.  For 40 years, our payment system has been based on resource consumption and volume.  In too many cases, we’ve paid too much, we’ve paid for unnecessary care, and we’ve paid for complications when things went wrong. 


The commitment to value is the basis for Medicare’s new policy to prevent hospital-acquired conditions and “never events.”  CDC estimates 99,000 people died from hospital-associated infections in 2002.  A conservative estimate says hospital-associated infections are the eighth leading cause of death.  Some states—New York, for example—use these policies in their own Medicaid programs. They know that doing things right the first time prevents complications, saves lives, and lowers costs. 



This commitment to value is the basis for CMS’s recent Medicaid regulations and the reason we will work to see that they go forward.  


Yesterday the House of Representatives passed a bill to extend the moratorium on implementing these regulations.  The President’s advisors will recommend that he veto this bill if it reaches his desk.  I want to explain why. 


The federal commitment in Medicaid is based on two principles:


  • First, partnership—this means matching real federal dollars with real state dollars for Medicaid-covered services; and,
  • Second, paying for actual medical assistance.


The federal government and states, together, should be safeguarding Medicaid to pay for the health care of the low-income seniors, children, pregnant women, and people with disabilities people who rely on it.  We can’t talk about federal funding in isolation from states’ roles or vice versa when we’re talking about Medicaid. 


But in practice, loopholes in Medicaid threaten our partnership, allowing Medicaid dollars to be spent on purposes other than health care, and allowing real federal dollars to be matched with dollars that aren’t real.  We recognize the importance of many of these services, but we can’t spend limited Medicaid funds on them if they aren’t Medicaid. 


The HHS Office of the Inspector General and the Government Accountability Office have released at least 40 separate documents—reports and congressional testimony—highlighting these issues. 


For example, when Medicaid is billed for costs related to transporting children from home to school and back, on days when no medical services are provided to the child, that’s inappropriate.  In one state, the HHS Inspector General found that more than 90 percent of transportation claims to Medicaid, made on behalf of almost 700 schools and pre-schools, were not in compliance with federal and state regulations over a 10-year period.


Please understand, when those transportation costs are claimed to support actual medical assistance—for example, to transport a child to and from the doctor’s office, or to transport a toddler to and from a school to receive a covered service—there’s no question we will pay for them.  We are for paying for transportation costs when a medical service is received.


Medicaid will continue to reimburse states for school-based Medicaid service costs.   For example, if a child is Medicaid-eligible and receives physical therapy, the rules don’t change the benefit or the level of reimbursement. 


But, when Medicaid is billed for rehabilitative services that go outside the scope of the program, that’s inappropriate.  In one example, a CMS audit found that Medicaid funds were used to pay for behavioral services in juvenile detention ‘‘wilderness camps.’’


But we want states to provide rehabilitative services under Medicaid.  We are for Medicaid rehabilitation services. We want them to be high quality, delivered in a patient-centered environment, according to best clinical practice.  That’s why, for the first time, the regulations stipulate that rehabilitative services need to be furnished through a written plan of care that identifies treatment goals and methods.


Or, for example, when Medicaid is billed for targeted case management services, for activities that bear only a feeble resemblance to actual case management, that’s inappropriate.  For example, one of the Inspector General’s audits found a state claimed targeted case management services for the initial form letters that providers sent to new Medicaid recipients. 


But we will absolutely pay for case management that addresses complex medical needs of people with real challenges. 


  • Several states provide targeted case management programs for high-risk pregnant women through pregnancy and afterward.


  • One state has a TCM program that enables people with traumatic brain injury; the frail elderly; and, adults, infants and children with physical or developmental disabilities, to remain at home with their families and get the services they need.


  • Yet another state provides TCM services to people who have chronic mental illness.  These services, from certified mental health providers, include assessment, planning, advocacy, linkage to other services, problem-solving assistance, and help with navigating the various state agencies.


All of these services are covered by Medicaid.  We are for case management.


The rules reaffirm the fact that states are obliged to match federal funding with real state dollars.  They are about what we at the federal level can support to comply with Medicaid matching requirements.  For example:


Congress enacted prohibitions on provider taxes and donations as far back as 1991.  CMS bears the responsibility for assuring the tax is real and is not being returned either directly or indirectly to the provider.


When Medicaid is billed for temporary intergovernmental payment transfers to nursing homes, for example, that’s inappropriate.  Last week, on the Senate floor, Sen. Chuck Grassley referred to this when he said Medicaid “is a program with a checkered history of financial challenges.”  In a 2007 report the GAO said, “Such financing arrangements had significant fiscal implications for the federal government and the states.” 


However—and I can’t repeat this too many times—nothing in the regulations changes the fact that Medicaid will continue to pay for Medicaid covered services to Medicaid beneficiaries.



We understand that we’re not always as clear as we should be about what constitutes a “covered service.”  An industry of contingency-fee consultants has sprung up to help states exploit our occasional lack of clarity.    We believe the program—and these regulations—should supply that clarity. 


Moreover, using Medicaid funds to pay for actual services is in your best interest as well as ours.  


It’s in your best interest when one out of every five dollars spent by states goes to Medicaid.  Most of you have balanced budget limitations, and when there’s a shortfall in public health funds, you’re required to take it out of other public priorities if you’re going to meet people’s needs.


Ultimately, state and federal Medicaid dollars come from the same taxpayer’s pocket.  Between 2007 and 2017 our total health care bill will double, from $2.2 trillion to an estimated $4.3 trillion. By 2017 we’ll be spending almost $1of every $5 of our gross domestic product on health care. If we aren’t able to control health spending, it will eat into important priorities at every level.



There’s a track record in Medicaid that proves funds can be used to support health care that has value for its beneficiaries. 


For example, states are using the flexibility in Medicaid, including flexibility authorized in the Deficit Reduction Act, to fund creative approaches to service delivery that constitute appropriate payment under the law.   


Virginia has an alternative benefit package that provides recipients with case management in addition to traditional Medicaid for some chronic conditions.  West Virginia offers its residents enhanced benefits if they sign—and follow—an agreement with their physician that promotes healthier behaviors.


Indiana, which reports roughly 14 percent of its residents are uninsured at some point during the year, is using Medicaid and state dollars to conduct a demonstration program that covers eligible adults through a high-deductible health plan and  individual “POWER” health accounts.   


Interest in this program has been well above the state’s expectations.


Just since January 1, the state agency has received 41,017 applications.  More than 6,000 people are already participating.  Just under 6,000 simply need to put their first contribution into the account within 60 days and they will begin coverage.  Another 15,000 applications are pending. 


These numbers put the state on target to meet its goal of 44,000 enrollments by year’s end.  We are pleased, Indiana is pleased, and we know the people who now will be able to count on health insurance are pleased as well.



There are many examples of how the federal government and states are working together to ensure that Medicaid dollars support people in need.  Ours is a shared responsibility and that’s the way it should be. 


Medicaid is an indispensable commitment to the people who depend on it, and the federal government is not reducing, restricting, or limiting our obligation to pay our fair share of medically necessary services.  We simply want them to be our fair share in terms of the actual medical services provided.


Funding for health care—especially Medicaid funding for the neediest Americans—is much too important to be cynically used for purposes other than health care and the related services it was intended to fund.  Not only do we stand firmly behind these Medicaid regulations, but we’re also just as firm about the value of our partnership on Medicaid and our joint commitment to the people it serves.


Thank you for the opportunity to be here today.




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