March 30,2000

Committee to Hold Hearing on Medicaid in the Schools

WASHINGTON -- Senate Finance Committee Chairman William V. Roth, Jr. (R-DE) today announced the Committee will meet on Wednesday, April 5, 2000, at 10:00 a.m., in 215 Dirksen Senate Office Building, to hear testimony on the pattern of improper payments in the school Medicaid program.

The following witnesses are expected to appear before the Committee:

I. A panel consisting of:

Kathryn G. Allen, Associate Director, Health Financing and Public Health Issues, General Accounting Office (GAO); Washington, D.C.

Robert H. Hast, Acting Assistant Comptroller General, Office of Special Investigations, General Accounting Office (GAO); Washington, D.C.

Tim Westmoreland, Director of the Center for Medicaid and State Operations, Health Care Financing Administration (HCFA); Washington, D.C.

II. A panel consisting of:

Lynn Davenport, President, Human Services Division, MAXIMUS; Waltham, Massachusetts

Susan Sclafani, Ph.D, Chief of Staff for Educational Services Houston Independent School District; Houston, Texas

Walter Thies, Assistant Director, Metropolitan Parent Center of Sinergia Inc.; New York, New York


Although doctors, hospitals, and nursing homes are more traditionally viewed as Medicaid providers, Medicaid is also authorized to reimburse schools when they provide covered medical assistance services. School-based Medicaid-covered services that qualify for federal funds include physical, occupational, and speech therapy, as well as diagnostic, preventive, and rehabilitative services. Some services are provided in conjunction with the Individuals with Disabilities Education Act (IDEA) program; others are included through a state's Medicaid plan and are available through Medicaid's early and periodic screening, diagnostic, and treatment (EPSDT) program.

On June 17, 1999, the Finance Committee held its first hearing on Medicaid payments for school-based services. At this hearing, the General Accounting Office (GAO) presented preliminary findings that "emerging practices appear to have some disturbing similarities to other 'creative' financing mechanisms that began to be used in the mid-1980s" - creative mechanisms that resulted in the spending scandals associated with Medicaid's disproportionate share hospital program. GAO's work last spring focused on rising administrative claims associated school-based services, and it concluded that "federal oversight of school districts' claims for administrative expense reimbursements has been weak.... These weak controls permit an environment for opportunism in which inappropriate claims could generate excessive Medicaid payments."

In response to these disturbing findings, Finance Committee Chairman William V. Roth, Jr. and Ranking Member Daniel Patrick Moynihan asked GAO to continue its investigation and expand its scope to include Medicaid payments for direct services as well as administrative costs.

On April 5th, the Finance Committee will hold a follow-up hearing at which the final results of GAO's investigations will be released. In addition, the Committee will hear from Tim Westmoreland, Director of the Health Care Financing Administration's Center for Medicaid and State Operations. Mr. Westmoreland will discuss HCFA's efforts both to provide clearer guidance to schools on how to appropriately bill Medicaid for direct and administrative services and to provide greater program oversight. The Committee will also hear from representatives of the consulting, education, and beneficiary communities.