April 05,2000

GAO Finds Questionable Practices by Consultants that Rip Off Poor and Disabled Students


WASHINGTON -- At a hearing before the Senate Finance Committee today, the General Accounting Office, Congress's watch dog agency, unveiled results of a year long investigation which found that millions of dollars meant for services for poor and disabled children have been siphoned off by consultants and state governments. The report was initiated last year at the request of Senate Finance Committee Chairman William V. Roth, Jr. (R-DE) and Ranking Democratic Member Daniel Patrick Moynihan (D-NY). Chairman Roth opened the hearing with the following statement:

"Nearly 10 months ago, this Committee held its first hearing on the complicated relationship between Medicaid and the schools. The foundation of that relationship is very straightforward - and unchallenged. Let me say clearly - Medicaid is responsible for reimbursing schools for the costs of providing health care services in the schools to Medicaid eligible children. This responsibility is entirely appropriate and will be preserved.

"However, at last year's hearing, a number of witnesses told us that the relationship between Medicaid and the schools is being exploited. Two basic points that we heard over and over again disturbed me greatly.

"First, we heard that systems were in place that provided no real assurances that vulnerable children in need of health care services were actually receiving those services. Second, we were told that the Health Care Financing Administration's oversight of billing practices permitted Medicaid funds to be spent inappropriately.

"Both of these findings were simply unacceptable to me. As Chairman of this committee, I take our oversight responsibilities very seriously. Accordingly, with Senator Moynihan, who has been working with me to address this problem every step of the way, I asked the General Accounting Office to broaden the scope of its investigation and provide us with recommendations to ensure that Medicaid programs in schools are run fairly and responsibly. I look forward to hearing GAO's testimony.

"I also look forward to hearing from the Health Care Financing Administration specifically what will be done to stop the questionable practices identified by the GAO. Because frankly, I am frustrated.

"I am frustrated because our basic goals are simple. We want to make sure that Medicaid eligible kids receive the services they are entitled to and we are paying for. And we want to make sure that Medicaid spending is appropriate. These basic goals have not been met.

"It is particularly important that we take GAO's findings seriously because of a parallel easily drawn between the patterns we are seeing today in school-based spending and one of the darkest pages in the Medicaid program's history - the disproportionate share hospital spending scandals of the 1980s.

"As we learned then, no one benefits when Medicaid dollars are used irresponsibly. In this case, the stakes are high - children with complicated educational needs depend on the health care services Medicaid provides. We owe it to these children, and to the taxpayers, to make sure that we run programs that are solid, defensible, and sustainable in the long run.

"Before we hear from our witnesses, I'd like to thank Senator Moynihan and his staff for their close cooperation over the past year as we have investigated this situation."