September 14,2004

Grassley, Baucus Seek Resources for Inspector General at HHS

WASHINGTON — The leaders of the Senate Committee on Finance today sent thefollowing letter to Senate appropriators to ask that adequate resources be provided to the InspectorGeneral for the Department of Health and Human Services.

Here is the text of the letter signed by Sen. Chuck Grassley of Iowa, chairman of the Finance Committee, and Sen. Max Baucus of Montana, ranking member of the Finance Committee.

September 14, 2004

The Honorable Arlen Specter
Senate Subcommittee on Labor, Health
and Human Services, and Education
United States Senate
Washington, D.C. 20510

The Honorable Tom Harkin
Ranking Member
Senate Subcommittee on Labor, Health
and Human Services, and Education
United States Senate
Washington, D.C. 20510

Dear Arlen and Tom:

As the Department of Health and Human Services, Office of Inspector General (OIG) undertakes thetask of overseeing the Medicare Prescription Drug, Improvement, and Modernization Act of 2003(MMA), we urge you to ensure that adequate resources are provided to support the OIG. Due to itsincreased oversight responsibilities, the OIG has informed us that the OIG's resources are presentlyinadequate to provide the appropriate level of oversight, both for implementation of the MMA andfor the OIG's workload generally. Aside from the new OIG responsibilities mandated by the MMA,the Medicare and Medicaid programs continue to grow and have placed greater demands on the OIG.

We concur with the OIG that at least $35 million is necessary for the OIG to conduct its new MMArelatedactivities and to address its increased workload.

The OIG has been closely monitoring the MMA since its passage, and has identified a number ofareas that demand its attention, specifically with respect to monitoring the implementation of theprescription drug provisions. While MMA oversight will be a concerted effort by the OIG, CMS, andthe Department of Justice, the MMA brings new responsibilities to the OIG in particular. Accordingto the OIG, the MMA program poses numerous oversight challenges:

The MMA brings new responsibilities to the OIG and increased challenges in providing an adequatelevel of prudent oversight to the program. In response to the mandatory provisions of MMA, the OIGwill initially focus on audits of drug manufacturers and surveys of market prices of Medicare PartB drugs; statutory requirements relating to safe harbors for electronic transmission of drugprescriptions and collaborative efforts of Federally Qualified Health Clinics; effects of Medicarepayment rates on the availability of hematology and oncology drugs; prices of drugs included in theend stage renal disease composite rate; payment methods for training residents in non-hospitalsettings; and notices to beneficiaries relating to hospital lifetime reserve days. In addition to themandatory work, OIG will initiate appropriate investigations, audits and evaluations and provideadvice and technical assistance on the impact of the MMA on the Medicare program. After carefulconsideration, OIG has identified several areas with the greatest potential for program integrityvulnerabilities and challenges under the MMA.

Congress routinely relies on the OIG's important oversight work and its of paramount importancethat we provide the OIG with resources commensurate to the task it faces. As you know, the MMAprovided $1 billion to CMS so the agency could fulfil its immediate implementation responsibilities.

It was the intent of the conferees that the OIG would receive adequate funding for its additionalMMA responsibilities out of these resources. Due to a technical issue in the drafting of the MMA,however, CMS is unable to redirect to the OIG any of the $1 billion. We have been informed by theOIG that they require $25 million in FY2005 to adequately fulfill responsibilities under the MMA,and, accordingly, we would urge the Appropriations Committee to redirect $25 million of the $1billion provided to CMS to the OIG.

We look forward to working with you on this funding priority.

Thank you very much for your attention to these crucial concerns, and if you or your staff have anyquestions, please feel free to contact our staff.


Charles E. Grassley
Chairman, Committee on Finance

Max Baucus
Ranking Member, Committee on Finance