Commentary: Why does Congress hate HCFA?

After the Internal Revenue Service, it is hard to find a government agency that engenders as much hatred from as many different interests as the Health Care Financing Administration--which runs Medicare, Medicaid and the State Children's Health Insurance Program.

It seems just about everyone in health care hates HCFA. Physicians, hospitals and other Medicare providers find its bureaucracy impenetrable and its decisions arbitrary. State officials chafe at the way requests to operate the joint federal- state Medicaid and CHIP programs as they see fit are frequently thwarted or sat on in Washington (actually, in Baltimore, where most of HCFA's workers are). Free market analysts hate HCFA because it represents a centralized, government way of doing business.

But it seems no one hates HCFA more than Congress itself. HCFA-bashing is one of Congress' favorite participatory sports.

"We have built up a system designed to block care and micromanage health care," Sen. Frank Murkowski, R-Alaska, declared last month in introducing the "Medicare Education and Regulatory Fairness Act," or MERFA--which would provide physicians with new "due process" rights.

And while HCFA-bashers are primarily Republicans, they are not exclusively so. "No one will deny that the Health Care Financing Administration has a difficult job, but it is a huge problem when the regulations they establish, and the manner in which they enforce them, stops our parents and grandparents from receiving the very health care they need and deserve," said Sen. John Kerry, D-Mass., Murkowski's lead cosponsor.

And the bashing is not only bipartisan, it is also--frequently--contradictory. At the same time legislators criticize the agency for heavy-handed anti-fraud tactics, they chastise it for an error rate--about 8.6 percent last year--that they insist is still too high, even though it is less than half what it was four years ago. That is thanks, largely, to those heavy-handed anti-fraud tactics--many of which Congress ordered in the first place.

Yet ironically enough, Congress is actually directly responsible for much of what ails HCFA. The legislator-made problems fall into three broad categories:

• Too much to do. As part of the 1996 Health Insurance Portability and Accountability Act, Congress required HCFA, among other things, to issue new regulations to simplify billing and protect medical privacy and to beef up anti-fraud and abuse efforts, as well as making the agency the backup insurance regulator to the states. The 1997 Balanced Budget Act made that workload pale by comparison: It saddled the agency with more than 300 new responsibilities, including the design and implementation of brand new payment systems for home health care, nursing homes and managed care plans, to name but a few.
• Not enough money to do it with. Four leading Energy and Commerce Democrats, led by ranking member John Dingell of Michigan, wrote in a letter to appropriators earlier this month asking for more money for the agency: "Over the last eight years, increases in HCFA's administrative budget have just barely kept pace with inflation or, to put it another way, it has been essentially flat during this period of significant workload growth. With just over 4,400 employees, HCFA's workforce is smaller today than it was in the early 1980s."
• Not enough authority. An Energy and Commerce hearing earlier this month featured horror stories about HCFA "contractors" and "intermediaries," the insurance companies the agency contracts with to process provider bills. Yet HCFA actually has only limited power over these companies--because that is the way Medicare was designed. Wrote Paul Starr in his prize-winning book, The Social Transformation of American Medicine: "In setting up Medicare, Congress and the administration were acutely concerned to gain the cooperation of the doctors and the hospitals. Consequently, they established buffers between the providers of health care and the federal bureaucracy."

"HCFA offices are filled with hundreds of dedicated employees, but also with outdated computer systems, a cumbersome bureaucracy and demands that have spread the agency too thin, for too long," Thompson said April 9 in releasing the department's budget, which seeks $36 million to modernize the agency's information technology systems. He added, "HCFA needs our help now, so it can help you and the American people."

But can Congress give up its favorite whipping boy and actually let HCFA attempt to do the work it has been assigned? More than perhaps anything else, how Congress deals with HCFA this year will in large part determine the fate of Medicare reform.