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Commonwealth of Pennsylvania House of Representatives COMMONWEALTH OF PENNSYLVANIA HOUSE OF REPRESENTATIVES APPROPRIATIONS COMMITTEE HEARING STATE CAPITOL MAJORITY CAUCUS ROOM ROOM 140 HARRISBURG, PENNSYLVANIA TUESDAY, MARCH 3, 2009 9:00 A.M. VOLUME I OF IV PRESENTATION BY PENNSYLVANIA DEPARTMENT OF PUBLIC WELFARE BEFORE: HONORABLE DWIGHT EVANS, MAJORITY CHAIRMAN HONORABLE MATTHEW D. BRADFORD HONORABLE TIM BRIGGS HONORABLE H. SCOTT CONKLIN HONORABLE EUGENE DePASQUALE HONORABLE DAN FRANKEL HONORABLE JOHN T. GALLOWAY HONORABLE WILLIAM F. KELLER HONORABLE WILLIAM C. KORTZ II HONORABLE DEBERAH KULA HONORABLE TIM MAHONEY HONORABLE KATHY MANDERINO HONORABLE CHERELLE L. PARKER HONORABLE JOHN J. SIPTROTH HONORABLE JAKE WHEATLEY HONORABLE JEWELL WILLIAMS ————————— JEAN DAVIS REPORTING 7786 Hanoverdale Drive • Harrisburg, PA 17112 Phone (717)503-6568 • Fax (717)566-7760 2 1 BEFORE (cont.'d): HONORABLE MARIO J. CIVERA, JR., MINORITY CHAIRMAN 2 HONORABLE GORDON DENLINGER HONORABLE BRIAN L. ELLIS 3 HONORABLE JOHN R. EVANS HONORABLE MAUREE GINGRICH 4 HONORABLE THOMAS H. KILLION HONORABLE RON MILLER 5 HONORABLE SCOTT A. PETRI HONORABLE DAVE REED 6 HONORABLE DOUGLAS G. REICHLEY HONORABLE MARIO M. SCAVELLO 7 HONORABLE RICHARD R. STEVENSON HONORABLE KATIE TRUE 8 9 ALSO PRESENT: MIRIAM A. FOX 10 MAJORITY EXECUTIVE DIRECTOR EDWARD J. NOLAN 11 MINORITY EXECUTIVE DIRECTOR 12 13 JEAN M. DAVIS, REPORTER NOTARY PUBLIC 14 15 16 17 18 19 20 21 22 23 24 25 3 1 I N D E X 2 TESTIFIERS 3 NAME PAGE 4 ESTELLE RICHMAN 5 SECRETARY, PA DEPARTMENT OF PUBLIC WELFARE.................4 6 BETH ANN SMETAK 7 DIRECTOR, OFFICE OF THE BUDGET, PA DEPARTMENT OF PUBLIC WELFARE.................5 8 MICHAEL NARDONE 9 DEPUTY SECRETARY, OFFICE OF MEDICAL ASSISTANCE PROGRAMS, 10 PA DEPARTMENT OF PUBLIC WELFARE................58 11 JOAN ERNEY DEPUTY SECRETARY, 12 OFFICE OF MENTAL HEALTH AND SUBSTANCE ABUSE SERVICES, 13 PA DEPARTMENT OF PUBLIC WELFARE................87 14 LINDA T. BLANCHETTE DEPUTY SECRETARY, 15 OFFICE OF INCOME MAINTENANCE, PA DEPARTMENT OF PUBLIC WELFARE...............104 16 KEVIN CASEY 17 DEPUTY SECRETARY, OFFICE OF DEVELOPMENTAL PROGRAMS, 18 PA DEPARTMENT OF PUBLIC WELFARE...............145 19 20 21 22 23 24 25 4 1 P R O C E E D I N G S 2 * * * 3 MAJORITY CHAIRMAN EVANS: The hour of 4 9 o'clock having arrived, I would like to convene the 5 Department of Public Welfare. 6 I'm going to make an announcement to the 7 members. We have 3 hours with the Secretary, 9 to 8 12. I will definitely stop at 12 o'clock. 9 So I encourage the Secretary and everybody 10 for questions to be concise, to the point, yes-and-no 11 answers. Yes-and-no answers. 12 SECRETARY RICHMAN: I can do that. 13 MAJORITY CHAIRMAN EVANS: Yes-and-no 14 answers, because when we get to 12 o'clock, I'm going 15 to stop. Okay? 16 So I'm going to make this very concise, 17 3 hours, so everyone knows ahead of time so we can 18 get to the point. 19 I want to get right to it because I want to 20 make sure every member gets a chance to ask their 21 questions. 22 The first thing I'd like to start off with, 23 Madam Secretary, can you introduce yourself for the 24 record and the person who is with you, and then we 25 can go right into the questions. 5 1 SECRETARY RICHMAN: My name is 2 Estelle Richman. I'm the Secretary of the Department 3 of Public Welfare. 4 DIRECTOR SMETAK: And I am Beth Ann Smetak, 5 DPW Budget Director. 6 MAJORITY CHAIRMAN EVANS: Okay. 7 The first question I'd like to start off 8 with, as we have heard a lot about the Auditor 9 General's audit on Medical Assistance programs, can 10 you specifically tell us or respond to exactly what 11 the Auditor General has expressed? 12 SECRETARY RICHMAN: Should I answer it yes 13 or no? 14 MAJORITY CHAIRMAN EVANS: Well, whatever way 15 -- hey, look, I like that. If you could just say 16 "no" to it, then guess what? I'll move to the next 17 question. I don't have to hear all that. 18 If you tell me that what the Auditor General 19 said is not something, then just say it. I don't 20 have to hear all that other stuff. 21 SECRETARY RICHMAN: I will try to make it as 22 concise as I can. 23 We do believe that the Auditor General's 24 14-percent error rate is not an accurate error rate 25 on the eligibility for the Medical Assistance 6 1 Program. 2 We believe that it is much lower than that. 3 I would put it probably in about the 4-percent error. 4 Zero percent is what our goal is, and that's what we 5 believe has to remain always the target on an error 6 rate. 7 We do believe, as we've read through the 8 Auditor General's report, that some very complicated 9 eligibility issues come up, and that we have seen, as 10 we go through every -- we will be going through every 11 one of the 1,600 cases that he reviewed and looking 12 at the complications of eligibility. 13 We also believe that there are areas of 14 vulnerability that he cited that we are already 15 beginning to make some of the changes in the logic 16 for our IT system. 17 For example, one of the things that he cited 18 that we believe was a problem with our logic was that 19 when someone is working at a job and their salary 20 changes because they go to a new position -- in other 21 words, they're working at Wal-Mart, they move to 22 Sears, Sears gives them an increase -- we get an 23 alert. We get an alert from L&I that there has been 24 a salary change, and we immediately then change and 25 review their eligibility benefit to make the 7 1 appropriate adjustment. 2 However, if they're at Wal-Mart and they get 3 more than $100, and they're still working at Wal-Mart 4 but they get a raise of more than $100 a week, we 5 don't get that alert. 6 We are now changing our logic so that we 7 will get that alert right away, and then we will, 8 again, change the eligibility to fit the 9 appropriate range at that point in time. That fix 10 on our eligibility logic should be in place in the 11 fall. 12 So there are things we learned from reading 13 his report and having the discussions. I've met with 14 the Auditor General. My staff has met with the 15 Auditor General. We will continue to meet and to 16 review all of the cases they have found. 17 MAJORITY CHAIRMAN EVANS: Okay. 18 SECRETARY RICHMAN: And we will make the 19 appropriate changes to our system as we believe is 20 appropriate within our eligibility. 21 Our goal, again, is to be able to have 22 100 percent, to have zero-percent error with an 23 eligibility, and therefore, by reviewing these cases, 24 we will learn whether there are other logic 25 corrections we need to make. 8 1 One of the -- let me give you just an 2 example of what we have found as we're reviewing 3 these cases. 4 And the eligibility rules, incidentally, for 5 Medical Assistance are fairly complex. There are a 6 lot of different areas. There are a lot of ways that 7 eligibility becomes -- that people can reach 8 eligibility. It takes us about 6 to 9 months to 9 train our own staff on many of the eligibility 10 rules. 11 One of the examples of a case that is 12 complicated is frequently an increase in salary comes 13 over and it says $2,000, a little over $2,000. It 14 was read that this was an increase in the salary that 15 the person had. In reality, it represented 3 months 16 of increase. So it had to be divided by three. And 17 when you did that and looked at the person's salary, 18 they were still eligible for full Medicaid benefits. 19 There are any numbers of examples that I can 20 give you. As I am sure this question will come up 21 several more times in the course of these 3 hours, I 22 will save other examples for other questions. 23 MAJORITY CHAIRMAN EVANS: I've been here a 24 long time, Madam Secretary, and I always hear over 25 and over again, why can't we just cut your department 9 1 10 percent? 20 percent? Why can't we just slash 2 you directly across the board and that can balance 3 us? 4 So tell us specifically, why can't we just 5 make a 10-, 15-, 20-percent cut across the 6 department? 7 SECRETARY RICHMAN: This year, knowing the 8 financial condition of the country and the impact 9 that would have on the Commonwealth, we did do a 10 zero-based budget, which meant that absolutely no 11 increase in total dollars that were going to be spent 12 by the Department of Public Welfare. 13 And that 10 percent, that is cutting a 14 little over a billion dollars in the Department of 15 Public Welfare budget. 16 Because we are so heavily matched by the 17 Federal Government, the first thing to realize is 18 when you cut a billion dollars out of the Department 19 of Public Welfare, you're actually cutting an 20 additional $1.2 billion for the Feds, which means 21 that we're cutting about -- to the providers -- we're 22 cutting about $2.1 billion from the Department of 23 Public Welfare.
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