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
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13 JEAN M. DAVIS, REPORTER NOTARY PUBLIC 14
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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
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1 P R O C E E D I N G S
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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.
24 The billion dollars, as we looked at a
25 zero-based budget, we would be cutting the county 10
1 allocations about 13 1/2 percent across all of the
2 county allocations.
3 We would be eliminating all of the
4 supplemental payments to hospitals.
5 We would be cutting the nursing-home
6 payments by approximately 15 percent.
7 We would be delaying our Part D payments to
8 the Federal Government by a total of 3 months.
9 We would be increasing our MCO
10 assessment, the broad-based assessment, to 5 percent
11 rather than the 2 percent.
12 We would be negotiating our rates with our
13 managed-care companies which have to be actuarially
14 sound. We would be keeping them very much close to
15 the lowest part of that range that we could do.
16 We would be virtually eliminating most of
17 our pay-for-performance program with HealthChoices.
18 We would eliminate all vacancies within DPW.
19 We would continue to have to make that have
20 our pharmacy consolidation initiative.
21 We would continue to look at the lowest
22 level that we could certify for our needs-based
23 budget.
24 And we would continue to be able to do many
25 of the caps that we have in our Behavioral Health 11
1 Program.
2 Essentially, that would get us to a
3 zero-based budget, and that would still be adding
4 back in some ability to negotiate an actuarially
5 sound rate with our managed-care plans.
6 It would also still have to recognize that
7 we see an increase in eligibility, particularly in MA
8 related to seniors and people with disabilities.
9 But all of that, if we were going to do all
10 of that, all of those things would have to fall into
11 place to cut 10 percent out of the DPW budget.
12 So it's a pretty -- many of the costs that
13 we cut out of the State budget are under mandated
14 services, so the counties would have to do something
15 to continue to provide those services. So that if we
16 did not provide services in child welfare or
17 additional dollars, the counties are still mandated
18 to provide those, so the cost would just roll from
19 the State and be mandated on the counties.
20 MAJORITY CHAIRMAN EVANS: Do you have any
21 specific sense of what impact that would mean to the
22 counties? I heard you say 13 percent. What cost
23 increase would that mean to the counties? Do you
24 know?
25 SECRETARY RICHMAN: About a 13 1/2 decrease 12
1 to the DPW budget would mean about $300 million out
2 of our budget that would all have to be absorbed by
3 the counties.
4 MAJORITY CHAIRMAN EVANS: Because it's
5 mandated by law?
6 SECRETARY RICHMAN: Because many of the
7 services that we provide are mandated by law.
8 MAJORITY CHAIRMAN EVANS: So in other words,
9 you would either have to -- now, is that State law or
10 Federal law?
11 SECRETARY RICHMAN: Depending on which
12 topic. Some of each. I mean, we would have to break
13 it down a little bit more narrowly to say whether
14 it's mandated under Federal law, which many of the
15 child welfare things are mandated by, I'll say, the
16 Mental Health and Mental Retardation Procedures Act
17 under mental health or mental retardation.
18 MAJORITY CHAIRMAN EVANS: So we would either
19 have to try to figure out simultaneously if that,
20 that proposal of that reduction, we'd have to try to
21 either change State law or Federal law---
22 SECRETARY RICHMAN: Right.
23 MAJORITY CHAIRMAN EVANS: ---in order for
24 the local governments---
25 SECRETARY RICHMAN: Right. 13
1 MAJORITY CHAIRMAN EVANS: ---the local
2 counties, not to have to be responsible for
3 implementation.
4 SECRETARY RICHMAN: Right.
5 MAJORITY CHAIRMAN EVANS: Okay.
6 SECRETARY RICHMAN: The other piece to
7 remember is, all of this of this billion dollars, the
8 vast majority of it goes to people who provide
9 service in Pennsylvania.
10 MAJORITY CHAIRMAN EVANS: Example; give an
11 example.
12 SECRETARY RICHMAN: To the pharmacists.
13 Let me give you a big one. The pharmacists
14 get a lot of this. Physical therapists; the
15 hospitals. Most of our hospitals in Pennsylvania are
16 nonprofits. It goes to nonprofit agencies. It goes
17 to providers across the system.
18 These dollars do not go into the hands of
19 providers. It does indeed give providers -- I mean,
20 consumers services.
21 MAJORITY CHAIRMAN EVANS: Okay.
22 SECRETARY RICHMAN: But many of those
23 services, the consumers would then go to an emergency
24 room. They would still get many of those services.
25 Hospitals and other providers wouldn't be paid for 14
1 it.
2 It hits the business person, it hits the
3 workers in Pennsylvania the hardest, because this
4 billion dollars or these $2 billion with the Federal
5 match go into the hands of other individuals to
6 provide service.
7 If we cut our budget, then they don't get
8 those dollars.
9 MAJORITY CHAIRMAN EVANS: Are you able to
10 qualify this in some way of what it would mean to
11 employment as a result from hospitals to providers if
12 this money is reduced?
13 What does it mean to these local communities
14 in terms of employment, things of that nature?
15 SECRETARY RICHMAN: You know, for a long
16 time, I've always carried those numbers, and I don't
17 have those numbers with me today.
18 I can tell you that it would be catastrophic
19 to most of our systems, particularly to our
20 hospitals, to our managed-care plans, and to our
21 community providers.
22 If you're taking $2 billion out of an
23 economy, there's an impact on that.
24 MAJORITY CHAIRMAN EVANS: Well, for example,
25 I was in Williamsport a couple of weeks ago, and I 15
1 know Williamsport in Lycoming County is the largest
2 employer with 3,000 to 5,000 employees, 120,000
3 people in that county. That's a specific hospital.
4 Do you have any sense of what it would mean
5 to a hospital like Williamsport? I know I'm just
6 throwing that to you off the top.
7 SECRETARY RICHMAN: Not particularly.
8 MAJORITY CHAIRMAN EVANS: And that's in
9 rural Pennsylvania.
10 SECRETARY RICHMAN: It's a rural hospital;
11 it would have an impact.
12 I would tell you that the current budget,
13 which has a $20 million cut for the hospitals, that
14 really morphs into $40 million with the Federal
15 match.
16 Every hospital is already telling me how
17 hurt they will be, what that will be, how many people
18 they may have to lay off, and the damage that will do
19 particularly to our small and rural hospitals.
20 That's $20 million. I'm talking about
21 taking in excess of $200 million out of the
22 hospitals.
23 MAJORITY CHAIRMAN EVANS: Okay.
24 When you were before the Senate, I heard
25 that some people were singing like happy days; you 16
1 have received a check from the Feds. My
2 understanding is it's not like an official check, but
3 money is coming in the mail.
4 Obviously, the stimulus idea is on a
5 temporary basis -- year one, year two. How have you,
6 in a very specific way, prepared us as a State
7 knowing that this money is temporary in terms of what
8 other kinds of adjustments you have to do in your
9 department in terms of cost containment in order to
10 understand that that money is going to disappear?
11 SECRETARY RICHMAN: Well, one of the things
12 that we constantly are considering is how do we make
13 sure that we try to look at ways that this money can
14 be replaced.
15 You know, we've dodged the bullet. We may
16 not have to cut $2 billion out of our budget this
17 year, but that's the immediate bullet.
18 What we're looking at is what I call the
19 cliff, and the cliff happens in January 2011 when
20 this stimulus money goes away and DPW, through the
21 FMAP process, stands to gain in the vicinity of
22 $4 billion. And I would like to make sure that I
23 don't leave my predecessor with a huge cliff to
24 resolve within the first few months. So we're trying
25 to do some of that planning now. 17
1 Two of those ways that we're looking at it,
2 one is through the pharmacy consolidation, which
3 saves us about $150 million on an annualized basis.
4 The good news in this area for all the folks
5 who are going to question about why we're doing it is
6 that we believe the Feds are going to do it.
7 The latest information coming out of the
8 Federal Government is that it's in the President's
9 budget to both give the managed-care companies the
10 ability to bill for rebates. And that was the issue
11 for us, is who bills for the rebates?
12 If the managed-care companies had the
13 ability to bill for rebates, then we're fine. But
14 that saves us $150 million, so that's part of
15 fulfilling that billion-dollar deficit.
16 Our statewide broad-based MCO assessment at
17 a 2 percent in the first year saves us about
18 $200 million in the second year, and that morphs to
19 $400 million with Federal match.
20 On an annualized basis, it would save us
21 $400 million. That goes close to a billion dollars
22 with Federal match.
23 Now we're talking about being able to
24 actually absorb within our budget or generate new
25 revenue. 18
1 We're also proposing any number of other
2 ways to control costs and to look at ways to be able
3 to change the DPW budgeting process to be able to
4 make sure that as we reach December 2011, that we
5 have a better way to absorb some of that cost.
6 Another example is we're totally looking at
7 the ways that we look at how we fund our child
8 welfare agencies. We're looking at ways to move more
9 to pay-for-performance.
10 We're looking at every opportunity to be
11 able to either reconsolidate, look at our
12 institutions, and consider ways to be able to save
13 dollars for the Commonwealth so that hopefully as we
14 reach the end of 2010, that either the cliff is very
15 small or that we have actually begun to look at other
16 ways that we either generate revenue, have strong
17 cost containment, or ways that we can make sure that
18 we don't leave the Commonwealth at the end of this
19 Administration with a huge potential deficit in the
20 department, in DPW.
21 MAJORITY CHAIRMAN EVANS: Thank you.
22 SECRETARY RICHMAN: Certainly.
23 MAJORITY CHAIRMAN EVANS: Chairman
24 Mario Civera.
25 MINORITY CHAIRMAN CIVERA: Thank you, 19
1 Mr. Chairman.
2 Welcome, Madam Secretary.
3 SECRETARY RICHMAN: Thank you.
4 MINORITY CHAIRMAN CIVERA: Before I begin, I
5 want to go back to what Dwight brought up as far as
6 the Auditor General's report.
7 But the mandates that are mandated by the
8 Federal Government, all the different mandates that
9 you receive, could we get a copy of that, what you're
10 mandated by the Federal Government on, the different
11 programs that DPW is expected to do?
12 SECRETARY RICHMAN: You want it across all
13 of our programs? just the Medical Assistance Program?
14 We have mandates that, there are seven
15 different programs or six different -- well, seven
16 different program areas, hopefully becoming six
17 different program areas, in the Department of Public
18 Welfare.
19 And do you want mandates under all seven of
20 those, or do you want a narrower slice?
21 MINORITY CHAIRMAN CIVERA: No---
22 SECRETARY RICHMAN: I'm trying to get to a
23 timing for you.
24 MINORITY CHAIRMAN CIVERA: Okay. If it
25 could be possible, what exactly is required from the 20
1 department so it would cover it all.
2 SECRETARY RICHMAN: Okay.
3 MINORITY CHAIRMAN CIVERA: Federal and
4 State. Because as we go in -- and we're going into a
5 different situation with the stimulus and what is
6 expected of us as a State, what the Federal
7 Government is going to expect the State to do.
8 And because the DPW budget is to the dollar
9 point that it's at at the last several years, we
10 would like to see the whole thing.
11 SECRETARY RICHMAN: Okay.
12 MINORITY CHAIRMAN CIVERA: If we could see
13 it across the board, that's what I'm asking.
14 SECRETARY RICHMAN: Okay. And we will try
15 to -- I mean, it's a pretty broad department. We
16 will try to do that in as succinct a way as we
17 possibly can.
18 MINORITY CHAIRMAN CIVERA: Okay.
19 Prior to -- and I'm glad that Dwight asked
20 the question.
21 Prior to the Auditor General's audit---
22 SECRETARY RICHMAN: Yes.
23 MINORITY CHAIRMAN CIVERA: And you were
24 touching on it a little bit when you went in just a
25 few moments ago as far as what you expect your 21
1 department to do at this point on until
2 2010-2011.
3 What were you doing prior to the Auditor
4 General's report as far as trying to save dollars and
5 people that were on these specific items that
6 shouldn't have been?
7 Could you give me an idea, an overall, as
8 far as what you were trying to do to curtail that so
9 this report wouldn't reflect what it's reflecting?
10 SECRETARY RICHMAN: Well---
11 MINORITY CHAIRMAN CIVERA: Because when we
12 go back to the 14 percent -- and basically you said
13 it was not an accurate rate.
14 SECRETARY RICHMAN: Yes.
15 MINORITY CHAIRMAN CIVERA: But quickly --
16 and I watched the Senate yesterday, too -- quickly
17 you went back to say that maybe a 4 percent error and
18 then you said that there should be no error.
19 SECRETARY RICHMAN: That's correct.
20 MINORITY CHAIRMAN CIVERA: So you've got to
21 give me some kind of an idea of what you were doing
22 prior to this audit coming out, because this audit
23 now has the news media coverage and---
24 SECRETARY RICHMAN: Let me---
25 MINORITY CHAIRMAN CIVERA: Go ahead. 22
1 SECRETARY RICHMAN: Let me make a parallel,
2 because I believe the Auditor General did between
3 this report and the LIHEAP report.
4 MINORITY CHAIRMAN CIVERA: Okay.
5 SECRETARY RICHMAN: In the LIHEAP report,
6 the Auditor General said that we had -- that they had
7 identified 253,000 cases of fraud in DPW in looking
8 at LIHEAP.
9 Of those, the Auditor General sent to the
10 OIG about a thousand cases that they believed
11 represented the worst of that fraud.
12 Out of those 1,000 cases, the OIG identified
13 77 cases that they believed would have been potential
14 fraud. And out of those 77 cases, they turned over
15 to the District Attorney's Office 21 of those cases
16 that looked like they were any definable real fraud.
17 The other 58 cases, they're continuing to look at
18 more detail.
19 So our issue has been, as in that case, we
20 can come out with some very broad statements, but as
21 you look into the cases one by one or you look into
22 the details of it, what you see is very, very, very
23 reduced.
24 We do not disagree that there may have been
25 some level of error rate in our program. We're 23
1 constantly looking at, how do we improve our error
2 rates? How do we do a better training of our staff?
3 How do we begin to look at all of the safeguards we
4 have to put in to keep from making people eligible
5 that should not be eligible for the Medicaid Program.
6 We work very closely with L&I, because they
7 are the ones that collect the unemployment data, and
8 they send us that data on a regular basis to update.
9 Whenever we get an alert from them that
10 indicates that one of our clients has been -- had a
11 change in income or a change in status, then we
12 immediately respond to that.
13 The logic that I told you was one of the
14 things that we also were able to catch and begin the
15 process of saying that we need to change the logic so
16 we catch when there's an internal promotion for a
17 person.
18 And again, the company you work for and the
19 dollar amount has been set at $100. So if your
20 salary changes by more than $100, then we do an
21 immediate change to your eligibility status.
22 We weren't catching those. We will now
23 catch those and be able to make that change.
24 We did catch ones when you changed jobs from
25 the information. The unemployment data that L&I 24
1 collects comes to them on a lag. Companies have to
2 report it, I believe, quarterly. They then send it
3 to us, and we respond to that information.
4 We track our accuracy and error rate
5 information with our county assistance offices very
6 much on a regular basis.
7 We look to change. We look to correct our
8 logic. We look to change any of our systems that we
9 believe make us vulnerable for any inappropriate use
10 of Federal dollars and State dollars.
11 The Auditor General believes that he has
12 cited 1,600 cases. We will go back and look at every
13 one of those 1,600 cases to determine, one, if there
14 was an eligibility problem. If it was, where it
15 happened, what we can do to change it, and how do we
16 continue to reduce the error rate.
17 As we looked at the error rate, our error
18 rate on this particular error is about 4 percent, a
19 little over 4 percent. In other words, our accuracy
20 rate is in the 96-percent range.
21 MINORITY CHAIRMAN CIVERA: He also pointed
22 out that Act 42, under the present system, needs to
23 be amended.
24 Do you support that, that we would amend
25 Act 42 to make the requirements a little bit more 25
1 difficult than what they presently are?
2 SECRETARY RICHMAN: In terms of making it
3 more difficult to get Medical Assistance?
4 MINORITY CHAIRMAN CIVERA: Or the
5 eligibility---
6 SECRETARY RICHMAN: The eligibility.
7 MINORITY CHAIRMAN CIVERA: ---so that we
8 wouldn't be faced with this.
9 What happens -- and I don't have to tell
10 you. I mean, you've been around many, many years,
11 both with Philadelphia and State Government, and you
12 do a nice job. You really do.
13 SECRETARY RICHMAN: Thank you.
14 MINORITY CHAIRMAN CIVERA: The problem is
15 the perception of what Pennsylvania reflects to State
16 Government.
17 SECRETARY RICHMAN: Right.
18 MINORITY CHAIRMAN CIVERA: And as that
19 perception goes, the Auditor General comes out with
20 such a report and then all of a sudden -- this is the
21 perception now -- we're at a $2.5 billion deficit.
22 Next year, you're at another $2.5 billion deficit.
23 And the only two departments that can be dramatically
24 cut here to make any kind of a difference in the
25 budget are the two controversial departments. One is 26
1 Education and one is your department, the Department
2 of Public Welfare.
3 Then all of a sudden this hits, and the
4 information that comes out of this report doesn't
5 reflect, not only as far as the department is
6 concerned but all of us in State Government, what are
7 you doing about it? And why are you allowing this to
8 happen?
9 These are the questions that go back once
10 the press releases that information, and that's why
11 I'm asking you if you would support that.
12 SECRETARY RICHMAN: Well---
13 MINORITY CHAIRMAN CIVERA: And I'm glad to
14 hear you say -- did you say "yes"?
15 SECRETARY RICHMAN: No.
16 First, we cannot touch eligibility during
17 the stimulus period. In other words, the two
18 conditions that the Federal Government put on anyone
19 who is receiving the increase in FMAP is that you're
20 eligibility determination, anything that is
21 associated with eligibility, cannot change from where
22 it was in July of 2008 through December of 2010, for
23 that 27 months that the stimulus money is to be
24 received.
25 So the easy answer on that for me is, I 27
1 won't be here to make that to be able to have that
2 choice.
3 In reality, Act 42 sets the determination,
4 as folks know, at 6 months, except for long-term
5 care, elderly, disabled, pregnant women, and
6 children, which takes just about the majority of our
7 population and says that you cannot change the
8 eligibility period to a shorter one.
9 I'm not sure that -- I believe we would
10 really like to look to see, what are the unintended
11 consequences of making a change in Act 42?
12 And I believe some of those are the nature
13 of some of the individuals that would fall under
14 that, many of whom would then, I think, compromise
15 the ability of our hospitals to stay solvent.
16 As you've mentioned, both of you have
17 mentioned, in listening to the Senate testimony, many
18 of the questions were around, why can't we provide
19 more support to the hospitals? Anything that does
20 not pay hospitals for people they see compromises
21 their stability.
22 This certainly in any way is not to say that
23 there should be any error rate. I think our goal has
24 to continue to be no error rate within a program of
25 this type, to tighten it up, to be able to look at 28
1 it, but I'm not sure the solution to that is changing
2 Act 42.
3 MINORITY CHAIRMAN CIVERA: Okay.
4 We could go on, but the other members of the
5 committee have questions.
6 I thank you for giving me those answers.
7 SECRETARY RICHMAN: Sure.
8 MINORITY CHAIRMAN CIVERA: Thank you,
9 Mr. Chairman.
10 MAJORITY CHAIRMAN EVANS: Representative
11 Parker.
12 REPRESENTATIVE PARKER: Thank you,
13 Mr. Chairman.
14 And good morning, Secretary Richman.
15 SECRETARY RICHMAN: Good morning.
16 REPRESENTATIVE PARKER: I have a few
17 questions, but will once again ask that you start
18 with the most basic.
19 You know, we know that there has been a
20 negative stigma attached to big W programs over the
21 years and those who are recipients, particularly in
22 the area of cash assistance.
23 SECRETARY RICHMAN: Yes.
24 REPRESENTATIVE PARKER: This past weekend I
25 had the opportunity to meet with residents in my 29
1 district, and when we talked about the Department of
2 Public Welfare, they were very taken aback when they
3 learned that approximately 3 or even less than
4 3 percent of your budget was actually spent on
5 providing cash assistance grants to Pennsylvanians.
6 So, you know, just for the record, once
7 again, can you just clarify where DPW stands as it
8 relates to its constituents?
9 And the reason why I ask you to do this,
10 Madam Secretary, is because, you know, in today's
11 time, it is very easy to grab a sexy headline when
12 proposing to, quote, "cut" welfare. And especially
13 when some people literally do have in their minds
14 that the normal welfare recipient is a typical
15 able-bodied man or woman who is receiving cash
16 assistance and not attempting to work.
17 So can you just, for the record, describe
18 who those recipients are.
19 SECRETARY RICHMAN: The folks that receive
20 cash assistance are fathers or mothers. They have
21 dependant children.
22 For a family of three, they receive $403 a
23 month. The dollar amount has been the same since
24 1990. It has not changed in close to 20 years. It's
25 still $403. 30
1 REPRESENTATIVE PARKER: Okay.
2 SECRETARY RICHMAN: And that fluctuates in
3 terms of how large the family is and what other
4 income the family might have.
5 So in some cases, if the family has some
6 income, it may be as small as $28. But the formula
7 to determine cash assistance hasn't changed since
8 1990.
9 We are at the lowest amount of people,
10 adults, on cash assistance since the time
11 John Kennedy was President in 1960.
12 REPRESENTATIVE PARKER: Okay.
13 SECRETARY RICHMAN: And while in our budget
14 we are projecting a small increase in our cash
15 assistance caseload, the reality is that caseload has
16 continued to stay very, very -- continued to drop and
17 stayed very flat.
18 So we have not as yet seen an increase or
19 seen an increase in the cash assistance caseload. We
20 are assuming, because of the economic climate in our
21 country, that there will be an increase next year.
22 And you can only -- you have to forecast
23 that, even though it has been dropping for
24 Pennsylvania, that some of the people who will be
25 losing their jobs or laid off will be those folks who 31
1 are below the income guidelines that qualify them for
2 cash assistance.
3 We also require all cash assistance
4 requirements on people who are not exempt by a factor
5 of a disability or a few other factors to work.
6 We do have people involved in either
7 education or activities to lead them to work.
8 I have to say that's difficult again right
9 now with so many people being laid off and losing
10 their jobs, and we have people whose primary job is
11 making sure folks are going back to work, and that we
12 have continued to push that.
13 REPRESENTATIVE PARKER: Okay.
14 SECRETARY RICHMAN: Most of our partners in
15 the workforce system I think sometimes think we are a
16 little nuts in that we are pushing them.
17 And they are paid on whether or not they get
18 people working, and they're looking at a workforce
19 climate in this country that is not hiring right now.
20 REPRESENTATIVE PARKER: Right.
21 SECRETARY RICHMAN: But their performance is
22 still on the basis of which we pay them. So we still
23 have people working very, very hard to make sure our
24 clients moving from Welfare to Work continue to move
25 from Welfare to Work. 32
1 REPRESENTATIVE PARKER: So, Madam Secretary,
2 would I be correct in noting that in fact I believe
3 we have approximately 200,000 Pennsylvanians who are
4 receiving some form of cash assistance?
5 SECRETARY RICHMAN: Yes.
6 REPRESENTATIVE PARKER: Okay.
7 SECRETARY RICHMAN: Yes. And 75 percent of
8 those are children.
9 REPRESENTATIVE PARKER: Okay. So even if we
10 removed all of those Pennsylvanians who receive cash
11 assistance off the rolls, would that savings be
12 enough to offset the double-digit increase in
13 health-care costs that we face and the number who are
14 eligible to receive Medical Assistance benefits at
15 all?
16 SECRETARY RICHMAN: No, because it's a very
17 small -- the number of people on cash assistance at
18 200,000 is only 10 percent of the number of people on
19 Medical Assistance, which is now at 2 million.
20 REPRESENTATIVE PARKER: Okay.
21 SECRETARY RICHMAN: So obviously this is a
22 very small item in our budget.
23 There is also a federally funded program, so
24 the hit on the State budget is very small compared to
25 the dollars we spend on Medical Assistance. 33
1 REPRESENTATIVE PARKER: Okay.
2 I next want to follow up with this issue of
3 long-term care and to talk about long-term living.
4 And I think for the past 2 years, between
5 Aging and DPW, its responsibilities have fluctuated,
6 but now with the Long-Term Living Department, the
7 issue of consumer workforce councils have come into
8 play.
9 And I'm sure you're familiar with all of the
10 innuendo and the correspondence that Legislators have
11 received. Talk to us a little bit about where we
12 are.
13 Is this something that's organized
14 throughout the Commonwealth of Pennsylvania? Is this
15 just a pilot? And who did you -- who was involved
16 with organizing the consumer workforce councils and
17 the concept?
18 SECRETARY RICHMAN: Well, this started with
19 a proposal that they had been putting together by a
20 task force within the Department of L&I.
21 REPRESENTATIVE PARKER: Okay.
22 SECRETARY RICHMAN: Many of the consumers
23 and other advocacy groups that read that very first
24 draft decided it did not meet the needs of many of
25 the people. And they decided to come together as a 34
1 task force independent of L&I and write what is now
2 known as the workforce -- the Consumer Workforce
3 Council Report.
4 This is very tightly targeted at consumers
5 that hire their own consumers -- not agencies --
6 consumers that hire their own attendants or their own
7 support to help them live independently.
8 It is a document that many people
9 participated in talking about. There was a group
10 that did not agree with it and a group that did. It
11 is one of those that there is a section of consumers
12 who to their heart feel that they would like to
13 control and be able to work within a framework where
14 they control their attendant care or they control the
15 home health care they get.
16 There's another group of consumers who
17 believe that it's okay to be with an agency, that
18 they don't need to control it themselves.
19 REPRESENTATIVE PARKER: Okay.
20 SECRETARY RICHMAN: And the two groups right
21 now are having a lot of struggle about which model is
22 right.
23 The Administration -- I'm a person who likes
24 to listen to consumers, so I immediately got caught.
25 I have some consumers who believe that plan A is 35
1 right and a set of consumers who very much are
2 dedicated that Plan A is not right and have an
3 alternative they would like to see.
4 The communication that the Administration
5 has had with the counties is to look at a pilot, and
6 in many ways when you have two things that are on
7 parallel tracks and you aren't sure really which one
8 is absolutely right -- and I'm not sure there is an
9 absolute right -- we were looking at counties who may
10 be willing, three counties that may be willing to
11 pilot this to let us know how it worked -- what are
12 the weak points, the strong points; what is the
13 impact it has on other services; what is the slippery
14 slope that people may be afraid of.
15 And I think the controversy has been, one,
16 is this going to go through the legislative process?
17 I'm not even sure we know whether it works yet.
18 Certainly it should go through a legislative
19 process once a decision is made that it should go
20 statewide. Right now we're trying to figure out
21 whether it should go in a county or two to see if it
22 even works conceptually.
23 Clearly, many of the consumers who spent a
24 lot of time developing this really believe it will
25 make a difference in the quality of their life as a 36
1 person that lives with a disability.
2 There's another group of people who believe
3 that that's not the way to go.
4 REPRESENTATIVE PARKER: Okay.
5 And I know the Chairman is monitoring our
6 time closely, so I want to ask two final questions.
7 And the first one is about the fiasco in
8 Luzerne County and the countless number of children
9 who have been impacted by it over the years.
10 SECRETARY RICHMAN: Yes.
11 REPRESENTATIVE PARKER: And, you know, I
12 don't know that the psychological harm that has been
13 done to the children and those families will ever --
14 they will ever actually be able to be made whole.
15 SECRETARY RICHMAN: Right.
16 REPRESENTATIVE PARKER: But with the large
17 number of requests for out-of-home placement and
18 detention rates there, do we monitor those now at
19 private facilities throughout the Commonwealth of
20 Pennsylvania to ensure on the front end if at all
21 possible that this is not happening in any other
22 facilities?
23 And my final question before we go is with
24 this issue of kinship care. I'm a product of an
25 actual kinship home, kinship-care environment, being 37
1 raised by my grandmother and my grandfather. And I'm
2 very much interested in knowing, have we seen an
3 increase in Pennsylvania in the number of children
4 who are being raised by grandparents or someone other
5 than their primary parents?
6 And then, is it due to incarceration and/or
7 drug and alcohol addiction? And those would be my
8 final two questions.
9 SECRETARY RICHMAN: Yeah. Let me answer
10 your first question.
11 Yes. In fact, part of what began to bring
12 this to light is our auditing of the number of
13 children -- this is the Luzerne situation -- the
14 number of children that were put in out-of-home
15 placement.
16 Luzerne County was astronomically high, and
17 as we went in to look at this, one of the things we
18 said is that we weren't going to continue to
19 reimburse you through your child welfare system for
20 what we believe were a very high out-of-home
21 placement.
22 There were a whole series of activities that
23 took place that ended, one, with the indictment of
24 the judges; that two, ended up with us not paying
25 Luzerne County some of the costs that were related to 38
1 the facility in place and that have continued to have
2 us question other facilities in the State that are
3 run by this same group.
4 We also, for the first time, filed an amicus
5 brief with the Juvenile Law Center as they began to
6 look at the protection of the rights of the children
7 that had been, we believe, had been denied by the
8 fact they were being placed in institutions without
9 reason to justify that kind of placement.
10 So the department has been very involved in
11 looking at this. We do work with counties. We do
12 bring to their attention, we believe, their rates of
13 out-of-home placement.
14 We have goals to continue to reduce
15 out-of-home placement to keep children in their home
16 and in their home communities.
17 And one of those is, many of the activities
18 right now going on within our Office of Children,
19 Youth and Families is really to change how we look at
20 these youngsters.
21 It is clear to us, as it is in many other
22 areas, keeping children at home, keeping them in
23 their communities, is much more cost effective
24 than putting them in any type of residential
25 placement. 39
1 If again indeed the Commonwealth wants to
2 make sure we're using our dollars in the most
3 cost-effective way, then we need to be able to bring
4 children back from out of State and, to as much as
5 possible, keep them at home and out of institutions.
6 So that's part of how we've changed.
7 Now---
8 REPRESENTATIVE PARKER: Kinship care.
9 SECRETARY RICHMAN: Kinship care.
10 Yes, it's increasing. We are urging all
11 counties when they are looking for a child, rather
12 than look to a foster home, to first look for kinship
13 care. So we are continuing to see that increase.
14 The reasons people, parents, children often
15 live with other relatives can be any broad number of
16 reasons. When we get involved, it's usually because
17 a child is at risk or has been subjected to some
18 level of abuse or neglect.
19 The secondary reason for why the parent is
20 doing that could be related to incarceration or drug
21 and alcohol or many other reasons that would lead a
22 parent to do that.
23 But it has to have come to our attention if
24 we're going to say that an alternative either would
25 be a kinship-care family, which is our preference, or 40
1 a foster home.
2 REPRESENTATIVE PARKER: Okay.
3 Thank you, Madam Secretary.
4 SECRETARY RICHMAN: My pleasure.
5 REPRESENTATIVE PARKER: Thank you,
6 Mr. Chair.
7 MAJORITY CHAIRMAN EVANS: Representative
8 Reed.
9 REPRESENTATIVE REED: Thank you,
10 Mr. Chairman.
11 Thank you, Madam Secretary, for appearing
12 before the committee today.
13 SECRETARY RICHMAN: Thank you.
14 REPRESENTATIVE REED: Real quickly on the
15 Federal stimulus money, could you just give us a
16 breakdown of the total amount of money coming into
17 your department and the breakdown for the next couple
18 fiscal years of what that money will mean to the
19 department?
20 SECRETARY RICHMAN: The total amount -- wait
21 a minute.
22 The Federal stimulus for DPW for FMAP -- and
23 we're getting four different pots of money. The
24 largest, by far, is our Federal match dollars, and
25 it's about $4 billion. 41
1 The first year is---
2 MAJORITY CHAIRMAN EVANS: Is your mike on?
3 Your mike, I was just curious, is it close enough?
4 Okay.
5 SECRETARY RICHMAN: Okay.
6 The first year, this year, '08-09, we're
7 receiving $1.1 billion. Next year, which is the full
8 fiscal year, '09-10, we get $1.9 billion. And the
9 following year, which is the first half of fiscal
10 year '10-11, we're getting $964 million.
11 And we have received the letters, I think as
12 they said. They came in on Friday giving us, telling
13 us that the $680 million would be available for
14 drawdown.
15 Part of that process is that we do have to
16 demonstrate that there have been no changes to our
17 eligibility since July '08 and that we will meet all
18 of the prudent-pay requirements within the State.
19 Prudent pay says that we will pay our
20 providers within 30 days. We are probably -- before
21 this point, we're about 35 days, 36 days, and we are
22 making the necessary adjustments to be able to
23 document to the Federal Government that we will be
24 paying within 30 days.
25 We are also receiving some dollars within 42
1 child care, the food-stamp line, and child support.
2 So all of those together are part of the changes
3 within the Department of Public Welfare.
4 As far as we know right now, all of the FMAP
5 dollars will go away in December of 2011. That's
6 what we call the cliff.
7 REPRESENTATIVE REED: When your proposed
8 budget, as the Governor announced in February, was
9 $9.6 billion approximately---
10 SECRETARY RICHMAN: Yes.
11 REPRESENTATIVE REED: ---that was proposed
12 before the Federal stimulus money came to light.
13 SECRETARY RICHMAN: Yes.
14 REPRESENTATIVE REED: Will you now need to
15 readjust that number and re-present that number to
16 the Appropriations Committee? And do you have any
17 idea what that number readjusted would be?
18 SECRETARY RICHMAN: The amount of money in
19 the -- that we are proposing for the '09-'10 budget,
20 it will not change. The category of where that money
21 is coming from will probably change.
22 REPRESENTATIVE REED: Okay. So---
23 SECRETARY RICHMAN: In other words, there is
24 not a mandate from the Federal Government except for
25 the two conditions around how those dollars are used. 43
1 They're coming into, in essence, the General Fund for
2 the Commonwealth.
3 REPRESENTATIVE REED: Okay. So the
4 $9.6 billion is going to hold true for '09 and 2010?
5 SECRETARY RICHMAN: That's correct.
6 REPRESENTATIVE REED: And if I'm
7 understanding this correctly, basically what's going
8 to happen is because that money is coming in from the
9 Federal Government that can be used for programs
10 which you administer, you're basically freeing up
11 $1.9 billion in the General Fund in a roundabout
12 way?
13 SECRETARY RICHMAN: In a roundabout way,
14 yes.
15 REPRESENTATIVE REED: Which means that
16 currently, about $7.7 billion worth of State tax
17 dollars will be used to fund your department's budget
18 for '09 and 2010? That's the difference between the
19 $1.9 billion. In a roundabout way.
20 SECRETARY RICHMAN: Yeah. In a roundabout
21 way, I believe that's probably true.
22 REPRESENTATIVE REED: Okay.
23 SECRETARY RICHMAN: We will be doing a new
24 budget to show those.
25 REPRESENTATIVE REED: Okay. I guess what 44
1 I'm getting at is where you are in essence creating a
2 gap of $1.9 billion in this upcoming fiscal year.
3 And then if, according to your numbers, we're getting
4 about $964 million in the fiscal year after that to
5 add on to that, we're creating another gap.
6 How are you proposing, or what -- I guess
7 the first question would be, when you project out
8 budget-wise---
9 SECRETARY RICHMAN: Yes.
10 REPRESENTATIVE REED: ---what is your
11 projected budget for the next fiscal year and the
12 fiscal year after that?
13 SECRETARY RICHMAN: Well, in part -- because
14 that's part of what we're doing now, is looking at
15 how do we make sure that there isn't a huge gap.
16 One of those would be the pharmacy
17 consolidation. That brings in -- that's $150 million
18 on an annualized basis for '10-11.
19 Now, while we had proposed within this
20 budget, before we had seen the President's budget at
21 this point, that we again are able to do this. It
22 looks as if the Federal Government will not only be
23 raising the amount of rebate percentage but will be
24 allowing the MCOs to be able to collect that rebate.
25 So yes. 45
1 REPRESENTATIVE REED: Okay.
2 When you look at -- let's assume the
3 pharmacy carveout goes as you plan.
4 SECRETARY RICHMAN: Yes.
5 REPRESENTATIVE REED: And let's assume
6 everything else stays neutral until you add in other
7 plans here.
8 SECRETARY RICHMAN: Yes.
9 REPRESENTATIVE REED: We're still looking at
10 a $2.86 billion gap that we're going to have in DPW's
11 budget in a couple of years for the fiscal year once
12 this Federal stimulus money goes away.
13 If we save your $150 million a year, we
14 deduct that from the $2.86 billion, you're still
15 talking about a $2.5 billion gap.
16 SECRETARY RICHMAN: I don't---
17 REPRESENTATIVE REED: How are we going to
18 solve that $2.5 billion gap?
19 SECRETARY RICHMAN: Right.
20 I don't think it will be $2.5 billion,
21 because by next year, we will have had to have solved
22 about half of it, because we only have about
23 900 million of Federal dollars.
24 REPRESENTATIVE REED: Okay. How do we---
25 SECRETARY RICHMAN: So we will have to solve 46
1 about a billion-dollar gap.
2 REPRESENTATIVE REED: Okay. How are we
3 going to solve that problem next year? $150 million
4 for pharmacy through carveout.
5 SECRETARY RICHMAN: $150 million I take out,
6 right.
7 REPRESENTATIVE REED: So $850 million we are
8 talking about.
9 SECRETARY RICHMAN: 850. If we are
10 successful in the broad-based MCO assessment at
11 2 percent, that will bring in over $800 million.
12 REPRESENTATIVE REED: Okay. How is -- that
13 money is to go towards helping the uninsured
14 currently in Pennsylvania.
15 SECRETARY RICHMAN: No, no.
16 REPRESENTATIVE REED: Okay. So that's not
17 going to help any folks who are uninsured in
18 Pennsylvania right now?
19 SECRETARY RICHMAN: No. That is purely --
20 that is an assessment.
21 Right now, we have an assessment on our
22 Medicaid MCOs.
23 REPRESENTATIVE REED: Okay.
24 SECRETARY RICHMAN: That is going away, and
25 that brings in about $240 million. 47
1 The Feds have said that that one expires in
2 October of this year and that we cannot any longer do
3 an MCO assessment because it's not broad based, on
4 just Medicaid.
5 So we have now proposed, as many other
6 States have, to go to a broad-based MCO assessment
7 that brings in at full annualization about
8 $400 million, which can be matched by the Federal
9 Government, and will bring in probably close to a
10 little under, probably $900 million.
11 REPRESENTATIVE REED: Okay. So that does
12 not have anything to do with helping the uninsured of
13 Pennsylvania?
14 SECRETARY RICHMAN: It has nothing to do
15 with the stimulus plan. It has nothing to do with
16 the impact of the stimulus plan at this point in
17 time. This is moving to the future.
18 One of the reasons we proposed this was that
19 we knew that if we got this, that we would see this
20 cliff.
21 We know that we have -- that we need to plan
22 more for the future. One of the things that I do in
23 DPW is constantly look at these numbers and figure
24 out what we have to do to reduce the burden without
25 creating an economic panic within all of the people 48
1 who receive these dollars, which are all providers,
2 businessmen, and hospitals and people in our State
3 who survive because of the work they do.
4 REPRESENTATIVE REED: Okay. So that
5 assessment basically is going to be used for general
6 operating services for the Department of Public
7 Welfare---
8 SECRETARY RICHMAN: That is correct.
9 REPRESENTATIVE REED: ---for your programs
10 in one form or another.
11 SECRETARY RICHMAN: That is correct.
12 REPRESENTATIVE REED: Okay.
13 Back to the Federal stimulus money very
14 quickly here.
15 SECRETARY RICHMAN: Yes.
16 REPRESENTATIVE REED: I understand that one
17 of the restraints -- and you've mentioned this
18 already -- on the dollars is that we cannot change
19 eligibility requirements dating back to, is it
20 July 1, 2008?
21 SECRETARY RICHMAN: Yes.
22 REPRESENTATIVE REED: Okay.
23 Is there anything within those dollars that
24 will require the department to expand any of their
25 program offerings or -- I'm trying to think of the 49
1 right way to word it -- ease eligibility requirements
2 at all?
3 SECRETARY RICHMAN: No. There's nothing
4 that says that -- there's nothing that requires us to
5 expand any program, and there's nothing that requires
6 us to ease. They do make a statement that if for
7 some reason people have already done that, there's
8 not a penalty for that.
9 REPRESENTATIVE REED: Okay.
10 SECRETARY RICHMAN: But there's nothing that
11 says we need to make it broader or easier or anything
12 of that type.
13 REPRESENTATIVE REED: Okay. And just one
14 final line of questioning, and just a broader
15 question.
16 SECRETARY RICHMAN: Yes.
17 REPRESENTATIVE REED: We're talking about
18 around $10 billion worth of State money under your
19 department and about $10 or $11 billion worth of
20 Federal money.
21 SECRETARY RICHMAN: That is correct.
22 REPRESENTATIVE REED: So we're talking about
23 $20 billion give or take, and that's a very large sum
24 of money.
25 SECRETARY RICHMAN: A very large sum of 50
1 money.
2 REPRESENTATIVE REED: From your perspective,
3 as the head of the agency that administers these
4 dollars, what are your macro goals for the
5 department?
6 SECRETARY RICHMAN: My goal, my broadest
7 goal, is to make sure we get our money's worth.
8 In other words, when we're allocating money,
9 whether it is through the Office of Medical
10 Assistance to hospitals and plans, whether it's to,
11 through the Office of Children, Youth and Families,
12 to county welfare, whether it's for mental
13 retardation and autism, is to make sure the providers
14 who get these dollars, who are providing a service,
15 are giving us a service that is worth the dollars
16 they're getting and we have a way both to monitor
17 that and to verify that.
18 My concern is too often we don't know
19 whether we're getting a high-quality service, and
20 that is why we've gone so far around
21 pay-for-performance.
22 We know that good service within the
23 health-care system, that people don't constantly use
24 emergency rooms. So I'm pushing the plans, for
25 example, to reduce the use of emergency rooms because 51
1 that's the most expensive service.
2 REPRESENTATIVE REED: Right.
3 SECRETARY RICHMAN: We want to make sure in
4 the child welfare field they're doing less referrals
5 to residential programs, because that's the most
6 expensive service, and if other services are working,
7 I shouldn't have to pay the premium of putting people
8 in residential treatment.
9 REPRESENTATIVE REED: It seems like in
10 government all too often we get caught up in the
11 philosophy of reacting to problems and just getting
12 by each and every day, because it seems like more and
13 more fires start before we get a chance to put them
14 out.
15 And when I talk to my human service folks
16 back home, they're continuously frustrated by
17 reacting to the problems that occur on a daily basis.
18 SECRETARY RICHMAN: Sure.
19 REPRESENTATIVE REED: What have we done to
20 not just react to problems, but what problems are we
21 looking to solve?
22 And I'll give you an example. When I meet
23 with human services folks back home, we talk about
24 smoking cessation programs.
25 SECRETARY RICHMAN: Yes. 52
1 REPRESENTATIVE REED: And in the end, the
2 goal of a smoking cessation program is not to be an
3 ongoing program for eternity. What it should be
4 doing is eventually working itself out, because
5 you've been effective enough where you don't need
6 your program anymore.
7 SECRETARY RICHMAN: That's absolutely
8 correct.
9 REPRESENTATIVE REED: Which problems have
10 you, during your time in office, felt were adequately
11 solved and which other ones do you think we're
12 looking at solving in the near future?
13 SECRETARY RICHMAN: I think that we've made
14 progress in almost every area in terms of being able
15 to reduce cost to the Commonwealth.
16 Let's look at mental health.
17 REPRESENTATIVE REED: Okay.
18 SECRETARY RICHMAN: We've closed two State
19 hospitals. The most expensive way to provide health
20 to a person who has severe, persistent mental
21 illness, community-based services are much more cost
22 effective.
23 We've closed two State hospitals and are
24 continuing to analyze whether or not it is the
25 appropriate timing to be able to look at an 53
1 additional. That saves us money and puts money back
2 into the budget.
3 We have closed one State center. Same
4 impact. It is much more cost effective and better
5 for the individual not to be in a State facility.
6 It's the most expensive way for us to provide
7 service.
8 All the activities we've done within the
9 Office of Long Term Living is to move more towards a
10 home- and community-based service.
11 If we get Federal match and we're able to
12 provide a cost for every person in a nursing
13 facility, we can serve probably up to two people
14 living in the community so we get a better bang for
15 our dollar.
16 In the Medical Assistance Program, the
17 plans, we have been working on a pay-for-performance.
18 We've seen plans increase the amount of prenatal care
19 that they're giving to moms, and they've done a good
20 job, which means our probability of getting a baby
21 that's going to cost us a million dollars because of
22 low birth weight has been reduced.
23 We're seeing more chronic care, which means
24 someone who has asthma, diabetes, is getting
25 continual treatment, continual monitoring, so they 54
1 don't use the emergency room. Again, one of our most
2 expensive treatments.
3 In the area of children and youth, we are
4 very, very much saying we want to bring children who
5 are out of State, who cost us much more money, in
6 State, into their communities, where we can serve
7 them at home and support the home as opposed to
8 putting them in institutions.
9 We're looking for every single opportunity
10 to do things that we know costs less. One of the
11 things I consistently do is look at what are our cost
12 drivers? What is costing me money? And what can I
13 do that will cost me less money? And how do we put
14 it into practice? How do we get it even to bulletin?
15 How do we educate providers around it? And how do we
16 change practice?
17 One of the reasons we've been able to
18 maintain so many of our programs is to be able to
19 continue to look at how we practice what we practice
20 on and how do we get better value for our dollar and
21 not continue some of our most expensive and in many
22 cases most destructive practices.
23 REPRESENTATIVE REED: Madam Secretary, I
24 really appreciate that response, and I understand it
25 was a broad question. And if I could just ask -- I 55
1 know you rattled a couple off the top of your head --
2 if perhaps you could provide the committee a list of
3 the problems from a broader basis throughout your
4 entire department that you believe during the first
5 6 years of your Administration that you have been
6 successful in solving, which ones you believe are on
7 tap that we could potentially and effectively solve
8 in the not-too-distant future, just so we can look at
9 it.
10 Because again, I think all too often we get
11 caught up in the daily tussle of trying to make it
12 through each and every week, and we forget to look at
13 it from the broad perspective of, how can we
14 effectively get folks to the point where they don't
15 need our programs anymore?
16 SECRETARY RICHMAN: And the question is
17 actually such a good one, because I think one of the
18 things we probably don't do as well is to make sure
19 that people know what we're doing and where we solved
20 or changed practices and how we're continuing to do
21 it.
22 So we will be very glad to give you that
23 information by our programmatic office so that you
24 can see it, and we will also have offered to the
25 Senate Appropriations Committee an opportunity to 56
1 review what we call our PeopleStat data, which is
2 when I bring in all of the departments and then sort
3 of do an inquisition with them around how they are
4 managing outcomes, not in numbers, but how they're
5 setting their goals and managing those outcomes and
6 how do we get them to a higher level of outcome and
7 accountability.
8 REPRESENTATIVE REED: It might be
9 interesting as well to look at how many folks are on
10 the system, leave the system, and then find their way
11 back on the system. You know, how effective are we
12 in making a permanent change in their life as opposed
13 to a temporary change.
14 SECRETARY RICHMAN: Another one, we look at
15 recidivism, particularly in many of our programs,
16 because again, I'm not getting my money's worth if I
17 have to treat you for the same thing over and over
18 and over again at the same level.
19 REPRESENTATIVE REED: Right.
20 SECRETARY RICHMAN: And that's why to me the
21 question has to be from a taxpayer, I give you all
22 this money; what am I getting in return, does it
23 work, and are we getting our money's worth?
24 REPRESENTATIVE REED: Thank you very much,
25 Madam Secretary. 57
1 SECRETARY RICHMAN: You're welcome.
2 REPRESENTATIVE REED: Thank you,
3 Mr. Chairman.
4 MAJORITY CHAIRMAN EVANS: Madam Secretary,
5 help me meet the pay-by-performance by 12 o'clock.
6 SECRETARY RICHMAN: I'm sorry.
7 MAJORITY CHAIRMAN EVANS: Help me get my pay
8 by 12.
9 Representative Siptroth.
10 REPRESENTATIVE SIPTROTH: Thank you very
11 much, Mr. Chairman.
12 Secretary Richman, I'm over here.
13 SECRETARY RICHMAN: Sorry. A lot of people.
14 REPRESENTATIVE SIPTROTH: Good to see you.
15 SECRETARY RICHMAN: Thank you.
16 REPRESENTATIVE SIPTROTH: I have a couple of
17 questions, and I'll try to make this as painless and
18 brief as I possibly can.
19 SECRETARY RICHMAN: Thank you.
20 REPRESENTATIVE SIPTROTH: The Office of the
21 Inspector General has found that Pennsylvania may
22 have not documented thoroughly the use of carveout
23 pharmacy drugs.
24 And currently the pharmacy carveout would
25 result in the Department of Public Welfare staff 58
1 managing the drug benefit for more than 1 million
2 additional customers.
3 Can you comment on the ability to do this in
4 relation to the recent findings of the Office of
5 Inspector General, who found that $4.4 million of
6 DPW's drug claims that were paid were not actually
7 eligible and possibly another $5.9 million were
8 questionable?
9 SECRETARY RICHMAN: Okay.
10 REPRESENTATIVE SIPTROTH: And also, do you
11 have to repay that $4.4 million?
12 SECRETARY RICHMAN: I have called up
13 Deputy Secretary Mike Nardone.
14 DEPUTY SECRETARY NARDONE: Hello. My name
15 is Mike Nardone. I'm the Deputy Secretary for the
16 Office of Medical Assistance.
17 There was an IG audit that related to some
18 drug files that are not updated by CMS, and we make
19 every effort to ensure that we're only paying for
20 drugs that are appropriate.
21 And we've really made some significant
22 improvements in terms of how we manage the pharmacy
23 program. Those reports date back to much earlier in
24 this -- around the 2004 period.
25 Since that time, we've dramatically expanded 59
1 the professionalism of that staff. We've made some
2 significant inroads in terms of introducing a
3 preferred drug list. We also have hired pharmacy
4 techs and others to manage the pharmacy benefit
5 program.
6 So I believe that finding relates to
7 something that happened much earlier, 4 or 5 years
8 ago rather than the current time.
9 REPRESENTATIVE SIPTROTH: Okay.
10 DEPUTY SECRETARY NARDONE: Since that time,
11 we've made some significant improvements. We've
12 managed the pharmacy benefit, and we've actually --
13 I'm not sure of the specific number that we have to
14 repay for that; however, we have reached agreement
15 with them and are continuing to look at ways that
16 there are inconsistencies in what they are providing
17 to us.
18 We still are not in full agreement with what
19 their findings are.
20 REPRESENTATIVE SIPTROTH: Okay.
21 When did your department learn of the
22 findings from the Office of Inspector General?
23 DEPUTY SECRETARY NARDONE: We've been
24 working with them over the course of -- I believe
25 this audit has been ongoing for more than 2 years. 60
1 REPRESENTATIVE SIPTROTH: Okay.
2 DEPUTY SECRETARY NARDONE: But again, it
3 dates back some 4 or 5 years ago in terms of when
4 these practices were taking place. And since that
5 time, we put processes in place to ensure that that
6 doesn't happen in the future.
7 REPRESENTATIVE SIPTROTH: So currently, as
8 of today, there is uncertainty as to whether a
9 portion or all of that $4.4 million would have to be
10 repaid. Is that correct?
11 DEPUTY SECRETARY NARDONE: I just don't have
12 the numbers handy with me today with respect to what
13 the final agreed-upon number was.
14 But the thing is that going forward and
15 since about 2004-2005 when we began to make some of
16 the improvements to the pharmacy program, I think we
17 put the necessary processes in place.
18 REPRESENTATIVE SIPTROTH: Okay. So we won't
19 hopefully jeopardize any---
20 DEPUTY SECRETARY NARDONE: So it won't be a
21 problem going into the future, no.
22 REPRESENTATIVE SIPTROTH: It won't
23 jeopardize any future funds.
24 On other question. Well, I have two other
25 questions, but this one relates to a House bill that 61
1 was introduced last year by Representative Baker, and
2 it regards that Pennsylvania is one of five or six
3 States that does not have an adult protective service
4 for vulnerable adults ages 18 to 59.
5 Certainly we have the child protective
6 services for those under age 18, but for our older
7 adult protective services for adults age 60 and
8 above, can you comment on where we are with trying to
9 get legislation through that would protect those
10 individuals between the ages of 18 and 59?
11 SECRETARY RICHMAN: The adult protective
12 services bill was within the Department of Aging, and
13 it had not made much progress over the last 4 years.
14 Sometime in late fall, the advocates
15 supporting that bill came to me and asked if I'd be
16 willing to have it moved to the Department of Public
17 Welfare. I told them I would, primarily because the
18 majority of the clients that fall in that age range
19 have developmental disabilities, primarily MR, and it
20 was appropriate for DPW.
21 The problem is that it has a budget note on
22 it of approximately $6 million. No, I am not a bank.
23 I don't have $6 million tucked away anywhere. But I
24 did tell them that I would be willing to help them
25 write it; I'd be willing to help look for it--- 62
1 REPRESENTATIVE SIPTROTH: Right.
2 SECRETARY RICHMAN: ---but that they're also
3 going to have to work with the General Assembly
4 around how do we identify dollars at this point?
5 I did suggest to them that maybe this could
6 be a rolling implementation and that it doesn't cost
7 $6 million in the beginning, that they were to look
8 at what some of the other States are doing.
9 What else could we build it on top of to
10 reduce some of our costs? It was originally built on
11 top of the act that protects seniors, and that didn't
12 seem to be the kind of match that could help it flow.
13 I have said I would look at seeing if I
14 could build it on top of our child protective
15 services to see if that would be better.
16 So I'm very supportive of the bill, very
17 interested in finding a way to make it work, but I am
18 not a magician in terms of money.
19 REPRESENTATIVE SIPTROTH: Okay. I'll have
20 to put a little more fertilizer on that money tree
21 our at Soldiers' Grove.
22 SECRETARY RICHMAN: Yes.
23 REPRESENTATIVE SIPTROTH: One final question
24 regarding the Office of Children, Youth and
25 Families. 63
1 Counties and the Office of Children and
2 Youth family staff have had months to offer input
3 into the process of residential contracting.
4 This goes back to a bulletin that came out
5 where bulletins are normally used to clarify specific
6 legislative processes. But yet this bulletin seems
7 to drive more to making regulatory changes or laws.
8 Can you just comment briefly on, you know,
9 is the department overstepping its bounds a little
10 bit, or should it come back to the Legislature for
11 clarification?
12 And I know that there was an extension
13 provided, but I'm not sure if that's really
14 adequate.
15 SECRETARY RICHMAN: I've actually polled
16 this enough to look at the entire process.
17 Deputy Secretary Gold will be doing a whole
18 series of regional meetings, working with counties
19 and any of the associated stakeholders, including the
20 judges and providers, administrators, and all the
21 stakeholders in the system.
22 Indeed this may need to go through the
23 regulatory process, and I'm not excluding that. But
24 I do have to say there's a lot of dollars involved in
25 this system. 64
1 We need to be able -- and this is one of the
2 systems in which I believe we have not been as tight
3 as we needed to be in how we spend those dollars.
4 This represents major change. We are not
5 going to get to survive to 2011 when we have this
6 cliff if we don't tighten up on absolutely everything
7 we do, and this is one of the areas we need to
8 tighten on.
9 It is change. People push back on change.
10 So I expect that you're going to hear a lot of
11 pushback, but if we don't become more accountable on
12 how we use these dollars, then I believe that
13 criticism saying that we don't manage well will have
14 some accuracy in this area.
15 So indeed we're looking at it. We are
16 looking at how far can we go in a bulletin process.
17 And obviously, there are always two sides of this.
18 Our lawyers are telling us it is within the framework
19 of a bulletin. Outside lawyers are saying that we
20 can't go that far.
21 I will be looking for how much change can I
22 do that will save and be accountable to the
23 Commonwealth budget and then still protect children
24 and youth.
25 But right now I'm looking at a cliff in 65
1 2011. I won't be here, but I will be thinking about
2 the cliff in 2011 and hoping, because I'll still be
3 living in the State, that what we find are ways to be
4 accountable but ways to protect children at the same
5 time.
6 REPRESENTATIVE SIPTROTH: Okay. Thank you
7 very much for the clarification.
8 And many of us may be here after 2011 and
9 will certainly want to provide the best opportunities
10 for all of the vulnerable citizens across the State
11 within the budgetary framework that we can do that.
12 SECRETARY RICHMAN: Right.
13 REPRESENTATIVE SIPTROTH: I'd just like to
14 pick up on Representative Parker's kinship-care
15 questions.
16 SECRETARY RICHMAN: Sure.
17 REPRESENTATIVE SIPTROTH: Do you think that
18 there will be a possibility to have any reciprocity
19 with other States and especially bordering States?
20 Many grandparents, aunts, uncles, that could take
21 care of individuals in a foster-care setting -- or
22 rather, than a foster care setting are more than
23 willing to do this. And it just seems that there are
24 some stumbling blocks crossing State-to-State
25 boundaries. 66
1 SECRETARY RICHMAN: Crossing State
2 boundaries is never easy, but there are interstate
3 compacts that make it possible for us to do that.
4 Any time a child has a family member
5 anywhere in the country that would like that child,
6 we want to work with that family and get that child
7 to that family, and we will work with many of the
8 States.
9 Interstate compacts do exist between the
10 States to make that easier, but that still means that
11 there has to be -- you know, there's still a
12 bureaucratic process that will not probably go away.
13 We try to make it as painless as possible.
14 REPRESENTATIVE SIPTROTH: Okay. Thank you
15 very much, Madam Secretary. I appreciate your
16 answers.
17 SECRETARY RICHMAN: Thank you.
18 REPRESENTATIVE SIPTROTH: Thank you,
19 Mr. Chairman.
20 MAJORITY CHAIRMAN EVANS: Representative
21 Gingrich.
22 REPRESENTATIVE GINGRICH: Thank you,
23 Mr. Chairman.
24 Welcome, Madam Secretary, colleagues.
25 I hope you ate your Wheaties this morning. 67
1 Three hours with us can be grueling, but you're
2 earning your lunch.
3 I do want to make comment quickly that I was
4 very glad to hear my colleague from Philadelphia,
5 Representative Parker, bring up the consumer
6 workforce council.
7 And I want to thank you, before I ask you my
8 question on a different subject sort of, but thank
9 you for calling for a full vetting and having it go
10 through the legislative process, which it really
11 needs to do.
12 SECRETARY RICHMAN: But that will only be if
13 we decide to take it statewide.
14 REPRESENTATIVE GINGRICH: Exactly. Exactly.
15 SECRETARY RICHMAN: Right.
16 REPRESENTATIVE GINGRICH: But we need to
17 back up that very fast-moving train, and I really
18 appreciate your perspective. And I think you were
19 sort of caught in the middle there. So you were very
20 valuable. Thank you very much.
21 SECRETARY RICHMAN: Thank you.
22 REPRESENTATIVE GINGRICH: I want to talk a
23 little bit -- you mentioned earlier about seven
24 program areas and soon to be six, moving one down the
25 street a little bit, and that would be the imminent 68
1 merger, I assume you meant---
2 SECRETARY RICHMAN: Yes.
3 REPRESENTATIVE GINGRICH: ---of Aging and
4 Long Term Living, of which I have a great and vested
5 interest in as well.
6 We heard a little bit about the structure
7 and the format from Secretary Hall last week. One of
8 the things that he talked about or did mention was
9 that 37 positions have been transferred or are in the
10 process of being transferred over.
11 So I'd like to know from you, how many
12 authorized positions are you planning? What's in
13 this transfer plan?
14 SECRETARY RICHMAN: When we created the
15 Office of Long Term Living, the long-term living
16 complement of people were in the Office of Medical
17 Assistance Programs.
18 We removed them from the Office of Medical
19 Assistance Programs to create the Office of Long Term
20 Living within DPW. So we had already isolated these
21 folks in their own office.
22 REPRESENTATIVE GINGRICH: Okay.
23 SECRETARY RICHMAN: That entire office of
24 people is moving to the new Department of Long-Term
25 Living, Aging and Long-Term Living. 69
1 The number of total people moving is 167.
2 REPRESENTATIVE GINGRICH: How many are
3 filled currently?
4 SECRETARY RICHMAN: I would have to get
5 that. I don't have the actual complement.
6 But I would imagine most of them are --
7 we've tried to keep that office pretty full, but
8 we've been under a freeze for the last 6 months so
9 I'm sure there are more vacancies than we may
10 normally have.
11 REPRESENTATIVE GINGRICH: I wouldn't be
12 surprised, because I feel the same way about
13 Aging---
14 SECRETARY RICHMAN: Right.
15 REPRESENTATIVE GINGRICH: ---that a lot of
16 those positions are not currently filled either.
17 SECRETARY RICHMAN: Correct.
18 REPRESENTATIVE GINGRICH: And I know you're
19 as concerned as I am about efficiencies versus
20 quality of care for both these very vulnerable
21 populations.
22 SECRETARY RICHMAN: Yes.
23 REPRESENTATIVE GINGRICH: The other thing I
24 want to ask you -- and I will be quick, which will be
25 unusual -- but we've got what, maybe seven waiver 70
1 programs we're transferring? I mean, this is a big
2 deal.
3 SECRETARY RICHMAN: I actually wish we had
4 seven waiver programs.
5 REPRESENTATIVE GINGRICH: What are we
6 transferring in the programs? Waivers.
7 SECRETARY RICHMAN: Pennsylvania has more
8 waiver programs than any other State.
9 REPRESENTATIVE GINGRICH: I know.
10 SECRETARY RICHMAN: We're up about 13.
11 REPRESENTATIVE GINGRICH: How many are
12 transferring over?
13 SECRETARY RICHMAN: I believe there are --
14 seven?
15 REPRESENTATIVE GINGRICH: Yeah; seven.
16 That's what I thought.
17 SECRETARY RICHMAN: I thought there were
18 eight, but maybe there are seven transfers.
19 REPRESENTATIVE GINGRICH: Okay.
20 SECRETARY RICHMAN: And these are waivers
21 for people with disabilities.
22 REPRESENTATIVE GINGRICH: Right.
23 SECRETARY RICHMAN: The waivers that are not
24 transferring are anything around autism or people
25 with developmental disabilities like MR. 71
1 REPRESENTATIVE GINGRICH: Right. Yeah; I
2 was aware of that.
3 Maybe it sounds like a silly question to
4 you, but I don't know: When you're transferring
5 waivers, and we're talking about these seven, and
6 they're critical waivers to our disabled
7 community---
8 SECRETARY RICHMAN: Right.
9 REPRESENTATIVE GINGRICH: ---which we've got
10 to make sure, we've got to make sure both of these
11 populations are going to be taken care of in this
12 efficiency move.
13 SECRETARY RICHMAN: Right.
14 REPRESENTATIVE GINGRICH: Is there anything
15 that would affect the Federal approvals and so on on
16 those waivers when you transfer them? Is there
17 anything that has to be done?
18 SECRETARY RICHMAN: No. DPW remains the
19 single point of accountability for HHS/CMS. The
20 waivers are already in the Office of Long Term
21 Living. We will be moving them intact.
22 We do have to have -- CMS, the Center for
23 Medicaid and Medicare Services, will require us to
24 have some level of memorandum of understanding with
25 the new department. 72
1 While we remain the single point of
2 authority, they are States that have an approved
3 memorandum of understanding. We will probably look
4 at one of those States and what they have and pretty
5 much adapt it to Pennsylvania, since we know that CMS
6 has approved that kind of activity.
7 But clearly it's within the purview of both
8 the State and approvable by CMS to be able to make
9 this kind of move.
10 REPRESENTATIVE GINGRICH: Thank you. I
11 thought it would be, but I wanted to clarify that,
12 and the memorandum would be the method for
13 documentation and so on.
14 Okay. Well, I'm interested in this. I'm
15 going to be working, watching, all of that. And I'm
16 seeing a chunk of money being transferred within the
17 budget out of your expenditure.
18 SECRETARY RICHMAN: Yes.
19 REPRESENTATIVE GINGRICH: Some $232 million
20 or something like that.
21 SECRETARY RICHMAN: Yes.
22 REPRESENTATIVE GINGRICH: But we're still
23 seeing based -- I'm sure a lot of what you're saying
24 this morning -- we're still seeing a significant
25 increase in our welfare budget. 73
1 So although I look at this as an efficiency
2 that we hope and pray will work well for both
3 populations, you can see why we're still struggling
4 with this budget questions, and I thank you,
5 Madam Secretary.
6 SECRETARY RICHMAN: Thank you.
7 REPRESENTATIVE GINGRICH: Thank you,
8 Mr. Chairman.
9 MAJORITY CHAIRMAN EVANS: Representative
10 Briggs.
11 REPRESENTATIVE BRIGGS: Thank you,
12 Mr. Chairman.
13 Thank you, Madam Secretary.
14 SECRETARY RICHMAN: Yes.
15 REPRESENTATIVE BRIGGS: I wanted to first
16 start by thanking you and the department for all the
17 great work you do for our most vulnerable residents
18 in Pennsylvania.
19 SECRETARY RICHMAN: Thank you.
20 REPRESENTATIVE BRIGGS: I was interested to
21 see that the early intervention program was being
22 expanded this year. As someone who received services
23 for developmental delays, I was pleased to find that.
24 And I was hoping you could tell me a little
25 bit about the expansion. 74
1 SECRETARY RICHMAN: The early intervention
2 is an entitlement program from the Federal
3 Government. So anybody who meets the qualifications
4 of needing early intervention, we have to provide
5 those services.
6 REPRESENTATIVE BRIGGS: Okay.
7 SECRETARY RICHMAN: So whenever -- every
8 year we make an assessment of where we are, what we
9 predict will be needed within this area. So we have
10 to put some ability to be able to expand that program
11 on the books.
12 There are new babies born or become
13 qualified in this program every year. So we try to
14 use both our historical data and the data we have on
15 hand to predict how much expansion we will need in
16 this program.
17 We really thought in the early days -- and
18 I've been involved with early intervention probably
19 for the last 20 years -- that there would be a point
20 when it would stabilize.
21 REPRESENTATIVE BRIGGS: Okay.
22 SECRETARY RICHMAN: You know, fortunately,
23 we are able to save the lives of babies born less
24 than a pound, but many of those babies still have
25 developmental delays, some of which they grow out of, 75
1 some of which do not.
2 So medical technology has continued to sort
3 of keep early intervention seeing a slight increase
4 every year.
5 REPRESENTATIVE BRIGGS: Okay.
6 I also have an additional question. In the
7 2008-2009 Commonwealth budget, there was a 1-percent
8 COLA included for services purchased by counties?
9 SECRETARY RICHMAN: Yes.
10 REPRESENTATIVE BRIGGS: The legislative
11 intent of this COLA was not met, from what I've been
12 told, and reports that only two counties increased
13 summaries to include this COLA.
14 What direction, if any, did the Office of
15 Children, Youth, and Families offer to the counties
16 regarding this?
17 SECRETARY RICHMAN: The first year that we
18 received a COLA, the Legislature put in language that
19 said it could only be used to increase provider --
20 allocations to providers.
21 REPRESENTATIVE BRIGGS: Okay.
22 SECRETARY RICHMAN: In subsequent years, the
23 Legislature has not chosen to put that language in
24 the budget bill.
25 Without that language, we cannot force the 76
1 counties. We can encourage them.
2 We have, at least in one of those years I
3 asked for the language, and the Legislature took the
4 option not to include mandatory language saying how
5 counties had to spend those dollars.
6 And counties then had the ability to make
7 their choice of where and how they spend the dollars.
8 REPRESENTATIVE BRIGGS: Thank you.
9 SECRETARY RICHMAN: We would love to see
10 them pass it on to providers. That is not our option
11 without a mandate.
12 REPRESENTATIVE BRIGGS: Okay.
13 My last question has to do with mental
14 health services and drug and alcohol services.
15 At a time when our citizens are trying to
16 cope with the personal stress and anguish of losing
17 their jobs and homes, I feel that it's going to be an
18 added service that the State may have to provide.
19 In this year's budget request, there's a cut
20 in these services, and I was hoping you could answer
21 how you might handle the added need and less
22 resources.
23 SECRETARY RICHMAN: There are two places
24 where we pulled back on the dollars within the Office
25 of Mental Health and Substance Abuse Services. 77
1 One was through the HealthChoices Program.
2 And the bulk of the dollars are coming from either
3 what we've called risk and contingency dollars where
4 we lowered the standards so that the amount of
5 dollars that sit in the bank is a little lower but
6 still we believe is protective enough of any issue
7 that may occur in those HealthChoices counties.
8 We've also reduced the amount of
9 reinvestment dollars that counties might retain that
10 had not been spent.
11 REPRESENTATIVE BRIGGS: Okay.
12 SECRETARY RICHMAN: And again, we were
13 looking for places where dollars were sitting, and
14 that in this time of need and this time to be able to
15 trim the budget, we cannot afford to have dollars
16 that are not being actively used.
17 We've also, as we looked at the budget and
18 knowing the pressure that everyone seems to believe,
19 or a large number seem to believe that the DPW budget
20 needs to be lower, I looked very carefully at where I
21 could most take that risk and most be able to be able
22 to cover that by looking at where and how we spend
23 it.
24 There is a 2-percent reduction on the mental
25 health base, and as we reviewed the budgets, as we 78
1 reviewed the opportunities, this is one we thought we
2 could bear.
3 REPRESENTATIVE BRIGGS: Okay.
4 SECRETARY RICHMAN: For those folks who we
5 believe will have mental health and/or substance
6 abuse issues secondary to the economic, our
7 obligation comes to Medicaid clients to a large
8 degree.
9 Some of these folks will qualify for
10 Medicaid, most of them will not, and that's why the
11 Federal Government put in the COBRA bill. Hopefully,
12 it will figure out how to work before people are in
13 too much distress.
14 But the answer to all of society's ills
15 cannot be that the Department of Public Welfare or
16 the Commonwealth will solve them.
17 REPRESENTATIVE BRIGGS: I understand that.
18 Thank you very much for all your answers.
19 SECRETARY RICHMAN: Certainly.
20 REPRESENTATIVE BRIGGS: Thank you,
21 Mr. Chairman.
22 MAJORITY CHAIRMAN EVANS: Representative
23 True.
24 REPRESENTATIVE TRUE: Thank you,
25 Mr. Chairman. 79
1 Good morning, Madam Secretary.
2 SECRETARY RICHMAN: Good morning.
3 REPRESENTATIVE TRUE: Over the years I've
4 been on Appropriations, I usually ask you one
5 particular question. You might know today I'm not
6 going to ask you that question. You seem to be doing
7 okay, and we won't have to go there.
8 SECRETARY RICHMAN: Okay.
9 REPRESENTATIVE TRUE: But I'd like to go
10 back a little bit to the fraud discussion that we
11 talked about earlier.
12 SECRETARY RICHMAN: Sure.
13 REPRESENTATIVE TRUE: And since -- and I
14 have to tell you, for the benefit of the folks here
15 in this room and those watching, you are one of our
16 most articulate Secretaries with a vast amount of
17 knowledge.
18 SECRETARY RICHMAN: Thank you.
19 REPRESENTATIVE TRUE: And I was wondering if
20 we could talk a little bit and if you could perhaps
21 explain the Pennsylvania Medicaid False Claims Act.
22 SECRETARY RICHMAN: Oh, wow. Okay.
23 I just had that one in front of me.
24 We proposed a False Claims Act, a
25 broad-based False Claims Act, in the Welfare Code 80
1 bill last year and changes. That was not approved.
2 This year we have come back, and we're looking at it
3 for the Medicaid Program only.
4 The Deficit Reduction Act that was passed by
5 the Federal Government provides incentives for States
6 to enact legislation that is modeled after the
7 Federal False Claims Act.
8 As most of you I'm sure know, the False
9 Claims Act has basically got nicknamed sort of a
10 whistleblower act---
11 REPRESENTATIVE TRUE: Yes.
12 SECRETARY RICHMAN: ---and we use it to be
13 able to look at where there may be issues within our
14 Medicaid Program or any other of our programs, that
15 the only people who might know there's a problem are
16 the people who either work or receive services within
17 that program and therefore would have some level of
18 protection if they were to report that via the legal
19 statute of the False Claims Act.
20 Within the Welfare Code bill, again, we are
21 looking to propose a more defined False Claims Act
22 this year on Medicaid specifically.
23 Our budget estimates that there will be
24 about $2.5 million of savings in '09-10 and
25 $17 million of savings in the program in '10-11. 81
1 REPRESENTATIVE TRUE: And I thank you for
2 that.
3 SECRETARY RICHMAN: Sure.
4 REPRESENTATIVE TRUE: And because I know
5 that you are always very straightforward and you know
6 how lots of conversation goes on around here and you
7 hear lots of things, particularly on the Republican
8 side when you hear trial lawyer, so I just figured I
9 would ask you a question and would hope that -- well,
10 I know I'm sure I'll get a straight answer.
11 Is it true that 20 percent -- if this
12 proposal would go through, right now apparently
13 Pennsylvania gets to claim all the money if this goes
14 forward.
15 If your proposal goes forward, I have heard
16 20 percent out of the share of any false claims
17 judgment, that we would no longer get to keep all
18 that, that the money would have to go to the attorney
19 and the whistleblower, some of it.
20 Would that be an accurate description?
21 SECRETARY RICHMAN: Currently, DPW pays a
22 proportionate share to recipients' attorney's fees
23 for all casualty recovery. So we do that now. This
24 would limit DPW's payment to no more than 25 percent
25 of the DPW's share of recovery. 82
1 So the savings -- this is the attorney fee
2 liability on casualties -- would be a million dollars
3 in '08-09, '09-10, and $2.1 million in 2010-2011.
4 REPRESENTATIVE TRUE: So you don't feel we'd
5 be a loser in this if this went through? You do
6 not?
7 SECRETARY RICHMAN: We do not believe that
8 we would be a loser on this. We do believe that
9 there are savings for the department.
10 And again, when we make these proposals, we
11 usually go through almost every scenario that we can
12 think of to see if there are going to be real
13 savings, and then we set that savings as a goal.
14 And my staff then have to update me on that
15 every month on where they have to be, either prep
16 work to get to that point and what are the savings.
17 REPRESENTATIVE TRUE: Okay.
18 SECRETARY RICHMAN: And we monitor tightly
19 enough to be able to make adjustments in terms of
20 what we're doing and how we're doing it.
21 REPRESENTATIVE TRUE: I see.
22 SECRETARY RICHMAN: There are actually very
23 few of our goals that actually are approved in the
24 final budget that we don't monitor tightly enough to
25 make that goal. 83
1 REPRESENTATIVE TRUE: I understand.
2 And just another point. Do most of these
3 end up -- are most of these settled before going to
4 trial?
5 SECRETARY RICHMAN: That's a good question.
6 REPRESENTATIVE TRUE: I mean, before going
7 to court. Would they be settled?
8 SECRETARY RICHMAN: Most of them are settled
9 before they go to court.
10 REPRESENTATIVE TRUE: Okay.
11 And I really do know about the other issue
12 we talk about all the time, but it will just be one
13 question, please.
14 SECRETARY RICHMAN: Okay.
15 REPRESENTATIVE TRUE: Bear with me, please,
16 Mr. Chairman, and I probably won't talk the rest of
17 the day. How's that?
18 MAJORITY CHAIRMAN EVANS: Is that a deal?
19 I'll give you a couple more minutes if you're ready
20 to do a deal like that.
21 REPRESENTATIVE TRUE: Will the attorneys get
22 20 percent of the Federal share or will they get
23 100 percent of State and Federal?
24 SECRETARY RICHMAN: I'm now feeling I'm a
25 little bit over my head. 84
1 REPRESENTATIVE TRUE: Okay.
2 SECRETARY RICHMAN: Let me have my
3 Deputy Secretary answer that question.
4 REPRESENTATIVE TRUE: Okay.
5 DEPUTY SECRETARY NARDONE: The main savings
6 from the proposal -- I'm Mike Nardone, again, Deputy
7 Secretary for Medical Assistance.
8 The main savings from the proposal are that
9 it potentially allows us to collect up to treble
10 damages for false claims, and also we get to recover
11 a higher percentage of the dollars in terms of, right
12 now our State share is 45 percent, so the False
13 Claims Act, if it meets the Federal requirements,
14 will allow us to keep a higher percentage of the
15 dollars.
16 I'm not aware of a percentage that has to go
17 to trial lawyers. I mean, that's something that I
18 can get more information on.
19 REPRESENTATIVE TRUE: Okay.
20 DEPUTY SECRETARY NARDONE: It's just not
21 something that I'm aware of.
22 But in terms of your other question around
23 settlements, one of the things that this legislation
24 will help to do is to encourage settlement so you
25 don't have to do treble damages. 85
1 I mean, part of this is cost avoidance, but
2 part of it is recovery. But in terms of the
3 specific question you're asking, I don't feel I have
4 the -- I want to make sure I have the right answer to
5 that.
6 REPRESENTATIVE TRUE: Thank you.
7 And, Mr. Chairman, I appreciate your
8 indulgence. It's just when we're talking about
9 fraud, of which all of us hear a lot about from
10 constituents, you know, I'd like to know that what we
11 are doing, trying to get to the bottom of things,
12 that we're not losing, that the State is going to
13 recover money, not have to give it away to other
14 folks.
15 DEPUTY SECRETARY NARDONE: We would
16 certainly collect a lot of the money from the False
17 Claims Act.
18 REPRESENTATIVE TRUE: Yeah; and I would
19 appreciate -- are you going to get back to us on what
20 your findings are?
21 DEPUTY SECRETARY NARDONE: Yes.
22 REPRESENTATIVE TRUE: Okay. Thank you.
23 DEPUTY SECRETARY NARDONE: Sure.
24 REPRESENTATIVE TRUE: I thank you for your
25 indulgence, Mr. Chairman. 86
1 MAJORITY CHAIRMAN EVANS: Thank you,
2 Representative True.
3 REPRESENTATIVE TRUE: Thank you,
4 Madam Secretary.
5 MAJORITY CHAIRMAN EVANS: Representative
6 Wheatley.
7 REPRESENTATIVE WHEATLEY: Thank you,
8 Mr. Chair.
9 Good morning, Madam Secretary.
10 SECRETARY RICHMAN: Good morning.
11 REPRESENTATIVE WHEATLEY: Let me back up.
12 And I'm not sure if the Chairman has already asked
13 you this, but are there any legislative actions that
14 you foresee us having to take in order for you to
15 meet any of the requirements to pull down the Federal
16 money from the American Recovery and Reinvestment
17 Act?
18 SECRETARY RICHMAN: There are no
19 requirements that take legislation in order for us
20 to receive the stimulus act for the Department of
21 Public Welfare.
22 REPRESENTATIVE WHEATLEY: Okay.
23 SECRETARY RICHMAN: There are requirements
24 that we can do no damage, but there's nothing that we
25 have to do in order to receive the dollars other than 87
1 certify that we can pay providers in 30 days and that
2 we are not making any changes to our eligibility.
3 REPRESENTATIVE WHEATLEY: Now, to that point
4 of paying providers in 30 days, I read through some
5 of your written testimony where you talk about the
6 fact that we are currently at 35 days.
7 SECRETARY RICHMAN: About 35 days.
8 REPRESENTATIVE WHEATLEY: And that may
9 require some one-time infusion of cash.
10 Do you anticipate or do you know now when
11 that may happen or when you will have some
12 understanding of when that may happen and how much
13 that would be?
14 DEPUTY SECRETARY ERNEY: It's actually going
15 to happen this Saturday. So we're going to institute
16 rolling the payments forward by 7 days in our cycle.
17 That will be for our outpatient, so that's
18 approximately $16 million that we'll roll.
19 In the Act it does also mention about
20 hospitals and nursing facilities by June 1. So we're
21 analyzing the impact of that area.
22 REPRESENTATIVE WHEATLEY: Okay. So you
23 don't know currently how much that may cost us?
24 And this is just one time, just for us to be able
25 to--- 88
1 DEPUTY SECRETARY ERNEY: Right. And we're
2 still analyzing sort of how the payments come in, so
3 projecting in the future what that would impact and
4 looking at past trends.
5 SECRETARY RICHMAN: We do believe we can
6 meet this stipulation and document it. We do have to
7 document to the Federal Government that we're meeting
8 that stipulation in order to continue to receive the
9 dollars.
10 REPRESENTATIVE WHEATLEY: Okay.
11 And in your written testimony, and I heard
12 you say it several times during your remarks, the
13 fact that this is only a temporary relief and the
14 fact that if this money had not have shown up or been
15 planned for, that there would have been more
16 broad-based, more devastating cuts in your mind,
17 which you say the reckoning day will be December of
18 2011.
19 SECRETARY RICHMAN: Yes.
20 REPRESENTATIVE WHEATLEY: Is that right?
21 SECRETARY RICHMAN: That's correct.
22 REPRESENTATIVE WHEATLEY: So tell me how we
23 now are planning and preparing for 2011. What in
24 your mind do you think will need to take place,
25 either legislative action or from your department, in 89
1 order for us to be prepared to handle what may be
2 still a very difficult period in time for our
3 Commonwealth.
4 SECRETARY RICHMAN: Well, the dollars end in
5 December 2010. So starting January 2011, the
6 stimulus dollars will not be available and we will go
7 back from an FMAP rate, a Federal match rate, that
8 will be in the vicinity of about 62 percent to an
9 FMAP rate that will be in the vicinity of 54 percent.
10 REPRESENTATIVE WHEATLEY: Now, tell me what
11 that means as it relates in dollars.
12 SECRETARY RICHMAN: That means that for
13 every dollar that we -- for a dollar, the Feds put in
14 56 cents and we put in 46 cents.
15 Right now, the Feds are putting in 62 cents
16 and we put in 38 cents. We will go back to the place
17 where the Feds put in 54 cents and we put in
18 46 cents.
19 REPRESENTATIVE WHEATLEY: So you're
20 projecting what type of hole in your budget come 2011
21 for us to either have to figure out if we're going to
22 continue to fund at that level or we're going to have
23 to figure out where we cut back?
24 SECRETARY RICHMAN: We are, depending on --
25 the legislative activity we need is that looking at 90
1 how we begin now to fill that gap. You can't look at
2 filling it next year. That's really a little late if
3 we're going to make it through all of 2010-11.
4 We have two proposals in our budget now, one
5 which might be solved by the Federal Government. One
6 is Smart Pharmacy at an annualized rate. It brings
7 in $150 million.
8 If the Federal Government as they have
9 proposed in their budget, and as we are aware that is
10 something that has been put forth by the Department
11 of Health and Human Services at the Federal level --
12 so we have every reason to believe that they will
13 fight very hard for it -- permits the MCOs, the
14 managed-care companies, to get the same rebate that
15 the States would get.
16 If that happens, that will give us
17 Smart Pharmacy, but it will give the rebate to the
18 managed-care companies, and we'll be able to save the
19 $150 million.
20 The second major proposal in the DPW budget
21 is looking at a broad-based MCO assessment. Right
22 now we have a narrow MCO assessment that is applied
23 only to managed-care companies. That was approved by
24 the Feds. It brings in approximately $200 million.
25 That one ends as of October of this year. 91
1 To replace that, the Feds have allowed
2 States to do a broad-based assessment. That
3 broad-based assessment on a partial year starting in
4 January brings in $200 million. On an annualized
5 basis, it brings in $400 million.
6 When matched by the Federal Government, it
7 would give us probably about $900 million to a
8 billion new dollars coming into this budget.
9 If those two come together, what we have to
10 do in January of 2011 or what is necessary at that
11 point is a much more narrow cliff than we have right
12 now. There still needs to be cost containment in
13 every area of the department, and those are the
14 things we are currently working on -- how do we begin
15 to look at all of our contracts within our
16 fee-for-service system; how do we look at our
17 contracts within our child welfare system, our
18 developmental disabilities system, our mental health
19 system, to make sure that if there's cost
20 containment, if there's tightening, if there's better
21 contracting, if there's more accountability on how
22 those dollars are being spent, then we need to do
23 it.
24 And, you know, in each one of those areas,
25 the Deputy Secretaries have initiatives, they have 92
1 pay-for-performance, and they have activities that
2 they are holding all the people they give the dollars
3 to, who are the providers within our communities, to
4 be able to do a job.
5 As an example, one of the things that we
6 remain concerned about in our mental health system is
7 recidivism: Are we treating people, are we treating
8 children within a residential setting only to see
9 that child come back and need another residential
10 setting 6 months later?
11 So we're looking at -- and we're also
12 looking at how we work together. The children in the
13 children and youth system may need mental health
14 services. How do those two Deputies make sure we
15 don't have duplicative services, and again, that
16 we're working together in a way that makes the
17 Commonwealth dollars most accountable?
18 REPRESENTATIVE WHEATLEY: Well, I appreciate
19 your comment, Madam Secretary.
20 SECRETARY RICHMAN: Thank you.
21 REPRESENTATIVE WHEATLEY: I could stay here
22 all day and ask you questions, but I won't.
23 And I will make a plug for my colleague,
24 Dan Frankel. He has a bill that I believe he will
25 re-introduce and hopefully gain your support for, the 93
1 closing of mental health facilities, those resources
2 going back into the areas where those people will be
3 served at. And as well as a plug for our Keystone
4 STARS Program, to continue to grow that program and
5 strengthen that.
6 And thank you, Mr. Chairman.
7 SECRETARY RICHMAN: I will not comment, but
8 I am supportive.
9 REPRESENTATIVE WHEATLEY: Thank you.
10 MAJORITY CHAIRMAN EVANS: Representative
11 Stevenson.
12 REPRESENTATIVE STEVENSON: Thank you,
13 Mr. Chairman.
14 And Madam Secretary, good morning.
15 SECRETARY RICHMAN: Good morning.
16 REPRESENTATIVE STEVENSON: The first area I
17 would like to raise with you is the reimbursement
18 rate for outpatient renal dialysis currently in
19 Pennsylvania.
20 As you know, it's $115 per treatment in
21 Pennsylvania, which is substantially less than
22 surrounding States in our neighborhood, and actually
23 it's $20 below our regional average.
24 In fact, there are only three States out of
25 50 who have lower rates than we do here in the 94
1 Commonwealth of Pennsylvania.
2 However, as you also note, by contrast, the
3 Medical Assistance reimbursement rate for inpatient
4 renal dialysis is $900 a day.
5 My concern with this issue is that if we
6 don't consider a higher rate for dialysis treatment,
7 providers may become reluctant to continue those
8 services in outpatient facilities.
9 And if that occurs and fewer outpatient
10 facilities are available, the department will be
11 compelled to approve renal dialysis treatment in
12 hospital settings at a much higher rate.
13 I'd invite your comments.
14 SECRETARY RICHMAN: It's the issue I face
15 all the time: How do we continue to make sure that
16 we aren't backing ourselves into a corner by not
17 paying almost any of our providers? This is probably
18 one example, and I'm sure many, many other providers
19 could line up behind and say that if you aren't
20 paying us an aggregate rate -- and I will never tell
21 you that I believe our Medicaid rates are rates that
22 don't need, probably in some cases, fairly
23 significant improvement -- then we force people to a
24 more expensive level of care.
25 However, we have a budget that most people 95
1 will tell you has way too much in it for DPW, that we
2 spend too much money on almost any topic you choose,
3 and that we need to continue to cut the budget.
4 I would tell you that without the stimulus,
5 all the providers in our Medical Assistance Program
6 would have taken somewhere around a 10- to 20-percent
7 cut in those rates.
8 What the stimulus package allowed us to do
9 is not go to the level of cutting provider rates,
10 which is, you know, in my opinion, it would have cost
11 us more money than we would have saved.
12 We would have seen a savings in the
13 beginning, but we would have seen more cost in
14 out-years.
15 Our problem is, if we're going to do cost
16 containment, if we're going to hold down the cost in
17 the Medicaid Program, then we can't do provider
18 rates. We can't do provider rate increases.
19 Over the last 6 years, we've tried to do
20 some targeted provider rates where we had been the
21 longest without an increase.
22 Last year, we did a rate increase on home
23 health care because they hadn't seen a rate increase
24 in 13 years. So we were trying to do a little bit
25 every year. 96
1 This year, because of the budget, the
2 deficit, the Commonwealth budget, we just weren't
3 able to do any rate increases, and I truly regret
4 that.
5 But I also realize that unless we as a
6 Commonwealth have determined that we want to avoid
7 the out-in cost of having providers leave because we
8 as a Commonwealth aren't going to pay them
9 accurately, we're going to face those consequences,
10 and those are the consequences I fear.
11 REPRESENTATIVE STEVENSON: Let me move on to
12 another area that's already been brought up this
13 morning by my colleague, Representative True, having
14 to do with the false claims issue that we talked
15 about a few minutes ago.
16 SECRETARY RICHMAN: Sure.
17 REPRESENTATIVE STEVENSON: I understand that
18 Texas is one State which has gone forward with
19 legislation on the State level, and I wondered if
20 you've looked at their experience and seen how that
21 moved through in Texas and what the results were
22 there?
23 SECRETARY RICHMAN: Mike, why don't you come
24 back up.
25 DEPUTY SECRETARY NARDONE: Actually, the 97
1 False Claims Act has been -- 23 States have moved to
2 implement a False Claims Act in their State.
3 Approximately 13 have received the Federal
4 approval that the False Claims Act actually mirrors
5 and contains all of the criteria that are required
6 for the False Claims Act.
7 The reports that we've received anecdotally
8 are that in these other States, it has resulted in
9 additional collections. And actually Texas is one of
10 the States that from the standpoint of collection
11 around fraud and abuse, it is one of the States that
12 has held up as a model.
13 And I would suggest that their False Claims
14 Act is part of that, that overall approach to program
15 integrity.
16 REPRESENTATIVE STEVENSON: I think a few
17 minutes ago you mentioned that one of the reasons to
18 go with the State statute, it has to do with the
19 treble damages. But if it's also true that those are
20 only imposed by a court, if the claim is settled out
21 of court, we don't get the treble damages.
22 My concern revolves around the same issue
23 that Representative True talked about in that the
24 Commonwealth of Pennsylvania in the end is the net
25 loser financially if we have our own act. 98
1 DEPUTY SECRETARY NARDONE: Well, actually, I
2 think that it's another tool in the arsenal in terms
3 of provider fraud and abuse.
4 What it also encourages is settlement of
5 cases that might drag on for years. The treble
6 damages is a major deterrent. There are other
7 aspects of the False Claims Act, like the
8 whistleblower provisions that hopefully will allow
9 for more provider increase to go forward.
10 So I think that it's -- I mean, it is one
11 component of some of the work that our Bureau of
12 Program Integrity does every day.
13 The False Claims Act would clearly give us
14 both the potential of treble damages, which
15 potentially could lead to settlement, as well as when
16 we make recoveries, because of having the False
17 Claims Act in place, we would be able to get -- we
18 would be able to retain more in the way of recoveries
19 that are achieved through the False Claims Act
20 statute.
21 So we've kind of done the cost analysis,
22 looked at other States, looked at what has been the
23 history over time on some of these global
24 settlements, and we feel pretty comfortable with some
25 of the savings that we're attributing forward in the 99
1 budget, if there is actually a False Claims Act that
2 is passed and if it is certificated by the Federal
3 Government as meeting the False Claims Act
4 requirements.
5 And that's what we tried to do in developing
6 the legislation.
7 REPRESENTATIVE STEVENSON: One more question
8 on this issue, if I may.
9 DEPUTY SECRETARY NARDONE: Sure.
10 REPRESENTATIVE STEVENSON: Did I understand
11 you to say that the Texas statute mirrored the
12 Federal statute?
13 DEPUTY SECRETARY NARDONE: The way I
14 understand this works is---
15 REPRESENTATIVE STEVENSON: And I guess the
16 second part of that question is, is the proposed
17 statute by the Administration, does it also mirror
18 the Federal statute?
19 DEPUTY SECRETARY NARDONE: The way I
20 understand the way this works is that -- and I'm not
21 a lawyer -- but the way I understand that this works
22 is that there are certain requirements that a State
23 False Claims Act has to meet in order to be
24 certifiable by the Federal Government and the Justice
25 Department. 100
1 And in order to be -- Texas is one of the
2 States that has been certified. So they would have
3 met the requirements of the Federal -- that the Feds
4 put on that.
5 We've written the legislation, and our legal
6 team has suggested that as the language has been
7 developed, that it does contain all of the
8 requirements that would be necessary to be certified
9 as meeting these Federal requirements.
10 And I trust -- I have to trust their
11 judgment on that, because they're the experts on this
12 and I'm not.
13 REPRESENTATIVE STEVENSON: You understand
14 our concern is that if we do institute a Commonwealth
15 statute and don't rely on the Federal statute, the
16 Commonwealth may be the net loser financially, and we
17 hope that would not happen.
18 Well, thank you very much for your
19 testimony.
20 DEPUTY SECRETARY NARDONE: Thank you, sir.
21 SECRETARY RICHMAN: Thank you.
22 REPRESENTATIVE STEVENSON: Thank you,
23 Mr. Chairman.
24 MAJORITY CHAIRMAN EVANS: Representative
25 Kortz. 101
1 REPRESENTATIVE KORTZ: Thank you,
2 Mr. Chairman.
3 And thank you, Madam Secretary, for being
4 here today.
5 SECRETARY RICHMAN: Thank you for having us.
6 REPRESENTATIVE KORTZ: In your written
7 testimony, Madam Secretary, you point out that the
8 department caught and rejected almost 46 percent of
9 the Medical Assistance applications and
10 48 1/2 percent of the TANF.
11 Can you briefly tell us how you did that?
12 SECRETARY RICHMAN: Well, we have 21 checks
13 that we do on both eligibility and income level to
14 determine whether someone is eligible for either one
15 of those categories.
16 REPRESENTATIVE KORTZ: Okay.
17 SECRETARY RICHMAN: And if people -- this is
18 how many people apply, and actually they often, some
19 of them apply and they continue the appeal process.
20 So they are over income.
21 I mean, the very simple thing on Medical
22 Assistance often is that they're making too much
23 money or they don't report all their money, and we
24 pick it up through one of our checks.
25 They've had a fine imposed by a court and 102
1 they haven't reached a settlement on that being
2 paid.
3 If there is any one of those 21 areas that
4 we do checks on that they come up positive, then the
5 claim is rejected up front.
6 It doesn't stop people from applying, but
7 just because people apply, we do not give them
8 benefits. It takes, on average, 30 days for us to
9 verify eligibility on a cash assistance claim, and it
10 takes 30 to 45 days to verify eligibility on Medical
11 Assistance.
12 So it is not as if you walk into one of our
13 county assistance offices and you walk out with
14 eligibility on anything.
15 REPRESENTATIVE KORTZ: Okay.
16 SECRETARY RICHMAN: So we are very thorough
17 in making sure we go through all of the paperwork,
18 all of the documentation, before we -- and 46 and
19 48 of those people are rejected at that level before
20 there are any level of benefits.
21 REPRESENTATIVE KORTZ: Very good.
22 Earlier you had mentioned -- we were talking
23 about the Auditor General's report and the logic
24 needed in the programming.
25 SECRETARY RICHMAN: Right. 103
1 REPRESENTATIVE KORTZ: And obviously you're
2 putting some additional funds towards your computer
3 system to help upgrade this?
4 SECRETARY RICHMAN: That is correct.
5 REPRESENTATIVE KORTZ: I think you talked in
6 your Executive budget about moving to servers. So
7 you're improving your system to help detect things
8 even better, correct?
9 SECRETARY RICHMAN: Yes. We are in
10 continual look at logic as our computer systems
11 improve, and we are always in some level of phase of
12 looking at what additional logic, what have we
13 overlooked that we can tighten on, and looking -- our
14 eligibility system is probably one of our most
15 important computer systems.
16 We need to make it so that our workers can
17 understand it and work through it, that it catches
18 the alerts, it feeds information to us on timely
19 basis, and yes, we probably take a good look at it
20 every year to see what upgrades we need.
21 This is one of the upgrades that is going to
22 be implemented this year.
23 REPRESENTATIVE KORTZ: Very good.
24 Can you tell me the ratio of caseworker to
25 client? Do you have a number on that? 104
1 SECRETARY RICHMAN: Linda, do you want to
2 come up? Introduce yourself.
3 DEPUTY SECRETARY BLANCHETTE: Linda
4 Blanchette, Deputy Secretary for the Office of Income
5 Maintenance.
6 I don't. I can get that information for
7 you. I don't have the ratio with me right now.
8 But what we are trying to do to manage the
9 increase in applications in face of the hiring freeze
10 is to kind of reorganize the way we do the work.
11 And rather than look at a one-to-one ratio
12 between caseworker and case, we're looking at
13 breaking up the work a little bit differently into
14 different components of the eligibility process and
15 building a team around each of those components
16 within the county assistance office.
17 That will let us leverage the staff that we
18 do have and still get the work done as application
19 volume continues to increase.
20 REPRESENTATIVE KORTZ: Very good.
21 I want to shift gears real quick. The youth
22 development centers, there are seven of them in the
23 State.
24 DEPUTY SECRETARY BLANCHETTE: Yes.
25 REPRESENTATIVE KORTZ: About $3.6 million, I 105
1 believe, we're giving there.
2 Are the results from those centers
3 encouraging to you? In other words, are you tracking
4 these young men and women when they leave there, and
5 are you seeing a recidivism rate that's low or do you
6 feel that it's a very good program and we're doing
7 the right thing there?
8 SECRETARY RICHMAN: I think the program is
9 improving. I think in some ways it had been
10 neglected for many years. And we have particularly,
11 under this Deputy Secretary's goal, we've been making
12 a very concerted effort to look at both outcomes and
13 recidivism within these programs.
14 I'll have to also give some credit. We
15 received a MacArthur Grant probably 3 years ago to
16 specifically look at after-care, the diversity within
17 these programs -- in other words, an
18 over-representative number of African-Americans are
19 within our camps and our centers -- and to look at
20 reasons why and how do we begin to make sure that
21 when these youngsters come into our programs, that
22 they do not come back.
23 I think we've made slow progress. I think
24 there's more progress to be made, but an awful lot of
25 it is on the after-care and being able to make sure 106
1 when people, when the youngsters, when the young
2 adults leave us, that they're either going back into
3 school, they're going to some level of structured
4 environment, and they had somewhere to live.
5 REPRESENTATIVE KORTZ: Very good.
6 Last question. We'll keep it brief.
7 The community mental retardation base
8 program, the waiver program, in your Executive budget
9 on page 229, you talk about the 47,000 people in
10 there.
11 Is there a waiting list to get into the
12 waiver program? You're showing a $1.7 billion budget
13 for that this year. Is there one?
14 SECRETARY RICHMAN: There is a significant
15 waiting list in all areas of mental retardation.
16 This year, again, in light that we did not
17 want to propose a significant cost increase in any
18 part of DPW, one of the things we did do is put money
19 for an emergency purpose in mental retardation, the
20 reason being that we have approximately 200 people
21 that would be at risk to going into a State
22 institution if we did not have some resources for
23 emergency in the community.
24 A State institution is the most expensive
25 place that we can provide service. In fact, we would 107
1 have to increase our complement, probably double
2 that, in order to serve an additional 200 people.
3 When I talk about emergency, I'm talking
4 frequently about people where they've been living at
5 home with elderly parents -- a parent dies or becomes
6 otherwise incapacitated and the person can no longer
7 stay at home and needs some sort of residential
8 setting.
9 The dollars we have put in the budget this
10 year will again make sure that we don't end up using
11 a State center as a fall-back position because we
12 have not made some level of arrangement.
13 Again, it's probably similar to the previous
14 question. It would be very, very pennywise and pound
15 foolish, except it would have immediate consequences
16 for us.
17 REPRESENTATIVE KORTZ: Thank you,
18 Madam Secretary.
19 SECRETARY RICHMAN: You're welcome.
20 REPRESENTATIVE KORTZ: Thank you,
21 Mr. Chairman.
22 MAJORITY CHAIRMAN EVANS: Representative
23 Reichley.
24 REPRESENTATIVE REICHLEY: Thank you,
25 Mr. Chairman. 108
1 And good morning, Madam Secretary.
2 SECRETARY RICHMAN: Good morning.
3 REPRESENTATIVE REICHLEY: I'll try to get
4 through these as quickly as I can. All I would ask
5 is a favor that because you can be quite expansive in
6 your answers, and I can be probably as verbose in my
7 questions, we will try to be as concise and direct as
8 possible.
9 SECRETARY RICHMAN: Sure.
10 REPRESENTATIVE REICHLEY: I'm asking staff
11 to put up a chart here that I reviewed in the
12 materials in preparation for this morning, and I
13 asked also that they give you a copy. It's a little
14 bigger.
15 SECRETARY RICHMAN: Thank you. I was going
16 to say, you really don't think my eyes are that good.
17 REPRESENTATIVE REICHLEY: It's not an eye
18 test. Don't worry.
19 SECRETARY RICHMAN: Good. Thank you.
20 REPRESENTATIVE REICHLEY: This is titled --
21 this is from your budget materials -- "Unduplicated
22 Number of Persons Eligible for Medical Assistance by
23 County," and I raise this, frankly, in a sense to be
24 fair to you.
25 SECRETARY RICHMAN: Okay. 109
1 REPRESENTATIVE REICHLEY: This is one of
2 those statistics that can probably be used to the
3 advantage of both sides.
4 We've highlighted the number of unduplicated
5 people from Philadelphia County, and your records
6 indicate that fully one-third of the population of
7 the city of Philadelphia, almost 500,000 people, are
8 eligible for Medical Assistance.
9 Now, I recognize that from your side of the
10 table you may say, well, that highlights the need for
11 us to be utilizing the Federal stimulus package in
12 providing more dollars.
13 From our side of the table it indicates the
14 need to exercise even greater restraint in the level
15 of spending within this budget, not only this year
16 but when those Federal stimulus dollars end in the
17 coming years.
18 And ironically, this is at a time when the
19 disproportionate share of funding for hospitals,
20 particularly those in Philadelphia, is being reduced
21 within your budget.
22 The number of people who are seasonally
23 unemployed in Philadelphia County, based upon
24 December 2008, is 53,900, which is less than the
25 number of people who are receiving TANF assistance. 110
1 And if you combine the TANF number with
2 those who are receiving general assistance aid as
3 well, it is more than those who are unemployed.
4 So I don't think we can fall back merely
5 upon the explanation that we have the largest number
6 -- the largest dollars being consumed by those who
7 are the most elderly within the system.
8 We have a number of families who are here,
9 and I'm very concerned the Administration is not
10 doing enough to reduce the number of people who are
11 on this eligibility assistance.
12 Now, serving that as the background to my
13 questions, really the thrust of them is, how are we
14 going to be saving money this year and next year?
15 Within your budget materials, you propose
16 $35 million in savings associated with the Behavioral
17 Health Management Care Reinvestment Fund.
18 SECRETARY RICHMAN: Right.
19 REPRESENTATIVE REICHLEY: That's something
20 we talked about a little bit last year.
21 And just for those who are sort of watching
22 us and trying to boil it down to third grade
23 language, as I understand it, the Department has a
24 contract with Mercer Consulting that does an
25 actuarial assessment for the behavioral health 111
1 contract under managed care---
2 SECRETARY RICHMAN: Yes.
3 REPRESENTATIVE REICHLEY: ---to provide a
4 certain amount of money to each county. Is that
5 correct?
6 SECRETARY RICHMAN: Yes. That is correct.
7 REPRESENTATIVE REICHLEY: All right.
8 And that is an estimate that is given to you
9 and then you pay a certain amount to the counties?
10 SECRETARY RICHMAN: We pay a capitated rate
11 to the counties.
12 REPRESENTATIVE REICHLEY: Right.
13 SECRETARY RICHMAN: Yes.
14 REPRESENTATIVE REICHLEY: But if they have
15 not -- if the counties have not expended that
16 capitated amount, the amount of money you've given to
17 them, they have this extra amount which is termed a
18 "reinvestment amount." Is that correct?
19 SECRETARY RICHMAN: If they spend less on
20 the services they provide than we give them, then
21 yes, they can use those dollars as part of a
22 reinvestment plan they have to submit and have
23 approved.
24 REPRESENTATIVE REICHLEY: Exactly.
25 Now, when did the reinvestment component 112
1 of behavioral health begin? Do you know how far
2 back?
3 SECRETARY RICHMAN: Oh, absolutely, since I
4 was in Philadelphia and I had it. It was in 1997.
5 REPRESENTATIVE REICHLEY: Okay.
6 And that has continued on through the
7 Rendell Administration. Is that correct?
8 SECRETARY RICHMAN: That is correct.
9 REPRESENTATIVE REICHLEY: All right.
10 Now, within the reinvestment process, you
11 just mentioned that the counties have to submit a
12 plan back to the department for the use of that
13 money.
14 SECRETARY RICHMAN: That's true.
15 REPRESENTATIVE REICHLEY: Is that to be for
16 a one-time initiative, or does it go to supplement
17 funds on programs that were already being provided by
18 that county within the capitated amount?
19 SECRETARY RICHMAN: We typically don't
20 approve for them to supplement funds that are already
21 in the county, that most of the programs in the
22 county are not Medicaid-based programs. And these
23 dollars should be used to support things within the
24 Medicaid Program.
25 One of the things that we would like to see 113
1 is if you have a new program coming up, that you use
2 some of your reinvestment dollars to do the
3 first-year funding of those programs or what we call
4 incubate those programs.
5 Once they're up and running, you convert
6 them into the Medicaid Program so that we can get the
7 50-percent match.
8 REPRESENTATIVE REICHLEY: So in a situation
9 where a county submits a reinvestment plan back to
10 your department and says we'd like to use this extra
11 money for this program, does it then get built into
12 the next year's request or capitated amount?
13 SECRETARY RICHMAN: It depends on the county
14 and whether they believe the program has stabilized
15 enough to give it enough of a feel that they can move
16 it into the capitated program.
17 REPRESENTATIVE REICHLEY: Okay.
18 SECRETARY RICHMAN: So some counties will
19 move it in a year, some counties may take a little
20 bit longer.
21 REPRESENTATIVE REICHLEY: All right.
22 Now, you've indicated within your budgetary
23 submission that you estimate a $35 million savings
24 within this program?
25 SECRETARY RICHMAN: That's the total amount 114
1 of savings we feel that are within the OMSAS Program.
2 There's a 2-percent cut on the base, and the rest of
3 it is within the HealthChoices Program.
4 REPRESENTATIVE REICHLEY: Now, is that
5 utilizing data as of last year or the last fiscal
6 year, '07-08? When's the cutoff that you were able
7 to utilize the information to calculate the
8 $35 million in savings? Is the majority coming up?
9 SECRETARY RICHMAN: Yeah, the majority is
10 coming up, and this is obviously an area that we both
11 follow very closely.
12 I believe the data within this was for
13 '07-08, but I'll let Joan be more concise.
14 REPRESENTATIVE REICHLEY: Okay.
15 DEPUTY SECRETARY ERNEY: Joan Erney, the
16 Deputy Secretary for the Office of Mental Health and
17 Substance Abuse Services.
18 There are three components to the
19 $35 million projection, and they were based at a
20 point in time on February 4, the day that the
21 Governor's budget was proposed. We actually updated
22 those at the time we made the original proposals.
23 They were based on '07-08.
24 REPRESENTATIVE REICHLEY: Okay.
25 DEPUTY SECRETARY ERNEY: So there are three 115
1 initiatives. One is really related to reinvestment
2 in that it's actually capping the amount of
3 reinvestment that would be available, and that would
4 be going forward.
5 That is variable every year. We made a
6 conservative estimate of $10 million, but we know,
7 again, it varies every year by county.
8 REPRESENTATIVE REICHLEY: Okay.
9 DEPUTY SECRETARY ERNEY: The second one is
10 on risk and contingency funds. For those counties
11 who have a risk-bearing partner, we believe that
12 reducing their 90 days of which they're currently
13 eligible for down to 30 still provides enough
14 protection. That projection is around $24 million of
15 State funds that could be returned.
16 The third is an existing contract that's
17 available to us. An existing contract, as you
18 indicated, it's for a point in time that we approve
19 reinvestment plans.
20 If those dollars are not expended or we have
21 not given them a renewal, they're considered
22 discretionary, and we're able to return those funds.
23 In all those events, if State funds come
24 back to the Commonwealth, the Federal funds are then
25 returned back to the Federal Government. 116
1 REPRESENTATIVE REICHLEY: Okay.
2 And in the last part of it you said that
3 certain funds are returned. Returned to whom?
4 DEPUTY SECRETARY ERNEY: They would be
5 returned to DPW and available for capitation.
6 REPRESENTATIVE REICHLEY: In other counties
7 within the same fiscal year?
8 DEPUTY SECRETARY ERNEY: No, no, no.
9 At this point, these initiatives are all
10 coming back only for cost containment purposes to
11 fill, you know, for a budget issue.
12 REPRESENTATIVE REICHLEY: Okay.
13 DEPUTY SECRETARY ERNEY: They are not going
14 to be redistributed, you know, specifically for a
15 community reinvestment plan.
16 SECRETARY RICHMAN: But if I can, they are
17 not going to go back to that county. They come into
18 our general pool of dollars to be used to defray our
19 costs as opposed to any stipulation that if we take
20 them from a county, we find a new way to give them
21 back to that same county.
22 REPRESENTATIVE REICHLEY: Okay.
23 Now, to stay on the good side of the
24 Chairman, I'm going to ask if you can submit some
25 information to us in writing, and it's the following: 117
1 a listing of approved Reinvestment Fund initiatives
2 by county in fiscal year -- within the Rendell
3 Administration.
4 SECRETARY RICHMAN: Okay.
5 REPRESENTATIVE REICHLEY: Number two, for
6 each initiative, show the amount originally approved
7 for that initiative by DPW and the amount actually
8 spent.
9 SECRETARY RICHMAN: Okay.
10 REPRESENTATIVE REICHLEY: And the reason I'm
11 asking this is, I know you've estimated $35 million
12 in savings. But based upon the information, which I
13 believe was drawn from the department's own Web site,
14 there was a reinvestment amount submitted by
15 Allegheny County alone as of 2007 for over
16 $16 million.
17 And this had been a trend since 1999 where
18 Allegheny County was essentially overpaid by
19 $42 million.
20 You go through each of the county
21 information -- and I'll be fair; let's pick Lehigh
22 County where I live, and we'll go through that one --
23 that stretching from 2001, Lehigh County was
24 overpaid, and this is with data from 2005-2006, by
25 over $24 million. 118
1 And lastly, for Philadelphia, which I know
2 that you said you came from, we have certain limited
3 figures up on this Web site showing 1997 and then
4 2002.
5 But the figure for the reinvestment amount
6 in Philadelphia County alone for 2002 is almost
7 $30 million; for 2003, almost $41 million; 2004,
8 almost $38 million.
9 So I'm quite curious as to how you're
10 estimating only $35 million in savings for the coming
11 fiscal year.
12 Now, once you have---
13 DEPUTY SECRETARY ERNEY: If I could just
14 respond to give you a figure for the life of the
15 program.
16 REPRESENTATIVE REICHLEY: Okay.
17 DEPUTY SECRETARY ERNEY: Since 1997, the
18 average reinvestment across all of HealthChoices is
19 3.5 percent. And again, it does vary by county by
20 year, and we have variability from losses to some
21 level of reinvestment.
22 Obviously smaller counties, the percentages
23 may look higher, but in fact the amount of resource
24 that is actually available is pretty low.
25 REPRESENTATIVE REICHLEY: Okay. 119
1 DEPUTY SECRETARY ERNEY: But the projection
2 or the proposal going forward is to actually cap that
3 amount at 2 percent in order for us to have more
4 control over that.
5 REPRESENTATIVE REICHLEY: Okay.
6 Now, once a county has received an approved
7 plan for the reinvestment, are there still situations
8 in which they can ask for an appeal of the rate that
9 Mercer identified to you to pay for the capitated
10 amount.
11 SECRETARY RICHMAN: When you say appeal, do
12 you mean the counties come back and say they want a
13 higher amount?
14 REPRESENTATIVE REICHLEY: Yes.
15 SECRETARY RICHMAN: They do it all the time,
16 and typically we say no.
17 REPRESENTATIVE REICHLEY: Okay.
18 Are you familiar with a person named
19 Nancy Lucas?
20 SECRETARY RICHMAN: Yes, I am.
21 REPRESENTATIVE REICHLEY: Okay. And is she
22 associated with the Philadelphia County Department of
23 Human Services staff?
24 SECRETARY RICHMAN: She runs the Community
25 Behavioral Health Program. 120
1 REPRESENTATIVE REICHLEY: Okay. Have you
2 ever spoken with Ms. Lucas about an appeal from
3 Philadelphia County to receive a higher rate even
4 after the plan was approved?
5 SECRETARY RICHMAN: No. In fact, for the
6 last 2 years we've given them cuts. And yes, they
7 appeal, and yes, they do not get it.
8 REPRESENTATIVE REICHLEY: Okay. Could you
9 also submit that to us in writing as to the record
10 over the last 5 years of counties which have
11 requested appeals of their capitated rate and the
12 record of the department in approving those appeals
13 and by how much they may have been approved?
14 DEPUTY SECRETARY ERNEY: And really, when
15 the request comes in for rate adjustment or at the
16 time of negotiation, we actually have the county
17 submit data and information as to the rationale as to
18 why they might want that.
19 Then it actually has to be reviewed by
20 Mercer and the actuarial team as well as the OMSAS
21 staff and our fiscal reviewers.
22 Then the request is either accepted or
23 denied. If we're making a recommendation, it then
24 goes to the Secretary and then we have a final
25 recommendation. 121
1 REPRESENTATIVE REICHLEY: Okay.
2 There's another area that I'm curious about,
3 which involves county contracts.
4 I've been informed that there are a number
5 of people who are essentially departmental employees
6 who are being paid through the county MH/MR systems
7 and the behavioral health systems.
8 For instance, are you familiar with Karen
9 Snyder, David Jones, or Aidan Altenor?
10 DEPUTY SECRETARY ERNEY: Dr. Aidan Altenor
11 is an employee of the Commonwealth. He's been an
12 employee for over 35 years.
13 David Jones is on contract with the
14 Commonwealth. He actually has been our point person
15 in closing both Harrisburg State Hospital as well as
16 Mayview State Hospital. He has come back as a
17 contractor. He was a former State employee.
18 The third is Karen Snyder, who has also done
19 a number of contracts, special initiatives. She's
20 the former Secretary of Welfare for the Commonwealth.
21 She currently is involved with us in actually
22 rewriting some clarifications on the Procedures Act.
23 We're looking at uniformity for the 1976 Mental
24 Health Procedures Act.
25 REPRESENTATIVE REICHLEY: Okay. And if you 122
1 would submit similarly a list back to the two
2 Chairmen of any individuals who are currently under
3 such contracts and if those were competitively bid
4 contracts of if they were awarded in some other
5 manner and the justification for that.
6 DEPUTY SECRETARY ERNEY: Sure.
7 REPRESENTATIVE REICHLEY: And that sort of
8 leads me to my final point, which is that there have
9 been a number of areas in which the spending has
10 been, to put it mildly, questioned.
11 And while I'm not going to necessarily pin
12 you down necessarily, the Auditor General's draft
13 report about the procurement contracts which were
14 issued to the Deloitte and Touche company did mention
15 your department.
16 I'll leave it open to you whether you want
17 to comment about whether the department provided the
18 information that was requested.
19 But specifically, there was an assertion
20 that there were $131 million in contracts from DPW
21 alone for 15 contracts issued by the Department of
22 Public Welfare.
23 But then there are up to 20 change orders --
24 excuse me -- 52 change orders on those same contracts
25 that resulted in an overall cost to the Commonwealth 123
1 of over $225 million. The change orders don't appear
2 to have had sufficient backing or justification.
3 And then there's a further assertion that
4 DPW employees are permanently working in Deloitte and
5 Touche office buildings.
6 Now, I put that out there as just sort of a
7 concern that you have mentioned a number of times
8 during your testimony this morning that we need to
9 get the best value for the dollars. You are
10 constantly trying to squeeze the value for those
11 dollars out of it.
12 But when we hear that this kind of
13 contracting took place and there doesn't seem to have
14 been the adherence to the sole-sourcing requirements,
15 to Procurement Code requirements, you overlay that
16 with the Auditor General's response to me on
17 February 20 regarding the Women's Medical Hospital
18 down in Philadelphia, the same neighborhood where
19 Governor Rendell and Senator Specter have their
20 homes. And in that situation, an attempt to salvage
21 what by all accounts was going to be a failed
22 enterprise, DPW advanced $7.2 million in Medicaid
23 funds.
24 There was a $2.5 million grant that was
25 unsecured, and the Auditor General has said there is 124
1 virtually no likelihood of recovering that money.
2 And I guess I'm just offering you the
3 opportunity, in light of all this evidence regarding
4 a less than satisfactory usage of State funds, how
5 can you assure us that within this budget we're going
6 to be seeing the best value for the money you're
7 asking?
8 SECRETARY RICHMAN: First let me start with,
9 in terms of the Deloitte contracts, we have worked
10 and responded to all the requests by the Auditor
11 General's Office and will continue to work as part of
12 the team that's working with them.
13 REPRESENTATIVE REICHLEY: Okay.
14 SECRETARY RICHMAN: One of the things that I
15 noted when I came into DPW is that procurement was
16 sort of in the midst of a variety of other things and
17 did not have -- and I needed them to not only be
18 identified but to have more authority to be able to
19 make sure that we were always going out to bid on
20 contracts, not doing sole sources and being
21 accountable and having contracts managers.
22 We then identified a member of our staff and
23 essentially gave him the title of being the person
24 who headed the procurement department. We pulled it
25 out separately, put it in, also ultimately gave him 125
1 responsibility for our Bureau of Financial Operations
2 and our audits as a defined job just to look at those
3 activities. He's been in that position for the last
4 3 years, since 2006.
5 We've also created a Procurement Review
6 Board. So that everything that we do needed to be
7 able to be reviewed by both the Procurement Review
8 Board and by this separate activity, because we
9 wanted to make sure that we were aware of where all
10 of our procurement contracts were, that we were on a
11 consistent path, and everything was being reviewed.
12 In terms of our IT actions, we actually --
13 we have two large contracts with Deloitte. They
14 total about $79, $80 million.
15 Through our contract negotiations -- and
16 they're basically split into two parts. One is a
17 bundling contract, because we felt that rather than
18 having managers in each one of these four very broad
19 areas, we get more cost savings by combining them and
20 bundling them.
21 And the fourth was what we call our Child
22 Support System, which is the PACES contract.
23 We were able to get a 20-percent cost
24 reduction for PACES and over a 10-percent cost
25 reduction on our bundling contract. And both of 126
1 these together have resulted in approximately
2 6.3 savings for the department and the Commonwealth
3 on an annual basis.
4 We do go through a competitive, fair, and
5 open RFP process. I am aware that there have been
6 change orders. We tried to make sure that any change
7 order has full documentation and are willing to
8 provide that documentation of what are the nature of
9 those change orders and why they have more.
10 One of the reasons that we needed to be so
11 tight on procurement is anything we do, because we're
12 using Federal dollars, all RFPs have to be approved
13 by the Federal Government. All contracts have to be
14 approved before they go into effect. And any changes
15 to their contracts have to be approved by the Federal
16 Government.
17 So we needed to set up an internal system
18 that could meet the standard of the Federal
19 Government and to make sure that anything we were
20 doing could meet that standard on an ongoing and
21 specific basis.
22 All of -- many of our contracts are
23 maintenance contracts as they go forward. And, for
24 example, probably a good example of a change order
25 would be the new logic we're putting into eligibility 127
1 and that we want to be able to have an alert come to
2 us right away when someone changes or gets a salary
3 increase within it.
4 That's a change order. That is something
5 that we had not planned to do a year ago when we were
6 setting up the contract.
7 We go back. We look at them. We look at
8 our priorities. We look at how much money we have.
9 There are some things that probably should be updated
10 that we just can't fit into the budget.
11 So we work with the staff. We look at --
12 another example would be the legislative changes
13 resulting from Act 62, which is the autism bill,
14 which require fairly significant changes to some of
15 our logic in Medical Assistance, because people who
16 are on Medical Assistance will now be coming out.
17 All of those were things, until the
18 legislation passed, we didn't know would need to be
19 within it. We have a timeline on this one. It needs
20 to be up and running by July. So it had to jump to
21 the top of a change order.
22 So we look at every bit of activity we do,
23 justify it, try to make sure there's no other way to
24 do it cheaper, try to negotiate it as tight as we can
25 down so those dollars come back into it. 128
1 Again, we're going to set priorities this
2 year, look at it. We're happy to share any
3 information.
4 But no change order can go in without
5 probably more justification than people are
6 comfortable with. But, you know, that's the nature
7 of being able to justify how and why we use public
8 dollars.
9 I believe in how we audit this. What this
10 particular person does is their sole job. It is,
11 again, a very tight process.
12 MCP. You know, I don't know what else to do
13 with MCP other than to blow it up. Indeed, we're
14 following the bankruptcy. We know they're close.
15 We're still pushing our people to see what they can
16 get back of the $7 million we put in.
17 It's not off our radar screen. All of my
18 legal department knows that we want to -- that we
19 need to be able to get some proportion of our dollars
20 back as they go through and get near to the end of
21 the bankruptcy settlements.
22 REPRESENTATIVE REICHLEY: And my final
23 response back is that on MCP at least, that Medicaid
24 services rendered by the hospital through March 12,
25 2005, amounted to only $166,285. 129
1 The department gave them at least
2 $7.2 million in direct Medicaid advances, a
3 $2.5 million grant. Their lawyer responded to the
4 Auditor General by saying that they were frankly
5 almost completely unqualified.
6 WMH, the Women's Medical Hospital, is unable
7 to raise the independent capital of roughly
8 $12 million you promised the Governor would be
9 forthcoming in the form of charitable contributions.
10 It was unable to obtain the amount of
11 outside financing it originally anticipated. It was
12 unable to retain either its CEO or its CFO beyond the
13 first few months. It operated with an interim CEO
14 without prior experience.
15 You know, it really calls into question
16 whether the money should have been given to them in
17 the first place.
18 In terms of how stringent your contracting
19 procedures are, I would just ask you to carefully
20 consider the submission you had -- or excuse me --
21 was addressed to Mr. Ted Dallas on January 22 from
22 Computer Aid, Inc., which estimated an $11 million
23 savings over the next 2 1/2 years.
24 So as tightly as you're watching some of
25 those dollars, I think there are other factors at 130
1 play which warrant consideration of certain vendors
2 out there beyond Deloitte and Touche.
3 So thank you, Mr. Chairman.
4 MAJORITY CHAIRMAN EVANS: Representative
5 Manderino.
6 REPRESENTATIVE MANDERINO: Thank you,
7 Mr. Chairman.
8 Thank you, Madam Secretary.
9 SECRETARY RICHMAN: Thank you.
10 REPRESENTATIVE MANDERINO: The Chairman
11 knows that I asked very few questions this whole
12 budget season, because I was saving up all my good
13 will with him for you.
14 SECRETARY RICHMAN: Okay.
15 REPRESENTATIVE MANDERINO: But having said
16 that, I will try to be succinct in the many areas
17 that I have concern.
18 One comment, I have lots of questions about
19 child welfare, but I'm not going to ask them today.
20 For those who are interested, we are having a hearing
21 on Thursday, March 26.
22 Representative True and I, who Chair the
23 Subcommittee on Health and Human Services, are
24 focusing that hearing specifically on the child
25 welfare system, how it affects this current budget 131
1 and future budgets going forward.
2 So in regard with your need for change and
3 need to tighten the budget, that will be a time that
4 we can discuss that. We hope to have not just your
5 department but also county administrators, providers,
6 and judges here for what I hope will be a very
7 productive discussion.
8 SECRETARY RICHMAN: Thank you.
9 REPRESENTATIVE MANDERINO: Let me start with
10 the issue of the Smart Pharmacy. I think we've
11 described that well enough.
12 My only question is, if the Feds do not move
13 soon enough -- and I know we're hoping that they will
14 -- and it affects this current budget cycle, tell me
15 what we would need to do kind of at this level to
16 achieve those bases or those savings.
17 And if we do get it passed -- because I
18 think it will take some legislative as well as some
19 budgetary action -- and then the Feds do pass and
20 allow the MCOs to get the direct reimbursements, will
21 the transition be that difficult?
22 I guess where I'm trying to go is, is it
23 worth waiting for the Feds, if they don't get it done
24 before we have to make our budget decisions and the
25 fiscal versus the policy and transition? 132
1 SECRETARY RICHMAN: We will probably be
2 reading the tea leaves on this one pretty tightly all
3 the way down to the end.
4 REPRESENTATIVE MANDERINO: Okay.
5 SECRETARY RICHMAN: Because it does require
6 the hiring of staff, the leasing of the building and
7 the buying of equipment.
8 So we're going to want to really get a
9 pretty good feeling from the Feds around how certain
10 they are they can bring this into practice.
11 And we do know that this saves $11 billion
12 on the Federal side, so there's a great carrot for
13 them to be able to get it done.
14 We also know that this is something that
15 many of the financial people within HHS also would
16 like to see because of the dollars it saves.
17 We also know there's going to be opposition
18 for this from the pharmaceutical companies. So we
19 know that it may not be as easy as it sounds.
20 But we've also heard both the President and
21 the Governor has heard the President make a
22 commitment to see that it's done.
23 So we'll try to follow this one all the way
24 down. We will try at the same time to be as ready as
25 we can without going and putting ourselves in a 133
1 deficit situation in terms of hiring staff to be
2 ready.
3 But these are dollars that we do need to be
4 able to see in the next year's budget.
5 REPRESENTATIVE MANDERINO: Okay.
6 With regard to home- and community-based
7 services versus nursing-home care in Pennsylvania,
8 tell me where we are right now with the current
9 balance, with initiatives that I know we have been
10 implementing, and really how do we -- I mean, we all
11 talk about how we want the least restrictive care and
12 what consumers want, but how are we moving that?
13 What impact is it having on the budget?
14 And something we don't often talk about, how
15 do we compare in the balance of nursing home versus
16 home- and community-based services compared to other
17 States? Are we kind of the same place they are or
18 are we more heavily reliant on one than the other,
19 et cetera?
20 SECRETARY RICHMAN: Sometimes people tell me
21 I'm smiling too much when I say this office is moving
22 to its own department, but it is hopefully, with your
23 concurrence and legislative approval.
24 I'm starting with your last question.
25 Pennsylvania has tended to be a State more dominated 134
1 by nursing facilities than it has been by home and
2 community services.
3 In other words, if your ratings states from
4 one being the most balanced in terms of home and
5 community services versus nursing facilities and
6 those that have the least balance, we're going to
7 clearly fall closer to the end of those having the
8 least balance.
9 Although we believe we've made progress over
10 the last several years by focusing on -- our goal was
11 to achieve a 50/50 balance by the end of this
12 Administration. We really won't make that in all
13 honesty, but we will have made some improvement of
14 having less reliance on nursing facilities and moving
15 more towards home- and community-based services.
16 The numbers still stay fairly consistent.
17 For everyone in a nursing facility, we can probably
18 serve, depending on circumstances, about two people
19 in home- and community-based services.
20 We believe, because of the rate of growth in
21 the aging population in Pennsylvania -- we being the
22 third oldest State in the nation -- we're going to
23 continue to see a lot of pressure.
24 And that was one of the reasons we thought
25 this needed to be unified with Aging. We thought 135
1 that because people with disabilities have so much
2 risk in going into a nursing home, the waiver
3 programs needed to move with it so someone could
4 devote their attention to this balance.
5 There has been an ever increasing amount of
6 money of the Medicaid budget that was going into
7 long-term living. We think that these dollars now
8 being managed in conjunction with the aging, the
9 policy within the aging waiver, will give the new
10 Acting Secretary the ability to really both control
11 costs here, do a better, faster job of rebalancing,
12 and hence, begin to use the dollars in the
13 Commonwealth in a more accountable way.
14 REPRESENTATIVE MANDERINO: Thank you.
15 Any time we have human services programs
16 that aren't mandated eligibility, we end up with
17 waiting lists.
18 SECRETARY RICHMAN: That is correct.
19 REPRESENTATIVE MANDERINO: Tell me where we
20 are -- and I know this is a mouthful, but I want to
21 kind of, we have MR waiting lists; we have child-care
22 waiting lists; we have home- and community-based care
23 waiting lists.
24 Tell me where we are in general on these and
25 what initiatives, if anything, you were able to put 136
1 in this year's tight budget to try to address our
2 waiting list concerns for services in Pennsylvania.
3 SECRETARY RICHMAN: The waiting list that
4 I've probably been most concerned about over my
5 tenure here has been the mental retardation waiting
6 list.
7 It is one that I think for the first time
8 last year we were actually able to stabilize it. And
9 we began to address over the last 2 years -- our
10 focal point began to stop having people come on the
11 waiting list by addressing through one of our waiver
12 programs the kids coming, the children with
13 developmental disabilities coming out of school.
14 REPRESENTATIVE MANDERINO: Okay.
15 SECRETARY RICHMAN: That way, they didn't go
16 on to the waiting list, and therefore, we've been
17 able to try to control the waiting list by not having
18 a continual flow of new people.
19 This year, we also realize that on any given
20 year, we have about 200 emergencies. And if we
21 didn't plan for those emergencies, those individuals
22 would more often than not end up in our State
23 institutions, which is the most expensive place for
24 us to provide that service.
25 So one of the things we do have in the 137
1 budget this year is the ability to be able to handle
2 on a centralized basis so that we can hit all the
3 hot spots across the Commonwealth if they are people
4 who need a home- and community-service in order to
5 stay away from and stay out of an institution.
6 So that will give us -- people have referred
7 to it as waiting list dollars. I've really called it
8 emergency dollars. So we can make sure that we
9 aren't using our State institutions and people can
10 continue to live in the community.
11 We centralize it because you never know
12 where that pressure is going to come. And if we give
13 it to one county and our emergencies for some reason
14 come in another county, we need the ability to make
15 sure the money is where the clients are.
16 Again, some of the reasons for people
17 needing emergency placement often is a parent died
18 who was being a caretaker or there were other types
19 of situations in an individual's life that meant they
20 had to move to a residential setting.
21 The second place -- and incidentally, we can
22 give you the emergency figures, but in the emergency
23 category, there are about 4,500 people on the waiting
24 list. In the critical category, there are 9,700
25 people on the waiting list. And then we're doing 138
1 planning for another 7,000 people.
2 But at this point in time, there are 4,500
3 people on the waiting list, and at any given point in
4 time, one of those individuals could have a crisis or
5 an emergency that would have to be dealt with.
6 And if we don't deal with it in the
7 community, they end up costing us more money in an
8 institution.
9 REPRESENTATIVE MANDERINO: Okay.
10 SECRETARY RICHMAN: The second waiting list
11 you referred to was child care.
12 REPRESENTATIVE MANDERINO: Yes.
13 SECRETARY RICHMAN: And there, we are at the
14 highest point that we've ever been in terms of a
15 waiting list.
16 We will be able to -- the stimulus bill did
17 put some child care money in that we will be using,
18 and we will be able to take about 2,000 children off
19 the waiting list.
20 That waiting list is critical because this
21 allows parents to work. If we cannot provide the
22 dollars -- and the dollars are supplementary. In
23 other words, parents pay some of the costs and we pay
24 some of the costs, because this is the child care
25 work subsidy. These parents would either be leaving 139
1 their children home alone, putting them in unsafe
2 conditions, or staying home and not working.
3 Obviously, we want to see as many people who
4 want to work working, and while they're working, be
5 able to have safe, affordable, and high-quality child
6 care.
7 REPRESENTATIVE MANDERINO: 2,000 off of how
8 long of a list?
9 SECRETARY RICHMAN: 15,000. It's the
10 highest it's ever been.
11 And I would tell you that 2,000 off is going
12 to be almost a drop in the bucket for how quickly it
13 will grow again.
14 The third list, group, of where we are
15 concerned about developing a waiting list -- and
16 again, it puts us at more risk -- is anyone waiting
17 for services that would keep them in the community in
18 the long-term-living system.
19 In other words, if people are not being able
20 to get attendant-care home-based services or
21 home-based nursing supports, they end up in a nursing
22 home. Again, the most expensive of our options. For
23 everyone in a nursing facility, we can serve two
24 people in the community.
25 So clearly, we don't want to put ourselves 140
1 at jeopardy of spending more money if we can indeed
2 do the planning that will help people receive
3 services in a more appropriate way and a less
4 expensive way.
5 REPRESENTATIVE MANDERINO: Do you have any
6 ability to, and I don't know if you can quantify for
7 us, but the impact that the child care waiting list
8 has on either the TANF rolls or -- well, maybe that's
9 where I want to take it.
10 SECRETARY RICHMAN: Okay.
11 When a person comes in to apply for TANF,
12 one of the things they have to do immediately is also
13 begin to make the commitment to go to work or to go
14 into a job-training program. And by definition, they
15 have children. We have to be able to get them into a
16 child-care program within the first 5 days.
17 In other words, we have to then put them in,
18 because our stipulation is they have to work. We
19 can't require them to work if we don't have a safe
20 and affordable place for their children.
21 So the TANF list usually does not have a
22 waiting list.
23 REPRESENTATIVE MANDERINO: Okay. But that
24 may be what is creating the longest waiting list
25 we've ever had situation? 141
1 SECRETARY RICHMAN: That is correct.
2 REPRESENTATIVE MANDERINO: And that then
3 become a priority.
4 SECRETARY RICHMAN: That becomes a priority,
5 and we do get them into child care very quickly
6 because we want them to work very quickly.
7 REPRESENTATIVE MANDERINO: Okay.
8 You talked about the MR system.
9 SECRETARY RICHMAN: Yes.
10 REPRESENTATIVE MANDERINO: We have met about
11 this. Representative Reed and I last year introduced
12 a bill to deal with the advanced cash payments to the
13 community mental health providers as you change your
14 payment system from the counties directly to the
15 providers.
16 SECRETARY RICHMAN: Yes.
17 REPRESENTATIVE MANDERINO: We had what I
18 thought was a productive discussion about ways that
19 we can avoid the legislation and ways that the
20 department could meet concerns of the community
21 providers.
22 But I have to tell you that Dave and I have
23 circulated to reintroduce that bill, because we're
24 still hearing from the community MR providers that
25 they have serious concerns about this and that they 142
1 have very real fiscal concerns about not continuing
2 the cash advance system.
3 Do you want to tell me what you are hearing
4 and what, if anything, that isn't being done now is
5 in the works to be done, that might alleviate some of
6 the concerns of the community providers?
7 SECRETARY RICHMAN: I will -- Kevin can
8 listen, and if I miss something, it would be good to
9 have Deputy Secretary Casey come up.
10 REPRESENTATIVE MANDERINO: Sure.
11 SECRETARY RICHMAN: But there are about
12 500 providers that are going to be affected by this
13 change, and this is a major change.
14 From the numbers that we have right now,
15 about 20 of the providers, which is a fairly small
16 number, say they may need an advance on or around
17 July 1 in order to meet cash-flow needs.
18 Our PROMISe system can make a gross
19 adjustment for these providers on a case-by-case
20 basis if they have a cash-flow system. So we are
21 trying to line up that if people need it, we can be
22 able to provide that cash flow.
23 We also realize that people can build a
24 PROMISe system, and our strong recommendation to them
25 will be to submit a bill in about 10 days and to bill 143
1 at least twice a month to keep that cash-flow payment
2 flowing.
3 And we believe that if they do that, they
4 will find they're being paid faster than the counties
5 were paying.
6 This is a change. I think people have what
7 I call anticipatory anxiety. They aren't quite sure
8 how it's going to work. They are concerned. They
9 have a lot of anxiety.
10 We believe that if we can get them through
11 the first 90 days and they can see the flow of those
12 dollars, a lot of that anxiety will drop. And those
13 clients, those providers, that still have some system
14 problems, that we can work with them individually to
15 make sure that they aren't put in a cash-flow
16 situation.
17 Again, one of the things that we will watch
18 very closely, if any provider -- and I'm hoping that
19 providers are watching -- feels they have to go to a
20 line of credit, they need to come to us first so we
21 can look at where the problem is and why they need to
22 do that, because we believe that this system now
23 should pay them faster and not slower.
24 REPRESENTATIVE MANDERINO: Okay.
25 SECRETARY RICHMAN: Kevin? 144
1 REPRESENTATIVE MANDERINO: Let me just,
2 because this may be something that Kevin will
3 address.
4 SECRETARY RICHMAN: Okay.
5 REPRESENTATIVE MANDERINO: I understand your
6 concern or your trying to allay the concerns about
7 the prompt payment once the system happens.
8 Here's where -- if I am now articulating
9 correctly what I am hearing, here is where the
10 problem comes in, and I don't know if this is what
11 you call system problems.
12 But when you talk about so far only
13 20 providers have said they need a cash advance, that
14 they are going to have some problems, what I am
15 hearing is that the number of providers who are very
16 concerned about their ability to meet cash flow is
17 much greater than that.
18 But when they raise the question, the first
19 approach of the department is not, how can we help
20 you, but you must not be managing your money right;
21 let's come in and audit you and figure out how you're
22 screwing up and not managing your money right.
23 And so therefore, there are lots of people
24 who aren't coming to you saying we're going to be in
25 trouble and need a cash advance, because it seems to 145
1 systematically be triggering a punitive rather than
2 helpful response.
3 SECRETARY RICHMAN: I'll let Kevin answer
4 that.
5 DEPUTY SECRETARY CASEY: Kevin Casey. I'm
6 the Deputy Secretary for the Office of Developmental
7 Programs.
8 Let me offer one thing first. If there's
9 any staff member of mine who is approaching a
10 provider in that punitive management, I want to know
11 who it is, where it is, and I will re-instruct the
12 staff member.
13 That is not the way we approach providers.
14 It's not the way I expect my staff to approach
15 providers, frankly.
16 The advanced system was originally set up by
17 allowing each county to decide whether or not they
18 would give advances to providers or not, and there
19 was a very uneven response across the State, as you'd
20 expect when counties had that level of authority.
21 I think, frankly, at this point in the
22 program's history, it would almost be impossible for
23 us to set an advanced system up that we could monitor
24 properly by July 1.
25 We have put in place a significant number of 146
1 protections for providers, including a process that
2 is called revenue reconciliation.
3 We will be working with providers comparing
4 next year's revenue on the new billing system to the
5 prior year's billing on the old system and making
6 them whole if there's a difference, and we'll be
7 doing that on a quarterly basis.
8 We're also prepared to work with providers
9 who express financial problems to us. We will have
10 the ability to give gross adjustments if providers
11 are in a financially difficult position.
12 We will also be in a position to be
13 monitoring providers' expenses on a regular basis.
14 I would second the Secretary's suggestion to
15 providers. Every time I meet with providers, I
16 suggest to them that in the new system, they make
17 sure through the first quarter that they bill twice a
18 month rather than once a month.
19 If they will bill twice a month, we will
20 have cash to them prior to the time they would have
21 received the advance from the county.
22 In Philadelphia, for example, the providers
23 usually receive their advances in early to mid
24 August. We'll have a payment to them well before
25 early to mid August, if they'll do that twice-a-month 147
1 billing.
2 That said, I'm willing to continue to
3 discuss the issue of advances and see if we can
4 arrive at a solution to this that makes sense for all
5 parties.
6 REPRESENTATIVE MANDERINO: Great. Thank
7 you.
8 Secretary Richman, turning your attention --
9 well, you still have the chart, the chart that
10 Representative Reichley put up.
11 SECRETARY RICHMAN: I need another copy.
12 REPRESENTATIVE MANDERINO: Oh, you lost your
13 copy, huh?
14 SECRETARY RICHMAN: Yes.
15 REPRESENTATIVE MANDERINO: Well, actually, I
16 could probably articulate my question without you
17 having it.
18 SECRETARY RICHMAN: Okay. That's fine.
19 REPRESENTATIVE MANDERINO: I'm not the
20 greatest at math, but, I mean, I look at the numbers
21 and at first blush I see why he raises concern --
22 percent of the population of our various counties of
23 persons eligible for Medical Assistance.
24 Philadelphia is absolutely at the highest
25 with 33 percent. 148
1 SECRETARY RICHMAN: Yes.
2 REPRESENTATIVE MANDERINO: Fayette and
3 Greene, who are other high poverty counties, are up
4 there, too, but definitely behind us at 25 and
5 22 percent.
6 And then I looked at two other counties
7 which are probably -- Lehigh, since he mentioned it
8 -- which are probably much more like the average at
9 16 percent, and the other county that I represent,
10 Montgomery County, which is not a high poverty county
11 and it's only at 7 percent.
12 But when I look at the numbers across the
13 board, I come to a couple of conclusions and one
14 factor that seems to drive the difference.
15 First of all, the SSI and the categorically
16 needy folks, I mean, if you meet those criteria,
17 those are Federal criteria; if you're eligible, you
18 get it, et cetera.
19 And everyone seems to be at about the same
20 percentage, meaning the percentage of their
21 population and how those numbers drive in those two
22 categories.
23 When you look at the federally kind of
24 eligible things, you can see how that's driving that
25 number. 149
1 SECRETARY RICHMAN: Right.
2 REPRESENTATIVE MANDERINO: The big
3 difference seems to be in the TANF column, and when
4 you look at the TANF column for some of the other
5 counties, they're TANF eligible is usually about
6 10 percent or less of their total category, and in
7 Philadelphia it is over 20 percent.
8 So that seems to be the distinguishing
9 factor, if I could say that, about what drives
10 Philadelphia's numbers.
11 Can you shed more light about why that is?
12 Are we just more savvy in Philadelphia, our residents
13 of getting on TANF? Is there some child poverty
14 issues and the number of children that are on TANF
15 that is driving this?
16 Can you give us some picture of what seems
17 to -- because that seems to be the number that's
18 driving Philadelphia's percentage higher than
19 everybody else.
20 SECRETARY RICHMAN: I will have
21 Linda Blanchette come up and address that, too.
22 REPRESENTATIVE MANDERINO: Okay.
23 SECRETARY RICHMAN: But one of the things
24 that tends to drive percentages is your
25 denominator. 150
1 Poor people tend to stay put. They don't
2 move. Wealthier people move out.
3 So as you have the population of
4 Philadelphia dropping, which everybody acknowledges
5 that population is dropping, and the number of poor
6 people stay in place and the number of people who are
7 middle class and upper middle class or on the
8 wealthier side continue to move out, which is one of
9 the more chronic problems of the city, you're going
10 to see a higher percentage of lower-income people who
11 are going to be more likely to be part of a potential
12 TANF population.
13 You would think -- in some ways, I think
14 many of these people would like to move to other
15 areas in the surrounding counties and just don't have
16 the means or resources to do that.
17 Let me have Linda address you.
18 DEPUTY SECRETARY BLANCHETTE: Linda
19 Blanchette, Deputy Secretary of the Office of Income
20 Maintenance.
21 I would just point out, though, if you look
22 at the total number of TANF in Philadelphia, which is
23 91,967, only 25,000 of them are adults. So the
24 balance are TANF children, and that's consistent with
25 the way the MA population tends to run anyway, where 151
1 we have a significant portion of the population who
2 are children.
3 In terms of Philadelphia's TANF
4 participation, they are one of our best performing
5 counties in terms of people meeting the participation
6 requirement and moving off of TANF to employment. So
7 they are, you know, driving towards that goal.
8 But again, as Secretary Richman said, you
9 tend to have a concentration of poverty in urban
10 areas, and then a proportion of children that
11 comprise that TANF population are a part of the
12 driver on the MA side.
13 REPRESENTATIVE MANDERINO: Okay.
14 My list is still long, but I see the
15 Chairman's patience is short, so this will be my last
16 question.
17 And let's stay with TANF. I mean, TANF is
18 kind of the last bottom safety net. During these
19 current economic times, our TANF caseload isn't
20 really growing that much. I think you budgeted for a
21 little bit of growth.
22 My question is, given as best you can look
23 into that predictable crystal ball and watch what's
24 both happening with the unemployment rate, with the
25 projections of how long this recession is going to 152
1 be, have we adequately provided for that safety net
2 and the growth that can be anticipated in this year's
3 budget?
4 SECRETARY RICHMAN: We have tried to base it
5 on our containment of that growth over the last
6 4 years, and we've seen drastic drops in the TANF
7 population.
8 This all depends on how quickly the recovery
9 is and the level of jobs that our TANF people tend to
10 go into, the unemployment of people who are more
11 qualified, and how far into this low-level pool they
12 will go.
13 And we've tried to read the crystal ball on
14 this. Right now, we seem to be able to still get our
15 people into very entry-level jobs.
16 And unemployment, as you know, in
17 Pennsylvania is not as bad as it is in some other
18 States. So we haven't seen yet people who have been
19 making middle-class incomes coming in and using as
20 their primary job the bottom entry-level jobs that
21 our TANF clients or cash assistance clients would be
22 in.
23 If indeed we begin to see the displaced
24 workers or laid-off workers coming in and picking up
25 very entry-level jobs, then we're probably then going 153
1 to see more people beginning to qualify for TANF.
2 But remember, to get into the cash
3 assistance population, you can have no resources, you
4 have to have sold almost everything you own, and you
5 have to be able to pretty much show us that you have
6 no other resource.
7 I'm not sure many of the people who are
8 losing their jobs right now are going to be able to
9 come down to that level.
10 REPRESENTATIVE MANDERINO: In this budget at
11 least.
12 SECRETARY RICHMAN: At least in this budget.
13 REPRESENTATIVE MANDERINO: Okay.
14 SECRETARY RICHMAN: I'm not even sure, many
15 of these folks actually have homes or cars or other
16 things or other tangible assets that would tend to
17 make them ineligible for cash assistance.
18 REPRESENTATIVE MANDERINO: Thank you very
19 much.
20 SECRETARY RICHMAN: Sure.
21 REPRESENTATIVE MANDERINO: Thank you,
22 Mr. Chairman.
23 MAJORITY CHAIRMAN EVANS: That shows you how
24 much it means being Chairman around here.
25 We still have 10 people. 154
1 SECRETARY RICHMAN: We can petition you for
2 another---
3 MAJORITY CHAIRMAN EVANS: We still have
4 10 people. This is lightning round. At
5 12 o'clock---
6 SECRETARY RICHMAN: Can we go back to yes
7 and no?
8 MAJORITY CHAIRMAN EVANS: Yes.
9 At 12 o'clock, we're going to stop. We have
10 10 members, okay? So I'm just alerting people, ask
11 your questions, yes or no, because at 12 the clock
12 will stop.
13 Representative Miller.
14 REPRESENTATIVE MILLER: Thank you,
15 Mr. Chairman.
16 Hello.
17 SECRETARY RICHMAN: The answer is yes.
18 REPRESENTATIVE MILLER: My understanding is
19 that President Obama's budget has a provision that
20 allows States to collect rebates on the
21 pharmaceuticals provided through managed-care
22 organizations.
23 SECRETARY RICHMAN: Yes.
24 REPRESENTATIVE MILLER: And I understand
25 that you supported this through a letter to 155
1 Senator Specter and other things.
2 SECRETARY RICHMAN: Yes.
3 REPRESENTATIVE MILLER: Assuming this goes
4 through in the final budget, does it make the
5 carveout proposal that we've been talking about
6 irrelevant?
7 SECRETARY RICHMAN: Yes.
8 REPRESENTATIVE MILLER: Obsolete?
9 SECRETARY RICHMAN: Yes.
10 REPRESENTATIVE MILLER: Okay. If that's
11 true, then I heard a number of $54 million or
12 something from the carveout that we expected to save.
13 What are we going to save with this change?
14 SECRETARY RICHMAN: We estimate the savings
15 will be the same.
16 REPRESENTATIVE MILLER: It will be the same?
17 SECRETARY RICHMAN: Right. In other words,
18 it could be that the rebates going to the
19 pharmaceutical companies mean that we don't have to
20 put that money in. The revenue is coming to them
21 from the rebates.
22 REPRESENTATIVE MILLER: So the Federal
23 Government passing this doesn't really benefit us
24 because we'd be doing it anyway?
25 SECRETARY RICHMAN: Well, yes. That's 156
1 right. It means that instead of coming from us
2 operating the program, we will get the pharmaceutical
3 company, the managed-care companies get the rebate
4 directly and we take our dollars off the top.
5 REPRESENTATIVE MILLER: Okay. But then I
6 heard something about a $150 million savings or
7 something.
8 SECRETARY RICHMAN: Yes, but it's the same
9 150 we have in the budget. It's not an additional
10 150.
11 It's either we do it through Smart Pharmacy
12 or the Federal Government does it. It's still
13 $150 million.
14 REPRESENTATIVE MILLER: Okay. Understanding
15 prescriptions and pharmacies is difficult for me, so
16 bear with me.
17 SECRETARY RICHMAN: Okay.
18 REPRESENTATIVE MILLER: The other thing I'm
19 trying to figure out is, the Governor's budget
20 proposes a change in pharmacy reimbursement
21 methodology for PACE and PACENET.
22 SECRETARY RICHMAN: Yes.
23 REPRESENTATIVE MILLER: And they're looking
24 at saying that that could be a $66 million savings.
25 And what's interesting about that, that's about 157
1 324,000 eligible participants.
2 Now, have you looked at that for your budget
3 and doing something like that?
4 They're looking at going from the average
5 acquisition costs, they're going to use that rather
6 than the wholesale price as the basis for drug costs.
7 Can we do that also in DPW? Because your population
8 served is like 2 1/2 times the number.
9 SECRETARY RICHMAN: Yes.
10 I want to be very conscious of the Chairman.
11 This is a fairly complicated area. We actually do
12 have it written out pretty well.
13 The answer is that we've looked at what PACE
14 is doing and the fact that they've moved to an actual
15 acquisition cost.
16 We believe that that would actually cost us
17 money because of some of the -- because of the way we
18 have a PVL and the way that we do our pharmacy.
19 We're willing to look at it. We're willing
20 to share with you and discuss with you why we have
21 chosen right now not to do that.
22 But we do believe in our first analysis it
23 would cost us money rather than saving us money. But
24 to go through that now would probably take most of
25 the 10 minutes. 158
1 REPRESENTATIVE MILLER: No problem. I'd
2 appreciate if you could, through the Chairman, supply
3 us the justification and why you believe that is
4 true.
5 SECRETARY RICHMAN: I'd be happy to.
6 REPRESENTATIVE MILLER: And one last quick
7 question.
8 SECRETARY RICHMAN: Yes.
9 REPRESENTATIVE MILLER: I represent a
10 district along the Maryland line. Whenever Maryland
11 is proposing to do something new, I hear from many of
12 my constituents that we should do the same.
13 I understand that they're going to
14 something, and if I understand it, it's a single
15 external vendor for Medicaid dental programs.
16 Is that something we've looked at or should
17 we look at? Evidently some other States have done
18 it, and they've found some savings and some program
19 enhancements.
20 SECRETARY RICHMAN: Anything that we can
21 look at in dental that will give us more dentists
22 being in the program. I don't know whether we're
23 looking at it, but I can tell you we will.
24 And we do look at Maryland frequently.
25 Remember this, when we get to MCO assessment, 159
1 Maryland is doing it successfully.
2 REPRESENTATIVE MILLER: Okay. If you could
3 just keep us apprised of what's happening there.
4 SECRETARY RICHMAN: We will keep you
5 apprised of what we're doing in dental.
6 REPRESENTATIVE MILLER: Okay.
7 SECRETARY RICHMAN: It is a high visible
8 area that we have not done well in.
9 REPRESENTATIVE MILLER: All right. Thank
10 you.
11 Thank you, Madam Secretary.
12 SECRETARY RICHMAN: Absolutely.
13 REPRESENTATIVE MILLER: Mr. Chairman, it's
14 back.
15 MAJORITY CHAIRMAN EVANS: Representative
16 Scott Conklin.
17 REPRESENTATIVE CONKLIN: Thank you,
18 Mr. Chairman.
19 And in the speed round, I'll try to keep it
20 quick.
21 SECRETARY RICHMAN: Please.
22 REPRESENTATIVE CONKLIN: Just very quickly,
23 we were talking about contracts earlier today.
24 SECRETARY RICHMAN: Yes.
25 REPRESENTATIVE CONKLIN: And am I correct 160
1 that you would fall under the same category as
2 municipalities, States, and other agencies that when
3 you go out for a provider, which would be a service,
4 you look for the best fit versus the best price?
5 SECRETARY RICHMAN: That is correct.
6 REPRESENTATIVE CONKLIN: Thank you.
7 SECRETARY RICHMAN: You're welcome.
8 REPRESENTATIVE CONKLIN: The second question
9 is that as we're talking about budget cuts, people
10 -- there has been in the media, let's cut you
11 10 percent.
12 When you look at your budget, because of
13 what the Federal Government does and we here in the
14 Legislature, how much of your budget is mandated?
15 SECRETARY RICHMAN: Well---
16 REPRESENTATIVE CONKLIN: 95 percent?
17 93 percent?
18 SECRETARY RICHMAN: Probably somewhere
19 around that -- maybe 80 percent. When you mean
20 "mandated," do you mean by the Federal guidelines
21 that---
22 REPRESENTATIVE CONKLIN: Either by
23 guidelines or laws.
24 SECRETARY RICHMAN: Yes. We're probably in
25 excess of 80 percent. 161
1 REPRESENTATIVE CONKLIN: So when we're
2 talking about cuts, where would we go, the Shared
3 Ride Program for seniors, taking them to the
4 hospitals? Would that be a place that isn't mandated
5 that we could cut?
6 SECRETARY RICHMAN: Medical Assistance
7 transportation is a mandated service.
8 REPRESENTATIVE CONKLIN: How about the
9 waiting list? Can we just not see those folks and
10 increase the waiting list?
11 SECRETARY RICHMAN: And mental retardation,
12 the folks who would be what is called 406,
13 involuntarily committed, so we would have to serve
14 them in a State mental center or in a State mental
15 hospital.
16 We cannot -- the court would force us to
17 provide some level of service or force the county to
18 provide some level of service.
19 REPRESENTATIVE CONKLIN: How about Meals on
20 Wheels for our shut-in seniors?
21 SECRETARY RICHMAN: Meals on Wheels, I
22 believe, is done by Aging, and we don't do.
23 REPRESENTATIVE CONKLIN: So where would we
24 cut?
25 SECRETARY RICHMAN: Well--- 162
1 REPRESENTATIVE CONKLIN: If we absolutely
2 had to cut -- and I know I'm already over my time
3 limit -- what services that aren't absolutely 100
4 percent mandated or through the Legislature could you
5 even look at?
6 SECRETARY RICHMAN: Probably, well, if we
7 were looking at a high-cost area -- well, in our
8 Medical Assistance Program, there are actually
9 programs that are not mandatory that we provide.
10 For example -- I want to make sure I get
11 this right -- optometry, chiropractor services, are
12 what they call voluntary services.
13 By even saying that, I think I will generate
14 any number of phone calls to all of you, because
15 somebody will pick up that I said that optometry
16 services are not mandated services. In other words,
17 under the Medicaid Program, we can determine whether
18 we do that.
19 I will tell you, we spend about, on a
20 chiropractor, we spend $104,000 for the State share
21 of the fee-for-service program.
22 If we didn't do that, people would then go,
23 the people who use this service, would go to a more
24 expensive service.
25 REPRESENTATIVE CONKLIN: That was my 163
1 question.
2 SECRETARY RICHMAN: Right.
3 I call almost all of our optional services
4 "in lieu of." In other words, they provide a less
5 expensive alternative to a more expensive service.
6 REPRESENTATIVE CONKLIN: Okay.
7 SECRETARY RICHMAN: And obviously, we would
8 rather have people use a less expensive service than
9 the most expensive service.
10 REPRESENTATIVE CONKLIN: Right.
11 SECRETARY RICHMAN: So indeed while we have
12 the right to trim it, our biggest single optional
13 service is pharmacy.
14 REPRESENTATIVE CONKLIN: Okay.
15 SECRETARY RICHMAN: If I wanted to save a
16 lot of money, I could save $165 million by not
17 offering pharmacy to anyone, and then everybody
18 would get sicker because they wouldn't have drugs to
19 take.
20 REPRESENTATIVE CONKLIN: Thank you,
21 Madam Secretary.
22 SECRETARY RICHMAN: You're welcome.
23 REPRESENTATIVE CONKLIN: Thank you,
24 Mr. Chairman.
25 MAJORITY CHAIRMAN EVANS: Denlinger. 164
1 REPRESENTATIVE DENLINGER: Thank you,
2 Mr. Chairman.
3 Good morning.
4 SECRETARY RICHMAN: Good morning.
5 REPRESENTATIVE DENLINGER: Most of my more
6 detailed questions have been asked, but there was one
7 exchange that I need to go back to, if we could.
8 SECRETARY RICHMAN: Sure.
9 REPRESENTATIVE DENLINGER: Earlier on, you
10 and Representative Reed had some dialogue about the
11 eligibility requirements under the new stimulus
12 package.
13 SECRETARY RICHMAN: Yes.
14 REPRESENTATIVE DENLINGER: And you
15 explained, I believe, that there are no changes
16 related to that. I want to make sure I'm clear on
17 that.
18 SECRETARY RICHMAN: Okay.
19 REPRESENTATIVE DENLINGER: Because it's been
20 widely reported that the stimulus package did a lot
21 of unraveling, I guess you would say, of the Clinton
22 welfare reform initiative of 1996, specifically
23 with regard to timelines for the payments of
24 benefits; in other words, back-end limits on those
25 time frames. 165
1 Could you share with us your understanding
2 as far as the impacts to you, your agency, on those
3 back-end requirements?
4 I understand they've been released or set
5 aside.
6 SECRETARY RICHMAN: In terms of our FMAP
7 payment, the match payment on the Federal, the only
8 stipulations that the State has to follow are not to
9 change eligibility requirements that were in effect
10 on July 1, 2008, and the prudent pay.
11 This is a very -- as you know, an 1,100-page
12 document, so we haven't worked our way all the way
13 through it.
14 REPRESENTATIVE DENLINGER: Okay.
15 SECRETARY RICHMAN: But I'm not aware of
16 anything that changes any of the Welfare to Work
17 timelines within State Government at this point in
18 time.
19 REPRESENTATIVE DENLINGER: If, as you and
20 your staff go through that bill, you find that there
21 is in fact a change on that, could you report that to
22 the Chairman of this committee?
23 SECRETARY RICHMAN: Absolutely.
24 REPRESENTATIVE DENLINGER: And then
25 secondly, behind that is a deeper question. 166
1 SECRETARY RICHMAN: Okay.
2 REPRESENTATIVE DENLINGER: You have a
3 long and respected history in the public welfare
4 realm.
5 The Clinton Administration's direction there
6 was in fact that we should incent people to move off
7 of the welfare rolls by putting those kind of
8 back-end limits in place.
9 Our new President was very clear as he was
10 running for President that he in fact does not
11 support that, that he supports really no back-end
12 limits on the payments of benefits.
13 Could you share with us your perspective on
14 what is the best direction, the Clinton or the Obama
15 approach?
16 SECRETARY RICHMAN: That's a very good
17 question.
18 I believe that most of the people that I
19 work with that come to our Advisory Committee on
20 Income Maintenance believe there's a value in work,
21 that they want opportunity. They want training.
22 They want to be able to be gainfully employed.
23 They don't believe they can live on what
24 cash assistance is, and they want the independence
25 and dignity of working. 167
1 I will tell you that one of the things that
2 was in the adaptation of the Clinton Welfare to Work
3 that I believe that I, too, will be probably lobbying
4 Obama to change is that on education.
5 As we look, at this point, only a person
6 moving from Welfare to Work can only really be in an
7 educational setting for 1 year.
8 We have found if we can get clients who are
9 capable through 2 years of community college, they
10 don't come back. We never see them again.
11 They actually get jobs and are able to get
12 on a career ladder that not only gets them off cash
13 assistance, it has a higher probability of getting
14 them off medical expenses, which is my most
15 expensive, child care, food stamps, and LIHEAP.
16 My goal is to get people as independent as
17 they can. Most of the time, they can't do that
18 unless they've had some fairly sophisticated
19 training.
20 So one of the places we'll be pushing and
21 where I would agree with our current President is
22 that we need to have a better value in education.
23 That doesn't mean we want to support people
24 who see education as their life goal, staying in
25 school and never working. I need them to get into 168
1 choosing an educational program that will get them a
2 job.
3 Frequently, it has been nursing, and as you
4 know, nursing always seems to have a shortage. But
5 people can jump from $400 a month to $40,000-a-year
6 jobs when they go into nursing.
7 It's well worth the investment to be able to
8 support them as they go into a community college and
9 2-year nursing programs.
10 So indeed I believe in the dignity of work.
11 I believe many of our clients believe in the dignity
12 of work, and I would never want to lose that
13 pressure of being able to help people make that
14 decision.
15 But I also need to believe that education is
16 part of that work.
17 REPRESENTATIVE DENLINGER: So as we consider
18 cash assistance for a moment -- and I understand your
19 answer with regard to education. With regard to cash
20 assistance, however, my sense is that you're
21 answering me that you would support the Clinton
22 direction there perhaps more?
23 SECRETARY RICHMAN: Yes.
24 REPRESENTATIVE DENLINGER: Okay. Thank you,
25 Madam Secretary. 169
1 SECRETARY RICHMAN: Sure.
2 REPRESENTATIVE DENLINGER: Thank you,
3 Mr. Chairman.
4 MAJORITY CHAIRMAN EVANS: This will be the
5 last member.
6 DePasquale.
7 REPRESENTATIVE DePASQUALE: Thank you,
8 Mr. Chairman.
9 Unlike some people, I take the Chairman
10 seriously when he says lightning round. I don't want
11 to get him mad going into the budget cycle here.
12 Madam Secretary, thank you.
13 SECRETARY RICHMAN: Thank you.
14 REPRESENTATIVE DePASQUALE: Real quick.
15 Juvenile justice, the detention centers
16 specifically, with the loss of transition grants and
17 TANF funds, I just want to know, is there a long-term
18 plan that the department is looking at in helping
19 counties with the juvenile detention centers?
20 My specific concern is not only the program,
21 which is important, but I'm also concerned, I think
22 some people have hinted around that if the Federal
23 Government and the State is not appropriately funding
24 a lot of the programs that we all know are going to
25 stay for a long time to come, the only option 170
1 counties have is to raise property taxes.
2 And so I am someone that believes that we
3 should obviously be doing what we can to save money,
4 but when it comes to necessary programs, that we
5 should have an appropriate balance between State,
6 Federal, and local dollars. And I'm very concerned
7 about pushing more on to the counties that really
8 only have the property tax.
9 So I wanted, you know, to get that out as
10 far as my concern but want to ask about the long-term
11 plan on the funding.
12 SECRETARY RICHMAN: Right.
13 This really does need to be a partnership.
14 At this point in time, child welfare, non-detention,
15 non-juvenile justice services are funded at a 75/25
16 match. In other words, the counties -- a 60/40
17 match.
18 For regular child welfare?
19 DEPUTY SECRETARY BLANCHETTE: Oh, I'm sorry.
20 It's 80/20.
21 SECRETARY RICHMAN: 80/20; sorry.
22 Child welfare is funded at 60/40 for
23 detention, because there needs to be an incentive not
24 to be able to find -- to be able to find alternatives
25 to putting kids in detention. 171
1 I am well aware that many of the counties
2 would like to move it that we pay 80 percent of that
3 cost. What incentive then is there to lower and find
4 alternative ways of controlling your juvenile justice
5 population?
6 I would strongly disagree with any change in
7 that formula. In fact, I would move it a little bit
8 back the other way, because I think we need to
9 clearly work with the counties around, how do we keep
10 kids out of juvenile justice?
11 How do we identify those kids who are most
12 at risk as early as we can?
13 If they have mental health or substance
14 abuse problems, how do we get them that treatment?
15 But how do we not incent them for putting
16 more people in, but how do we clearly make it an
17 incentive to keep kids out of that system?
18 REPRESENTATIVE DePASQUALE: The only thing
19 to chime in on that is, and you may already do it,
20 and if you do, great, continue; if not, let's maybe
21 work to build this, and that is, just like any
22 program in counties, there are places that are
23 getting it done and there are places that are
24 probably struggling.
25 SECRETARY RICHMAN: Yes. 172
1 REPRESENTATIVE DePASQUALE: And if we can
2 continue to use the areas that are getting it done,
3 whether it be in Pennsylvania or even other parts of
4 the country, to continue to try to work with the
5 counties to try to supply that information so that
6 the ones that aren't making those goals can make
7 those goals.
8 SECRETARY RICHMAN: I strongly agree with
9 you.
10 We do have promising practices. We are
11 trying to fund that. But we probably do need to make
12 sure that the counties who are weak in this area are
13 meeting and getting resources and getting the
14 day-to-day support to help them cross that barrier
15 so, one, they don't raise taxes, and secondly, aren't
16 putting children at risk.
17 REPRESENTATIVE DePASQUALE: Thank you,
18 Madam Secretary.
19 SECRETARY RICHMAN: Thank you.
20 REPRESENTATIVE DePASQUALE: Thank you,
21 Mr. Chairman.
22 MAJORITY CHAIRMAN EVANS: To the members who
23 I still have on the list, what I'll do is move you up
24 front on the other ones down the line. I apologize
25 to those members. 173
1 Madam Secretary, I want to thank you, one,
2 for what you do for the people of the Commonwealth of
3 Pennsylvania -- and your department.
4 SECRETARY RICHMAN: Thank you,
5 Mr. Chairman.
6 MAJORITY CHAIRMAN EVANS: I know it's a very
7 difficult challenge that you have, and we all need to
8 be in this together.
9 It's not just you and your department; it's
10 the General Assembly working in conjunction with the
11 Governor to move this State forward.
12 SECRETARY RICHMAN: I agree.
13 MAJORITY CHAIRMAN EVANS: We want to work
14 with you and not against you, so all the questions
15 you heard were just members wanting to know what goes
16 on.
17 So again, I want to sincerely thank you for
18 what you do for this State, and continue.
19 SECRETARY RICHMAN: Thank you very much.
20 And we'd be very willing to take any
21 questions in writing that you'd like answered.
22 MAJORITY CHAIRMAN EVANS: Correct. The
23 members who want to, you can send questions in
24 writing and we'll await your answers.
25 SECRETARY RICHMAN: Sure. Thank you. 174
1 MAJORITY CHAIRMAN EVANS: Thank you.
2 We will recess until 1 o'clock, and then
3 we'll start the State-Related Universities.
4 Thank you very much.
5
6 (The hearing concluded at 12:01 p.m.)
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25 175
1 I hereby certify that the proceedings and
2 evidence are contained fully and accurately in the
3 notes taken by me on the within proceedings and that
4 this is a correct transcript of the same.
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7 ______Jean M. Davis, Reporter 8 Notary Public
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