[House Hearing, 110 Congress] [From the U.S. Government Publishing Office] THE LACK OF HOSPITAL EMERGENCY SURGE CAPACITY: WILL THE ADMINISTRATION'S MEDICAID REGULATIONS MAKE IT WORSE? DAY TWO ======================================================================= HEARING before the COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM HOUSE OF REPRESENTATIVES ONE HUNDRED TENTH CONGRESS SECOND SESSION __________ MAY 7, 2008 __________ Serial No. 110-73 __________ Printed for the use of the Committee on Oversight and Government Reform Available via the World Wide Web: http://www.gpoaccess.gov/congress/ index.html http://www.house.gov/reform U.S. GOVERNMENT PRINTING OFFICE 44-180 PDF WASHINGTON DC: 2008 --------------------------------------------------------------------- For Sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; (202) 512�091800 Fax: (202) 512�092104 Mail: Stop IDCC, Washington, DC 20402�090001 COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM HENRY A. WAXMAN, California, Chairman EDOLPHUS TOWNS, New York TOM DAVIS, Virginia PAUL E. KANJORSKI, Pennsylvania DAN BURTON, Indiana CAROLYN B. MALONEY, New York CHRISTOPHER SHAYS, Connecticut ELIJAH E. CUMMINGS, Maryland JOHN M. McHUGH, New York DENNIS J. KUCINICH, Ohio JOHN L. MICA, Florida DANNY K. DAVIS, Illinois MARK E. SOUDER, Indiana JOHN F. TIERNEY, Massachusetts TODD RUSSELL PLATTS, Pennsylvania WM. LACY CLAY, Missouri CHRIS CANNON, Utah DIANE E. WATSON, California JOHN J. DUNCAN, Jr., Tennessee STEPHEN F. LYNCH, Massachusetts MICHAEL R. TURNER, Ohio BRIAN HIGGINS, New York DARRELL E. ISSA, California JOHN A. YARMUTH, Kentucky KENNY MARCHANT, Texas BRUCE L. BRALEY, Iowa LYNN A. WESTMORELAND, Georgia ELEANOR HOLMES NORTON, District of PATRICK T. McHENRY, North Carolina Columbia VIRGINIA FOXX, North Carolina BETTY McCOLLUM, Minnesota BRIAN P. BILBRAY, California JIM COOPER, Tennessee BILL SALI, Idaho CHRIS VAN HOLLEN, Maryland JIM JORDAN, Ohio PAUL W. HODES, New Hampshire CHRISTOPHER S. MURPHY, Connecticut JOHN P. SARBANES, Maryland PETER WELCH, Vermont ------ ------ Phil Schiliro, Chief of Staff Phil Barnett, Staff Director Earley Green, Chief Clerk Lawrence Halloran, Minority Staff Director C O N T E N T S ---------- Page Hearing held on May 7, 2008...................................... 1 Statement of: Chertoff, Michael, Secretary of Homeland Security............ 31 Leavitt, Michael O., Secretary of Health and Human Services.. 10 Letters, statements, etc., submitted for the record by: Chertoff, Michael, Secretary of Homeland Security, prepared statement of............................................... 33 Davis, Hon. Tom, a Representative in Congress from the State of Virginia: Prepared statement of.................................... 8 Wall Street Journal artical dated April 4, 2008.......... 44 Leavitt, Michael O., Secretary of Health and Human Services, prepared statement of...................................... 13 McCollum, Hon. Betty, a Representative in Congress from the State of Minnesota, various statements..................... 57 Sali, Hon. Bill, a Representative in Congress from the State of Idaho, letter dated May 12, 2008........................ 65 Waxman, Chairman Henry A., a Representative in Congress from the State of California: Information concerning I-35W bridge collapse............. 62 Prepared statement of.................................... 3 THE LACK OF HOSPITAL EMERGENCY SURGE CAPACITY: WILL THE ADMINISTRATION'S MEDICAID REGULATIONS MAKE IT WORSE? DAY TWO ---------- WEDNESDAY, MAY 7, 2008 House of Representatives, Committee on Oversight and Government Reform, Washington, DC. The committee met, pursuant to notice, at 9:31 a.m., in room 2154, Rayburn House Office Building, Hon. Henry A. Waxman (chairman of the committee) presiding. Present: Representatives Waxman, Cummings, Tierney, Norton, McCollum, Van Hollen, Murphy, Sarbanes, Davis of Virginia, Shays, Issa, and Sali. Staff present: Phil Barnett, staff director and chief counsel; Karen Nelson, health policy director; Karen Lightfoot, communications director and senior policy advisor; David Rapallo, chief investigative counsel; Andy Schneider, chief health counsel; John Williams, deputy chief investigative counsel; Sarah Despres, senior health counsel; Steve Cha, professional staff member; Earley Green, chief clerk; Zhongrui ``JR'' Deng, chief information officer; Leneal Scott, information systems manager, Kerry Gutknecht, William Ragland, Miriam Edelman, and Jennifer Owens, staff assistants; Sheila Klein, office manager/general assistant to the staff director; Larry Halloran, minority staff director; Jennifer Safavian, minority chief counsel for oversight and investigations; Keith Ausbrook, minority general counsel; Christopher Bright, Jill Schmaltz, Benjamin Chance, and Todd Greenwood, minority professional staff members; Patrick Lyden, minority parliamentarian and member services coordinator; and Ali Ahmad, minority deputy press secretary. Chairman Waxman. The meeting will please come to order. Today we are holding the second of 2 days of hearings on the impact of the administration's Medicaid regulations on the ability of our Nation's emergency rooms to respond to a sudden influx of casualties from a terrorist attack. On Monday we heard from the leading experts that the emergency rooms in our Nation's premier trauma centers have little or no surge capacity. We learned from them that many Level I trauma centers do not have the capacity to respond to a terrorist bombing like the one that happened in Madrid in 2004. And we learned that the administration's new Medicaid regulations are expected to make these problems worse by cutting off crucial funding. The hearing left us with a number of important questions, which we hope to answer this morning. Why would the Department of Health and Human Services, knowing that the Nation's emergency care system is already stretched to the breaking point, withdraw billions of Federal dollars from the hospitals that provide the most comprehensive emergency care to the most seriously injured? Why would the Department of Health and Human Services take this drastic step without first considering the impact of its actions on emergency preparedness, or consulting with the agency with lead responsibility for homeland security? Why would the Department of Homeland Security, which is the Federal agency with lead responsibility for protecting the Nation from terrorist attacks, stand by while local emergency surge capacity is compromised? The impact of the Medicaid regulations on our health care safety net is not a partisan issue. Last month Republicans in the House joined with Democrats in passing bipartisan legislation that would postpone the regulations and give Secretary Leavitt and Secretary Chertoff an opportunity to reevaluate their implications for homeland security. The issue we are considering today is one that concerns all Americans: how to ensure that we have a robust response capacity in our emergency rooms. If the unthinkable happens, and we have learned that the unthinkable can happen, lives will be lost unless emergency care is immediately available. If a major city experiences a terrorist bombing like the one that occurred in Madrid, there will be a golden hour, an hour in which the fate of those who are injured will be determined, whether the most severely injured survive or die. The Federal Government's job is to do everything possible to ensure that emergency care resources are ready during that golden hour. Certainly our government should not be taking actions that undermine the prospect of an effective emergency response. That is why we are having this hearing today, and that is why I look forward to the testimony of the two men in charge, Secretary Chertoff and Secretary Leavitt. [The prepared statement of Chairman Henry A. Waxman follows:] [GRAPHIC] [TIFF OMITTED] T4180.001 [GRAPHIC] [TIFF OMITTED] T4180.002 [GRAPHIC] [TIFF OMITTED] T4180.003 [GRAPHIC] [TIFF OMITTED] T4180.004 Chairman Waxman. But before we go on, I want to recognize Mr. Davis for an opening statement. Mr. Davis of Virginia. Well, thank you, Mr. Chairman. As you said, we are here today to discuss two issues, Medicaid reimbursement regulations and the hospital surge capacity in response to predictable, some say inevitable, mass-casualty events. And we are fortunate to have two very distinguished witnesses to inform our discussion. Welcome Secretary Leavitt and Secretary Chertoff. We appreciate their taking their valuable time to be with us today. As we learned from Monday's testimony on these same subjects, the nexus between Medicaid payments to hospitals and emergency preparedness may seem intuitive, but it is not by any means proven. Extrapolating directly from daily emergency department utilization rates to catastrophic surge capacity overlooks complex and interrelated factors that differentiate single-facility financial management from the broader resources needed to mount a coordinated regional disaster response. But extrapolate the committee did in releasing a 1-day snapshot of hospital emergency room occupancy in seven major cities and concluding it painted a complete picture of surge capacity. Consulting the issues of Medicaid reimbursement and terrorism preparedness simultaneously oversimplifies and obscures both issues. I happen to agree with Chairman Waxman: we ought to know more about the impact of the administration's proposed regulation changes before exacting further cost savings from an already stressed health care system. But wrapping that issue in the mantle of terrorism creates the false impression that solving the problem of emergency room capacity on Tuesday means we are ready for doomsday. It does not. As one peer-reviewed study put it, surge capacity planning involves ensuring the ability to rapidly mobilize resources in reaction to such a sudden, unexpected increase in demand, regardless of baseline conditions. It is just too simple and fiscally untenable to say there can never be cost savings in Medicaid as long as we are not ready for a Madrid-style attack. Both Medicaid efficiencies and preparedness need to be pursued; not one pitted against the other. So I hope we can move beyond limited snapshots and talk about the dynamic range of factors, in addition to baseline facility funding, that make up real surge capacity: organization, leadership, standards of care, medical education and training, interoperable communications, transportation coordination and information technologies. Finally, we appreciate the fact that our witnesses made a tough choice to be here today. As we speak, the Federal Government is conducting a national continuity of operations exercise, testing many of the response elements needed to treat a surge of trauma patients. I hope the exercise goes well in their absence, and trust the committee's approach to these issues will continue to be constructive and supportive of executive branch efforts to prepare the Nation for catastrophic events. Thank you. Chairman Waxman. Thank you very much, Mr. Davis. [The prepared statement of Hon. Tom Davis follows:] [GRAPHIC] [TIFF OMITTED] T4180.005 [GRAPHIC] [TIFF OMITTED] T4180.006 Chairman Waxman. Because of time constraints, we will leave the record open for all Members to insert an opening statement in the record. But we will go right to our very distinguished witnesses, and we are privileged to have both capable Secretaries with us today with distinguished careers in public service. Secretary Michael Chertoff served as the Secretary of Homeland Security since February 2005. That capacity is a challenge. He has a challenging and critical responsibility to lead the Nation's efforts to prepare for, protect against, respond to and recover from terrorist attacks, major disasters and other catastrophic emergencies, whether man-made or natural disasters, that affect our homeland. And before taking the helm at the Department of Homeland Security, Secretary Chertoff served as a judge on the Third Circuit Court of Appeals. Prior to that, he served as Assistant Attorney General of the Criminal Division at the Department of Justice. Secretary Michael Leavitt has been the Secretary of the Department of Health and Human Services since January 2005. As Secretary of HHS, he is responsible for managing a daunting array of medical, public health and human services programs. HHS is the lead Federal agency for public health and medical preparedness and response. And before coming to HHS, Secretary Leavitt was the Administrator of the Environmental Protection Agency. He also served as Governor of Utah for three terms, and during his 11 years as Governor, Utah was recognized six times as one of America's best-managed States. We are pleased to have both of you here with us. I don't know which one of you wants to go first. Secretary Leavitt--both of your prepared statements will be in the record in full. We would like to ask you to make your oral presentation to us now. STATEMENT OF MICHAEL O. LEAVITT, SECRETARY OF HEALTH AND HUMAN SERVICES Secretary Leavitt. Good morning, Mr. Chairman. And thank you very much, Ranking Member Davis and other members of the committee. I am very pleased to discuss HHS leadership role in the public health and medical emergency preparedness efforts, as well as HHS and CMS efforts to ensure that Medicaid pays appropriately for services that are delivered to Medicaid recipients. As you know, local, State and Federal agencies have a shared responsibility for ensuring that the Nation is prepared for emergencies. In that context, permit me to briefly discuss a few of the emergency preparedness efforts that are currently being led by HHS. On October 18, 2007, President Bush signed the Homeland Security Presidential Directive 21 [HSPD-21]. It established a new national strategy for public health and medical preparedness. HSPD-21 mandates the development of an implementation plan. HHS chairs the interagency writing team that drafted the implementation plan that is currently in the process of being finalized. As part of the implementation plan, HHS is implementing an Emergency Care Coordinating Center. This new center will serve as a coordinating focal point for emergency care as an enterprise. The ECC, as we have come to know it, charter is being finalized, and we anticipate having the center up and running by the end of this year. The National Response Framework Emergency Support Function, or ESF 8, titled the Public Health and Medical Services Function, provides a mechanism for coordinating Federal assistance to State, tribal and other local resources in response to a medical disaster. The Secretary of Health and Human Services leads all of the Federal public health and medical response to public health agencies. The Secretary of HHS also coordinates, through his Assistant Secretary or ASPR, all of the ESF 8 preparedness, response and recovery actions. The National Disaster Medical System [NDMS], transferred from the Department of Homeland Security to HHS and remains the tip of the spear, if you will, as the Federal disaster health care response capacity. Over the past 5 years, the Hospital Preparedness Program has provided more than $2.6 billion to fund the development of medical surge capacity at the State and local level. As part of our pandemic planning, we have asked grantees to report participating hospitals' ability to track beds electronically and to report to the grantee's emergency operations center within 60 minutes of a request. From 2002 to 2007, the Public Health Emergency Preparedness Program has provided $5.6 billion to State, local, tribal and territorial public health departments. This program has greatly increased the preparedness capabilities of the public health departments. Now turning briefly to Medicaid, it is important to remember that Medicaid is fundamentally a Federal-State commitment to provide health care for Medicaid beneficiaries. First and foremost, our responsibility is to assure that these low-income children, pregnant women and people with disabilities are able to receive high-quality and appropriate care when they need it. The package of recent Medicaid regulatory activity will help enable, or to ensure rather, that Medicaid is paying providers appropriately for services delivered to Medicaid recipients, and that those services are effective, and that taxpayers are receiving the full value of the dollars that are spent through Medicaid. GAO and the Office of Inspector General at HHS have provided policymakers with numerous reports on various areas in which States inappropriately engage in activities that maximize Federal revenues. These rules address these types of abuses head on. They address them by ensuring that the Federal Medicaid dollars are matching actual State payments for actual Medicaid expenses to actual Medicaid beneficiaries. Medicaid is already an open-ended Federal commitment for Medicaid services for Medicaid recipients. It should not become a limitless account for State and local programs and agencies to draw Federal funds for non-Medicaid purposes. In conclusion, as I have mentioned earlier, HHS is working diligently to improve our Nation's emergency preparedness and our medical surge capacity, and we have made extensive funding available to hospitals through the States specifically to this end. Medicaid, however, is fundamentally a partnership that relies on both States and the Federal Government to contribute their share of the cost of the program. Allowing for the continuation of abusive practices that shift costs to the Federal Government is not an appropriate way to ensure our Nation's preparedness. We are committed through our emergency preparedness efforts to continue to make progress and to make funding available to States, while acting through these Medicaid rules, to provide greater stability in the program and equity to the States. And I want to thank you for the opportunity of being here to testify. Chairman Waxman. Thank you, Secretary Leavitt. [The prepared statement of Secretary Leavitt follows:] [GRAPHIC] [TIFF OMITTED] T4180.007 [GRAPHIC] [TIFF OMITTED] T4180.008 [GRAPHIC] [TIFF OMITTED] T4180.009 [GRAPHIC] [TIFF OMITTED] T4180.010 [GRAPHIC] [TIFF OMITTED] T4180.011 [GRAPHIC] [TIFF OMITTED] T4180.012 [GRAPHIC] [TIFF OMITTED] T4180.013 [GRAPHIC] [TIFF OMITTED] T4180.014 [GRAPHIC] [TIFF OMITTED] T4180.015 [GRAPHIC] [TIFF OMITTED] T4180.016 [GRAPHIC] [TIFF OMITTED] T4180.017 [GRAPHIC] [TIFF OMITTED] T4180.018 [GRAPHIC] [TIFF OMITTED] T4180.019 [GRAPHIC] [TIFF OMITTED] T4180.020 [GRAPHIC] [TIFF OMITTED] T4180.021 [GRAPHIC] [TIFF OMITTED] T4180.022 [GRAPHIC] [TIFF OMITTED] T4180.023 [GRAPHIC] [TIFF OMITTED] T4180.024 Chairman Waxman. Secretary Chertoff. STATEMENT OF MICHAEL CHERTOFF, SECRETARY OF HOMELAND SECURITY Secretary Chertoff. Thank you, Mr. Chairman. Good morning, Ranking Member Davis and other members of the committee. Let me just take a few moments now, since my full statement will be in the record, to put into perspective what the role of the Department of Homeland Security is with respect to the issue of preparedness and response, one dimension of which, but only one dimension of which, is the issue of mass care in the event of some kind of a terrorist attack or natural disaster. But I also underscore the fact that the planning and execution of a response to an attack, particularly with respect to the issue of mass care, would implicate not only HHS, but would also require the participation of the Department of Defense and Department of Veterans Affairs. They have a major role to play in furnishing the resources and capabilities necessary to respond to a medical emergency, and their capabilities are built into our plan. So it is not merely a matter of HHS. Basically what I would like do is describe the role that we play in any kind of a response and, therefore, what role we play in planning in the lead-up to the possibility of a response. As you know, under the National Response Framework and the National Incident Management System, the Department of Homeland Security plays the role of incident coordinator/ incident manager. That does not mean that we are exercising command and control over other departments and agencies. That would be prohibited as a matter of law. What we do is bring to the table the agencies that will play a role. There is a lead agency designated for particular functions; in the case of mass terrorists, the Department of Health and Human Services. That is a designation that is both prescribed by statute as well as by HSPD 5 and HSPD 21. Our role then would be to coordinate and deconflict the various capabilities that we bring to the table and the roles and responsibilities of the lead agency and other agencies. For example, in the case of an attack, let's say a conventional attack, we would obviously have to coordinate the law enforcement response, although the lead agency there would be the Department of Justice. There might well be a security response, in which case we would be coordinating with the Department of Defense and the National Guard. And to the extent there was a mass casualty response, the mission assignment for carrying that out would be to HHS, but there would be support provided by the Department of Veterans Affairs and the Department of Defense. This is all done under the rubric of what we call Emergency Support Function 8, and the actual undertaking would be coordinated through the National Response Coordination Center. As part of the preparation for this, we engage in a variety of planning exercises. And with respect to the issue of mass care, again we look to the Department of Health and Human Services to take the lead with respect to identifying what the gaps are with respect to potential surge capability, what the available resources are, and what are the most efficacious ways to provide those resources. That is done with the understanding that the initial response obligation lies upon State and local public health officials. Therefore, they must participate in the planning, and it is their responsibility to make sure that they are planning in a way that is synchronized with us. We also recognize, however, that these capabilities would likely be overwhelmed in 24 hours, or maybe 48 hours. That is why we have capabilities such as the National Disaster Medical System, which is run by HHS. We would look to the Department of Defense to provide mobile field hospitals and other kinds of medical capabilities, which we would move into the arena as quickly as possible. The National Guard would obviously play a major role. And, again, if there were some particular issue like a chemical attack or a dirty bomb attack, there would be specialized capabilities by the military that would be called into play. So that is the general role that we play in coordinating these issues. We have engaged in planning, strategic planning, on a number of scenarios, including some with medical dimensions, again looking to HHS as the principal lead in identifying what the requirements are, identifying where the gaps are, and formulating a way in which those gaps can be plugged. Thank you, Mr. Chairman. Chairman Waxman. Thank you very much. [The prepared statement of Secretary Chertoff follows:] [GRAPHIC] [TIFF OMITTED] T4180.025 [GRAPHIC] [TIFF OMITTED] T4180.026 [GRAPHIC] [TIFF OMITTED] T4180.027 [GRAPHIC] [TIFF OMITTED] T4180.028 [GRAPHIC] [TIFF OMITTED] T4180.029 Chairman Waxman. Without objection, we are going to begin questioning with 10-minute rounds, first controlled by the Chair and second controlled by Mr. Davis. After that we will go back to the 5-minute rule. I am going to start off the questions myself. Secretary Leavitt and Chertoff, we are here to answer the very simple question--if we had a terrorist attack like what happened in Madrid, with conventional bombs or suicide bombers, which most terrorist experts say is most likely, not the unthinkable weapons of mass destruction, but if the unthinkable, unlikely terrorist attack using conventional weapons occurred, would we be prepared to deal with it? Now, many experts have told us that if we had something like an attack on a commuter train where, as in Madrid, 177 people were killed and more than 2000 were injured, we wouldn't have the surge capacity in some of our major cities to deal with those people in the Level I trauma centers or even in the emergency rooms. Secretary Chertoff, do you think we have the capacity to deal with such an attack? Secretary Chertoff. I do, Mr. Chairman. Now, I want to note that HHS is currently engaged in a systematic survey of capacities and plans across the country, so there is going to be a definitive answer to this. And there is no doubt some communities are better prepared than others. But I don't have to speculate about it. I remember we had a bridge collapse in Minneapolis some months ago. That was exactly the kind of event that you are talking about. It was not a terrorist event, but it was one which certainly posed challenges to casualties. My understanding is that in Minneapolis things worked very well. Chairman Waxman. Thirteen people went to the emergency room under those circumstances. We could have hundreds, if not thousands, of people rushed into emergency rooms. Secretary Chertoff. We have had air crashes, we have had other disasters. I can't give you a definitive statement with respect to a particular city. What I can tell you is I am not sure that the day-to-day capacity rates of emergency rooms is a prediction of the capability of the emergency system to deal with a disaster. Chairman Waxman. Have you delegated that to HHS? Secretary Chertoff. HHS has a principal responsibility, to my understanding. Chairman Waxman. Well, let me read to you what your Chief Medical Officer Jeff Runge told the House Appropriations Committee last month. He said, ``I don't think anybody who has looked would be under the mistaken notion that we are adequately prepared for a hospital surge. We have squeezed all the capacity out of the hospitals' budgets, and it's just not there.'' He went on to say, ``We frankly don't have a lot of solutions for it. Surge capacity does just not exist in the world of hospitals.'' Mr. Runge did say the Federal assets could be brought to the scene of a bombing, as did you earlier, but that could take some period of time, maybe a day or more, which may be too long for many critically injured victims. So your own expert does not think we are prepared. Why, do you disagree with Dr. Runge's assessment? Secretary Chertoff. I wasn't here for the testimony. I think it depends on the number of people. If there are--I can certainly imagine an attack of a dimension that would overwhelm local resources. That is the very premise of what our position is with respect to planning. It is the recognition that the Federal Government would have to step in and surge. And obviously since we are doing a gap analysis, I am going to be the first person to tell you there are undoubtedly gaps that need to be plugged, some of which are planning, and some of which are capability gaps. What I can't tell you is that this is simply a matter of emergency rooms. I think it is a much more complicated issue than that. I will also obviously acknowledge I am awaiting more precision in the results of the HHS study with respect to the country as a whole. Chairman Waxman. Well, I don't doubt it is more complicated than one factor or another, but what I fear, and what the experts told us a couple days ago, is if we go ahead with these Medicaid cuts, withdrawing billions of dollars from hospitals that have Trauma I centers and emergency rooms, we will be making the problem worse. We will make it less sure that we can even meet the response that we found so inadequate in our survey on March 25th. At that time the staff called Los Angeles, and three of the five Level I hospitals that were so overcrowded, they simply shut their doors. There wasn't even a terrorist attack. They shut their doors and said divert these people somewhere else. And Washington, DC, both Level I trauma centers surveyed are over capacity and treating patients in hallways and waiting rooms. So if, in the middle of this inadequate capability of our emergency rooms to deal with ordinary problems, we had a terrorist attack, I just think that if we go ahead with the billions of cuts in Medicaid funds for those institutions, we are making the problem worse. The first thing at the Federal level is at least not do any harm. I think a lot of people can ask how is it possible that 6 years since 9/11, nearly 3 years after Hurricane Katrina, we have spent billions of taxpayer dollars on homeland security, and yet our emergency systems are not in place? I don't doubt that you have very good intentions and a lot of helpful initiatives, but the problem is that the positive effect of these programs, which involve grants of millions of dollars, are going to be overwhelmed when we pull out billions of dollars in some of these Medicaid cuts. We were told Monday that the Medicaid regulations will cripple hospital emergency rooms. The head of Virginia's emergency response program said if you take away significant Medicaid funding, it is going to be disastrous. An expert from UCLA said the regulations would cripple emergency care in Los Angeles. Secretary Leavitt, do you think these experts are wrong? Secretary Leavitt. Mr. Chairman, I think we are dealing with two fundamentally different assumptions. They are fundamentally different assumptions in two areas. The first is the way surge capacity works, and that we would have to rely on hospitals as the bed for surge capacity. The second is that the mission of Medicaid is the assurance of emergency preparedness. Let me deal with the first one, surge capacity and the way it works. Chairman Waxman. I am asking about the Medicaid, the Medicaid cuts by these new regulations. I know we contacted you and your Department, and we asked for every document that you might have that would indicate that you--if you--did an analysis to find out what the impact would be of these Medicaid regulations. And I think we might have even sent the same request to the Department of Homeland Security. And we found that there was not a single analysis of the effects of the Medicaid regulations on our Nation's emergency rooms. If that is the case--maybe we haven't received it, but if that is the case, no analysis has been done. I just think that is irresponsible. Secretary Leavitt. Mr. Chairman, we have exercises on a regular basis, and the people from CMS sit at the same table as those from our Assistant Secretary for Preparedness and Response. Medicaid's mission, however, is not emergency preparedness; it is to provide health care to people, not to support institutions. Now, at HHS we have a very important Assistant Secretary for Preparedness and Response who is tasked with that responsibility. We have made substantial investments in developing surge capacity. Chairman Waxman. Did he do an analysis of what the impact would be of the Medicaid regulations that withdraw money from these institutions? Secretary Leavitt. He manages emergency response, not Medicaid. The analysis on Medicaid was based on the fact that the funds were being drawn for purposes that we believe were inappropriate under the mission of Medicaid, which we believe to be helping people, not supporting institutions. Chairman Waxman. Well, they help people by supporting institutions. Our public hospitals are absolutely dependent on the Medicaid dollars. They have so many people that come into emergency rooms that have no insurance, and the hospitals then have to shift the cost. And then if they find that Medicaid is not going to pay them for graduate medical education or other functions that they serve, they just have to give up the expensive things like Level I trauma centers. That is what they are telling us. But it looks like they never told you because they were never asked the question of what the impact would be with these Medicaid cuts. Secretary Leavitt. Mr. Chairman, it probably won't surprise you that I hear similar expression from those who run schools, who say, we need to have more money for our schools, and if we can find a way to get Medicaid money to support our school effort, it will help our schools. I hear a similar thing from those who run child welfare programs; if we could just get some Medicaid money, it would help us, and they stretch it over to health care. Medicaid was not intended to be our emergency response mechanism. Chairman Waxman. It wasn't intended, but, in fact, it is. Secretary Chertoff, you are head of the Homeland Security. You have designated this issue of health care functioning to HHS, and yet they are saying that they don't know what the impact is going to be of these cuts. Congress always holds hearings after the fact. After Hurricane Katrina and that disaster, we held hearings, and we asked, how could this happen? This is a hearing to find out if we are prepared. I don't want it on my conscience years after a terrorist attack, God forbid, that we realize that we didn't do what was necessary because the bureaucracies weren't functioning the way they should, the planning wasn't taking place, that there was money being withdrawn so that the whole system, which is all very fragile in this country for health care, wasn't able to function when it came to emergency care or preparedness for a surge of victims of a terrorist attack. I don't want it on my conscience. Do you feel that you can tell us today that your conscience would say that we are doing all that we need to do, Secretary Leavitt and Secretary Chertoff? Secretary Leavitt. Mr. Chairman, I share with you the worry about surge capacity. It is a responsibility that I have and we have at HHS. I also worry about the long-term sustainability of Medicaid. Medicaid was not designed nor intended to be the source of money that we use to design an effective surge capacity strategy in this country. We do have a means by which that should be done. If Congress in its wisdom believes that more money is needed for more surge capacity, we need to use the intended vehicle. We need to apply it to a logical, thoughtful strategy. That logical and thoughtful strategy will not include emergency rooms being the only place where surge capacity takes place. There is not an emergency room in America for which you can't build a scenario that will blow the doors off in a very short period of time. Chairman Waxman. So you feel good about the situation? Secretary Leavitt. No, that is not what I said at all, Mr. Chairman. I said I don't feel good about the situation, but I don't believe Medicaid is the way to solve it. Chairman Waxman. And you think we ought to give other money, but we haven't been asked to give other money for this purpose. Secretary Chertoff, how do you feel? Secretary Chertoff. I actually agree with Secretary Leavitt on this. I think that I am the last person to tell you I think we are done. I think that we aren't--and I have been involved in more specifically looking at the issue of emergency response in the Gulf States. But more generally I think we need to be identifying gaps based on planning done at a Federal, State and local level. And then if we need to plug the gaps with money, the money ought to be targeted to plug the gaps. Although I am seeing a bit of a disconnect, I have no reason to believe that giving more Medicaid money to hospitals is going to result in that money being spent specifically on those items which would be required to deal with a surge situation. Nor is it obvious to me that the only solution in this surge situation is the emergency rooms. So the question to me would be, do they need to have additional beds in storage? Do they need to have additional ventilators or medication or things of that sort? And if, in fact, there is a gap, that ought to be directly funded, but with the understanding that money is going to be spent on those issues. I have no reason to believe that Medicaid funding in a hospital is necessarily going to be dedicated to emergency response as opposed to something else. Chairman Waxman. A lot of it is being dedicated to this now, and that money is going to be withdrawn, and it is a sizable amount of money. I have taken up 13 minutes, and I am going to give 13 minutes to Mr. Davis. Mr. Davis of Virginia. Thank you, Mr. Chairman. Secretary Leavitt, let me start with you. Thanks for being here. Regardless of one's views on the regulation, I am concerned about using Medicaid reimbursement to support emergency medical preparedness because it is an imperfect financial tool. In my experience, hospitals use additional revenues created through reimbursement policy. They can be reinvested in ways that may not improve emergency capacity, as Secretary Chertoff just noted. For example, hospitals may more regularly reinvest in expanding capacity for profitable services, orthopedics for example. Do you think that additional Medicaid reimbursement necessarily results in improved emergency surge capacity? Secretary Leavitt. There is no evidence that it does. Mr. Davis of Virginia. Thank you very much. I mean, Medicaid is the fastest-growing part of the Federal budget. It is the fastest-growing part of States' budgets as well. And to allow this to continue without tampering and looking at ways that we can improve service, but at the same time cut back costs means there won't be money for a lot of other things in the budget downstream. Let me ask you this, Secretary Leavitt. For the Homeland Security Presidential Directive 21, it is my understanding that there is a stakeholder group that is working on the different financial levers available to improve preparedness. The group is looking at Medicare, Medicaid, private payer, grant funding and market forces. How does this group's work inform future funding decisions made at the Department? Secretary Leavitt. That group is looking at that question as well as many, many others to inform this question. Until I receive their report, I don't know what they will say. I think it is clear that homeland security is everyone's second job. We all have a primary job. The job of Medicaid is to take care of people who are poor or indigent or disabled, and States are using ambiguities in the law to try and tap that fund for many different reasons. Mr. Davis of Virginia. Because it is the largest part of their budget? Secretary Leavitt. And they have determined---- Mr. Davis of Virginia. Even in economic downturns when their revenues are less, the Medicaid costs are going up. Secretary Leavitt. In fact, Mr. Davis, I would make the point that Medicaid is the single greatest influence on State budgets right now. Mr. Davis of Virginia. I agree. Secretary Leavitt. And if you wanted to see why States were not investing and why they were looking for ways in which they could divert Federal funds into schools and to child welfare and to public health and public safety, it is because Medicaid is pushing all those things out and crowding them out. Their capacity to do that is being compromised by the fact that the program is growing so fast. Mr. Davis of Virginia. And understand this, 10, 12 years ago it was really not a factor in State governments the way it is today. Secretary Leavitt. I was elected Governor in 1993, and I would have to check this, but I believe it was in the neighborhood of 6 percent of the State budget. Today, again, I would have to check, but I am guessing it is like every other State in that it is close to 20 percent. That means every one of those dollars is crowding out education, it is crowding out higher education, it is crowding out public response and preparedness, all of the things we are talking about. Mr. Davis of Virginia. So in point of fact, putting more money into this may have the opposite effect? Secretary Leavitt. Well, it has had the opposite effect. Mr. Davis of Virginia. The Homeland Security Presidential Directive 21 requires that the group review financial incentives that improve preparedness without increasing health care costs. There are economic reasons that hospitals have not increased emergency department capacity or the number of inpatient beds. How does the health system increase capacity without increasing costs? Secretary Leavitt. Well, I want to emphasize in this process the whole concept of an all-perils response. Everything we do to prepare, for example, for a pandemic helps us for a bioterrorism event. Anything we can do that will use the same assets for multiple things allows us to expand capacity without expanding costs. The idea of sharing assets. The way our surge capacity is designed to work, we know that there is a scenario for every hospital, no matter how big, no matter how well funded, no matter how sophisticated, that the capacity will exceed their ability to deal with that. And therefore every hospital and every community needs to have a surge capacity plan that allows them to use schools that may, in fact, have been mothballed. Or I have seen plans where shopping centers are converted into surge capacity. I have actually witnessed during Katrina convention centers being turned into hospitals, and very good hospitals, in the context of 24 hours. So surge capacity is about using existing assets to convert to hospital capacity very quickly. It is not simply using the emergency room. If you were to look at any emergency room in this country, you would see that at least half of what is there at any given moment would not be considered absolutely critical. And if we turn into an emergency, those will be moved away or asked to be deferred, and we will have substantial capacity that would not have been evident in the snapshot that was taken that the chairman referred to. Mr. Davis of Virginia. Thank you. I would like to ask unanimous consent that a Wall Street Journal article, Nonprofit Hospitals Once for the Poor Strike It Rich, be included in the hearing record. Chairman Waxman. Without objection. [The information referred to follows:] [GRAPHIC] [TIFF OMITTED] T4180.030 [GRAPHIC] [TIFF OMITTED] T4180.031 [GRAPHIC] [TIFF OMITTED] T4180.032 [GRAPHIC] [TIFF OMITTED] T4180.033 [GRAPHIC] [TIFF OMITTED] T4180.034 [GRAPHIC] [TIFF OMITTED] T4180.035 [GRAPHIC] [TIFF OMITTED] T4180.036 [GRAPHIC] [TIFF OMITTED] T4180.037 Mr. Davis of Virginia. Thank you. The majority staff report on the status of emergency departments looked at 34 hospitals and found that many were operating at or above capacity. Three hospitals were diverting ambulances, including one hospital that is undergoing a major expansion that includes the recent purchase of 3 million pounds of travertine imported from Tivoli, Italy, and 569 flat-panel TVs. Another hospital that, according to the majority report, had patients in overflow spaces and borders has also undergone a significant expansion that included a new women's hospital with marble in the lobby, and flat-screen TVs, and birthing rooms. Both of these hospitals are nonprofits and it appears that they have sufficient resources to invest in marble and TVs, but not enough to invest in emergency departments. Is this typical, and is this appropriate in your view? Secretary Leavitt. Well, it is not appropriate, in my mind. I don't know how typical it is. I think the point you are making is a good one, and that is many times the lack of emergency room capacity is because the administration of the hospital has chosen not to invest there because it didn't, in fact, assist their business model. Mr. Davis of Virginia. And, in fact, raising Medicare reimbursement and diverting that money to pay for marble floors and flat-screen televisions really doesn't go anywhere to solve this problem, does it? Secretary Leavitt. You made the point earlier that there is no assuredness or no guarantee that money coming from Medicaid would go into emergency preparedness, and there is no direct link. Mr. Davis of Virginia. The question is, if we want to look at surge capacity, perhaps Medicaid is not the best way to look at that. Secretary Leavitt. Indeed, Mr. Davis, it is not. I want to emphasize I believe that there are deficiencies in our surge capacity. I just don't believe Medicaid dollars is the source of funds that ought to be directed or looked to to link to that solution. Mr. Davis of Virginia. Thank you. Secretary Chertoff, thanks for being with us today. Does DHS have the expertise to determine the appropriateness of any of the following matters as it relates to Medicaid? Let me go through them. Whether public providers should be limited to cost in Medicaid reimbursement. Secretary Chertoff. No, we rely on HHS. Frankly, the whole issue of Medicaid is not actually within our purview. So the short answer is no, we don't have the expertise. Mr. Davis of Virginia. Do you have the expertise to determine the appropriateness of the definition of unitive government for health providers that treat Medicaid patients? Secretary Chertoff. No. Mr. Davis of Virginia. How about the appropriateness of graduate medical education payments in Medicaid? Secretary Chertoff. No. Mr. Davis of Virginia. How about the scope of rehabilitation services? Secretary Chertoff. No. Mr. Davis of Virginia. How about the appropriateness of the administrative claims for schools? Secretary Chertoff. No. Mr. Davis of Virginia. The definition of the scope of outpatient services? Secretary Chertoff. No. Mr. Davis of Virginia. The definition of the scope of targeted case management services. Secretary Chertoff. No. Mr. Davis of Virginia. Thank you. The National Response Framework encompasses a broad array of functions and entities. Secretary Chertoff. Correct. Mr. Davis of Virginia. For example, transportation, communication, roads, utility and public work infrastructure may all be heavily used in an emergency; however, these facilities also have important functions unrelated to disaster response or homeland security. Therefore it seems imprudent to describe any service that might have a role in an emergency as a homeland security activity. How do you determine what functions are primarily related to homeland disaster compared to those that are tangentially related? Secretary Chertoff. Well, I agree with you. The key philosophy is what is directly related, and the way we go about that is we put together a plan. We analyze what are the core capabilities that we have to have to respond effectively. We then identify and survey whether there are gaps in those capabilities, and then we determine what is the best way to plug those gaps. Mr. Davis of Virginia. Thank you. Mr. Shays. Mr. Shays. Thank you both for being here, and thank you, Mr. Chairman, for having this hearing. I am wrestling with the fact that I think we are really dealing with two issues. We are dealing with the health care issues and the needs of our hospitals, and we are dealing with a potential catastrophic event and a surge capacity. I would like to know from each of you who has the responsibility? First, has there been a study done that looks at the entire United States to say how many Trauma I, Trauma II and Trauma III centers we need and ideally where they should be located? Secretary Leavitt. Mr. Shays, with respect to emergencies, we are currently doing a study right now under the matter that was referred to earlier. Mr. Shays. Can you move the mike a little closer? Secretary Leavitt. Yes. We are currently doing a study under HSPD 21, the group that was referred to earlier. However, I can also tell you that we are asking and requiring grantees of HHS for pandemic preparedness to give us information about their surge capacity plan. Between those two, we will have a very good idea in the future as what the capacity is and where our gaps are. I would also like to make the point---- Mr. Shays. When do you think that would be done? Secretary Leavitt. We expect it to be done by the end of this year so that we can make the report before the end-- conclusion of this term. But I would like you to know that we already have the capacity at any given moment to determine where rooms and beds are available anywhere in the country within a reasonably short period of time. During Katrina I was constantly updated as to how many beds we had anywhere in a region that we could move patients to. This is an important part of the way surge capacity works. We are discussing surge capacity today as to what you can put into an emergency room at any given hour. That is not the way surge capacity works. Mr. Shays. I want to make sure that my colleague has time. I would like a brief comment from both of you as to who is ultimately responsible for this issue, because it seems to me like when two people are, no one is. Secretary Leavitt. I think we both agree HHS has responsibility for any matter related to medical response in a disaster. Mr. Shays. And so it would be your job, not DHS, to determine how many Trauma I, II and III units we need around the country. Secretary Leavitt. Well, it will be our determination to determine how many we have, what our gap is and how best to respond to that. Mr. Shays. Thank you. Mr. Issa. Thank you. Governor, I will continue along that line. With 259 trauma centers in the country, 5 in San Diego, 4 in Utah, it is very clear that in San Diego we have as much capacity for our 2 million people in a relatively small area as Utah has in a huge area. For all practical purposes, in the case of disasters of any sort, take the Northridge earthquake, aren't we essentially always assuming for homeland security that they are going to be in high-risk areas, where ultimately the people of Utah or Oklahoma or Wyoming could just as easily have a huge disaster affecting thousands of people over an area that could not possibly concentrate the types of hospitals that we have in Los Angeles or San Diego? So ultimately isn't the planning for major disasters more about the essential planning and training and ability to move people than it ever will be about having operational extra spaces in one location? Secretary Leavitt. Yes. There is no one area of the country capable of handling their own surge in an event of sufficient size to require that kind of capacity. Chairman Waxman. Mr. Davis, your time has expired. Ms. McCollum. Ms. McCollum. Mr. Chairman, the report conducted by the committee highlights serious challenges confronting hospital emergency rooms, and crowding is a serious problem. The American College of Emergency Physicians released a report last month that addresses the crowding issue. The report asks what causes crowding, and it responds, ``Over the years the reasons for crowding have included seasonal illnesses, visits by the poor and the uninsured who have nowhere else to turn except the safety net provided by emergency departments. This country can continue to expand the capacity of emergency rooms, to serve as a provider of last resort for the uninsured and the mentally ill, or Congress can work to provide universal health care for all Americans. The choice is ours.'' Mr. Chairman, I don't know about the situation in New York, Washington, Chicago, Houston, Denver or Los Angeles. I have never visited an emergency in any of those cities, so I will take this report's findings as accurate. But I live in Minnesota, and I need to set the record straight. First, the report inaccurately states that Minneapolis is hosting the 2008 Republican Convention. The convention will take place in St. Paul, MN, my congressional district, with Minneapolis accommodating many of the visitors. This distinction is important, especially for the St. Paul officials, first responders, health care professionals involved in preparing to meet the needs of 40,000 visitors, including the President of the United States and Republican nominee for President. Second, the report examines Hennepin County Medical Center, which is an excellent hospital and a Level I trauma center located in Minneapolis. In the event of an emergency at the national Republican convention, Regions Hospital in St. Paul, an excellent facility, will be the primary responder, with the hospital examined in the report providing support. What concerns me about this report is it examines Minneapolis solely as the presence of the national convention, yet it evaluates emergency room capacity on a random day, March 25, 2008. During the 4 days in September when the Republicans gather in St. Paul, there will be significant additional resources available to ensure a safe, enjoyable convention. There will also be an emergency plan and considerable assets in place to respond to any foreseen event. The Department of Homeland Security designated the national party conventions as a national special security event. This Congress appropriated $50 million to each host city to ensure coordination is seamless between Homeland Security, Secret Service, local and State law enforcement and their first responders. Finally, while I fully understand the use of Madrid terrorist attacks as a standard for assessing casualty preparedness, real American tragedies like the Oklahoma City bombing, Hurricane Katrina, Virginia Tech shooting could also have been used as models. In the Twin Cities we don't need to investigate emergency room capacity using a telephone survey. Our first responders were forced to respond to an emergency in real time. Only 9 months ago on August 1, 2007, at 6:05 during rush hour, 8 lanes of traffic on Interstate 35W, the bridge, it collapsed into the Mississippi River. That night 13 people died, many my constituents. And more than 110 patients required emergency and medical attention. The bridge collapsed due to structural failure. It just as easily could have been the result of a terrorist attack, but the disaster tested the very hospital in the committee's report. Hennepin County Medical Center and hospitals from the entire Twin Cities metropolitan area responded heroically, professionally and efficiently. Their response was not a simulation or a blind phone survey, it was real. And people are alive today because of that response. Mr. Chairman, I have statements from Hennepin County Medical Center, Regions Medical Center, St. Paul's chief of police, Minnesota Hospital Association, and there are more to come that I will submit to the record later. And I would like to have the committee's permission to enter these into the committee report. Chairman Waxman. Without objection, that will be the order. [The information referred to follows:] [GRAPHIC] [TIFF OMITTED] T4180.038 [GRAPHIC] [TIFF OMITTED] T4180.039 [GRAPHIC] [TIFF OMITTED] T4180.040 [GRAPHIC] [TIFF OMITTED] T4180.041 Chairman Waxman. The gentlelady's time has expired. We will be pleased to have the rest of her statement in the record. [The information referred to follows:] [GRAPHIC] [TIFF OMITTED] T4180.042 [GRAPHIC] [TIFF OMITTED] T4180.043 Chairman Waxman. Mr. Sali. Mr. Sali. Thank you, Mr. Chairman. Secretary Chertoff, border security is an important issue affecting Idahoans, and the need for secure travel documents I think they consider equally as important. Do you have any security concerns specifically with the use of matricula consular cards, passport cards, NEXUS and Sentry and PASS cards? Secretary Chertoff. First, Mr. Chairman, I guess I do have to observe when I was invited here, I thought the topic was going to be medical surge. It is hard for me to see the correlation here, so I have to ask you whether you want me to answer this. But if you do, I will go ahead and answer. Chairman Waxman. Well, the rules allow each Member to ask questions. Secretary Chertoff. On any topic. Well, the short answer is I think certainly our NEXUS cards and Sentry cards, our PASS cards which are about to be issued by the Department of State are secure. They reflect a substantial step forward in improving the security of our documentation. Likewise our laser border-crossing cards. The matricula consular is not an American-issued card, so I can't warrant or vouch for the security of that. We don't rely upon that for purposes of allowing people to come across the border. Mr. Sali. I think there is a relation here. I hear concerns for many areas of the country that part of the problem in hospitals is that they are overrun with illegal aliens in specific places. And part of the problem in dealing with the problem of illegal aliens is making sure that we have legal ways for people come to our country that are secure in fact. Was there a recall on the NEXUS, Sentry or PASS cards during the last year or two? Secretary Chertoff. Not that I am aware of. Chairman Waxman. Mr. Sali, it is your time to ask questions, but you are off the topic for which we have invited the Secretaries to speak, I guess Secretary Chertoff will have to decide whether he is prepared to respond. But---- Mr. Sali. Well, Mr. Chairman---- Secretary Chertoff. I could find out. I didn't come prepared to talk about it. Mr. Sali. Perhaps the Secretary would be willing to respond to some of these questions in writing---- Secretary Chertoff. Sure. Mr. Sali [continuing]. If I submit them to the committee. [The information referred to follows:] [GRAPHIC] [TIFF OMITTED] T4180.044 [GRAPHIC] [TIFF OMITTED] T4180.045 Mr. Sali. And if I may continue, do you share the concern that the presence of illegal aliens in our country is affecting the ability of our hospitals to respond in a surge situation? Secretary Chertoff. Well, I don't know if I would connect it to a surge, but I would agree that I am aware that the presence of people who are in this country illegally does strain emergency rooms on a day-to-day basis, because often these people don't have health care through their employers, so they are relying on the emergency room as a kind of primary care facility. And that is one of the things we hoped to address when we took up the issue of comprehensive immigration reform, but as everybody now knows, that didn't take off in the Senate. So in the meantime our approach is to enforce the existing laws as vigorously as possible. Mr. Sali. Secretary Leavitt, let me ask you the same question. Do you share that concern about the presence of illegal aliens, overwhelming at times, on the emergency room and hospital capabilities in our country, and if you do, what is your office doing to relieve that situation? Secretary Leavitt. Again, there is no connection necessarily between surge capacity. But there is little question that many of those who go to emergency rooms to be treated are here without proper documentation. Our Department does provide substantial assistance to hospitals to pay for those, but there is no question about the fact that it is a big part of the problem. Mr. Sali. How much does your agency pay for treatment for illegal aliens each year? Secretary Leavitt. That is not a number I have off the top of my head. It is a big number. Mr. Sali. You will get that for me, though? Secretary Leavitt. I would be happy to respond in writing, to the degree we have that information. Mr. Sali. I have heard both of you say today that the presence of illegal aliens is not directly related to the surge, and yet both of you have said that illegal aliens use emergency rooms as their primary care doorway, if you will, into the health-care system. Secretary Leavitt. This is an important point, and I want to clarify it. On a day-to-day basis, in an emergency room, there are many people who are there for what essentially could be a clinic, not necessarily an emergency. In such a setting, they would be asked to take their health-care problem or defer it for another time, and that capacity would be used for the surge. Virtually any emergency room would have somewhere between 30 to 50 percent of its capacity used in that way. So when we say that they are overflowing, they are not overflowing necessarily with people who are in life-and-death situations. Surge capacity would clear those out in the kind of emergency we are talking about, to be treated in another way or on a different day. Chairman Waxman. The gentleman's time has expired. Mr. Sarbanes. Mr. Sarbanes. Thank you, Mr. Chairman. On that last point, we had testimony on Monday that suggested that a relatively small percentage of the ED volume is from non-urgent kinds of care. So I think that is a red herring. We are really talking about people coming into emergency rooms that need emergency care. We had a number of hearings on the effect of these Medicaid regulations. Going back last year, in June, we were told by a panel of experts that the emergency rooms are at the breaking point and the ability of emergency department personnel to respond to a public health disaster is in severe peril. In November, the American College of Emergency Physicians said that if the regulations we are discussing today went into effect, ``The Nation's public hospitals and emergency departments will sustain a devastating fiscal blow from which recovery may be impossible.'' And the National Association of Public hospitals--and, by the way, public hospitals are the ones really getting hit between the eyes. We had a description of a nonprofit hospital engaged in some purchases, which I am not sure I would necessarily defend myself, but let's not get off on that tangent. We are talking about the impact largely on public hospitals, which are the ones that would suffer the most from implementation of this regulation. The Association of Public Hospitals said, ``These regulations have the potential to devastate essential safety-net hospitals and health systems in many parts of the country.'' So what is it that these experts understand that the two of you don't understand about the impact these regulations are going to have? Secretary Leavitt. Mr. Sarbanes, let me describe for you, as a former Governor, what is happening with respect to public hospitals and where I believe we ought to be turning to remedy this. It is not unusual at all, in our public hospital setting, we agree to pay public hospitals an increment more than what we do normal hospitals. Many States are taking that increment more and essentially taking it off the table, putting it into their general revenues, and then using that increment more to pay the match that they are supposed to be paying for Medicaid. This is essentially a dispute between partners. We are saying to the States, we want you to put up real dollars, not our dollars recycled, so that you don't have to put up as much money. Mr. Sarbanes. Let me take that line of thinking and move it slightly in a different direction. First of all, I want to challenge a premise that I thought I heard in your testimony, that perhaps hospitals are not at the center of any kind of disaster response. And you talk about these other things, convention centers being set up on a short- term basis or schools or so forth. But you both agree that when there is an emergency or a disaster, hospital emergency rooms are where people go, are they not? I mean, I represented hospitals for 16 years. Any kind of disaster or occurrence in the community that created pressure, the first place they come, the first place they come, because they can't think of any other place to go, is to the emergency room. True? Secretary Leavitt. Mr. Sarbanes, there is no hospital in America that can keep enough spare capacity warm all the time just in case we have a major catastrophic event. Mr. Sarbanes. Let me ask you this question. Secretary Leavitt. You can develop a scenario that will blow the doors off any emergency room in America---- Mr. Sarbanes. The doors are already blown off. This is the thing. There is this notion that we are waiting for these surge situations. But as a practical matter, we have a surge already. When you look at the boarding that is going on, the diversions that are going on, the fact that the beds in the hospitals for inpatient admissions are completely full, we are talking about a surge happening right now. Now, let me ask you this question: If a hospital is underfunded, understaffed and underequipped in its main operations and main functions, is it better or less prepared for a surge, in your view? Secretary Leavitt. This question ought to be directed to those who administer and invest in the hospital. Most of the hospitals---- Mr. Sarbanes. I am just asking your personal opinion. If a hospital in its core function is underfunded, underequipped and understaffed, is it better or less prepared for an emergency in a surge? Secretary Leavitt. Obviously they are less prepared. Mr. Sarbanes. They are less prepared. Well, that is the situation many of the hospitals are in. So this fascinating but, I think, largely false distinction between funding that is going just for a surge as opposed to funding that is going to what Medicaid core functions should be, it is sort of--this is a red herring, at best. And we have to strengthen the underlying core function and structure and infrastructure of our public hospital system and other parts of our health-care system if we are going to be able to respond to this surge. Thank you. Chairman Waxman. And we shouldn't be cutting money out of it if they are already not prepared to deal with the problems. Mr. Issa, you are recognized. Mr. Issa. Well, thank you, Mr. Chairman. And I certainly think that it has been good to wait a little while to go today, because I think Mr. Sali's questions, although they seemed to start on a tangent, finished pretty cogently. Secretary Chertoff, the link that you did agree exists between our inability to either stop illegal immigration or the absence of their having an alternate insurance plan that would put them into the normal front-door of hospital and urgent care and other places rather than emergency rooms and trauma centers is a significant part of the overcrowding and the underfunding today. From your side, Homeland Security, you seem to very much agree that part of the problem you face when looking at surge capacity today is can you get those centers freed up in time of emergency? So my question to you is, do you feel comfortable that even though a nonscientific, partisan telephone survey found that, lo and behold, these seven trauma centers were overcrowded on a given day, or emergency rooms, that those would be reasonably free-upable for the kind of catastrophic emergencies we might have in the case of a dirty bomb or some other terrorist attack? Secretary Chertoff. Well, I agree with Secretary Leavitt. My understanding--of course, the expertise really resides with his Department, but it certainly makes sense to me. My understanding is that, in a true emergency, people who are in the emergency room using it for primary care or for something less than an emergency would be asked to leave, and many of them would. I also agree with Secretary Levitt there is probably some point at which no emergency center, no matter how well-funded, is going to be able to handle what would be a truly mass event. And that is why we have these backup systems in place. There is no question that a catastrophic event is going to be bad. It is not going to be pleasant. But I think that we would expect the emergency room to clear out all but the priority cases in order to handle them. Mr. Issa. I certainly agree. And certainly there are doctors who have been serving in capacities other than urgent care whose experience in surgery and other areas would quickly be brought in post-triage to do it. Governor Leavitt, you know, the title of this hearing today I think is significant, because it starts off and it says, ``The Lack of Hospital Emergency Surge Capacity: Will the Administration's Medicare Regulations Make It Worse?'' Yesterday, or the day before yesterday, I asked the panel-- who all felt that overcrowding was a problem and so on but differed on whether they could handle emergencies. Virginia said, ``We did handle emergencies. We believe we are well- organized, even here in the District,'' while other areas did not. One of the interesting things was, I said, ``Here is a billion dollars. How would you spend it? Would you spend it on training and preparation for an emergency, or how else would you spend it?'' To a person, the panel said, ``I would spend it on day-to-day, routine costs. I would simply absorb a billion dollars.'' Governor, certainly you have the background to understand that $1 billion is a lot of money. But the cost of injuries in America today is estimated to be $300 billion in medical costs. A billion, $2 billion, $3 billion, if it is not used for preparation training, emergency facilities and planning, even $3 billion or $4 billion added into the system, will it in fact increase surge capacity if it is simply spent on a daily basis? Secretary Leavitt. Our significant concern with moneys that we give to States is that they are focused on increasing surge capacity. We have put nearly $7 billion, through different departments other than Medicaid, into emergency preparedness and specifically into surge capacity. And I believe that if we were just to send Medicaid money, it would be absorbed into the hospital overhead. Mr. Issa. And, Governor, following up, because the time is limited, essentially aren't we dealing exactly with that here today? That if, in fact, we don't carefully make sure that these funds do not get diverted and do not cover up for problems, including illegal immigration, to quote the other Member, but all kinds of problems of the underinsured, aren't we, by definition, making ourselves less capable if we don't take action to ensure that it goes into planning and training and preparation, rather than absorbing what clearly appears to be an everyday problem in America that was neither created by September 11th nor would be rectified by a few billion more dollars here or there? Secretary Leavitt. Every community needs a plan, every community needs to train, every community needs to exercise. And that is what much of our money goes to, and should. Mr. Issa. Governor, my time is short, but you did deal with the problems of illegal immigration. You dealt with the problem of your emergency rooms and the impact of the underinsured. Isn't that a separate issue that we should concentrate on finding solutions for but not mix it with today's hearing on surge capacity directly related to 9/11-type events? Secretary Leavitt. We have dealt with three specific and different issues today: surge capacity, the effect of illegal immigration, and Medicaid regulations. All three are separate. All three are important issues. Mr. Issa. Thank you. Thank you, Mr. Chairman. Chairman Waxman. Secretary Leavitt, could you furnish for the record how that $7 billion you claimed is going to help the hospitals? Secretary Leavitt. What I said, Mr. Chairman, was we have spent nearly $7 billion on local and emergency preparedness, including surge capacity in hospitals. And, certainly, we can provide how that has been spent. Chairman Waxman. And how much of that has been surge capacity? Secretary Leavitt. That is not a figure I have. Chairman Waxman. If you could give it to us for the record, we would appreciate it. We now have Mr. Murphy. Mr. Murphy. Thank you very much, Mr. Chairman. Welcome, Secretary Leavitt and Secretary Chertoff. For the last 4 years, before I came to Congress, I was the chairman of Connecticut's Public Health Committee in our legislature charged with this very issue, making sure that we had appropriate surge capacity and everyday capacity in our hospitals. And, Mr. Leavitt, I was reading through your testimony, and it is dazzling, at some level, the amount of bureaucracy and commissions that we have created around this issue: ACD, NVSB, ECCC, ASPR, NRF. And I am sure these are worthy commissions; I am sure they are looking at important questions. But as somebody who is doing this on the ground floor, this is all new to me. As a State policymaker, we knew that Medicaid was not just about supporting people, it was about supporting institutions as well. They are one and the same. You can't help people unless you have institutions that are there and willing to do the work. So the distinction, I guess, is a little bit troubling to me. But we also didn't know too much about these grants that were coming to us, because we really knew that in order to keep these hospitals up and running, in order to keep capacity working, we needed Medicaid. We couldn't do it with grants alone. Mr. Leavitt and Mr. Chertoff, if the staff has it ready, I would like to just draw your attention to a chart. And this, I think, gets at Chairman Waxman's question about the amount of money that is going to hospital preparedness grants. This is, I think, a fair representation of, over the last several years, the amount of money that has been going into hospital preparedness grants, starting at $498 million in 2003, dropping now to a proposed $362 million in the proposed budget for the coming fiscal year--a pretty sharp decrease. And $362 million over 50 States spreads pretty thin. The real rub here is when you compare it to the Medicaid cuts, if we can put that chart up now. Now, this is the grant money that States are getting, $362 million proposed in the next year, compared to the impact of the Medicaid cuts. Now, this is the State Medicaid director's estimates. If you take the CBO estimates, you are still talking about five times the amount of Medicaid cuts as you are talking in grant money to hospitals. And I think every State appreciates that grant money, but it is a drop in the bucket compared to what hospitals are going to face with regard to these Medicaid cuts. I guess I ask this to you, Secretary Leavitt. Do you have concerns that these grants, dwindling year by year, are going to be dwarfed by the size of these cuts? And though those cuts are going to obviously see their way through the entirety of a hospital's operation, no doubt much of it is going to end up in the emergency room. Do you have a concern that these cuts, these Medicaid cuts--you say they are to support individuals; they inevitably have to support institutions in order to support the individuals--are going to dwarf those grants? Secretary Leavitt. Mr. Murphy, the distinction on institutions and people is not one that we have arbitrarily made. It is in the statute. Over time, States have inappropriately claimed Medicaid dollars in a number of categories, which had the direct impact--I know you know this as a State legislator--of crowding out all of the other activities, including the development of public health and emergency systems. Medicaid was not designed, nor is it intended, to support institutions. Money should be directed to people. We support people. We support poor people, pregnant mothers and the disabled. This is not intended to be a hospital entitlement. Now, I understand that they have come to rely on it, in some cases. That is precisely the reason that we are pushing back to the fee-based consultants who are driving this on the basis of their getting a piece of the action to push Medicaid into every area of State government. It is not just emergency preparedness. It is in schools. It is in child welfare. It is in all the places that the States are not adequately funding, they are trying to get a garden hose into the Medicaid fund. Mr. Murphy. But we are not talking about those places today. We are talking about institutions that are indisputably linked to health care, which are hospitals. And the fact is you say it is about supporting individuals, but the money doesn't go to individuals. It goes to institutions. It goes to doctors. It goes to hospitals. It goes to outpatient clinics. Because we know we need those places up and running. So let me just shift to a related question, and this is building off of Mr. Sarbanes's questions. You talk about the fact that ultimately this isn't going to happen in emergency rooms. If something enormous happens, you are going to have to build something outside of the emergency room. But doesn't that capacity, whether it exists in the physical confines of the emergency room or not, rely on the assets that exist right now in those emergency rooms? If we are gutting the capacity of hospital emergency delivery systems, in terms of equipment, in terms of personnel, in terms of expertise, it seems to me, Mr. Leavitt and Mr. Chertoff, that this directly impacts your ability to then move that capacity offsite, even if it isn't onsite at the hospital grounds. Secretary Leavitt. Again, this is a very important point, Mr. Murphy. We are bringing capacity in. In the first 24 hours of an emergency, we are dependent upon local assets. And that is where you clear out the emergency room, you take anyone who is nonessential out of the hospital. You make capacity. Within 24 hours, we have the NDMS system there. We have as many as 6,000 beds we can bring from all over the country. We then go to another phase where we start taking patients into capacity. At any given moment, we know how many hospital beds are available in the area. We are not dependent upon the hospital facilities, except for that 24-hour period. And that is why we exercise and train for all of the other aspects on surge capacity. Mr. Murphy. And I appreciate that. I know enough about how these things work to know that they still do draw upon local resources, they still do draw upon other hospitals, upon other capacity in the system. And, as Mr. Sarbanes and others have suggested here today, we have maxed out both the emergency and nonemergency capacity of our health-care systems to the point that extra capacity, even in the 48 and 72-hour window, simply doesn't exist. Now, you can fly it from in from all over the country, but I think this problem exists across the board. Our medical technicians, our emergency medical personnel, are working 24/7 just to handle existing capacity right now, never mind being able to move over to an emergency when it does happen. My time has expired, Mr. Chairman. Chairman Waxman. Thank you, Mr. Murphy. Mr. Duncan. Mr. Duncan. Thank you, Mr. Chairman. Secretary Leavitt, I have to be very quick because they have a vote going on. But a few days ago, we were given figures that, in the 10 years leading up to 2006, Medicaid payments to Tennessee hospitals went up from $245 million to $607 million. I am sure that you have no idea of what those exact figures are, but do you think that every State has received similar- type increases, more than doubling over the last 10 years? Secretary Leavitt. Well, States have clearly seen dramatic increases. We have seen a dramatic increase in the overall program. Tennessee may have been somewhat unique because of TennCare. Mr. Duncan. And would it be fair, then, to say that, in those 10 years, inflation has averaged around 3 percent a year, so those payments to hospitals have gone up several times above the rate of inflation? Do you think that is fair? Secretary Leavitt. Medicaid is growing at two to three times inflation. Mr. Duncan. Two to three times the rate of inflation. So payments to the hospitals have gone way up over the past 10 years? Secretary Leavitt. The Medicaid money going to hospitals has dramatically increased over the past decade. Mr. Duncan. All right. Thank you very much. Chairman Waxman. Mr. Tierney. Mr. Tierney. Thank you, Mr. Chairman. Thank you, gentlemen, for being here today. Secretary Chertoff, I want to ask you a little bit about your role or your involvement in these Medicaid rules that were issued. In your testimony, you said that, ``Medical surge capacity is a critical element of our local, State and national resiliency.'' But I don't see any evidence, I don't think we have been able to find any evidence of your Department expressing any concern about these Medicaid rules to anybody, and particularly with respect to the impact they might have on emergency rooms or the ability to respond to an attack or a natural disaster. Did you consult with Secretary Leavitt about these rules before they were issued? Secretary Chertoff. No, because I don't think that these Medicaid rules are particularly closely connected to the question of whether there is surge capacity necessary to meet an emergency. Mr. Tierney. So you were aware of them but just chose not to get involved, or you weren't even aware that they were being considered? Secretary Chertoff. I don't think I was particularly aware of it, nor would I have expected to be made aware of it. Mr. Tierney. The staff interviewed Dr. Runge from your staff, your Chief Medical Officer. It is his role, apparently, to coordinate between the Department of Health and Human Services, to make sure that hospitals and the medical system are prepared for a disaster or for an incident. They asked Dr. Runge if he had reviewed or commented on the regulations, and he also said he had no communications with anyone at HHS about it. And he said that there was no discussion within the Department of Homeland Security about the rules. That is pretty consistent with your testimony, as well, on that? Secretary Chertoff. It is. Mr. Tierney. If he supposed to be the point person for medical preparedness, I just don't understand how he completely ignores rules which are certainly going to have some impact? Or is it your position they are absolutely going to have no impact at all on emergency rooms? Secretary Chertoff. Here is where I think we are having some disagreement. Everything has impact on everything. So, in some sense, the economic health of the country has an impact on homeland security. But if I used that logic, I would be involved also in the subprime mortgage crisis, because that affects State budgets; I would be involved in gas tax and gasoline prices, because that has an impact. Even for a Department which has sometimes been accused of having too broad mandate, that goes several bridges too far. Our focus, with respect to working with HHS, is to assure that there is a planning effort under way, that we are identifying gaps, and that we are coming up with specific measures that will plug the gaps. And I have to say I agree with Secretary Leavitt; I don't think that Medicaid funding and reimbursement rules have anything more than a very indirect connection with this issue. And if I took the position that every indirect impact on homeland security made it my business, we would become the Office of Management and Budget instead of the Department of Homeland Security. Mr. Tierney. I do think there is a disconnect between what we are talking about here. I have a difficult time thinking that you don't see a more direct relationship between the status of our hospitals' capacity and emergency rooms' capacity to deal with these things than a mortgage. There is a bit of a difference there between the two, and I would hope you would get that distinction. Secretary Chertoff. No, I don't say that I don't think emergency care and the health-care system isn't more connected. I think that Medicaid reimbursement, which is not specifically targeted to putting money away for emergencies, is, I think, several degrees of separation from the kinds of much more specific issues that we are focused on, in terms of getting ready for emergencies. Mr. Tierney. But I find it interesting that your Department didn't even look at the prospect that reducing Medicaid funding might have an impact on hospitals' overall operations, including the impact on emergency rooms and capacity in case of a surge incident. I would think that is the type of thing that you are assigned to do and Dr. Runge is assigned to do, to at least raise the issue and think about it and move on from there. The staff asked Dr. Runge how he justified this lack of communication with HHS about the rule. What he said was, ``We are focused on threats that can kill hundreds of thousands, not hundreds.'' A little insensitive, I would think, to---- Secretary Chertoff. Well, I wasn't there for the interview; I can't read his mind. But I think what he was trying to draw a distinction between is the very real issue of day-to-day capability of the medical system to deal with day-to-day kinds of issues, which is a perfectly important and significant matter but not one that falls within the purview of my Department, as compared to dealing with the issues that do rise to the level or do specifically involve homeland security, like a pandemic flu or a major catastrophe, where we do focus on the issue of surge. But our main focus is on those matters that have a direct relationship. Are we stockpiling enough? Do we have a plan? Do we have a delivery mechanism? Do the localities have a plan? And there we do interface with HHS, not only Dr. Runge, but I personally talk to Secretary Leavitt about these issues. But much more tightly related to the specific need to have an emergency preparedness capability than Medicaid funding, which has to do with the overall economic health of the medical system, which is, frankly, a much broader issue than my Department's focus. Mr. Tierney. Well, I guess it could be seen that way, but it could be narrowed down to when there is a serious, severe cut in financing, it will affect the operations of a hospital, including those that you are directly concerned with. I would like to think your Department gets involved at that capacity. That is not indirect; that is pretty direct. My time is up, and I yield back. Thank you. Chairman Waxman. The gentleman's time has expired. Ms. Norton. Ms. Norton. Thank you, Mr. Chairman. I want to thank both these witnesses for being here. I am particularly grateful for this hearing, because I am afraid I am more deeply implicated than some because of my representation of the District of Columbia. I have worked closely, of course, in my work on the Homeland Security Committee with Secretary Chertoff. Secretary Leavitt, I worked with your predecessor on something called ER-1. I am particularly concerned about this place, not only because I represent 600,000 people here, but because all of official Washington is here, 200,000 Federal workers, and because this is a prime target for terrorism. This discussion about trying to separate out Medicaid from other money is important because we want money used for what it is intended. But you certainly can't treat a hospital as if it were not an organism with core functions that treat private and poor patients alike, as if you could collapse the part that treats Medicaid patients. And I think that is what some of us have been trying to get at. I want to ask you about the hospitals here. We have three trauma centers here. Two of them were surveyed in this survey, and they were extensively above capacity. No available treatment spaces in the hospital. Only six had intensive care unit beds. One could not participate in the survey because it was so overcrowded that it had to stop taking, accepting new patients at all. My good friends on the other side of this dais cite the Washington Hospital Center emergency room as a model for the country. It is a very good emergency room. That is what I worked with on so-called ER-1. I will get to that in a minute. But since they cite the Washington Hospital Center, I went to the head of the emergency room, Dr. Mark Smith, and Dr. Smith confirmed the findings of the survey and, in addition, said he had twice as many patients as he did treatment spaces. They are putting them in the corridors and administrative offices. They are putting them in waiting rooms. And he said he had a major problem with preparedness. Now, I understand triage. I also hope we are not ever in the position of what I would believe would be chaotic triage, if everybody surged in one place. For that reason, here in the Nation's Capital, I have been working with the administration-- actually we have almost gotten it through several times--on at least one hospital that would have surge capacity, so that everybody would know in advance, don't put all these Federal workers close to the nearest hospital. This is the one that is prepared. It has huge capacity--it would have a huge capacity. A lot of private money would go into this, some Federal money. Now, my question is this: If you cut billions of dollars of what amounts to safety-net funding from hospitals, you are also including these trauma centers here in the Nation's Capital. Can you assure this committee that, even with such very severe Medicaid cuts, the hospitals in the Nation's Capital are prepared for a mass event here and to accept patients in the event of a mass event here? I would further ask Secretary Leavitt if he supports ER-1. First, I want to know, are you saying to this committee, in the face of a survey that you are aware of, that in the event of a major or mass event here, that the hospitals, even with the cuts that are on the table, could, in fact, manage that event? Secretary Leavitt. Ms. Norton, I will tell you that the Washington, DC, area engages in regular planning exercises I think as well as any place in the country. I want to restate: Am I saying that surge capacity is acceptable everywhere in the country? No. Ms. Norton. I am not asking about that. I am asking about the place where Members of Congress, the President of the United States, where members of the Cabinet, where 600,000 residents are here, where 200,000 workers are here, three traumas centers--I am being very specific. I am not focusing on elsewhere. I am focusing on target No. 1. Can you say you are prepared? Secretary Leavitt. I am not the person to answer that. The person in my Department would be Rear Admiral Vanderwagen, who was not invited to the hearing today. And I am sure he would be happy to meet with you and give you his reaction to the preparedness. Ms. Norton. I have to indicate that, as the Secretary, I would think you would know whether or not the Nation's Capital is prepared for a mass event. Secretary Leavitt. I live here, just like you do, and I am anxious for that to be the case. Ms. Norton. And that troubles me, both as a member of the Homeland Security Committee and as a member of this committee, that you cannot answer that question. Do you support ER-1 surge capacity? Secretary Leavitt. Is the project at George Washington? Ms. Norton. It is the project at Washington Medical Center. Secretary Leavitt. I am aware of the project by title. I do not know enough about it to respond at this hearing. If you would like, I would be pleased to respond in writing. Ms. Norton. I very much appreciate it. And thank you, Mr. Chairman. Chairman Waxman. Thank you, Ms. Norton. Mr. Cummings. Mr. Cummings. Thank you very much, Mr. Chairman. Secretary Leavitt, perhaps the thing that most confuses me about your actions is why you did not consider the impact of your Medicaid regulations on emergency preparedness. Last June, the committee had a hearing on the state of emergency medical care in the United States. At the hearing, concerns were raised about the effect of the Medicaid regulations on hospital emergency rooms. As a result, the committee wrote to the Centers for Medicare and Medicaid Services to ask whether CMS, which issued the rules, had consulted with the Assistant Secretary for Preparedness, who is the official in your Department in charge of emergency response. Astonishingly and unbelievably, CMS responded that it, ``did not specifically request input from the Office of the Assistant Secretary for Preparedness because that office is not likely to have expertise in Medicaid financing.'' The committee wrote you again in November. In this letter the committee specifically requested, ``all documents relating to the potential impact of the Medicaid regulations on emergency care and trama services.'' In February, the Department responded to the committee's request. I want to read to you from this letter. And it says, ``The Department has not found responsive documents.'' According to this letter, your staff searched for responsive documents in five different parts of the Department: the Office of the Secretary, the Office of the Assistant Secretary for Preparedness, the Health Resources and Services Administration, the Centers for Disease Control, and CMS. Yet not one of those offices had done any analysis of the impact of the regulations on emergency care. Secretary Leavitt, how can you possibly explain this? Hospitals across the Nation are telling us that your regulations will devastate their emergency rooms, yet you did not even consider this issue, according to what I just read. Secretary Leavitt. The rule change we are proposing is not about surge capacity or hospital health. It is about States who have been claiming inappropriately funds that they are using to recirculate to pay their fair share with Federal funds. Medicaid is not a program to support hospitals. Medicaid is a program to support people who are poor, people who are pregnant and people who are disabled. It was not intended nor is its purpose, nor should it be managed, to be the source of funds for surge capacity. Mr. Cummings. Let me just go a little bit further. You were specifically asked to consider the impacts of your rules on trauma centers and emergency rooms. Over a year ago, Chairman Waxman and over 150 other Members of Congress wrote to you to urge you to consider these issues. Let me read to you from our letter: ``We are writing to request that you withdraw the proposed rule. The proposal would threaten the capacity of safety-net hospitals to deliver critical but unprofitable services, such as trauma centers, burn units and emergency departments.'' Yet, still, you prepared no analysis. This appears to be a case of willful blindness. Perhaps it would be better stated if I said it appears to be ``eyes wide shut.'' It seems that you are deliberately ignoring the impacts that your rules will have on emergency care and preparedness in our Nation. That is irresponsible, and, to be frank with you, it is quite dangerous. Secretary Leavitt, the preamble to the proposed Medicaid regulations read, ``With respect to clinical care, we anticipate this rule's effect on actual patient services to be minimal. While States may need to change reimbursement or financing methods, we do not anticipate that the services delivered by governmentally operated providers or private providers will change.'' In response to these regulations, your Department received over 400 written comments, all of which expressed opposition to the rule or to portions of the rule. And I would like to read just a sample of one of those. It is from the Society of Academic Emergency Medicine. And it says, ``This proposal will jeopardize the viability of public and other safety-net hospitals. It will also jeopardize the viability of our emergency medicine teaching programs, which has long-reaching downstream effects on the quality of emergency care in this country. We believe that Medicaid cuts of this magnitude projected under this proposed rule will adversely affect access and the viability of our Nation's safety-net providers.'' So I am just wondering, do you have a comment on that? Secretary Leavitt. Yes, I do. This rule is about States not paying their fair share, and it is a dispute between partners. We are mutually committed. If States will step up and do their share, we will ours. But this is about paying for people, not for institutions. We are following the law. We are trying to push back where people or States and other programs within State governments are trying to make up for deficiencies that have occurred in State governments by tapping Medicaid funds. And someone needs to do it, because the Medicaid program is unsustainable in its current course; I made the point earlier. Many of the programs in States are being crowded out by Medicaid. And it is being crowded out because we continue to use it for virtually every aspect of State government. Anyone in State government who thinks they can find some connection to Medicaid is attempting it. And we have to do this in a way to keep the integrity of the fund, so that we know we are paying for health care for people, not for institutions, and we are not making up for States who aren't doing their share. Mr. Cummings. I see my time is up. Chairman Waxman. Secretary Leavitt, with all due respect, I think you are ignoring reality. You are saying that you want to cut back on a system that is getting Federal dollars inappropriately, and they should make up the money at the State and local level. They are not going to be able to make up that money in a recession. The income is not coming into the States. And you never asked your partners, the States, what the impact would be to make these kinds of withdrawals of the Federal share of the Medicaid funds that go to the institutions, especially public hospitals that are funded exclusive by the taxpayers. At the minimum, I would have thought that you would have wanted to ask the question of what the impact would be, so you would know. You insist that is not going to have this kind of impact. Yet, when you put our rules, the Society for Academic Emergency Medicine said, ``This proposal will jeopardize the viability of public and other safety-net hospitals. It will jeopardize the viability of our emergency medicine teaching programs.'' Parkland Hospital in Texas said they received Medicaid payments of $90 million annually and that, without this funding, Parkland may be forced to drastically scale back their services in the Trauma I center, the level Trauma I center. You have all these others--the president of the University of California, the University of California academic medical centers. You have all these comments. And we looked at the rulemaking record; the fact is you ignored these comments. You didn't adjust the policy in response to these comments in the final rule, and you did prepare an analysis to the effect of the Medicaid regulations would be minimal impact on care being provided by the States. How can that be? Isn't that irresponsible? Secretary Leavitt. Mr. Chairman, it is responsible for me to follow the law and assure that the States are doing their job. Otherwise, we are not being a wise steward of limited Medicaid funds. This is a dispute between partners, between the Federal Government and the States. And the Federal Government is saying, you can't take money we have given you extra for these hospitals, put them back into your general fund, and then use them to pay your share. Just give us real money, give us value, give us--for real patients. This is not about surge capacity. It is about a relationship between the States and the national Government---- Chairman Waxman. The consequences will be the institutions that provide the safety net to the very poor in our society will not be able to continue to function and provide those services. It just seems to me you are judging your actions on an ideology without having established the record. You didn't come to Congress and ask for those changes. You are trying to put them into effect on your own. Fifty Governors have asked us to at least put a halt on this so they can be studied, which they should have been studied before they were put into place. An overwhelming majority of the House of Representatives has put a hold on these regs until we can look at them further. I think that you ought to withdraw these regulations and let's see what the impact will be. Let's know that we are not doing any harm to the ability for hospitals around the country to deal with the problems that they may face, not just day to day, but in a terrorist attack. Secretary Leavitt. It is not surprising to me that you can unite 50 Governors around the proposition that the Federal Government should pay their share. And that is essentially what this amounts to. Many States have improperly used money that has come from the Federal Government for the purpose of supporting the hospitals we are talking about, have taken it off the table, and then used it to pay their share. This is about States not paying their fair share. And I would think we would all be united in saying, if we are going to have a partnership, then everyone ought to pay real dollars for real value for real patients. Chairman Waxman. Did you consult with Secretary Chertoff to tell him that there may be some impact around the country on the ability to deal with a terrorist attack? Secretary Leavitt. This is a dispute between the Federal Government and the States on Medicaid financing. Chairman Waxman. You didn't inform Secretary Chertoff of that? Secretary Leavitt. We regularly consult on the larger strategic issues related to our joint mission. This is not one of them. Chairman Waxman. Did you do an evaluation to know what the impact would be on these hospitals if these regs went into place? Secretary Leavitt. Medicaid is not intended to support institutions. It is intended to support people. Chairman Waxman. But it does support these institutions, because people without insurance go to these hospitals. People who are injured go to these hospitals. If you withdraw the money from the hospitals because you have a theory that the States ought to come up with more money, it means, as we were told by Dr. Roger Lewis, who is an emergency room physician at UCLA, a nationally recognized expert in hospital emergency preparedness, he said, ``Those of us who work on the front lines of the medical care system believe it is irrational that an emergency care system that is already overwhelmed by the day-to-day volume of acutely ill patients would be able to expand its capacity on short notice in response to a terrorist attack.'' He said, ``If a bomb went off in Los Angeles and injured hundreds or thousands, LA would not have the emergency room capacity to care for the wounded.'' In your statement to the Congress, you emphasize the support the Federal Government is giving States and localities to improve this emergency preparedness. And we asked Dr. Lewis, and he said they were getting $433,000 in a preparedness grant, and he was very grateful for it, but the cost of these Medicaid changes would mean they would go without $50 million. He said that is 100 times more than the Medicaid cuts they would get on these preparedness grants, and they are going to be in very, very sad shape. Do you take what he had to say seriously? Do you think he is just fronting for the States because they want to rejigger their money around? Secretary Leavitt. Mr. Chairman, over the course of the last 3 years, I have been in virtually every State and met with the emergency community, and the record is replete with my statements of concern about surge capacity. It is not at the level we want it to be. We have many areas in which we can improve. But Medicaid is not the source of funds to do that. If the Congress of the United States views that there is a need for more dollars, we have ways in which we can funnel directly to the hospital funds that are necessary to improve their surge capacity. Medicaid was intended to be for people, not for institutions. And every institution I know would like to drag a garden hose over into the Medicaid fund and be able to tap it, because their fund isn't what they would like it to be. We need to be disciplined. We need to ensure that these disputes are resolved between the States and the Federal Government so that we have a true partnership, not just one that relies entirely on the Federal Government. Chairman Waxman. Well, I must say, with all due respect, your actions make absolutely no sense. The tiny grants you are giving to hospitals can't possibly offset the impact of cutting billions of dollars from those programs. I must say, as we conclude this hearing, I find it very discouraging. We know the Nation's emergency rooms are already at the breaking point. We know a terrorist bombing is a predictable surprise. We know that local emergency room capacity is critical to saving lives in that golden hour following an attack. We know that public and teaching hospitals operate many of our Nation's most critical emergency rooms and trauma centers. We know that the Medicaid regulations will reduce funding to these institutions by hundreds of millions of dollars each year. We know that these cuts will further undermine the ability of these hospitals to respond to a terrorist bombing. We know that these regulations will go into effect in 3 short weeks. And yet the Secretaries that are in the position to avoid this harm will not take any action. I think it is regrettable. I must say, this is not just a disagreement. I think it is a substantial breach in what I think is our mutual responsibility to make sure that we can deal with a homeland security attack, which could amount to a tragedy. I thank you both for being here. We hear the bells; there is a vote on the House floor. I do want to ask unanimous consent that the record be held open for Members to ask further questions and get responses in writing. We stand adjourned. [Whereupon, at 11:15 a.m., the committee was adjourned.]