Tom Scully, administrator of the Centers for Medicare and Medicaid Services (CMS), defied a congressional subpoena to appear on April 10 before a House committee to discuss the effect of Medicare regulations on small businesses. Small Business Committee Chairman Rep. Donald Manzullo (R-Illinois) immediately demanded Scully resign his position.
The House Small Business Committee had called Scully to testify about whether Medicare regulations have hurt small businesses marketing medical devices, such as portable x-ray machines. Committee members want to know more about CMS regulations that reduced payments to providers of portable diagnostic equipment.
The suppliers of portable diagnostic equipment serve nursing homes and similar facilities by taking the equipment there, allowing x-rays and EKGs to be performed at a patient’s bedside. Several physicians have said low Medicare reimbursement rates are forcing a number of small companies out of business.
Ready to Testify
Scully said he arrived on Capitol Hill shortly before the scheduled hearing fully intending to testify until he read the witness list, which included representatives of industry groups affected by low reimbursement rates.
Scully told committee staff members he would not appear at the hearing with individuals from the companies he regulates. He did, however, submit written comments to the committee.
Scully said he would address the committee separately and would listen to testimony from the other witnesses, but would not “mix it up with people who have a gripe about a particular regulation.” Scully maintains congressional “courtesy” and “tradition” should allow him to testify “free of interference” from other witnesses.
Checking with the Boss
Scully decided not to appear before the committee after consulting with HHS Secretary Tommy Thompson and department counsel Alex Azar. “The department decided this was the right thing to do. There was no precedent for the department to testify on a panel with people we regulate,” Scully told the New York Times.
Scully’s office had balked at the administrator testifying on the same panel as industry and advocacy groups, many of whom are upset over Medicare funding regulations. The hearing was to have dealt with a 1980 law known as the Regulatory Flexibility Act (RFA). The RFA requires agencies to take into consideration the impact of rule-making on small businesses before regulatory actions are taken. The Small Business Administration has ruled the reduction in Medicare reimbursements violates the RFA.
Zachary Evans, chairman of the board for the National Association of Portable X-Ray Providers, told the hearing committee, “The CMS refuses to consider the impact on our industry.”
Scully’s decision not to testify prompted Manzullo to demand his resignation. “I asked for his resignation,” Manzullo told CongressionalDaily, “because if he thinks he’s too good to sit with taxpayers, he does a disservice to every medical provider and recipient of Medicare and Medicaid.”
Manzullo added, “Anybody who refuses … to work out problems affecting people’s lives shouldn’t be in public service.” Manzullo said he is considering several options to deal with the situation, including holding Scully in contempt of Congress. Manzullo went so far as to say that by the time his committee meets again, the CMS may have a new administrator.
Any official action against Scully would require a full House vote.
Increasing Medicare Payments
In further House action down the hall from where Scully was to have testified, Reps. Jerry Moran (R-Kansas) and Jim Turner (D-Texas) introduced a bill to increase Medicare payments to rural hospitals.
Currently, only a limited number of rural hospitals—those with 15 or fewer beds—are eligible for Medicare’s Critical Access Hospital program. Moran and Turner’s Rural Community Hospital Assistance Act (RCHAA) would extend eligibility to hospitals with as many as 50 beds. Additional medical services would also become eligible for Medicare support.
The Critical Access Hospital program, established under the Balanced Budget Act of 1997, grants full Medicare reimbursement for the costs of services provided by hospitals qualifying for Critical Access designation.
The RCHAA, if passed into law, would cost an estimated $2 billion over five years.
Moran and Turner also joined the growing number of people critical of a provision in President George W. Bush’s fiscal year 2003 budget proposal requiring any Medicare payment increases to providers be offset by decreases to other providers, such as specialists who provide portable diagnostic equipment.