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REVIEW OF FROGRAMS AND ORGANIZATION OF
THE. HEALTH SERVICES AND MENTAL. HEALTH ADMINISTRATION

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A-REFORT PREPARED FoR

THE ASSISTANT SECRETARY FOR HEALTH

 

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APRIL 5, 1973

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EPARTMENT OF HEALTH, EGUCATION, ND WELFARE
OFFICE OF THICSECRETARY .

WASHINGTON, D.C. 20208 |

April 5, 197°

’

Dr. Charles C. Edwards
Assistant Secretary for Health

_ Department of Health, Education . i - .

and Welfare
Washington, D. C.
Dear Dr. Edwards:
Attached is the final report of the managein2 ational
study of the Health Services and Mental Heal
programs and other health services related pre
The conclusicns and recomnendaticns in this rer.
after extensive anterviers with the Acting Admunistrator, KSHBAS
Deputy, Assoc“ate and Assistant Administretors of HSBAAS al] HSMAA
Program Inrecters: Program Hirectors WN @gVenct is outs ice HSMAAL exch
Regicnal Health Directors; staff noueers 1 ft e of the Secretary;
and several working sessions with t e key start in the Office of the

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The recommendations of the study were develoned in the context of the
future federal role in healtn as at ticulated -y Secretary Weinberger
before the House Subcommittee on Public t Jealt. and Welfare. Specifical],

the federal role in health will be:

_. Financing of health services throueh Hedicare, Medicaid,
. ~ and Hational Health Insurance -
. Health and medical research
. Preventive health and consumer protection

. Technical assistance and special stcrt-up funding for
demonstration

., General student assistance programs vor health manpower
education

. Direct provision of medical care on:y as a last resort.

Fach alternative organizational alignzent considered in this study Was

fs

analyzed in Vieht af tis nov fotapod vole.
“ fissist

6 ant Secretary for Health ‘

The develcpment and implementation of health policy is presently
t i

tact.

fragmented across three componcrcs of DHEN; the Health agenci€sSs, ..-

SSA and S25. This is che most sicnificant issue that the stusy

had to address. in the proposed 1974 budget, the Medicare and
Hedicaid programs represent 79.12 of the total health buecet.

ee - This means the Assistant Secretary for. Health, the nation's top

health official, has direct influence over no sore than 285 of
federal health expenditures.

: In response to challenges that Medicare and Medicaid are not h

alth

programs, Secretary Weinberger has stated, “ho- only are they fealth

progrems, they are the nation's most jmportent health programs’.

The Office of Management and Budget supports this argument by treating

Medicare and Medicaid as health programs in the federal budget.

The approach to administering these programs jn the past has. been

predicated on two major assumptions:

. Medicare and Medicaid eligibility js tied so closely

to Lie incgne ssgistance pregrems thet sesararcon 7S

@ not yeasibie

. The delegation of jeadership and policy guidance
responsibility for these programs to the Assistant
Secretary for Health should provide zdequate health
input

ce longer valid and need to be reconsidered at seis point if more

- pee rane - a . “

Both the Bureau of Health Insurance (SSA) and “edical Services
Administration (SRS) could be removed from their

without disrupting present payinent systems. WW

Based on the observations of this study, these assumptions are no

_ effective health direction at the federal jevei is to be achieved.

parent organizations
gibility determination

=
would continue without chance. Support services in the headquarvers

and the regional offices could be adjusted wi

“-gut major disturvance

of operations. There are, in the case of medicare, other offices in
SSA that support BHI but these are readily scdentifiable and the .

appropriate divisions or branches are senarabia from the rest of the
i organization -- 7.¢. sub-units within Office cr the Actuary, Office
‘ ‘ of Research and Statistics, Office of Planning and Evaluation.
: . Delegation of policy responsibility to the Assistant Secretary for
a . Health has not worked. whether an Assistant Socretary with
© stronger organizational support would have been more effective is
arqumentativea, Tho fact feo, thorn is presor fy na eravonriate
n2Chusbical UG Cihowi Oo cine wil beste pOblGe suet S Ube suugecd ee
cof

f
SSA, and SRS. Duplicate staffs now exist with respect to such

Assistant Secretary for Health oo. : 3

early and thorough review in terms of their potential impact on ..
the nation's heaith care delivery system nd that the full intent,

of such policy decisians on tho health side is adequately reflected
jn contracts with the sceal intermediaries and State agencies.
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Further, policy guicance ftsely is of limited value if communice tions
and contracts with intermediaries, States and other participating
agencies are perform d in a separate organization. This is the

point of leverege that will have to be shifted to the organizaticnal

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‘control of "Health" if integrated policy with respect to health

services is to be achieved. In short, there needs to be a single
point of acceuntebility for both policy determinations and impiementa-
tion of health poticy with respect to presrams that finance health
services.

HSMHA,
tivitic
as health care standards and surveillance; health services research -
and experimentation, health planning and review and health maintenance
organizations. Attempts to coordinate these separate efforts through
the Office of the Secretary have resulted in additional stafring and
cubctantial dalays in decision-making. Such overlanping activities
are not oniy wasteTui of resources but are ulso convusing and costly
to private anc other affected organizations throughout the country.
These difficulties can enly be overcome by the establishment of a
single focus of management responsibility end accountability for all
health affairs within the Department.

There is increasing overlap of functions end staffing emong QOASH

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Other major issues addressed in the report are as follows:

. National Health Insurance, the most important new
health initiative, will be most effective if it is
established and operated with an awareness of total
health care supply and demand

. The Office of the. Assistant Secrezary for Health will
require strengthening and realigning to effectively
assume its role as the focal point for establishing and
directing the implementation of health policy

. The character of HSHHA must underso drastic revision
to accommodate the new federal reve in health

. The role of the regional office will need to be alte

aa

ed
significantly to reflect the ney vederal role in healt

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tion of the study recomendations. Specifically. here’ ist

Assistant Secretary for Health | , a.)

. The respective roles of the health agencies,
especially jin applied research and control
activities, are not clear

‘The role and organizational placement of health
manpower programs needs to be redefined

Several HS!HA organizational issues were identified in the study

and are addressed in the report:

HSHHA is a conglomerate of specialized categorical
programs without a central purpose supportive of
overall health policy
Each program contains one or more of the following
functional elements: grants administration, standards’
‘development and monitoring, technical assistance,
research and development, direct delivery, training

Inter-program communication and ccordinetion 1s
minimal and clustering of prograns has been marginally
effective in correcting this problem

_ The interface between health services and health
financing programs has been inadequate

Successfull mechanisms have not been devised to resolve

the conflict between regiona| objectives and the

national objectives of categorical programs

‘

.- The new organization must provide for niicca-out of
several activities witnin HSHA

The relationship of mental health to of. HSEHA
activities is unclear

The study has revealed tha
decentralization ef HSins
current probloms, however.

   

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sotementa-

 

. Lack of unified missi and Poe
headquarters activities ae
. Inadequate relationships to ether HEM ry sapams

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Assistant Secretary for Health

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Incomplete grant decentralization, particularly
invotving ihe National Institutes of Mental

‘Health

Lack of an operational budget controlled by the
Regional Health Directors

Lack of effective methods for providing regional

input on national policy

A number of management changes need’ to be effected to improve health
operations in the regions:

Define the Regional Health Director's role as
the principal health official in the region and
his reporting relationship to the Assistant
Secretary for Health

Integrate al] regional health staff activities
including RHE

Integrate the regional health service activities
with the health financing program activities

Complete the decentralization of grant. authority

Strengthen the technical assistance capability
of the regional offices

_ _These changes, when implemented, will enable the regions to assume
their future role in implementing the federal health mission. This

new role will consist of:

Monitoring compliance of health care providers
with financing standards

Health surveillance and assessment of need,
capability and evfectivencss of health delivery
systein

Assistance in resource development at the State and
local level .

Traditional public health and disease prevention
activities
The organization of programs under the Assistant
I

Assistant Secretary for Health a 6.

Lay VOMUR 4
For HSIMHA, che.
2

In developing the reccmmendcd reorganizatio. plen :
alternatives

f
task force developed four principal alternatives. Thess
were chosen to contrast available options of organizing:

; To assume future functional alignment

. To benefit from existing administrative
capacity

. To integrate mental health with other health
services activities

Each of these alternatives were then analyzed and evaluated in
light of major organizationa] objectives

. Facilitate development of health poiicy for a
national health missicn

_. Facilitate inter-program coordination and
regional operations within a single agency
mission .

. Provide flexibility for future chet.ce

. Facilitate implementation without cisrupticn of
program operations

The recommended reorganization draws on the strengehs of each
alternative and as such represents a synthesis of organizational
advantages of all options considered. Obviously, this process

requires compromise on certain cbjectives.

secretary for Health

should be realigned in five agencies, each havi . unified mission:

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: National Institutes of Health (NIH)
. Food and Drug Administration (F5A)
. Health Resources Administration (HRA)

. Health Services Adwinistration (HSA) \

. Center for Disease Control (CDC)
pomeeee

Assistant Secretary for Health: os 7

National Institutes of Health - The Bureau of Health tanpower

Education (f:e) should be transferred from KIA into the nev
agency H2A. The rationale for keeping BHIE in NIH because of

the close ties and grent support to nedical schools and other
instituzions has been largely. eliminated through decisions to
support cducation primarily through general student assistance.
The future role of BHSE in HRA must focus on the nature of health
manpower as a critical health services resource, and will consist
primarily of manpower intelligence (determination of supply and
demand) and highly targeted special projects in manpower research
and demonstration. -

The National institutes of Mental Health should be transferred to
NIH. The buduvet cecisions to cease making new project awards for
community mental health centers and alcohol abuse programs removes
NIMH from the arena of direct services. The retention of project
grant activities in drug abuse programs is no more compromising cf

‘the research orientation of NIH than the “control activities" of

the Cancer ard Heart and Lung Institutes. Legislation presently.
requires that the National Institute for Alccholism and Alcohol
Abuse aad tha now Uational Tie dteirtan Faw Oeics Ahieo (Docember joys

wee Aw EERE RE Ee FE wey cee Vee sALE

be in the Nif#l. With changes in this Tegis‘ation, tne aiconol ang
drug abuse acrivities could be separated frum HINA if desired.

Primarily for administrative reasons, this study does not propose
separation of the alcohol and drug abuse programs from hind. It

was recognized that alcohol anc drug abuse are important public
health problems. There are, however, many ther areas with high
national priorities, such as cancer, heart and lung disease, aging,
etc. The focus of this study was not so mucn the priority status

of various programs, as it was to develop an organizational fremewors

for effective operation. The question. of elevating these two prograns

for higher visibility: 7s a policy issue that needs to be addressed
separately. From a purely functional and organizational point of view,
the work group could not find reasons to recommend elevation or these
programs. Certainly, the matter requires further consiceration to
examine in greater detail the programmatic jmphications and the
professional and medical inter-reiationships of the programs.

No recommendation is being made regarding organizational changes
in the health service related activities of NIH. However, it is
recommended that this area receive futher attention,

Food and Drua Administration - The FDA should remain intact but

its relationship to the other health agencies in applied research
should be further studied. .
© Assistant Secretary for Health : Se 8

Health Resources feninistration ~ A new esency should be established

‘ to provide national leacership related to the requirements for and
distribution of healtn resources. In perforating this mission, the

; HRA should:

i

i.

_° Provide overall surveillance of the status of health

' care in the U.S. through State ang Tocal health planning
activities and the collection ana enalysis of data on
resource capacities, health service needs, vital
statistics and disease incidence

. Develop and test nev approaches to the provision,
production, and utilization of health manpower,

 

to health facilities, and health care systens
. . Provide limited special support for resource cevelop-
i ment that is not effectively covered under health
service financing and/or general educational support
7 mechanisms
{ . . _ wpe
| This agency would consist of programs nresoatly existing in the
Development cluster Gf NSM Giith major recivection oF program
activities) and adding the BIMc, National Center for Health
i Statistics, National Health Service Corps, znd health service
research and training activities.
Health Services Administration - A new econcy should be established
to provide and finance the delivery of heaith services through
Hedicare, Medicaid, grants and contracts, and witimately, National _—
Health Insurance. In accomplishing this mission, the HSA should .
perform the following functions:
. Develop standards and certify manpower and
facilities for participation in financing
programs
. Monitor compliance and adequacy of standards and
evaluate the overall impact of standards and
financing for policy implications
j . Administer Titles XVIII (Medicare) and XIX .
SO (Medicaid) Programs
. Review appropriateness of care received in terms

of cost, quality, and effectiveness

. Provide assistance to existing hostth service
i PiOGiess CO Strebyenod WEP Goney Wem’ Capaoiiity

, and ensure they. meet acceptable st:ndards for
- . reimburscment through financing pregrams
Assistant Secretary for Health. . os -. 9

. Continue to provide.or arrange for health services
to specific federal beneficiaries wile facilitating
conversion of these activities to support through
financing programs

This agency would consist of those HSHHA programs currently in

the Delivery cluster (redirected and combined along functional
lines) plus the Bureau of Health Insurance (SSA), Medical Services
Administration (SRS), and Professional Standards Review Organization

_ and Nursing Home Affairs (OASH).

Center for Disease Control - CDC should be established as an
independent agency retaining its cresent- mission, In addition,

the remaining pregrams of the Bureau of Cowsunity Environmental
Management (rat contre] and lead based paint) should be incorporated
into the CDC progran.. National Institute of Occupational Safety and
Health should receive administrative direction from CDC.

 

Implementation of the recommended reorganization should be under-

taken at the earliest possible cate and should be effected under

the leadershin of a management team to be assembled for this express

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concurrence in the concept of the reorganization as cefined herein,

and delegation of implementation authority to the Assistant Secretary
for Health. ‘

Immediate action should be taken on the following:

. Transfer Hational Institutes of Mental Health to National
Institutes of Health

= -, -Establish Center for Disease Control as a separate agency

: . : f
. Establish Health Resources Administration and Health
Services Administration as separate agencies

. Abolish Health Services and Mantal Health Administration
concurrent with establishment o* Health Resources Adminis-
tration and Health Services Administrati

~~

7}

Transfer Bureau of Health Manpower Education to Health
Resources Administration

. Change reporting. relationship of Regional Health Director
to Office of Assistant Secretary for Health
pote enn.

Assistant Secretary for liealth

- | 10,

On a date to be established by the Secretary, prererably no Tater than

July 1, 1973, place the Bureau of
Services Administration under ¢%
for Health. The OASH and the
maxiniun of 90 days to develcp
merger of the appropriate sta

ue

ha

pike
tm
{1

if
he

ch cticth ie

a
j

Health Insurance and Medical

direction of tho Assistant Secretary
organizations should Ze given a
adininistrative details for effective

s into the Health Services Adninistration.

Restructuring of this magnitude will require considerable flexibility

for the management team directing the activities.
not the intent of this report to prov

Therefore, it was

sde a detailed plan but rather

to provide the overall framework of the proposed reorganization within

which operational decisions can be made.

Authority to act and timely

implementation will determine the ultimate degree of success of this

undertaking.

, i nf}
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David 1. Smith (Project Director)
Food and Drug Administration

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Respectfully submitted,

Work Group on HSHA Organization

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Daniel I. Zwick
Office of Assistant Secretary for
Health

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fo 4 i BL OLA Mate eapttee?
2 Place i

Pau] G. Vaugaman ,

National Institutes of Health

 

 

Judith L. Carpenver
Office of Assistant Secretary for
— Health