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Y 4.674/7:1 46/3
- MEDICARE HEALTH MAINTENANCE ORGANIZATIONS:

THE IMC EXPERIENCE

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OS RECORD ONLY

HEARING

BEFORE A

SUBCOMMITTEE OF THE

COMMITTEE ON
GOVERNMENT OPERATIONS
HOUSE OF REPRESENTATIVES

ONE HUNDREDTH CONGRESS

FIRST SESSION

DECEMBER 15, 1987

Printed for the use of the Committee on Government Operations

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FEB 1989

NOSSOS

ON LIBRAR

RARY OF GO

OVT DOCUS

U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 1988

87-094 5

For sale by the Superintendent of Documents, Congressional Sales Office

U.S. Government Printing Office, Washington, DC 20402

COMMITTEE ON GOVERNMENT OPERATIONS

JACK BROOKS, Texas, Chairman JOHN CONYERS, JR., Michigan

FRANK HORTON, New York CARDISS COLLINS, Illinois

ROBERT S. WALKER, Pennsylvania GLENN ENGLISH, Oklahoma

WILLIAM F. CLINGER, JR., Pennsylvania HENRY A. WAXMAN, California

AL MCCANDLESS, California TED WEISS, New York

LARRY E. CRAIG, Idaho MIKE SYNAR, Oklahoma

HOWARD C. NIELSON, Utah STEPHEN L. NEAL, North Carolina

JOSEPH J. DioGUARDI, New York DOUG BARNARD, JR., Georgia

JIM LIGHTFOOT, Iowa BARNEY FRANK, Massachusetts

BEAU BOULTER, Texas TOM LANTOS, California

DONALD E. "BUZ” LUKENS, Ohio ROBERT E. WISE, JR., West Virginia

AMORY HOUGHTON, JR., New York MAJOR R. OWENS, New York

J. DENNIS HASTERT, Illinois
EDOLPHUS TOWNS, New York

JON L. KYL, Arizona
JOHN M. SPRATT, JR., South Carolina JAMES M. INHOFE, Oklahoma
JOE KOLTER, Pennsylvania

CHRISTOPHER SHAYS, Connecticut
BEN ERDREICH, Alabama
GERALD D. KLECZKA, Wisconsin
ALBERT G. BUSTAMANTE, Texas
MATTHEW G. MARTINEZ, California
THOMAS C. SAWYER, Ohio
LOUISE M. SLAUGHTER, New York
BILL GRANT, Florida
NANCY PELOSI, California

WILLIAM M. JONES, General Counsel
DONALD W. UPSON, Minority Staff Director

HUMAN RESOURCES AND INTERGOVERNMENTAL RELATIONS SUBCOMMITTEE

TED WEISS, New York, Chairman THOMAS C. SAWYER, Ohio

JIM LIGHTFOOT, Iowa JOHN CONYERS, JR., Michigan

JAMES M. INHOFE, Oklahoma HENRY A. WAXMAN, California

CHRISTOPHER SHAYS, Connecticut NANCY PELOSI, California

Ex OFFICIO
JACK BROOKS, Texas

FRANK HORTON, New York
JAMES R. GOTTLIEB, Staff Director
MARC SMOLONSKY, Professional Staff Member

PAMELA H. WELCH, Clerk
MARY VIHSTADT, Minority Professional Staff

CONTENTS

Page

158

Der

.........

Hearing held on December 15, 1987.

Statement of:

Fowler, Wayne A., former Director, Office of Health Maintenance Organi-

zations, Department of Health and Human Services, and former vice

president, International Medical Centers .....

Goulet, Arthur W., former qualifications officer, Office of Health Mainte-

nance Organizations, U.S. Public Health Service, Department of Health

and Human Services, and former associate executive director, Interna-

tional Medical Centers .....

178

Haddow, C. McClain, former Chief of Staff, Department of Health and

Human Services .........

Kusserow, Richard P., inspector general, Department of Health and

Human Services, accompanied by George Reeb, Director, Health Care

Audits, and Michael Cesario, senior inspector for HCFA programs .........

Moley, Kevin E., Director, Office of Prepaid Health Care, Health Care

Financing Administration, Department of Health and Human Services .
Prussin, Jeffrey A., president, Health Systems Development Corp., Coral
Gables, FL, former staff, Department of Health and Human Services,

and former executive, International Medical Centers ........
Weiss, Hon. Ted, a Representative in Congress from the State of New

York, and chairman, Human Resources and Intergovernmental Rela-

tions Subcommittee: Opening statement .............

Williams, David C., Director, Office of Special Investigations, U.S. Gener-

al Accounting Office, accompanied by Alex Falcon, supervisory special

agent, and Dana Bedwell, special agent................

Letters, statements, etc., submitted for the record by:

Fowler, Wayne A., former Director, Office of Health Maintenance Organi-

zations, Department of Health and Human Services, and former vice

president, International Medical Centers:

December 16, 1985, letter to Mr. Miguel Recarey, Jr., president, IMC

HMO, Inc., re acceptance of employment ...............

171

Prepared statement .......

160-166

Goulet, Arthur W., former qualifications officer, Office of Health Mainte-

nance Organizations, U.S. Public Health Service, Department of Health

and Human Services, and former associate executive director, Interna-

tional Medical Centers: Prepared statements ................

............ 180-198

Kusserow, Richard P., inspector general, Department of Health and

Human Services:

International Medical Centers, Inc., chronology of events ....................... 56-62

Prepared statement................................................................................... 13-26

The Recarey Organization (mid-1986).......

28

Moley, Kevin É., Director, Office of Prepaid Health Care, Health Care

Financing Administration, Department of Health and Human Services:

Prepared statement ...

............. 121-131

Prussin, Jeffrey A., president, Health Systems Development Corp., Coral

Gables, FL., former staff, Department of Health and Human Services,

and former executive, International Medical Centers: Prepared state-

ment ..........

.... 147-153

Williams, David C., Director, Office of Special Investigations, U.S. Gener-

al Accounting Office:

Prepared statement ........

........ 73-85

Submissions to additional questions of Mr. Lightfoot ..............

89-94

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MEDICARE HEALTH MAINTENANCE
ORGANIZATIONS: THE IMC EXPERIENCE

TUESDAY, DECEMBER 15, 1987

HOUSE OF REPRESENTATIVES,

HUMAN RESOURCES AND
INTERGOVERNMENTAL RELATIONS SUBCOMMITTEE
OF THE COMMITTEE ON GOVERNMENT OPERATIONS,

Washington, DC. The subcommittee met, pursuant to notice, at 9:30 a.m., in room 2247, Rayburn House Office Building, Hon. Ted Weiss (chairman of the subcommittee) presiding.

Present: Representatives Ted Weiss, Thomas C. Sawyer, Nancy Pelosi, Jim Lightfoot, and Christopher Shays.

Also present: James R. Gottlieb, staff director; Marc Smolonsky, professional staff member; Pamela H. Welch, clerk; and Mary Vihstadt, minority professional staff, Committee on Government Operations.

OPENING STATEMENT OF CHAIRMAN WEISS Mr. WEISS. Good morning. The Subcommittee on Human Resources and Intergovernmental Relations is now in session.

We will have other members of the subcommittee joining us as the day goes along, and then some will be leaving us as business on the floor becomes activated.

Mr. Lightfoot, the ranking member, will be here with us shortly. We are pleased to note the presence of Ms. Pelosi.

Before we go on to the business of the day, let me just update the record on some recent and current business of the subcommittee.

On November 18, the subcommittee voted the issuance of two subpoenas, one to the Office of Management and Budget and the other to the Department of Health and Human Services.

I am pleased to note that the subpoena to OMB did not have to be served and that in fact the records were delivered before service was necessitated.

The subpoena to the Secretary of the Department of Health and Human Services was served on December 8, and this morning we received the material that was subpoenaed.

We should note for the record that the Secretary, as well as a number of other important people in the administration, yesterday issued a statement indicating their objection to the subpoena and the issuance of the subpoena and the delivery of the records pursuant thereto. But they said that they feel they have to abide by the law, and I respect their commitment to that. Congress clearly has

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