Statement by
Leslie Norwalk, Esq.
Acting Deputy Administrator
Centers for Medicare & Medicaid Services

2004 Annual Reports of the Board of Trustes of the Federal OASDI and HI/SMI Trust Funds
before the
House Ways and Means Committee

April 1, 2004

Good afternoon. Chairman Thomas and Members of the Ways and Means Committee, my name is Leslie Norwalk. Since November 2001, I have officially served as Counselor to the Administrator at the Centers for Medicare & Medicaid Services. For the past year, I have been the Acting Deputy Administrator and Chief Operating Officer of CMS. In this role I direct the day-to-day operations of CMS.

On March 25, 2004, Richard Foster, CMS's Chief Actuary, mentioned my name and referred to me as a "top attorney at CMS" in his testimony before this Committee. I understand that the Committee is interested in hearing my recollection about a meeting I had with Mr. Foster and any advice I gave him.

On June 13, 2003, Mr. Foster came to see me to discuss a difficult situation for him and to ask for my help to resolve it. While Mr. Foster sought my advice, I believe that it was in my capacity as the Deputy and Chief Operating Officer, and not in my capacity as a lawyer. I believe this because my interactions with Mr. Foster in 2003 focused on helping him manage the incredible workload that the Office of the Actuary had from a CMS-management perspective. Nevertheless, in discussing his concerns last June, I gave Mr. Foster my opinion about the interplay of the Constitution, the Balanced Budget Act of 1997 and its accompanying report language.

During our June 13th meeting, Mr. Foster described the history of his office in providing actuarial support to Congress, including the history surrounding the Balanced Budget Act of 1997 legislation and accompanying Conference Report language and his professional responsibilities. Under these authorities, he believed that he had an obligation to report his actuarial analysis to Congress, without informing the Administrator of the specifics of the Congressional request or his analysis in response to the request. He believed that providing this information to the Administrator compromised his ability to function as he believed the Chief Actuary should.

During the meeting, I reviewed the statutory language, which states, " The Chief Actuary shall be appointed by, and in direct line of authority to, the Administrator…." 42 U.S.C. § 1317(b)(1). The accompanying Conference Report language highlights the importance of actuarial analysis in drafting legislation. However, neither the statutory text nor Conference Report language on its face requires the Office of the Actuary to report to or provide internal Executive Branch information to Congress. While Mr. Foster noted the emphasis in the Conference Report of sharing information with Congress, I explained to him that the Conference Report language does not require sharing information. In any event, the Conference Report language does not have the force of law. I further explained that a statutory requirement that would mandate the Chief Actuary report directly to Congress would raise serious Separation of Powers issues under the Constitution. While I am an attorney, my interpretation and advice was provided in my capacity as Acting Deputy Administrator and Chief Operating Officer for CMS, and not as an attorney for the agency. Of course, on a daily basis all Executive Branch officials interpret the statutes under which we operate. Furthermore, I have consulted with the attorneys in the HHS Office of General Counsel, and they have informed me that they concur in my interpretation.

Mr. Foster is a very highly regarded actuary, and consequently, it is not surprising that Members of Congress and the Executive Branch are interested in his actuarial analysis of items impacting the Medicare, Medicaid and SCHIP programs.

Finally, I had no knowledge of any analysis by the Office of the Actuary that scored a complete bill until I returned from my Christmas vacation this January. It is my understanding that the only request that was delayed was an impact analysis of an early version of the premium support provision.

Thank you.

Last Revised: April 5, 2004