It seems clear enough, Mr. Chairman, that the requirement that admission to a nursing facility be made by first touching base at the hospital will result in a vastly increased demand for the presently crowded hospital facilities of our country. This portion of the bill is not a deterrent to overuse of hospitals, but an engraved invitation to overuse them. It is an invitation that would be accepted by large numbers of people whose health care does not require hospitalization for any period of time, however limited.

This same section of H. R. 4222--Section 1603--defines "home health services". Included, but not clearly defined, are medical social services and, to the extent permitted in regulations, part-time or intermittent homemaker services.

We do not know exactly what these terms mean, what the bill's drafters intended them to mean, or what the Secretary of HEW may ultimately construe them to mean. Medical social services, and part-time or intermittent homemaker services are not clearly defined in the bill; but neither is the exact meaning of these terms clear to professionals or laymen. The danger here is that Social Security funds could be used to provide services of a nature far removed from medical benefits, and far removed from the intentions of Congress. To give the Secretary power to determine what other services may be necessary for the health of the individual, and to prescribe, by regulation, the sort of services these shall be, is to give the Secretary a blank check signed by Congress, with no payee shown and no amount specified.

There is also the matter of hospital and nursing home utilization committees, Mr. Chairman. H.R. 4222 provides that hospitals and skilled nursing facilities should have such committees to be eligible for participation in the program.

To begin with, few hospitals--and fewer nursing homes--have such committees. But presuming this condition of eligibility were met by participating facilities throughout the country, would the overall effect be good or bad in terms of the authority which it would potentially place in the hands of the Federal government?

The basis for all good medical care is the intimate relationship between a doctor and his patient. One of its essential ingredients is the physician's particular knowledge of his patient's medical needs. It is on the basis of this intimate knowledge that a physician selects a course of treatment based on his patient's individual need.

Is

Thus, the physician is best qualified to judge how ill his patient is, what treatment should be prescribed, whether or not he should be admitted to a hospital, when he is well enough to go home. it wise to subject his judgment to the critical review of a group which is, first of all, far removed from the individual doctor-patient relationship; and which is, second of all, subject to the influence of such

regulations as the Secretary of Health, Education and Welfare may promulgate?

We doubt that this is wise. For the moment, it is sufficient to say that if this legislation were adopted, HEW is faced with only two choices:

On the one hand, HEW can hold this program within the financial limits imposed by tax receipts, tightening the reins on services as costs rise. Here, government keeps an eye on the budget instead of on the patient, with consequent lowering of the quality of medical care. On the other hand, HEW can give the program free rein and wind up by confronting Congress every year or two with a request for more money.

It is not hard to predict how HEW will resolve its dilemma, Mr. Chairman. It will use its power to regulate--and use it to the fullest. Parenthetically, we are convinced this program would be so drastically underfinanced that even the power to regulate would not keep it fiscally sound without further tax increases.

But HEW would at least try to hold costs down through its power to impose regulations. In the process, it could seek to restrict admission to hospitals and nursing homes; cut down on the patient's length of stay within these facilities; impose limits on prescription of drugs, tests or treatment: in sum, HEW could apply the brakes in any of a hundred ways.

The utilization committees would simply become one of the means through which HEW would seek--however vainly--to balance its books.

The powers entrusted to the Secretary under H.R. 4222 are broad indeed, Mr. Chairman. Under Section 1609, these words appear:

"The amount paid to any provider of services with respect to services for which payment may be made under this title shall be the reasonable cost of such services, as determined in accordance with regulations establishing the method or methods to be used in determining such costs for various types or classes of institutions, services and agencies."

There's that word "regulations" again. And with it goes the requirement that payment be made on the basis of the "reasonable cost" of services.

Costs will be reasonable for any product, Mr. Chairman, only when the buyer and the seller agree that they are reasonable. If agreement cannot be reached, any party to the negotiations is usually at liberty to withdraw and seek a satisfactory understanding elsewhere.

A different situation prevails when the Federal government sits down to the bargaining table to negotiate agreements with the providers of medical care. In this case, HEW is in the position of buying perhaps ten to twenty per cent of all the hospital care in the country, plus a substantial percentage of the skilled nursing home care. The providers of service, in the final analysis, are given the option of selling at the customer's price, or not selling at all.

"Reasonable cost" thus winds up by meaning reasonable from

HEW's viewpoint.

Anyone not satisfied with the HEW interpretation of the word is given the sole option of staying out of the program--to the disservice of older patients.

Physicians are not recognized under the bill as eligible providers of services, of course, although the services of more than 50,000 of them are involved., They would therefore not be represented in negotiations between government and the hospitals for the fees to be paid for their services. As for the medical services rendered by interns and residents, under teaching programs, presumably hospitals would be able to bill the government and collect for the services which these physicians would render.

But getting back to the subject of reasonable costs, they will obviously vary from patient to patient, from facility to facility, and from location to location.

Any omnibus measure attempting to lump the charges for medical services into the single concept of "reasonable costs" must inevitably result in overpayment and overspending of tax dollars in some instances; and underpayment in other instances.

The provider not fairly compensated for services provided has no recourse but to leave the program. Those remaining within the plan may well do so because of their ability to cut corners on services, cut costs in the process, and thus obtain adequate compensation.

We cannot predict the standards which the Secretary of HEW would set up for determining "reasonable costs". It is enough to note that one Secretary's standards would not be binding upon his successor, and that the entire process of unilateral cost fixing would be accompanied in the years ahead by concerted out cries of discrimination.

In our opinion, those out cries would most often be based upon

demonstrable injustice.

H.R. 4222, in the process of giving the whip hand to the Secretary of Health, Education and Welfare, requires that the eligibility of hospitals to participate in the program be based on three conditions. (a) adequate medical records; (b) bylaws in effect with respect

These are:

to staff and physicians; and (c) such other conditions as the Secretary may find necessary, in the interest of the health and safety of the individuals receiving the services provided.

Here again H. R. 4222 provides a device for Federal control of hospitals and the medical services they furnish.

We do not argue that hospitals, like other institutions or businesses, should not maintain "adequate records". But who is to say what records are adequate and what records are not? The bill is clear on this point. The arbiter of adequacy is to be the Secretary of HEW. If he so wished, the Secretary could require records so "adequate" that compiling and maintaining them would require a doubling or tripling of hospital administrative staffs.

The Secretary is further empowered to determine such other conditions of participation as he may find necessary in' the interest of health and safety. What the Secretary and his successors might find necessary, Mr. Chairman, I cannot venture to guess. I can only point out that this section of the bill gives him enough authority to become the nation's czar of hospital care.

Very properly we fear unrestrained power in this country. It is all very well to say that our public officials are men of good will and that we can count upon that alone as a safeguard of the regulatory power. But the unrestrained power to regulate can become the power to destroy, whether it be a free nation or a free system of medical care. Even if we could be guaranteed the good intentions of the Secretary and all of his successors, could we be guaranteed that all would be knowledgeable and wise in their exercise of this great authority?

I suggest that we could not. Standards set by an appointed official, and regulations promulgated by him, may be responsive to the wishes of an Administration. But it is unlikely that the political expert will be equally expert in his control of a health system. Delegate these powers to the Federal government, Mr. Chairman, and our free system of medical care--the world's best--would be placed in extreme jeopardy.

I should like to point out to the Committee that H. R. 4222 pro

vides an apparent penalty for economy.

Where the provider furnishes more expensive services than those required or requested by the patient, payment is limited to the reasonable costs of the less expensive services which would have sufficed.

However, where the provider furnishes less expensive services not at the patient's request, a penalty attaches to the economy effected. For the bill provides that the amount of the payment with respect to such services shall--and I quote the measure's language--"be the reasonable

cost of such services minus the difference between the charge customarily made by the hospital or nursing facility for such services... and the charge customarily made by it for such services in the accommodations furnished.

As an example, suppose the reasonable cost for a two, three, or four-bed room is determined to be $30, and that the reasonable cost for a room with more beds is established as $20 per bed. The difference between the two accommodations amounts to $10. If the patient were placed in the less expensive room, the provider would not be entitled to receive the $20 reasonably charged for the services furnished, but only $10. This sun would represent the difference between its customary charge and the difference between that charge and the higher cost of more private accommodations.

It does not seem wise to us that a provider of services should be penalized for saving tax dollars, particularly in view of the fact that circumstances at the time of hospital or nursing home admission may require the use of a less expensive but available accommodation.

Now let us take a look at the availability of the promised benefits. The bill sets up a number of requirements which must be met by the providers of services before they can participate in the program. I have referred to several of these.

One of the eligibility requirements for nursing homes is that

they have a 24-hour-a-day nursing service.

According to a statement made by Representative Adam Clayton Powell (D-N.Y.) during the debate on a bill to extend the Practical Nurse Training Act, of the 23,000 nursing homes in the United States, only 9,000 had the services of either a professional or a practical nurse. Obviously, then, nursing home services--limited under the bill to conditions for which the patient was treated in the hospital--will be unavailable in many nursing homes and in many parts of the country.

Similarly, there is reason to question the availability of home health services, for there are only 900 such organizations in the 3,067 counties of this country.

There is even some question as to whether all our hospitals, especially those in the rural areas, will be qualified.

Elsewhere I have predicted overuse of the facilities covered in the bill for a number of reasons. This overutilization, compounded by the limited availability of some facilities, will result in one thing: overcrowding, preceded by increasingly long waits for admission.

Finally, Mr. Chairman, I should like to point out that this is
It places its emphasis on putting the

an institution-oriented measure.

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