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other words, how much is actually covered by Medicare today for the elderly recipients of health care. What are the numbers you have?

I recall, again, serving in 1977, it was only about 38 percent. That figure as I recall has slipped. Can you comment on that?

Secretary SULLIVAN. I believe it is really still around 40 percent but let me just check. We can provide that for the record.

[At the time this publication went to press, no follow-up data had been received from Secretary Sullivan.]

Mr. VENTO. That would be very helpful.

I note also that we probably would like to know how many Medicare eligible actually slip into Medicaid. That would be another statistic that I think would be helpful-we say we are going to save money by chopping down the Medicare budget or restricting Medicare payments of it and, of course, I have a major concern with that again this year.

I realize that on the average there has been a tremendous increase in health care costs for Medicare. As we look at the numbers, it is more than it should be. I come from Minnesota, and there we squeezed a lot of the excess costs out of the standard fees paid to medical doctors so now we face a plight where the majority of doctors, medical doctors, will not serve under the payment amount.

Do you have any solution in the near term to deal with this type of disparity? Minnesota may be different, I don't want to pick on California or Florida, but I know the costs there tend to be significantly higher for the same services.

We have doctors saying they are not going to serve Medicare patients any more, certainly they are not going to do it under the mandated payment.

Are we going to get a solution that deals with this inequity-I would like you to comment on the significant recommendations this year to again make significant cuts in the Medicare payment system.

Secretary SULLIVAN. Yes.

Mr. Vento, first of all, let me say that the overall answer to your question really is one which will come as part of our task force findings that presently is working very hard, looking at our comprehensive system.

But with our budget this year, as I pointed out, we are not cutting benefits to any of our citizens, but what we are working to do is to be more prudent purchasers of services.

There are a number of things that we are proposing to eliminate. For example, I mentioned previously the anesthesia payments where we are paying anesthesiologists, plus anesthetists, we also propose to eliminate some of the payments for assistants in surgery

Those benefits will still be there, but we are eliminating duplicate payments.

We are also finding that we are paying through our Medicare system, higher costs for durable medical equipment and for oxygen services than, say, the VA is paying or private sector is paying.

What we are proposing to pay there is what is a national median payment for those services, meaning that those efficient providers

of those services would be the ones that we would use as a standard for payment.

So through this mechanism, we are not reducing benefits, but rather paying appropriate prices for those services that are being provided.

Mr. VENTO. Mr. Chairman, with regards to Minnesota and the various disparities with regards to the various States, if you could comment on that, it would be helpful. I know my time has expired, but I appreciate the time of the committee.

Dr. Sullivan?

Secretary SULLIVAN. If I understand your question, is it concerning physicians payments?

Mr. VENTO. Yes.

Secretary SULLIVAN. Of course, we were pleased that the Congress passed physician payment reform last year that begins to address some of the inequities that exist in physicians payments, inequities where individuals in primary care fields have been paid at very low scales—that is, pediatricians, internists, family physicians, whereas payments in other areas have been excessive, in such fields as radiology, anesthesiology, and some other areas such as cardiac catheterization. So physician payment reform will begin to address some of these inequities.

Secondly, as part of the physician payment reform, we propose bonus payments of up to 10 percent for physicians who work in medically under-served rural areas and inner cities.

As far as hospitals are concerned, we have recommended in the past a greater update in reimbursement rates for hospitals in rural areas, as well as a number of other programs, to support hospitals in rural areas.

All of these efforts are addressing parts of this whole system. But again, I would say that the ultimate solution will be part of the recommendations that will be going forward from our various studies to the Domestic Policy Council, and then ultimately to the President for his action.

Mr. VENTO. Thank you, Mr. Chairman.
The CHAIRMAN. Thank you, Mr. Vento.

Mr. Secretary, the time has just flown. It is past 12 o'clock. I would like to get you for another 5 to 10 minutes; but I must try to recapitulate.

We have discussed today, and it has been reiterated over and over again that the cost of medicine is increasing. We know that the elderly are paying a larger percentage of their income today than they did just last year or the year before.

We also know that if something is not done the elderly, by the early 1990's, will be paying more than 20 percent of their income. It is also estimated that if the cost of medicine continues, we will be paying, by that same time, in excess of 15 percent of our gross national product.

It is a situation that we do not want to see. But what concerns me is here we have a commission who is supposed to be a bipartisan commission that came up with the recommendations of all combined. When the time came to vote on the recommendations, it was on a party basis.

Now, what about your Domestic Policy Review Commission? Is that going to be bipartisan also? Will it be a panel that will make recommendations on a partisan basis, or will it be a panel to make recommendations that will meet the needs of the elderly and nonelderly in this Nation?

Secretary SULLIVAN. Mr. Chairman, of course the Domestic Policy Council will be with our other members of the Cabinet. We will be making recommendations which we really believe are in the best interests of the American people. That is who we are here to serve.

The Pepper Commission, Mr. Chairman, as I recall, I think there were votes on both sides of this. Mr. Stark, for example, voted against that proposal, and he has been very active in the health arena.

So I don't look upon that committee's outcome as really a partisan effort. I think that everyone on that commission tried to, as I understand it, do a good job in coming up with the best response to those recommendations.

The CHAIRMAN. Well, Dr. Sullivan, I appeared before the Pepper Commission, and I was told that today they would be acting in the best interest of the American people. They believe that.

Now, the only thing we learned from you with regard to the Pepper Commission is that you are concerned about the $66 billion cost. Now, can you tell us what specific concerns you have in regard to access portions of the Commission's recommendations?

Secretary SULLIVAN. Well, Mr. Roybal, of course that report was just released on Friday, and we haven't had time to really study it in great detail.

The CHAIRMAN. All right. Can you, for the record, submit to this committee in writing, your concerns with regard to access portions and long-term portions of the Commission's recommendations?

I would like to know where you would differ from those recommendations when, as long as I have known of you, you seem to be for them.

Secretary SULLIVAN. Yes, sir. Mr. Chairman, the position that I have taken is really not to try and dissect the Pepper Commission's recommendations at this juncture.

My approach is to this is to try to get all of the information that we can from all sources. We have, as I mentioned, two other bodies that are working who are yet to report.

And rather than try and comment on the specific Pepper recommendations when we don't yet have our own analysis completed, I would rather wait until we have that, so that the responses that we do make are then made on the basis of the best information available and with the objective of coming up with a plan that would be workable and that would certainly serve the American people.

It's not really my intention to criticize or single out specific aspects of the Pepper Commission.

The CHAIRMAN. Well, to make a positive recommendation is not a criticism; I think that that can be done.

But that is entirely up to you. One of the things that comes to my mind is the difficulty that you or any other group is going to have in making some of these positive recommendations, in view of what you read in the budget for fiscal year 1991.

Reductions are made in almost everything with regard to health, even reducing out patient payments by 10 percent. You limit anesthesia payments through 90 percent of the national average. Everything is limited.

And as you go on and on about this thing, you also find that Medicare is recommended to be reduced every year quite considerably.

My question is, would it be a difficult task for anyone to come up with a positive recommendation if everything in the budget is being reduced, or do you think it can be done?

Secretary SULLIVAN. I think there is no doubt that it can be done, Mr. Chairman. Let me say this: What we have recommended in our budget is not reduction in dollars spent, but restraints on the rate of growth.

The CHAIRMAN. Sure. So what you have done is shifted over to the person receiving the care-the senior citizen.

Secretary SULLIVAN. Well, that is not the case, Mr. Chairman. Let me give you a specific example here.

When I cited that we pay more through our Medicare system for oxygen services than do private sector organizations and the VA, we are proposing to reduce the payments for those services, but not reduce the services.

It's that kind of excess payment that we are reducing. We have a situation now where an anesthesiologist may supervise up to four separate nurse anesthetists and receive a fee as though he had delivered the anesthesia himself, plus we are paying the fee for those nurse anesthetists.

That is double payment. It's that kind of payment that we are proposing to eliminate because we don't believe that is fair to the American taxpayer or to our department to be paying that.

The CHAIRMAN. I agree with you, Dr. Sullivan, that there is room for improvement and that there should be improvement, but I still think it is going to be a very difficult task for anyone to come up with proper recommendations.

I am concerned about the fact that Medicare, for example, is reduced or recommended to be reduced in 1991 by $5.5 billion; in 1992 by $8.2 billion; in 1993 by $10.3 billion; and 1994, $12.5 billion; and on and on.

Will that have an effect on what one does with medical care in this country?

Secretary SULLIVAN. Well, Mr. Chairman, if we continue to do things the way we have done, yes, they would. But what we are proposing is to change that because as I pointed out, we as a Nation are already outspending any other nation by far, and we are spending 50 percent more than the number two nation.

So we are proposing to get more return for the dollars that we spend; and clearly, if our health status were number one in the world, then I think there could be some justification for that.

But when other nations are doing better than we are in infant mortality and overall life expectancy and the incidence of heart disease and other conditions, then that means that we are not spending our money wisely.

The CHAIRMAN. In other words, we are not spending our money wisely, and we are not very efficient in providing the care that is necessary at the least cost.

Secretary SULLIVAN. Yes. Those are the kinds of changes

The CHAIRMAN. With that, I agree. But to project decreases over a period of 5 years before a plan is even formulated, I think is not the right way to go.

I yield now to Mr. Wyden.
Mr. WYDEN. Thank you, Mr. Chairman.

Just one question. Throughout this Congress, Dr. Sullivan, a bipartisan group of legislators have been trying to pass legislation to provide home care for the frail elderly. What this would do would be to give the States the option to use Medicaid dollars that have been earmarked for institutional care, to be able to use them for home care programs and the like, and do it without going through this cumbersome waiver process that they have to apply for.

Can you support that legislation at this point as something consistent with your philosophy for serving the frail elderly?

Secretary SULLIVAN. Well, Congressman Wyden, on the specific legislation, I would first want to review that in its entirety, which I will do and get back a response to you in writing.

[At the time this publication went to press, no follow-up data had been received from Secretary Sullivan

Secretary SULLIVAN. But having said that, let me say this: Certainly the intent of that legislation, as you describe it, is certainly something that I believe is meritorious, and we would certainly want to work to support that. But on the specific bill, I would need to analyze that and get a response back to you, which I would be pleased to do.

Mr. WYDEN. Well, that would be helpful, Mr. Secretary.

This bill has been in for 2 years. It passed the House last time, but the administration objected. If you could let us know as quickly as possible, I would appreciate it. Thank you, Mr. Chairman. .

The CHAIRMAN. Dr. Sullivan, each Member seems to have one quick question.

Secretary SULLIVAN. Sure.

The CHAIRMAN. And if it will be quick, I hope you can remain for another minute or so.

Mr. VENTO. Just a statement representing a little frustration.

I am sure that Dr. Sullivan may understand this, but, you know, we have increased copayments to try to drive efficiency out of the system; that is in essence what has happened in my State because of the difference in terms of payment.

And I know that with the legislation passed last year in some time, we may see some change. Unfortunately, I don't know if we will have any doctors left serving in any of those areas. That is a real crisis, and we are going to have to do something.

By increasing copayments, we sort of pass the buck to the patient, and the fact is they come out of the hospital with a computer printout. That is what their bill looks like now, and we expect them to be advocates for themselves.

I think the message I get back is they want us to be their advocates, and I think it really means taking on the issue here and

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