physicians" on different terms than with other physicians. Normally, anesthesiologists have been perceived as included within that term. We have said in the past that if the term "hospital-based" has any valid usage at all (which we doubt), it should be used only to describe those physicians who are in fact in an employment relationship with a hospital. This would not include anesthesiologists: According to information available both to ASA and to HCFA, the vast majority (upwards of 80 to 90 percent) of practicing anesthesiologists in this country practice, not on a salaried basis, but on a fee-for-service basis.

Why is it so important to us that we not be characterized as an "institutional service" under H.R. 5400 or any other plan of health insurance? I can respond only by saying that the concept of fee-for-service-whether the fee is set by private physician-patient agreement, or by Federal mandate-rests upon the existence of a personal relationship between physician and patient, whereas the institutional salary arrangement simply does not. a surgical patient is, in today's world, no less the patient of his anesthesiologist than the patient of his surgeon, and is owed no less a duty of direct, personal and quality care by the anesthesiologist, than by the surgeon.

Some Subcommittee members may believe that ASA favors fee-for-service compensation, because in the main it is assumed that this form of compensation produces higher income to the physicians. The fact is that ASA possesses no information to verify this assumption, but we do certainly know that professional independence is normally far more often a charactertistic of the fee-for-service arrangement than of a salaried arrangement. We believe strongly that it is this sense of professional independence which leads to a more direct relationship with the patient, and in the last analysis to better patient care.

If there is any valid basis for distinction among physician services, under H.R. 5400 or some other program of governmental or private health insurance—and we doubt there is such a valid basis-it seems to us that the distinction would more properly rest between those physicians who have a direct personal relationship with the patient, and those who do not-whether the medical services in question are performed within, or outside, a hospital. In the last analysis, however, we question the wisdom of attempting to distinguish among various types of physician services for purposes of compensation under a program of medical insurance, and we strongly recommend that this concept be dropped from H.R. 5400 or any other similar proposal.

I would also like to comment specifically on the proposed concept, contained in subsection 1837 (e) of the bill, that "non-hospital" physicians will be paid under the plan on the basis of Federally-established fee schedules. I am certain it will come as no surprise to the Committee that ASA opposes the proposed abandonment of the present Medicare reimbursement standard-"usual, customary and reasonable"-in favor of a fee schedule method of compensation.

We recognize, as we did in 1976, that given the inelasticity of demand for many medical services, any NHI program must "contain controls which assure to the patient and his insurer that anesthesia care is being provided at a fair cost consistent with medical and legal responsibilities. . . ." Our opposition to the proposed fee schedules thus stems not so much from the naked concept of a fee schedule, but from our fear-we believe not unjustified-that such a mechanism, once in place, would be used to prevent physicians from being fairly compensated for their services, or would be used to ration medical care.

Under Medicare, we are already witnessing the use of an indexing system, for establishing reimbursement levels, that operates in precisely this fashion. In the case of our own specialty, reimbursement levels lag far behind the compensation necessary to cover rapidly escalating costs, such as cost of malpractice insurance, and of course the pattern under Medicaid is even worse, dramatically worse. Why should be have any confidence that a fee schedule system will work any better, or for that matter, won't be considerably worse?

Subsection 1837 (e) contains the statement that the Secretary shall “consult with physician representatives concerning fee schedules." On the basis of the present record, we believe this offers little comfort to organized medicine. As some members of the Subcommittee are perhaps already aware, the Federal Government-through the FTC and the Justice Department-has undertaken

3 It is the official policy of The American Society of Anesthesiologists, Inc. that an anesthesiologist is free to choose whatever arrangement he prefers for compensation of his professional services. The Society does not consider the compensation arrangement so chosen to be a matter of professional ethics.

in recent years a wide-ranging attack on the capacity of organized medicine to speak effectively on issues related to the economics of practice. ASA bore a major brunt of this attack in a suit by the Justice Department, by which the Government sought to enjoin ASA's preparation and dissemination of an informational relative value guide-not a fee schedule but merely an effort to relate the complexity of various anesthesia procedures, one to another-designed to assist both anesthesiologists, patients and third-party payers in their fee negotiations. To me, it is not as significant that ASA won this suit-after spending hundreds of thousands of dollars- but that the Government brought it, and having brought it, refused to negotiate with ASA a settlement of the suit, guaranteeing ASA's constitutional right to speak out on economic issues related to the practice of our members.

This is the same Administration that now seeks tacitly in H.R. 5400 to suggest that the proposed fee schedules will be fairly administered, because of the consultative rights of physician representatives. Even recognizing that consultative rights are only just that, and that our consultative advice can be accepted or rejected by the Governmental fee-setters as they see fit, we in ASA believe that on its record, this Administration does not really care very much what organized medicine thinks about economic issues. To the contrary, the Administration's track record has been oriented toward stilling what small voice organized medicine still possesses on economic issues, and limiting its input to the provision of "historical data". You will forgive us, therefore, if we view with some suspicion the motivation behind, or the effectiveness of, the Administration's proposal of consultative rights under the fee schedule approach.

That suspicion would seem to be even further justified by the requirement of Section 1854, that providers under the plan must accept payment under the fee schedules as payment in full for their services. As we are all aware, the Administration-and many Members of Congress-have become alarmed at the increasing disinclination of physicians to accept assignment under Medicare. This trend requires no elaborate explanation: It exists because Medicare reimbursement rates are becoming increasingly unrealistic, as compared to other insurance plans and in terms of the costs of providing medical care.

As an example: I am a member of a large anesthesiology group in San Diego, California. In the past seven years, since the inception of Medicare, our cost of practice, per case, has risen 353 percent. During that same period, our level of Medicare reimbursement for a representative group of procedures has risen only 171 percent, or only half as much. It it any wonder that my colleagues and I are increasingly disinclined to accept assignment?

We submit that the mandating of provider acceptance of a Federally-determined fee is simply not the answer, at least until the Government-under its existing medical insurance programs, shows a real inclination and capacity to establish reimbursement levels which are in fact equivalent to private plans. We finally wish to express our concern over the provisions of Section 1856, by which the Administration proposes in effect to establish national standards for allied health care personnel, and in the process to override limitations of State law relating to the scope of practice of such personnel, when their services are offered through a Federally-certified outpatient facility.

We express our opposition to this proposal, not because it would have any present particular impact on anesthesia care, but because it (a) by its terms ignores the necessity of physician input as to the educational qualifications for allied health care personnel, and (b) proposes to override the entire existing state licensure system for such personnel. We believe these are both dangerous concepts, and should not be permitted a foothold under the mantle of a proposed program of insurance.

We understand the desire of the drafters of H.R. 5400 to optimize the availability of lower-cost health care services in the outpatient setting. We oppose, however, the apparent effort in the bill to deny to the state legislatures or regulatory bodies the right to determine the scope of practice of non-physician health care personnel. In the last analysis, the determinative factor in defining scope of practice is the provision of quality care to the patient. This determination, we submit, is best made by the various state boards of medicine and nursing, access to which is available for all members of the local health care community, and for the public.

In connection with the preparation of this testimony, I have kept very much in mind, and on occasion have referred to, the formal statement approved by ASA's House of Delegates four years ago on the subject of national health

insurance. I can perhaps do no better in summarizing the position of our Society on the Administration's bill than to quote a pertinent portion of that 1976 statement:

"ASA believes that the greatest benefit to the American public, both generally and in terms of anesthesia care, derives from the continued application of the basic fee-for-service concept for physician care rendered. Application of this concept operates to preserve the integrity both of the profession and of the physician/patient relationship, and as a practical matter, to encourage the continued cooperation of physician providers under an NHI program. Within that framework, however, any program of health insurance should intelligently be structed so as not to discourage anesthesiologists from participating in arrangements with non-physician health care personnel to maximize the appropriate availability of medical direction by anesthesiologists at a reasonable cost to individual patients, consistent with sound medical practice. ASA will oppose, however, any effort to erode, through the vehicle of NHI or otherwise, the essential requirement of physicial direction of patient care." Thank you for your attention.

[From the ASA Newsletter, April 1976]

1976 ASA STATEMENT ON CURRENT ISSUES RELATED TO NATIONAL HEALTH INSURANCE PROPOSALS

The American Society of Anesthesiologists (ASA) is a national professional organization representing over 14,000 member physicians. ASA is dedicated to advancement of the art and science of anesthesiology-a recognized specialty practice of medicine principally involving

1. Management of procedures for rendering a patient insensible to pain and emotional stress during surgical, obstetrical and certain medical procedures; 2. Support of life functions under the stress of anesthetic and surgical manipulations;

3. Clinical management of the patient unconscious from whatever cause;

4. Management of problems in pain relief;

5. Management of problems in cardiac and respiratory resuscitation;

6. Application of specific methods of inhalation therapy; and

7. Clinical management of various fluid, electrolyte, and metabolic disturb

ances.

In accomplishing the above, the Society endeavors to extend and improve the science of anesthesiology by encouraging institutions and individuals to pursue research in anesthesiology and related fields. The Society is also dedicated to the teaching of the art and science of anesthesiology to medical students, all allied health care personnel, and other physicians as well as its own members.

ASA believes that in view of the current extensive study and debate on various proposals for programs of national health insurance, it is obligated on behalf of its membership to make a formal statement of ASA position on several of the issues central to those proposals.

In perspective, medical care is only one of the many factors affecting the quality of life for Americans, and any program of national health insurance (NHI) cannot, and should not be expected to solve all health-related social problems facing the country. If changes are to be made in the means of access to the present health care delivery systems, they must be so structured as not to diminish the already-existing high quality of care extensively available to our citizens, nor to place an undue financial strain on the economy of the nation. Any new NHI program should thus be realistic in scope and goals, cost contained, and administratively workable.

Within these limitations, every citizen must be deemed entitled to have practical access to the basic essential benefits of health care. These benefits should include health education, preventive care, diagnostic and therapeutic services (for both inpatients and outpatients), and rehabilitation services. Entitlement to essential benefits should not be deemed to include, however, access to unproven experimental procedures, forms of treatment having no scientific basis (e.g., chiropractic treatment), or treatment of a mere cosmetic or otherwise nonessential nature.

While any NHI program should concern itself with accessibility to essential care, it should not do so at the expense of disrupting the physician/patient relationships, inhibiting medical initiative or innovation, or eliminating patient

choice among proven alternative provider mechanisms. A principal feature of any NHI program must be the assurance of physician direction of health care provision, whether involving anesthesia care or otherwise, and especially at the patient interface.

Priority in the development of any NHI program should be assigned to protection of every citizen against the often disastrous economic consequences of prolonged or catastrophic illness. ASA believes that the national interest would be served by a mandatory and compulsory program of catastrophic health insurance, which would provide coverage on an initial co-payment basis, with costs above a certain percentage of income, or maximum yearly amount, to be borne by the insurer.

Financing methods for a program of catastrophic insurance, or any other similar program, should draw on proven strength of the present system and should not disproportionately burden low income families. ASA subscribes to the current financing proposals of the American Medical Association, which involve utilization of employer-employee contributions and income tax credits for the non-indigent, and tax dollar financing for the indigent.

Financing of any NHI plan should provide for separation of medical and institutional components, so that costs of these categories are ascertainable. In this connection, clear recognition should be given to the fact that only those physicians or other providers in the full employ of hospitals are properly termed "hospital based" a status applying to less than ten percent of all practicing anesthesiologists.

With particular reference to the delivery of anesthesia care, ASA believes that any system of health insurance for all or a major segment of our society should be designed to encourage the most efficient, medically-sound use of anesthesia care skills. Such a system should not discourage the use of qualified non-physician health care personnel (e.g., Recovery Room Nurses, Anesthesia Technicians or Assistants, Nurse Anesthetists, Respiratory Therapists) under the medical direction of anesthesiologists-thus encouraging the availability of expert medical judgment to as many patients as ethically possible and as so recommended to the Subcommittee on Heatlh of the Senate Finance Committee.

Any NHI program must also give recognition to and fairly compensate the spectrum of anethesia care services which are performed by all members of the anesthesia care team. An NHI program should fully be consistent with the requirements of ethical medical practice, and particularly should reflect the Guidelines for Patient Care in Anesthesiology and the Guidelines to the Ethical Practice of Anesthesiology, approved by the ASA House of Delegates.

Given the inelasticity of demand for many medical services, including anesthesia care services, ASA recognizes that any NHI program will contain controls which assure to the patient and his insurer that anesthesia care is being provided at a fair cost consistent with the medical and legal responsibilities, training of the provider, and the complexity of the medical procedure involved. Such a program will also inevitably contain features to assure provision of quality care; ASA has supported, and will support in connection with any NHI program, the initiation and operation of peer review mechanisms such as those attached to this statement as pertinent to the practice of anesthesiology.

ASA believes that the greatest benefit to the American public, both generally and in terms of anesthesia care, derives from the continued application of the basic fee-for-service concept for physician care rendered. Application of this concept operates to preserve the integrity both of the profession and of the physician/patient relationship, and as a practical matter, to encourage the continued cooperation of physician providers under an NHI program. Within that framework, however, any program of health insurance should intelligently be structured so as not to discourage anesthesiologists from participating in arrangements with non-physician health care personnel to maximize the appropriate availability of medical direction by anesthesiologists at a reasonable cost to individual patients, consistent with sound medical practice. ASA will oppose, however, any effort to erode, through the vehicle of NHI or otherwise, the essential requirement of physician direction of patient care.

In general, ASA finds itself in large agreement with the positions on NHI taken in recent months by the American Medical Association, and expects to cooperate with AMA in the formulation of realistic NHI proposals in the months and years ahead.

1980 ASA SUPPLEMENTAL STATEMENT ON NATIONAL HEALTH INSURANCE PROPOSALS

In 1976, The American Society of Anesthesiologists (ASA) promulgated a formal statement on issues related to national health insurance proposals. That statement, while emphasizing the entitlement of American citizens to have practical access to the essential benefits of health care, cautioned that any program of national health insurance must be "realistic in scope and goals, cost contained, and administratively workable."

In this context, the 1976 statement endorsed a program of catastrophic health insurance, and specifically endorsed proposals of the American Medical Association as to the structure and financing of such a program. The ASA Statement also set forth a number of precepts which the Society deemed germane to any national health insurance program:

Separation of medical and institutional components, continued patient choice of physician, and continued application of the fee-for-service concept for physcian care.1

Physician direction of patient care, and specifically, anesthesiologist direction of anesthesia functions provided by non-physican personnel.

Assurance that high quality, readily accessible medical care, including specifically anesthesia care, is provided at a charge which is fair both to patient and provider.

In the four years since issuance of the ASA statement, continued consideration of national health insurance proposals has occurred in the Congress, and several proposals are now pending before Congressional committees. It is thus appropriate that ASA reaffirm its support for the continued efforts of the American Medical Association in this area. By this statement, it does so.

In particular, however, ASA reaffirms its condemnation of the efforts of some current national health insurance proponents to deal with patient care by anesthesiologists as an institutional service, or otherwise to deal with anesthesia care on a basis different from medical care provided by other physicians. It also specifically reaffirms the continuing need, in connection with optimum anesthesia care, of personal performance or personal direction by an anesthesiologist of all anesthesia functions.

Mr. HEFTEL. We thank you very much and I think it was very informative and so I do appreciate it.

Mr. RANGEL. We thank you for your patience and the record will remain open in case you want to speak on any other pieces of legislation. Staff will tell you what other proposals we are considering besides the administration's bill.

Thank you, Doctor.

STATEMENT OF NAOMI SHAW, DADE COUNTY CONSUMERS
FIGHTING INFLATION

Ms. SHAW. I am glad I sat here through some of this testimony. On some occasions my blood pressure rose. I would say perhaps hearing about the anesthesiologists and other times when the heart strings were pulled.

First, let me say that I represent a very large cross-section coalition of different organizations. What we are getting at is a consideration of alternatives to the built-in, locked-in structure of medical care and hospital services, such as fee-for-service and third-party payments which serve the provider's interests, not the patients'; also separation of care in categories, instead of considering the whole person.

1 It is the official policy of The American Society of Anesthesiologists, Inc. that an anesthesiologist is free to choose whatever arrangement he prefers for compensation of his professional services. The Society does not consider the compensation arrangement so chosen to be a matter of professional ethics.