An estimated 3 million people are going without needed home health services se few can qualify for “skilled nursing" care.

dividuals as providers: The HHAA opposes subcontracting by either Federal te governments with individuals for the direct provision of home care services d of contracting with agencies. The failure to train and supervise such individill result in poor care and abuse.

ight to choose intermediaries: The HHAA supports the right of providers to
between having their claims processed by their designated intermediary or
y by the government through the Office of Direct Reimbursement (ODR). We
ly support legislation which will settle any remaining questions as to the
of providers to a choice and which will preserve ODR.

October 26 regulations on physicians serving on home health agency_boards:
HAA objects to the October 26 regulations published in the Federal Register
would bar physicians from certifying patients for Medicare when they have a
ntial interest in a home health agency because the regulations appear to
I to physicians who serve on the board of directors of non-profit home health
es and receive no compensation. This regulation is overboard and Congress
I intervene with the Department of Health and Human Services.
emoval of medicare waiver of liability provision: The President's January 31,
budget proposal contains a recommendation that the Congress eliminate the
r of provider liability provision which serves to protect hospitals, nursing
and home health agencies who have, in good faith, provided Medicare serv-
individuals who, it is later learned, are ineligible. The Administration claims
10 million can be saved in fiscal 1984 if this change is made in the law.
s proposal was advanced by the Administration last year and rejected by the
ess. Its enactment would serve to further undermine both public and provider
ence in the Medicare program. It would make accepting Medicare patients a
of "Russian Roulette" at a time when more rather than less certainty and pre-
ility is required. Given the vague application of constantly changing regula-
it is difficult for home health agencies to be 97.5 percent perfect in their de
nation of eligibility. Removing this requirement would demand that they be
ercent perfect in their determinations or suffer accordingly.

. RINALDO. I would like to start out by asking Ms. Goldschmidt
estion. You stated, and I would like to quote, that "there also
ed for an independent monitoring system to insure that qual-
f care does not deteriorate because of the incentives to reduce
nditures. There is no evidence in New Jersey that the DRG
m has had any negative impact on the quality of care."
m very concerned about the earlier discussion of yesterday's
Ledger's story to the effect that New Jerseys hospitals are dis-
ging patients prematurely. And what I would like to ask is a
s of questions on that article. First of all, is the Department of
th aware of this particular problem? Second, have you studied
requency of such premature discharges under the State DRG
am? And maybe you had better answer those two first, and
I will move on.

. GOLDSCHMIDT. To the first part of that, the Department of
th has heard anecdotal stories. We do not have any hard evi-
> to support those stories. As such, I have no way of knowing
the frequency of "early discharges" is.

'ould like to make a comment about that article. First of all, three examples that were cited in the article lead me to er if perhaps the discharge planning and practices of the hositself were not at fault.

ond, since I do not know the hospitals involved, I do not know y were on DRG's at the time. Not all our hospitals were on

ummer.

rd, we would certainly like hard evidence that this is occur

An orderly for

Peopment in place
ink that is the
dects who were
e too early that
y sick patients at
tainment

Mr. RINALDO. Woul
survey when it i
to this matter?
Mrs. LIVENGOOD. I
Mr. RINALDO. Tha
year history of
trustees said. 1
ancial experience
hat the estimates o
actual experience.
that "on a long ran
on during 13 of th
ment? It seems to b
Mrs. SOMERS. Ye
with the precise f
cost increases and
you have to set th

onitoring us just to insure that detrimental dis

cur.

ou do have that in place now?

OT. Utilization review, yes.

nd have they come up with any evidence whatsoe discharges?

DT. I have not seen any hard evidence.

Mrs. Livengood, since it was your agency that ges, the New Jersey Home Health Agency Assemare to comment on them? And if you could docue greatest extent possible.

D. The headline does not represent the context of not think, because when I read "Nurse organizasaid, "What crazy group is that?" Then I read it was myself.

dy of the article it says that we are currently doing ment whether or not these cases are frequent and

happens, as in anything, that one or two extreme seem statewide. Therefore, we brought any kind of to the DRG system, we have a survey out now and erial in, case histories as well as numbers.

t free to comment on that survey. It is far from comink the article does point that out. And I agree with re is not enough documentation to make the accusa

hony, however, I do say we have early discharge and harge. I think that distinction has to be made. An e is not something we are opposed to provided it is derly fashion with good discharge planning and all t in place, and that there is a safe habitation to refer at is the difference. And the article talks about a lot ho were able to be taken care of. That is early. But it rly that we are documenting. We take care of very, ients at home, much sicker than we did before cost

po. Would you please submit for the record a copy of then it is completed, so that our committee can look

ter?

GOOD. I would be very happy to.

DO. Thank you. Mrs. Somers, you mentioned that the ory of medicare is positive. I want to quote what the s said. They said that "since its inception in 1965, the perience of the HI program has been unfavorable, in mates of costs have repeatedly fallen short of projected rience." The trustees of the trust fund have reported ong range basis, the program has been in deficit condi13 of the last 14 years." Do you agree with that assessems to be the facts.

ERS. Yes. I have no quarrel with that. I am not familiar recise financial details but I agree on the unacceptable ses and the precarious position of the part A fund. But o set those negatives over against the positives-the in

e in life expectancy, the increase in the quality of life, the inin the quantity and quality of health care facilities and pronals in this country. I think there are many, many positives actually outweigh the negatives.

wever, I agree that, if we do not correct the cost problem and of the other related problems, the whole thing can collapse. I been saying for almost 17 years, that this "blank check," the onable costs" and "reasonable charges" approach to provider ursement, which medicare did not invent, but wrote into legwe concrete were time bombs that had to explode. Now we to correct those deficiencies. But in the effort to correct, let us row out the baby with the bath water.

RINALDO. You also mentioned, and I believe it is in your artiRethinking Medicare to Meet Future Needs," the emphasis in are on acute care rather than on prevention. Would you exto us how we would pay for the added factor of prevention ong-term maintenance under medicare, particularly in light of npending funding gap? And what are your solutions to this ng problem?

3. SOMERS. Well, I did suggest several things. One, no question fixed rates have to be established in one way or another. I hope not unilaterally, but through negotiations. Of course, in ishing the new prospective rates for hospitals, a great deal of mal bargaining has gone on between the Federal Government he American Hospital Association and related organizations. I I like to see that bargaining actually formalized, and done in e view, so we would know where exactly both parties stand. -, one way or another, provider rates have to be fixed. Since ointed out, quite correctly, that price inflation is the biggest factor in the runaway costs, that would help to address that. 1 not correct it altogether, but it is a very important begin

ond, I have no quarrel with a reasonable amount of patient haring. I think that has to be used very carefully, selectively, t should be used, I think, rather deliberately in order to corthe current tilt toward acute care and toward institutional as Mrs. Livengood and others have mentioned.

RINALDO. Could you give us some percentages?

he other side, we Custodial simply me into that, one way o for patients with sta Compared to what a situation. So I woul benefit expenditures Sins of chronic cond rentable.

x asked how would one, an immediate and perhaps other zal portion of the S being spent for longRINALDO. Thank y e been looking ove ber of cases in whic and statements, tha ir example, accordin medical society of N ospitals to get their Yes, they are bein And if you say the reated at home, it is is a pretty strong psible position. And rer did a bad job or ents have not been p te this article in a n what led to the cond comment on that? Ms. GOLDSCHMIDT. Ye for hospitals to re 2 under the DRG sys ch incentive, so that ans are becoming aw only when medicall A decrease in the le Mrs. Livengood said arged too early, whe at could be a proble not feel that they

8. SOMERS. I cannot give precise percentages partly because it matter of definition. What exactly is acute care? What exactly -onic care? When a person, who has had a long history of prove heart failure or coronary heart disease, suddenly gets a attack, is that acute or is that chronic? It is actually an acute rbation of a chronic condition, but it is hard to be completely se. What is curative? What is prevention? But we do know section 1862 of the medicare law specifically prohibits payfor anything which is not diagnostic or treatment, that is, ing which is strictly preventive. We know that a little bit of ntion is reimbursable. Not much, but a little bit. The intermay figure out a way to get his patient with diabetes a little counseling. But in general I guess that about 90 percent of care payments go for diagnosis and treatment and only 10 perat most for prevention.

cute care.

Mr. RINALDO. We ar e to go home. We h mittee on Aging of Visiting Nurse efore Senator Bradley hem do not even ma oes not indicate to m ven make it home in ery serious situation should look into.

mply means long-term care. So again a little bit e way or another. A little rehabilitation may be with stabilized stroke conditions. But this is mino what we are spending on acute care in the hoso I would say that 90 percent, 90 percent of medinditures are going to acute care or acute exaceric conditions, which are, at least theoretically,

y would we pay for it. I made two suggestions. A mediate source, would be to transfer from medics other Government programs, to medicare a subof the $15 billion or so public dollars which are for long-term care.

Thank you. I want to get back to Ms. Goldschmidt. king over the Star Ledger story, and there are a in which there has been testimony at other hearents, that I consider rather persuasive.

according to Dr. Harold Slobodien, the president of ety of New Jersey, "Physicians are being pressured get their patients out of the hospital as soon as posare being pressured. It is, Doctor, get your patient say the patient still needs care, the patient cannot ome, it is still Doctor, get your patient out." I think strong statement by a person in an extremely reon. And yet the attitude seems to be, well, the red job or the headline writer did a bad job, the statet been proven. It seems to me that the people who le in a number of instances have documented exactthe conclusions that they have drawn. Do you care that?

MIDT. Yes, I would. As you know, there is an incenals to reduce expenditures and to reduce length of DRG system. I believe historically there has been no , so that now that we are under DRG's, yes, physiming aware that they should get their patients out, medically feasible, not ahead of time.

in the length of stay is not necessarily a bad thing. good said, it is those cases where the patients are disarly, where they are not medically ready to go home, a problem. The cases where they can go home, then I hat they should be in the hospital having to pay for

o. We are talking about people who are not medically ne. We have testimony here before the Senate Special Aging where Rosemary Caccera, the executive direcg Nurse and Health Care of Union County, testified or Bradley that "Certainly the very acutely ill, some of even make it home in the ambulance, Senator." That cate to me that that person is cured when they do not - home in the ambulance. That indicates to me a very, situation, and a situation that perhaps this committee nto.

. GOLDSCHMIDT. I would like to comment on that one. In order s to make a really valid judgment, I would have to go back look at the evidence that they had and find out if this had a practice prior to DRG's or if that hospital was on DRG's at ime. In other words, what was the actual reason that incident ened.

. RINALDO. So what you are saying then is right now, the fact e matter is, you do not know whether people are being premay discharged or not.

. GOLDSCHMIDT. We have no hard evidence right now.

. RINALDO. We can then say that everything in the article I be absolutely true and the situation could even be worse or it I be better.

-. GOLDSCHMIDT. Right.

. RINALDO. Thank you. I have no further questions. Mr. Smith. . SMITH. Thank you, Mr. Chairman. This is for Faith Goldidt. Just a couple of questions.

e New Jersey DRG system applies to all payers, thereby reduche effect of cost shifting. How serious do you feel cost shifting d be under prospective payment of medicare hospital coverage, what additional measures do you recommend to the committee minish it in all the other States?

. GOLDSCHMIDT. I think that based upon what we saw in New ey before we had all payers on, the potential is quite large. It is alloon effect, where you have a ceiling and then the rest go So I think the potential is quite large for cost shifting. And one that could be done is to eventually have all payers under the bective payment system.

-. SMITH. That is the key then?

=. GOLDSCHMIDT. I think so, yes.

. SMITH. Can you think of some recommendations you can e to this committee as to how we could encourage other States low suit and to make it mandatory?

5. GOLDSCHMIDT. You can make it mandatory, but I think if - States take a look at what happened in New Jersey pre- and DRG's, it is quite dramatic.

ication of having rztermediaries. d also provide a confused by the e of the providers. probably many ph e would be other b venues, which are went there. If the t gical to have a ce I would hate to se ing like a third ave now with part part A. Perhaps ease the immedia ally, a merger of p to one big HMO. the physicians woul instead of totally although it indi Dr. Slobodien show And it seems to me a

. SMITH. Do you think their best interests will prevail, in words, look at the facts and probably follow suit?

5. GOLDSCHMIDT. I hope so.

which is pushing th nistrations for the tal and physician tinue to sanction and present separation i VSMITH. Thank yo the record for thos record, the Advisor ing the combination Combining part A ved beneficiary und istration and impr are services. Potential acing considerations urces and complexiti ns under part A and It is kind of a summ e your comments.

-. SMITH. Mrs. Somers, I want to thank you for your statement, all three witnesses. In part of your testimony, you mentioned olidation of parts A and B. As you probably know, the Advisoouncil on Social Security has that under advisement right now they have not come up with any specific recommendation. Peryou could share any thoughts you might have along those , as to how much perhaps could be saved, and why that would etter for administrative purposes, as well as for beneficiaries. rs. SOMERS. I do not know how much would be saved. The adstrative costs of medicare are remarkably low now. That is one e big positives. For part A I think it is a little over 2 percent of costs. And for part B, where, of course, you have so many e smaller claims, it is a little over 6 percent. Maybe you could g the entire administrative costs down to something like 3 perObviously there would have to be some savings by avoiding

Finally, I just want g the committee, as edicare. You know s and as you said, in re e do not destroy, bu al of providing me Fant to thank you all Mr. RINALDO. Than panel have any sugg octors? We have hea as wondering if an forth at this time in t Mrs. SOMERS. Noth surveys

these

that we