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I am Howard D. Slobodien, M.D., President of the Medical Society of New Jersey. I appreciate the opportunity to appear before you and to present the collective opinion of the 9,300 physician members of the

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Practicing physicians are concerned with a number of proposals that

are being considered by the Administration to curtail the costs of

Medicare. While these proposals are well-intentioned, they may not achieve the desired result. If they do have a salutary effect on cost containment, they can have an adverse impact on the quality of care and the health of

our senior citizens.

Diagnosis Related Groups The DRG program is being hailed by the Health Care Financing Adminis

tration as the answer to controlling hospital costs. Its effectiveness as a cost containment measure has not been established, and New Jersey

is the only state in which it has been tested.

That test has not been

completed nor properly evaluated. The reconciliation called for under the Federal waiver has not been completed and will not be completed

without modification of the original protocol.

As a practicing surgeon, I had great hopes for DRG. After all, I have been reimbursed along DRG lines since entering private practice.

My charge to the patient in the vast majority of cases includes the fee

for both the operation and the total hospital care, regardless of the

variation of the number of days involved. This method has worked well so I looked forward to the DRG program when it was first proposed.

But now I have great reservations about its applicability in paying hospital costs or charges. I am far from convinced that there has been a saving in cost in New Jersey. I am particularly concerned that the quality of care may be deteriorating, and that patients are being forced out of the hospital setting still hurting, still in trouble, and still in need of acute care, merely because the system rewards those institutions with rapid turnover of patients.

The DRG program has been criticized adversely in outstanding publi

cations, by extremely well-qualified individuals located in areas

stretching from the Atlantic to the Pacific.

This criticism covers

many areas in the application of the program. It should be noted that among these criticisms is the fact that the medical profession has been invited only minimally or marginally to participate in the program. The only rebuttal to these criticisms, as far as I know, has come from

those responsible for initiating or expanding the DRG concept in New Jersey. Yet, these same people who defend this program, have MDs, PhDs, and MPHs, etc. among their scientific accomplishments, but they continue to oppose the application of scientific inquiry despite their backgrounds and despite their avowal at the onset of DRG that it was a pilot program. The Congress of the United States is approving this program for Medicare purposes despite the lack of proof of its merits.

The medical profession has been given a bum rap that it is responsible for much of the rise in health care costs, despite the fact that

physicians do not receive even one cent of every five spent on health


If for no other reason

and there are many others


are interested in containing costs. We will continue our efforts to control costs and to assure the maintenance of quality care under whatever reimbursement mechanism Medicare chooses.

I don't know whether DRG is good in whole or in part. But no one else truly does either. It has not passed the test of scientific

inquiry. If it is garbage and we continue its expansion, there won't
be enough landfills in the country to contain it. Isn't it about
time we found out the truth? That is why I urge a thorough and long
overdue evaluation of this concept before it becomes the method of

reimbursement for hospital costs.

Financing of the Social Security System

The Medical Society of New Jersey and the American Medical Associa

tion are concerned with protecting the solvency of the Social Security System, particularly the hospital insurance trust fund which finances

Part A of the Medicare program.

It is imperative that the fiscal

solvency of the Medicare program be maintained in order to assure access to high quality care for the nation's elderly. While the Medicare trust funds do not face the immediate difficulties of the retirement fund, pressures are projected to begin near the end of this century. I truly hope that congress will act to provide both a short-term and a long-term solution to the problems facing Medicare and Social Security. We hope they will avoid modifications which only produce a "band-aid"


Conditions of participation for Hospitals

Medicare and Medicaid

HCFA has proposed rules to revise the Medicare and Medicaid Conditions on the impact, on the quality of patient care in hospitals, of a proposed redefinition of the term "physician" to include chiropractors, optometrista, dentists, and podiatrists in addition to doctors of medicine and osteopathy. We are opposed to the redefinition for the following reasons:

of Participation for Hospitals.

The AMA has called for withdrawal of

those proposals, and we join them in that request.

Our concern centers

It does not reflect the scope and type of services provided in
acute care general hospitals. HCFA is failing to recognize
that all the professions listed do not provide medical services.
Chiropractors and optometrists do not have admitting privileges
in acute care hospitals and are not licensed to provide any

services requiring inpatient care. Expansion by this definition fails to recognize the vital role and responsibility of MDs and

DOS to provide and supervise the full course of medical care for all patients admitted to an acute care hospital. The medical staff must be responsible for insuring the quality of patient


Services within hospitals should operate under written

guidelines and procedures that are approved by both the medical

staff and the governing body.

I have attempted in this discussion to touch upon only the most

dramatic issues of the Medicare program.

There are many improvements

that might be considered, but I must urge you to carefully avoid mistakes

occasioned by the desire to foster change.

Thank you for this opportunity and the courtesy you have extended

to me.


The American Health Care Association, the nation's largest

association of long term health care facilities, and the New

Jersey Association of Health Care Facilities, New Jersey's

largest association of long term care facilities, are pleased to

present our recommendations for cost-effective changes in the

financing and coverage of extended care services under Medicare.

The American Health Care Association membership includes

nearly 8,000 proprietary and non-proprietary facilities which

serve 750,000 convalescent and chronically ill of all ages.

Our membership comprises roughly half of the nation's licensed

nursing homes and reflects the cross-section of the entire pro


Members are increasingly the providers of a broadening

range of institutional and non-institutional long term care services,

such as residential care, home health and homemaker services, adult

day care, and hospice care.

Every day hundreds of Medicare beneficiaries are confronted

by a distressing realization:

Medicare, provides scant coverage

for nursing home services and other long term care.

Medicare is

promoted as

the health insurance for the elderly and people assume

that Medicare coverage is comprehensive

if a beneficiary is

sick, Medicare pays the bill.

This is the Medicare myth,

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