oney. Now, I do not know if this is true throughout the counout if it is not true, Congress should look into making this latory, because hospitals, sometimes just for prestigious reathey just want to be big, will spend hundreds of millions of rs in expansions throughout the Nation and add it to the bills, 1 could be very unnecessary. . SMITH. I am sure all of you would agree, too, just based on home health care emphasis, that you also see an equal ems should be placed on outpatient delivery of testing as well as . KEISERMAN. Yes, definitely. . SMITH. Finally, I have one more question, and that is to Mr. . You spoke extensively of prospective payments and you ed that there is a new complication, and the way you put it, it slow the adoption of new medical techniques if they involve ional costs that are not in the DRG schedule. Could you elaboon that? . BOND. This is the point I was making. Let us say there are liagnostic groups reported. A new technique is reported in the cal journals. A physician sees the applicability of it to a pathat he has, but it does not involve any of the types appearing e DRG schedule. What should he do? Should he have the hoscarry those out and have an overrun on that? Should he e not to use the latest technique because of the lack of a cateto put that in? That is the general question I was raising on . RINALDO. Thank you. And I certainly want to thank the 1 for the reactions of the organizations and your own reactions ese very, very serious problems. -. KEISERMAN. Thank you very much, sir. -. BOND. Thank you. -. RINALDO. I would like to acknowledge the presence of Mayor Rafferty of nearby Hamilton Township who is here this mornWithout objection, I will insert his prepared statement in the ing record. e now call the final panel on medicare reform, cost contain; and benefit restructuring: Anne Somers, a professor at the ersity of Medicine and Dentistry of New Jersey; Faith schmidt, health economics services, New Jersey Department of th; and Winifred Livengood, the executive director, of the e Health Agency Assembly of New Jersey. ur testimony as presented, the written testimony, will be ined in the record in full. And we would appreciate a summary. PANEL TWO, COST ST Mrs. SOMERS. Tha partment of Enviro What I have trie In an effort to t run the risk of so complex and so im dealt with effective One, the origina vide needed health over, without a m but feasible. In reforming me stroy, but instead 22-020 0-83-6 ST CONTAINMENT AND BENEFIT RESTRUCTURNG OF ANNE SOMERS, PROFESSOR, DEPARTIRONMENTAL AND COMMUNITY MEDICINE AND ICINE, RUTGERS MEDICAL SCHOOL; FAITH ', HEALTH ECONOMICS SERVICES, NEW JERSEY OF HEALTH; AND WINIFRED LIVENGOOD, EXECUOR, HOME HEALTH AGENCY ASSEMBLY OF NEW STATEMENT OF ANNE SOMERS Thank you, Mr. Rinaldo, and Mr. Smith, ladies and name is Anne Somers. I am a professor in the Devironmental and Community Medicine and Family utgers Medical School, which as you know is a niversity of Medicine and Dentistry of New Jersey. research associate, industrial relations section at ersity. a close observer and student of the medicare proinception. My husband, Herman Somers, and I vely on the original HIBAC, the Health Insurance ory Council to medicare between 1968 and 1975. And e first serious study of the program, "Medicare and published by the Brookings Institution in 1967. We great many of the problems which are generally recincluding the cost problem. et to say, we have a different point of view. We are ries. But at least it has given us a well-rounded expee opportunity to view medicare from many points of pre advantageous than others. views have been set forth in several recent articles, aper entitled "Rethinking Medicare to Meet Future I gave to the National Leadership Conference on in June 1982. o. If you will yield, we would like a copy of that to be he record if you have one. RS. You will have it. And a second paper on "Medicare m Care," which was published in the New England edicine, last July. I would welcome the opportunity to in greater detail with you or Mr. Smith or any memstaff. ve tried to do-in what was even for 10 minutes a very is boil my views down to a series of six statements. Obas to cover a lot of territory. The challenge you have to us is both imaginative and urgent. ort to be both precise and comprehensive, I inevitably x of sounding somewhat dogmatic. But the topic is so d so important, that it really must not and cannot be effectively on a piecemeal basis. 2. original goal of the medicare program, that is, to pro1 health services of good quality to all Americans 65 or ut a means test, was not only humane and idealistic, ning medicare, we must be very sure that we do not denstead we protect and strengthen, this original goal. vo, the 17-year medicare experience has been, on the whole, tive. Average life expectancy for those 65 has been extended by t 2 years in that short period of time, a very remarkable evement. he quality of life has improved for millions of both the elderly seriously disabled. Health care personnel, technology, procees, and facilities have improved both quantitatively and qualita y. nd private health insurance has flourished, both as an adminisive adjunct to, and as a supplement to, medicare. ree, the major negatives in the medicare experience involve he real disagreement, however, still involves the causes and the xternally, the principal factors include: (a) the constant im- ternally, medicare has suffered from two major deficiencies: an ost total lack of cost controls and overemphasis on acute inpat care at the expense of less expensive primary and long-term . our, medicare reforms should be addressed simultaneously to two programmatic deficiencies with full appreciation of the nge to external environment. fforts should be focussed on effective cost controls, consonant the original and continuing goals of the program; and rede sign of the benefit pa ease. Obviously there are for example, the one Chairman-exploring enues; or one that I consolidation of parts trative, but some oth should be included. I d And, in any case, it the benefit package a That leads me to th Five, cost controls, sumers. Among the s providers: fixed rates just hospitals, but all ers. I realize the word euphemism, I think. 1 fixed for an agreed pe There are numero such rates. The DRG think it is applicable for example-where case rate. In the case of pract ate. It is not the onl may be better in othe used, it must be, fixed 1 or 2 years. And pre or the other, the rati tradition of American er and payer organiza Assignment provis also need tightening Let us turn to co ranging from zero d certain preventive se riding-to some deg services-which, of n another. The artifici ple. Six, with respect t tient care should be defined to include a care-the modalities ic disease. Specifically, the e and custodial-a eup the Secretary of HH reimbursible, profess Such schedules shou propriate perhaps All medicare ben health assessment b fit package to fit the new pattern of chronic dis e are many other relevant approaches to reform, e one that you have stressed this morning, Mr. oring new sources of revenue, such as general revat I feel has not been mentioned-administrative parts A and B, which could have, not only adminise other important consequences. Those obviously ed. I cannot do it for question of time. ase, it seems to me that cost control and redesign of age are basic. to the last two points. trols, should be directed at both providers and conthe specific measures needed with respect to the rates or prices for all provider services-all, not out all, both institutional and individual practitione word "prospective" is the "in" word today. It is a nink. The important thing is that the rate be firmly eed period of time. umerous acceptable methodologies for establishing DRG or per case method is certainly one. I do not icable in all cases. There are cases-long-term care, where per diem is more appropriate than the per of practitioners, sometimes fee-for-service is approprihe only culprit in the cost rise. Salary or capitation in other cases. In all cases, whatever methodology is e, fixed for a definite period of time, even if it is just nd preferably, rather than being imposed by one side he ratio should be negotiated and renegotiated in the merican collective bargaining by the principal providorganizations. provisions, as you have already discussed, obviously tening up. n to consumers. Reasonable cost-sharing provisions, zero deterrence or even financial inducements for ntive services-where societal considerations are overme degree of deterrence for certain high-technology ch, of necessity will have to be rationed in one way or artificial heart, if it ever works, is an obvious exam espect to benefits, the existing bias toward acute inpaould be reversed to emphasize primary care, the latter clude appropriate preventive services, and long-term odalities most appropriate to the new picture of chron y, the existing section 1862 prohibition on preventive 1-a euphemism for long-term care should be removed; y of HHS should be instructed to establish schedules of , professionally approved periodic preventive services. les should be reviewed periodically and revised as apperhaps every 5 years. are beneficiaries should be encouraged, to undergo a ssment by an appropriate primary care practitioner or up at the onset of medicare eligibility, and to remain in periodic tact with that practitioner or group before resorting to any speized care. The Secretary of HHS should be instructed to establish a schedof reimbursible professionally approved long-term care services, h institutional and noninstitutional. Noninstitutional, of course, ans primarily home care; institutional means nursing home e. Such schedules should be reviewed periodically and revised as ropriate, perhaps every 5 years. Existing medicaid responsibilities and Federal funds now budgetfor long-term care through medicaid should be transferred to dicare for this purpose. Objections to this approach to medicare reform may be anticipatfrom many who are happy with the status quo, as well as from e who would like to demolish medicare altogether. But the cus quo is, as you have pointed out, financially untenable for re than a very few years, and the real medicare wreckers have serious political support at the present time. Too many providas well as nearly all elderly consumers, are too dependent on program. 'he practical question then is how to put together a reform packmade up of many different components which addresses the jor programatic deficiencies as fairly and as painlessly as possi The suggested package, I submit, provides at least a pragmatic inning for a politically and financially viable compromise which tects the idealistic vision of the original medicare program ile introducing fiscal responsibility and realining benefits in ping with changing demographic, epidemiologic, and technologidevelopments. Thank you very much. The material submitted by Mrs. Somers follows:] The importance and timeliness of the Not since 1964-65 and the great debates Bill and other proposals that led to en and XIX of the Social Security Act has policy been so completely up for grat we do, or do not do, to Medicare in the have a lasting, perhaps irreversible, im health care economy and the health of Not only is Medicare the principal financing for nearly 30 million of our r cans-over 26 million elderly and ab disabled-but it provides nearly 35 p care revenue for the nation's commun ports about 17 percent of the entire economy? Perhaps even more importan the flagship for this economy-pattern ite-extender-and, of course, insatiable It is no wonder that, despite all the r decision-makers have, in the final analys extensively with this remarkable progr take about it, Medicare is a remarkab most popular and effective govern developed in this country. Now, after 15 years of unprecede controlled or guided expansion, Medica serious problems which must be corr to play a constructive leadership role. calling for dismantlement or even cu my presentation today is precisely the and strengthening of Medicare as the priority in the US today-not only millions of enrollees and patients, ph tals, and others directly dependent on its our flagship and pattern-setter. Do we want to revert to the pre-M inadequate financing, rationing on th and frequently mediocre quality-th "This paper was presented by Anne R. S Research Corporation's Seventh Annua on Health Policy, Washington, D.C., Jun 1730 M St |