Flavin, James L., director of Government programs, Blue Cross-Blue Letters and statements from individuals and organizations: Item 1. Policy statement regarding coverage of outpatient services, Minneapolis Age and Opportunity Center, Inc.; submitted by Thomas M. Tierney, Director, Bureau of Health Insurance, Social Item 2. Letter and enclosures from Thomas M. Tierney, Director, Bu- reau of Health Insurance, Social Security Administration; to Sen- ator Edmund S. Muskie, dated September 16, 1974----- Item 3. Letter and enclosures from James L. Flavin, director of Gov- ernment programs, Blue Cross-Blue Shield of Minnesota; to Senator BARRIERS TO HEALTH CARE FOR OLDER AMERICANS WEDNESDAY, JUNE 26, 1974 U.S. SENATE, SUBCOMMITTEE ON HEALTH OF THE ELDERLY OF THE The subcommittee met, pursuant to recess, at 10 a.m. in room 212, Russell Senate Office Building, Hon. Edmund S. Muskie, chairman, presiding. Present: Senators Muskie, Mondale, Hansen, Brock, and Domenici. Also present: William E. Oriol, staff director; Val Halamandaris, associate counsel; Elizabeth Heidbreder and John Edie, professional staff members; John Guy Miller, minority staff director; Margaret Fayé, minority professional staff member; Gerald Strickler, printing assistant; Yvonne McCoy, assistant chief clerk; Donna Gluck and Joan Merrigan, clerks. OPENING STATEMENT BY SENATOR EDMUND S. MUSKIE, Senator MUSKIE. The subcommittee will be in order. Yesterday, this subcommittee heard from witnesses from the AbbottNorthwestern Hospital and Minneapolis Age and Opportunity Center. They described what happened when a senior clinic opened its doors to older people with the promise that nothing would be charged to the patient above what Medicare would pay. Daphne Krause, executive director of the center, told in very effecting terms of the people that overloaded the facilities of the clinic. She said: "Our staff were faced with the horrendous choice of choosing between the sick and the very sick and trying to decide who needed help the most urgently. A large majority of the patients who came to the clinic did so because of the need for immediate medical attention. Yet many had gone without seeing a doctor for long periods of time because of their fear of bills. They had what she called "paper doctors" or doctors of record only who they did not see until a crisis situation arose. The clinic filled an enormous need because of the very real fear of these elderly widows and retired people that their small incomes and savings could not bear the Medicare deductible and coinsurance charges. While the hospital anticipated absorbing such costs, it found that after the clinic had been operating a while, it was being disallowed Medicare reimbursement for diagnostic services which before had been paid without question. Blue Cross, as the Medicare intermediary, began to scrutinize every claim and deny many in an action that was described as discriminatory. At the same time, older people were canceling their medi-gap insurance policies under Blue Cross as they signed up for the free clinic. This resulted in the reduction of premiums in Minnesota from 50 cents to $1.50 a month and an open enrollment period. This occurred just after the Medicare deductible was raised from $72 to $84 and an increase in the part A coinsurance from $18 to $21. Such decreases in insurance premiums are surely unusual-if not unprecedented. The actions of the intermediary raises serious questions concerning the role of the fiscal intermediary in the Medicare program. They also raise questions of the dual role of an insurance company as intermediary and seller of health insurance policies. We have Blue Cross here today to reply to some of the questions that were raised yesterday, and we also have representatives from the Social Security Administration to comment. I look forward to their testimony. But yesterday's testimony raised even more serious questions about the Medicare laws themselves-whether they are being administered in cases like this according to congressional intent, and whether they need changing. May I at this point express the regret of Senator Humphrey that he could not be here today. Senator Mondale was here yesterday, he participated in the hearing and the questioning, and was most interested in being here today. Unfortunately, he is tied down in another hearing and might not be here, but his interest yesterday reflects his interest in the hearing today, and I am sure he will study the record closely, so I would now like to call our first witness, representing Blue Cross-Blue Shield of Minnesota, the director of Government programs, James L. Flavin, accompanied by Winton Johnson, vice president of finance. STATEMENT OF JAMES L. FLAVIN, DIRECTOR OF GOVERNMENT PROGRAMS, BLUE CROSS-BLUE SHIELD OF MINNESOTA; ACCOMPANIED BY WINTON P. JOHNSON Mr. FLAVIN. Thank you. Mr. Chairman, committee members, my name is James L. Flavin and I am the director of Government programs for Blue Cross and Blue Shield of Minnesota. Also with me today is Winton P. Johnson, vice president of finance for our organization. It is a privilege and honor to address you today concerning the very important issue of health care for the elderly. As you are aware, there is a somewhat unique health program for certain senior citizens residing in Minneapolis, called the Minneapolis Age and Opportunity Center, Inc. This organization has an arrangement with AbbottNorthwestern Hospital and certain physicians in the Minneapolis area to carry out this program. The intent of the Minneapolis age and opportunity program is to offer comprehensive health and social serv ices which some elderly citizens might not otherwise receive or seek out. Blue Cross and Blue Shield of Minnesota's corporate policy is to enthusiastically support programs which attempt to provide needed medical and social services not only to senior citizens but to all segments of the population. As a Medicare fiscal intermediary, we have certain contractual obligations with the Department of Health, Education, and Welfare. To fulfill those contractual obligations, we have had, over the last few months, several telephone conversations and meetings with representatives from Abbott-Northwestern Hospital concerning the Minneapolis age and opportunity program. In addition, we have also discussed the program with the Travelers Insurance Co., the part B Medicare carrier serving the Minneapolis area, and appropriate bureau of health insurance representatives. As an intermediary, our concerns centered around the issue as to whether certain services provided by the hospital's outpatient department were covered services under the Medicare program. The Medicare program is, as you know, an insurance program and similar to many private health insurance programs has certain deductible, coinsurance and exclusionary features. The program, for example, excludes routine physical exams and diagnostic screening tests associated with those examinations. To that point I would like to quote from section 3157 of the part A intermediary manual issued by the Department of Health, Education, and Welfare: The routine physical checkup exclusion applies to (a) examinations performed without relationship to treatment or diagnosis for a specific illness, symptom, complaint, or injury. In adjudicating outpatient claims from Abbott-Northwestern Hospital, we became concerned when several claims were received with identical laboratory and radiological services and charges. It was obvious that these services might be part of a screening examination and, therefore, not covered under the program. Subsequent investigation confirmed the fact that initial visits involved diagnostic screening examinations and followup physicals. This is an integral part of the Minneapolis age and opportunity program and here I quote from a letter by Daphne Krause, executive director of the Minneapolis Age and Opportunity Center, to each new clinic member: In order to give you the quality health care and supportive services which we are committed to provide for you, we are setting up an appointment for you to receive a complete diagnostic screening. Following this, probably within a week, we will ask you to return for your physical with one of our doctors. A copy of this letter is attached to my testimony.1 Blue Cross personnel met on March 4, 1974, with Abbott-Northwestern Hospital personnel to discuss reimbursement questions. At that time, we indicated it appeared the initial visit and laboratory services were for diagnostic screening purposes and, since Medicare excludes these services from coverage, we have to disallow them. A summary of that meeting will be supplied later.2 Another meeting was held on April 11, 1974, at which time we reiterated our concerns regarding the coverage issue. At that meeting, we again asked the hospital to screen those claims which involved 1 See appendix, item 3, p. 1385. See appendix, item 3, p. 1386. |