Mr. FLAVIN. Not specifically minutes of the meeting, however, it is a common practice with our people, Senator, when they attend any kind of a meeting outside of our building, to write up a report for the file, it is a history of what went on, and we do have that particular document in our files.

Senator MUSKIE. What is that? Who prepared that document?
Mr. FLAVIN. May I see it?

Senator MUSKIE. Is this it?

Mr. FLAVIN. No, these minutes are the minutes I referred to in my testimony. Blue Cross had not seen them before you sent them to us. Senator MUSKIE. Before I get into this, I want to know whether or not you kept minutes, and the report, have you made that report, would you make that report available to the committee?

Mr. FLAVIN. I have it with me.

Senator MUSKIE. I think it would be useful for the record to have it. Mr. FLAVIN. We will provide it.1

Senator MUSKIE. Now, these minutes which Mrs. Krause provided to the committee were sworn on June 11 of this year by Richard Kramer, and there are several other certifications to the effect they do reflect the meeting, and I think those affidavits should also be a part of the record, and we will have your version also.

Mr. FLAVIN. Fine.

Senator MUSKIE. Now, who prepared that report?

Mr. FLAVIN. Our report, Senator, the one I am going to give you, was prepared by Sharon Blood, mentioned in the minutes.

Senator MUSKIE. She was present for all the meeting?

Mr. FLAVIN. Yes.

Senator MUSKIE. Does she challenge the statement attributed to her in the minutes which the committee has?

Mr. FLAVIN I do not think she has challenged them as such, however, she gives an explanation of some of her statements in her recollection of that particular meeting.

Senator MUSKIE. And those explanations are contained in the report which you are now filing?

Mr. FLAVIN. Yes.

Senator MUSKIE. I may have an opportunity a little later to look at her report, and I may have some questions about it.

Mr. FLAVIN. Fine.

Senator MUSKIE. First of all, let me ask you, what is your organiza tion's attitude toward this program that we heard so much of yesterday, and which is now the subject of these hearings?

Do you think it is a good thing? Do you think it is a good way to deal with the problems of the aged? Do you support the central idea which is to provide medical care at no greater cost to the patient than the Medicare payment?

Do you think that is a sound concept, something that your organization would support?

Mr. FLAVIN. Senator, I would answer in this way. I think you asked what our attitude would be toward Government programs, specifically Medicare.

1 See appendix, item 3, p. 1386.

Senator MUSKIE. I am talking about this particular program, the Abbott-Northwestern program, as developed and implemented in Minneapolis. What is your feeling about it? Do you support it; is it a good thing; is it performing a useful service?

Mr. FLAVIN. I think in our testimony we indicated we are supportive of this type of activity, not only for the senior citizens, but also for the rest of the population.

Senator MUSKIE. You say it in general terms. I want to concentrate specifically on this one. You say the intent of Blue Cross and Blue Shield's Minnesota corporate policy is to enthusiastically support programs which attempt to provide medical services to the population. Does that statement of general enthusiasm apply specifically to this program?

Mr. FLAVIN. Yes, it was specifically written for that purpose. Senator MUSKIE. So, if there is any way to make it work, you are interested in finding a way to make it work.

Mr. FLAVIN. That is right.

DIAGNOSTIC SCREENING TESTS EXCLUDED

Senator MUSKIE. And the issue which had been raised yesterday by those involved in that program, and described in your statement today, in this sentence, "The program, for example, excludes routine physical exams and diagnostic screening tests associated with those examinations."

Now, that is a major issue, is it not?

Mr. FLAVIN. It would seem to me, Senator, that is the issue.

Senator MUSKIE. Now, how would you define the diagnostic screening tests?

No, before I get to that, you have given in your statement the regulation from the manual that applies.

Mr. FLAVIN. Yes.

Senator MUSKIE. And if I may reread that, and get it in the context. "The routine physical checkup exclusion applies to (a) examinations performed without relation to treatment or diagnosis for a specific illness, symptom, complaint, or injury."

So what you are saying is that the tests for which the clinic seeks reimbursement, in your judgment, those tests are examinations performed without relationship to treatment or diagnosis for a specific

illness?

Mr. FLAVIN. What we are saying, Senator, is there are certain charges to the program that have been made that are noncompensable, and there are some that are compensable.

It is not a general statement to say everyone that has this type of an examination in the outpatient department of this hospital has his claim denied.

There are many of the claims that are paid for examinations. I think the implication is, Senator, as far as our handling of the claims in the outpatient department of Abbott-Northwestern Hospital, that there is a 100-percent denial of these claims, and this is not true.

Senator MUSKIE. I am trying to get into the record your perspective with respect to these rejected claims and why it differs from that of

others who administer the program. I gather that this provision from the manual is the basis for your point of view.

Mr. FLAVIN. Yes.

Senator MUSKIE. And what that provision of the manual says is that payment is not permitted for examinations performed without relationship to treatment or diagnosis of a specific illness; that is what you said.

Mr. FLAVIN. Yes, coming out of the manual.

Senator MUSKIE. Now, the applicable provision of the law would appear to be this, and I ask you if you agree with me, section 1862 (a), which reads:

Notwithstanding any other provision of this title, no payment may be made on the part A or part B of Medicare for any expenses incurred for items or services (1) which are not reasonable and necessary for the diagnosis or treatment of illness or injury, or to improve the functioning of a malformed body member. Are you familiar with that provision of the law?

Mr. FLAVIN. Vaguely, Senator.

Senator MUSKIE. You have not studied it with respect to the provision of the manual?

Mr. FLAVIN. Yes; we have. However, in reading the manual, I would like to take a look at the total section to refresh my memory.

Senator MUSKIE. I can show you the language so you will not be dependent on my oral recitation. I would like to ask you a question about it, and I would like you to have this in front of you.

Now I ask this question as a legislator concerned with the question of whether or not we need to change the law, or whether the intent of the law is being implemented. This question is not directed to your own conclusions about particular claims.

When that language says, "which are not reasonable and necessary for the diagnosis or treatment of illness or injury," it seems to me it is not as restrictive language as the language of the regulation. But that is a casual opinion, and I simply would ask you if you would focus on the difference in the language on those terms.

CLAIMS ADJUDICATED FROM MANUAL

Mr. FLAVIN. Senator, I do not have a comment on that interpretive issue.

From our point of view, we adjudicate our claims based on language from our manual.

Senator MUSKIE. The language from the manual?

Mr. FLAVIN. Yes.

Senator MUSKIE. If you have some subsequent thoughts about the language, we would like to have it.

Now, with respect to the procedures at Abbott-Northwestern, as described in the testimony yesterday-incidentally, were you present yesterday?

Mr. FLAVIN. Yes, Senator, I had the privilege of being there yesterday.

Senator MUSKIE. So you can correct my recollection of what we heard yesterday if you think my recollection is erroneous. As the procedures were described for us, it consisted of three phases, phase 1 was

the first appointment. The client sees the counselor, gives the social history, and sees the nurse to give medical history.

That was phase 1, and I think the testimony was no claims were submitted to Blue Cross for phase 1. That was the testimony.

Phase 2 was the second appointment, consisting of diagnostic tests. Mr. FLAVIN. Yes.

Senator MUSKIE. Phase 3, third appointment, the client sees the physician; the physician reads the tests and gives the physical.

Now, as I understand it, at this period, from November 1 to February 3, claims were originally submitted to Blue Cross for phases 2 and 3.

Mr. FLAVIN. Yes.

Senator MUSKIE. These claims were rejected by Blue Cross. Abbott did not contest these rejections and did not appeal them. They absorbed the costs of both phase 2 and phase 3 in that period, amounting to $25,000.

That was the testimony yesterday.

Mr. FLAVIN. Yes.

Senator MUSKIE. Now, because of the enormous influx of patients of Abbott seeking help, the procedures after February 3, 1974, eliminated phase 2 and phase 3 entirely.

Only phase 1 is used, and only very sick clients were seen.

Phases 2 and 3 were eliminated. So many seriously sick persons were coming in that there were not enough doctors to treat them. The clinic, in effect, was forced to choose between the sick and the very sick.

Now, that was the testimony as I understand it, yesterday.

Mr. FLAVIN. Yes.

Senator MUSKIE. So that the program from then on was designed to deal with the illnesses of people, all of whom were sick when they entered the hospital.

Now, that is my recollection in summary of the procedures and their evolution, as the program went along.

Mr. FLAVIN. Yes.

Senator MUSKIE. Now, it was in that context that this question of the rejected and disputed claims has come up.

Mr. FLAVIN. Yes.

Senator MUSKIE. The clinic arguing that every case was an illness, that every case involved a specific application to clear the obvious illnesses, and therefore eligible for reimbursement.

It was not a question of screening out the well or the phony from the sick. It was a question of dealing only with the sick.

That is, as I understand it, that is their argument. Now we have here a few of the files, and a few of the claims that were rejected.1

CLAIM REJECTIONS EXEMPLIFIED

Here is one of hypertension, abdominal discomfort, I am not sure I can decipher all of the abbreviations. Hypertension, of course, is a symptom that can give a warning sign leading to possible stroke. We have here another one rejected, congestive heart failure, urinary infection.

1 Retained in committee files.

Another one here, bright red blood in the stool. Another one here, atrial fibrillation.

Another one here, chronic obstructed pulmonary disease.

Another one, cardiovascular accident, that is, a stroke, as I understand it.

Another one, angina anemia.

Another one, hypertension, probably early congestive heart failure. Diabetes, hypertension, rheumatic heart disease.

Hypertension, cancer of the colon.

Hypertension, arteriosclerotic heart disease.
Hypertension.

First of all, with regard to these, I do not know whether you want to see the specific ones, but how do you respond to the argument that these claims are not related very specifically to illnesses?

The tests are made with full understanding that a sick patient must be dealt with. The purpose of the tests is to progress with treatment, not to decide whether or not treatment is necessary, and the illness is very specific.

How do you respond to that as being subject to the application of that provision of the manual upon which you rely?

Mr. FLAVIN. Senator, I think it would not be necessary for me to look at the claims, but there are many times when claims are submitted to our organization, or to any other carrier, or to any other intermediary, and if a claim is rejected, for example, it is returned to the provider, and the provider has the option of coming back to us, and indicating to us that they disagree with the decision made on that particular claim, because in our business, like in most businesses, we cannot be right 100 percent of the time, and the law provides for just that, so if you disagree with a decision, you have an appeals process you can go through. You also have a hearing process you can go through. However, I would suggest that claims like this, where there is a difference of opinion, be submitted to our claims department, and then we can talk to those people to see whether or not there is some additional documentation that has not been available to us previously. Senator MUSKIE. Well, is it your view that when these obviously sick patients come in, that the tests ought not to be made at all?

SOME PROGRAMS NOT COVERED

Mr. FLAVIN. Senator, we are not saying that at all. All we are saying is if the M.A.O. program, as it was described by the group yesterday, and by their description of this particular program, it is part of their program to include, for example, a physical examination as part of their membership, or whatever other services they want to give to those people, it is perfectly all right and within their province, but they must realize that payment may not be allowable under Medicare regulations.

Senator MUSKIE. That was phase 1. Phase 1 has been dropped, as I understand it, and that is why I reviewed the procedure as I recall the testimony, and they are making no claims for this physical examination.

Mr. FLAVIN. Well, if this were to be a fact then they are taking care of fewer people now than they were in the last quarter of 1973, is this true?

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