(2) Tax status as a definition of who may be a provider is arbitrary. As long as there are standards that apply equally to both proprietary providers and non-profit providers, and as long as these standards are enforced, then tax status will not determine the quality of the provider's care. Commitment, responsibility and accountability will.

(3) Coupled with the uneven instructions to intermediaries, there is a truly incredible amount of paperwork involved in the cost reimbursement process as administered by the Bureau of Health Insurance for Medicare. Several state Medicaid programs follow the same procedures. This paperwork adds immeasurably to administrative costs and wastes good time and talent which could better be spent on hands-on delivery.

5. THE HOME HEALTH FIELD

The Social Security Act should be the vehicle to prepare the country for an all-encompassing health program in the future. Amendments to the existing titles of the Act must be made in order to erase what are now recognized at inequities and shortcomings. Titles XVIII and XIX over the last ten years have built sufficiently comprehensive hospital and nursing home programs to create a good data and experience base from which to incorporate viable national health insurance provisions. However, the home health provisions in those two titles are neither equitable nor comprehensive. Even though Public Law 92-603 mandated home health demonstration projects, to date fewer than ten have been awarded, much less implemented, proving nothing. Statistics drawn from these projects are by definition too narrowly-based to be effective tools of measurement of the program.

It has long been recognized that America's Medicare and Medicaid health care delivery system is marked by poor utilization of manpower and resources, an over-dependence on costly institutionally-based modes of care, and a tendency to perpetuate the system by adding more dollars to it, rather than attempting to redistribute the manpower and resources through designing new systems of health care delivery. The development of home health care in recent years represents an attempt to redirect the nation's health resources and provide a broad continuum of care for America's increasingly large elderly population. It is generally agreed by health experts that home health care delivery encourages more efficient utilization of institutional beds through earlier discharge of the patient from the institution to home care where available. Conversely, home health care is a potential mode of preventive care which can delay or prevent institutionalization of the patient. A home health program can relieve pressures to expand institutional facilities.

PROVIDER ELIGIBILITY

Restrictive definitions of provider eligibility have limited the availability of home health services. Section 1861 (o) of the Social Security Act defines a home health agency as "a public agency or private organization . . . except that such term shall not include a private organization which is not a non-profit organization . unless it is licensed pursuant to state law. . ." Only sixteen states have licensing laws (and one of these is anti-proprietary).

It is vital that all home health agencies be licensed, regardless of tax status. The home health field-and it's the only one in all of health care to which this applies has been restricted to the not-for-profit home health agencies since the inception of Medicare. Times change, and now, eleven years down the road, a new assessment must be made.

Soaring federal spending on health since the enactment of Medicare/Medicaid mandates the involvement of the private sector with its manpower, resources and management expertise to help produce a more effective health care delivery system. It will take the combined and cooperative efforts of all the tax-supported as well as the tax-paying home health agencies to provide a comprehensive and workable home health program.

Should any state not adopt a licensing procedure for home health agencies, the Secretary of the Department of Health, Education and Welfare should be empowered to issue a license directly to the agency according to federal standards set by the Secretary.

In a speech presented to the National Association of Home Health Agencies in 1973, Dr. Charles Weller of the AMA stated,

"The key to successful co-existence between proprietary and non-profit providers is a set of adequate but non-restrictive controls on standards, accountability, organization, and incentives for efficiency.

"Whereas an eligibility determination based on the provider's profit or nonprofit structure is discriminatory and wasteful, a determination based on the service's quality, availability, and reasonableness of cost would encourage healthy competition for the delivery of services. Indeed, with adequate standards applied equally to all providers, competition would stimulate quality, availability, economy, and efficiency."

PAYMENT FOR SERVICES

A cost-plus method of reimbursement is inappropriate for home health services and destroys the cost-effectiveness of delivery. The addition of auditing costs is never included in the overall cost of the care. We propose that the charge be based on the level of care delivered.

The cost-plus method is based upon the "brick and mortar" philosophy of institutional care, and is inappropriate for the "people business" of home health agencies. In order to protect the not-for-profit home health agencies with their smaller base for overhead absorption, we would suggest preserving their current method of reimbursement to assure them of recovering their costs, which are proved through the auditing process. In the case of for-profit home health agencies, whose normal billing rates for comparable services are less than those of the not-for-profit agencies in comparable markets, we propose that those agencies be allowed to bill at the usual and customary rate, so long as those charges are no more than the not-for-profit agency charges for comparable services in the identical market. Our premise here is that proprietary home health charges are less than non-profits, and we are attaching for your information a survey we did last year of hourly rates for home health aid services in 73 cities. Example: Venice Home Health Services in Hyattsville, Maryland, a non-profit Maryland-certified home health agency, puts out a flyer which offers registered nurse services at $19.00 for the first hour and $9 for each additional half-hour. Homemakers Upjohn charges for a registered nurse are $7.65 an hour. A Venice Home Health Services home health aide is $19 for the first two hours, and $9 for each additional hour. A Homemaker, Upjohn home health aide is $4.80 an hour. Our Washington, D.C. office has a contract with the District of Columbia Department of Human Resources which pays $5.15 an hour, no matter what the service delivered. We should add that we work holidays, weekends, and evenings, in addition to the regular weekly schedule. Check your local VNA for their hours of operation. Probably 9 to 5 with no weekends or holidays.

6. RECOMMENDATIONS

All of the recommended and enacted changes in the last few years to our current health insurance programs have been aimed at the effects of a poor mechanism; they have not been aimed at the cause which is basically the current insurance structure. We believe that there is a certain amount of urgency in dealing with this problem because, as we all know, national health insurance is looming closer and closer. If we could avoid copying, yet again, the mistakes made forty years ago and compounded over the years when we come to enacting national health insurance, we could avoid wholesale slaughter of our health economy. Consequently, our recommendations to you imply sweeping legislative and regulatory changes because of the severely disabled finance mechanism for health care.

(1) Insurance benefits must be expanded to cover the risk the patient faces rather than the risk the provider faces. Insurance should cover whatever care is necessary at an appropriate level of care utilizing an appropriate level of skill in the appropriate setting for the individual patient situation at the lowest possible cost commensurate with quality. Where the care is received should have nothing to do with whether or not it is covered. The point of insurance ought to be to cover individual risk, not specific procedures. This current barrier to appropriate health care delivery must be broken if the industry is to become responsive to need and economy.

(2) Delete non-cost justifiable contributed assets from the cost reimbursement structure and clarify the kinds of overhead costs that will be allowed.

(3) Since home health agencies do not have capital assets, they are misplaced in the definition of facility. They should be allowed to charge and be reim

bursed on a fee for service basis, based on level of skill at an hourly rate. Our strong belief is that you should not be allowed to charge the government more than you charge the private customer, and this is exactly what's happening in home health today.

(4) All providers must be treated equally. If the federal government cannot mandate state licensure for providers, then there should be federal standards. (5) Encourage the development and expansion of home health with its potential to be a real cost reducer. There are currently movements in this direction— first of all in recommendations made by the White House on Aging in 1971, recommendations made by the General Accounting Office in July, 1974, and in February, 1976, and proposed regulations that were promulgated by HEW's Medicaid Bureau a year ago—although all of these efforts are now stalled.

(6) Certificate of need should apply to not-for-profit organizations only with Section 1122, review of capital expenditures, which will probably help to avoid over acquisition of new equipment and supplies. For instance, there needs to be only one coronary care unit in a given community, not one in every hospital.

(7) Hospital staffing should be based on patient census. To lower their labor costs, we recommend that hospitals permanently staff at a level near the lowest patient census in the year, and above that level, they would save a lot of money by hiring temporary personnel as patient census increases occasionally arise. This hospital staffing practice is another element of our analogy that is becoming well known in the health industry. The idea is that current practice authorizes the use of too high a level of skill in the provision of services. Current practice also means that you are paying your personnel full time when you probably don't need them full time to deliver care. Why pay them when they're not delivering care and why use the Queen Mary when a tugboat will do the job? (8) Reduce administrative costs by cutting down on duplication of management equipment such as sophisticated computers-you only need one computer for several hospitals, you don't need an underutilized computer for each facility.

(9) During the transition period required to turn the industry around in terms of risk coverage, let's pay the doctor an incentive for writing a plan of care that utilizes the most economic approach to delivery. All of the data needed to determine the most economical approach does exist and is stored in SSA's computers across the country that have files on each patient, histories by diagnosis, age and geographic area, etc. This information does not need to be restricted just for the use of Professional Standards Review organizations. We all need it.

(10) Let the health provider provide the care and pay him for it. If fiscal intermediaries are to be used, let them make 100% payment to the provider and themselves be responsible for collecting co-insurance and co-payments and deductibles from the patient. As it operates now, the 20% co-pay under Part B of Medicare is generally "foregiven" because the providers generally don't have time to deal with that kind of paperwork. As a consequence the 80% payment from the fiscal intermediary is often equal to the original 100%. This procedure would also save on paperwork and allow the provider to concentrate on health delivery rather than attempting to become efficient as a collection agency.

In health care there is a barrier in funding between the social service component of health care and medical service component of health care. A line between the medical/social aspects has been bureaucratically built, isolating these two components from one another and causing immeasurable harm to patients, especially the chronically ill, disabled, long term care patients.

This is Homemakers-Upjohn's grand plan for comprehensive administrative and reimbursement reform for Medicare and Medicaid. S. 3205 is a good start on controlling fraud and abuse in the institutional sector of the health industry. We belief, however, that the time for patching the program has ended and the time for comprehensive reform is now.

COMPARISON OF 1973 MEDICARE PER VISIT COST VERSUS HOMEMAKER-UPJOHN 1975 HOURLY RATES BY RANGE

STATEMENT OF CENTER ON SOCIAL WELFARE POLICY & LAW

The following statement on S. 3205 is submitted by the Center on Social Welfare Policy and Law, the only national law office devoted to problems of social welfare law. The Center has eleven years of experience in representing poor persons affected by public benefit programs, and is currently representing clients with many problems addressed by S. 3205. This statement addresses those points the Center has been able to consider in the time available: delays in determining eligibility, deficiencies in current quality control procedures, inadequacies in current procedures for developing agency policy, and consideration of property transferred to relatives without fair compensation. No position is taken on other portions of the bill at this time. SECTION 4

APPLICATION PROCESSING TIME LIMITATIONS

Section 4(a) of S. 3205 would add to the Act a maximum time period of 30 days (60 days in disability cases) for the determination of eligibility for medical assistance benefits under Title XIX. We agree that speedy determination of eligibility is a matter of vital importance to all needy persons requiring medical care, since there is no manner in which a person can be compensated subsequently for denial of medical care at a time when it is most needed. Since delays are now commonplace, we support legislative action such as that reflected in § 4(a). There are certain problems arising from the language of § 4(a), or current agency practices, however, which we believe the Committee should address if it wishes to accomplish its benevolent purposes.

Before turning to those problems, we should first note that time standards of 30 and 60 days are entirely realistic. A 30 day standard was applied by HEW in the AFDC program from 1951 to 1973; the sixty day standard in disability cases was introduced in 1968. HEW defended its 30 day requirement before the United States Supreme Court in Rodriguez v. Swank, 403 U.S. 901 (1971), stating in its amicus brief that the mandatory 30 day standard "was drawn on the experience of more than seventeen years in administering the statute, as well as the experience and comments of various states and recipients." A number of states who were out of compliance with the 30 day requirement in the early 1970's were brought into compliance by court orders. Even when HEW extended the time period to 45 days in 1973, it recognized that 30 days was the reasonable period, and required that benefits be paid as of the 30th day.

HEW has not set any standard for promptness of determination of eligibility for SSI in its regulations, and has been under serious criticism for its delays. In an October 21, 1975 Report to the Subcommittee on Public Assistance of the House Committee on Ways and Means, SSA stated that by March 1976 it hoped to determine the average case in approximately 30 days (60 days for disability cases). A March 1976 Report states that those goals were exceeded, that is, that the average case took less time. Of course many cases took longer. Nonetheless, it is apparent that the time standards contained in S. 3205 are certainly attainable and should be retained in the bill.' This brings us to the problems raised by the bill in its present form.

1. We are concerned that S. 3205, as currently drafted, may not have the desired impact in assuring that eligibility determinations will be made within the time limits desired by the sponsors. Thus, S. 3205 could be read to apply the 30 and 60 day time limits for the making of eligibility determinations on "applications for coverage" under the medicaid program only to medicaid applications of persons already receiving AFDC or SSI benefits. §4(a) now says:

"(37) provide

"(A) for the making of eligibility determinations under the plan, on the basis of applications for coverage, within thirty days of the date of such application for all individuals: (i) receiving aid or assistance (or who except for income and resources would be eligible for aid or assistance) under any plan of the State approved under title I, X, XVI (for the aged and the blind) or part A of title IV, or (ii) with respect to whom supplemental security income benefits are being paid (or who would except for income and resources be eligible to have paid with

1 In this respect, it should be noted that S. 3205 need not be changed to allow for a few hard cases, for the bill allows for cases in which it is alleged that a determination of eligibility simply cannot be made within the 30 or 60 day time limits by providing that the sanction under the Act appiles only if timely determinations are made in fewer than 95 percent of all medical assistance eligibility determinations. Section 4 (b) of S. 3205.