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the medicaid program which is controlled by a welfare administration.

I would like to take one moment and ask, how many of you have medicaid cards? Not medicare-medicaid cards?

This is what has happened to the elderly people. I had an elderly man walk into my office and he said, "Senator, I got a problem." He took out a billfold and he opened up a long line of glass-paned envelopes and he pointed to it and he said in broken English:

This is my Medicaid card, this is Medicare, Part A. This is my Blue Cross. This is my union health card because I am a retired member of the bricklayers union. And my Medicaid card is limited because I have all these other things.

I said, "What is your problem ?

He said, "I got a bellyache, what do I do?” (Laughter and applause.]

We have so fragmented the most basic social service, we have an obligation to give our citizenry that not even a Philadelphia lawyer could tell him of his rights. There can be nothing more important than preserving the health and life of our people. We live in a peculiar society that says that the child's education is the concern of all of us and its illiteracy is a social disease and we have to pay for his education out of a progressive tax system. But let that little kid get hit by a truck or get a heart attack and then we stop him at the door of a hospital and say, "Wait a minute, are you self-insured? Do you have Blue Cross? Can you pay? If not, plead poverty.” [Applause.]

Senator, there is no reason why a courtroom where you and I litigate private rights ought to be paid for by Government, but a hospital where we may have to go to determine a case of cancer be part of the private sector only subsidized by Government. Certainly that hospital is much more a public function than a place to litigate private rights.

In summation I would say there is lots that the Congress could do, unfortunately we don't have enough Senator Smathers in the Senate. I wish we had more who comprehended and understood the problems that are involved. [Applause.]

It would seem to me that the Congress could, if we could have more men like

you, give the doctors their just desert but on the other hand recognize that no amount of Government contribution can ever satisfy the uncontrolled and insatiable appetite of a private sector and deprive some members of the medical establishment.

Again my congratulations to you, sir, and my deep thanks for affording me this privilege. [Applause.]

Incidentally, Senator, your staff director, who I must compliment you is a great dedicated human being and terribly efficient, spoke to me at some length about a nursing home problem and I think Dr. Wise touched on it. I have gone through in addition to hospitals a number of nursing homes. We have a lot of people in nursing homes who really don't need nursing homes, they need our homes like these, but they are kept in nursing homes because medicaid won't pay the bill if they go into an old age home or into a home like this. In a nursing home although they are ambulatory and custodial care they are prolonged there so that the Government will pay the costs.

This is backing up into the hospital and the hospital in turn cannot really see the patients into the nursing home. It seems to me that we musť define what a hospital is, what an extended care facility is, what

a nursing home is and what an old age home is, and we ought to try and make certain that those yardsticks are adequately enforced and that will eliminate a great deal of the cost involved.

Some day to one of your subcommittees I would like to spell out the conditions we have found in some of these nursing homes, both voluntary and proprietary. I think the committee would do itself a great favor if it could some day visit a few of these nursing homes unannounced. I would recommend you do it before a weekend, you will need at least 2 days to rest up over the mental and physical shock you will receive in looking at how we treat some of our elderly citizenry in this 20th century.

Thank you. [Applause.]

Senator SMATHERS. Thank you very much, Senator Thaler. You certainly made a splendid statement and gave us many constructive ideas.

(The prepared statement of Senator Thaler follows:) PREPARED STATEMENT OF SEYMOUR THALER, NEW YORK STATE SENATOR, 10TH

Mr. Chairman and members of the Special Committee on Aging.

I am Seymour R. Thaler, New York State Senator and the ranking minority member and former chairman of the New York State Joint Legislative Committee on Public Health and Medicare. I am grateful for this opportunity to present my personal observations on the effect of the much heralded, but somewhat disappointing, performance of the National Health Act of 1965, commonly referred to as Medicare and Medicaid.

It is my opinion that our senior citizens are now paying more for their medical bills, under Part B of Title 18, than any other segment of our society. In short, many doctors are deliberately-albeit legally-distorting the program to insure a greater economic return to themselves at a greater cost to the elderly patient.

Let me explain how this has happened. Under Part B, a person over 65 years who pays $3.00 a month for a total of $36 a year-soon, we hear, to be raised to $4 or $4.50 per month-is supposed to have his medical bills paid by the Federal Government after, of course, the patient pays the first $50 plus 20% of the balance. The law provides, however, that a doctor may not charge government more then “the reasonable and customary fee" for the service rendered.

The legislation, even if not so intended, is helpful only in cases of fairly extensive medical bills. To demonstrate, if a patient's bill amounts to $100, in addition to the annual cost of $36 he has already paid by way of monthly contributions, he must also pay the first $50 plus 20% of the balance, or $10, or a total of $96 for a medical bill of $100. Assuming his medical costs for the year amounts to $200, he would be required to pay $116 out of the total bill-still more then 50% of the total cost.

But there are two gimmicks in the legislation which have been used by many members of the medical profession to milk our elderly citizens.

First, the doctor is permitted, at his own option, to either bill the government directly or to bill the patient who can then seek reimbursement from the government. Most doctors have deliberately decided to bill patients rather then their own fiscal intermediary-in this locality United Medical Service, commonly known as Blue Shield. I am informed that in New York City only one-third of the practicing doctors agreed to "accept assignments", that is, to bill government rather than their patients.

Second, nothing in the legislation prohibits a doctor from charging his patient any amount in excess of the "reasonable and customary fee.” He legally can unilaterally determine the size of his bill. The patient, on the other hand, is reimbursed by Blue Shield under the “usual and customary fee" limitations. There is no ceiling of any kind upon the doctor's billing practices except his own conscience, morality or compassion—a barometer which is all too frequently an inadequate safeguard against greed.

In November of 1965, Blue Shield conducted a survey of physicians "to accumulate customary charge data". Some 15,000 physicians were asked to list their usual charge". The phrase, “usual charge” was defined by UMS as "the fee you

charge most of your patients for the listed procedures or services, regardless of the patient's income level" and directed the physician not to “include the many occasions you render care to charity or medically indigent patients without charge or for a nominal fee". Since Blue Shield indicated that the purpose of the inquiry was to “develop programs that will provide more realistic payments" and since the answers were, at best, self-serving, I think it can be realistically assumed that most doctors were neither modest nor self-effacing in listing their “usual charges". The individual questionnaire, when completed, is politely referred to by Blue Shield as the doctor's "Fee Profile”.

Nevertheless, many doctors bills are being reduced by Blue Shield. After they compare it with his "Fee Profile” and the prevailing charges in his county, the patient is the scapegoat since he has to pay the difference.

On October 6, 1967, in replying to my inquiry, Dr. Harold J. Safian, VicePresident of Medical Affairs of Blue Shield stated that "a recent UMS study of doctors' charges in relation to 'allowed charges' indicates that, the percent of 'allowed charges' to doctors charges is 83% ...". In simple language, 17% of the doctors bills are in excess of the “reasonable and customary fees". I must add, however, that Blue Shield is most generous in permitting a doctor, at any time, on his own initiative, to change his fee profile to reflect increases in his so-called customary charges and that many doctors have already taken advantage of this benevolent attitude.

In bread and butter terms, just what has this meant to the individual elderly patient who was already faced by an 8.9% general increase in doctors fees? Let us look at the record.

Patient "A" treated by Dr. Anthony J. Rella was billed $500. Blue Shield allowed as the reasonable and customary fee for the services involved $175. After deducting $35 for co-insurance (apparently he had already used up his $50 deductible), Blue Shield reimbursed the patient $140 and the patient paid $360.

Dr. Robert H. Goetz charged Patient “B” $125. Blue Shield set $60 as the "allowed charge” for the service performed. After the deductible and co-insurance, UMS reimbursed the patient a total of $10.83 out of a total bill of $125.

Dr. Lester Moskowitz charged Patient "C" $750. Blue Shield set $300 as the "allowed charge" so that the patient paid $510 as his share and Blue Shield paid only $240.

Dr. C. J. Campbell charged Patient "D" $350 to remove a cataract. Blue Shield allowed only $175 as the usual and customary fee. As a result, the patient paid $214 and Blue Shield only $136.

We have one case where a patient had a cataract removed prior to Medicare and was charged $175. After Medicare came into effect, the same patient had a similar operation by the same doctor who now charged $500. After Medicare, the patient had to pay a total of $400 whereas before Medicare, he merely paid $175.

Dr. George W. Fish operated on Patient “E”' 's prostate and charged $1,000. Blue Shield set $300 as the usual and customary fee which meant the patient, after the deductible and co-insurance, paid $800 and Blue Shield paid $200.

Copies of these Blue Shield memoranda with the patients names deleted are annexed to my testimony submitted to this Committee." I must emphasize that the patients are all working people since these, and many other similar cases, come out of union files.

Just how is this affecting the elderly patients who visit a clinic? Let me tell you the story of Mrs. "F" who, due to a blood condition, visits Mt. Sinai clinic weekly for a B12 injection. She seldom bothers the doctor since the nurse is familiar with the case and performs the needed service. Prior to Medicare, she was first charged $1.50 and then $1.75 per visit. The moment Medicare began to help her, the hospital billed $20 a visit which meant that she was required to pay for the first 2122 visits or $50 plus 20% of all subsequent visits or $4 a visitinstead of $1.50 or $1.75. Her husband told me what we could do with Medicare as far as he was concerned.

It might interest you to know that it would appear that a fraud is being practiced on the elderly persons since Blue Cross is only paying 60% of the billed charges, at the present time, which means that the hospital is only collecting $12 per visit from Blue Cross, but that the patient pays his deductible and 20% co-insurance based upon $20 a visit.

1 In committee files.

It might further interest this Subcommittee to know that Blue Cross refuses to disclose inpatient and outpatient rates paid to individual hospitals and nursing homes since Social Security, I am told, insists that such information is confidential ... Why? State officials have also been rejected by Federal Government and Blue Cross. Whatever information we have is gathered through incidental exposure to individual patient's bills. However, if we can judge Title 18 rates on the basis of the officially promulgated and federally approved Title 19 rates, the statistics are awesome and fantastic. Let me give you some examples of Medicaid rates in this area.

Mt. Sinai charges $81.85 per day for a ward patient and 17.56 for a clinic visit. Let me reiterate : I am talking about the officially approved Medicaid rates. New York Hospital charges 84.92 per day for a ward patient and 20.25 per clinic visit. Montefiore Hospital charges 87.94 per ward day and 26.20 per clinic visit. Presbyterian Hospital charges 76.95 and 15.22 respectively. Roosevelt Hospital 80.15 and 18.60 respectively. St. Lukes 89.91 and 20.30 respectively.

Further, many hospitals now add a per diem charge to a Medicare inpatient's bill for the availability of such services as anesthesiology, radiology and pathology, not covered under Title 18, Part A. This additional sum of money (ranging in some cases from 3% of the total bill to $1.32 per day in one hospital) is in some hospitals distributed to selected members of the medical staff and is billed to the patient whether or not he receives any such services, In fact, in spite of this per diem charge, if the patient does receive such excluded services, he is billed an additional amount of money for the specific services under Part B of Medicare. In response to my inquiry, Deputy Commissioner of the New York State Health Department, Dr. Andrew C. Fleck, Jr, replied on October 11, 1967 "it is also my understanding that the Social Security Administration has no regulations concerning the hospital's subsequent disposition of such funds".

To make matters worse, H.R. 12080, passed by the House of Representatives, introduced still another gimmick to enable doctors to avoid adhering to the "reasonable and customary fee" principle.

Under the present statute, a doctor who refuses to accept an assignment so that he can bill the patient above the "allowed charges" must be paid by the patient before the patient can submit the bill for reimbursement. As a result, if a patient does not have enough money to pay the doctor, the doctor has been forced to take an assignment and, therefore, be bound by the “allowed charge”. Under the new amendment, patients would no longer be required to pay the bill before seeking reimbursement. This, therefore, would enable a doctor to collect the "reasonable and usual fee" from even the poorest patient and still dun him for any balance.

It is my hope that you, gentlemen, will make every effort to delete this unconscionable provision in an effort to arrest the ever spiralling cost of medical services to our elderly. Many, if not most, of our senior citizens are worse off today than they were prior to Medicare, and doctors bills to the rest of us are daily being increased to match Medicare rates. Where government funds are so largely committed to a basic social program, the Legislature should not permit a private sector to continue to make their own ground rules.

Medicare, which was supposed to eliminate the indignity and humiliation of the old Kerr-Mills Program, has nevertheless forced a large percentage of our elderly to seek additional assistance under the Medicaid Program still controlled by a welfare administration.

I think it is apparent that no amount of government contribution can ever satisfy the uncontrolled, insatiable appetite of many members of the medical establishment. We must have corrective legislation.

Again, Senator Smathers and gentlemen, thank you for affording me this privilege of testifying before your Subcommittee.

Senator SMATHERS. Our next group of witnesses we are going to ask to come up together. I would like for Mrs. Ethel McDonough, Mr. James Tobin, and Miss Patricia Carter to come together. Miss Carter is the director of the consumer education project, Hudson Guild-Fulton Center. Mrs. McDonough and Mr. Tobin are from the Fulton Senior Association, Manhattan.




Mrs. McDonough. Senator and members of the committee, I am now employed by Project FIND—friendless, isolated,

needy, and disabled. During the spring of 1966 I was hired by the Community Progress Center on West 34th Street in Manhattan to serve as a community aide. Like most aides I was assigned to a social agency. My agency was Hudson Guild, my job was that of friendly visitor.

Following are two cases that I worked on during the year, Mrs. Kathryn McCarthy, an 83-year-old widow lived on a pension of $27 monthly and was supplemented by New York City Public Department of Welfare. She lived in a tiny room two floors up. She had a cardiac condition and also suffered from arthritis.

Miss Simmons, our VISTA worker at Hudson Guild, found Mrs. McCarthy unconscious on the floor the month before and asked me to visit Mrs. McCarthy and to assist her with clinic visits and shopping. During this period I took Mrs. McCarthy to the clinic eight times by cab. Mrs. McCarthy was not capable of walking more than three or four blocks and we spent on the average of six and a half hours waiting in the clinics for service.

Since Mrs. McCarthy was a cardic case she was also in need of money for special diets. She was in the salt-free diet during this time and I did her food shopping. We made several calls to the New York City Department of Welfare for help but with no results. Demands for cabfare refunds were not answered during this period. Mrs. McCarthy had four different investigators, none of whom visited her.

Finally, after accumulating a cab bill of $11.50 from Mrs. McCarthy and over $30 for other shut-ins, Miss Simmons reported this to Hudson Guild officials. Mr. Pilpel gave Miss Simmons a check from the Hudson Guild to cover this and suggested that we not accumulate any more bills for elderly shut-ins as the agency was not financially able to supplement them.

Finally we got an increase in welfare for Mrs. McCarthy's food allowance but never the cabfare refunds.

Another case is Mrs. Anna Burke, a client of welfare. She had trouble walking and had a cardiac condition. In October 1965 the man from the Chelsea Elliott housing project called Miss Simmons and asked her to visit Mrs. Burke and get her rent. Although Mrs. Burke received a monthly check from the New York City Department of Welfare, she always refused to pay her rent. After working with her a couple of months, Miss Simmons referred her to me. I spent hours shopping and talking to her. At nights at home and on weekends I would get calls from Mrs. Burke to please come visit. I finally became known as her woman.

One weekend in late 1967 Mrs. Burke suffered a heart attack and died at a local hospital. Thus ended nearly 2 years of Hudson Guild service to Mrs. Burke.

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