rity checks, despite the fact that medical service without cost whatever were available under medicaid.

The enactment of medicare was a great step forward. It certainly must be hailed as a great achievement by the Congress, and its mere existence has given hope to a multitude of the aged in the Nation. After 2 years operation it is showing a need for improvement. However, the amendments of 1967 that have emerged from the House of Representatives are definitely a move in the wrong direction.

DEDUCTIBLES A BAR TO PREVENTION

The retention of the deductibles is a bar to preventative care. The emasculation of medicaid menaces the health of young and old alike and the minute increase in benefits continues to condemn the vast majority of the aged to end their span of life at an unthinkable subsistence level. It is my belief that the rumored increase of the registration fee for part B would prove financially disastrous to the Social Security Administration. My information from the directors of the many clubs and centers affiliated with the Congress of Senior Citizens assures me that dropouts would prove momentous and that such cancellations would come mainly from those senior citizens who are in good health and are in no financial liability to the medicare program in the first place.

I want to close with these observations. The medicare law is a great boon to the elderly of the Nation. It does need further improvement in order to operate properly. It is my opinion that the Congress enact legislation providing a schedule of fees similar to those in operation by Blue Shield and accepted by the medical profession in general and that the Congress remove the deductibles and the coinsurance stipulations which are a deterrent to preventative care.

Medicare is indeed a fine program, let's make it a better one.
I thank you. [Applause.]

Senator SMATHERS. Thank you very much.

(The chairman addressed the following questions to Mr. Newburgher in a letter subsequent to the hearings:)

1. May we have some additional discussion on your point that the "retention of the deductibility is a bar to preventive care" under Medicare?

2. Your statement said that examples of improper action by doctors come to your attention almost daily. If you can possibly do so, I would like to have, in descriptive terms, examples of several of the actions you consider abusive or unethical.

(The following reply was received :)

In the statement that "retention of the deductibility is a bar to preventive care" a phrase I did not elaborate on, as it seemed to me quite obvious. To the great majority of the elderly, the $50.00 constitutes a sum much needed for the purchase of food and if he indulges in self diagnosis he will attempt to cure what he believes to be a mild disorder by resorting to some patent cure-all purchasable at the drug counter at a minute expenditure. In most cases the disorder can be a warning of serious trouble, where a visit to the doctor can bring about the control of a serious illness, cure the patient, which would result in considerable pecuniary savings to the Social Security Administration by making hospitalization and the services of a surgeon unnecessary.

On the 2nd question I want to say that I used the particular case quoted in the testimony because I became personally involved and therefore knew for certain that the facts were indisputable, however, as I stated many other cases came to

my attention which I did not pursue and where I confined myself to the assuage of the members ruffled feelings. I might however quote some of these cases:

An elderly lady at one of our affiliated Clubs in the Bronx accosted me after a meeting, to express her gratification at the Medicare program. She had to undergo a cataract operation for which the surgeon demanded $750.00-she borrowed the money from her children and promised to restitute the sum when she gets the 80%. Medicare was wonderful indeed. I had a rather unpleasant obligation to explain to this lady that the most she could look forward to was $320.00 80% of $400.00 and that she would have to find $430.00 more to repay the loan.

Another case that comes to mind is where a surgeon charged $500.00 for a minor surgical procedure involving the removal of growths from the face and neck. The possibility that these might be malignant motivated the patient to react to the urging of his doctor. His reimbursement will be less than $100.00.

Another area of abuses, not to be overlooked is the sudden increase in house calls by practitioners who have been more and more reluctant to make these calls, but it appears that when it comes to Medicare patients it is profitable to drop in daily for a minute or so.

My statements should not be construed as an indictment of the Medical profession per se. There are many fine men, ethical men engaged in curing the ill (and I am thinking of my own doctor) but a good percentage of physicians particularly in the urban communities are resorting to practices which could undermine the Medicare program and that would indeed be a tragedy.

Senator SMATHERS. Those are very excellent statements and we are very grateful to each of you. Thank you very much for your appearance.

Ladies and gentlemen, we have two more witnesses. This committee. is going to have to adjourn at 5 o'clock. It is now 4:25. We have Dr. Himler who is the coordinator of the Council of the County Medical Societies of New York City. We have Mr. James A. Brindle, president of the Health Insurance Plan of Greater New York City, accompanied by Mr. Samuel Shapiro, vice president and director of Research and Statistics.

Then we have Dr. Leo Gitman, director, Department of Community Health and Multiphasic Screening Program.

I want first for Dr. Himler to come up. I don't want to limit Dr. Himler's testimony too stringently because he and his group have been the subject of considerable criticism, and he is entitled to have some time to answer. We now have 35 minutes. Dr. Himler, how long will it take you to get through with your statement?

Dr. HIMLER. I think I can cover the presentation in 12 or 15 minutes. I will be very happy to edit what I have to say as well as I can. Senator SMATHERS. We will be very happy if you would do that. We will let you take over then and proceed.

STATEMENT OF GEORGE HIMLER, M.D., COORDINATOR, COUNCIL OF THE COUNTY MEDICAL SOCIETIES OF NEW YORK CITY

Dr. HIMLER. Thank you, Senator Smathers.

Gentlemen of the committee and ladies and gentlemen.

Senator, for the information of your committee I brought up two or three other statements that I have made elsewhere, they are relevant to this subject although not directly. I have only two copies of each but I would like to leave them with you.

Senator SMATHERS. If you desire, we will make them a part of this record.

Dr. HIMLER. I would be glad to leave it to the discretion of the committee. They need not be part of the record.

83-481-68-pt. 2- 8

Senator SMATHERS. We will read them and make that determination.

Dr. HIMLER. My name is George Himler, M.D. I am chairman of the Coordinating Council of the five county medical societies of New York City and chairman of the Technical Advisory Committee of the Medical Society of the State of New York to the New York State Department of Health on matters pertaining to medicaid.

I have been asked to assess the impact the title 18 and title 19 programs have had on the availability of medical services to the elderly and the effect they may have in the future. The question is clearly not a simple one but, to make a beginning, I will divide it into its separate components of medicare and medicaid and then further subdivide the discussion into ambulatory, hospital, and posthospital or extended care services.

Judging from the statistics that have been made available on the first year of medicare operation, the program has had virtually no effect on the number of ambulatory services received by the elderly. The number of office visits has not increased and our municipal and voluntary clinics were already working at capacity before medicare went into effect. There are two ways of explaining this finding.

It is possible that the elderly were not previously deprived of care to the significant extent because of health insurance protection, private means, family assistance or Government assistance. There would then have been no appreciable backlog of necessary medical services to create an increased demand. A more likely explanation is that the benefits provided by medicare do not differ substantially in kind or extent from those of the usual type of health insurance. It has deductible and coinsurance features which are characteristic of voluntary health insurance. There are no benefits for drugs, sickroom supplies, prostheses, eyeglasses, hearing aids, and other services and supplies. These limitations and exclusions may still be serving as a deterrent to the elderly from seeking ambulatory health services.

The picture is somewhat different when we consider inhospital care. Immediately before the implementation of medicare, much apprehension and even alarm was expressed by physicians and hospital administrators that there would be an uncontrollable "run" on hospital beds by the elderly. Fortunately, the expected deluge did not materialize. It is true, however, that those over 65 now occupy a proportionately larger number of hospital beds than they did before medicare. The increase is in the neighborhood of 20 percent. This is probably due to a backlog of previously neglected conditions which are now in the process of being corrected.

Part of the reason for the rise in bed occupancy is also to be found in the requirement that medicare beneficiaries be in a general hospital for at least 3 days before admission to an extended-care facility. This 3-day stay is often greatly protracted because these patients are admitted to the general hospital whenever a bed can be found for them, whether or not arrangements have been made for subsequent transfer to a convalescent or nursing home. Since long-term care accommodations are scarce, there is often a delay in transferring them, during which time they continue to occupy general hospital beds. It appears likely, however, that as in part B of medicare, the deductible and co

insurance provisions of part A have had some effect in limiting utilization.

I will skip the extended-care benefits because I don't think it is germane to this discussion.

It seems a fair statement that medicare has had only a moderate impact on the totality of medical services. Its greatest effect has been an exacerbation of preexisting shortages of hospital beds and personnel.

MEDICARE COVERAGE CALLED INADEQUATE

In evaluating the effectiveness of medicare, it is apparent that the scope of coverage is inadequate. In my opinion, this is due to the cost limitations imposed by extending it to all persons over 65 years of age, regardless of need. The most important gaps in coverage are the deductibles in both part A and part B. Limitation of hospital benefits to 90 days often works a hardship in an age group where hospitalizations tend to be prolonged. Finally, as I previously pointed out, the provision for extended-care benefits falls far short of the needs.

On the credit side, the administrative policies established for the program are practical and fit well into the practice patterns of physicians and patients alike. They have utilized the existing facilities of the insurance industry and, as a result, there has been only minimal confusion, dislocation of patients, or deprivation of benefits due to administrative difficulties. So much for medicare.

In discussing medicaid, I will limit my remarks to its implementation in the State of New York which differs from that in other States in many important respects. The program offers comprehensive coverage. There are complete benefits in and out of the hospital. Provision is made for payment for drugs, prostheses, sickroom supplies, eyeglasses, and whatever other health services and supplies the recipient may require. Benefits are provided for extended-care facilities. There are no dollar or time limitations on the assistance available. To this extent, the program is admirable and it has had the support of the medical profession from the day of its implementation.

Beyond this point, however, professional and public enthusiasm fall abruptly to the vanishing point. From the administrative point of view, the program is completely disorganized. In spite of repeated urging by the Medical Society of the State of New York, the Department of Social Services in Albany has failed to develop a uniform coherent program. It has acted on the premise that the local welfare districts are autonomous and cannot be forced to submit to State regulation. As a result, there are as many programs operational as there are social service districts. Each district has its own invoice forms and its own regulations. The capacity of the various local offices to cope with their new administrative responsibilities varies greatly but administration and professional relations have generally been poor.

Since the processing of claims is a new venture for the district offices, at least on this scale, most of them have fallen badly behind in the payment of bills from physicians and other providers of services. In some areas, payment has been delayed by as much as 10 or 12 months. Some districts are just beginning to catch up with invoices now, after 18 months of operation, while others are 3 to 4 months behind and will be indefinitely.

At the same time, the physician cannot charge the State more than the fee schedule allows. Under these circumstances, with large numbers of their patients potentially eligible for the program, physicians understandably began to take a much keener interest in fee schedules than they had in the days when the number of patients receiving medical assistance was low and they, the doctors, were content to give the State the usual "welfare discount."

BASIS FOR FEE STRUCTURE

The State medical society therefore undertook a negotiation with. an interdepartmental task force of New York State. After prolonged efforts to arrive at a fair reimbursement formula for physicians, the negotiations broke down and the departments of health, welfare, and budget unilaterally promulgated a maximum fee schedule for the State of New York. The fee structure was based on the society's relative value scale with a conversion factor of $4 for surgery and $5 for nonsurgical procedures.

The actual amounts of the fees ranged from parity with customary fees in a very few rural areas to 40 percent below in high-cost areas such as New York City. It has been estimated that, on a statewide basis, the maximum fee schedule is 35 percent below the prevailing rates charged by physicians in private practice. The clamor about the inadequacies of the established fees become so great that the State was forced to grant so-called interim increases in six specialties. Even with these increases, the rates are below the prevailing rates in almost all communities.

A large number of physicians of the State, faced with an administrative shambles, unnecessary and excessive paperwork, low reimbursement rates, and delays in payment, declined to participate in the program. It should be made clear at this point that the Medical Society of the State of New York, although justly and publicly critical of the administration of medicaid, never wavered in its support of the principle on which it is based. The decision on whether or not to participate was therefore left to each individual physician and there was never a boycott of the program as has occasionally been charged. Oddly enough, the public has shown relatively little enthusiasm for medicaid, particularly in New York City. It is my opinion that this is largely because enrollment was left in the hands of the welfare department or the department of social services as it is now called. The establishment of eligibility, registration, and administration were still conducted in a manner strongly reminiscent of old welfare methods. The welfare connotation of the assistance program were apparently sufficiently strong and distasteful to outweigh its possible benefits in the minds of the recipients. In New York City, after prolonged effort, less than one-half of the estimated 3 million eligibles have been enrolled to date.

In spite of these limitations on utilization, the costs of the program have increased spectacularly. The major reason was an apparently uncontrollable increase in hospital per diem rates. A second factor was a huge demand for nursing home and convalescent care, payment for which had now become primarily a Government responsibility. The