One of these is you might believe that Medi-Cal does not provide preventive services. I must tell you that Medi-Cal strongly supports preventive services-that the instructions to social workers are that people who do not have a personal physician, must be encouraged to seek such a personal physician, to undergo examination in order that any illness may be detected early and be subject to treatment when it can be treated sensibly and with a good chance of success. The main problem with the program in the past has been the extreme haste with which it was put into operation. The fiscal intermediary testified this morning about the contract: the contract was entered into just a few weeks before the operation was to start

Senator RANDOLPH. Am I correct in saying not only the haste, but to a certain degree the magnitude of the problem of a State like California-and I am not attempting to lead the witness-but would you say that that is a problem, as well as the haste with which you

stress

Mr. MULDER. It is, indeed. It continues to be a problem. We have made many improvements in the operation of the system.

The claims processing is going a great deal faster than it has. There has been much more emphasis on the medical audit. We now have operating in most counties very active peer review committees. Not only in the field of medicine, but for other fields as well.

MEDI-CAL COMPLEMENTARY TO MEDICARE

Another observation I would like to make is that with respect to the aged, Medi-Cal is really a complementary resource to medicare; that the majority of the care received by the aged is really medicarefinanced, rather than by Medi-Cal.

The speaker this morning spoke about the problem around reimbursement for physicians and indicated that there had been a steadfast refusal on the part of the Governor to consider a fee schedule for physicians' services.

In that connection, the committee should know that the law which was enacted before Governor Reagan took office contains the requirement that payment be made on the basis of "reasonable charges" and that these reasonable charges are to be determined in relation to the individual physician's usual charge-customary within the locality— and within the prevailing charges in the locality.

Senator RANDOLPH. When was that law passed?

Mr. MULDER. It was passed in November of 1965, and became operative on March 1 of 1966.

The fee language is the same as the fee language which is in title 18, the medicare program. The legislature did have opportunity for reviewing the method of payment to physicians. Two committees gave it their attention and fee schedules were considered by legislative committees, and they did not proceed with them.

It has been our position that with, respect to a fee schedule, if it is to provide adequate payment for the average physician, this will happen: that the physicians who customarily charge below the average will immediately move up to the average, and that physicians who customarily charge above the average will become disinclined to participate in the program, if it doesn't provide them with their usual fees.

And the end result is that you pay the same, except that you pay it to fewer physicians who are predominantly, usually, charging lower. And the end result we felt would not be substantially different in terms of outlay.

Another observation with respect to some of the testimony of this morning: reference was made to utilization surveillance. Lest there be any misunderstanding, the system which Dr. Breslow, when he was director of public health, instituted in the early stages of the program still exists.

We do receive paid claims which are arranged in month of service order, and these records are reviewed to detect any pattern of care that appears to deviate from the accepted community norm.

Anything that looks deviant is referred to Blue Shield, where it is again subjected to medical audit, and then may go to the peer review committees that were described by Dr. Todd this morning.

Likewise, in our office, we receive complaints from a variety of sources, such as the licensing boards-indications that something may be wrong-and wherever professional judgment is needed to determine what went wrong and what should be done about it, we use these peer review committees.

SAN JOAQUIN COST REVIEW PROJECT

In fact, in one area, the San Joaquin valley--the northern part of the valley-we are experimenting with an even deeper type of review. As was indicated this morning, physicians services constitute only 19 or 20 percent of the medical care dollar that is paid in Medi-Cal. On the other hand, about 75 percent of the dollars are for services which have been ordered or prescribed or recommended by physicians. Therefore, a review of the physicians billings is really not sufficient to determine if there is economical and conscientious use of the program.

In the San Joaquin project, which is operated by the foundation for medical care, records are reviewed with respect to all of the services so there is an intensive review of hospital utilization, drug prescriptions, and so on.

This offers a much greater promise for control than we have found in the past, and if this will work, and if it is not too expensive--we have to balance cost against the result-we hope to expand it to other

areas.

We also want to expand the prepayment concept which is being experimented with in San Joaquín Medical Foundation as well.

It was said this morning that Governor Reagan would like to see Medi-Cal scratched. I want to assure you this is not so. The governor has observed from time to time that the Medi-Cal program is a problem which needs much tighter control, and it needs much, much improvement. We have been working toward that improvement and in cooperation with the provider organizations, we have better controls. The legislature has been responsive in approving legislation which will enable us to exercise more controls and to require prior authorization for certain services where this is warranted, and has also given us the means in case we do run short of money to have an orderly readjustment of the services in the program.

If there are any other questions that you may have I will be glad to answer them. If I don't have the answers, we would be glad to furnish them to you in writing.

Senator RANDOLPH. Thank you, Mr. Mulder.

This committee now, I believe I will be speaking appropriately for all members, we are in nowise interested in the politics of a particular situation nor in the personalities involved in such a situation. We must, however, probe, search. This is our function. And the hearing is for that purpose as well as hearing testimony. So, when we hear the conflicting viewpoints, it is necessary that we attempt to have a presentation-even, perhaps, a rebuttal, if we wish to call it that to keep the balance.

And I personally am not so concerned-and I say this to our audience as well as to the witness-I am not so concerned with differences. I am concerned only when people are indifferent. And that is what I want to find out-if there is a difference, yes, I have that with my colleagues who sit here at my right today. As I earlier sat here today.

We do not vote all the same on all questions, but I can say for him. that he is not indifferent to this subject matter-as well as other subject matter in the Congress.

And I think, by and large, that would be said of the Members of the Senate the body to which we belong.

And so, if we can, with a spirit of objectivity, we can have viewpoints expressed as we have here today and not allow them to go off into tangents, but to keep at least on the body of the substance of what we are talking about, then it is a service to us, frankly, when we have these different viewpoints that are expressed here today.

I would not want the viewpoints to flow from imagined problems, you understand. We, in this country, can often create crisis. I don't want to get into that-that's another subject-but we want to be very careful to deal with the substantive matters. I know our chairman feels that way, and I know all the members of the committee feel that

way.

And so, I think it is constructive that we have the discussion which we have had, not only from Speaker Unruh, but from Mr. Mulder and perhaps others who are contributing to the dialog here today.

This is highly important. Yes, Congress passes legislation. The intent is written, and then often the agency or agencies involved will not administer the law as perhaps we in the Congress really intended. This has happened many times, and we have to have an oversight committee to check up and to see, "Now, is the agency carrying out the law as intended by the membership that passed it?"

And so you see why conflicts often arise in these areas. I would hope that out of this hearing, and I will be speaking for all members, particularly for our chairman, who of necessity is absent at this time, that we want the facts insofar as we can determine the facts.

And we want to move forward to correct the inequities whenever those inequities have been substantiated by fact. This is very important. I think it is an obligation.

As we go back on Capitol Hill, as we review not only the problem here in the immediate Los Angeles area, but in California.

Well, perhaps I have talked too long about this, but I want the record to reflect that there is a purpose in the committee other than to write legislation, but then, to go out into the countryside, as it were, and to see how the legislation actually, in operation, is coping with the problems-sometimes solving the problems. In other words, a commitment which is a continuing one, with the necessity always, I realize, for review and perhaps extension and refinement of the law which may have been placed on the statute books at the outset.

And I thank all those who have contributed today in this spirit in this context.

Mr. ORIOL. Were there any other comments you wanted to make at this time, Mr. Mulder?

Mr. MULDER. No; I was ready to answer any questions that the committee staff may have.

Mr. ORIOL. Did you say that Medi-Cal participants are given screening of some sort a physical, tests-test for physical condition? Is this a requirement?

Mr. MULDER. No; I wouldn't go that far. I say that, in California, we have attempted to have in Medi-Cal a program that utilizes the mainstream of health care services, so that people, whether they are poor or rich can use this system-the available resources--the same

way.

Mr. ORIOL. That is why I raised the question. I thought you were requiring this on a wide scale.

I wanted to ask whether you have the facilities to do it with.

Mr. MULDER. No; we do not require it. We strongly recommend that each person in the program have a personal physician, and if that physician believes that this should be done some screening should be done the program will provide that.

Mr. ORIOL. Well, when you said screening, I immediately thought of multiphasic screening on a scheduled basis.

Mr. MULDER. Well, we do not have that.

Mr. ORIOL. Do you feel there is need for more of that type of facility within California, and if so, what age groups do you think it would most benefit?

SANTA CRUZ EXPERIMENT

Mr. MULDER. Well, there was a very successful experiment in Santa Cruz County, many years ago, where applicants for old age assistance were given opportunity, at the Public Health Department, for a battery of tests the results of which would then be sent to their personal physician.

To the extent that there is manpower and that facilities are available, I would like to see that extended, indeed. The physicians in Santa Cruz found this very helpful, and it helped the aged persons who had not yet sought out a physician, to do so. With the old program, the problem was that we only paid for the treatment of illness. It did not pay, at that time, prior to 1966, for diagnostic examinations in the absence of symptoms.

Mr. ORIOL. I have another question.

If this is not properly addressed to you perhaps you could indicate that, and we will send it by mail to whomever you suggest.

The San Francisco Chronicle of October 10 carried a story about a study showing that the death rate of elderly patients went up alarmingly after they were removed-and apparently with some amount of haste from Stockton State Mental Hospital. The study showed that the death rate was 27 percent higher than of those who stayed in the hospital. I believe this was part of the hospital population reduction program, but this sort of study raises some questions, I would think, about that project.

We will also address some questions by mail to the author of that study and will ask him some questions, too, but have you anything to discuss with us?

Mr. MULDER. No, I am not conversant with the article to which you refer. I suggest you address the question to Dr. James Lowry, the director of mental hygiene in Sacramento.

Mr. ORIOL. We will do that.

Without objection, we will enter that article in the record. (The information follows:)

[From the San Francisco Chronicle, Oct. 10, 1968]

MENTAL HOSPITAL MOVE-STARTLING STUDY OF AGED

(By Carolyn Anspacher)

The death rate of elderly patients, abruptly removed from Stockton State Mental Hospital under orders of the State Department of Mental Hygiene has shot up alarmingly since the "Hospital Population Reduction Project" was inaugurated last January.

According to a new, and carefully controlled study of geriatric psychiatric patient transfers, the mortality rate of the most helpless who had been removed to nursing homes and convalescent hospitals ran 27 per cent higher than those allowed to remain in the familiar hospital setting.

The research project was undertaken by Eldon C. Killian, a member of the Academy of Certified Social Workers, and a psychiatric social worker at Stockton State Hospital. It is being submitted with hospital approval to "Social Work", the authoritative scientific journal of the profession.

He began his research last January when it was decided in Sacramento that the entire north area of Stockton State Hospital should be deactivated and, within the year, some 50 to 60 per cent of the slightly more than 800 geriatric patients moved out in a series of "waves". Some according to the transfer plan, were to be taken to other "less crowded" mental hospitals-Agnews, Modesto or Napa.

Some were to go to nursing homes, convalescent hospitals, boarding homes or guests homes and family care homes. And some were to be kept at Stockton in south area wards.

For his study, Killian took three separate groups. The first group totaled 71 males and 8 female geriatric patients who were transferred by chartered bus from Stockton to other state hospitals during the first three months of this year. The second groups, 21 male and 44 female geriatric patients (40 per cent of whom were non-ambulatory) were taken by ambulances and autos to "extramural facilities"-nursing homes, convalescent hospitals and the like.

The third group, 52 men and 57 women, remained at Stockton State Hospital, but in other areas of the institution.

An equal number of geriatric patients was selected from the hospital's January 1, 1967 census and each matched to those in the 1968 study group as to age, sex, race, organic or functional diagnosis length of hospitalization and ambulatory or non-ambulatory status.

Killian, found that the mortality rate was 4.98 times higher for the experimental group transferred from Stockton to other psychiatric hospitals than for its "control group".