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High participation rates imply broad acceptance of Medicare patients among Medicare providers. However, the Regional Office overseeing Nevada has reported anecdotally that some physicians have recently threatened to stop accepting Medicare patients because of declining reimbursement and increasing paperwork burden. No studies have yet been done which substantiate increased rates of withdrawal of physicians from the Medicare Program in Nevada.


Senator REID. I have also three letters that I have written to you. And I am sorry to say that you have not answered any of them. Dr. WILENSKY. That is inexcusable. What are your letters about? Senator REID. I really think it is inexcusable.

Dr. WILENSKY. I agree.

Senator REID. Especially when each letter deals with the same subject. Each letter becomes, from me, more desperate.

I have a rule with my staff that we may not want to give the answer that we have to give, but we have to answer the letters. And I can understand how one could get lost someplace in the shuffle of the vast bureaucracy that we deal in, but three is not really appropriate. The first one was sent on September 6 of last year. And then we sent a couple after the first of the year.

Dr. WILENSKY. I know that I have seen at least one, if not more, letters addressed to you. But we will go back and make sure. [The information follows:]


HCFA records indicate that we responded to Senator Reid's September 6, 1990 letter on October 1, 1990, but the Senator's office has no record of having received that response. HCFA, however, has no record of receiving any correspondence from the Senator on liver transplants after the first of the year. HCFA is working with the Senator's staff to get the correspondence back on track. A copy of the HCFA October 1 letter has been sent to the Senator's office, and the Senator's staff has sent copies of the January letters to HCFA. A reply will be sent within the next few days.


Dr. WILENSKY. Again, there is no excuse for such a delay in having your letters answered and answered promptly.

Senator REID. The reason we wrote these letters is that I have people in Nevada, two in number, who are in California hospitals. The reason that they are in California hospitals is that there are no hospitals in Nevada that do liver transplants. They are awaiting liver transplants which are to be paid for by Medicare.

This is 1 year later now. Medicare is not yet paying the hospitals for liver transplants. We have been told the reason this is so is that your regulations are still in the developmental stage. People's lives are literally hanging by a thread waiting for liver transplants. And

how can I tell them, and how can we tell them that the regulations are not yet written? What again do I tell these people?

Dr. WILENSKY. We had proposed rules that were put out last spring. We have received some comments. We have revised the regulation accordingly. The revised regulation is not exceedingly different from the proposed rule. We anticipate that we will be submitting this regulation to the Office of the Secretary within the next couple of weeks. At that point, it will go the Office of Management and Budget.

It is our

Senator REID. That is probably a deep-six forever.

Dr. WILENSKY. Actually, all of our regulations take this route, and we actually do get most of them out.

Senator REID. You do get most of them out?

Dr. WILENSKY. We do get most of them out. We anticipate we should have this regulation out this spring, and that it will be very close to the final rule. The proposed rule had coverage for adults in specific medical conditions as long as they were taken care of in centers that were participating facilities. It covered inpatient and physician services, as well as the organ acquisition. There are some details of the final rule that have yet to be sorted out. But it will still be quite close to the proposed rule.

Senator REID. Would you notify me when the proposed regulation goes through the various steps that you have outlined?

Dr. WILENSKY. Yes; we will keep you informed when it leaves the Department, and when it is cleared for final printing.

Senator REID. And you will have somebody look into the other problem as it relates to that?

Dr. WILENSKY. Absolutely.

Senator REID. Thank you, Mr. Chairman.
Senator HARKIN. Thank you, Senator Reid.

Senator Bumpers.


Senator BUMPERS. Very quickly, Dr. Wilensky, how much Federal money do we spend on nursing homes in a year, about $25 billion?

Dr. WILENSKY. Something like that.

Senator BUMPERS. Anybody, wherever you are sitting, do you know the answer?

Dr. WILENSKY. I think you are in ballpark.

Senator BUMPERS. What does that mean?

Dr. WILENSKY. That is, I think, $48 billion was spent on longterm care in fiscal year 1989, most of it in nursing homes. Medicare and Medicaid accounted for about $25 billion.

[The information follows:]


Nursing home costs for the United States in fiscal year 1989 were $47.9 billion. Private funds accounted for payments of $22.7 billion and Government payments accounted for $25.2 billion. These private funds were composed of $21.3 billion in outof-pocket payments, $0.5 billion in private insurance payments, and $0.9 billion in miscellaneous payments. Government funding was composed of $20.7 in Medicaid payments, $3.6 billion in Medicare payments, and $0.9 billion in payments from the Veterans Administration. The Medicaid program provided $11.7 billion in Federal

payments and $9 billion in State payments. The impact of the combined Federal and State Medicaid programs accounted for 43.2 percent of total nursing home payments, and the Medicare program contributed another 7.5 percent of the national total. Together these programs accounted for 50.7 percent of nursing home payments in the United States in fiscal year 1989.

In fiscal year 1992, skilled nursing facility payments by the Medicare program are estimated to be $2.8 billion. The Medicaid program projects fiscal year 1992 nursing home payments totaling $23.5 billion, including $13.4 billion in Federal payments and $10.1 billion in State payments.


Senator BUMPERS. Let me ask you a couple of questions.

Through your Medicare contractor budget, you pay Arkansas Blue Cross/Blue Shield to process claims for the Medicare program in Arkansas, am I correct?

Dr. WILENSKY. I do not know if we have the same contractor acting as both the fiscal intermediary and the carrier. We use intermediaries to pay for part A or hospital care, and we use a different contractor, a carrier, typically to pay for part B, physician and outpatient care.

Senator BUMPERS. Why do you do that? Why do you have separate contractors for part A and part B?

Dr. WILENSKY. They are different types of contractors in large part because they deal with different kinds of claims, and have different expertise. Part A and B contractors are not always different in a given area, but they are usually different. We have a total of about 84 contractors now in the 50 States providing these functions. It is an area

Senator BUMPERS. That means that you have a number that overlap, that do both.

Dr. WILENSKY. Right.

Senator BUMPERS. OK.

Dr. WILENSKY. We are, and have been since last spring, looking at the whole issue of how we go about paying our bills, examining who does what and how many groups are involved in the process. Our basic payment strategy, which has developed according to who does what and how many groups do it, was adopted when the Medicare Program was first set in motion 25 years ago. We are now reassessing whether or not, 25 years later, enough changes have occurred to justify rethinking how we process bill payments.

Senator BUMPERS. Do you put these contracts out on competitive bids periodically?

Dr. WILENSKY. It depends on the particular situation. Once a contractor is inside the process as either a carrier or fiscal intermediary, we would only put that contract out for bid if the established contractor fails to meet our performance standards, or if the contractor voluntarily withdraws for its own reasons like dissatisfaction with our payments. In such cases, we would put the contract out for a competitive bid. But once we have a carrier or intermediary in the process, and if it meets our standards for performance, we continue its contract on a yearly basis.


Senator BUMPERS. You contracted with Arkansas State Health Department to do your nursing home inspections for you?


Senator BUMPERS. And how many inspections a year does HCFA require of nursing homes?

Dr. WILENSKY. My understanding is that, typically, each nursing home gets surveyed on average once a year. There is a requirement that 100 percent of all nursing homes get surveyed. Nursing homes that are found to have problems may either have a compliance plan that does not result in a followup visit, or may have a compliance plan that, in fact, involves surveyors coming back to the nursing home in order to make sure the problems were corrected. An annual certification is provided on a rotating basis so that, throughout the course of the year, all nursing homes in Arkansas would come under inspection by these surveyors.

Senator BUMPERS. And how would you charge user fees for those inspections? Would you charge on a per patient or per bed basis? Dr. WILENSKY. No; the user fee is charged to the facility.

Senator BUMPERS. That would be a flat rate based on the number of licensed beds?

Dr. WILENSKY. We have not yet determined the exact nature of our proposed regulatory approach, but I think that facility size would be a key factor in our strategy.

Senator BUMPERS. What would it be for a 100-bed nursing home? What are you proposing to charge as a user fee for a 100-bed nursing home?

Dr. WILENSKY. Our estimate is that the charge would be somewhere between $15,000 and $17,000 for the average nursing home. Senator BUMPERS. You've got to be kidding. For one inspection a year maybe, $15,000 to $17,000? I am going into the inspection business.

Dr. WILENSKY. Well, this fee includes the costs of followup visits, and additional compliance determinations, something that usually is an involved process with a team of professionals-such as nurses and pharmacists. These teams go in and actually interview the nursing home residents. These activities are rather significant and involved as they should be in order to assure safety.

Senator BUMPERS. Well, typically how long would it take and how many people are involved?

Dr. WILENSKY. I believe the number is 1 week, and perhaps as many as 10 or 12 people would be involved.

Senator BUMPERS. 10 to 12 people a week?

Dr. WILENSKY. During that whole period.

Senator BUMPERS. It would take 10 to 12 people a week to inspect a 100-bed nursing home?

Dr. WILENSKY. I will get you the specific numbers. In response to being asked both how long the process takes and the size of the inspection group that goes into the facility, these figures represent our estimate of what is needed to look at all aspects of the facility. I do not specifically know how this estimate varies by bed size. I just have never asked how much variation would occur among a 50-bed, a 100-bed, a 250-bed nursing home. Though I do not know the amount, I expect there would be some variation according to size.

Senator BUMPERS. Send me some information on that, will you, Dr. Wilensky?

Dr. WILENSKY. I will be glad to. [The information follows:]


Surveys at nursing facilities require an average of 9 onsite person-weeks per facility, plus significant pre-survey preparation, post-survey documentation and evaluation, travel, and overhead. The size and composition of State agency facility survey teams require State discretion. In order to determine if Federal conditions of participation are met, the average standard nursing facility (NF) survey requires three to four surveyors for approximately four onsite days. The States employ staff representing a wide array of health care disciplines; the majority are registered nurses. Surveys of nursing facilities are conducted along the following guidelines: Initial certification surveys are conducted on all NF's requesting participation in the XVIII/ XIX program(s); recertification surveys are conducted on all NF's on the average of once a year (required by OBRA 87); extended surveys (required by OBRA 87) are conducted on approximately 30 percent of all NF's; historical data shows that an average of between 2 and 3 complaint and/or follow-up onsite surveys are required per NF per year; and additional time onsite is required for determinations of compliance with guidelines for nurse aide registries and nurse aide training and competency evaluation programs (required by ŎBRA 87).

We anticipate surveying approximately 15,400 NF's in fiscal year 1992 (i.e., both currently- and newly-participating). With all the requirements above, surveys at these NF's will each require an average of 344 hours, or approximately 9 personweeks. The hourly rate we must pay the State agency surveyors in fiscal year 1992 will be approximately $40. The average State cost, therefore, to survey such a NF in fiscal year 1992 will be approximately $13,760. This does not include Federal costs of the NF survey program.

OBRA 87 requirements have only recently been implemented. Accordingly, HCFA is not yet able to assess the impact of survey costs at the level of detail of facility size. Due to the distribution of NF's by size, however, we are comfortable addressing survey costs in terms of the "average" NF. Nearly 60 percent of NF's have 51 to 125 beds; only 17 percent have 50 or less beds, and about 25 percent have 126 or more beds.

We will assess survey costs by facility size as such data becomes available, and we will provide our findings to the Senator's office at the earliest opportunity.


Senator BUMPERS. I used to have an interest in a nursing home, and it seemed to me like every time we looked up, somebody was coming by to inspect us, and if we had to pay all of them it would be about-well, I know one year we counted something like 27 inspections. The State inspects. HCFA inspects. The State fire marshall comes by. Everybody comes by.

If we had to pay fees to all of them-I say "we." I am not in the business and I have not been in it for 20 years, but if nursing home operators had to pay fees like that to all of those people based on the fee you just quoted me, I think it would be a serious burden. The nursing home I was affiliated with had 73 beds, and I think two people were the most we ever saw to come by and inspect.

Dr. WILENSKY. Well, there has been a very major change in the kind of inspection that occurs as a result of the OBRA 87 nursing home reforms. Now, in addition to checking the facilities, the paper process, the laboratory, the pharmacy, and the food, there are actual interviews done with patients in nursing homes to make sure that patient abuse is not going on, and try to asses overall treatment more clearly.

There have been enormous increases in statutory requirements, particularly as a result of the OBRA 87, relating to the kinds of inspections that go on in nursing homes. We will be glad to give you more information on these requirements.

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