Health to serve as the single point of responsibility for defining health policy, administering federal health programs and evaluating the state of the nation's health. The Department should be administered by a Secretary of Health appointed by the President with the advice and consent of the Senate. The Secretary should be responsible for all health programs now administered by the Secretary of Health, Education and Welfare, including Medicare and Medicaid and any new program of national health insurance. In connection with the establishment of a new Department of Health, an independent panel of experts should conduct a study to develop a thoughtful and coordinated national health policy and a detailed national health program for meeting current and future health needs for the United States." Issue: Prospective Reimbursement of Providers. The Association supports the concept of prospective reimbursement of providers of health care services under a national health insurance system, but believes that certain modifications in the prospective payment provisions of S. 3286 are necessary to make the reimbursement system more readily acceptable to institutional providers. S. 3286 provides, in Section 2042 (b) (6) (B) that "(B) The Administration by regulation shall provide for adjustment to the agreed upon prospective rate amount for (i) unforeseeable events such as natural catastrophies and (ii) significant and unexpected changes in demand for services or for unexpected or significant changes in patient mix not under control of the provider." The Association believes that the example in the first clause-"unforeseeable events such as natural catastrophies"-too strongly suggests that only such factors as fire, flood, or wind might justify adjustments in the institution's prospective payments. Many "unforeseeable events" not natural disasters would, in the Association's view, support a need for renegotiation. Labor strikes and subsequent settlements, for example, are unforeseen events, and although not natural disasters, they may necessitate adjustments in the reimbursement rate. Last winter's significant fuel price increase provides another example of an unforeseeable event not a natural disaster which nonetheless disrupted the economic planning of many institutional providers. Recommendation. The Association recommends that the Committee delete the phrase "such as natural catastrophies" from Section 2042 (b) (6) (B) (i) of S. 3286 if the Committee incorporates that provision into its ultimate national health insurance bill. Issue: Classification of Providers. Section 2042 (c) (4) of S. 3286 authorizes the Administration to develop and utilize a “comparison methodology" for grouping and comparing similar providers of services for purposes of prospective reimbursement. Recommendation.-The Association of American Medical Colleges recommends that the Committee specify, in this provision, that the methodology in question should take into account the nature and scope of services provided and the type of patients treated by the institutions, particularly with regard to the complexity of their illnesses. Issue: Payments to Federal Providers of Services. Section 2041 (b) of S. 3286 stipulates that no national health insurance payments may be made to any federal provider of services "not providing services to the public generally as a community institution or agency. . ." This provision, identical to one now in effect under the Medicare program, has discouraged the establishment of "sharing agreements" between Veterans' Administration hospitals and other hospitals. These agreements are designed to rationalize the services rendered in both institutions so that unnecessary duplication can be avoided. Because the same staff covers both institutions, all of the complex neurosurgery patients, for example, can be handled by the university or community hospital, even though they may include veterans, while all of the kidney patients can be handled by the VA hospital, even though they may not all be veterans. Each institution then does its own accounting and "bills" the other institution for the services rendered to its patients with the objective that the volume of services rendered in both instances will be approximately equal, thus eliminating the necessity for transferring cash. The current Social Security Administration interpretation of this section allows Medicare payments for inpatient services performed in the VA hospital pursuant to a sharing agreement, because the Medicare patient is considered to be an inpatient of the university or community hospital, even though the services are actually performed in the VA hospital. However, under the current interpretation of these sections, renal dialysis and other outpatient services performed on Medicare beneficiaries in VA hospitals under sharing arrangements are not covered under Medicare unless the VA hospital meets the definition of community hospital. The Medicare patient is not considered to be an outpatient of the university or community hospital, but an outpatient of the VA hospital. This interpretation not only impedes the establishment of new sharing agreements, but it also encourages the dismantling of existing ones. Recommendation.-The Association believes that the Veterans Administration health care system should be gradually integrated into the national health insurance program and that needless duplication of facilities should be avoided. The Association recommends that the Committee adopt a provision which would encourage sharing agreements between VA hospitals and other hospitals under national health insurance. If the Committee adopts Section 2041(b) of S. 3286, the Association recommends that it be amended to read "(b) No payment may be made under this title (except for services provided pursuant to an agreement for the sharing of either inpatient or outpatient services as authorized under subchapter IV of chapter 81 of title 38, United States Code, and except under subsection (c)) to any Federal provider of services or other Federal Agency, except a provider of services which the Administration determines is providing services to the public generally as a community institution or agency; and no such payment may be made to any provider of services for any item or service which such provider is obligated by a law of, or a contract with, the United States to render at public expense." Issue: Limitations on Payment for Major Surgery Section 2041 (h) (1) of S. 3286 would preclude national health insurance payment for major surgery or for other specialized services not performed by specialists after referral by a general or family practice physician, or in emergency situations. This provision would appear to disallow national health insurance reimbursement for such surgery or other specialized service performed after referral by a board-certified internist or ophthamologist. The Association wishes to point out that a great deal of primary care is delivered by physicians other than those in general or family practice. Furthermore, many patients seek care directly from teaching hospitals and from boardcertified specialists. Recommendation.-The Association can see no justification for the restriction imposed by Section 2041 (h) (1) of S. 3286, and accordingly recommends that the provision be excluded from this Committee's ultimate national health insurance bill. APPENDIX Clinical Research: Academic Clinical Laboratory Physicians & Scientists 34-500 O7413 American Federation for Clinical Research Southern Society for Clinical Investigation American Academy of Neurology American Neurological Association Association of University Professors of Neurology Obstetrics and Gynecology: American College of Obstetrics & Gynecology Association of Professors of Gynecology and Obstetrics Ophthalmology and Otolaryngology: American Academy of Ophthalmology and Otolaryngology Orthopaedics: American Academy of Orthopaedic Surgeons Pathology: American Association of Neuropathologists American Association of Pathologists & Bacteriologists Association of Pathology Chairmen, Inc. Pediatrics: American Pediatric Society Association of Medical School Pediatric Department Chairmen, Inc. Pharmacology: Association for Medical School Pharmacology Physiatry: Association of Academic Physiatrists Physiology: American Physiological Society Association of Chairmen of Departments of Physiology Biophysical Society Psychiatry: American Association of Chairmen of Departments of Psychiatry American College of Psychiatrists Radiology: American College of Radiology American Society of Therapeutic Radiologists Association of University Radiologists Society of Chairmen of Academic Radiology Departments Surgery: American College of Surgeons American Association of Neurological Surgeons American Association of Plastic Surgeons American Association for Thoracic Surgery American Surgical Association Association for Academic Surgery Plastic Surgery Research Council Urology: American Urological Association The CHAIRMAN. We will now hear from the Federation of American Hospitals. They are represented here this morning by Mr. Michael D. Bromberg, director of the national office. STATEMENT OF MICHAEL D. BROMBERG, DIRECTOR, NATIONAL OFFICES, FEDERATION OF AMERICAN HOSPITALS, ACCOMPANIED BY DR. SAMUEL L. BERSON, PRESIDENT; MARK S. LEVITAN, PRESIDENT-ELECT Mr. BROMBERG. Thank you very much, Mr. Chairman. With me today are Dr. Samuel L. Berson, president of the federation and executive medical director of two hospitals in Brooklyn, N.Y., and Mr. Mark Levitan, on my left, who is president-elect of the federation and senior vice president of American Medicorp, a hospital management company headquartered in Bala Cynwyd, Pa. We would like to present our statement for the record, Mr. Chairman, in full and briefly summarize from it. At the beginning of our statement we describe the scope of our investor-owned hospital industry. There are presently more than 1,000 acute care short term investor-owned hospitals, with over 85.000 beds in 42 States. These represent nearly 25 percent of the Nation's nongovernment hospitals. Not only do we deliver quality health care, but these facilities pay a substantial amount in taxes amounting to, last year, $110 million in Federal and State income taxes and $27 million in local property taxes. We estimate that it would cost approximately $5 billion in public funds to replace the beds built by investor-owned organizations in the United States. We believe in a pluralistic health care delivery system, Mr. Chairman, and believe that a national health insurance bill would be of benefit to the Nation. While there is no single bill pending before the committee which we endorse in its entirety, we do believe that certain features of each bill deserve and merit individual endorsement. The federation supports the general philosophy of the administration bill in that it relies on the already existing strengths of the private sector, using insurance companies as. private enterprises rather than fiscal intermediaries. In addition to this, we strongly endorse the concept of multiple prospective payment methods for hospitals with quality management payments, as advocated in S. 3286, sponsored by Senator Kennedy and Congressman Mills. These two proposals incorporate many of the ideas and provisions of other national health insurance bills pending before this committee, including the catastrophic insurance measure sponsored by you, Mr. Chairman, Senator Ribicoff, and other members of this committee. For that reason our statement will focus on those bills. We set forth in our testimony, the 10 guidelines we believe should be used as a yardstick for measuring the effectiveness of a bill drafted by the committee. The basic part of the national health insurance plan is an employer-employee mandated plan to provide basic protection against the cost of health care for employees. We believe this protection should meet minimum Federal standards. We believe a mandated employer-employee should be designed in a manner similar to the workmen's compensation laws, with private rather than public financing. The administration bill follows this general philosophy as does S. 1100 and S. 3353. Under catastrophic insurance we support the concept as an integral part of any national health insurance bill. We would recommend that the benefit package go further than the title XVIII program, however. Once the deductible under a major medical type of coverage is met, we believe that all illness-related expenses should be covered. We also urge the committee to report a bill which provides basic coverage for all Americans rather than just catastrophic coverage. Should the committee choose the latter approach, as called for by the Long-Ribicoff bill, we urge an amendment substituting prospective cost reimbursement contained in S. 3286. As we shall discuss in a moment, we believe that retrospective cost reimbursement has been the single most important factor in rising hospital costs. In our testimony we raise concern about the concept of a single trust fund, the public financing provisions of the Kennedy-Mills bill, which other witnesses have also raised. We believe that a legislated ceiling on health costs, which is what a massive trust fund would be, could not be effective unless we are prepared to risk a reduction in both quality and quantity of medical services. The lesson of the economic stabilization program is that health care costs cannot be controlled with a ceiling in an economy where wages, food and suppliers are decontrolled. That is one reason we oppose a single financing mechanism. Mr. Chairman, we begin the part of the testimony we would like to emphasize the most, and that is the question of how hospitals should be paid and what can be done about rising hospital costs. Since the establishment of our organization in 1966 we have called for the adoption of negotiated prospective rates or prospective payment systems as the most effective to curb spiralling hospital costs. |