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give testimony on behalf of the American Society of Clinical Pathologists. ASCP is a medical specialty society with more than 50,000 members. It is also the largest certifying agency for medical laboratory personnel in the country.

Many of you are well aware of the extensive shortages of qualified medical laboratory personnel and its impact on laboratories, especially in rural areas. ASCP estimates that in 1990 the Nation's 12,000 hospital and independent laboratories have approximately 42,000 unfilled positions. In fact, the medical technology vacancy rate of 11.6 percent far exceeds the nursing vacancies experienced at the height of their shortage. Federal standards imposed under CLIA 1988 may further exacerbate that shortage. The need for medical laboratory professionals is already projected by the Bureau of Labor Statistics to increase by 24 percent by the year 2000.

Two factors have strongly influenced the shortages. First, the decline in education programs parallels the termination of Federal support for allied health education in 1981. Second, there has been significant erosion in hospital-based programs, the major source of rural manpower due to the implementation of the Medicare Prospective Payment Act in 1983.

ASCP strongly supported the reinstatement and funding of allied health education in title VII of the Public Health Service Act. As you may be aware, in the first year HRSA received over 100 applications for this program, approved almost 50 grants, yet funded only 7. Almost one-half of the approved grants were for medical technology programs, although none were funded due to the priority given to other professions and limited funding.

The recently published regulations regarding 1991 funds for allied health continue to ignore specialties in short supply. The key to addressing the shortages of medical laboratory personnel is to bring more candidates into the field through appropriate educational programs. Therefore, ASCP is pursuing a two-pronged approach.

We would first like to see the current allied health program broadened to address the needs of allied health specialties in short supply, such as medical technology. These professionals are critical to the support needed in geriatric care and in breast and cervical cancer screening, a high-priority program of this subcommittee. We urge you, No. 1, to incorporate report language directing HHS to fund grants in shortage affected allied health professions as a high priority and to fully appropriate the allied health programs currently authorized.

PREPARED STATEMENT

Second, ASCP is working to establish a special initiative for medical laboratory education in the title VI reauthorization legislation anticipated later this year. ASCP is proposing special project grants to address both short- and long-term manpower needs to rebuild the high-quality, well-trained medical laboratory manpower. We look forward to working with this subcommittee on appropriations for this program when it is authorized.

Mr. Chairman, ASCP appreciates the opportunity to testify today, and I would be happy to answer any of your questions. [The statement follows:]

STATEMENT OF MICHELE LYNN BEST

Thank you Mr. Chairman. My name is Michele Best. I am the Director of Laboratory Quality Assurance and Human Resources at the Washington Hospital Center. I am also a Medical Technologist certified by the American Society of Clinical Pathologists (ASCP) and today I am pleased to present testimony on behalf of ASCP. ASCP is a nonprofit medical specialty society with more than 50,000 members (with 39,000 laboratory personnel members and 11,000 pathologists). ASCP is also the largest certifying agency for medical laboratory personnel. Since 1928, ASCP has certified 300,000 medical technologists and other laboratory personnel.

Many of you are well aware of the extensive shortages of qualified medical laboratory personnel and its impact on laboratories, especially in rural and other traditionally underserved areas. In 1988 and again in 1990, the ASCP surveyed nearly 1,000 laboratory managers to measure the vacancy rates for 10 medical laboratory positions, including medical technologists, cytotechnologists, histotechnologists and medical laboratory technicians. ASCP estimates that in 1990, the nation's 12,000 hospital and independent laboratories had 41,950 unfilled positions. This compares to 24,800 unfilled positions in 1988. Cytotechnologist vacancies increased most dramatically since 1988, with one in four positions unfilled, a vacancy rate of 27.3 percent nationwide. The medical technology vacancy rate of 11.6 percent exceeds the nursing vacancies of 11.3 percent experienced at the height of their shortage.

Federal standards imposed under the Clinical Laboratory Improvement Amendments of 1988 (CLIA '88) to improve the quality of laboratory testing as well as the growth in the scope and complexity of clinical laboratory testing will further increase the need for trained laboratory personnel. One study indicates that without dramatic intervention and recruitment, vacancy rates for the clinical laboratory professionals will double by the year 2000.

While the decline in the applicant pool for medical laboratory education programs is often attributed to increasing opportunities for women in other medical fields and a general waning interest in health careers, two additional factors have strongly influenced the shortages of medical laboratory personnel. First, since 1981 there has been a significant erosion in hospital based programs in medical technology. The number of med tech programs decreased from 652 in 1980 to 420 in 1990 with almost 70 percent of these closed programs based in hospitals, the major source of medical technologists working in rural areas. Pressure on hospital based programs was compounded with the implementation of cost controls and Medicare's Prospective Payment System. Also the decline in programs overall paralleled the termination of federal support for allied health education in 1981.

CURRENT ALLIED HEALTH EDUCATION PROGRAM

ASCP strongly supported the reinstatement of the allied health programs in Title 7 of the Public Health Service Act and has worked with this Subcommittee to secure funding. As you may be aware HRSA received 123 applications for special project grants under this program and approved almost 50 grants in the first year. However, only seven grants were funded. Almost half of the approved grants were from medical technology programs or allied health programs with a medical technology component, yet none were funded due to limited funds and priority given to professions engaged in geriatric care.

RECOMMENDATIONS

The key to addressing the shortages of medical laboratory personnel is to bring more candidates into the field through educational programs. Therefore ASCP is pursuing a two pronged approach with the appropriation's and authorization Committees.

First, ASCP would like to see the current allied health program broadened to address the needs of allied health specialties experiencing the greatest national shortages, such as medical technology and cytotechnology. These professionals are critical to providing the support needed in geriatric care and in breast and cervical cancer screening, another high priority program of this Subcommittee. We urge you: (1) to incorporate report language directing HHS to fund approved grants in shortage allied health professions as a high priority; and (2) to fully appropriate the allied health programs currently authorized.

Second, ASCP is working closely with Members of the Committee on Labor and Human Resources to establish a special initiative for medical laboratory education in the Title 7 reauthorization legislation anticipated later this year. ASCP is proposing project grants to address both the short and long term need to rebuild high quality, well trained medical laboratory manpower that include:

One, scholarships and/or stipends for medical technology, cytotechnology and histotechnology students for their clinical training period (3rd or 4th year of training) who agree to work in rural or other underserved hospitals.

Two, grants to schools for consortium arrangements that creatively link academic resources with rural clinical settings to provide community education.

Three, grants to schools to recruit non-traditional students into the fields of medical technology and cytotechnology.

Four, grants to schools to provide refresher courses for medical technology and cytotechnologists who have not been working in the field for several years. These short courses could bring people back into the field in a few months.

Five, grants to schools for recruiting and training medical laboratory technicians to become medical technologists thus providing additional career pathways for talented, motivated MLT's.

We are pleased that this initiative has been well received within the medical laboratory community and the following organizations have offered their support: America Society of Cytology, American Society for Medical Technology, American Association of Blood Banks, College of American Pathologists, American Society of Microbiology, American Society for Cytotechnology, American Cancer Society, Clinical Laboratory Management Association, American Association of Clinical Chemists and American Medical Association-CAHEA. We are encouraged thus far and hope Congress will incorporate these proposals into legislation. We look forward to the opportunity to work with the Subcommittee on appropriations for this program when it is authorized.

CONCLUSION

Concerns about manpower shortages have prompted discussions about the use of equivalency or proficiency examinations to increase the supply of medical technologists. ASCP urges Congress to forgo this option. Congress can address the short term and long term medical laboratory manpower needs by broadening the priorities of todays allied health grant program and adopting ASCP's recommendation for a targeted initiative.

Mr. Chairman, ASCP appreciates the opportunity to testify today.

STATEMENT OF DR. MILFORD C. MALONEY, PRESIDENT, AMERICAN SOCIETY OF INTERNAL MEDICINE

Senator BUMPERS. Dr. Maloney.

Dr. MALONEY. Mr. Chairman and members of the subcommittee, my name is Dr. Milford C. Maloney, and I am president of the American Society of Internal Medicine, an organization which represents over 25,000 internists who are specialists in adult medical care in these 50 United States, as well as in the District of Columbia and Puerto Rico. I appreciate the opportunity to share with you ASIM's views on the administration proposed Medicare contractor budget for fiscal year 1992.

Insurance carriers perform a variety of administrative functions for Medicare. Many of these programs help to explain Medicare's complex rules to patients and physicians and offer some due process when physicians and patients disagree with carrier decisions. Carriers have also been required to undertake extensive outreach and education programs for the 1992 implementation of physician payment reform, one of the most major changes in Medicare since its inception.

We are pleased that the administration's overall contractor budget for 1992 calls for an 11-percent increase for claims processing. However, ASIM is troubled that the budget cuts funding for hearings and appeals by 60 percent and for beneficiary communications and provider relations by 57 percent. At least $225 million more is needed by carriers to restore proposed cuts in services and to undertake additional responsibilities arising from patient reform. The proposed level of funding will result in delays of 250 days or longer

for carrier hearings and claims appeals, and it will force carriers to answer fewer than one-third of inquiries posed to them. Thus, a beneficiary or a physician who disagrees with a carriers rejection of a claim will have to wait almost 9 months to contest that decision while carrying the cost of that denial, and it appears that 8.6 million inquiries will be handled out of an estimated 30.4 million inquiries which carriers are expected to receive in 1992. inquiries

Over the years, Congress has added a number of administrative requirements for carriers. These mandates are seriously undermined if carriers are not given the financial resources to carry them out. Contractor funding will affect the implementation of physician payment reform which is slated for January 1, 1992, and which is expected to generate some 12 million more inquiries to carriers than those projected by the administration. However, carrier programs to respond to these questions are pitted against claims processing, claims appeals, and claims inquiries. If carriers cannot carry out any of these responsibilities effectively, physicians and beneficiaries will come to view Medicare less favorably and physician confidence in and support for payment reform will be seriously eroded.

Mr. Chairman and committee members, if these cuts are not averted, the likely effect will be long delays in the appeal of claims, increased out-of-pocket expenses to patients and physicians, an increase in the hassle factor as patients and physicians find it more difficult to reach the carrier, the undermining of congressional intent to improve the administration of Medicare, erosion of physician confidence in physician payment reform, greater patient dissatisfaction with Medicare, and greater physician dissatisfaction with the program.

Thank you, Mr. Chairman and members of the committee. ASIM welcomes the opportunity to work with you on this issue.

Senator BUMPERS. Thank you very much. [The statement follows:]

STATEMENT OF DR. MILFORD C. MALONEY

The American Society of Internal Medicine appreciates the opportunity to share with you our views on why additional funds need to be added to the Administration's proposed contractor budget for fiscal year 1992.

ASIM represents over 25,000 practicing internists in all 50 states, the District of Columbia and Puerto Rico. A major effort with which ASIM has been involved is the reform of Medicare's physician payment system to recognize more equitably those evaluation and management services provided by primary care physicians such as internists. On January 1, 1992, the most significant change in Medicare's payments to physicians since the program's inception will begin. Using a resource based relative value scale, or RBRVS, Medicare will pay physicians according to the work effort and intensity of the resources they devote to providing health care services. This is meant to improve payments for cognitive medical services such as are provided by primary care physicians relative to payments for procedural services. As the major proponent of the RBRVS, ASIM is extremely concerned about any policy initiatives that affect its implementation.

ASIM also launched an effort last year to bring to the attention of the public and policymakers the burdens imposed on patients and physicians by increasing rules and regulations in Medicare and other health care programs. Many of these problems were identified in a paper ASIM issued last fall_titled The Hassle Factor: America's Health Care System Strangling in Red Tape, which offered recommendations for reducing unnecessary paperwork and improving administrative efficiency in the administration of health care programs.

Medicare contracts with insurance carriers around the nation to process and pay claims for hospital and physician services to Medicare beneficiaries. These carriers

are also required to review claims for medical necessity, conduct hearings on denied claims, and respond to patient and "provider" questions. The hearing processes and beneficiary/provider services are particularly important in explaining Medicare's many complex rules and provide physicians and patients with a degree of due process when confronted with unreasonable carrier decisions. Recent omnibus budget measures have also asked carriers to take on additional responsibilities in anticipation of the implementation of physician payment reform.

The Administration has asked for an overall contractor operating budget for fiscal year 1992 of $1.46 billion which is $37 million less than the fiscal year 1991 funding level. Nevertheless, ASIM is pleased that the total amount for claims processing has increased by over 11 percent, from $815 in fiscal year 1991 to $909 million in fiscal year 1992. Medicare faced a shortage in administrative funds this year which would have caused delays of 60 days or more in payment of claims. This would have imposed a terrible financial burden on beneficiaries and physicians. Thanks to pressure from Congress, OMB released $75 million from the contractor contingency fund to prevent this from happening. We are hopeful that this 1992 funding level will be sufficient to avoid future threats of claims payment delays.

However, ASIM is extremely troubled that the Administration's contractor budget calls for severe cuts in beneficiary and provider services. Funding for appeal hearings has been slashed over 60 percent, from $75 million to $28 million and money dedicated to beneficiary communications and provider relations has been cut 57 percent, from $1 million to $72 million. However, as the Blue Cross and Blue Shield Association has recommended, at least $120 million more is needed to restore the cuts proposed in the Administration's budget while an additional $105 million will be necessary to respond to their additional responsibilities arising in 1992 and beyond. While recognizing the budgetary limitations under which Congress is operating, we nevertheless feel this is important in order to ensure continued patient and physician support for the Medicare program and proper implementation of physician payment reform.

On March 7, 1991, before this subcommittee, the Administrator of the Health Care Financing Administration, Gail Wilensky, PhD, stated that this level of funding would result in delays of 250 days or longer for carrier hearings and reconsiderations of claims appeals. Thus, a beneficiary or physician who disagrees with a carrier's rejection of a claim will have to wait almost nine months to contest that denial. It is estimated that carriers will receive over 10 million requests for hearings on disputed claims next year. Under the present funding formula, only 3.3 million hearings will be possible. The rest will be "backlogged." Because the majority of reconsiderations and hearings are the result of "provider" appeals, this burden will fall largely on physicians. However, physicians appeal these claims denials because they believe the patient was entitled to those benefits. Many initial denials are reversed on reconsideration. A nine month wait to have a claim rejection overturned means some patients will have to wait that long to get reimbursed for a claim that should have been paid in the first place. Finally, if physicians are denied reimbursement for nine months or longer because legitimate claims for services are being rejected it will only reinforce their growing cynicism about the Medicare program.

Dr. Wilensky also predicted that carriers will be able to answer fewer than onethird of the inquiries posed to them. Using the 57 percent reduction figure, this means that, of the estimated 30.4 million inquiries carriers will receive in 1992, only 8.6 million inquiries will be handled. What happens to the other 21.8 million inquiries?

A growing elderly population coupled with the new legal requirement that physicians submit all Medicare claims for beneficiaries means there will be more Medicare claims submitted next year than this-approximately 77 million more. As the number of claims increases, so too do the number of disputed carrier decisions and inquiries. Based on letters and calls from members, ASIM finds that physicians already have great difficulty in reaching the carrier by telephone and seldom have letters answered in a timely fashion. We expect this situation to get worse should the budget figures stand as proposed. Contractors are already taking actions in anticipation of cutbacks, such as the announcement by the Rhode Island carrier that physicians will now be limited to five questions per call or letter.

Other carriers, such as the one in Texas, have taken an "entrepreneurial" approach to make up for insufficient funding. Instead of limiting inquiries from physicians, they instituted a fee-per-call, or 900, telephone number. Thus, in order to get necessary information about Medicare coverage and claims payment policy, physicians would not only have to pay the long distance charge, they would have to pay the fee that goes along with the 900 number. Although objections may have caused the carrier to reconsider this action, HCFA may be contemplating proposed legislation to require imposition of 900 telephone numbers for carriers nationwide. This

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