Medicaid regulations now require the release to the public of the names of all physicians making more than $100,000 from that program. Inexplicably, Medical regulations prohibit a similar disclosure of the names of providers over $100,000. I believe this Committee should intervene to make the Medicare list available in view of the strong public interest and our desire to make Medicare and Medicaid consistent.

(6) In the nursing home context, I have several bills which I will not discuss at this point. I will have by staff sit down with the staff of this Committee and express my thoughts along these lines.

Senator TALMADGE. In opening the hearings today, I would like to remind witnesses once again, all presentations and testimony are limited to not more than 10 minutes as I have stated.

The full statement will be made a part of the record, and carefully reviewed.

The next witness is Mr. Edward Beddingfield, medical doctor, chairman of the council on legislation, the American Medical Association. Dr. Beddingfield, we are honored indeed to have you with us. Your entire statement will be inserted into the record.

STATEMENT OF EDGAR T. BEDDINGFIELD, JR., M.D., CHAIRMAN, COUNCIL ON LEGISLATION, AMERICAN MEDICAL ASSOCIATION, ACCOMPANIED BY HARRY N. PETERSON, DIRECTOR, DEPARTMENT OF LEGISLATION, AMERICAN MEDICAL ASSOCIATION

Dr. BEDDINGFIELD. Mr. Chairman and members of the subcommittee. I am Edgar T. Beddingfield, Jr., M.D., a physician in the active practice of medicine in Wilson, N.C. I serve as chairman of the Council on Legislation of the American Medical Association, and I am pleased to present to this subcommittee the views of the association on the important legislation, S. 3205, before you. With me is Harry N. Peterson, the director of the AMA Department of Legislation.

At the outset I would like to state that this subcommittee is to be commended for these hearings on S. 3205 with its review of certain areas of the medicare and medicaid programs. Major amendments to these programs were adopted in 1972. Subsequent to that time only relatively limited hearings have been held concerning implementation and development of these programs. It is evident that there has been substantial dissatisfaction with major provisions of these laws as well as with regulations promulgated pursuant to the laws.

Dissatisfaction has been voiced by providers and physicians, as evidenced by numerous lawsuits, by Congressmen, as well as by Medicare-Medicaid patients-the beneficiaries of those programs. It is indeed timely that this committee, through its hearings, review these programs as to issues in S. 3205.

However, Mr. Chairman, in considering any changes to medicare and medicaid, it is of paramount importance to consider possible effects upon patients in those programs, and it is equally important to measure the impact of program changes upon those who are not

Federal program beneficiaries-the private patients. We perceive in the amendments before this committee, as proposed in S. 3205, a very strong potential for a continued shifting of segments of health care costs to private patients-costs which are properly the obligation of the Federal program on behalf of its beneficiaries. When this shifting occurs, it not only has ramifications relating to availability of care for medicare-medicaid patients, but it also affects quality of care for all patients.

As to S. 3205, an overview of the modifications this bill would make indicates clearly that the major thrust is cost containment.

The American Medical Association fully supports measures which can properly contain costs so long as such measures do not impair the quality and availability of care for beneficiaries. The medicare and medicaid programs were intended to provide for their beneficiaries the same kind of care received by other segments of our population. Unless it is now the intent of Congress to alter the status of availability of care and quality of care for medicare and medicaid beneficiaries, it is imperative that any cost containment measures be imposed cautiously so as not to have unintended effects.

We are, of course, aware that Congress faces "hard decisions" in attempting to maintain these health programs at a high standard of quality care while struggling with a means to fund properly all of the obligations assumed by the Government, relating not only to these programs, but also to all other programs.

It must be recognized that the increased demands which have flowed from increased care made available through Government programs have added to the marked increase in total cost of these programs. It should additionally be recognized that health care costs are not immune from natural increases during a period of high inflation as we have been experiencing recently. And it must be recognized that increased expenditures resulting from increased services and resulting also from inflationary costs do not of themselves warrant the imposition of arbitrary cost controls.

We have submitted for your consideration a more detailed and extensive discussion on major provisions of S. 3205. We have indicated our support and our opposition-to provisions of the legislation. As to some provisions we have suggested amendments. We urge your careful examination of that statement. In the remaining portion of the brief period allotted us during these hearings for oral presentation, I will quickly summarize our recommendations with respect to elements of the bill.

ADMINISTRATION

Under the category of administrative reforms, we recommend that the sections relating to the establishment of a health care financing administration, an office of central fraud and abuse, and the appointment of an inspector general for health administration not be adopted. In our opinion, these provisions are unnecessary, because sufficient

authority is provided in current law to accomplish the goals sought by these provisions. In fact current initiatives are now underway and are being pursued vigorously to accomplish the objectives. With respect to establishment of a separate health care financing administration, we recommend that overall direction of health care programs not be so divided.

We support the principle underlying the provisions establishing procedures for more timely and accurate determinations relative to eligibility and administrative procedures under medicaid. The provisions enabling States to verify medicaid services on a sample basis would also be beneficial.

Concerning the provisions relative to promulgation of regulations, we are firmly on record for modifications of the Administrative Procedures Act to correct abuses which have occurred in the promulgation of regulations. Modifications are needed in order to afford proper opportunity for all interested persons to have meaningful input into the regulation process. Following the promulgation of a proposed rule there should be a minimum comment period of 60 days, with additional time being provided thereafter for the assimilation of comments before the rule is published in final form.

We recommend for your consideration the elements of the proposal developed by the American Medical Association, S. 3358, which is now pending before the Congress. In that bill we addressed certain of the same issues involved in S. 3205. Our bill for administrative rulemaking reform, in addition to providing for an expanded comment period on proposed regulations, would in part also make modifications to require major policy statements, which often affect substantive provisions, such as benefits and eligibility, to be published in the Federal Register. Too often agencies will circumvent the Federal Register process by directives issued through guidelines or policy statements. Our reform proposal also covers many issues not addressed by S. 3205. As to the last item of proposed change in the section pertaining to administration, we recommend not only a continuation of HIBAC but also a strengthening of its role through proper independent staffing.

PROVIDER REIMBURSEMENT

S. 3205 provides a new methodology for determination of hospital reimbursement. We have strong concerns with respect to this proposal. It would, in effect, classify hospitals and create for each classification an average daily rate-for routine operating costs-which would determine reimbursement under the medicare program. In some respects this provision may ameliorate some of the problems which have developed in implementation of section 223 of Public Law 92-603, upon which similar methodology was imposed. However, we find this averaging of hospital costs to be undesirable. This method, even with the variances allowed in S. 3205, still retains the seeds for reduction of

quality of care. It also creates the probability that costs properly attributable to government programs will be shifted to the private sector. The proscription in medicare law against such shifting would be violated.

We do support in principle the provisions which encourage the closure or conversion of underutilized facilities. We suggest, however, that assistance for these purposes might more appropriately come from funds which have not been earmarked for the direct delivery of health care services.

PRACTITIONER REIMBURSEMENT

A series of provisions under this section of the bill have special applicability to physicians.

The provisions establishing a new statewide prevailing charge level and restricting the applicability of the economic index are objectionable and should not be enacted. Current medicare reimbursement formulas are themselves discriminatory and arbitrary. Now to impose further limitations that would have the effect of denying even the restricted increases allowable by the economic index is most unjustifiable and the proposal should be rejected. Unrealistic and arbitrary ceilings could unfortunately reduce physician participation in medi

care.

The provisions requiring physicians to designate themselves as either a participating physician or as a nonparticipating physician, with the undesirable consequences dictated by the bill, would vitiate a fundamental concept upon which the medicare program was premised. These provisions would remove the present option of the physician to accept an assignment or to bill directly on a patient-bypatient basis. They would require physicians to enter into an agreement with the Secretary of HEW to accept assignments from all patients as participating physicians, otherwise they, as nonparticipating physicians, would not be allowed to accept assignments from any.

To support a medicare mandated division of physicians would be both unwise and unrealistic. The proposal is unrealistic in that it would fail to recognize the present appropriate practice of a case-bycase determination as to whether an assignment should be taken. To label a physician as participating only on the basis of whether he accepts a restricted reimbursement is to denigrate the services of other physicians who actually provide treatment for medicare patients, but who would be deemed nonparticipating solely because they chose not to accept assignment for all their medicare patients far in advance of treatment. In our opinion, although the cost to the program would be relatively unchanged, the result would very likely be a decrease in assignments.

The proposal is unwise because, by disallowing assignments on a case-by-case basis, some patients will not seek services of physicians of their choice. This effect would be contrary to the intent and language of the Medicare Act itself.

These provisions offer certain new entitlements to participating physicians, those who must accept assignments for all patients. Certain of the so-called benefits, those calling for more timely payments, are no more than those to which the physician is entitled now. If the medicare administration could in fact fulfill a new mandate of Congress to expedite payments to physicians, as held out in the bill, such a system should, in all fairness and equity, be initiated immediately. It is disheartening, indeed, if advantageous administrative aids are presently available and they are not being used now. The $1 per claim offered as an inducement for physicians to take assignments is an inducement in name only since it is coupled with the requirement that payment in full as determined by medicare must be accepted thus depriving physicians of other appropriate reimbursement procedures. The foregoing provisions, intended to increase the use of assignments, instead only emphasizes the need for examination of the basic reasons why assignments are being shunned.

In our view the provisions as to hospital-associated physicians exceed the proper bounds of Federal action. It is not the role of the Federal Government to specify elements which constitute the practice of medicine generally or in any of its specialty fields. Nor should Federal legislation, by statutory definition, attempt to divide or specify the role of the physician in the practice of medicine. Accordingly, the provisions as to anesthesiology services and pathology services should not be adopted.

Moreover, the section entitled "Hospital Associated Physicians" is not in fact so limited and accordingly is misleading. In modifying the general definition of physicians' services, section 22 of S. 3205 would apply to the entire spectrum of physicians' services in the medicare program. We strongly object to any application of any provision which would limit recognition of what constitutes physicians' services in the communities across our Nation. This section would disregard normal professional relationships and establish as the proper recognition of certain physicians' income only that level which would be received by a salary. We find this premise untenable. These provisions should be rejected.

Concerning the provision which would tie medicaid reimbursement levels to the reasonable charges allowed under medicare, we have strong concerns, and recommend that this provision not be adopted. The medicare level is itself arbitrary and discriminatory, and to peg medicaid reimbursement at a percentage of such an unfair figure should not be countenanced in statute. Moreover, to do so would give an illogical approval for different levels of reimbursement by separate Federal programs for the same services.

We support section 24 to provide payment for furnishing antigens prepared by allergists for medicare beneficiaries.

We support section 25 to facilitate medicare payments in the administration of the estates of medicare beneficiaries.

The prohibition against assignment of physicians' accounts, as proposed, is too broad and should not be adopted.