STATEMENT OF HON. JACOB K. JAVITS, A U.S. SENATOR FROM THE STATE OF NEW YORK Mr. CHAIRMAN: I am pleased to co-sponsor S. 3205, "Medicare and Medicaid Administrative and Reimbursement Reform Act of 1976", which seeks to make these programs more efficient and economical. The time has come to use the taxpayer's dollars spent for Medicare and Medicaid wisely and to bring about long overdue changes in the Nation's health care system. In my testimony, I shall highlight the constructive changes the bill would make in the current administration of these programs, and I present my suggestions to strengthen and improve the bill. As you know, the present Medicare payment formula to hospitals and nursing homes reimburses retrospectively for their "reasonable costs." This is without regard to the necessity of these costs, or the efficiency of the management of the hospital. Payment of "reasonable costs" is inherently inflationary, because there are no effective limits on what costs recognized as reasonable, and there is no deterrent to managerial inefficiency. The pending bill addresses this problem by redefining classes of hospitals, by establishing new performance-based reimbursement procedures, and by instituting a system of incentives, to reward hospitals for savings induced by better management. Moreover, hospitals would not be reimbursed for costs which are over 20 percent of the costs of hospitals within their class. In my judgment, even these measures could be improved. Why should a hospital spend below its target rate, if in the following year, the new reimbursement rate includes and pays for these new costs. In short, this ceiling of 20 percent over the class average quickly becomes the floor for its reimbursement. Therefore, I recommend we institute a truly prospective reimbursement system under this bill so hospital lump-sum payments would be negotiated in advance, without regard to historical costs which may reflect merely a history of poor management. It is a national disgrace that the amount of money the elderly must spend for medical services has tripled in the past decade. As you know, under the existing Medicare legislation, the elderly may be liable for additional physician charges, if the physician elects not to accept the "assignment" fee under the Medicare program. Now only about half of the physicians treating the elderly have elected to accept assignment and be bound to the Medicare reimbursed fee. This serious situation not only presents a financial barrier to medical care for the elderly but also contributes to to the continuing inflation in medical care costs. The existing Medicare program has no control over the fees which physicians charge for their services beyond their Medicare reimbursed fees and paid by the patient. The pending bill seeks to improve this situation by streamlining the paperwork and reimbursement procedures many physicians find burdensome. Easing the red tape for physicians in Federal programs may encourage more of them to accept "assignment." I recommend that we must go even further and that we should require physicians as a condition of participation in the Medicare programs to accept the Medicare reimbursed fee as payment-in-full. I recognize that Medicare fees may have to rise to be sufficiently attractive to physicians. Yet, we in the Congress can begin to have an effect on provider fees only when we determine what they are. Let us use the opportunity afforded by this bill to institute this overdue reimbursement reform. Medicaid, as we know all too well, is plagued by the fragmented State-by-State approach which creates inconsistencies and inequities in patient eligibility, benefit coverage, differences in levels of quality health care and states' share of the matching funds. I support the bill's provision for technical and financial assistance to state Medicaid programs to remedy past deficiencies in their programs. But I think we should also extend Federal support to those financially hard pressed states, like New York, that have taken the initiative to try to develop a program of high quality with stringent controls for fraud and abuse. (419) This bill creates an Administration for Health Care Financing which will coordinate reimbursement policies and will establish and enforce standards for performance. I applaud this approach, an essential building block for future universal, comprehensive national health insurance as well as an important step to improve the present Medicaid and Medicare programs. For the first time, we will have a central, accountable source for policy development in this field. We should take advantage of this streamlined administrative structure contemplated in the bill by using it to consolidate Parts A and B of Medicare. Under the present system, hospitalization and physician services are artificially separated, with different regulations, enrollment procedures, cost sharing, and payment mechanisms, creating confusion, administrative waste, and unnecessary red tape for patients. I recommend that the pending bill require strict performance standards for the insurance company roles in these programs, the record of some to date all too often has been less than impressive. I wish especially to commend you for the strong and effective anti-fraud provisions of the bill that boldly attack kickbacks and other illegal payments with respect to clinical laboratories. These provisions achieve significant cost controls and quality standards for this growing sector of the economy which now accounts for about $12 billion of our nation's health care expenditures. These provisions are totally consistent-in spirit and substance with those provisions of my Senate-passed "Clinical Laboratories Improvement Act of 1976" (S. 1737). I shall continue to work dilligently to assure that these anti-fraud measures, which cruelly bleed our health care system, are retained in the version of the legislation now before the House. For reasons of quality and economy, I support the changes in the bill which would prevent percentage billings, lease arrangements, and direct billings for the hospital-based specialties of radiology, pathology, and anesthesiology as now authored under Medicare and Medicaid. The present payment formulas have permitted these arrangements that have led to flagrant abuses and grossly excessive payments. I have heard it said that the chief lessons of Medicaid and Medicare is that we cannot "afford" National Health Insurance. I believe the reverse is the case: we cannot afford to stand idly by. The beginning steps towards rationalizing the administrative and reimbursement policies of current federal programs, which this bill achieves will have benefits for the future of the entire health care system. I believe many of the provisions of this bill will dovetail with the "National Health Insurance for Mothers and Children Act," which I recently introduced with Senators Cranston and Brooke as a first, sensible step towards universal population coverage, and I request that the text of that bill and my introductory statement be made part of this hearing record. Finally, I would like to share with you my overriding concern with respect to Medicare and Medicaid reform namely: how can we avoid penalizing the recipients of services-the poor, the elderly, those who need health care when providers or administrators fall down on the job? I agree with Senator Talmadge, that price and wage controls here tend to become arbitrary and artificial. I agree that fraud and abuse must be vigorously addressed. I agree that reimbursement formulas can and must be improved to reflect reality and achieve quality, and the Talmadge bill goes far in doing so. However, we have seen in recent years how difficult it is to apply sanction in our health care system. I am concerned that when we deny-Medicaid payments to states-even as provided in the pending bill with respect to administrative costs the poor suffer. Can we retroactively deny claims for unnecessary services and hold the patient responsible? The question is a rhetorical one, and the answer is no. I believe that the vast majority of our health care providers-institutional and individual-will respond to positive incentives rather than to the threat of punishment. While, when we set performance standards, we have every right to expect that they will be met, we must be certain that any penalty does not harm the people the program is intended to benefit. [From the Congressional Record, 94th Cong., 2d sess., June 18, 1976, Vol. 122, No. 95] (By Mr. Javits (for himself, Mr. Cranston, and Mr. Brooke)) S. 3592. A bill to provide for comprehensive maternal and child health care practices. Referred to the Committee on Labor and Public Welfare. S. 3593. A bill to establish a national health insurance system of maternal and child health care. Referred to the Committee on Finance. NATIONAL HEALTH INSURANCE FOR MOTHERS AND CHILDREN ACT AND COMPREHENSIVE MATERNAL AND CHILD HEALTH PRACTICE ACT Mr. JAVITS. Mr. President, with Senators Cranston and Brooke as cosponsors, I introduce two bills, the National Health Insurance for Mothers and Children Act, which I send to the desk for appropriate reference, and the Comprehensive Maternal and Child Health Practice Act, which I send to the desk for appropriate reference, and I ask unanimous consent that the full text of both bills be printed in the Record at the conclusion of my remarks. The PRESIDING OFFICER. Without objection, it is so ordered. Mr. JAVITS. Mr. President, I am very pleased that my distinguished colleagues Senator Cranston and Brooke are joining me in cosponsoring this important legislation. Senator Cranston has long been a dedicated leader in seeking better health care for all Americans, both as a key member of the Health Subcommittee of the Committee on Labor and Public Welfare, where we have productively collaborated on health legislation for many years, and as chairman of the Health and Hospitals Subcommittee of the Veterans' Affairs Committee, Senator Brooke, as the ranking minority member of the Senate Appropriations Labor-HEW Subcommittee, has long been aware of and worked to meet the need to assure a strong financial and organizational base for cost-effective, high-quality care. Mr. President, I believe that the time has come to take another step toward a major national goal: a comprehensive health program for all our citizens. Medicare and medicaid have provided health care coverage for our elderly citizens and for many poor citizens. Now is the time to provide for children and mothers Accordingly, I introduce two bills. The first would establish a system of national health insurance for mothers and children, and the other would at the same time foster and develop the organizational framework for delivering comprehensive maternal and child health care. I believe that such legislation represents the next logical step along the road to national health coverage. Mr. President, while I continue to support the enactment into law of the Health Security Health Act (S. 3), it makes enormously good sense both in human terms and as national policy to begin on the road to universal national health insurance with comprehensive health care for mothers and children. It is imperative to safeguard their health by providing accessible, comprehensive health services. At the same time, both the financial and organizational provisions of this legislation allow us to set into motion and to evaluate health systems with cost controls and a rational delivery system in which continuous, high quality health care may be provided. While we provide the means of increasing access of mothers and children to health care that emphasizes the prevention of disease and the promotion of health, we shall have the opportunity to prove out my conviction that universal national health insurance is not only feasible but desirable and will foster im portant improvements in the quality and cost-effectiveness of the total health care system. The two bills work in tandem to do so. The two measures I introduced today build upon, modify, strengthen, and integrate bills to the same effect introduced separately by Representatives James H. Scheuer and Andrew Maguire. Healthy mothers and healthy children represent the fruits of truly preventive health services that are rendered at a crucial time during the human life cycle. Therefore, the children and mothers of our Nation cannot wait for the promise of national health insurance-a promise which has been on the legislative agenda for a long period of time. I believe the time is now for the Congress to be the effective advocate for the health and well being of the mothers and children. It is time to invest together in our Nation's health future. The major provisions of the National Health Insurance for Mothers and Children Act include: Comprehensive ambulatory-including home health, rehabilitative, social and mental health services-and hospital care for children from birth up to the age of 18 with incentives for preventive children's health services included in the benefit package. All appropriate prenatal and post-partum health care for women, up to 12 weeks after childbirth. Support services-transportation, outreach, dependent care-for special populations or those persons determined to have a high risk of infant and maternal morbidity. Only such limited cost sharing and special reimbursement incentives that would stimulate the development and acceptance by both provider and patient of maternal and child health group practices. Payments for health professionals on the basis of specified and negotiated fee schedules, periodically adjusted according to such economic index or indices determined to be appropriate. Payment for institutions according to budgets agreed to in advance--prospective budgeting. Specific standards for health institutions and health professionals qualified for reimbursement under the maternal and child health programs. Second consultation for certain surgical procedures. Financing through payroll taxes and general revenues. The major provisions of the Comprehensive Maternal and Child Health Practice Act include: First. A program designed to foster the development of group practices for the delivery of maternal and child health care. Second. Grants, contracts and loan guarantees-$93,500,000 authorized-for the initial planning and operational costs of group practices consisting of pediatricians, family practitioners, obstetricians/gynecologists and other health professionals-such as nurse practitioners and nurse midwives-who deliver maternal and child health services. Third. Medical malpractice reinsurance for claims brought against a comprehensive maternal and child health practice. Fourth. The sum of $30 million authorized for health professions educational programs related to providing health care through comprehensive maternal and child health group practice. Fifth. Special consideration for assignment of national Health Service Corps personnel to those practicing in comprehensive maternal and child health practices. UNITED STATES SENATE, Hon. HERMAN E. TALMADGE, DEAR MR. CHAIRMAN: Attached are two reports from the Library of Congress, dated May 29, 1975 and July 26, 1976, describing the status of HEW's implementing standardized health care billing forms for federal health insurance programs. I would appreciate this information being included in the hearing record on Medicare and Medicaid reform, along with my letter to you dated July 23, 1976, discussing this matter, among other issues that I asked be raised during the course of the hearings. Thank you. Sincerely yours, Enclosures. GAYLORD NELSON. THE LIBRARY OF CONGRESS, CONGRESSIONAL RESEARCH SERVICE, Washington, D.C., July 26, 1976. To: Honorable Gaylord Nelson. (Attention: Judy Robinson). From: Education and Public Welfare Division. Subject: Standardization of Health Care Billing Forms. The following information on the development of standardized health care billing forms is provided pursuant to your request on this subject dated July 22, 1976. This report updates our previous report to you on the same subject dated May 29, 1975. A copy of that report is attached. A standardized form for professional services called the Health Insurance Claim Form has been tested and is now being used by the Bureau of Health Insurance for the Part B portion of the Medicare program. In the latter part |