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infant and child health. As you recall, legislation introduced by the Commission in 1989, the Healthy Birth Act, was enacted in OBRA-89 as part of the MCH Block Grant reauthorization, but funds have not yet been appropriated. The law calls for the establishment of the types of programs I discussed above to draw women and infants into care and to integrate and coordinate the services they need. We recommend full funding for the Block Grant.

The Community and Migrant Health Centers programs

These programs serve medically needy communities, and a large percentage of their patients are women and children. These centers, particularly with the recently initiated Comprehensive Perinatal Care Program, have been proven effective in reducing infant mortality and improving maternal and infant health. However, funding has not kept pace with the need.

The National Health Service Corps

We are pleased that Congress increased funding for this important program last year. Because pregnant women and infants need basic, primary health care more consistently and regularly than other groups, they are at higher risk if no providers are available in a community. Thus, we hope similar support will be available in Congress this year to continue to increase the number of physicians and nurses to underserved communities.

The WIC program

Although WIC is not under this Subcommittee's jurisdiction, I bring it up to emphasize its importance and proven effectiveness in improving the health of mothers, infants, and young children. We recommend that funding be increased so that the program reaches all the women and children who need nutritional supplements.

Childhood Immunization program

As you know, a child begins his or her series of immunizations early in infancy. With the escalating reported cases of measles and other preventable diseases including some reported deaths, we recommend increased funding for all aspects of this program, including the vaccine stockpile and the National Vaccine Program which is charged with coordination and oversight of a national strategy for developing safer and more effective immunizations and improving the delivery of immunization services.

To "Target" or Not

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Does the Commission have a position about whether to "target" funds, versus taking a broader approach such as providing funds to the Maternal and Child Health block grant in your view, is "targeting" a good policy to pursue? I don't think there is one correct answer to whether targeting funds to address a specific problem is or is not a good idea. If the problem is more severe in one location than another, then certainly it is a good idea to zero in on the problem.

Funds are targeted all the time. Although it is a block grant, the MCH Block Grant program clearly targets funds from both the federal and state levels.

It is my opinion that we already know how to implement many strategies for reducing infant mortality. The need to target funds, as the Healthy Start Initiative would do, to see if these very strategies work, is not the right approach. We need to institutionalize the effective strategies we already know work.

For the areas where we still have questions, targeting can work. But, as I said in my testimony, it is very important that we learn from what we do. It does no good to find out what works and then not take those lessons learned and apply them to how the federal government and others approach solving our infant mortality problem. Commitment for the long term is needed from the Congress, Federal government, states, and communities to institutionalize what works and get rid of what doesn't work.

I would like to take a moment to make an overall comment about the President's targeted Healthy Start Initiative for the Committee's consideration. The funds that Congress may appropriate for this effort are large and HHS's plans and operations for the initiative are unclear at this time. Congress may want to consider requesting that, over the course of this initiative, HHS provide documentation, reports, and other evidence of how the funds are being spent, the activities each grant recipient are pursuing, the results they are finding, and how HHS plans to incorporate the findings into their ongoing programs and overall approach to reducing infant mortality in the future.

Implementation of the Initiative

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If we agree that "targeting" can help, what suggestions would the Commission make to the Administration about how to go about this initiative: what steps can the federal government take to encourage coordination and cooperation, and what are the current impediments to coordination?

In our upcoming report on one-stop shopping, the Commission will address strategies that the public and private sectors can take to better coordinate services for pregnant women and infants. I will highlight a few themes here that are pertinent to the federal government.

Leadership on the part of Congress and Administration officials in program coordination is needed to demonstrate that this is a high priority. Congress should work to improve communication between committees that have jurisdiction over programs serving the same populations but often do not work to coordinate their efforts. Interagency collaborations should be a regular part of the federal policy-making process for services that target mothers and children.

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The overall goal of coordinating services at any level whether federal, state, or local, should be an integrated, user-friendly service delivery system that accommodates rather than just tolerates the needs of pregnant women and children. The federal government can contribute by simplifying and linking eligibility processes for various programs, communicating the importance of coordination to the states, encouraging collaborative efforts through joint planning and funding processes, and maintaining a regular dialogue with those providing services on the front lines.

Commission's Activities in FY92

The Commission has requested its first funding increase in the past several years.

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If the Committee is able to provide the funds, what types of activities will the Commission undertake?

Several of our planned activities for FY 1992 are mentioned in my testimony and are discussed in the Commission's Status Report that I submitted with my testimony. As the Committee knows, the Commission receives both appropriations and private sector support. We plan to continue to advise Congress and the public about what works and what steps are needed to reduce infant mortality and to improve maternal and infant health. To accomplish this our plans include:

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Working with the Pan American Health Organization and the World Health
Organization on an international health ministers meeting here in Washington, D.C.
for the purpose of highlighting the many lessons that we can learn from other
countries.

Continuing to promote policy and practical strategies that lead to the goal of
universal access to care for all pregnant women and infants.

Continuing to draw attention to the importance of mothers and children through
reports and other methods of communication with Congress, business leaders, the
media, health professionals, and others.

Working with the U.S. Conference of Mayors to develop city-based projects focused on raising awareness about the need for prenatal and preventive health care, reducing barriers to care and highlighting what works.

Working with the Blue Cross and Blue Shield Association on the national public awareness campaign, "Caring for Tomorrow's Children," that the Association has developed in consultation with the Commission.

Developing a series of roundtable meetings in cities and communities to discuss how business can further assist in addressing the concerns of maternal and child health. Developing a project and report on substance abuse during pregnancy and a project on maternal and child health needs in minority populations.

Bringing together news journalists in regional seminars to help them learn about infant mortality and maternal and child health.

Continuing our leadership efforts with the National Health/Education Consortium.

PHYSICIAN PAYMENT REVIEW COMMISSION

STATEMENT OF PAUL B. GINSBURG, PH.D., EXECUTIVE DIRECTOR
ACCOMPANIED BY LAUREN LEROY, PH.D., DEPUTY DIRECTOR

BUDGET REQUEST

Senator HARKIN. Next we will hear from the Physician Payment Review Commission. If you will take your seats. I am going to just call a recess here for about 3 or 4 minutes, and I will be right back. [A brief recess was taken.]

Senator HARKIN. The subcommittee will resume its sitting.

The Physician Payment Review Commission is requesting $4.4 million for next year. That is an increase of $717,000 over last year. I am pleased to welcome Dr. Paul Ginsburg, Executive Director of the Commission, before the subcommittee. Since its creation in 1986, the Commission has provided Congress with excellent analyses and recommendations regarding Medicare physician payment system reform and cost containment for physician services under Medicare. This is certainly an issue that lies at the heart of improving the quality of and access to health care in both rural and urban areas. I want to hear more about the Commission's activities and plans for 1992.

Dr. Ginsburg, welcome to the subcommittee. Your statement will be made a part of the record in its entirety, and if you could summarize it, I would sure appreciate it.

Dr. GINSBURG. Thank you, Mr. Chairman. I am pleased to come here to discuss the Commission's budget request for fiscal year 1992. Accompanying me is Dr. Lauren LeRoy, the Deputy Director of the Commission.

The Congress continues to find the Commission's work of value as it grapples with difficult health care policy issues. In OBRA 1989 it enacted a comprehensive Medicare physician payment reform that followed very closely the recommendations of the Commission.

Also in that legislation, the Commission was directed to undertake five specific studies and to prepare a second routine annual report on "Medicare Volume Performance Standards." The specific studies include Medicare payment to assistants-at-surgery, geographic payment areas under the fee schedule, payment to nonphysician practitioners, treatment of practice expense and malpractice expense under the fee schedule, and physician payment in the Medicaid Program. Four of these studies have already been completed either on or ahead of schedule with the fifth scheduled for completion by July 1. The four are included in our 1991 annual report which was summarized in testimony before the Senate Finance Committee 2 days ago. I have copies of that statement for the committee.

In OBRA 1990, the Congress substantially broadened the Commission's mandate. In addition to its role in advising on major implementation issues concerning the Medicare fee schedule and making annual recommendations on the volume performance standard, the following topics were added: physician payment in the Medicaid Program, medical malpractice reform, graduate medical education, access to services in inner-city and rural areas, utilization review and quality of care, constraining the costs of health insurance to employers, and licensure and certification of physicians.

The Commission requests $4.4 million for fiscal year 1992. This would be 16 percent higher than the 1991 level, but it is necessary for the Commission to comply with the work requirements of its expanded mandate. The additional funds would support increased staff and additional computer charges for work with new, large databases.

PREPARED STATEMENT

The Commission has set a challenging agenda for the coming year, and I am pleased to present its plans to you and to respond to any questions you have regarding the Commission's work or its budget request.

[The statement follows:]

STATEMENT OF PAUL B. GINSBURG

Mr. Chairman, I am pleased to come before this Committee as the Commission is nearing completion of its fifth annual report to Congress. The Commission was established in 1986 to advise Congress on reforms in the methods used to pay physicians under Medicare. Since then, its mandate has been expanded three times, first to take on the issue of controlling spending for physician services, then to carry out advisory responsibilities in monitoring and updating the Medicare Fee Schedule, and this past year to look beyond Medicare payment to issues affecting access, quality, and cost. Throughout this time, the Commission has maintained a strong record of accomplishments, providing timely information and advice to Congress and considering the views of groups affected by its work in developing its recommendations. The Commission's activities in the past year reflected both a continuation of its work on issues related to refinement and implementation of the Medicare Fee Schedule and a turn toward work on a broader range of issues. OBRA89 set out new assignments for the Commission in both monitoring and updating the fee schedule and conducting studies of specific issues of concern to Congress. Last May, the Commission issued the first of what will become an annual report on setting standards for expenditure growth and updating fees. It also established an expert panel on access to advise it in commenting on the HHS Secretary's annual report on utilization, access and, quality. In addition, it has already completed four congressionally mandated studies and has one remaining study slated to be submitted to Congress in July.

In OBRA90, the Congress set out the most substantial expansion of the Commission's mandate to date. Formally added to its work plan were such topics as Medicaid physician payment, medical malpractice reform, graduate medical education, access to services in inner-city and rural areas, utilization review and quality of care, and constraining the costs of health insurance to employers. Anticipating the interest of Congress in many of these issues, the Commission already had work underway at the time the legislation was enacted. OBRA90 also formalized the role the Commission has played since 1987 in providing advice on budget options affecting Medicare physician payment.

COMMISSION REPORTS TO CONGRESS

The Commission now has two reports due each year. OBRA89 added a report on Volume Performance Standards that is submitted to Congress shortly after the Commission's annual report. In that report, the Commission comments on the Secre

tary's recommendations on setting Volume Performance Standards and updating fees and presents its own recommendations and supporting analyses. The approach proposed by the Commission in this year's report, to subtract two percentage points from the Medicare Actuary's best projection of outlay growth, was adopted by Congress for the Volume Performance Standard for fiscal year 1991.

The Commission will be submitting its 1991 Annual Report to Congress at the end of March. Two days ago, we summarized its major conclusions and recommendations for the Senate Finance Committee, and I have brought copies of my testimony for members of this Committee. As you will see in that testimony, the report covers a broad range of topics that fall into three general categories. First, a substantial portion of the report is devoted to unresolved issues in the implementation of the Medicare Fee Schedule. These include refining the scale of relative work, developing resource-based methods for determining practice expense and malpractice expense, defining geographic payment areas, and calculating the conversion factor.

The report next considers a number of specific policy and technical issues concerning the fee schedule. These include payment to nonphysician practitioners (an issue about which this Committee has expressed particular concern), payment to podiatrists and optometrists, the use of time units in payment of anesthesiologists, and issues related to payment for the anesthesia care team, assistants-at-surgery, and electrocardiograms.

The final chapters of the report reflect a turning point in the Commission's work by introducing new issues contained in the OBRA90 mandate. These include physician payment under Medicaid, improving delivery of health services in rural areas, the impact of Medicare payment reform on private payers, profiling physician practice patterns, and medical malpractice reform. While I cannot go into detail on the 1991 report in this brief statement, I will be pleased to answer questions on any of the issues it contains.

COMMISSION WORK PLAN

With the expansions in the Commission's mandate in the past two years, its work plan has grown to include both broad policy areas encompassed in the payment reform legislation and other issues that go beyond Medicare policy. While the initial work on the key elements of the Medicare Fee Schedule will be completed prior to its implementation in January 1992, the Commission expects important refinements to be made after that date. During the next year, it will continue its work to evaluate and refine additional results from the Hsiao study. It will assess new visit coding policies and develop a strategy to monitor their use. The Commission will also begin to explore the potential for establishing broader units of payment, such as bundling payment for certain tests into visits or establishing a payment for the team of physicians involved in the care of patients undergoing transplant surgery. The Commission's work on the practice expense and malpractice expense components of the fee schedule will focus on refining the resource-based methods, assessing their implications, and developing recommendations on these policies for Congress. The Commission is also very interested in the responses of physicians to the Medicare Fee Schedule and the effects of payment reform on beneficiaries. It will analyze claims data to assess the impact of fee changes on volume of Medicare services and the effect of changes in Medicare payment on private sector outlays. It will also conduct a series of analyses and consult with its Advisory Panel on Access to assess the impact of payment reform on beneficiary access.

This coming year, the Commission will again review the HHS Secretary's recommendations on the annual Volume Performance Standard and fee update and make its own recommendations to Congress. To meet this responsibility, the Commission includes in its work plan a series of analyses to determine how to account for such factors as technology change, inappropriate utilization of services, and inadequate access to services in setting the standard. It will also assess actual expenditure patterns along with other factors that should be taken into consideration in determining annual updates in fees. The Commission plans to continue to explore options for moving from a national Volume Performance Standard to a system of subnational standards.

The Commission will have projects underway in each of the new areas included in its mandate in OBRA90. In many cases, they will build on the initial work reported in its 1991 annual report. After completing a general review of rural health care issues this year, the Commission will consider different types of payment incentives to attract and retain physicians in rural areas and examine measures to increase the availability of health care resources to rural populations. It will also begin a review of access problems in the inner city. The work the Commission is conducting

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