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Mr. DAVID. Yes, I believe that this would be the case. I hope that they would agree. There may be isolated cases, but, in general, they are being paid quite promptly.

Senator SMATHERS. All right, sir.

Mr. DAVID. There has been considerable discussion of medicare's impact on hospital use, particularly on average length of stay. To provide information as quickly as possible on this matter the Social Security Administration has been publishing in the Social Security Bulletin monthly data on inpatient hospital care showing the total days of care and the average number of days per claim. These data are based on claims for which reimbursement has been made and recorded in our accounting records that are maintained in Baltimore.

The figures are meaningful when they are properly used but unfortunately they are quite easy to misinterpret. Accurate and detailed figures on discharge rates, total patient days and average length of stay will become available in statistics that we will be publishing annually. For 1966, the tables will cover experience during the first 6 months of the program and we hope that the 1966 tables will be available late this summer or early this fall.

Senator SMATHERS. You don't have any statistics now, is that what you are saying?

Mr. David. We do have some, but they are not of the kind that will give you an accurate picture of such a thing as average length of stay because we do not yet have enough cases which have remained in the hospital long enough to give a full picture of the situation.

In other words, you do have to wait until you get sufficient data on discharges and you can't get a fully satisfactory picture until you do have that. Until you have a backlog of discharges, you can't tell for

a sure how long the average length of stay is going to be.

For instance, we do have data now but they don't have in them the sufficient reflection of the long-stay cases.

Senator SMATHERS. I want to ask you this simple question of arithmetic. If you now have statistics on how many elderly people are using the program, why do you have those statistics and not statistics on how long they stay in the hospital?

Mr. DAVID. We can tell you how long these people stayed in the hospital but we don't have a fair representation yet of what will be the average length of stay when the program has been in operation for a substantial period.

Senator SMATHERS. What sort of answer would you give if somebody said the reason you have not produced those statistics as to how long they are going to stay is because those statistics at the moment are very unfavorable to the program? What would you answer to that

1 ? question if it were asked you?

Mr. David. Well, I would answer that, if such a question were asked, by saying that we have undertaken to get the statistics as quickly as we could. We do have a great many statistics and I will furnish the record the Social Security Bulletin articles that contain the statistics.5

The figures show that up to date the average length of stay has been 13 or 14 days or something like that and we know that that is too low. Senator SMATHERS. You say 13 to 14 days is too low?

* The material submitted for the record begins on p. 161 of the appendix.

83-481 087-pt. 1-2

Mr. DAVID. Yes. Actually, when you finally get the figure over the full period of the year, which we, of course, don't have yet, when we get the figures from the claims that are made over a longer period, we will know more about the discharges and we will be able to get a more accurate picture. These figures, up to now, are loaded too much with shorter stay cases.

Dr. Silver. May I interject, Senator?
Senator SMATHERS. Certainly.

Dr. SILVER. The way you asked the question I would respond by saying if we used the American Hospital Association data, the objection we have is that we think they are too favorable, not too unfavorable. The average length of stay is much too short and we are not getting the influence in there of long-stay patients at all and it is very misleading

Senator SMATHERS. Originally, you will recall that it was said that what would happen would be that these elderly people would get into the hospital, that they would continue to occupy the beds, that there would be no way to get them out, and that, because we have a nationwide shortage of hospital beds, this would lead to a chaotic situation for those who had some serious illness and had to go to the hospital. Now, what you are saying, as I understand it—and I think the record ought to show this

is that as of today the figures that you have are so contrary to that charge that they would stay too long that you believe that you need more experience actually to demonstrate in point of fact that the charge is not true, or you are afraid people won't believe it when you bring these figures out; is that correct? Am I correct in saying that?

Dr. Silver. Well, you are being too kind. Actually, we know that with the long-stay patient-information not available as yet—that these figures are incorrect and we are not afraid that people will accuse us of fudging the statistics.

Senator SMATHERS. Those are figures supplied by the American Hospital Association?

Dr. SILVER. Yes.
Mr. DAVID. Yes.

I might say, Mr. Chairman, that the AHA figures up to date have been tied to admissions into a hospital in a given month. We understand, though, that the American Hospital Association figures for March of this year, which will be available some time in the next few weeks, will be based on total inpatient days used by patients who are discharged in a given month and thus will, for the first time, reflect a true average length of stay.

We don't have any reason to want to give an overfavorable picture of the financing of the hospital insurance program, and we would not, in any circumstance, want to have the picture appear more favorable than it is.

Senator SMATHERS. Well, you just don't imply by that that because you want more financing you want it to be worse than it is, you want it to be actually what it is.

Mr. David. We would like it to be exactly as it is all the facts on the table.

Senator SMATHERS. And while we have an automatic increase with respect to raising money to provide for these things you do not foresee at this moment any need for any additional increase other than that which is now projected by law?


Mr. DAVID. No, sir. At this time we do not see any need for any additional financing of the hospital insurance program. The program is financed, we believe, on a conservative basis and even though hospital costs in 1966 did increase by 161/2 percent or so, this is within the range of the estimates made on the costs of the program, and there is no basis up to this point for changing the financing of the program or increasing the income of the program.

I might mention that one of the elements in the conservative financing of the program is that the cost estimates assume that the base on which the social security contributions are paid; namely, the base of $6,600, at present, will not be increased over the next 25 years.

Now, to the extent that wages do go up, as they have been going up over all the years and decades in our history, to the extent that wages do go up and this base is increased, as the Congress has increased it from time to time over the years, there is additional income to the hospital insurance system and there is no corresponding increase as a result of that in the cost except insofar as costs go up as wages go up generally.

Senator SMATHERS. Can you foresee the day when those who avail themselves of medicare will not have to make any $50 contribution, for example, themselves?

Mr. DAVID. Mr. Chairman, I think that it would be foolhardy to say that one could foresee that day.

As you know, there are really three deductible provisions in the medicare program. One of them is the $40 deductible in the hospital part, and the other big one is the $50 deductible in the medical insurance part. Unfortunately the one that causes the greatest amount of difficulty in administration and understanding is that $50 deductible in the medical insurance part. That is a lot of trouble for the patient and for the doctor and for the carriers and for the Government and for everyone; but that particular deductible would be one that there would be less clear basis for cutting down or eliminating than would be the case with the $40 deductible in the hospital part of the program. That would be one on which I imagine that the day might come when we would find, on the basis of experience and surveys and the data growing out of the operations, that it might not be necessary any longer to have that deductible.

ARGUMENTS ON DEDUCTIBLES There are certainly arguments both ways. It is clear that the deductible must have some effect on deterring people from going into the hospital and getting services that they do need, and there can hardly be any doubt that it has some effect in deterring people from getting Services that they don't need.

I think that it has to work both ways but, on balance, it remains to be seen whether it will be feasible and desirable to either cut down or eliminate that deductible.

My opinion is that it may easily come to a point where we can say that it would be safe and prudent and that we will have the financing to cover the cost of the hospital services without that deductible. I think that is a possibility.

In the case of the $50 deductible for the medical insurance part of the program it is not quite so easy to see the time when that will be eliminatable, if I can coin a word there. If we were to eliminate that deductible right now the $3-per-month premium that is paid by the people 65 or over financed by the Federal Government would have to be increased to, we estimate, about $4.75 a month. It makes that much difference to eliminate the bills before they reach the $50 level.

Of course, another small item there in eliminating that $50 deductible would mean that we would be dealing with a great mass of smaller bills and administratively that would add quite a lot to the load.

Senator SMATHERS. It would be pretty difficult for you to say there is some administrative benefit in having this $50 medical deduction.

Mr. David. Yes; I would say there is some benefit in it, but I want to be very sure I am not understood to be saying that we would object to the elimination of the $50 deductible for administrative reasons. I am sure we would not want to take a position like that.

It is true that it would increase the administrative load, but we would not object to it for that reason.

Senator SMATHERS. All right, sir. Go ahead.

Mr. David. As to the services of physicians, our current information on use and charges is still scantier than what we have for hospitals. Under part B of medicare the patient must first incur $50 in costs to cover the deductible. Then he must pay the bill and get a receipt, unless his physician has agreed to accept assignment and to be paid by medicare directly for the reasonable charges that are determined under the program.

Senator SMATHERS. On that point, you say you don't have any experience yet?

Mr. David. I didn't say we didn't have any experience. I said we have scanty experience so far.

Senator SMATHERS. Thus far what is your experience? I will tell you what mine is; you tell me what yours is.

Mr. David. Well, we have quite a lot of experience, Mr. Chairman. Are you referring to the

Senator SMATHERS. That is right. How many of the doctors would prefer to deal directly with the patient ?

Mr. David. Actually, as I remember it, it is very close to 60 percent of the doctors in the country do accept the assignments in either all cases or in some cases.

Senator SMATHERS. That has been my experience.
Mr. David. Forty-three percent, as I recall it, refuse to accept assign-

I ments in any cases. There is a great variation in different parts of the country in this respect. In some parts of the country a very high percentage of them, like 80 percent, do accept assignment in some cases. Of course, obviously, there are some cases where the bill is very large or the patient is in a very low income bracket and it is pretty much out of the question for him to have paid the bill and then get reimbursed on the basis of the receipted bill.

Senator SMATHERS. I think doctors believe that it is a more certain source of payment to operate under the assignment method and to work with the medicare program than to wait for the individual to come in with $35 or $25 and build up to the $50.

Mr. DAVID. Yes.

Senator SMATHERS. It has been my observation from talking with them that they are happy to go that route.

Mr. David. When the payment is made under the assignment method, the bills are prepared by the doctor or in the doctor's office and they are properly prepared and completely prepared in a very much higher percentage of the cases and they do go through much more rapidly.

Senator SMATHERS. Right.

Mr. David. Well, after you have gone through all these steps of the receipted bill and the claim has gone to the intermediary, it is paid and a report is sent to us and we have to tabulate it all that is a time-consuming process—and we don't have as much information yet as we are going to have.

There is no doubt that this process of paying the bill to the physician confuses older persons and causes real hardship for those whose physicans are unwilling to accept assignment and they do not have the cash to pay the large bills or the resources to cushion delays in reimbursement.

The Social Security Administration has made available the services of our district offices to help older persons with their claims. This has speeded the claims process, but it obviously cannot affect the basic character of a system which includes reimbursement of a portion of paid charges after a deductible is met. That is just inherently a complicated process.


Recognizing that delays in information would occur, the Social Security Administration began last July a current medicare survey. As with most of our major surveys, the Bureau of the Census is acting as our agent in the collection of the data. We are now getting information from a national sample of beneficiaries on their current medical care and expenses. We should have a basis for estimating how many people are meeting the deductible and what is the accruing liability of the system, for bills, that is, that may not come in for a number of months hence.

The survey suggests that during the first 6 months about two-thirds of the people enrolled under part B of the medical insurance part made some use of the services.

In the first month less than 4 percent met the deductible and were eligible for reimbursement. By December of last year 22 percent of all the enrollees in the medical insurance part, one-third of those using covered services, had met the deductible; 22 percent of all and onethird of those who had used covered services had met the deductible.

At the time medicare was adopted, we estimated that the program would cover perhaps 40 percent of the aggregate medical costs of the aged. We do not have any basis, up to this point, for modifying that figure.

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