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form is processed and amounts payable under both programs are determined. Payment is thus made by the same organization but from separate funds.

These dual claims currrently run almost 40,000 per month. Since in the great majority of cases Blue Cross administers both programs, coordination is easily accomplished, and speedily. Were another organization to administer Medi-Cal, delays and most probably confusion might develop in coordinating the benefits payable under the two programs.

COOPERATION WITH BLUE SHIELD AND OTHER INTERMEDIARIES

Blue Cross enjoys cordial working relationships with Blue Shield and other intermediaries.

As an example of how this is helpful to Medi-Cal (and Medicare) administration, both Blue Shield and insurance companies request information about hospital care through Blue Cross. This system reduces the number of people who approach hospitals to review confidential medical records. It is customary for hospital personnel who know Blue Cross personnel to allow them ready access to necessary information.

CONTROL MECHANISMS

Blue Cross processes claims professionally—that is, with an eye to services which could be inconsistent with the diagnosis and charges not in line with similar hospitals.

This same service is performed for Medi-Cal. The system requires trained personnel and cooperation from the providers. The procedure

1. Claims are reviewed for benefits or exclusions, for medical necessity and for appropriate charges ;

2. Claims requiring medical evaluation are sent to the Medical Audit & Review Section ;

3. This section, staffed by experienced medical auditors, reviews the claim. It is approved and returned for processing and payment, or is referred for further check;

4. When indicated, an investigator is sent to the facility to obtain copies of patient records. These records are reviewed by a physician who is a Blue Cross medical advisor in instances where a physician's judgment concerning the medical aspects is required ;

5. A claim, rejected for medical reasons, is returned to the provider with an explanation by the physician;

6. Should a questionable pattern of care develop, the facility's claims are audited. The provider is invited to discuss questionable claims. If a problem is still not solved, the provider meets with the Peer Committee of the California Hospital Association for final examination and resolution.

The Professional Relations Department also has responsibility for Blue Cross' activities in utilization review. As required under Medicare, utilization review is being installed in most hospitals to apply to all patients. In this sensitive area, Blue Cross' professional assistance and counsel is readily accepted because of its long experience and close relationship with providers.

SUMMARY

To summarize_since March 1, 1966, Blue Cross has worked with 1,903 providers, and paid 4,010,945 claims, totalling $730,367,036.

Over the past thirty months, significant improvements in performance hare been achieved through the informational, utilization review and audit procedures and collateral educational and support operations.

Medi-Cal has come through its early problems of changes in regulations and policies, the complexities and resultant delays in determining eligibilities and the cross-relation with Medicare in determining eligibility and usage under that program.

In its intermediary role between the providers and eligible beneficiaries and under the fostering policy guidance of the Department of Health Care Services, Blue Cross has seen the program become an efficient contributor to the health care of the people of California.

Blue Cross welcomes the projected plan for systems analysis of administration of Medi-Cal and will join the Department of Social Welfare, the Department of Health Care Services, and all other interested institutions and departments in working for its success.

The success of Medi-Cal thus far is only a beginning to the benefits to be enjoyed by the people of California from title 19. In its fiscal intermediary responsibility under this program, Blue Cross is dedicated to the equitable provision of good health care services for all the people of California as one more example of private enterprise working with government for the common weal.

The following tables provide some indicators for Blue Cross' performance of its intermediary role under Title 19, Medi-Cal. They cover the number of claims processed, the benefits paid, review activity, field activity and administrative costs :

BLUE CROSS PERFORMANCE-STATEWIDE
TABLE 1.-CLAIMS VOLUME AND AMOUNTS PAID (FIRST 12 MONTHS), MAR. I, 1966, THROUGH

FEB. 28, 1967

Vendor

Number of claims paid

Amount

paid

Home Health agencies..
County hospitals.
Noncounty hospitals..
Nursing homes.

61,955
386, 961
523, 482
401, 506

$1, 370, 046 49, 781, 403 74, 448, 835 108, 811, 671

Total..

1,373, 904 $234, 411,955

TABLE 2.-CLAIMS VOLUME AND AMOUNTS PAID (SECOND 12 MONTHS), MAR. 1, 1967, THROUGH

FEB. 29, 1968

Vendor

Number of claims paid

Amount

paid

Home health agencies.
County hospitals.
Noncounty hospitals.
Nursing homes.

Total..

97.697 693,976 791.774 555.246

$2,223, 413 89, 374,248 91, 746, 966 135, 554,083

2,138, 693

318, 898, 710

TABLE 3.-CLAIMS VOLUME AND AMOUNTS PAID (FIRST 6 MONTHS OF 1968–69)

MAR. 1 1968, THROUGH AUG. 31, 1968

Vendor

Number of claims paid

Amount paid

Home health agencies.
County hospitals.
Noncounty hospitals.
Nursing homes.

30, 272
557,662
477, 242
285, 942

$1,310,992 38, 888, 149 54, 754, 842 82, 102, 388

Total..

1,351, 118

177,056, 371

TABLE 4.-CLAIMS VOLUME AND AMOUNTS PAID (TOTAL PERIOD), MAR. I, 1966, THROUGH AUG. 31, 1968

Vendor

Number of claims paid

Amount paid

Home health agencies.
County hospitals.
Noncounty hospitals.
Nursing homes.

Total..

189.924 1,638, 599 1,792, 498 1, 242.694

$4, 904, 451 178,043, 800 220,950, 643 326, 468, 142

4,863, 715

730, 367,036

TABLE 5.---PROVIDERS COMMUNICATIONS CONTACTS MAR 1, 1966, THROUGH AUG. 31, 1968

Visits to providers facilities.
Workshops (average attendance 95 persons).
Bulletins.

10,357

75 113

TABLE 6.-BLUE CROSS ADMINISTRATIVE COSTS (STATEWIDE), MAR. 1, 1966, THROUGH AUG. 31, 1968

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ITEM 2: EXHIBITS RELATED TO STATEMENT OF JUANITA C. DUDLEY,*

ASSISTANT REGIONAL DIRECTOR, WESTERN REGIONAL OFFICE,
NATIONAL URBAN LEAGUE
EXHIBIT A. LETTER TO DIRECTOR OF HUMAN RELATIONS AGENCY, STATE OF

CALIFORNIA

MAY 6, 1968. DEAR MR. WILLIAMS: Recently many of the Negro Professionals offering services to Medi-Cal recipients have brought to our attention two extreme hardships being imposed upon them by the slowness of services given by the Blue Shield Company. Upon discussing this with the Los Angeles office of Blue Shield it was suggested that their services would be greatly improved if two innovative changes were made, these are:

(1) Establishment of a Southern California Computer Center to process this region's claims;

(2) Adoption, state wide, of the San Bernardino Plan, which involves each recipient having 5 eligibility cards being given to them each month for use by practitioners to enable the elimination, in time, of the processing of

eligibility by Blue Shield. As these two innovations are feasible, we would strongly urge the adoption of same. Blue Shield states, that, as of today, they are processing January and February applications for payment which indicates a hardship on the practitioners.

It was most rewarding having an opportunity to talk with you personally during lunch at the Human Relations Commission Luncheon meeting in Sacramento last week. Sincerely,

JUANITA CARROLL DUDLEY, Assistant R onal Director, Health and Welfare.

EXHIBIT B. NEWSPAPER ARTICLE CONCERNING REPORT ON MEDI-CAL PROGRAM BY

CALIFORNIA DEPARTMENT OF JUSTICE**

LYNCH CHARGES MEDI-CAL FRAUD

SACRAMENTO.—Nursing homes, drugstores and other parts of the medical establishment are robbing the state's Medi-Cal program of at least $8 million and probably more every year, Atty. Gen. Thomas C. Lynch has charged.

His Department of Justice said a nine-month investigation into abuses of the $800 million program showed Medi-Cal was riddled with kickbacks, phong claims, “overserviced" patients and other “illegal and unethical activities."

A 75-page report charged that physicians, dentists, druggists, optometrists, hospitals, nursing homes and others paid with Medi-Cal funds cheated the taxpayers out of about 1 per cent of the program's budget.

*See statement, p. 666. **See full report, app. 4, pp. 812–836.

Lynch's chief deputy, Charles O'Brien, told a news conference that the temptation to abuse Medi-Cal was made easier by a vast bureaucracy operated by both the state and its fiscal intermediaries, Blue Cross and Blue Shield.

The report identified no bilkers and called for no indictments. O'Brien said the attorney general could not prosecute because records were too inadequate to make a case.

“The best prosecutor in the world would be hard-pressed to use these records," he said.

State human relations secretary Spencer Williams demanded that specific cases of fraud be identified and prosecuted.

O'Brien acknowledged that while there might have been some deliberate “overutilization” by medi-care recipients, nearly all the abuses were by the medical profession.

"One of the worst ironies in the world is that when we are talking about law and order and increasing penalties for liquor store holdups, that striped tie, buttoned-down crimes goes unpunished," he said.

About 1.5 million poor Californians receive free medical care under the program, financed by state, federal and local governments. Blue Cross and Blue Shield funnel the money from the state and the medical suppliers.

But O'Brien harged “the private sector has not handled it (Medi-Cal funds) the way the private sector handles its own funds." He said the intermediaries were paid on a cost-plus basis “so there is no incentive for improvement."

He also asserted the state had no effective enforcement program “to discover, investigate and defer" frauders.

Professional and other organizations criticized the report as "generalized" and "vague." They demanded proof of such claims as:

Druggists charge the state three times as much for the same medication as they charge the public.

Some nursing homes require “under the table” payments from patients to secure admission while others accept kickbacks from vendors in exchange for business.

Doctors, dentists, optometrists and other professional falsified claims for treatment that was never performed or for treatment that was unnecessary.

In one case, an optometrist sought state authorization for an expensive pair of sunglasses for a blind patient.

Some nursing homes pocketed for their own use state funds for incidental patient expenses. O'Brien said the Justice Department is investigating the possibility that organized crime had infiltrated the nursing home business, but that evidence so far has not indicated it is extensive.

Williams said the state has not and “will not tolerate fraudulent misuse of Medi-Cal funds by those who receive or provide services."

He said he requested a meeting with Lynch's staff, "to secure specific cases of fraud and abuse which were uncovered." He added, “we will continue to insist on prosecution in any case where there is evidence of wrongdoing."

EXHIBIT C. LETTER FROM ROBERT H. West, VETERANS AFFAIRS COORDINATOR, TO ADVISORY BOARD MEMBERS

JUNE 8, 1968. DEAR VETERANS AFFAIRS ADVISORY BOARD MEMBER : On Tuesday, June 18, Senate Bill 1263, sponsored by Urban League Veterans Affairs, will be heard before the Education Committee in Sacramento. This bill is an effort to recognize the college equivalency of armed forces technical training and service. Specifically, this bill, introduced by Mervyn Dymally, will allow 15 semester units for each year in the service as a medical technologist or laboratory technician up to 60 units or equivalent to two years of college work.

This college credit will encourage veterans to take advantage of GI Bill education and earn their degrees as medical technologists. Another beneficial feature of this legislation is to alleviate the shortage of trained medical technologists presently plaguing the world of medicine.

Senate Bill 1263 is a real breakthrough of the archaic bonds in our educational system. This recognition of armed services education is long overdue and can be a pilot legislation for federal efforts in this vital area.

This effort to solve the joint problems of veteran unemployment and unmet medical needs is but one of the enterprising, innovational ventures of your Vorban League.

Please call me with any constructive comments on the subject of this bill. I might add that the outlook is extremely optimistic—at this time there is no opposition. Sincerely,

RICHARD H. WEST, Veterans Affairs Coordinator.

EXHIBIT D. LEGISLATION INTRODUCED, CALIFORNIA LEGISLATURE, DESIGxED TO PRO

VIDE AN EDUCATIONAL EQUIVALENCE TO VETERANS WITH CERTAIN KINDS OF TRAIN.
ING; SENATE BILL 1263

CALIFORNIA LEGISLATURE,
SENATE COMMITTEE ON SOCIAL WELFARE,

Sacramento, Calif., June 5, 1968.
Mr. RICHARD WEST,
Urban League,
Los Angeles, Calif.

DEAR Dick: As you are aware, I have introduced legislation in the current legislative session which is designed to provide an educational equivalence to veterans with certain kinds of training. Specifically, the measure is Senate Bill 1263, and it pertains to veterans who have had training and experience as clinical technicians in the armed forces of the United States.

We believe this legislation is in line with the recent efforts called for by President Johnson to assist veterans in the transition from the military to the civilian sector of life. Further, we are sure that the valuable and worthwhile experience these men have gained could be of immeasurable worth to the needs of the communities of our state.

In view of these factors, I am willing to devote the full resources of my office to seek the passage of Senate Bill 1263. Any assistance you can provide toward that end will be greatly appreciated. Sincerely,

MERVYN M. DYMALLY. (Enclosure)

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An act to amend Section 1261 of the Business and Professions Code, relating to

clinical laboratory technology. The people of the State of California do enact as follows:

SECTION 1. Section 1261 of the Business and Professions Code is amended to read:

1261. The board shall issue a clinical laboratory technologist's license to each person found by it to be properly qualified and it shall hold written, oral, or practical examinations to aid it in judging the qualification of applicants. The examinations for license to work in a clinical laboratory as a technologist shall cover the fields of biochemistry, hematology, and microbiology, except that the examination for a special clinical laboratory technologist's license shall be concerned only with the subject or subjects in which the license is to be issued. The minimum prerequisites for entrance into the examination shall be one of the following:

(a) Graduation from a college or university maintaining standards equivalent as determined by the department, to those institutions accredited by the Western Association of Schools and Colleges or an essentially equivalent accrediting agency with a baccalaureate and a major in clinical laboratory technique, the last year of which course shall have been primarily clinical laboratory procedure; provided, however, that if the curriculum did not include practical clinical laboratory work, six months as a clinical laboratory technologist trainee or the equi

*Passed Senate, July 5, 1968 ; passed Assembly, July 29, 1968.

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