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that, by stressing prevention today, we will be able to avoid costly treatments tomorrow.

I am very concerned, however, that 37 million uninsured Americans continue to have difficulty obtaining primary care and preventative services. Our current cost containment focus has made it more difficult for hospitals and others to provide this care, and often even acute care, to individuals with a limited ability to pay.

The 1990 Budget Act specified that ProPAC expand its analysis of this problem, specifically regarding the policy for recognizing bad debt and charity care costs.

Please describe your recent efforts to address this issue and any initial recommendations you have formulated.

Mr. Berman: In our March 1991 report to Congress we included the initial findings from analysis. Uncompensated care costs are increasing for all groups of hospitals. Further, the portion of uncompensated care costs that is not offset by government subsidies increased even faster at a rate of 13.5 percent a year from 1980 to 1989. Uncompensated care costs, after offsetting government subsidies, commands the same proportion of hospital resources in rural areas as in urban areas.

Before making specific recommendations, we believe it is important to also examine the impact of medicaid payment level on rural and urban hospitals. We did indicate in our report that Congress should continue to consider methods to reduce the size of the uninsured population.

Hospital Outpayment Payment Reform

Senator Harkin: I was pleased to find that ProPAC has begun to develop alternative outpatient payment systems as requested in the 1990 Omnibus Budget Reconciliation Act.

We have witnessed the increased number of hospitals providing outpatient services over the last decade--now over 67% of hospitals have organized outpatient departments, up from 44% in 1981.

Certainly, smaller hospitals and hospitals in rural areas are depending more on revenue generated from these outpatient services, and I suspect that this revenue is used to "cross-subsidize" smaller hospitals' inpatient services in the event that PPS reimbursements do not cover actual costs.

For this reason, I believe it is critical that any proposed outpatient payment system be constructed to minimize outpatient payment biases against small rural providers.

How do you intend to address this issue in designing this policy?

Mr. Berman: We agree with you that outpatient payment reformn should not include any biases against rural, or for that matter any groups of hospitals. In our prior report on payment for ambulatory surgery services, we did not recommend treating rural hospitals differently than urban hospitals.

There is another aspect to outpatient payment policy that is creating financial pressure on rural as well as urban hospitals. In OBRA 1990, Congress reduced cost based reimbursement for hospital outpatient services for all hospitals. Since rural hospitals rely on outpatient revenue to greater extent than urban hospitals, the reduction will have a greater impact on rural hospitals. Any assessment of the impact of outpatient reform must recognize that Congress has enacted several legislative changes to reduce the growth in outpatient spending for all hospitals.

Paperwork Burden

Senator Harkin: I'd like to focus for a moment on some of the recommendations included in your annual report to Congress that was submitted earlier this month.

One of your recommendations concerns implementing uniform data collection and coding requirements for all providers of outpatient care. We have talked in the past about the "paperwork" burden that is required for Medicare reimbursement and the need to streamline this process.

How would implementation of these uniform requirements impact
Medicare Part B providers?

Mr. Berman: The Commission is concerned about the paperwork burden facing providers and considered this impact in developing recommendation. We do not believe that the recommendation will substantially increase the burden after the recommendation is implemented. The major focus of the recommendation is on obtaining consistent information rather than increasing the total amount of data collected. Further, uniform reporting will result in more consistent payment policies which is to the advantage of providers.

Office of Rural Health Policy

Senator Harkin: Last fall, the Committee included report language directing ProPAC to provide technical assistance to the Federal Office of Rural Health Policy (ORHP). The rationale here was that ProPAC has developed data base systems essential for ORHP's impact analysis of Medicaid and Medicare regulations. Sharing this technical information would alleviate the need for ORHP to create a parallel data base.

What is the status of this collaboration?

Mr. Berman: ProPAC's policy is to share data bases with other Federal agencies, consistent with the legal requirements of the data licensing agreements we sign to obtain the data. In addition, we try to make the findings from our analyses widely available to other agencies as well as the public. We have not previously used our limited resources to develop analysis plans, computer specifications and programming for the mainframe computer for agencies and individuals outside ProPAC. We have, however, collaborated with other agencies on projects of joint interest. To date, the Office of Rural Health Policy has not asked us for data tapes, technical assistance, or specific computer analyses.

U.S. SOLDIERS' AND AIRMEN'S HOME

STATEMENT OF MAJ. GEN. DONALD C. HILBERT, U.S. ARMY (RETIRED), GOVERNOR

ACCOMPANIED BY:

COL. JOHN W. GHEEN, U.S. ARMY (RETIRED), DEPUTY GOVERNOR

COL. ROBERT J. GRIDER, U.S. ARMY (RETIRED), DIRECTOR, ADMINISTRATION

ELIZABETH J. WALKER, BUDGET OFFICER

BUDGET REQUEST

Senator HARKIN. The next panel is the U.S. Soldiers' and Airmen's Home.

The home's total fiscal year 1992 request for operations and maintenance is $42.1 million. This is an increase of $1.5 million over last year. There is also a capital outlay request of $4.2 million for construction and renovation of the physical plant.

The home was established in 1851 for the relief and support of retired and disabled soldiers. The 2,200-bed facility is located in Northwest Washington.

It is my pleasure today to welcome Maj. Gen. Donald C. Hilbert before the committee. In June 1990, Major Hilbert was appointed by the President as the 25th Governor of the home. I also want to congratulate you on your recent retirement from the U.S. Army. I understand you completed 35 years of military service this past spring. Congratulations on both, your service to your country and other service to your country as head of the home. Welcome.

Your statement will be made a part of the record in its entirety. Please proceed to summarize your statement for us.

INTRODUCTION OF ASSOCIATES

General HILBERT. Thank you, Mr. Chairman. I would like to introduce the folks that I have brought with me. On my left is Col. Wes Gheen who took over the job of Deputy Governor in November of 1990. He has been with the home for about 8 years. On my right is our new Director of Administration, Col. Jeff Grider, who retired also from the Army the end of September; and Mrs. Betty Walker, who has been our Budget Officer since February 1988.

On behalf of the distinguished veterans of the U.S. Soldiers' and Airmen's Home, I appreciate the opportunity to meet with you today. This is my first appearance before Congress as the Governor of the home, but I am well aware of your subcommittee's strong support in the past for improving the home's standards of living and care for our membership.

EVALUATION OF ORGANIZATION AND MANAGEMENT

I have spent the past several months evaluating the organization and management of the home and reviewing the several oversight reports from outside agencies which have been received in the recent past, the latest being the Department of Defense inspector general report and the Department of Defense general audit. All of the recommendations of both reports have been resolved either through agreement with the inspector general, overcome by the new legislation that has been passed, or corrective action has been or is in the process of being taken.

One of the major criticisms in the past and repeated in the audit report was the accounting system at the home. We are in the process of converting to a new accounting system obtained through a reimbursable agreement with the Department of Treasury Financial Management Services. This system will place us in full compliance with GAO standards.

I am also happy to report that in October 1990, the home's Benjamin King Health Center received an additional 3-year accreditation from the Joint Commission on Accreditation of Health Care Organizations. This was in recognition of its long-term care stand

ards.

I have also been involved in evaluating the Armed Forces Retirement Home Act of 1991. As you are aware, the new legislation makes several changes in admission policy, the governing boards, the appointment of officers, and the trust fund of the home.

CAPITAL OUTLAY PROJECTS

Next I would like to summarize the status of our principal capital outlay projects.

The construction of the intermediate care facility is approximately 50 percent complete, and all work is on or ahead of schedule. The current contract completion date is April 1992. However, the contractor is planning to complete the work 1 or 2 months early. Our capital outlay request for fiscal year 1992 is $4,220,000. The individual projects are outlined in our budget submission.

There is no request for funds to continue the renovation of dormitories in the fiscal year 1992 budget. As recommended by the Department of Defense Inspector General, prior to major capital outlay projects, we will conduct an economic analysis. Currently we are conducting an economic analysis in conjunction with the Office of Management and Budget to determine the best alternatives to provide housing for our members and the sequence for renovating the remaining dormitories.

OPERATION AND MAINTENANCE

The home's operation and maintenance budget request for fiscal year 1992 is $42,123,000, which is $1,542,000 greater than the fiscal year 1991 appropriation. A major portion of the increase is to provide pay raises for the personnel employed. This budget will fund an employee level of 970 personnel.

In that context, there have been several studies in the past that have addressed manpower levels for health care. However, since

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