uled to report this summer. Can you tell us when exactly that Council will report, and do you envision then at that point, having legislation ready to send to Capitol Hill? Because certainly if anything is going to be implemented, I think the realities of the matter would at least indicate to me that that it is going to be difficult to enact any reforms next year, in an election year, so you are already up to 1985 at the earliest. Would you give me your views on when the Council is going to report and whether or not you envision sending legislation to Capitol Hill?

Dr. DAVIS. Yes. The initial date that was given to the Council was a report due in July. However, by statute, they must have the report in by next January. The date was simply arrived at when the Council was initially set up. They had a couple of months delay in actually getting started.

There was some question as to whether they had to meet the date of July. Secretary Schweiker did indicate to the Council that if they needed an additional month or two that would be appropriate.

I believe that they plan on completing their work sometime during the summer, so I would anticipate that we would be getting their report in the early fall.

We would obviously take a look at that and would sit down with the Department and think through the kinds of recommendations that they have. We would incorporate many of those suggestions, I would expect, into our legislation for 1985, which we will be working on in August and September.

Mr. RINALDO. So you would be submitting legislation in 1985.

If the Council recommends the use of general revenues, would you then support that approach?

Dr. DAVIS. I cannot speak for the administration at this time on that approach. If they would recommend that, we obviously would take it under advisement. But I, as you know, would not presume to make the final decision for the administration at this time.

Mr. RINALDO. Since you are obviously opposed to using general revenues, would you then say that the entire shortfall has to be made up primarily by program cuts or reduction in benefits or by a combination of reduction in benefits and other revenues? And, if so, what revenues?

Dr. DAVIS. I think it is premature to make a final determination about what the change in behavior would bring, but, as I indicated earlier, it probably would need to be a careful balancing of both a reduction in the outlays, as well as looking at how one can finance it.

Mr. RINALDO. Have you or the Department investigated any alternative methods of finding revenue sources for medicare?

Dr. DAVIS. No. At the moment, we have been concentrating most of our resources on the development of reimbursement reform. The prospective payment system took us about a year to develop because it is a brand new system. After 16 years of paying in a retrospective way, one does not change that overnight.

Second, we then tackled the whole area of looking at restructuring the third-party financing mechanism for health care benefits with a tax cap and the other health incentive reforms for this year.

I am confident that as soon as we get the Council's report, we will sit down and look further in this area.

I just received a note from Tom Burke who indicates to me that the Council is now on record as opposing the use of general rev

enues.

Mr. RINALDO. I cannot make a decision about the Congress, but what I am looking for is an overall plan, and while I think it is laudable to say there are going to be behavior changes, I think they are very difficult to implement. Just take a look at what happened with social security. There were no major changes. While some people who supported the plan stated it is going to carry us through the next 25 or 30 years, I very much doubt that. And I think long, long before that, Congress is going to be faced with the problem of grappling with social security again.

Just like in 1978, President Carter said that if we increase the taxes at that point in time, it will take care of the social security problem for another 100 years. It only lasted 5 years. So he was wrong there.

Let me go onto another topic that I think is important. You recently made a decision with regard to releasing the name of doctors who accept assignment. Do you not feel that by releasing these names we might help to promote health competition such as the administration has suggested?

Dr. Davis. You indicated that we recently made a decision relative to this. I am not aware of the fact that we did make that decision. But one of the problems that one does have in looking at the whole issue of physicians' assignment is that it is done on a claimby-claim basis, so that you really cannot accurately portray those physicians that take assignment all of the time versus those who take it part of the time. Indeed the same beneficiary may go back into the same physician on a second or a third time for a different ailment and may find that the doctor accepted assignment at one point and not the next.

I think what is needed is a significant study looking at the entire usual, customary, and reasonable fee for service. And I am putting together a small study group now of physicians to help advise us.

As you well know in the new legislation that Congress just passed, there is a request that the Health Care Financing Administration study physician reimbursement with an eye towards incorporating that component into the DRG type system. And they did give us a target date of 1985 to complete that report.

Mr. RINALDO. I asked that question because I have in my possession here, which I would like to submit into the record, a copy of a memo that you sent out on January 29 to regional administrators withholding the assignment information. My understanding is that you decided, or the Department decided, not to make the information public to the Gray Panthers.

Would you be willing to supply that information to this committee?

Dr. DAVIS. I understand what you are referring to now. I believe that the decision not to make it public was based upon the fact that we do not have that kind of data in the format that they had requested. And under the Freedom of Information Act, if one does

not have that data, in that kind of a format, we are not required to collect it specifically for that purpose.

Again, I go back to the fact that because it is on a claim-by-claim basis, it is difficult to identify.

Mr. RINALDO. In other words, what you probably have to do is write a special computer program, and you are not willing to do that because of the cost involved, I assume?

Dr. DAVIS. That is a part of that, yes.

Mr. RINALDO. Can you give me any other reasons why you are not willing to do that or why you do not think it is a good idea? Dr. DAVIS. Frankly, I stopped at that point, when it was a cost factor. But you are asking me to make a policy decision in the abstract and I would want to take a look at it again before I made such a decision. That is why I am hesitating. I would be happy to reconsider the issue.

Mr. RINALDO. I would appreciate it if you would, particularly in view of the fact that the cost may be outweighed by the savings. And if that is so, that would be one way to effectuate just a small savings.

Dr. Davis. I will look at it again, but I would like to reserve judgment on what my final decision would be.

[The material referred to by Mr. Rinaldo follows:]

[Memorandum]

DEPARTMENT OF HEALTH AND HUMAN SERVICES,
Washington, D.C., January 29, 1982.

From: Carolyne K. Davis, Administrator, by Paul Willging.

Subject: Policy decision on Gray Panther fee waiver requests under FOIA.
To: Regional administrators.

In recent months the Gray Panthers have made requests under the Freedom of Information Act (FOIA) for lists of physicians in certain areas accepting or not accepting assignment under Medicare. In addition, they have requested waiver of fees normally charged of FOI requestors. Regions II and III have granted waivers. Costs for retrieval of the requested data from our contractors' computers-have been substantial.

I have now been advised that information which can only be retrieved from a computer through special programming does not constitute a "record" under the Act. Any such request can be refused without constituting a formal denial under FOIA, since no "record" or document is being denied. Based on that advice from the Department FOIA Officer and the Office of General Counsel, I have just ruled against a Gray Panther appeal in Region V. A copy of my decision letter is attached. Noted that past FOIA decisions on this matter do not set a binding prece

dent.

As a matter of policy, I ask that any similar FOIA requests by the Gray Panthers (or any other person or organization) be diplomatically refused, so long as retrieval of the requested information requires special computer programming, since the FOIA pertains only to existing records. Regional Public Affairs Directors also will be so advised by the Department's Freedom of Information Officer. Attachment.

Hon. MARGARET M. HECKLER,

CONGRESS OF THE UNITED STATES,

HOUSE OF REPRESENTATIVE, Washington, D.C., March 22, 1982.

Secretary, Department of Health and Human Services,
Washington, D.C.

DEAR MADAME SECRETARY: We are writing to ask you to improve the information available to Medicare beneficiaries about physicians in their communities who accept assignment. As you know, when a physician agrees to take Medicare assignment, he or she agrees to accept the Medicare reasonable charge as payment in full

and agrees not to charge the beneficiary any additional amounts above the statutory 20 percent coninsurance.

The problem is that beneficiaries have difficulty determining which physicians in their communities usually, or even sometimes, accept Medicare assignment. If beneficiaries had this information, they would be in a position to decide whether a change of physicians would enable them to protect themselves against excess charges.

In order to better inform beneficiaries, a number of organizations have attempted to assemble directories listing physicians who are willing to accept assignment. These directories have generally been based upon surveys of individual physicians. However, the results have been less than satisfactory, since there is little incentive for physicians to respond to the surveys and there is no way of readily varifying the responses received.

The Part B carriers, in carrying out their claims processing responsibilities, routinely collect and maintain this information. In the past, the Department has honored Freedom of Information Act requests for such information and waived fees for nonprofit organizations representing the elderly seeking this information. This has permitted the dissemination of a highly successful directory on physician assignment practices in the Washington, D.C., metropolitan area.

It has come to our attention that the Department has recently reversed itself and begun denying Freedom of Information Act requests for information listing which physicians participating in Medicare always accept assignment, sometimes accept assignment, and never accept assignment. Several organizations representing the elderly, and at least one local public official, have already been denied access to this information, either formally or informally,

We do not believe that the Department's new policy is in the best interest of the Medicare_program or its beneficiaries, and we do not believe that it is consistent with the Freedom of Information Act.

We urge you to comply with requests for this information and to continue to waive fees in the case of nonprofit organizations representing the elderly.

We understand that the Department, as a general matter, strongly supports competition in the health care system. By enabling Medicare beneficiaries to make an informed choice among physicians in the community, the dissemination of this data would, we believe, promote more cost-conscious behavior on the part of physicians and beneficiaries alike.

Thank you for your consideration of this matter. We look forward to hearing from you at your earliest possible convenience.

Mr. RINALDO. Congressman Smith.

ANDY JACOBS, Jr.,

Mr. SMITH. Thank you, Doctor, for your testimony and also for your questions to the chairman. I do have a few questions.

You were talking about the 1-year freeze on physical reimbursement under part B. I was wondering if such a freeze were enacted, do you believe that these costs would be shifted to the beneficiaries?

Dr. DAVIS. I would hope not. Physicians make, on the average, between $82,000 and $89,000 a year. What we are suggesting by the 1-year freeze would be to not allow physician fees to rise 8 or 9 percent as they normally do under our current program. That would

be difference of about $1.50 in an office visit. It seems to me that that would be a small sacrifice on the part of physicians. And since all other segments of the health care industry are being asked to develop a plan, we would hope that they would do likewise.

Mr. SMITH. Since we were having a problem with assignment, and my understanding is something like 50 percent of physicians operate under the assignment program, how do you think would affect that? Do you see more physicians declining assignments as a result of the freeze on reimbursement?

Dr. DAVIS. Actually no, because the number of physicians that are coming into practice is increasing every year, and if you look at our trend over the last 4 or 5 years, we have had more physicians accepting assignment each year.

Again, the 50-percent figure means that 50 percent of all claims are accepted for assignment. I think that the assignment rate itself in 1982 stands at 53 percent.

Mr. SMITH. And more physicians have been?

Dr. DAVIS. Yes. More physicians have been. It was at a low in 1977 of 50 percent. So it is gradually increasing.

Mr. SMITH. Has there ever been a study or an analysis as to why? It is good news to hear that more physicians are participating.

Dr. DAVIS. I think that, frankly speaking, as there are more physicians out there, they are becoming more competitive with each other. And, for example, I know some communities around the country where physicians are now advertising that they are accepting assignment. Recently in New York City, there was a group formed that went on the radio and indicated that they were a group of physicians who were specializing in geriatric care and were willing to take assignment. I think we are finding more of those groups around the country now. And I suspect that if you look ahead, and we recognize the fact that there will be increasing numbers of physicians over the next decade, that we will continue to see more individuals interested in assignment.

Mr. SMITH. A few more questions. The Department has suggested that over the next 5 years we gradually increase the part B premiums so that it covers 35 percent of part B program costs. Now, it is my understanding currently it is about 25 percent. How was the 35-percent figure arrived at?

Dr. DAVIS. Because we currently are at the rate of approximately 24 percent, and initially it was 50 percent. The decision was made to move that closer to the initial 50 percent, and yet not all of the way there.

Mr. SMITH. Would that be an immediate or phased in?

Dr. Davis. No, it is a phase in, about 2.5 percent increase each year over the next 5 years until 1988 it would be at the 35 percent level.

Mr. SMITH. Do you see any need on the further out years to raise it even higher to get closer to the 50 percent?

Dr. DAVIS. Our assumption was that if we moved it back to the 35-percent that we would hold it that level in 1988.

Again, reflecting back on the fact that the initial intent when medicare was developed under the medical insurance program was