Thank you very much.

Senator TALMADGE. Thank you very much for your helpful and constructive statement.

Senator Dole?

Senator DOLE. Just briefly, of course, I share your view with reference to the statement about the Secretary. I think it raises again the spectre of inaccuracy, for reporting payments under programs were not too accurate, and he promises to be accurate next year and maybe he can also clarify the statement made about your association, since you are opposed to that.

You say professional liability premiums are as high as $18,000 annually. Are you suggesting $18,000 as a minimum malpractice payment?

Dr. AMENT. No. The average malpractice insurance premium is, at the present time, $7,500. In some areas, anesthesiologists, particularly in the Midwest, are paying considerably lower than that, despite the fact that they are in a high-risk category. If you will note, in that statement, I refer to large metropolitan areas. The $18,000 figure comes from New York City. The $30,000 figure comes from a part of California. In some parts of California, it is even higher. The metropolitan areas are the areas in which the malpractice situation is most acute.

Senator DOLE. What is it in Buffalo?

Dr. AMENT. In Buffalo it is about $5,600. The upstate area runs approximately a third to a half of the metropolitan area.

Senator DOLE. That does not give us a totally objective figure, where the highest figure is given for the cost. I assumed it was not that high. What is the average income for an anesthesiologist? According to the previous testimony, they are quite well-paid.

Dr. AMENT. I would have no way to give you such a figure. We have never done an economic survey on anesthesiologist, the kind of surveys that medical economists have done. My own feeling is that there is a certain built-in error, just in the method of collection. I really could not give you a figure.

Mr. SCOTT. In the letter to Secretary Califano, referred to by Dr. Ament, there is a reference to a study by an independent consulting firm to HEW on the compensation, on a salary basis, or percentage basis, leaving aside the fee-for-service basis, of the three specialties known as hospital-associated.

The average earnings, admittedly, on a small statistical basis, of the anesthesiologist on a salaried basis was $62,300 a year and on a percentage basis was $87,400 per year.

As we pointed out in our letter, an anesthesiologist on a percentage basis assumes all or many of his costs of practice which would be paid for by the hospital under a salary arrangement. It is our own belief, based on HEW's own figures, at least on the basis of this study, there is not a substantial difference for the anesthesiologist who practices on a percentage basis rather than on a salary basis.

Senator DOLE. Would it be fair to say that you do not share the views expressed by the previous witnesses, the anesthetists? Dr. AMENT. No, we do not.

Senator DOLE. There is total disagreement?

Dr. AMENT. Just about.

Senator DOLE. That is hopeful.

The nurse anesthetists have asked that we amend the legislation to mandate the only other person to be recognized as performing anesthesia services be a certified registered nurse anesthetist.

Do you have any objection to such an amendment?

Dr. AMENT. Yes; I certainly do. There are programs at the present time, both at Emory University and Case Western Reserve, and these programs will probably be approved by the American Medical Association for anesthesiologist assistants at baccalaureate and master's levels. Restriction of services to nurse anesthetists (other than anesthesiologists services) would preclude these individuals from being able to be a part of the anesthesia care team.

I do not believe that such restrictions should be initiated. We have concerns about the educational programs which are not autonomous from the political and economic organization of the AANA. We have concerns about the quality of the product that comes out of their 18month school of education, which is not an academic program. As a matter of fact, they were just recently turned down for accreditation status by the Council on Post-Secondary Accreditation. So at the present moment, there are many questions regarding the entire field of nurse anesthesia, and I believe that it would be an error to restrict the law in such a way that it would give this organization a mandate. As a matter of fact, in order to retain certification, the organization requires membership, which may well be in violation of the antitrust laws.

Senator TALMADGE. Thank you, Senator.

Senator Curtis?

Senator CURTIS. No questions.

Senator TALMADGE. Ms. Ecklund, in all fairness now, we would like to have you respond to Dr. Ament's last comments so we can make that a part of the record so that this controversy can be elucidated in its entirety in the record of this hearing.

Thank you very much, Dr. Ament, for your constructive suggestions. Thank you, sir.

[The prepared statement of Dr. Ament follows:]

STATEMENT OF RICHARD AMENT OF THE AMERICAN SOCIETY OF ANESTHESIOLOGISTS My name is Richard Ament, and I am here to present testimony on S. 1470 on behalf of the American Society of Anesthesiologists (ASA). I am currently the president of that society, which is composed of approximately 11,000 physicians actively engaged in the practice of anesthesiology. I am also a practicing anesthesiologist in Buffalo, New York, and clinical professor of anesthesiology at the State University of New York in Buffalo.

ASA's position on S. 1470 is straightforward. With only a few minor exceptions, ASA favors those portions of the bill which particularly impact on the practice of anesthesiology. It is a strong bill, and is accurately directed at a few persistent trouble spots in Medicare reimbursement. The "exceptions" which ASA takes to the bill are not directed at the manner in which S. 1470 seeks to accomplish needed reforms. Rather, ASA's concerns are with particular language presently used in the proposed legislation which ASA feels will later prove to be troublesome or counterproductive. This language could be clarified either in the statute itself (the preferable solution, ASA believes) or in the Committee Report.

Having announced that ASA favors S. 1470, and that virtually all of the changes which it would like to see made are changes of wording rather than of meaning, I will now discuss the one true change in the legislation which ASA would like to see. ASA would like to have reinserted in S. 1470 a provision similar to Section 23 of S. 3205 (the predecessor to S. 1470), which would require state Medicaid programs to reimburse physicians at a rate not less than 80% of the reasonable charge for such service as determined by Medicare. We are informed that this provision was deleted because some physicians felt that the "minimum" would in effect become a "cap" on Medicaid fees. Frankly, as far as anesthesiologists and most Medicaid anesthesia patients are concerned, this would be wishful thinking. As best I have been able to determine, most Medicaid programs now pay anesthesiologists only 40% of the reasonable charge as calculated by Medicare. (And, for anesthesiologists, even the Medicare "reasonable charge" is often unrealistically low, since Medicare reimbursement is based on charges submitted during the last complete calendar year prior to the present fiscal year-a lag of 1-2 years-and is subject to an economic index limitation. Thus, Medicare payments do not reflect the astounding increases in malpractice premiums which have occurred in many areas during the past one to two years.)

As a result of the low Medicaid reimbursement schedules, many anesthesiologists are being forced to consider refusing to accept Medicaid patients. In many instances, the Medicaid reimbursement rate does not even cover the anesthesiologist's direct cost of doing business, a cost which, of course, includes extremely high and ever-escalating malpractice premiums. In the large metropolitan areas, for example, anesthesiologists' professional liability premiums are as high as $18,000 to $30,000 annually. Thus, since anesthesiologists personally perform on the average 950 to 1,000 cases per year, their malpractice premium cost averages $18 to $30 per procedure. Medicaid reimbursement frequently does not cover this cost. At one Pittsburgh hospital, for example, the average reimbursement under Medicaid is $18 per case. In addition, an unrealistic reimbursement ceiling ranging from $40 in Pennsylvania to $100 in several other states has been placed on Medicaid reimbursement. In those states, providing anesthesia care for complex and lengthy procedures, such as craniotomies and open heart operations of six to twelve hours duration, penalizes the anesthesiologist most severely. Furthermore, the fact that a higher incidence of malpractice actions are attributable to Medicaid patients increases the reluctance of the physician to care for these patients at these unreasonably low levels of compensation.

While anesthesiologists who have relatively few Medicaid patients can and will in all probability continue to subsidize those patients, as they have done for years, such a subsidy is impossible for anesthesiologists practicing in hospitals where a large percentage of the patients are Medicaid patients. In those hospitals, anesthesiologists will not be able to afford to practice, and anesthesiologists' care will become unavailable. The implications are clear. Despite the mandate of Title Nineteen that each state Medicaid program provide high quality care to Medicaid patients as a prerequisite to receiving federal funding, such care has already become unavailable in some areas simply because the State programs have consistently refused to pay for it. A specific provision mandating minimum payments under Medicaid is now necessary to ensure that the provision of quality medical care under Title XIX does not become simply a hollow promise. I would now like to point out two sections of S. 1470 which ASA believes should be clarified. Our views on these two sections coincide with those of the Society of Academic Anesthesia Chairmen (SAAC), an independent organization of anesthesiologists engaged in medical school and residency education in anesthesiology, and I am authorized to make these comments on SAAC's behalf as well as ASA's.

It is our understanding from members of the Senate Finance Committee staff that the actual intent of the sections in question coincides with our suggestions. However, ASA and SAAC believe that to avoid difficulties of interpretation in the future, the Committee should either clarify the language in the sections, or insert into the Committee report language specipcally indicating the Committee's intent.

1. PART B REIMBURSEMENT TO EDUCATORS

Section 12 of S. 1470 amends the definition of physicians' services to exclude services which a physician performs "as an educator, an executive, or a researcher". This is generally in accord with present BHI practice and with the policies underlying Part B reimbursement. Part B of Medicare provides supplemental medical coverage only to those eligible persons who choose to participate and who pay monthly premiums for their coverage. As both an accounting and an equitable matter, Part B reimbursement should be provided only for those services actually received by the particular patient who has obtained Part B coverage. The cost of services whose sole purpose is to teach other physicians or to provide for the smooth functioning of the hospital should be borne either by all the patients who use the hospital or by the teaching institution itself. Conversely, a specific patient care service should be reimbursed by the patient who receives that service. This is true whether or not an intern or resident learns from watching, or performing part of, that procedure. Otherwise, virtually all surgical and anesthesia care given in teaching hospitals, which include some of the finest hospitals in the country, would be given "free" to Medicare and private patients alike, for the most efficient, and the dominant, means of teaching surgical and anesthesia residents and interns is in the operating room. Denying reimbursement in this type of teaching setting would seriously impair the ability of the hospitals to train new physicians in these specialties.

I have been assured by the staff of the Senate Finance Committee that this is not an intended result of S. 1470. Instead, in S. 1470, the term "services performed as an educator" is intended to refer only to services performed in a classroom setting, not to individual patient care services which also are used to teach. To clarify this intention, ASA and SAAC recommend that the term "physicians' services" exclude only those services that a physician may perform as an educator when such educational function is not performed simultaneously and in connection with the personal performance or personal direction of an identifiable patient care service. In the alternative, language specifying this intent could be inserted in the Committee Report. (Suggested language is attachd to my statement.)

2. ANESTHESIOLOGY SERVICES

Section 12 of S. 1470 also states that "in the case of anesthesiology services", a procedure is "personally performed in its entirety" (and hence entitled to full reimbursement under Part B) when the physician performs certain specified activities. These activities are entirely reasonable and appropriate when the anesthesia services are administered to facilitate surgery, obstetric delivery, and the like. However, anesthesiologists now perform a varity of services outside the operating room. For example, anesthesiologists render extensive services in pain therapy clinics, intensive care units and respiratory therapy clinics. It would be quite impossible for those services to inIclude the activities specified in Section 12. For example, one activity listed is personal participation in "induction" and "emergence". Those terms are inapplicable to respiratory therapy. And indeed, staff members of the Senate Finance Committee have assured us that the listed activities are not intended to apply to respiratory therapy and other anesthesia services rendered outside the operating room.

However, we have found in the past that unless such intentions are embodied in the statute or in the Committee Report, problems do arise. Thus, ASA suggests that the listed activities refer only to "aneshesiology services, where anesthesia is administered to facilitate surgery, obstetric delivery, or special examinations.” Again, although ASA and SAAC would prefer a change in the statutory language, this result could also be accomplished through language in the Committee Report. (Suggested language is attached to my testimony.)

I would also like to confirm ASA's understanding that Section 12 of S. 1470 permits full Part B reimbursement to an anesthesiologist who performs each of the activities specified in that section so long as he is not responsible for the care of more than one other patient when he performs the most critical of those activities (namely, personal participation in the most demanding procedures in the anesthesia plan; following the course of anesthesia administration at

frequent intervals; and remaining physically available for the immediate diagnosis and treatment of emergencies). Thus, an anesthesiologist who is assisted by nurse anesthetists or other nonphysician personnel may receive full reimburement for each patient whose anesthesia he directs, so long as he does not direct the administration of anesthesia to more than two patients during the enumerated critical portions of the anesthesia plan. (If the anesthesiologist is responsible for more than two patients, but no more than four patients, he will be reimbursed at one-half of the Medicare-determined reasonable charge for each patient.)

This provision will permit anesthesiologists to delegate the more routine portions of the anesthesia plan to trained nonphysician personnel without incurring a financial penalty for so doing-an important result given the fact that there are simply not enough anesthesiologists in this country to provide all needed anesthesia services. By mandating Medicare reimbursement where an anesthesiologist does effectively utilize his time and skill, this section will both lower anesthesia costs in the long run and make available the skills and knowledge of anesthesiologists to maximum number of patients.

In making these comments, however, I am constrained once more to emphasize to the Committee the fact that in terms of optimal medical care, there is no substitute for the one-to-one relationship between anesthesiologist and patient. ASA's support for those portions of the bill which contemplate reimbursement in another context-that is, where the anesthesiologist directs care provided by nonphysicians under his responsibility and control-rests upon the recognition that in many communities, there are insufficient anesthesiologists to provide this optimal form of care. In these situations, we believe, the best practical solution is to encourage the anesthesiologist where possible to assume a medical direction function, so that his medical skills are available to the maximum number of patients consistent with sound medical care for each.

Finally, ASA would like to comment upon Section 15 of S. 1470, which is entitled "Use of approved relative value schedules." This section sets up a procedure for HEW to establish a system of procedural terminology and of relative values which would provide a basis for the reimbursement of physicians by Medicare. Most significantly from ASA's viewpoint, this procedure explicitly provides for the participation of physicians, through their medical societies, in the process of determining relative values. This provision, while it falls far short both in philosophy and methodology from that advocated by ASA, is nonetheless a step in the right direction. Quite apart from its recognition of the constitutional right of physicians to petition the government to communicate their ideas and to protest injustices and outright errors in the method by which they are reimbursed, this provision accomplishes a very practical result. For as government carriers and private insurance companies have found over and over again, it is totally impractical to manage a health care delivery system without establishing channels of communication and cooperation between the administrators of the plan and physicians. In short, it is impossible to effectively administer that which you do not understand. A year or two ago, for example, the Bureau of Health Insurance promulgated regulations which provided Medicare reimbursement only for local anesthesia for cataract surgery, unless special justification in writing was provided for the use of general anesthesia. Reimbursement for cataract operations would no longer be generally provided for the services of a surgeon's assistant or, as a practical matter, for the services of an anesthesiologist. Because of the increasing average age of our patients and the frequency of cataracts in the elderly, both opthamologists and anesthesiologists were justifiably concerned. An increased number of elderly patients with heart disease, high blood pressure, and chronic lung disease are requiring cataract surgery. Even if they do not receive a general anesthetic, they benefit from the intravenous sedation, oxygen by nasal cannulae, and constant electrocardiographic and respiratory monitoring that the anesthesiologist provides. Thus, it was clear that BHI's reimbursement policies-which failed to reflect valid medical needswould adversely and seriously affect the quality of medical services rendered to the elderly. These medically inappropriate regulations were finally withdrawnbut only after a combined effort on the part of the national societies representing anesthesiologists and ophthamologists.

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