Suddenly, it appears that everybody wants to get into the act. However, there is the danger that a proliferation of profit-making HMOs could result once again in high incomes for providers instead of better health care for patients. The answer must be the development of consumer or community non-provider controlled HMOs. This is why H.R. 51 is so timely. The Subcommittee on Public Health and Environment has the opportunity to give direction to the HMO movement which will affect the quality, cost and availability of health care services now and in the indefinite future. We are sure this Subcommittee and the full Committee on Interstate and Foreign Commerce will accept this challenge. Why does the AFL-CIO have this interest in Prepaid Group Practice? It is because our experience has demonstrated to us that HMOs can provide qualified medical care at a lower cost than the fragmented fee, for-service system. Our members are enrolled in the Kaiser Foundation helath plan in California, Oregon, Hawaii, Ohio and Colorado. We have members who belong to the Health Insurance Plan of Greater New York (H.I.P.), Group Health Association here in Washington, D.C., Group Health of Puget Sound and others. All the reports we receive indicate these plans give the best value for the medical dollar. The first urban consumer controlled health plan was established in 1937 in Washington, D.C. It is Group Health Association, Incorporated. It has been in existence 36 years. Group Health of Puget Sound, a consumer cooperative, began operating in 1947, 26 years ago. The giant Kaiser Foundation Health Plan started in 1942, 30 years ago. The Health Insurance Plan of Greater New York (H.I.P.) has been operating 25 years. All were confronted with bitter-sometimes bordering on hysterical-opposition by organized medicine. All of these plans have been time-tested. They have through the years provided quality care at a lower cost than can be obtained from the fee-for-service system. Prepaid group practice has proven itself. The need for experimentation and demonstration is over. What is needed is a rapid development of a competing system to the present feefor-service, episodic, and crisis-oriented non system. If, indeed, prepaid group practice is more efficient, why is government support necessary? Simply because private capital is not willing to take the risks inherent in developing a new plan. These risks are substantial. Every new plan must have facilities, medical staff and an enrolled membership in the 20,000 range to be self-sufficient. It is impossible to open a health center on day one and have 20,000 members. With regard to private financing of start-up costs, our experience in Rhode Island is a good example. The Rhode Island Group Health Association has recently received a $500,000 loan from one of the major life insuranc companies at a rate of 9 percent. This loan was forthcoming only after the following events took place: (1) State enabling legislation was passed. (2) A battle for hospital privileges for RIGHA medical staff was won. (3) A medical staff was hired. (4) Out-patient medical facilities were leased and the facility remodeled and equipped at RIGHA's expense. (5) An initial enrollment of 7000 members was secured. What private entrepreneur would be willing to finance a new plan in the absence of the above achievements? RIGHA's experience is that no private financing became available until there was a reasonable assurance of the plan's success. If new HMOs are to be organized, Federal support for planning, development, capital financing and initial operation is essential. We have only one suggestion for improving H.R. 51-namely that prepaid group practice plans should not be required to provide a broader scope of benefits, other than prevention and health maintenance services, than their competitors. The most comprehensive Blue Cross, Blue Shield or commercial insurance benefit packages seldom include more than physician services, hospital out-patient and in-patient services and diagnostic services. The great majority exclude preventive services. It is essential that prepaid group practice plans have the flexibility to tailor their services to realistic expectations of potential buyers. We therefore recommend that the "basic health services" required under Sec. 1201 (2) be limited to preventive and curative physician services, in-patient and outpatient hospital services diagnostic laboratory and diagnostic and therapeutic radiological services. Dental services, eye care and home health services should be optional with the HMO. The AFL-CIO could then strongly support H.R. 51. We urge early and favorable consideration of the bill by the House Subcommittee and the full Committee on Interstate and Foreign Commerce. Mr. ROBAH KELLOGG, HOUSE OF REPRESENTATIVES, Washington, D.C., March 16, 1973. Director, Department of Home Health Agencies and Community Health Services, National League for Nursing, Inc., New York, N.Y. DEAR MR. KELLOGG: Thank you for your recent letter regarding hearings on Health Maintenance Organization legislation. Open hearings were held on March 6th and 7th on H.R. 51 and similar bills. The Subcommittee will be meeting in executive session on HMO legislation shortly and we hope to obtain Congressional approval in the very near future. I am forwarding your letter to the full Committee on Interstate and Foreign Commerce for insertion in the hearings record. King regards. Sincerely yours, PAUL G. ROGERS, M.C., Chairman, Subcommittee on Public Health and Environment. NATIONAL LEAGUE FOR NURSING, INC., Hon. PAUL ROGERS, Chairman, Subcommittee on Public Health and Environment, Committee on Interstate and Foreign Commerce, U.S. House of Representatives, Washington, D.C. DEAR MR. CHAIRMAN: We understand that the Committee on Interstate and Foreign Commerce is conducting closed hearings this week on newly introduced HMQ legislation-H.R. 51. Because of this we are taking the opportunity to reiterate our position as stated in testimony before your Committee during the 92nd Congressional session and in correspondence with you January 24 of this year. The Council and Assembly of Home Health Agencies and Community Health Services of the National League for Nursing is the national organization which represents over 1,400 agencies across the country. These agencies are the major providers of home health care in the nation. We are concerned that any legislation regarding the promulgation of Health Maintenance Organizations, enable these HMOs to provide a full range of preventative, curative and restorative services either directly or by contract with existing services in the community. To do otherwise would be costly to that community in terms of administrative overhead, qualified staff recruitment and retention and public confusion. We would appreciate it if the committee would consider these comments for the record and would ask that we be allowed to speak to these when public hearings are scheduled. Sincerely, ROBAH KELLOGG, Director, Department of Home Health Agencies and Community Health Services. AMERICAN PUBLIC HEALTH ASSOCIATION, Hon. PAUL G. ROGERS, DEAR MR. CHAIRMAN: This letter is addressed to you and to your Committee as you consider H.R. 51 and H.R. 4871, legislation proposed to develop health maintenance organizations. I am electing to forward the views of the American Public Health Association in this fashion, because on May 2, 1972, Drs. Kimmey and Roemer and Mr. Daniels presented extensive testimony on this issue before your Committee. The position of the American Public Health Association, as stated then, remains constant. This position, the testimony of the above-named representatives, and the discussion with the Committee which followed, can be found on pages 567 through 594 in Part Two of the 1972 hearings on H.R. 5615 and H.R. 11728, 92nd Congress. I wish to emphasize once again our concern relative to the need for the inclusion of safeguards in the legislation, in order to exclude participation by the unscrupulous H.M.O. sponsor who would profit at the expense of inadequate care for patients. As was made clear in the testimony of last year, we favor nonprofit or public sponsorship, influenced by substantial consumer participation. This does not necessarily preclude other alternatives, nor does it blanketly imply that non-profit programs are inherently good and those for profit are bad. Experience has shown, however, that controls must be incorporated in order to avoid abuses to the system: those that might sacrifice the enrollee's health needs to cost-cutting and profit-taking. The potential for this sort of abuse was the subject of some articles that appeared recently in the Los Angeles Times, which are attached for your consideration. A distressing example of what has, in fact, happened has been documented by the California Council for Health Plan Alternatives. Their report was prepared in the course of an investigation for a union considering enrolling its members in the California Medical Group (a proprietary plan). They recommended rejecting this program, which the union later did, on the basis of some of the following findings: 1. An unusually poor doctor/patient ratio (less than half of the average ratio for the state of California) and a resulting lack of availability of care for the enrollees; 2. An excessively low hospital utilization rate (only about one half or less the amount of hospital care used in other well-recognized group practice prepayment plans) to the point where "the question of whether needed hospitalization is actually being provided" has been raised; 3. Use, principally of a number of small, inadequate proprietary institutions "in an area in which excellent hospitals abound." 4. Lack of guaranteed availability of appropriate physician coverage on a 24 hour basis, and associated with this, the problem of continuity of care for the enrollees in terms of seeing a physician familiar with their case or medical history; 5. And insufficient guarantees that consultant specialists have been contracted with and will provide prompt treatment for enrollees. We offer this example to you as a means of conveying our concern over the need for developing proper safeguards for H.M.O. programs. Your consideration of the views of the APHA is appreciated. Please make this letter a part of the Hearing's record. Sincerely yours, MARGARET B. DOLAN, President AMERICAN COUNCIL OF MEDICAL STAFFS, Hon. PAUL G. ROGERS, House Office Building, Washington, D.C. DEAR SIR: We are writing to object to further promotion of Health Maintenance Organizations until those now in existence have been completely evaluated. We object because: 1. None have been proven successful. 2. They do not provide cheaper Medical Care. 3. We don't want "crisis legislation" to be enacted to relieve a crisis. We know of no H. M. O.'s that are successful. By successful, we mean one that does all that their advocates claim. Namely: lengthen life span, decrease infant mortality, and make a higher quality medical care more available at less cost. Kaiser Permanente Plan raised their rates 11% to 14% annually (from 1966 to 1970.) In 1971 there was an increase of 18%; in 1972 an increase of 12%. According to one poll taken of the Southern California Plan, 44% had sought medical care elsewhere. With this many seeking medical care outside of their own system, you can't arrive at an accurate cost figure. The cost advantages that some claim of the system do not reflect the truth unless one takes into account the 44% that sought medical care elsewhere. There is no "crisis" now. So, there is no need for any rush on "Crisis Legislation." Why not study the issues and let us furnish you more data on this subject? The Council of Medical Staffs are expert in this field. Yours for the Freedom of Private Practice, PAUL E. BRADY, M.D., Chairman, Florida West Coast Chapter of American Council of Medical Staffs. ASSOCIATION OF AMERICAN MEDICAL COLLEGES, Hon. PAUL G. ROGERS, In previous testimony, the Association emphasized the importance of including clinical training grants for professional personnel in any HMO legislation. The Subcommittee's original HMO bill in the 92nd Congress (HR 11728) included a section on grants for clinical training, which the Association supported. That section was dropped from the succeeding legislation last year (HR 16782), and the Association urged its reinstatement in a letter to the Chairman on September 14. Again in HR 51 there is no section for clinical training grants, and again the Association must express its great concern over this omission. The education of health personnel must be closely related to any system for providing health services. The HMO concept diminishes the traditional process of dealing with illness only when it occurs and it places new emphasis on maintaining health. Health personnel must be trained in the context of this approach, which means they must become thoroughly involved as students in the principles and techniques of preventive care. They must also gain an understanding of the differences in delivering health care to a defined population for a prepaid rate. The lack of understanding of the HMO has certainly produced some difficulties in recruiting physicians for present programs. If HMOs are to develop, it is important for medical students, interns, residents and other health professionals to have their clinical training within a framework which provides for the delivery of comprehensive, primary health care in a setting that stresses preventive care and the use of a variety of health personnel in a team approach. This learning experience requires certain extra educational costs, which must be met. The Association, therefore, strongly urges special federal assistance to cover additional HMO expenses associated with clinical training, so that such costs are not borne by HMO enrollees. Federal grants to cover these training costs should be equally available for accredited programs in all teaching HMOs. Support for clinical training grants comes from both the providers of health care in existing HMOs and the academic health centers that must develop HMO educational programs for students and house staff. We of the Association are familiar with the argument that any authority for clinical training grants in HMO legislation would duplicate similar authority in the Comprehensive Health Manpower Training Act of 1971. That argument appears to us to be irrelevant. In the absence of clinical training grant authority from the same government agency that provides other forms of HMO support, the complexity of attempting to negotiate a unified package of federal assistance could seriously hinder the development of teaching HMOs. Past experience has shown that when responsibility and authority are divided among multiple federal agencies, achievement of a central purpose or objective becomes frustrated, delayed and confused. No better example of this exists than the development of the Johns Hopkins program in East Baltimore, where more than a dozen government agencies at the federal, state and local levels entered the program with conflicting requirements, standards and regulations concerning construction, service and education. Confusion of this sort must not be allowed in a major new federal effort to support the national development of health maintenance organizations. Another important element that is not included in HR 51 is a mechanism for assuring that HMOs provide the highest quality of health care. The Association believes that nationwide uniformity of standards is imperative for the development of public confidence in this new system of health care delivery. Standards of excellence in the provision of health care must be established and maintained. A National Advisory Council on Health Maintenance Organizations, which would be required by HR 51, is a step in that direction. Since the Association of American Medical Colleges presented its full comments on HMO legislation to the Subcommittee so recently, it should be necessary at this time only to summarize our key points: full participation of academic health centers in HMO development is important in influencing the attitude, interest and involvement of physicians in HMOs; a dual option between an HMO and other health delivery methods should be retained; the comprehensive services required of an HMO in order to qualify for federal aid should not prohibit either the ability to provide them or to pay for them; legislation should emphasize a progressive enrollment policy aimed at producing an HMO membership representative of the geographic area being served; enrollment of high-risk populations should be subsidized; rigid requirements on enrollment from medically underserved areas should be avoided; HMO management training grants should be provided; and federal assistance should be available for the initial planning, developmental and early operational stages of HMOs. The Association feels strongly that the ultimate solution to the problem of more adequate health care cannot be achieved simply through enactment of yet another separate, categorical program of federal assistance. What is required is a clear, coherent and comprehensive national health policy supported by stable financing. This carefully developed policy should set forth the objectives to be sought, delineate the public and private roles, and provide the program strategy that will assure the availability of effective health services to all citizens. Toward this end, the Association urges coordination between the legislative considerations of a national health insurance system and a national health care system. The Subcommittee should have no doubt that the Association of American Medical Colleges supports prepayment of health services along the general lines of H.R. 51. We believe that the nation's academic health centers can make a significant contribution in the development of health maintenance organizations, drawing upon their direct experience with the problems of medical care and health services in the community setting. Indeed, four medical schools and one teaching hospital of the AAMC are working now through a contract from the Health Services and Mental Health Administration in the development of prototype HMOs. We believe that these projects will have a usefulness that the nation can share. We hope that the comments contained in this letter will be useful to the Subcommittee in your continuing consideration of HMO legislation. The Association and its staff are eager to provide whatever additional assistance the Subcomittee may require. We appreciate your attention. Sincerely, JOHN A. D. COOPER, M.D., President. ASSOCIATION OF UNIVERSITY PROGRAMS IN HOSPITAL ADMINISTRATION, Hon. PAUL G. ROGERS, DEAR MR. ROGERS: We understand that the Subcommittee just held hearings on H.R. 51 and H.R. 4871 relative to Health Maintenance Organizations. As we wrote some weeks ago, the universities which train management personnel for health services are deeply interested in the challenge of supporting the growth of HMO's. We want to respond with effective management training programs. |