in expenses at the physician's office practice; in effect denying to the physician a fair consideration of actual economic changes affecting his total economic life.

Apart from these serious objections to the regulations as adopted, we feel compelled to reiterate our request that Congress seriously consider amending or repealing section 224 of Public Law 92–603.

We believe that Congress may have failed to adequately appreciate the extent of its discrimination in placing physicians in a separate category from the rest of the producing elements of the economy.

While we understand the congressional concern over the rising cost of the medicare program, and the rapidly depleting social security reserves, it is most unfortunate that cost savings in the program have been construed to justify direct price control of a single profession.

But, more importantly, this "cost savings device" will ultimately have its most significant impact on the medicare patient. He will have to carry an increasing portion of the real cost of this medical care, for the economic factors which necessitate increases in physicians' charges are real and cannot be ignored.

Thus, physicians will either collect the balance of the true cost of the services from the medicare patient or pass on the medicare "losses" to his private patients, forcing those patients to subsidize the medical care for a segment of the population.

This amounts to an indirect social security surcharge. We believe this committee would wish to have a tax called a tax and its incidence shifting and ultimate burden carefully considered and consciously enacted.

In summary, we have serious reservations about the possible adverse effects of section 224 on patients and physicians. Further, we believe that the regulations implementing the provision are not in conformity with the law and impose restrictions beyond those intended by Congress.

We would, therefore, respectfully request that this committee reconsider the appropriateness of the economic index provision, both as drawn in regulation, and in basic principle.

Mr. Chairman, this concludes our formal remarks. We again thank you for giving us the opportunity to participate in these important hearings and will be happy to respond to any questions you may have. Mr. ROSTENKOWSKI. Thank you, Dr. Taylor.

Are there any questions?

Mr. CRANE. Yes. Dr. Gabriel, I looked over your testimony and I think you had a reference to the confidentiality of doctor-patient records, which is a matter of much concern to me with respect to the PSRO legislation.

I am in the process of trying to draft a bill that would guarantee the confidentiality of doctor-patient records, and I would only make the request to you that any thoughts you have on that we would appreciate hearing from you before submitting the final draft of that for legislative approval.

Dr. GABRIEL. Thank you.

Mr. ROSTENKOWSKI. Thank you. Doctor.

Dr. Lawrence Kerr, if you will identify yourself and I don't know whether you have to identify the gentlemen that you are associated

STATEMENT OF DR. I. LAWRENCE KERR, REPRESENTING THE AMERICAN DENTAL ASSOCIATION AND THE AMERICAN SOCIETY OF ORAL SURGEONS; HAL CHRISTENSEN, DIRECTOR OF WASHINGTON OFFICE; EDWIN COHEN, COUNSEL TO THE AMERICAN SOCIETY OF ORAL SURGEONS

Dr. KERR. Thank you, Mr. Chairman, members of the subcommittee. I am Dr. I. Lawrence Kerr of Endicott, N. Y., where I am a practicing dentist specializing in oral surgery. I am a member of the Board of Trustees of the American Dental Association. I also am chairman of the Committee on Legislation of the American Society of Oral Surgeons. I speak in a representative capacity for both organizations. Mr. Hal Christensen, director of our Washington, office, and Mr. Edwin Cohen, counsel to the American Society of Oral Surgeons, are with me today.

In the interests of the time constraints under which the committee is operating, I will limit my oral testimony to problems with respect to the role of dentists in the existing professional standards review program.

I would request permission to submit for the record supplemental statements dealing with H.R. 5515 introduced by Representative Karth; the use of economic indexes for determining allowable increases in reasonable charges under medicare; and recomended amendments to eliminate inequities and discriminatory practices regarding coverage of oral surgical services and hospital dental services under medicare and medicaid.

Mr. ROSTENKOWSKI. Without objection.

Dr. KERR. Also attached as an appendix is a copy of a resolution adopted last November by the House of Delegates of the American Dental Association expressing the official policy of the association on the present PSRO program.

PROFESSIONAL STANDARDS REVIEW ORGANIZATIONS

At the outset I would like to commend the chairman and members of the subcommittee for including part B of title XI of the Social Security Act, Professional Standards Review, as one of the topics for discussion at this hearing.

We believe this is extremely important and timely because, as you know, this controversial component of the Social Security Act, unlike virtually all of its other parts, was not the subject of hearings before the Ways and Means Committee prior to enactment.

Our most basic concern is that while the PSRO law is made applicable in its opening section to all "health care services for which payment may be made (in whole or in part)" under the Social Security Act, there is no statutory mandate that the review process established in the remaining sections of the law will be "peer review" in the case of members of the dental profession. Existing law does not require that review of a dentist's professional acts shall be by other dentists. Our concern over this omission is serious and substantive. Dentists are members of the medical staffs of most hospitals; more than 15,000 dentists regularly admit patients to hospitals; inpatient admissions for dental treatment are estimated at well over million per year and

many inpatient admissions by other services involve dental consultation and treatment.

A large number of dentists are now providing hundreds of millions of dollars annually in dental services under titles V, XVIII, and XIX, a significant portion of which is provided in hospitals.

Additionally, the law permits expansion of PSRO's to ambulatory services which eventually may involve all of the Nation's 100,000 practicing dentists. The effect of the law upon the dental profession would increase manifold if any of the pending national health insurance proposals is enacted since all of them provide substantial dental benefits and most are tied in with the PSRO provisions of title XI. Thus, it is clear that the practical effect of the PSRO law upon the dental profession is immediate and important.

The dental profession is willing to accept the responsibility of "peer review" whether that review is related to private insurance plans or public programs such as medicaid and medicare, but we do not believe it is reasonable to be subjected to the highly complicated and exacting PSRO system without having entitlement to representation in its development, operation, and final adjudicatory functions.

In this connection, it should be noted that the author of the PSRO law. Senator Bennett, assured our association witness in February 1972, during hearings on H.R. 1. "that the language of the bill, as it is finally adopted, if any peer review is adopted, will make sure that only dentists review the work of dentists."

Unfortunately, and presumably through oversight, this assurance was not carried over into the statutory mandate. As a result, we have been informed verbally by the Department of Health, Education, and Welfare that none of the 63 conditional PSRO's thus far approved has established a formal arrangement with dental practitioners for the development of standards, criteria, and the review of dental services.

Nor do we foresee the establishment of such arrangements or expect that if established they would be workable or practical under the terms of existing law.

We therefore urge this committee to exercise its oversight responsibilities and prerogatives by adpoting appropriate remedial

amendments.

To assure the principle of peer review responsibility for dentists in fact as well as in concept, the statute should be amended (1) to mandate the participation of dentists in each PSRO and appropriate representation of dentists on the statewide and national Professional Standards Review Council; and (2) to assure (as the statute now provides in the case of doctors of medicine or osteopathy) that every PSRO must utilize the services of a duly licensed dentist to make final determinations with respect to the professional conduct of any other dentist.

In the case of dentistry, the present statutory restrictions confining participation in PSRO's to doctors of medicine and osteopathy are wholly unrealistic and are incompatible with the concept and definition of "peer review."

Peer review is a demanding concept to implement; its objections will be accomplished not by guidelines published in Washington but by the cooperative activities of practitioners throughout the country.

The way to assure true peer review of dental services is to give dentists a full participating role in all phases of the PSRO program involving dentistry.

We would be pleased to assist the committee in drafting appropriate language to carry out this objective.

I appreciate this opportunity to appear before the subcommittee today and I hope you will note the additional comments and recommendations in our supplemental statement. Thank you.

[The resolution and supplemental statement follow:]

1974 RESOLUTION OF AMERICAN DENTAL ASSOCIATION ON PSRO LAW Resolved, That the Association take action to assure full and equitable participation of dentists at all levels of the PSRO structure so long as dental services are being reviewed, and be it further

Resolved, That the Association pursue every option available to it to amend the Professional Standards Review Organization Act in those sections which present potential dangers to the profession and its patients, such as those dealing with confidentiality, quality of care, development of norms, standards and criteria and the authority of the Secretary of the Department of Health, Education, and Welfare, and be it further

Resolved, That the Association favors repeal of the law if its implementation demonstrates that it permits unwarranted interference with appropriate judgments made by professional health providers or if it adversely affects the peer review machanisms already developed and supported by the dental profession that protect the health interests of the nation's dental patients.

AMERICAN DENTAL ASSOCIATION SUPPLEMENTAL STATEMENT

H.R. 5515-PROFESSIONAL STANDARDS REVIEW AMENDMENTS

This bill contains a large number of proposed amendments to the PSRO program, many of which are of importance to the dental profession and which we support.

In particular, we would support the provisions of section (3) (c) of the bill requiring the utilization of individuals for review activities who are actively engaged in the practice of their professions in the PSRO area. This is consistent with our view expressed earlier that review of dental services should rest with dentists and with the intent that review activities under the PSRO program should be by practicing health professionals who have most experience in the actual delivery of care and with the standards of quality that are desirable.

We also support the provisions of section (j) (a) of H.R. 5515 giving each PSRO needed authority to arrange for the maintenance of patient profiles of care and services received and which give the PSRO discretion to review these profiles on a regular, sample or other basis. Under this more flexible authority, each PSRO would then be able to relate its functions to the specific conditions faced in its area and provide its review of services accordingly.

The bill in section 4 would eliminate references to rigid norms of care and would call for the use of guides to be used as initial points of evaluation and review. It is the purpose of this provision, as we understand it, to emphasize the importance and to protect the exercise of professional judgement in health

care.

We support this provision because of our concern that norms or standards established under a federal program would become the only level of care which, out of necessity, would be followed by health professionals. Such rigidity, in our opinion, would interfere with professional judgement of practitioners and impede them from varying from the established norms while trying to serve the best interest of individual patients. As indicated above, flexible guidelines may be appropriate to establish initial points of review, but references to norms of care imply a strict adherence to established standards which we do not believe is desirable.

Section 5 of H.R. 5115 would give the PSRO flexibility in the reporting of violations. Instead of requiring the reporting of all violations, regardless of severity, to the statewide PSRO council, reports would be required only where

there is a substantial violation or a pattern of violation of an individual's obligations. We believe this flexibility is necessary and desirable.

We also support the provision in the bill establishing the penalty of suspension from the program rather than monetary penalties as provided in current law. Additionally, we favor, as the bill provides in section 7, deletion of the present provisions purporting to provide immunity from civil liability for practitioners who exercise due care and who comply with the PSRO's established norms. We have two basic concerns with this aspect of current law. First, it would tend to force strict compliance with the norms of care, possibly to the disadvantage of an individual patient where a deviation from the norm may be indicated in the professional judgment of the practitioner. Secondly, the words "due care" add nothing to existing common law since that is the issue that now is raised and adjudicated in any malpractice litigation. Thus, this provision of current law gives the health professional a false sense of security if he relies on adherence to the PSRO norms, reduces his freedom to exercise his best professional judgment, while still not providing him the protection implied in the law.

The bill contains very important provisions in section 12 aimed at maintaining the confidentiality of records held by the PSRO. We strongly urge enactment of these provisions since confidentiality of records is a keystone principle if practitioners are expected to participate and cooperate in the PSRO program.

Finally, the bill in section (3) (d) extends the PSRO requirements to the direct federal health care programs provided by the Veterans Administration and the Public Health Service. This would appear to be a logical and consistent expansion. The Association urges enactment of the foregoing provisions.

PRACTITIONER REIMBURSEMENT UNDER MEDICARE

Of further concern to the Association are the provisions in the Social Security Act (Section 1842(b) (3)) which allow the Secretary to regulate "reasonable” charges of physicians and dentists through the use of an unspecified economic index. While recognizing the concern of Congress with increasing health care costs, a concern we share, we have serious reservations about this section of the Act. As promulgated by the Secretary, the regulations under this provision are so vague as to be incomprehensible. Moreover, the system may or may not reflect the usual and customary charges of health practitioners in the various communities or many of the overhead components of a practice that are subject to inflationary pressures and contribute to the charges that are made for health services. In general, fees for dental services have risen at a slower rate than for other services. The acceleration that has occurred can be attributed to the period when artificial, selective and arbitrary controls were federally imposed upon the health industry. As time goes on these increases can be expected to again fall below the rate of increases for the general services sector of the economy.

Because of the history of responsibility on the part of the dental profession, the distortions and inequities that occurred during the imposition of selective controls and the vagueness of the index provision, the Association strongly recommends that this section of the Act be repealed as unworkable and unnecessary. Mr. ROSTENKOWSKI. Thank you, Doctor. Are there any questions? Mr. Crane.

Mr. CRANE. Thank you Mr. Chairman.

Dr. Kerr, there is only one error, I think, in your testimony with respect to PSRO's and that is there is no mandate absolutely that physicians or doctors of osteopathy will constitute the composition of a Professional Standard Review Organization because if a majority of the physicians under that jurisdiction do not approve, then the Secretary of HEW has the authority to name anybody he wants.

I think that is a deficiency in the language. I agree with you wholeheartedly; only dentists should review dentists: only physicians should review physicians. But I would be very careful about how that language is drafted because I think that was an inadvertent part of the PSRO bill that physicians did not immediately catch and I laud you for your insistence, that no one is competent to review dentists except fellow dentists. Thank you.