Concerns have been expressed to the committee regarding the precarious nature of the current authority for Medicare payments. Various specific concerns have been raised, as well. Among these concerns are: the ineligibility of community centers that are comparable to those receiving Medicare payments but are not receiving PHS grants under the two sections noted above; constraints on the range of covered benefits; inadequate reimbursement; and potential liability under the anti-kickback provisions of the Medicare statute for waiving deductibles and coinsurance for indigent patients. (Under the terms of their grants from PHS, these centers must charge patients on a sliding scale, based on the patients' ability to pay.)

The committee bill would provide statutory authority for Medicare payments to these health centers. The bill would essentially treat these centers, for coverage and reimbursement matters, in the same manner that rural health clinics are treated under the current statute. In particular, it would extend eligibility to additional centers, would expand covered services, waive the Medicare Part B deductible, and protect the centers from violations of the anti-kickback provision.

Sec. 4015-Physical and Occupational Therapy Services

Outpatient physical therapy and occupational therapy services are reimbursed under Medicare in a variety of settings and by a variety of methods. Among these, they are covered when furnished by an independently practicing therapist (i.e., services that are neither part of the services of an organization or agency nor furnished under arrangements with an organization or agency) in the therapist's office or in the patient's home. In this situation, the services are reimbursed on a charge basis, but there is a statutory maximum of $500 per year on the amount Medicare will recognize. (Medicare pays 80 percent of the recognized amount.) This amount has remained unchanged for many years and there is a growing concern that it creates a barrier to appropriate care.

The committee bill would increase the upper limit for these services to $750 per year. It would also request the Comptroller General to undertake a comprehensive study of how physical therapy and occupational therapy services are covered and reimbursed under Medicare. The committee is interested in a better understanding of how such services are furnished in various settings and under various conditions, the effects which Medicare requirements have on the availability and quality of such services, and the appropriateness of the reimbursement rules. The study would be due January 15, 1991.

Sec. 4016-Study of Reimbursement for Ambulance Services

Ambulance services are currently covered under Part B of Medicare and reimbursed on a charge basis. Reimbursement has been restrained by the Medicare economic index, as well as being subjected to the freezes imposed on Part B charges under previous budget reconciliation acts and the "inflation-indexed charge" restraint promulgated by the Health Care Financing Administration in 1986. Meanwhile, many ambulance providers have been subject to increased regulatory requirements, from State and local govern

ments, regarding the scope and quality of the services they must provide. As a consequence, there is growing concern that the level of Medicare payments is inadequate to assure reasonable access to appropriate ambulance services.

The committee recognized these concerns, but concluded that it did not have sufficient information and analysis to undertake a reform of Medicare payments at this time. The committee bill, therefore, includes a study to be undertaken or arranged by the Secretary of HHS of the appropriateness of Medicare payment rates. The committee is interested in a comprehensive review of the various types of ambulance services and the conditions under which they are furnished, as well as an analysis of the effects which the current payment rules have on the availability and quality of services. The study results, and any recommendations from the Secretary for policy changes, would be due one year after enactment.

The committee is advised that the Health Care Financing Administration has been reviewing the coverage and reimbursement of air ambulance services, with a view towards potential changes in the current policies governing these services. While the committee does not have a view at this time on the merits of these issues and is interested in having them included in the study, the committee does not intend for HCFA to withhold policy changes which it might otherwise make, in order to await the outcome of this study. Sec. 4017-Physician Payment Review Commission Study of Assistants at Surgery

Medicare currently reimburses under Part B for the services of a surgeon or a physician assistant, acting as an assistant at surgery. The former are reimbursed on a the basis of reasonable charges and the latter on the basis of special charge rules enacted in the Omnibus Budget Reconciliation Act of 1986. Other health care practitioners, including residents and registered nurses with special training for this purpose, perform these services.

The committee is interested in a comprehensive review of the appropriateness of the use of assistants at surgery, including the appropriateness of current Medicare policies on coverage and reimbursement. The Congress had previously asked the Physician Payment Review Commission to study the issue of what surgical procedures should require prior approval of the assistant at surgery, as a condition for Medicare reimbursement. The committee bill would expand the previous request of PPRC to include the broader study described above.

Sec. 4018-Study of Reimbursement for Blood Clotting Factor for Hemophilia Patients

Of the Nation's 20,000 people with hemophilia, 6.5 percent-approximately 1,300-are Medicare beneficiaries and most of these are on Medicare because of disability. Most hemophiliacs are dependent on clotting factor which makes their blood clot normally and prevents bleeding. Uncontrolled bleeding into joints and muscles causes crippling. Some hemophiliacs face life-threatening hemorrhages. Advances in management or acute bleeding episodes have brought a remarkable change in the lifestyle of persons with

hemophilia, significantly reducing morbidity, disability, days lost from work or school, unemployment and patient costs.

In recent years, partly in response to the spread of Acquired Immune Deficiency Syndrome, the blood products industry has developed virally-safe, highly purified clotting factor concentrates through the use of monoclonal antibodies. Many physicians treating hemophiliacs prefer these products over heat-treated products out of a belief that they have a reduced risk of transmitted viruses or contamination with extraneous blood proteins and a better record of efficacy.

However, the cost of these products has in some cases has at least doubled over the past 5 years. According to Glen F. Pierce, et al, in a June 16, 1989 Journal of the American Medical Association article, average treatment costs have escalated from $10,000 to more that $60,000 per year. The reasons for the increase in price are not clear to the committee at this time.

The committee is concerned that Medicare reimbursement rates for clotting factor have not kept pace with these medical and technological developments and is directing the Department to conduct a study, within 6 months of enactment, to review the current methodology for reimbursing for blood clotting factor under part B of Medicare and to evaluate the effect of current reimbursement rates on the accessibility and affordability of clotting factor to beneficiaries. The committee expects the Department's report to include recommendations. The committee recognizes that definitive human studies to demonstrate unequivocally the superiority of the newer clotting factor concentrates would be beyond the time frame of this study. The committee expects the Department to look to the best judgment of the medical profession and the basic science literature on viral and immune aspects of blood products in making its recommendations.

Subpart 3-Changes in Coverage and Miscellaneous

Sec. 4021-Mental Health Services

Psychotherapy and other treatments for mental illness and disorders are covered under Part B, subject to various conditions that can be a restraint on access. Services furnished by psychologists are currently covered only in community mental health centers. In addition, the patient is responsible for 50 percent coinsurance, instead of the standard 20 percent, and the maximum amount of Medicare reimbursement is $1,100 per year.

The committee bill would expand access to mental health benefits through several measures. It would eliminate the $1,100 annual limit, while retaining the 50 percent coinsurance. It would also cover the services of clinical psychologists and clinical social workers, to the extent such services would have been covered if furnished by a physician and if the services are ones which the psychologist or social worker is legally authorized to perform under State law.

The committee was concerned that a patient receiving mental health services might have physiological or medical problems, or be suffering from drug reactions or interactions, that are contributing to or causing his or her mental illness or disorder. This concern is

particularly warranted in the case of elderly patients, who often have multiple health problems and frequently are taking one or more prescription drugs. To make sure that such problems are detected, the bill would also require the psychologist or social worker furnishing mental health services to take appropriate measures to inform the patient about the desirability of seeing his primary care physician and to notify that physician of the care being furnished to the patient.

Sec. 4022-Nurse Practitioner Services

In the Omnibus Budget Reconciliation Act of 1986, the Congress authorized coverage and reimbursement for the services of physician assistants. Previously, such services had only been covered when furnished "incident to" a physician service. The 1986 provision, which was initiated by this committee, covered the services of a physician assistant when furnished in a hospital or nursing home or as an assistant at surgery. An amendment in 1987 added services furnished in a physician's office located in a rural health manpower shortage area. The 1986 provision also included a special payment formula and several other conditions on coverage and payment. The principal objective of this provision was to increase the delivery of appropriate services to residents of nursing homes. A Medicare demonstration program was indicating that furnishing physician assistant services on a regular basis to nursing home residents improved the quality of care and greatly reduced the need for hospital services.

Nurse practitioners perform many of the same services as physician assistants and do so in a generally comparable manner. They were also part of the Medicare nursing home demonstration project noted above. The committee bill would add nurse practitioners to the provision authorizing payments for physician assistants. It would generally apply the existing conditions and requirements to nurse practitioners, except that nurse practitioners would be required to work "in collaboration" with a physician (as defined in the statute), rather that acting "under the supervision" of a physician.

The committee bill also contains another provision designed to assure proper utilization of these services by nursing home residents. It would require the Secretary to instruct the Medicare carriers to develop utilization review mechanisms which permit payments, on a routine basis, for up to one-and-a-half visits per month per resident by a members of a team consisting of a physician and a physician assistant or nurse practitioner. It is the committee's understanding that, to be practical at this time, this review would have to be carried out on a patient-by-patient basis, although it would clearly have to be done by averaging the number of visits for a particular patient over several months. Moreover, the review is not intended to preclude medically necessary visits to a patient, but rather to act as a screen to monitor routine visits. The bill also contains a provision requiring the Secretary to conduct at least one demonstration project to determine whether this screening provision can be implemented by averaging the number of visits for a given month over all of the patients being furnished services by the team.

Sec. 4023-Coverage of Screening Pap Smears

Medicare generally does not cover screening or preventive services. Exceptions to this include flu vaccinations, pneumococcal vaccinations, hepatitis B vaccinations, and mammography screenings. According to the recently published report of the U.S. Preventive Services Task Force (Guide to Clinical Preventive Services, 1989) pap smears, used to detect cervical cancer, are another important screening service.

The committee bill would authorize payments for pap smears, including a physician's interpretation of the results, in accordance with frequency guidelines recommended by the Task Force. As a general rule, the exam would be reimbursed once every 3 years, but could be furnished more frequently in accordance with factors identified by the Secretary which indicate the patient is at high risk. The committee expects the Secretary to consult the Task Force report when implementing this provision.

Sec. 4024-Rural Health Clinic Services

Rural health clinics are reimbursed under Medicare in accordance with extensive conditions and requirements. When these provisions were enacted in 1977, the Congress anticipated there would be a large number of clinics established, but this has not proven to be the case. The committee report includes several provisions designed to promote the development of rural health clinics and improve access to their services.

First, it would change the current regulatory requirement that clinics have a physician assistant or nurse practitioner available to furnish services at least 60 percent of the time. It would change the rule to 50 percent and would allow the clinic to count the time of a nurse mid-wife.

Second, the bill would include coverage of clinical social workers among those who can furnish services at a rural health clinic.

Third, the bill would expand the number of areas which are eligible to have a qualified rural health clinic. Under current law, the area must be rural and must have been designated by the Secretary of HHS either under section 1302(7) of the Public Health Service Act as having a shortage of personal health services or under section 332(a)(1)(A) of that Act as being a health manpower shortage area. The committee bill would allow governors, with the approval of the Secretary, to designate additional rural areas as having a shortage of personal health services for purposes of being qualifying under this provision. It would also cite additional sections of the Public Health Service Act which, if a rural area has been designated by the Secretary for purposes of that Act, would serve to qualify the area under this provision.

Fourth, the bill requires the Secretary, in consultation with the Office of Rural Health Policy, to disseminate information on how to qualify to become a rural health clinic to appropriate agencies within 60 days of the enactment of this provision.

Fifth, the bill permits the Avalon Municipal Hospital on Santa Catalina Island to qualify as a rural health clinic. Avalon is the sole hospital and outpatient provider for the island's residents and tourists. Under the Rural Health Clinic Act, a rural health clinic