DETAILED SUMMARY OF THE PROVISIONS OF H.R. 3920, HOSPITAL INSURANCE ACT OF 1963 PROHIBITION AGAINST ANY FEDERAL INTERFERENCE The bill specifically prohibits the Federal Government from exercising supervision or control over the practice of medicine, the manner in which medical services are provided, and the administraion or operation of medical facilities. FREE CHOICE BY PATIENT GUARANTEED The bill specifically provides that the beneficiary may receive services from any participating provider of his own choice. ELIGIBILITY The proposal is limited to coverage of the aged because the aged as a group have low incomes and high medical care expenses. Moreover, they are at a period in life where their incomes and assets are more likely to go down than up. Their income is, on the average, about half that of those under 65; at the same time they require three times the hospital care of younger people. Furthermore, since most aged people are not employed they have in general no opportunity to obtain economical group insurance. The individual or nongroup health insurance that may be available to them is often twice as exepensive for the same benefitsbecause of higher acquisition cost, premium collection cost, and other administrative costs as group insurance would be. Under the bill, hospital insurance protection would be provided for all people who are aged 65 and over and entiled to monthly old-age or survivors insurance benefits or to benefits under the Railroad Retirement Act. An individual would be eligible for hospital insurance protection at age 65 even though his monthly cash benefits are being withheld because of earnings from work. In addition, protection would be provided, under a special provision of the plan, to many people aged 65 and over who are not eligible for benefits under the social security or railroad retirement systems. Almost all of the more than 18 million people who will be age 65 and over in January 1965 would be protected under the proposal. The few not protected under the legislation would consist for the most part of retired Federal civilian employees, who have their own health insurance program, and aliens with relatively short residence in the United States. Of the people protected under the proposal, about 15 million would be covered as persons eligible under the old-age and survivors insurance or railroad retirement programs and about 24 million would be protected under the special provision. Under the special provision, aged people who are not insured for cash benefits under the social security or railroad retirement systems would be deemed insured for hospital and related benefits only. Uninsured people who reach age 65 in 1967 would be deemed to be insured for hospital benefits if they had earned as few as six quarters of coverage in covered work at any time-nine fewer quarters of coverage than men of this age need to quality for cash social security benefits. For people who reach age 65 in each of the succeeding years, the number of quarters of coverage needed to be insured for hospital insurance protection would increase by three each year. Thus the provision would not apply to women who reach age 65 in 1971 (or later) and men who reach age 65 in 1972 (or later), since in those years the number of quarters that would be required to qualify for hospital benefits would be the same or greater than the number required for social security cash benefits. The cost of the coverage for aged persons who do not meet the regular insured status requirement of the social security law would be met from general revenues. Thus, the provision of the same hospital benefits for persons who are not fully insured under the social security system would not be inconsistent with the principles upon which the system is based. Funds obtained through the application of social security contributions would be used only to pay benefits of those who have contributed over a sufficient length of time to acquire insured status, and over the long run only persons who make significant contributions would be eligible for benefits. BENEFITS PROVIDED The bill would provide payments for inpatient hospital services, followup care in a hospital-affiliated skilled nursing facility, certain organized home health agency services and hospital outpatient diagnostic services. Inpatient hospital services were selected as the point of concentration in the bill because of the great financial strain placed on people who must go to the hospital. Medical expenses for aged people who are hospitalized in a year are about five times greater than the annual medical bills of aged people who are not hospitalized, and hospital costs account for the major portion of the difference between the health bills of the hospitalized aged and those not hospitalized. Further, the occurrence of hospitalization one or more times in old age is to be expected. It is estimated that 9 out of every 10 people who reach age 65 will be hospitalized at least once before they die; 2 out of 3 will be hospitalized 2 or more times. Another reason for placing primary emphasis on protection against the cost of hospital care is that hospital insurance is the part of the protection against health costs on which there is the most experience in this countrythrough Blue Cross and other Government programs-with the result that adequate models for administration are available. BENEFICIARY OPTION Under the bill, payment would be made for up to 90 days of inpatient hospital services, subject to a deductible amount of $10 a day for up to 9 days (with a minimum of $20), unless the beneficiary exercises his option to receive inpatient hospital benefits for either (1) up to 45 days with no deductible or, (2) up to 180 days with a deductible amount equal to the average daily cost of 21⁄2 days of hospital care. The provision under which each beneficiary could choose among three alternative hospital benefit plans enables the beneficiary to select the plan which he thinks is best suited to his needs. Hospital services SERVICES FOR WHICH PAYMENT WOULD BE MADE The proposed inpatient hospital benefits would (except for the deductible amount applicable under two of the beneficiary options) generally cover the full cost of all hospital services and supplies of the kind ordinarily furnished by the hospital which are necessary in the care and treatment of its patients. The full coverage follows the recommendations of the Commission on Financing of Hospital Care and other expert groups studying hospital insurance. As hospitals acquire new equipment, adopt new health practices, and improve their services and techniques, the additional operating costs resulting from such changes would automatically be covered under the proposal without need for modification. Thus, coverage would always be up to date. Furthermore, this built-in responsiveness to changing medical practices and needs would provide assurance that the program would provide the proper financial underpinning to improvements in care. Skilled nursing facility services The bill would provide payments for the cost of hospital-affiliated skilled nursing facility services in cases where a hospital inpatient is transferred to such a facility to continue to receive professionally supervised skilled nursing carewhile under the care of a physician-needed in connection with a condition for which he had been hospitalized. The requirement that the patient have been transferred from a hospital is one of the measures included in the bill to limit the payment of nursing home benefits to persons who may reasonably be presumed to require continuing skilled nursing care and for whom the nursing facility provides an alternative to continued hospitalization. Home health care services Payments would be made for visiting nurse services and for other related home health services when furnished by a public or nonprofit agency in accordance with a plan for the patient's care that is established and periodically reviewed by a physician. Since the nature and extent of the care a patient would receive would be planned by a physician, medical supervision of the home health services furnished by paramedical personnel-such as nurses or physical therapists— would be assured. Outpatient diagnostic services In the case of outpatient hospital diagnostic services, payment could generally be made for any tests and related services that are customarily furnished by a hospital to its outpatients for the purpose of diagnostic study. Payment would only be made for the more expensive diagnostic procedures because a $20 de ductible amount would be applied for each 30-day period during which diagnostic services are furnished. Patient's need and economy served The bill provides payments for skilled nursing facility care, home health agency services, and hospital outpatient diagnostic studies in order to promote the economical use of hospital inpatient services. In doing so, the proposed legislation would support the efforts of the health professions to limit the use of hospital beds to the acutely ill who need intensive care and to make more efficient use of other health care facilities. Moreover, coverage of these services is consistent with the recommendations made by authorities who have studied the causes and effects of improper utilization of hospital care. For example, the availability of protection against the costs of outpatient hospital diagnostic tests would avoid providing an incentive to use inpatient hospital services in order to obtain coverage of the cost of diagnostic services. The availability of this protection would also give support to preventive medicine by meeting part of the costs of expensive procedures that are essential in the early detection of disease. INCLUDED AND EXCLUDED SERVICES Under the bill, payment would be limited to health services which are essential elements of the services provided by hospitals. Since the primary purpose of the proposal is to cover hospital costs and a major reason for the coverage of other services is to provide economical substitutes for hospitalization, the proposed legislation is framed to permit payment for skilled nursing facility, home health, and hospital outpatient diagnostic services only to the extent that they could be paid for if furnished to a hospital inpatient. Thus the outer limits on what the proposed program would pay for are set by the scope of inpatient hospital services for which payment could be made. Services covered outside the hospital are more limited than those in the hospital. Following is a description of the various services for which payment would be made under the bill. Room and board Payments would be made for room and board in hospital and skilled nursing facility accommodations. Generally speaking, accommodations for which payment would be made would consist of rooms containing from two to four beds. Covered accommodations are described by number of beds, rather than the frequently used designation of "semiprivate." The differences that exist among hospitals in the use of the term "semiprivate" would create an undesirable lack of uniformity of benefits provided. Payments could also be made for more expensive accommodations where their use is medically indicated. Where private accommodations are furnished at the patient's request, the payments that would be made would be the equivalent of the reasonable cost of accommodations containing two to four beds. Room and board would not, of course, be paid for where the beneficiary is receiving care under a home health plan. Nursing services Payments would cover all hospital nursing costs, but not private duty nursing. Private duty nursing would not be paid for since it can be expected that the nursing services regularly provided by hospitals and skilled nursing facilities which would participate in the program would almost always adequately meet the nursing needs of their patients. Payments for home health services would only cover part-time or intermittent nursing care such as that provided by visiting nurses. Where more or less continuing skilled nursing care is needed, an institutional setting is more economical and generally more suitable. Physicians' services The cost of physicians' services would not be paid for under the proposal except for the services of hospital interns and residents-in-training, and for the professional component of certain specified ancillary hospital services described below under "Other health services." The bill would cover the cost of the services that hospital interns and residentsin-training furnish but only while they are participants in teaching programs that are approved by the American Medical Association's Council on Medical Education and Hospitals. This coverage of the services of interns and residents is in agreement with the generally accepted principle of hospital payment that third parties should contribute a fair share toward the hospital costs-in large part consisting of educational costs of interns and residents. Drugs Under the bill, payment could be made for drugs furnished to hospital and skilled nursing facility patients for their use while inpatients. The bill would provide payment for drugs which are approved by the hospital's pharmacy committee or its equivalent-or which are listed in the U.S. Pharmacopoeia, National Formulary, New and Non-Official Drugs, or Accepted Dental Remedies. A hospital's drugs must, of course, meet the standards established by these formularies in order for the hospital to be accredited by the Joint Commission on Accreditation. Assurance of satisfactory control over drugs in nursing facilities is provided through the requirement that the nursing facility-hospital affiliation agreement include provision for standards on use of drugs. The drugs prescribed for a patient as part of his home health care would not be paid for under the proposed program. The decision to exclude the cost of drugs from home health service payments is part of the more basic decision not to provide coverage of drug and other outpatient therapeutic costs under the program. The coverage of drugs outside the institutional setting would, of course, add greatly to the cost of the program and would present exceedingly difficult problems in limiting payment to needed drugs and covering the payment of a multitude of small bills without excessively cumbersome and expensive administration. Supplies and appliances Under the proposal, payment would be made for supplies and appliances so long as they are a necessary part of the covered health services a patient receives. For example, the use of a wheelchair, crutches, or prosthetic appliances could be paid for as part of hospital, nursing facility, or home health services but payments would not be made for the patient's use of these items upon discharge from the institution or upon completion of the home health plan. Extra items, supplied at the request of the patient for his convenience, such as telephones in hospitals, would not be paid for. Medical social services Payments would cover the cost of the medical social services customarily furnished in a hospital, as well as such services furnished in a skilled nursing facility or as part of a home health plan. Such services often perform the important function for the aged of facilitating a return to normal life at home. Other health services Payment would be made for the various ancillary services customarily furnished as a part of hospital care, including various laboratory services and X-ray services and use of hospital equipment and personnel. Among the covered services would also be physical, occupational, and speech therapy. Payment for ancillary services would cover the costs of services rendered by physicians in four specialty fields-anesthesiology, radiology, pathology, and physiatry-where the physician furnishes his services to an inpatient as an employee of the hospital or where he furnishes them under an arrangement with the hospital which specifies that payment to the hospital for the services he performs discharges all liability for payment for the services. Thus, whether the services of any particular specialist are covered would depend entirely upon the arrangement between the physician and the hospital. The chart below lists the specific kinds of hospital and related care for which payments could be made and those which would not be covered. LIMITATIONS ON PAYMENT The bill includes a number of limitations on the payment of hospital and related benefits, primarily because of considerations of cost and priorities of need. The deductible provisions and the other limitations on inpatient hospital and skilled nursing home payments would be applied on a "benefit period" basis. In general, the "benefit period" would coincide with the beneficiary's episode of illness. Under the proposal, the benefit period would begin with the first day in which the patient receives inpatient hospital services for which payments could be made and would end after the close of a 90-day period during which he was neither an inpatient in a hospital nor a skilled nursing home; the 90 days need not be consecutive, but they must fall within a period of not more than 180 consecutive days. This limitation is designed to provide a cutoff point in the payment of benefits for persons who are more or less continuously institutionalized persons without, however, denying payment for persons who suffer repeated episodes of serious illness. |