Hon. DURWARD G. HALL, U.S. Representative from Missouri, MISSOURI HOSPITAL ASSOCIATION, Jefferson City, Mo., September 10, 1963. DEAR REPRESENTATIVE HALL: Enclosed is a resolution that has been sent to the Commissioner of Welfare Administration of the Department of Health, Education, and Welfare for immediate consideration. The resolution calls for reverting to the former method of payment for old-age recipients in the hospital program that prevailed for 2 years. A new dictate from the Welfare Administration of the Department of Health, Education, and Welfare has caused confusion with the patients and economic distress in many of our hospitals. The director of welfare in Missouri, is in sympathy with our request as we have functioned with little difficulty until the issuance of this directive from the Department of Health, Education, and Welfare to the State of Missouri, to change our procedure of reimbursement. We do not feel that the present method is equitable for the hospitals who are already underwriting a big percentage of these patients' bills. Up until the issuance of Bulletin PA 495, hospitals could recapture some of the unpaid bills through family, insurance, or other sources. We would appreciate your aid in helping to get us back on the previous method of payment which the Federal Government approved for 2 years. I am sure that Mr. Proctor Carter, director of welfare in the State of Missouri, who is sympathetic with our situation, would give you any information you desire about this program. The hospitals of Missouri thank you very sincerely for any consideration you might give in calling on the Commissioner of Welfare Administration, Dr. Ellen Winston, Washington, D.C., in the consideration of the enclosed resolution. Very truly yours, TED O. LLOYD, Executive Director. RESOLUTION Whereas the Missouri Division of Welfare on April 5, 1963, issued its Bulletin PA 495, wherein it outlined a change in the method of payment to hospitals for the services rendered indigent patients under the vendor payment program, pursuant to a directive promulgated by the Welfare Administration of the Federal Department of Health, Education, and Welfare; and Whereas since that date the Missouri Division of Welfare has been making such payments pursuant to said bulletin; and Whereas prior to the issuance of said Bulletin PA 495, the Missouri Division of Welfare paid each hospital's established per diem patient cost up to the maximum days and permitted the hospital to collect the balance of each account from any other available source; and Whereas the director of the Missouri Division of Welfare has stated that the change in method of payment to hospitals was required by the Federal Department of Health, Education, and Welfare, and was not in accordance with the desired policy of the Missouri Division of Welfare; and Whereas experience under the present method of payment has been most unsatisfactory to the hospitals of the State of Missouri, and has resulted in most unfavorable economic conditions within the hospitals participating in this program: Now, therefore, be it Resolved, That the Missouri Hospital Association is opposed to the present method of payment to hospitals under the provisions of the Missouri Division of Welfare Bulletin PA 495, dated April 5, 1963; be it further Resolved, That the Missouri delegation in Congress is urged to take all possible steps to cause the Federal Department of Health, Education, and Welfare to change its current policy so as to permit the Missouri Division of Welfare to revert to the former method of payment as quickly as possible; be it further Resolved, That the Missouri Hospital Association strongly urges the Welfare Administration of the Federal Department of Health, Education, and Welfare to change its policy and to recommend that the Missouri Division of Welfare revert to its former method of payment. CONGRESS OF THE UNITED STATES, Mr. PROCTOR N. CARTER, Director, Division of Welfare, State Office Building, Jefferson City, Mo. HOUSE OF REPRESENTATIVES, Washington, D.C., September 13, 1963. DEAR MR. CARTER: Will you please send me a copy of PA 495, dated April 5, 1963? This is a bulletin having to do with a revision of payment formula of hospitals participating in the vendor program. Dr. Winston and others here in Washington have only file copies. Thank you. DURWARD G. HALL, Member of Congress. DIVISION OF WELFARE, Jefferson City, Mo., September 20, 1963. STATE DEPARTMENT OF PUBLIC HEALTH AND WELFARE, Hon. DURWARD G. HALL, House of Representatives, Congress of the United States, Washington, D.C. DEAR MR. HALL: You have received a resolution from the Missouri Hospital Association concerning the recent change in method of payment for those patients who receive benefits from the Missouri Division of Welfare's hospital vendor program. In order that you might have a clear picture of the situa tion, please let me explain both the old and the new payment method. Prior to April 1963, payments under the hospital vendor program were based on the billed charges for the total period of hospitalization. Any payments from sources such as insurance, relatives, etc., were deducted from the total billed charges. The hospital vendor payment was then the hospital's per diem cost figure multiplied by the number of days the patient was in the hospital, up to a maximum of 14 days, or the outstanding balance, if that were lesser. What this meant was that the hospital could hope to collect from all sources up to, but not to exceed the billed charges. This system worked very well and was easy for everyone to understand. Subsequent to April 1963, the method as outlined in Bulletin PA-495 (a copy of which is attached) was placed into effect. The payment is now computed in this way: 1. Multiply the total number of days the patient is hospitalized (counting the day of admission but not the day of discharge) by the hospital's established per diem cost, which has been approved by the division of welfare. 2. Compare that result with the total billed charges; 3. Take the lesser of these two figures, and subtract from it the amount of payment received by the hospital from any other source (i.e., insurance, relatives, patient, other agencies, etc.). 4. The division of welfare will pay either (a) the unpaid balance as arrived at by the following steps 1, 2, and 3 above; or (b) the per diem cost multiplied by the number of days in the hospital up to a maximum of 14 days; whichever is the lesser. Let me give you an example: We will take a patient with a total hospital bill of $635. This patient had a Blue Cross policy which will pay $150. The patient remained in the hospital for 20 days. Under the old method we would deduct the $150 Blue Cross payment from the $635 billed charges. This leaves an outstanding balance of $485. We would then multiply the hospital's per diem figure of $24 by the maximum 14 days in which we would participate. The vendor payment would be $336, since this is less than the outstanding balance. The hospital could still collect from relatives or other sources the rest of the billed charges ($149). Under the new method this same example would be figured this way: 1. Multiply the 20 days total hospitalization by the hospital's per diem of $24, which gives us $480. 2. Compare this with the billed charges of $635. 3. Take the lesser of the two ($480) and subtract the other source payment ($150 Blue Cross), leaving $330. 4. The vendor payment would be $330. 5. The hospital could never collect from all sources, including vendor, more than $480 on this hospital admission. You can see why the hospitals are complaining about this payment method. I think they have a justifiable complaint, and I hope the Missouri Division of Welfare will be permitted to return to the former payment method. Very truly yours, PROCTOR N. CARTER, Director. DIVISION OF WELFARE, Jefferson City, Mo., April 5, 1963. (Bulletin PA-495) To: Administrators of hospitals participating in the vendor program. The Missouri Division of Welfare has just received a change in regulations from the Federal Department of Health, Education, and Welfare, requiring us to make an immediate change in the formula by which hospital vendor payments are computed. The change is mandatory if Missouri is to continue to receive matching funds for the hospital vendor program (for all four assistance programs, the Federal share at this time is 62 percent). The change in formula will affect only those cases in which the hospital receives partial payment from other sources, such as insurance, relatives, county courts, the patient himself, or any other sources. This type of case represents about 10 percent of all cases in which vendor payments are made. The new formula will have no effect on those cases where there are no payments other than from the vendor program. The 14-day limit per admission remains unchanged. It will continue to be expected that the hospital staff will encourage the fullest participation in payments by relatives or other sources whenever this appears to be feasible. Effective immediately, the following formula will be used in determining the amount of hospital vendor payment: 1. Multiply the total number of days the patient is hospitalized (counting the day of admission but not the day of discharge) by the hospital's established per diem cost, which has been approved by the division of welfare. 2. Compare that result with the total billed charges; 3. Take the lesser of these two figures, and subtract from it the amount of payment received by the hospital from any other source (i.e., insurance, relatives, patient, other agencies, etc.). 4. The division of welfare will pay either (a) the unpaid balance as arrived at by following steps 1, 2, and 3 above; or (b) the per diem cost multiplied by the number of days in the hospital up to a maximum of 14 days; whichever is the lesser. This revision means that copies of previous instructions sent from this office will need to be changed, as follows: A. Bulletin PA-463, dated October 14, 1960, which carried the subject "Form HC-7, Vendor Payments Based on Per Diem Costs." This bulletin should be retained in your files because of the instructions relating to form HC-7. However, the following sections should be deleted: On page 1, all the statements beginning with: "This payment level will become effective **** On page 2, all the statements from the top of the page down to but not including the paragraph which begins "Form HC-7 is an exact duplicate ** B. Memorandum dated March 16, 1961, which carried the subject "Revision of Method for Making Refunds on Vendor Cases." This bulletin should also be retained in your files. However, we are revising form HC-8, "Refund-Adjustment" to include the changes necessary because of the change in formula, and will send a supply of the revised forms to each hospital as quickly as possible. Please hold refunds and prepare them after you receive this supply of revised forms HC-8. Any forms HC-8 now in this office will be adjusted by the bureau of finance to comply with the new payment formula. CONGRESS OF THE UNITED STATES, Mr. PROCTOR N. CARTER, Director, Division of Welfare, State Office Building, Jefferson City, Mo. HOUSE OF REPRESENTATIVES, Washington, D.C., September 27, 1963. MY DEAR PROC: Thanks for your good letter of September 20, 1963, and subsequent concerning "drug vendor program" forwarded to me as a physician, from my home address. I am glad to have them both. Concerning the Missouri Hospital Association resolution, I, too, have the letter from Ted Lloyd, executive director of MHA. It is dated September 10. I appreciate your furnishing me a copy of Bulletin PA 495, and the examples in your good letter. However, your letter does not state an exclusion from collecting from all sources available under either the prior system or your current directive. As I figure the difference in your example, it is only $5 when in the current method one subtracts $480 from $634 to equal $154, as you have done in the prior method and come out with a similar figure of $149. I should think nothing would keep the local hospitals from continuing to collect their just debts. I can suspect that in certain instances, where hospitals had "jacked up charges" among the 10 percent that had other factors of income, whether it be Blue Cross, from the family, personal savings, etc., etc., that the new directive might be effective, and I can also see where it might force the hospitals to raise their per diem charges which, of course, must be approved by the State of Missouri before they establish for payment by you, the vocational rehabilitation, etc., etc. As a practicing physician in Missouri, who had 92 years with vocational rehabilitation where we used the per diem figures of the various hospitals as approved by the State regularly, and certainly as a physician-humanitarian interested in the care of the people, I am anxious to pursue this. Please correct my thinking as above if it is in error, and provide me with a copy of the directive to you, which you refer to in PA 495 of April 5, 1963, in the first sentence as having just received "a change in regulations from the Federal Department of Health, Education, and Welfare requiring us to make an immediate change in the formula by which hospital vendor payments are computed." In the meantime, before replying to Mr. Elliott, I want to contact some of our local hospital administrators to see how serious this is. At the present time none of them have seen fit to write me about the problem. I certainly hope you and yours are well, and wish you well in your dedicated and devoted work. Sincerely, DURWARD G. HALL, Member of Congress. BURGE-PROTESTANT HOSPITAL, Hon. DURWARD G. HALL, Congressman, 7th District, Missouri, DEAR DURWARD: It was good to talk with you last week, and we do appreciate your interest in our State vendor program. The enclosed memo from my assistant gives you the picture as far as our hospital is concerned, and you can readily see it is a sizable item of loss for us. If I can be of further service please call upon me. Sincerely yours, Elmer, ELMER W. PAUL, Administrator. BURGE-PROTESTANT HOSPITAL, INTEROFFICE MEMO To: Mr. Paul, From: Mr. Gold. Subject: Welfare loss. At your request an analysis was made of the welfare program now in effectsince April 15, 1963, insofar as the program affected the hospital. Certain facts should be kept in mind when considering this analysis: 1. Prior to April 15 it was permissible for the hospital to attempt to collect the entire amount. In other words we would apply the welfare payment received (billed charges or per diem, whichever is less) and, in addition, make an effort to secure further payment from the patient-providing the bill exceeded the welfare payment. We were fairly successful in doing this, for often it was possible to secure insurance payments and payments from relatives. 2. Furthermore, we were not limited in any way in our efforts to collect for charges incurred beyond the days approved by welfare. If possible we could and did collect billed charges for these days. 3. Present welfare program. (a) We are now limited to the total payment which welfare will approve both for welfare days and days beyond the period approved by welfare. For example, if a patient is hospitalized and has secured welfare approval for 14 days, the hospital will be able to collect from welfare either $355.60, that is $25.40 times 14, or billed charges, whichever is less. We are encouraged to attempt to collect from or through the patient the charges incurred during these 14 days; however, such collection must be applied to the limited payment approved by welfare.1 (b) Should such a patient stay beyond 14 days, welfare limits our collection efforts to either per diem payment of $25.40 a day or billed charges, whichever is less. We can no longer attempt to collect full billed charges for such a period of time. Analysis GENERAL Since April 15 the hospital has provided care for 134 welfare patients. These patients stayed in the hospital for a total of 1,757 days. One thousand two hundred forty days were approved by welfare, leaving 517 days not approved. These patients incurred gross charges of $45,852.39. The hospital sustained a loss of $5,856.48. In determining this loss each case was analyzed and the actual loss determined. Frequently, the per diem payment exceeded the billed charges; therefore, we were able to secure only billed charges from welfare. When the total payment received from welfare for all these cases was determined the actual loss proved to be, as I have pointed out, $5,856.48. It might be stated that it is not possible to determine the total loss the hospital sustained by multiplying the total days by $25.40, because many times we were only able to obtain billed charges from welfare. In conclusion I might mention that we sustained a loss on 64 of the 134 patients for an average loss of $43.70. Incidentally, in the past we collected at the time of discharge, some money from the patient. This we could apply to the charges incurred during the period not covered by welfare. Under the present program, whatever is collected must be applied to the charges incurred during the period approved by welfare. Obviously, this reduces our opportunity to collect for nonwelfare approved days and further increases our loss.3 DIVISION OF WELFARE, STATE DEPARTMENT OF PUBLIC HEALTH AND WELFARE, Hon. DURWARD G. HALL, House of Representatives, Congress of the United States, Washington, D.C. DEAR MR. HALL: Thank you for your letter of September 27, concerning the Missouri Hospital Association resolution. In the example I gave you in my letter of September 20, the hospital will automatically take a loss of $155. You see we formerly could allow them to collect from all sources, including the vendor payment, up to the total bill of $635. Now what we have said by the use of this new method is that the hospital can never collect from all sources, including the vendor payment, any more than $480. This means they must write off $155 on the example I have given. I think you can see that they have a justifiable complaint. You ask about a copy of the instructions we received from the Federal Department of Health, Education, and Welfare which required us to make an immediate change in the formula by which vendor payments were computed. These instructions were received by me on April 3, 1963, in a letter from Mr. Alfred |