E. Poe, regional representative of the Bureau of Family Services. This is a five-page letter and sets forth a number of examples, but I think the key statement is as follows: "In summary, the principle is that resources must be applied against the amount which would be used by the State if there were no resources in the case; i.e., the lesser amount when billed charges and per diem cost are compared. No question will be raised if the State recognizes the total number of days of care received as a basis for applying resources even though those days exceed any limit on the number of days for which the State would pay." Several methods of payment were discussed with Mr. Poe-the most reasonable of which is the one we adopted and the one described in Bulletin PA-495. I certainly hope something can be done to alleviate this situation at the earliest possible moment. Very truly yours, PROCTOR N. CARTER, Director. CONGRESS OF THE UNITED STATES, HOUSE OF REPRESENTATIVES, Washington, D.C., October 11, 1963. Mr. PROCTOR H. CARTER, Director, Division of Welfare, Jefferson City, Mo. MY DEAR PROC: Thanks for your good letter of October 7, 1963, and I had just received letters from individual hospitals in the area. Your letter was explanatory as to the example given in your first letter, and why the hospitals were losing money under the new arrangement. This disturbed me, along with the proof from the various participating hospitals, so that I called Department of Health, Education, and Welfare directly and in your absence from the city today, they talked to a Mr. Singleton in your office. Apparently the problem has evolved around interpretation of the hospital's ability to "collect from other sources" for the days over the authorized (by Welfare), number of days at a per diem rate. Apparently the Department of Health, Education, and Welfare intended only to see that overloading or false per diems were not used or collected from in the instant of matching funds. On the other hand, apparently they did not intend that the hospitals could not collect from all sources, including insurance, Blue Cross, families, personal ability, etc., for number of days in hospital in excess of those authorized by welfare as long as the total care did not exceed the number of days in hospital, times the per diem cost. Department of Health, Education, and Welfare cannot see how either your Directive Bulletin PA-495, Mr. Poe's instructions to you, or their basic requirements, could have been interpreted otherwise by the hospital, but apparently by usage this has come to pass. I understand they have suggested that you write a clarifying memo to the hospitals to the effect that "they can collect for extra days as long as total care does not exceed the number of days in hospital times the per diem cost. I hope this will help our hospitals and will get you off the hook, and that I have been of service. Please advise me if there is anything more that I can do. Very truly yours, DURWARD G. HALL, Member of Congress. DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE, WELFARE ADMINISTRATION, Hon. D. G. HALL, House of Representatives, Washington, D.C. DEAR MR. HALL: This is in response to your letter enclosing a resolution adopted by the Missouri Hospital Association. States have wide latitude in the methods that they choose for reimbursement of hospitals under the old-age assistance program with Federal participation in the payments. Missouri some time ago adopted, for most cases, an established per diem cost. The amount varies from one hospital to another and each 27-166-64-pt. 1- -30 hospital's amount requires the approval of the State division of welfare. If the total charges billed to the patient were less than the established per diem cost, the lower amount was paid. The State did not cover costs for more than 14 days of hospitalization. An exception was made, however, when resources were available from insurance, relatives, or other sources. In such instances, the amount of resources was deducted from the total amount billed to the patient and the State paid the remainder so long as the amount of the actual State payment did not exceed 14 days times per diem cost. This exception, applying to about 10 percent of hospital cases where there were other resources involved, raised questions of equity. Section 2(a) (10) (A) of the Social Security Act requires that all income and resources be taken into account. Under the Missouri procedure, some of the income and resources were being used to meet hospital charges above the established per diem cost which raised question as to whether the statutory requirement was being met. After some negotiation, the State issued Welfare Bulletin PA 495 to take care of the situation. Under this bulletin, a hospital in all cases receives the established per diem cost or the total billed charges, whichever is less with a minimum payment of the per diem rate multiplied by 14. However, any resources available to meet the hospital cost are deducted from the lower of the two figures rather than from the billed charges exclusively as had been the practice previously. According to State Letter No. 495, the charge will have no effect for 90 percent of the cases-those in which there are no outside resources. Obviously, there will be no effect in cases with resources where the hospital bills the patient at a rate no higher than the established per diem cost. The change will have no effect for hospital stays in excess of 14 days unless the average daily cost billed exceeds the "established per diem cost" since, both prior to and under Bulletin No. 495, resources, in effect, apply first to portions of the stay for which the State plan does not provide. Thus, insofar as we can determine, the only cases affected are those in which the hospital wishes to collect more than the established per diem rate, which presumably already represents the full cost of care on an average basis. You will want to know that the same resolution has been sent us by other members of the Missouri delegation. Our replies are therefore the same. Sincerely, ELLEN WINSTON, Commissioner. MISSOURI HOSPITAL ASSOCIATION, Jefferson City, Mo., November 13, 1963. Hon. DURWARD G. HALL, U.S. Representative, House Office Building, Washington, D.C. DEAR SIR: Your concern in our problem in the payment method for hospitals and the welfare program is very much appreciated. I received your letter with the copies of the letter you received from Miss Winston. To further present our case to you, I am including the letter I have written to Miss Winston in answer to the correspondence from her. I am also sending examples of how the previous system worked and how the change under Bulletin PA 495, has caused confusion and economic loss to our many hospitals. Your continued consideration of helping us in our cause, will be very much appreciated by the hospitals and patients in Missouri. Very truly yours, TED O. LLOYD, Executive Director. NOVEMBER 8, 1963. Re resolution presented to the Department of Health, Education, and Welfare on the Missouri hospitals payment method of welfare cases. Miss ELLEN WINSTON, Commissioner, Department of Health, Education, and Welfare, Welfare Administration, Washington, D.C. DEAR MISS WINSTON: I have your letter and copies of the letters you sent to all of our Missouri Senators and Representatives in Congress. Miss Winston, in your explanation to us and to the Senators and Representatives, we still feel that there are two exceptions to the method in which the Missouri hospitals are being paid. The curtailment of the method being used for 18 months in Missouri, very successfully, does not give us the wide latitude you spoke of, that is needed in working with our hosiptals and welfare patients. Our organization would like to know if the legal counsel for your Department determined after 18 months that this method was statutorily wrong. Changing the system has caused a lot of confusion and misunderstanding. Could you give us a copy of the legal opinion which caused the change in the ruling of the administration of the program in Missouri? You stated in your letter "the only cases affected are those in which the hospital wishes to collect more than the established per diem rate, which presumably already represents the full cost of care on an average basis." Miss Winston, Missouri hospitals have been working on a historical per diem for almost 2 years and this has not been changed since the first cost statement was filed with the Department of Welfare in 1960. Therefore, we are not, and have not been receiving full cost for the care of these welfare cases. It is still the feeling of many hospitals and their representatives that we should be permitted to return to the previous method of payment that was changed by Bulletin PA 495. Our director of welfare in Missouri, Proctor Carter, found the previous method very satisfactory to work with. I am sending you examples of how the hospitals are being penalized in many instances in our State because of Bulletin 495. These examples are, I think, selfexplanatory. I have been requested by our Senators and Representatives to send any further information on this. I am also including to them the examples showing how we feel the present system of payment is inequitable. Your further consideration of our request and our resolution would be appreciated. Sincerely, EXAMPLE TED O. LLOYD, Executive Director. 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, sent to our hospitals, 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 substract 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. 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. To further clarify the examples above the hospital will automatically take a loss of $155 in the first example I gave you. Formerly we could collect for all services including the vendor payment up to the total bill charges which was in the example $635. Under the new PA 495 ruling coming from the Department of Health, Education, and Welfare through the Missouri Division of Welfare, the hospitals can never collect from all sources including the vendor payment any more than $480. This means we have to write off $155 on the example shown. This is just not right. Above are typical examples of what is happening that is causing distress and concern in hospitals, along with the fact that our present per diem is not current, but was established in 1960, 18 months past. The CHAIRMAN. Mrs. Griffiths. Mrs. GRIFFITHS. It has been my contention ever since this bill has been under consideration that there is a vast difference in the quantity and quality of hospital and medical care that is available in this country. You are now a doctor from one of the districts in the United States that I know best. Therefore, I think together we can make this point pretty clear. You mentioned a nursing home, a Sunshine Home. How many people does that accommodate? Dr. HALL. I am speaking specifically now, Mrs. Griffiths, about Greene County. There are two such homes there now. I think our total accommodates are about 250. We are very proud of it. Mrs. GRIFFITHS. Are those homes approved by the State of Missouri? Do they meet the standards for nursing homes in the State of Missouri? Dr. HALL. Yes, ma'am. One of them has been built completely since the Warrenton fire disaster, which I think you will recognize set the standards in all of the State under Missouri's new law for approved nursing homes. Mrs. GRIFFITHS. How many approved nursing homes are there in the State of Missouri? Dr. HALL. I do not have that information. Mrs. GRIFFITHS. Let me tell you that a few years ago, Mrs. Sullivan pointed out to me that there were three. So, if there are a good many more than that now, it is quite recent indeed. But I would be very pleased if you would submit it for the record. Dr. HALL. If I may say one more thing about that. There has been a rapid growth of approved nursing homes in the last 5 years since the Warrenton fire disaster in north Missouri. Mrs. GRIFFITHS. Are these nursing homes required to have registered nurses? Is that one of the requirements? Dr. HALL. Yes. Mrs. GRIFFITHS. How many per number of patients? Dr. HALL. Again, I do not have that information. Mrs. GRIFFITHS. Would you find that information and supply it for the record? Dr. HALL. Certainly. I will be delighted. Mrs. GRIFFITHS. Do they have registered dietitians? Dr. HALL. I would doubt it in many of these approved small nursing homes. Mrs. GRIFFITHS. May I ask you to supply for the record whether or not this is one of the requirements to meet approval that there must be a registered dietitian in a nursing home? May I ask if the Sunshine Home in Greene County has that? Dr. HALL. Yes. Mrs. GRIFFITHS. Do you have a registered dietitian? Dr. HALL. Yes; we do have, it works cooperatively under the welfare department, the county court, the medical society and the city health department. Mrs. GRIFFITHS. Now, may I ask you, How many hospital beds are there available in your district? Dr. HALL. Again, I would have to supply the exact figure. But under the regional hospital association plan of Missouri, we are oversubscribed for regular hospital beds. Mrs. GRIFFITHS. Would this be because of hospitals in Springfield? Dr. HALL. Certainly Sprinfield is the medical center along with Joplin and Carthage, Mo., of our 21-county district, as the Congresswoman well knows. Mrs. GRIFFITHS. Perhaps it will be interesting if you will tell how many people are in your district. Dr. HALL. 436,000. Mrs. GRIFFITHS. How many hospitals are there? Dr. HALL. Again, like the beds, I do not know exactly. The breakdown, according to the type of hospital or the number of hospitals, we, of course, have our tuberculosis sanitarium and hospital in southwest Missouri, which is a State organization. We have the Federal hospital for defective delinquents for the entire prison system in Springfield. For private hospitals or general hospitals, I would imagine 25, and I would imagine the number of hospital beds would be over 1,500. That is as close as I can come, but I will be glad to supply that information. (The information furnished appears on p. 441.) Mrs. GRIFFITHS. Thank you very much. I will be pleased if you would. Then how many nursing homes are there in your district, qualified, approved nursing homes? Dr. HALL. I will be glad to find out. Mrs. GRIFFITHS. How many of those qualified and approved nursing homes have registered nurses available in the home? Dr. HALL. As I said in the beginning, they all have. Mrs. GRIFFITHS. And how many registered nurses are there per how many dozen patients? Dr. HALL. Yes. Mrs. GRIFFITHS. I would like to know also the cost, for instance, in the Springfield hospital. What is the cost per day? Dr. HALL. The per diem cost in Springfield Baptist Hospital is $29.27 a day. Mrs. GRIFFITHS. Is that a private room or a ward? Dr. HALL. Per diem charges in the State of Missouri, as determined for use by vocational rehabilitation, the department of welfare, all agencies hospitalizing patients do not differentiate between private, |