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The subcommittee met, pursuant to notice, at 8:35 a.m., in room 2221, Dirksen Senate Office Building, Hon. Herman E. Talmadge (chairman of the subcommittee) presiding.

Present: Senators Talmadge, Dole, and Danforth.

Senator TALMADGE. The subcommittee will come to order. Today, we begin 4 days of hearings on S. 1470, the Medicare and Medicaid Administrative and Reimbursement Reform Act. S. 1470, which I introduced joined by Senators Long, Ribicoff, Dole, and 16 other colleagues, is the successor proposal to S. 3205 of the last Congress. S. 3205 was the subject of 5 days of hearings last July.

[The committee press release announcing these hearings and the bill S. 1470 follows:]

[Press release, Committee on Finance, Subcommittee on Health]


Senator Herman E. Talmadge (D., Ga.), Chairman of the Subcommittee on Health of the Senate Finance Committee, announced today that the Subcommittee will hold a hearing in early June on the various Medicare and Medicaid administrative and reimbursement reform provisions of S. 1470, introduced by Senator Talmadge on May 5, is cosponsored by a total of 19 Senators.

The hearing will be held beginning at 8:30 a.m. each day beginning June 7 through June 10 in Room 2221, Dirksen Senate Office Building.

Senator Talmadge stated: "S. 1470 is an improved version of S. 3205, a similar proposal introduced in the last Congress. The present bill incorporates constructive testimony received last year during five days of hearings on S. 3205. S. 1470 is designed to deal with, among other things, the problem of the continued explosion in the costs of the Medicare-Medicaid programs. Last year, I pointed out that those programs would cost Federal and State taxpayers more than $38 billion in fiscal 1977. Bad as that was, just one year later these programs are estimated to cost Federal and State governments more than $47 billion in fiscal 1978." Senator Talmadge said, with respect to soaring health costs: "The Congress and the Administration share a common concern; however, I believe we can best control costs by providing hospitals with equitable incentives and with the right kind of penalties.”

Requests to testify.-Senator Talmadge advised that witnesses desiring to testify during this hearing make their request to testify to Michael Stern, Staff Director, Committee on Finance, 2227 Dirksen Senate Office Building, Washington, D.C. 20510, not later than Friday, May 27, 1977. Witnesses will be notified as soon as possible after this date as to when they are scheduled to appear. (1)

Once the witness has been advised of the date of his appearance, it will not be possible for this date to be changed. If for some reason the witness is unable to appear on the date scheduled, he may file a written statement for the record of the hearing in lieu of a personal appearance.

Consolidated testimony.—Senator Talmadge also stated that the Subcommittee urges all witnesses who have a common position or with the same general interest to consolidate their testimony and designate a single spokesman to present their common viewpoint orally to the Subcommittee. This procedure will enable the Subcommittee to receive a wider expression of views than it might otherwise obtain. Senator Talmadge urged very strongly that all witnesses exert a maximum effort to consolidate and coordinate their statements.

Legislative Reorganization Act. In this respect he observed that the Legislative Reorganization Act of 1946, as amended, requires all witnesses appearing before the Committees of Congress "to file in advance written statements of their proposed testimony, and to limit their oral presentations to brief summaries of their argument."

Senator Talmadge stated that in light of this statute and in view of the large number of witnesses who have already formally requested an opportunity to appear before the Subcommittee in the limited time available for the hearing, all witnesses who are scheduled to testify must comply with the following rules: (1) A copy of the statement must be filed by the close of business the day before the witness is scheduled to appear.

(2) All witnesses must include with their written statement a summary of the principal points included in the statement.

(3) The written statements must be typed on letter-size paper (not legal size) and at least 75 copies must be submitted before the beginning of the hearing.

(4) Witnesses are not to read their written statements to the Subcommittee, but are to confine their ten-minute oral presentations to a summary of the points included in the statement.

(5) Not more than ten minutes will be allowed for the oral summary. Witnesses who fail to comply with these rules will forfeit their privilege to testify. Written statements.-Witnesses who are not scheduled for oral presentation, and others who desire to present their views to the Subcommittee, are urged to prepare a written statement for submission and inclusion in the printed record of the hearings. These written statements should be submitted to Michael Stern, Staff Director, Committee on Finance, Room 2227 Dirksen Senate Office Building not later than June 20, 1977.


S. 1470


MAY 5 (legislative day, APRIL 28), 1977

Mr. TALMADGE (for himself, Mr. LONG, Mr. RIBICOFF, Mr. DOLE, Mr. NUNN, Mr. EASTLAND, Mr. Matsunaga, Mr. Randolph, Mr. HOLLINGS, Mr. INOUYE, Mr. GRAVEL, Mr. FORD, Mr. JAVITS, Mr. PELL, Mr. PERCY, Mr. BROOKE, Mr. BURDICK, Mr. STONE, Mr. METZENBAUM, and Mr. HATHAWAY) introduced the following bill; which was read twice and referred to the Committee on Finance


To provide for the reform of the administrative and reimbursement procedures currently employed under the medicare and medicaid programs, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 3 That this Act may be cited as the "Medicare-Medicaid 4 Administrative and Reimbursement Reform Act".



Sec. 2. Criteria for determining reasonable cost of hospital services.

Sec. 3. Payments to promote closing and conversion of underutilized


Sec. 4. Federal participation in hospital capital expenditures.




Sec. 10. Agreement by physicians to accept assignments.

Sec. 11. Criteria for determining reasonable charge for physicians


Sec. 12. Hospital-associated physicians.

Sec. 13. Payment for certain antigens under part B of medicare.

Sec. 14. Payments on behalf of deceased individuals.

Sec. 15. Use of approved relative value schedules.


Sec. 20. Hospital providers of long-term care services.

Sec. 21. Reimbursement rates under medicaid for skilled nursing facilities and intermediate care facilities.

Sec. 22. Medicaid certification and approval of skilled nursing and intermediate care facilities.

Sec. 23. Visits away from institution by patients of skilled nursing or intermediate care facilities.


Sec. 30. Establishment of Health Care Financing Administration.
Sec. 31. State medicaid administration.

Sec. 32. Regulations of the Secretary.

Sec. 33. Repeal of section 1867.


Sec. 40. Procedure for determining reasonable cost and reasonable charge. Sec. 41. Ambulance service.

Sec. 42. Grants to regional pediatric pulmonary centers.

Sec. 43. Waiver of human experimentation provision for medicare and


Sec. 44. Disclosure of aggregate payments to physicians.

Sec. 45. Resources of medicaid applicant to include property disposed of to applicant's relative.

Sec. 46. Rate of return on net equity for for-profit hospitals.


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SEC. 2. (a) (1) The first sentence of section 1861 (v) 4 (1) (A) of the Social Security Act is amended by striking 5 out "The" and inserting "Subject to subsection (aa), the". 6 (2) Section 1861 (v) of the Act is also amended by 7 adding at the end the following paragraph:

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