many physicians to be disenchanted with the assignment method. It also should be observed that in seeking to foster acceptance of assignments S. 1470 is dichotomous. In one section it seeks to provide inducements for assignments, while in another it discourages such use through the imposition of more reductions in payment. Rather than seeking new devices to bolster assignment usage that are based on the perpetuation of artificial and arbitrary payment levels, it is time to examine and make realistic the basic Medicare reimbursement formula and payment mechanisms. If indeed it is the intent of Section 10 to achieve more widespread acceptance of assignments, it would be better accomplished by making the reimbursement level under that system more acceptable and in accord with usual and customary practices. Medicare limitations, as through application of the economic index, are discriminatorily imposed, and should be removed. As to the multiple list billing mechanism, one assumes there are administrative advantages for Medicare and the physician that underlie this proposal. If so, there is no reason why this payment feature should not be put into effect immediately. The provision for early-or more appropriately, timely-payment is certainly no more than physicians are entitled to and should receive at the present time, without the necessity of statutory mandate. It would be disheartening if convenient administrative aids are now available—but are not being utilized. Section 10 as now written will not contribute to the continuation of quality care under Medicare and should not be adopted. Criteria for Determining Reasonable Charges for Physicians' Services (Sec. 11 and 12) The bill would significantly change determinations of reasonable charges under Medicare. At the present time prevailing charge levels are set in localities so that the prevailing charge level would cover 75 percent of the customary charges made for similar services in that locality. Certain additional limitations are imposed so that the charge level for any fiscal year beginning after June 30, 1973 would not exceed the level determined during the fiscal year that ended on that date, except to the extent that a higher level is justified by economic changes determined to be acceptable by the Secretary on the basis of appropriate economic index data. Under S. 1470, however, the Secretary would determine state-wide prevailing charge levels for each State. The prevailing charge level of the State would be based on 50 percent of the customary charges made for similar services in the State. Prevailing charge levels in a locality would remain subject to the economic index but the bill specifies that for an economic index increase for any particular service, “no prevailing charge level for physicians' services shall be increased to the extent that it would exceed by more than one-third the statewide prevailing charge level . . . for that service." This procedure could, in many cases, result in a diminution in future increases in the reimbursable amount which physicians might otherwise receive. It appears that the real effect of the new methodology would be to cause a leveling of reimbursement. This leveling would be accomplished, however, through a reduction (particularly in metropolitan areas) in the amount of increases which otherwise would be due under the economic index and to which physicians currently are entitled. While the reimbursement levels in non-urban areas might for a period of time undergo normal increases which could be higher (as a percentage) than those to be recognized in metropolitan areas under the economic index, this stifling of proper fee recognition for all physicians would be detrimental to maintaining a proper level of care under the program. Discrimination in the application of the economic index in states with two or more localities would result. Some physicians would receive the full amount allowed by the index, others would not. Further discrimination would result because the index would apply fully to all physicians in states constituting a single locality. The artificial ceiling imposed on Medicare reimbursements could affect participation by physicians and affect the availability of care for Medicare patients. This type of limitation would also further aggravate the shifting of expenses not reimbursed by Medicare and Medicaid to patients under private programs. In our opinion, reimbursement levels imposed upon physicians are already substandard. This provision would further reduce this standard and thus adversely affect Medicare patients. This provision should not be adopted. A further provision in sec. 12 also affects the amount a physician may be reimbursed. The charges of a physician or other person related to income or receipts of a hospital or hospital subdivision would not be taken into consideration in determining his customary charge to the extent that such a charge exceeded what a salary (plus certain expenses), as determined by the Secretary, would reasonably have been if the physician or other person had been employed by the hospital. This provision presupposes that these contractual arrangements automatically result in excessive remuneration and that by "outlawing" certain forms of contract, excessive charges will be avoided. In point of fact, excessive reimbursement is not the result of the form of financial arrangement, but instead results from the intentions of the parties involved. Limiting the freedom of contract will not control or eliminate any problem of excessive reimbursement. What it will do is make it more difficult for certain institutions to provide needed services to Medicare patients. We further question the appropriateness of the Secretary's power to determine a "reasonable salary." On what basis will this be decided? No guidelines are provided in this bill and, therefore, the discretion given to the Secretary is excessive. This provision should be deleted from the bill. We note that one provision in section 11 is intended to permit greater flexibility in the recognition of charges in physician shortage areas. The intent of this provision is salutary. The current needs of certain areas for medical care are well recognized and a variety of ideas should be tried in order to solve these shortages. We would recommend, however, that the definition of shortage area be consistent with that in other laws. There is no need to create another definition of shortage areas exclusive to Medicare that will overlap areas established under other statutes. Hospital-Associated Physicians (Sec. 12) Section 12 would establish a stringent definitioin of "physicians' services"; would enact statutory definitions of reimbursable anesthesiology and pathology services; and would reduce the Medicare payment for radiology and pathology services if the physician providing them did not accept assignment. Medicare law now defines "physicians' services" as "professional services performed by physicians". S. 1470 would amend that definition to exclude thoseservices the physician performs as an educator, an executive, or a researcher. The amendment would exclude even patient care services unless "personally performed by or personally directed by a physician" for the benefit of the patient and unless the service is of such a nature that its performance "by a physician is customary and appropriate." It should be made clear that although this amendment comes under the heading "Hospital-Associated Physicians" the amendment is not so limited, and the placement of this amendment under that heading is misleading. In fact this amends the general definition of "Physicians' Services" in section 1861 (q) and consequently the new limitations apply to all "physicians' services" under Medicare. We object strongly to this modification. All activities of physicians customarily recognized as part of the physician's practice should be reimbursable as "physicians' services" under Medicare. A strict application of this language would have dire consequences for proper recognition of, and payment for, all services of physicians under Medicare. Even if the provision was intended to affect only the inpatient services of "hospital-associated physicians", the modification would still be objectionable. The writers of regulations, armed with this proposed statutory language, could arbitrarily change the practice of medicine as recognized today to the detriment of both the patient and the profession. Whatever its intent, a legal definition which states that a physician acts as a physician only when directly treating a patient and when performing services only a physician can perform will ultimately lead to confusion in the Medicare program and further dismemberment of health care. Furthermore, the physician as educator, researcher, or administrator does not cease to be a physician; indeed, since the earliest days of the medical profession, teaching and research have been recognized as intrinsic parts of the practice of medicine. As medicine has become more organized and technologically sophisticated, administrative tasks have developed which can be performed most effectively only by a practicing physician. We protest strongly any artificial division of the physican's role. We further protest, therefore, the attempt to define precisely what are "personally performed" or "personally directed" services in the fields of aesthesiology and pathology. Medicine is a living science, which changes rapidly and dramatically. Laws may take years to change. Even the regulatory process, as this Congress is well aware, can be dilatory and inflexible. The language of these sections goes further in limiting medical practice than the laws under which these physicians are licensed to practice. Its restrictions on anesthesiology and pathology are not only unwise legislation in themselves, but tend to undermine the very mechanism established by Congress in 1972 designed to improve care under Medicare, Medicaid, and Maternal and Child Health programs. Congress then established PSRO's to determine whether patients under the three programs. receive care which meets appropriate professional standards of quality. Decisions as to what constitutes proper physician services were delegated to local professionals who are better equipped to make such determinations than government employees. This bill would superimpose on PSRO deliberations specified artificial standards as to how many patients a physician could personally treat, or personally direct treatment for, and still have the treatment considered a "physician's service". It would say which services of pathologists are "physician's services" and which are not. PSRO's were properly given the charge to determine the propriety of medical services and if they met professional standards. Congress should not undermine this function. We suggest that this Committee consider very carefully the limitations this law would set on care recognized as properly provided by anesthesiologists. For purposes of the program, an anesthesiologist could "personally perform" physicians' services for only two patients at a time, and could only "personally direct" care for four patients at a time. The "reasonable charge" for "personally directed" care will be half that for "personally performed" care. By this standard, an anesthesiologist will receive the same payment for two patients for whom he provides all the listed services as for four patients for whom he provides all but one of the listed services, but for whose care he remains legally liable. This change could well result in a reduction in the anesthesiology services available to Medicare, Medicaid, and Title V patients. The Congress should not set in inflexible statutes the elements that constitute acceptable performance of practice by anesthesiologists or pathologists or any other physician. Finally, in Section 12, the bill would enact an approach which is intended to "encourage" physician acceptance of assignments--but it does so by penalizing the patients if they do not. Under present law, pathology and radiology services to hospital inpatients are paid under Part B at 100 percent of the "reasonable charge," whether the physician has accepted assignment or not. S. 1470 would change the amount of Medicare payment to the usual 80 percent of the "reasonable charge" if the physician does not accept assignment, and permit crediting of the patient's 20 percent of the "reasonable charge" towards the annual Part B deductible. We point out that the Medicare "reasonable charge" for pathology and radiology services remains the same, whether or not the physician accepts assignment. The Association questioned whether the coinsurance factor should be eliminated for specific segments of medical care during the discussions prior to passage of Public Law 90-248. We question even more strongly the establishment of different rates of payments by Medicare for similar services when provided on assignment or when billed to the patient. We believe that this approach violates basic principles of equity to the Medicare beneficiaries, who pay the same out-of-pocket premium but would receive different degrees of coverage as a result of factors over which they have little or no control. These proposed definitions of "physicians' services" are described as an effort to control health care costs by limiting reimbursable services under Medicare. In actuality, it is an effort by the government to evade its responsibilities to Medicare beneficiaries who depend on this program for their health care. Changing the definitions does not change the true costs of services, but merely shifts the burden of financial responsibility from the government to the patient who can ill afford such a shift. For the government to renege on its promises to the elderly can only result in a further diminution of confidence in our federal system. The changes, ostensibly aimed at the physician, will in the end cause the most harm to the patient. We strongly urge that section 12 not be adopted. Payment for Certain Antigens Under Part B of Medicare (Sec. 13) There would be added to the definition of "medical and other health services" provisions to include antigens (as limited in quantity by the Secretary) prepared by an allergist for a particular patient. Included also would be antigens prepared and forwarded to another qualified person for administration to the patient by or under the supervision of another physician. We believe that this provision is a beneficial one. It would answer questions concerning payment that have been raised with respect to antigens prepared by allergists. Providing payment for these services will be beneficial for many Medicare beneficiaries. We recommend support for section 13. Payment Under Medicare of Certain Physicians' Fees on Account of Services Furnished to a Deceased Individual (Sec. 14) Medicare payment to a physician for services rendered to a person who died prior to payment to, or acceptance of an assignment by, a physician presently may occur only if the physician agrees later to accept payment under the terms of an assignment. This new provision would enable a spouse or other legal representative of the deceased person to authorize payment to the physician under Part B without regard to the acceptance of an assignment by the physician. We believe this provision would aid the orderly administration of the Medicare program and be of benefit to the heirs and representatives of deceased Medicare beneficiaries in estate administration. We are in support of this provision. Use of approved relative value schedule (see 15) The Secretary of HEW would establish a system of procedural terminology under Medicare, Medicaid and Maternal and Child Health as developed by the Health Care Financing Administration (HCFA) with the advice of professional groups and other interested parties. Upon development of the procedural terminology, it would be published in the Federal Register for six months' comment and for recommendations as to relative values for procedures and services designated. Any association of health practitioners in "good faith" preparing or submitting a relative value schedule would not be barred from doing so because of any consent decree waiving its rights to recommend fees provided such schedule is not disclosed to anyone other than those preparing the schedule or their counsel, until made public by the Secretary. HCFA would recommend that the Secretary adopt a specific terminology system and its relative values for use under Part B of Medicare, but only after analyzing and evaluating the system and determining that its use would enhance the administration of the federal health care financing programs. After adoption of a system by the Secretary, any organization or individual could use it for purposes other than for this bill. The Secretary could adopt a terminology system without adopting a relative value system and could modify any system adopted. The use of relative value schedules (RVS) can, if properly designed and implemented, be a useful administrative tool in any system of health care reimbursement. However, a RVS must not be so rigid as to preclude adjustments in fees based on regional cost-of-living differences, overhead or other factors that affect physicians' fees in a particular locality. Above all, a RVS should not be used to "fix" fees either by practitioners or the government on a regional or national level. We are concerned about this particular proposal because of the discretion available to the Secretary, and residing solely in the Secretary, in establishing the relative values. In determining any RVS, he is not required to adopt the recommendations of the Health Care Financing Administration or of any professional association and is also free to modify any RVS at any time. Such overbroad authority is not conducive to effective use of the RVS in federal reimbursement programs. Nothing prevents the Secretary from using the RVS to create a federal fee schedule. We would oppose such a move. Likewise, there is nothing in this provision that prevents the Secretary from using the RVS as a lever to lower the already inadequate reimbursement levels under federal health care payment programs. Such a move would only make it more difficult for the beneficiaries of titles V, XVIII and XIX to obtain quality care. There should be proper recognition of the wide acceptance in the profession of the Current Procedural Terminology (CPT). We urge the committee to incorporate in section 15 appropriate safeguards for the development and use of the RVS to insure its proper implementation, and to keep it from being used as a fee reduction system. We again remind the committee that a lowering of reimbursement levels represents cost savings only to the government. The actual cost of the service does not change and the difference between actual cost and reimbursed cost usually is made up by higher prices on other services to nongovernment patients or an increased cost to the Medicare beneficiary. It is unrealistic to expect physicians to donate services on a massive scale. A system of inadequate reimbursement can only lead to inferior health services. We note that this provision would permit other uses of the approved RVS. This is an effort to overcome certain legal obstacles that now prevent the use of an RVS. However, because of the complexity of the legal situation surrounding the use of the RVS, we are not sure that the language of section 15(e) is sufficient to overcome the present restrictions on its use. We urge that the language be re-evaluated. We oppose adoption in its present form. Legislation should recognize and provide for use of terminology and relative value schedules as developed by the profession. LONG-TERM CARE REFORMS Hospital providers of long-term care services (sec. 20) Title XVIII would be amended to allow rural hospitals of less than 50 beds having average daily occupancy of less than 60% to enter into agreements with the Secretary to provide extended care services using inpatient hospital facilities. These hospitals would have to meet other conditions prescribed by the Secretary, obtain a certificate of need for provision of long term care services from the health planning agency, and would be reimbursed at the Medacaid level of skilled nursing facilities in the State. A hospital having such an agreement would be considered as meeting most of the otherwise applicable Medicare requirements for providing extended care service. Medicaid would also be amended to provide reimbursement for skilled nursing services and intermediate care services of a hospital having such as agreement. This provision is designed to allow certain rural hospitals flexibility in their use of hospital beds. Under present law, long term care services offered by a hospital must be located in a separate unit of the hospital. Such a requirement often works a hardship on rural hospitals with limited facilities since they cannot reasonably comply with the separate location requirement. This amendment recognizes this handicap of many small, rural hospitals and allows them to use available bedspace for multiple purposes for which they will be reimbursed under Medicare and Medicaid. This is a sensible response to this situation and we support the provision. Medicaid certification and approval of skilled nursing facilities (sec. 22) This section provides that the Secretary would enter into an agreement with any State able and willing under which the services of the State health agency, or other appropriate State or local agencies, would be utilized by the Secretary for the purpose of determining whether an institution in the State was qualified as a skilled nursing facility for purposes of the Medicaid program. Notwithstanding certification by the State agency, however, the Secretary is empowered to accept or reject such certification and would make the final determination for each institution. In our opinion this section of the bill would create confusion and uncertainty in the program and constitutes an unnecessary and unwarranted involvement of the Federal government. The present procedure which recognizes certification by state agency as determinant of eligibility for Federal Medicaid payment to the states should be retained. Section 22 should not be adopted. Patient absences from facility (sec. 23) We support Section 23 of the bill on "Visits Away From Institution by Patients of Skilled Nursing or Intermediate Care Facilities". This section would provide that under Medicaid an inpatient of a skilled nursing or intermediate care facility could make visits outside the institution 92-202-77—17 |