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effort in maintaining professional and technical standards. Even in the case of services with a low physician's component, there is no way of foretelling which particular service will require direct attention and special interpretation by the pathologist beyond his involvement in establishing procedures, evaluating methods, judging the competence of technical personnel, correcting procedures, establishing and evaluating quality control, determining abnormal results outside expected norms, and other professional services. Thus, every procedure performed in the department of pathology, including the clinical laboratories, involves an actual as well as a possible consultation by the pathologist. We have discussed this in greater detail in our testimony on S. 3205.

The third variable, the conversion factor, is applied for a given period of time to the current relative value of each item of clinical pathology laboratory service and must be adjusted to reflect general economic changes, including inflation. Only if inflation were halted and the buying power of the dollar stationary, would the conversion factor remain stationary.

In short, Mr. Chairman, we strongly support the use of a relative schedule with an appropriate physician's component as a basis for an equitable method of reimbursement for pathologists.

This discussion of the relative value schedule with a physician's component and the earlier discussed lease-type arrangement in appropriate situations does not touch upon all types of contractual relations that we support. As stated in the action of the College Board of Governors, the College urges multiple approaches to contractual relations between pathologists and institutions. Our discussions of the relative value schedule and the lease arrangement are to point out and support alternatives, not substitutes for various forms of contractual arrangements. In an effort to better relate Section 15 to Section 12, we would urge the following addition to the language of Section 15:

Amend Section 15, subsection (b) by inserting a new sentence following the sentence ending with the word "terms" so that the subsection would read:

“(b) Upon development of a proposed system of procedural terminology and its approval by the Secretary of Health, Education and Welfare, it shall be published in the Federal Register. Interested parties shall have not less than six months in which to comment on the proposed system and to recommend relative values to the Secretary for the procedures and services designated by the terms. In the instance of hospital-associated pathologists' procedures and services, such relative value schedules shall include physician components for each clinical pathology laboratory procedure. Comments and proposals shall be supported by information and documentation specified by the Secretary."

In addition, the College would suggest some modification to subsection (e) of Section 15. This subsection seems to give broad discretionary powers to the Secretary. As we interpret the wording, the Secretary may review and modify terminology and relative value schedules without any requirement to consult with groups affected by such actions.

We would suggest that the bill or the Committee Report give guidance to the Secretary as to a reasonable definition of "periodically" and that this review and modification should not take place without proper consultation with and input from representatives of the medical specialties directly involved.

Further, more positive acknowledgment of the accomplishments in the areas of procedural terminology by medical specialty organizations should be included in the legislation. The Secretary should be required to consider these efforts in mechanisms outlined for the acceptance and approval of procedural terminolgy and relative value schedules.

We would now like to turn our attention to several other sections of the bill. Section 2-Criteria for determining reasonable cost of hospital services

The College recognizes that the issue of reimbursement of hospital must be addressed. We do not believe it is our function here today to comment on this broad and complicated issue. If our understanding is correct, laboratory services would fall under "ancillary service costs" and thereby be excluded from the definition of routine operating costs. We believe this to be appropriate.

Section 4-Federal participation in hospital capital expenditures

We are concerned with Section 4 of S. 1470. We question the wisdom of providing for expenses incurred by planning agencies from the Federal Hospital Insurance Trust Fund and funds in the Federal Supplementary Medical Insur

ance Trust Fund. These trust funds presently have tremendous demands upon them in meeting the rising cost of providing service to Medicare patients. To divert funds to pay for health planning activities does not appear to be a timely proposal. The health planning process is very much in a developmental phase and the College fears that much money would be lost due to the confusion that the health planning process is presently experiencing.

Another point of concern is obtaining approval of the local designated planning agency for capital expenditures in excess of $100,000 as a condition for Medicare and Medicaid reimbursement for such costs. Clinical laboratory equipment needed for routine operation today is very expensive and that cost cannot be expected to lessen. To set a review "trigger" of $100,000 is unreasonable to us. We would suggest a substantial increase of that $100,000 figure or the removal of a dollar figure in this section.

Section 10-Agreements by physicians to accept assignments

The College believes that the wording of this section creates a discrimination against hospital-based physicians, pathologists in particular. Subsections (c) (2) (B) & (C) specifically excludes pathologists who direct bill from benefits of the administrative cost savings allowance.

We would recommend that these discriminatory provisions be eliminated, or if that is not possible, be modified so that there might be some aggregate figure per bill below which no cost savings allowance would be appropriate.

Section 11-Criteria for determining reasonable charge for physicians' services Subsections (a) (1), (C) and (E) provide for the establishment of a lowest charge level for medical supplies, services, and equipment, and prevailing charge levels for each state.

Because of many factors involved in determining the cost of a clinical pathology laboratory service, it is inappropriate, if not impossible, to apply a lowest charge level to such a service. In some instances, the utilization of lowest charge levels for reimbursement may be appropriate for medical supplies and equipment such as hospital beds and wheel chairs. To group clinical pathology laboratory services with manufactured medical supply items ignores the varying cost components present in the delivery of laboratory services.

Laboratory services may vary in quality from one laboratory to another in a given locality. Determining the cost of such services is a very complex issue. If this determination is to be meaningful, one must evaluate all the elements of cost associated with the testing process and consider the cost and value of what happens as a result of that testing. The availability of services must be considered. In each element of cost, there must be recognition given to the professional input of medical direction, supervision and responsibility provided at all levels by the pathologists.

What elements of cost would be considered under the lowest charge level? Does the lowest charge level refer to only the actual physical performance of the test, or does it include the entire service provided, beginning with the test order and ending with the return of the final results to the patient's chart? The services required by patients vary considerably depending on the patient's location and medical condition. Costs of collection, preparation of tests and transmittal of results are costs which may or may not be included. For the same type of tests, the fee charged may legitimately vary depending on whether 9 a.m. to 5 p.m. weekday or 24-hour emergency availability is required. If the lowest charge level is to apply only to the physical performance of the test, it would not take into account other critical components of a procedure and is therefore incomplete. If the lowest charge level includes the whole spectrum of providing the laboratory service, then this section will create an administrative nightmare for carriers trying to develop the multiple fee profiles required.

It is our belief that the implementation of a lowest charge level system of reimbursement for laboratory services could result in the following:

Subjecting laboratory services to price comparison would be misleading. There are many factors such as availabilty, specificity, sensitivity, pickup service, reporting, overhead expenses, and others which must be considered. Clinical pathology laboratory services are not numbers generated by machines.

The lowest charge level wrongly places emphasis on precedures that can be automated rather than procedures that are appropriate. Test procedures are done by varying methods under varying situations. Some tests may be automated in one situation and not in another.

The administration of a lowest charge level method of reimbursement will be hopelessly complex.

Charge differentials would have to be developed depending on the specimen sources (arterial, capillary, venous), time of day, location of patient (rural, urban, suburban), patient's age, general availability of services and other factors. The philosophy behind our discussion of concerns over a lowest charge level is in many ways appropriate to the development of prevailing charge levels for each State. Such prevailing fee development must take into account the location and circumstances under which the service is provided. Was it inpatient or outpatient? Was it routine or emergency? Did the laboratory obtain the specimens ? Was it a preprocessed specimen?

We urge careful consideration of these points in developing prevailing charge levels for each state or its economic region. We also recommend elimination of laboratory services from the lowest charge concept.

Section 30-Establishment of Health Care Financing Administration

To quote you, Mr. Chairman, in your introductory remarks in the Senate on S. 1470:

"Although I am most proud that the new administration followed my proposals, I am most apprehensive that in implementing this reorganization. the aims of the original proposals may be lost.

I had proposed this reorganization in order to collapse duplicative functions within the existing agencies and to establish clear lines of command and authority.

From the latest information available to us, it seems as if the new health care agency, rather than collapsing overlapping positions and clarifying lines of authority, may do the opposite and establish a new bureaucratic superstructure as a haven for displaced bureaucrats."

The College shares your concern. We believe it appropriate that the establishment of a Health Care Financing Administration and an Office of Assistant Secretary for Health Care Financing be included in this legislation.

Section 32-Regulations of the Secretary

The College understands the need for prompt action on certain proposed regulations. However, there are no safeguards built into this section to preclude the Secretary using the sixty-day "urgent" designation to avoid receiving and reviewing comments in opposition to such proposed regulations.

The due process for the public in allowing them to comment on proposed regulations in a manner that is appropriate should be provided. The development of a position by any health care organization would be jeopardized by unrealistic rigid limitation of the amount of time in which comment may be made. We recommend this rigid limitation be eliminated from the bill.

Section 33-Repeal of section 1867

Mr. Chairman, HIBAC presently is the only advisory body available for presentation of views on the administration of Medicare and other health financing programs. We believe that to terminate HIBAC without the establishment of an appropriate form would not be in the public interest.

Section 44-Disclosure of aggregate payments to physicians

The College strongly supports this provision which would prevent the release of names of physicians who have been paid large amounts from treating Medicare patents.

The harm and embarrassment caused by inaccurate releases has been obvious. Even accurate releases can be misinterpreted, e.g., billing for an entire pathology group under one individual's name may be done for simplicity. A technically accurate but highly misleading figure is thus listed against one physician on any list released.


Mr. Chairman, this concludes our comments on S. 1470. When we came before you last year to testify on S. 3205, the College opposed the limitations which were placed on contractual relationships between pathologists and hospitals. As you requested, we have worked on developing alternatives and specific proposals. We have worked to create mechanisms for preventing abuses of reimbursement mechanisms for pathologists. We have worked to help others better understand

the complexities of the pathologist's role in the clinical laboratory. We have also worked to help pathologists understand the complexities of government concerns over the cost of health and medical services.

The College has taken action to support the use of relative value schedules including a physician's component. We will work with the Committee and the Secretary to develop an equitable system.

We support the intent of S. 1470 to contain the increasing costs of Federal health care programs. We pledge our support in providing high quality clinical pathology laboratory services to the public at a reasonable cost to the taxpayer. During the past year, there have been fruitful opportunities to confer with you, Mr. Chairman. and with the Committee staff. We want to continue these cooperative efforts and are ready and willing to assist you at any time. We thank you for this opportunity to present testimony on S. 1470.

The next witness is Ruth E. Ecklund, president, American Association of Nurse Anesthetists, accompanied by Ronald F. Caulk, president-elect; J. Martin Stone, executive director; and Kenneth Williamson, Washington consultant.

We are delighted to have you. If you would submit your entire statement for the record and, in the interests of time, summarize it in 10 minutes.


Mr. Chairman, I am Ruth E. Ecklund, CRNA, president of the American Association of Nurse Anesthetists and chief nurse anesthetists, Family Hospital, Milwaukee, Wis. Accompanying me are Ronald F. Caulk, CRNA, who is president-elect of the association; J. Martin Stone, who is executive director of the association; and Kenneth Williamson, who is the Washington consultant for the association. We appear here today in behalf of the association.

Mr. Chairman, the next two paragraphs of my statement I will not read, in the interests of time. It sets forth the purposes of our association.

On the bottom of page 1 and top of page 2, we have indicated the percent of anesthetics provided by nurse anesthetists in hospitals of various sizes which shows that nurse anesthetists provided a substantial portion of the total of the anesthesia care in the large medical centers where the most complicated surgery is performed as well as in smaller hospitals.

In the interests of time, I will not read the following two paragraphs. We wish at this time to direct our testimony to S. 1470 and we will limit our comments and recommendations to those provisions of the bill which deal with anesthesia services as a part of section 12 entitled Hospital-Associated Physicians, starting on page 31 of the bill.

In July of last year we appeared before the committee and discussed S. 3205. We made a number of recommendations which we felt would improve the bill and its administration, which gave some recognition to the major role of nurse anesthetists and which, most importantly, were essential to protect the public and assure quality

of anesthesia services. We are, of course, quite disappointed that none of our recommendations are incorporated in S. 1470.

We believe the same weaknesses exist in S. 1470 that were part of last year's bill. In various ways, our reading of the bill suggests that insufficient attention is directed to the effect of the bill's provisions upon patient care or the quality of that care. Thus, S. 1470 shows no concern for half the patients receiving surgery because it contains nothing pertaining to those professionals who provide the anesthesia to these patients, the nurse anesthetists. Once again, the bill does absolutely nothing to bring a degree of fair treatment and equity to nurse anesthetists. In fact, it totally ignores them.

On pages 3 and 4, Roman numerals I through VII, we have set forth recommended changes in the bill which we believe are essential. to protect patients and insure quality care. I will not read them. We have attached an appendix labeled exhibit A that has the specific. language that incorporates our recommended changes.

I direct your attention to the bottom of page 4 where we will discuss equity and fairness.

Mr. Chairman, over the past several years, we have met with representatives of the Social Security Administration. We have also spent a great amount of time in discussions with the staff of the House Ways and Means Committee and the Senate Finance Committee and we have given testimony at hearings before both committees. In all of this, we have tried to provide some understanding of the role of the nurse anesthetist and of what we beileve to be a simple right for them to be accorded fairness and equity under the law. Notwithstanding all of these efforts, we were advised that it was unlikely that our appeals for fairness and equity and removal of discrimination would be entertained unless we provided specific legislative language. Therefore, we turned to a highly skilled and experienced draftsman who performed such activities for the Congress for a number of years and he drafted the specific recommendations for amending titles XVIII and XIX of the Social Security Act which we wish to present. I will not read the specific language for amending the Social Security Act that appear on pages 5 and 6.

On the bottom of page 6, I wish to read the explanation of the amendments.

In general, the amendments recommended do three things. First, they permit hospitals to charge separately under medicare and medicaid for the services of nurse anesthetists who are employees of the hospitals. Second, they permit nurse anesthetists who are not employees of the hospitals where they perform their services to bill directly for their services under part B and under medicaid.

Third, the amendment states that the charge for the services of a nurse anesthetist shall be deemed to be reasonable if that charge does not exceed the percentage of the charge for those services which could have been made by a board certified anesthesiologist physician determined by the Secretary to be reasonable.

Mr. Chairman, I will not read the discussion of the recommended amendments that follow on pages 6 and 7, except to point out a significant omission that appears on page 7. In the discussion of section 5, line 3, the word "not" should appear immediately before the words "hospital employees."

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