Our recommendations set forth above were drafted in such form that they could be presented as a separate bill. We hope, however, Mr. Chairman, that the language will be included as a part of S. 1470. Thus, the bill would deal with anesthesiologists and their role; and an additional section will deal with nurse anesthetists and their role. President Carter and his administration have expressed their great concern for the increasing costs of health services. The Congress has also done so and, in part at least, S. 1470 is directed to these problems. We believe our recommended amendments pertaining to nurse anesthetists are very much in keeping with the purpose of President Carter and of the Congress and would result in substantial savings to the public.

In our opinion, recommendations for amendments to the Social Security Act as they relate to reimbursement for anesthesia services should accomplish three objectives. Specifically:

One, decrease total expenditures spent on anesthesia services by the Government, or other third party payers;

Two, provide incentives to the providers of anesthesia to be as efficient as possible; that is, the lowest cost without adversely affecting quality;

Three, improve the equity of the various parties involved.

We believe that the proposal which we have presented accomplishes these objectives. However, we recognize that reimbursement of nurse anesthetists on the basis of charges poses certain questions. For example, a suggestion has been made that nurse anesthetists might move away from salaried employment to self-employment if these amendments were adopted.

This is unlikely to occur because of the many advantages identified with an employed status, that is, job security, fringe benefits, malpractice insurance coverage provided by the hospital, et cetera.

Second, the overall economic status to the hospital employed nurse anesthetists will probably improve and thereby provide little incentive to move away from an employed status. Because of these factors, we believe our recommended amendments may well encourage more nurse anesthetists to go from a self-employed to a hospital based arrangement.

On the bottom of pages 8 and 9, we have given a specific example, which I again will not read, of the kinds of reduction of total cost which would result through the adoption of our proposed amendments.

Mr. Chairman, I direct your attention to the middle of page 9, the sentence beginning with "in this factual example." The word "salary" should be replaced with the word "income."

We do believe that the proposal satisfies our three objectives, decreasing total expenditures, maintaining quality and improving equity. On the second half of page 9, we discuss the self-employed nurse anesthetist. Our previous testimony and statements discussed the role of the self-employed nurse anesthetists who are called upon by hospitals, or members of the surgical staff of hospitals. This occurs where no anesthesiologist is available and where nurse anesthetists are not employed by the hospital, or when additional anesthesiologists or nurse anesthetists are needed. The present medicare and medicaid laws provide the rankest sort of discrimination against these health profes

sionals Under the law, a physician can bill the Government directly for his services as an individual practitioner whereas a nurse anesthetist who is fully qualified and renders the services is prohibited from doing so.

A letter from the chairman of this committee to Ms. Iris Berry, CRNA and president, Georgia State Association, of Nurse Anesthetists dated January 13, 1977, contained the following assurances to correct this situation. "You will be pleased to know that, as one result of the Finance Committee's hearing on S. 3205, I have decided to make appropriate changes in the revised bill so as to allow for an equitable reimbursement mechanism for those nurse anesthetist is who practice their profession independent of hospital employment. I believe that this will help resolve a substantial portion of the problems you raised."

Our reading of the bill does not indicate that any improvement has been made.

Mr. Chairman, in the following paragraph on page 10 we have again stated our belief that a national study of all anesthetic services is greatly needed. We attempted to bring about such a study. I wish to read our specific recommendations which apply there.

Though our recommendations here relate to the economic aspects of the services provided by nurse anesthetists, we have a major and continuing concern for the quality of these services. Substantial efforts are being directed to the education of nurse anesthetists. Working with the U.S. Office of Education, our council on accrediation is striving to continually improve the education provided. We have also developed a set of standards for nurse anesthetist practice.

We are continuing extensive programs of information and education related to new procedures, new techniques and the like, and we have in public testimony, urged the development of a national study of the quality of all anesthesia services, which we believe is badly needed.

Our council on practice has had correspondence and discussions with the Department of HEW and following preliminary efforts by a committee of knowledgeable persons, they met with representatives of five sections of HEW who have a concern for anesthesia services to discuss the possible assistance of the Department in financing such a study.

Unfortunately, they have made little progress with HEW. It has seemed to us inasmuch as the public is expending more than $2 billion a year on anesthesia services and the service is provided in such life and death situations that the Government would have a major interest in seeing that a thorough study of the quality of anesthesia services is made. We urge that this committee and the Congress in its report on this bill direct the appropriate persons in HEW to see that such a nationwide study is undertaken without further delay.

We have provided a summary statement of our testimony citing specific recommendations, which we have presented. We appreciate this opportunity to once again bring our views to you and we would be pleased to be of any possible assistance to the committee.

We ask that our complete statement be made a part of the record of these hearings.

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Senator TALMADGE. Without objection, that will be done.

I am somewhat surprised by your testimony. I recall when we met and I got staff working on this and we had a meeting with your organization I thought that we had reached agreement in what would be incorporated in the bill.

Mr. Constantine, would you relate what happened?

Mr. CONSTANTINE. Since medicare's enactment, there have been a host of groups-dieticians, licensed practical nurses, physical therapists, physician extenders, social workers, who want fee-for-service. The general attitude has been that more fee-for-service would generally be inflationary to the cost of the programs. Although physicians are paid on a fee-for-service basis, that was an historic fact when medicare was enacted. In almost all other cases, health professionals were a part of hospitals or other organized settings such as clinics. The nurse anesthetists came in and discussed certain problems with us at a dinner meeting some 2 months ago which Mr. Kern of our staff also attended. We told them at the outset that we did not believe the staff could recommend to the committee fee-for-service for nurse anesthetists.

That was not the purpose of the meeting, we were told. They described four problems to us. One was alleged exploitation by some anesthesiologists who use nurse anesthetists extensively to provide the anesthesia service and then the anesthesiologist bills and collect for the nurse's work. The leadership of the Society for Anesthesiology recommended specific services, included in the bill, which an anesthesiologist must perform to earn his fee and which would avoid that exploitation.

The recommendations were incorporated verbatim. We believed, and recommended to the committee, that they were fair and quite explicit. As a matter of fact, the original recommendations were stronger than we thought were necessary.

The second concern was that in larger hospitals they suggested that nurse anesthetists be members of the hospital staff. That was preferable to being employed by the anesthesiologist. The bill does contain a provision toward that end. That is, in a hospital which is large enough to have full-time nurse anesthetists where the anesthesiologist earns a fee and uses a nurse anesthetist to assist him who is employed by him, he is required to pay her out of his fee.

If he uses a hospital staff anesthetist, he still earns his fee but the hospital pays the nurse and medicare and medicaid would pick that up as a routine hospital cost. Obviously there is an incentive for the nurse anesthetist to be employed by the hospital.

Another suggestion they made is that the committee should put something in as to how much a nurse anesthetist should be paid by the hospital. We suggested that that was merely a matter for negotiation, just as other nurses negotiate with hospitals.

A third issue was the circuit-riding nurse anesthetist who serves rural hospitals and hospitals too small to retain an anesthesiologist and where there is no other source of service. We asked what the problem was there. They described two problems. One was, that in many instances the hospitals were being billed by the nurse anesthetists for services and medicare will recognize that as a reasonable charge to

the hospital as an arrangement with others. We do pay for that now, but the hospitals were taking substantial percentages of those amounts for the nurse anesthetist's service for billing and collection purposes.

We believe that practice is contrary to present law and we have asked the Bureau of Health Insurance to look into the matter. We thought that that might be double dipping, where the hospital takes not only 30 percent of the nurse anesthetist's charge but probably includes its own administrative costs as a hospital expense where the Government pays for it again.

That is being looked at right now.

The other related aspect that they described to us was where the surgeon who calls in the nurse anesthetist, bills for the anesthesia service and then pays the anesthetist whatever proportion of that amount he chooses to pay. We suggested to them that that was probably violative of an amendment that the Finance Committee put in the tax laws in 1969 relating to fee splitting.

That is, if he billed $300 of which $100 was for the nurse anesthetist and he gives her $50 and he rendered no service, in that regard, he may not deduct the $50 as an expense. The entire $300 is income to him.

Those were the principal problems which we understood and which we discussed with the nurse anesthetists. We were not involved in a discussion of fee-for-service for the services of nurse anesthetists. We were involved in a discussion of avoiding exploitation, both in the rural area, the smaller hospital area, and by anesthesiologists and in relation to their concern that they be members of hospital staffs. Senator TALMADGE. Senator Dole?

Senator DOLE. I have listened to the testimony and also to Mr. Constantine. I am sort of lost.

How are we going to save any money? Two billion dollars is a great deal of money. I read your statement at the bottom of page 8 and the top of page 9. How much money are we going to save if we adopt the suggestions you made?

You only have one example there. You say it is a factual example. Ms. ECKLUND. Yes, it is, sir.

Mr. WILLIAMSON. We had an economist, Senator, make a projection from specific examples and he estimated the area of $200 to $300 million would not be an unfair or unlikely savings that could result from the approach that has been recommended here. This would come about because there would be equity and efficiency since the fee would be determined by the Secretary, and based undoubtedly, in relationship to the training and experience of the individuals and not whether they happen to be a physician or a nurse, which in itself could make considerable difference.

I think that it would make it possible for the services to be revenueproducing to hospitals and therefore, an incentive to them to be concerned with who performs the anesthetic in a way that they are not now. The services performed and billed by anesthesiologists would be increasingly performed by nurse anesthetists and would be billed at a much lower rate.

I think in the situation where the nurse anesthetists perform six or eight procedures and are paid a salary, but the anesthesiologist bills his full fee, that would change appreciably. We believe all of these

things together and the incentive to the hospital would result in very substantial savings, Senator.

Senator DOLE. Are you in essential agreement with the statement of Mr. Constantine? Do you have any different view?

Mr. CAULK. If a physician has utilized the services of a nurse anesthetist in a small community hospital; and if the physician cannot get something for collecting the fee for the nurse anesthetist then he refuses to collect and the nurse anesthetist has no alternative for being paid, because they cannot bill themselves. They have no way to be paid for their service.

Mr. WILLIAMSON. I think at a meeting you can come away with different understandings of what you agree to, but in our reading of the bill, we do not think it helps the individual nurse practitioner and I think apparently Jay thinks it does.

As a matter of fact, the words added to the bill, "who need not be his employee," would likely result in the Government's paying twice for one procedure. They would have to pay the anesthesiologist and then the hospital would be entitled to bill a second time for the services of the nurse anesthetist. We do not see those words as helping the freelance nurse anesthetist at all, unless there is some other understanding, which we do not have, of those words.

Senator TALMADGE. I would like Mr. Constantine to comment on that. Mr. CONSTANTINE. The point there is the nurse anesthetist who is a salaried staff member is paid on a cost basis, fringe benefits and other costs, not on a given procedure. The incentives in the bill are obviously for the anesthesiologist to use a staff nurse and, in most cases, in discussing the matter with the leadership of anesthesiology, they agreed.

If the same fee is paid for the procedure and in one instance the anesthesiologist has to pay the employee out of his fee, and in the other instance he does not have a pay, where we will wind up will be for him in most cases-for large hospitals, not the smaller hospital, not talking about that-that they will start to use, obviously, staff nurses. The economic incentives-if that needs clarification

Mr. WILLIAMSON. I think that is what we are saying. We think it needs clarification. We do not think it will accomplish that purpose. Senator TALMADGE. Would you work with the staff and try to clarify that?

Do you have any questions, Senator Curtis?

Senator CURTIS. No.

Senator TALMADGE. Senator Dole?

Senator DOLE. Aside from that, you are in essential agreement with what Mr. Constantine has started this morning You did not address the one issue of fee-for-service? That was not the purpose of the meeting, even though you raised it in this testimony.

Of course, we will consider it.

Aside from that, there is a basic understanding?

Mr. WILLIAMSON No, I would not say so, Senator-no. The area that Mr. Constantine touched upon, the free-lance nurse anesthetist, we do not think is clarified and the ability of hospitals to bill on a charge basis is not clarified.

We do not think the economics for the nurse anesthetist are improved at all. We thought, from our conversations, that they would be.