received. The report and recommendations of that task force were reviewed by the several agencies within the Department concerned with the regulations and the decision was made to adopt virtually all of the recommended changes.

The regulations were rewritten accordingly and were approved by the Administrator of SRS on January 28, 1970. They were published in the Federal Register on April 29, 1970. I have provided to the subcommittee copies of these final regulations.*

Section 1902 (a) (27) which originated as a Moss amendment also became effective January 1, 1969. This section provides that State agencies must enter into agreements with providers (including nursing homes), relating to records to be kept by the provider and to documentation of claims. Regulations implementing this subparagraph were published in the Federal Register on September 20, 1969.

Effective July 1, 1969, section 1902 (a) (26) requires States to provide medical review programs. Such programs have two parts: first, medical evaluation of each patient's needs prior to admission and second, regular and periodic inspections, by independent review teams consisting of physicians and other health and social service personnel, of the care being given title XIX patients in nursing homes.

Development of our basic policy approach to the implementation of this amendment was begun in February of 1969 by a committee of professional staff in the Medical Services Administration. Staff of the Community Health Service, the Division of Mental Health Service Program, and the Bureau of Health Insurance were also involved and consulted. A completed draft was circulated for concurrences of these other agencies and for legal clearance during late July and August of 1969. The proposed regulations were then circulated to the States through the Advisory Commission on Intergovernmental Relations and were reviewed by the Task Force on Medicaid and by the Medical Assistance Advisory Council. We expect an early resolution of the several unresolved issues under discussion.

The amendment with the latest effective date is that which provides that after July 1, 1970, States must provide home health services for any categories of persons for whom nursing home services are provided. An initial draft of regulations implementing this amendment has been completed and is now under review in the Office of General Counsel.

As you know, the Department has established a Federal Assistance Streamlining Task Force (FAST) under the direction of Deputy Under Secretary Frederick V. Malek. FAST has reviewed more than 50 different grant programs to date. As a result of its work, a number of important steps have already been taken to speed up the processing and review of grant applications, to eliminate or reduce unnecessary reporting requirements, and to decentralize decisionmaking authority to the field.

I have been advised that this task force has under consideration for one of its next undertakings a review of the Department's procedure for processing regulations.

*See app. 1, p. 693.

Mr. Chairman, I should like to conclude with a statement of my own conviction that the Medical Services Administration can and will progressively solve the problems which have plagued the Medicaid program in its early years. The statements I have just made on the actions taken to implement the Moss amendments clearly indicate that we have moved more slowly and less effectively than we should. I would have liked to be able to make a better report to you today. Although I have been Commissioner only a few months and am not familiar in detail with the period covered by my testimony, I have come to appreciate that the Medical Services Administration has come through a very difficult period. A new organization, a massive new program, shortages of staff and funds have characterized this period. I am not apologizing for these conditions, but noting them and noting that they are changing. We are now in the midst of reorganization. We are getting an infusion of new personnel giving us both added manpower and new skills. Implicit in these changes is a recognition within the Department of a different and stronger role for the Federal level of administration of the Medicaid program.

Medical Services Administration should stand for quality medical care for beneficiaries of our programs. I do, myself, and I wish to be associated with an organization which does. We should be the patients' protagonist and take his part in the processes of balancing fiscal, provider, and consumer interests. We should be able to give leadership, consultation, and backing to State administrators in carrying out an effective program and in acting within the framework of law and congressional intent. I assure you of my determination to see these things accomplished.

With your permission, Mr. Chairman, I should like to call on Mr. Arthur Kimball, HEW regulations officer, to comment briefly on the Department's clearance procedures.

Senator Moss. Mr. Kimball, we will be glad to hear from you, sir.

DEPARTMENT

OF

STATEMENT OF MR. ARTHUR KIMBALL, REGULATIONS OFFICER,
MEDICAL SERVICES ADMINISTRATION,
HEALTH, EDUCATION, AND WELFARE

Mr. KIMBALL. Thank you, Mr. Chairman. Mr. Chairman, I brought with me several copies of the chapters of the Department's administration manual which deal with the processing and development of regulations. One chapter is 3-20 which is "Development and Processing of Regulations and Notices of Proposed Rulemaking," the other is chapter 19-11 concerning the consultation with heads of State and local governments in the development of regulations affecting Federal assistance programs.

If I may pass these to you.

There are three charts at the back of chapter 3-20. The first chart gives, I think, the most complete picture of the development of Federal regulations. It shows the requisite procedure for those cases needing consultation with the heads of State and local governments through the Advisory Commission on Intergovernmental Regulations and those cases which involve significant policy issues.

I would like to point out to the committee that in October 1969 these revised procedures were approved by Secretary Finch. I believe the keynote of the new procedures approved at that time has been the attempt to take action as early as possible. For example, in the case of regulations of State and local governments we are transmitting, at the earliest possible date, policy issues and even draft regulations to the Advisory Commission on Intergovernmental Regulations instead of waiting for the so-called final set of regulations. This will enable the ACIR and its constituent organizations, the National Governors' Conference, the U.S. Conference of Mayors, and the other organizations to make their recommendations known early in the formulation process. Also, the new procedures encourage the operating agency, in this case the Medical Services Administration or the Social and Rehabilitation Service, to prepare memorandums of specifications setting forth the policy issues in regulations to be developed.

Those recommendations include alternatives the reasons for suggesting a particular alternative. These recommendations, in the form of a memorandum, are to be forwarded to me at the earliest possible date. I then send them to the officials in the Secretary's office who are particularly concerned; the General Counsel, the Assistant Secretary, Controller, the Assistant Secretary for Planning and Evaluation, if grant or fiscal matters are involved, and on occasion, the Assistant Secretary for Legislation.

We obtain their comments and recommendations simultaneously instead of one after the other. We are then able to present the memorandum of specifications to the Secretary with the comments and recommendations of appropriate key officials including the Under Secretary.

In this way, as Secretary Wilbur Cohen once put it, the Secretary would not receive the regulations on his desk frozen in concrete but there would be an opportunity for the top officials to determine the policy questions at the time the regulations were under development. With these two steps under this new procedure taking place simultaneously, the drafting agency should then have the advantage of the policy decisions of the Secretary and his top staff as well as the recommendations of the State and local officials in the preparation of the final regulations. These steps are spelled out to give you a little idea of the timing because I know this is crucial in the questions you have raised.

We have pretty well set a pattern with the agreement of ACIR of 3 weeks for their initial review, of course, there are times when they may request additional time or we may ask that something be expedited.

We have also scheduled as normal timing under these procedures a 10-day or 2-week period for review of the memorandum of specifications. Obviously in any given case there may be problems which make such timing impossible but that is the goal and my office endeavors to follow up on any delayed responses to determine the cause.

The main thrust of our procedures is to try to identify the problems, obtain the recommendations, and get the decisions made as early as possible. We thereby hope to avoid surprises or delays when the regulations come up for final clearance and approval.

Senator Moss. Thank you, Mr. Kimball.

Do either of the other gentlemen have a statement they would like to make?

Mr. NEWMAN. No, Mr. Chairman, but I am accompanied by two highly respected members of the staff of the Medical Services Administration, Mr. Thomas Laughlin, Deputy Commissioner, and Mr. Frank Frantz who is the Chief of the Office of Nursing Home Programs, both of whom who have detailed knowledge of the specific issues of concern to this subcommittee.

Senator Moss. Well, now, I appreciate your laying out in detail and telling us what the timing would be but on the provisions for medical review, the deadline set by the law for compliance by the States was July 1, 1969; is that correct?

Mr. NEWMAN. Yes, sir.

Senator Moss. And we still don't have that regulation requirement even today.

Mr. NEWMAN. That is correct. I am hopeful, sir, that that regulation will be issued very shortly.

Senator Moss. Twenty-eight months have elapsed since the legislation was enacted. Don't you think that is an unreasonable time?

Mr. NEWMAN. As I said in my statement, sir, I think that it should have been done by now and I personally regret that this has not been the case. We expect to do all that we can to get it accomplished.

Senator Moss. I think in your testimony you said something about you were getting additional personnel now. Is it because you have not had adequate personnel, sufficient numbers to do it?

Mr. NEWMAN. The problem of indaequate staffing of the Medical Services Administration has related generally to difficulties in the management and administration of the program. I personally would not like to say that staff size has been the only impediment to the process by which the regulations have been developed. However, we have been authorized to increase the staff substantially and it is my hope that additional staff in the regions and the central office will enable us to cut down the time required.

Senator Moss. From the summary that Mr. Halamandaris made, in talking about the number of people involved in getting regulations implemented he says as follows. This is a letter from Mr. Tierney, Director, Bureau of Health Insurance:

In summary some 30 people were employed substantially or on a part-time basis in the development of standards, policy, and regulations covering both hospitals and ECF's. Another 12 people were involved for approximately six months in the planning for the certification process of all providers. Finally, 65 people were involved in the certification of ECF's on a largely full-time basis for four months with an additional 15 used on a part-time basis within this period. Thus, while the total number of people used on this activity at one time or another numbered 122, as best we can determine the work as related to the implementation of the extended care benefit program required some 40 man-years of professional or semiprofessional staff time.

Now that sounds like an awful lot. How much time was put in on developing the standards for medical review?

Mr. NEWMAN. One relevant figure which I can offer is that there were three people in the Medical Services Administration at the time of the passage of the Moss amendments who had responsibility for this activity. I cannot estimate the number of man-years or the amount of time expended in developing the medical review policy.

41-304-71-pt. 8

I would point out, however, that the comparison between the Medicare and Medicaid programs often leads to difficulty when one attempts to compare the nature of the management to the programs. Ours requires the involvement of States in a way which I personally believe substantially complicates the management and administration of our program, and for this reason I don't think that the comparison of man-years expended is a terribly useful figure.

We are, however, in our reorganization attempting to devote a substantial amount of our new resources to this problem. Part of the reorganization has included an expansion of our Program Management Division with responsibility for the policy development activities. I personally feel fortunate that the staff of the Medical Services Administration, while it has had difficulty going through this period of time, is comprised of people of high caliber who are concerned about these issues. I want to emphasize that any delays have not been due to woeful neglect either by me or by any member of my staff. I hope that the new staffing pattern will allow us to be more responsive to your intent and I ask that we be given an opportunity to show what the new Medical Services Administration organization can produce to this end.

Senator Moss. Well, I recognize that you are rather new as Commissioner of the Medical Services Administration so some of the delay we are talking about does not come under your tenure there. I might ask Mr. Frantz who is Chief, Office of Nursing Home Programs, Medical Services Administration, about the size of staffing that has been put on the implementation of the Moss amendments.

Do you have any comments you can make on that, Mr. Frantz? Mr. FRANTZ. Yes, Mr. Chairman. Initially, beginning in December of 1967, at which time the amendments had passed though they had not been signed, a unit was developed which had initially one person. During the course of the next 6 months it was increased to three people with responsibility for the nursing home phases of the program and was maintained at that level during most of the period under discussion. I would estimate that half to two-thirds of the time of these individuals was devoted to the development of the nursing home standards and the certification regulations. So we are talking about one and a half to two people.

Mr. HALAMANDARIS. Is that one and a half to two man-years? Is that what you are saying?

Mr. FRANTZ. Yes.

Mr. HALAMANDARIS. As compared to 40 man-years devoted to implementing the Medicare extended care nursing home program. Mr. FRANTZ. Yes, that would be correct.

Mr. NEWMAN. I would point out we take exception to the use of that analogy.

Mr. HALAMANDARIS. Your exception is noted.

Senator Moss. We are trying to find out why we have had just interminable delay which seems to ignore the various deadline dates that we have in the statute for implementing the Moss amendments.

What did you say your plan was for publishing new regulations? What is the timing on medical review provisions?

Mr. NEWMAN. I would expect that we will have the publication of that regulation within the next 10 days.