any bill submitted under this procedure for this period will not be denied retroactively to the date of admission. For 1969, these denials constituted 22.9% of the total denials, and for the first quarter of 1970, 29.7%.

In addition there are certain claims in which the ECF or utilization review committee may notify the intermediary of a change in the patient's level of care or the intermediary may approve coverage to a specified future date. Most of these cases would not involve retroactive denials. The number of such cases is unknown.

3. What appeals procedure does an ECF have if it feels the intermediary is denying claims without proper physician review or feels the intermediary is not implementing SSA's requirements properly?

The Medicare law makes no provision for provider appeals to the Secretary whether arising from the application of the cost principles or the amount payablein a specific case. The intermediaries are charged by contract with the responsibilities of making coverage determinations and determining the reasonable cost reimbursement due the providers. The intermediaries are further charged by contract to:

Establish and maintain such procedure as the Secretary may approve for considering and resolving any differences which may arise when payment to a provider of services on behalf of an individual for services furnished him has been denied or when the amount of such payment is in controversy; The Blue Cross Association (serving 75 percent of participating providers), in conjunction with the subcontracting Plans, has developed a "BCA Provider Appeals Procedure" providing for a "two level" appeal. First the local Plan affords the provider a review it customarily grants in settling disputes in its own business. The provider, if dissatisfied with the outcome of the local review, may appeal to the national level, i.e., the "BCA Provider Appeals Committee, which includes provider representatives.

The other intermediaries provide some mechanism for higher level review of their intial decisions within the organization.

Quite apart from the appeals process, where the intermediary is, in fact, not administering SSA requirements properly, it becomes a question of performance or compliance with the terms of the agreement between the contractor and SSA. SSA does consider and pursue such complaints or protests.

4. How many denials have been appealed and the results? Also, has there been a recent increase in appeals (on a national basis)?

The health insurance appeals process (involving provider services) provides for a beneficiary dissatisfied with an intermediary decision on his claim to request a reconsideration of the claim within 6 months of the intial decision. The intermediary then reconsiders the case and the reconsidered decision is reviewed by SSA which then advises the beneficiary. The beneficiary is then given 6 months from the date of the notice of the reconsidered decision, if dissatisfied, to request a hearing by a hearing examiner of the Bureau of Hearings and Appeals.

In accordance with the above, we have the following data beginning with 12/69 broken down to show ECF denials and the number of reconsiderations received and processed each month. Prior to 12/69, information as to reconsiderations was not broken out by the type of provider categories involved, i.e., Hospital, ECF, or Home Health Agency.

The following data shows the number of reconsidered cases which wese subsequently heard on appeal by a Hearings Examiner and returned to the Social Security Administration in each of the months indicated. Prior to 12/69 the information was not broken out by provider category.

5. How does an intermediary go about processing a denial, that is, who sees the case, what documentation is needed to substantiate a denial, etc.

Intermediary ECF claims activities are directed toward assuring that, as a condition for payment, necessary skilled services have been prescribed for and provided to the patient for the same illness which required a stay of 3 or more days in a hospital. If these services appear to be appropriate to the patient's condition and require skilled nursing care, the intermediary determines, in the absence of evidence to the contrary, that the care constitutes covered care.

Since April 1967, we have issued several intermediary letters and other materials (see Appendix 3, p. 716) giving intermediaries instructions for determining the level of care furnished patients in extended care facilities. These instructions provide that the views of the attending physician and the utilization review committee be thoroughly considered before a case is denied, and emphasize the responsibility of the intermediary to inform the committee and facility of questionable cases so that the possibility of conflicts between the views of the patient's physician, the committee, and the intermediary's medical staff are minimized. Followup on the provisions of our various instructions on level of care disclosed some significant inconsistencies among intermediaries in determining whether stays in extended care facilities are covered. In April 1969 Intermediary Letter No. 371 provided greater detail regarding factors that should be taken into account in making such determinations. Instructions in this letter serve as basic guidelines and do not remove the judgmental factor necessary to resolve questionable cases. Intermediaries were asked to supplement these instructions, where necessary, with specific claims review instructions and procedures adapted to their individual claims processing systems. Generally, the "typical" intermediary processes denials as follows:

The admission form is first reviewed by a claims examiner applying the screens contained in I.L. No. 371, together with any related guides prepared by the intermediary. Claims which do not pass this screen are usually referred to paramedical personnel (nurses trained in the evaluation of these cases) for review. The nurse may make a determination or request additional information. A denial is rarely arrived at based on the limited information provided in the usual billing process. Additional information requested by the reviewing nurse may include nursing notes, attending physician's orders, progress notes, medical information form, transfer form and/or the discharge summary from the hospital. If these sources of information are insufficient to approve the claim, additional documentation by the ECF utilization review committee or the patient's attending physician is requested.

Through these sources of information, intermediary paramedical personnel usually are able to determine whether to allow or deny. In exceptional cases, the claim may be referred to the intermediary's medical staff for consultation before final action is taken by the claims staff.

6. What professional or educational requirements are established for people who review and pass on claims, i.e., must they be nurses with nursing experience, physicians, college graduates, etc.?

SSA has not established any mandatory professional or educational requirements for carrier and intermediary personnel who review and pass on claims. Instead, we have emphasized that claims reviewers must have proper training and supervision and that each intermediary and carrier have medical personnel to give consultation and advice on questionable claims.

Generally, claims examiners are lay personnel. They usually undergo a training period before contractors allow them to process Medicare cases. Written guidelines are used by the examiners to enable them to uniformly review and pass on claims. If the claim falls outside of the guidelines, the examiners usually refer the cases to a medical technician or professional nurse for review. If, after this review the claim is to be denied, the case is usually referred to a physician or a physician advisory group to make a final determination of denial.

The surveillance of contractor performance in this area by the Social Security Administration indicates that while all contractors understand their responsibility and are taking steps to assure proper program reimbursement, their performance varies somewhat. Although we have full awareness of the difficulty involved in this aspect of carrier performance, nevertheless, we will continue to require whatever improvements are necessary in the claims process of contractors to assure quality claims review.

You also requested copies of all pertinent intermediary instructions, memorandums and rulings regarding denial of ECF claims. These materials are enclosed in the attached folder.

Please contact me or my staff if we can be of further assistance.
Sincerely yours,

THOMAS M. TIERNEY,
Director, Bureau of Health Insurance.

Senator Moss. We will ask Dr. Offenkrantz if he will come forward

now.

Unfortunately I will have to leave, Doctor, before you complete your statement because the time has gone much faster than I expected and I have a commitment I must keep. Mr. Oriol and Mr. Halamandaris, the professional staff members will remain, will continue the hearing and will make the record on which the subcommittee and the full committee depend.

I apologize to you that I will have to leave before you have completed your testimony but we would like to have you come forward

now.

Dr. Offenkrantz is the medical director of the Cranford Health and Extended Care Center, Cranford, N.J., and as such he has first-hand knowledge of the problems that we have been talking about here about rehabilitation and care of the elderly in the nursing homes of long-term care facilities.

Proceed, Dr. Offenkrantz.

STATEMENT OF FREDERICK OFFENKRANTZ, M.D., MEDICAL DIRECTOR, CRANFORD HEALTH AND EXTENDED CARE CENTER, CRANFORD, N.J.

Dr. OFFENKRANTZ. Thank you, Senator Moss, for the invitation to speak here.

My name is Frederick Offenkrantz. I am a physician, the medical director of the Cranford Health and Extended Care Center in Cran

ford, N.J. This is a facility operated by the nonprofit New Jersey Rehabilitation Care Foundation as one of a number of projects designed to give the most advanced long-term care possible in areas of New Jersey, extending from Princeton to the inner-city ghetto of Newark. The foundation's basic purpose is to serve people who might not otherwise be able to afford or obtain such long-term care.

I wanted to say that Commissioner Newman made an interesting statement. He said he regarded his Bureau as the patient's protagonist. I am very happy to here this because in my dealings with subgroups of the SSA they act more like the devil's advocate in this type of thing. As I am sure the committee knows, extended care is post acute general hospital institutional care, designed to cut down on the days required in an acute hospital. The ECF patient needs both medical and skilled nursing care beyond that of simple custodial care.

My purpose in coming here is to, on behalf of our patients protest the number and method of Medicare cutoffs at our facility through our fiscal intermediary, New Jersey Blue Cross. Within the past year there have been over 50 such cutoffs and only recently we were notified of 18 such terminations in one day. The tempo appears to be increasing, apparently by design, and I am here to protest these actions on the following bases.

With regard to Mr. Oriol's statement I would like to repeat that during the first 18 months of operation we had less than 12 retroactive cutoffs and in the period from March through today we had over 50 such cutoffs. During this time we admitted less than 200 patients which means for statistical purposes as I see it 50 out of 200.

Now I would like to protest these actions on the following bases: 1. Every cutoff was made despite referrals from general hospitals whose utilization review procedures embody referrals to ECF's. Further, in every instance a referring physician from a general hospital certified to the need for ECF care. These patients are sent to us from their hospitals in accordance with the Medicare rules.

2. Cutoffs were made with total disregard to the certification by the attending physician at the Cranford facility as to need for ECF care, plus a preadmission review by the administrator, the very capable and experienced director of nursing, and by the medical director.

3. The utilization review committee of this nonprofit community facility is comprised of, among others, a physiatrist-this is a physician trained in physical therapy-the medical director and a practitioner of many years standing in admitting patients to this facility. In each instance of retroactive cutoffs, this committee had certified to the necessity of additional ECF care, within the guidelines from the Social Security Administration as best we can interpret them, plus our mutual judgment.

4. In many cases no portion of the patient's chart, except for an initial checklist, was requested or reviewed by the individual making these cutoffs, which, of course, should be medical judgments.

By the way, on that last statement, No. 4, since we started raising heck about this-and the cutoffs have been in effect for over a monthwe have had requests, and I have them here, from the intermediary asking for these charts that they had already cutoff without the benefit of the charts.

5. In every instance the cutoff was made retroactive up to as much as 7 weeks from the date of our notification, sometimes this was to the date of the patient's admission to this facility. In several instances the date of cutoff was actually after the death of the patient. Unheard of. 6. In many instances the attending physician has flatly refused to order discharge of patients following these cutoffs. Because of the severity of the patients' illnesses, these physicians felt strongly that discharge would constitute malpractice. I must call your attention to the fact that if this constitutes malpractice on the part of the attending physician, it constitutes malpractice on the part of the intermediary in so ordering, contrary to our combined medical judgment. Since many of these victims come from poor areas, many being inner-city ghetto residents from Newark and Elizabeth, N.J., they cannot afford the charges; and as a nonprofit facility, we are deeply in debt because of those denials which are made long after we, in all good faith and honesty, have rendered the service.

As Dr. Miller pointed out, we cut off most of the people applying for admission long before they ever get to us.

7. Despite repeated efforts, no appeal to reason, no appeal for review and no appeal to professional judgment or humanitarian need has been entertained by the New Jersey Blue Cross plan or the Social Security Administration.

I have to modify that. In the last couple weeks we received the one review and acceptance of further hospitalization on the part of the patient who had complained to us.

8. In no instance during my almost 2 years of tenure as the medical director has a physician from the intermediary or the SSA contacted me regarding a cut-off. This, in my opinion, constitutes a serious defect in the entire program. It permits unnamed persons to effect virtually a life and death decision on these patients whose requirement for additional care is certified to by referring physicians, treating physicians, consultants and utilization review physicians at this extended care facility.

May I beg the indulgence of this committee in reviewing my background, to explain what I think are my qualifications for appearing before you with this appeal. I am by training a pathologist, graduated from Bucknell University and the Columbia College of Physicians and Surgeons. In addition, I hold a master's degree in public health administration from Columbia University. My attention to the problems of pathology which are inherently those of diagnosis and the course of disease has given me interest in several associated activities. The one in which I appear before you is that of the admission, treatment, supervision and discharge of the geriatric patient under Medicare.

In the opinion of the Foundation leadership, which comprises trained educators and administrators in the health field, a pathologist so interested, constitutes a proper and valuable medical person to objectively evaluate the sick and afflicted geriatric patients being admitted for ECF care. It was felt that having someone trained exclusively in the evaluation of illness rather than subjectively in the treatment of patients was a step towards fully scientific, objective procedure. This was intended to assist the treating physician along