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I would like to extend our thanks to you, Senator Williams, for the presentation of S. 4115, recently in the U.S. Senate, which calls for the establishment of an Institute for Retirement Income.

I think that this is long overdue, considering the fact that we live in a rather youth-oriented society, and that poverty, where it lies, hurts the seniors to a greater degree, because of his inability to work, than it does the junior. And this I am most appreciative for.

Now, I want to preface this with a comment regarding the general statement of Dr. Todd. I don't want to construe that what I am about to say in the form of testimony is derogatory or a reflection on all the people within the medical profession or all the people who are responsible for administering hospitals. I think Dr. Todd touched on the fact that there are some scoundrels probably in both areas.

But those of us in the federation of labor, and those of us in the senior citizens organizations are aware that by and large a major portion of our doctors and our hospitals are dedicated and sincere.


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Since the advent of medicare and Medi-Cal, union officials and officers of senior citizens organizations have been deluged by complaints of increased hospital costs and doctors' fees. These increases were reflected in a social security bulletin, as I recall, dated July 1, 1967, which is after 1 year of medicare experience, and as I recall, this report showed an increase of approximately 22 percent in daily hospital charges and just over 5 percent in doctors' fees on a national average basis.

Several studies by responsible researchers have been conducted since 1966, one such study having been made by University of California at Los Angeles, which involved some 75 or more it seems to me the correct figure is 77—hospitals in the Los Angeles area.

The study showed an average daily hospital charge of $74 during the first quarter of 1967, according to hospital officials; but the hospitals who replied to the study questionnaires showed an average daily charge of in excess of $86.50 for the first 6 months of 1967.

Let's compare this with the Blue Cross daily average of $75 for the last half of 1966. You show a daily increase of $11.50.

During the time of this study, which was the study quoted, during 1966-67, discussions were held with health plan administrators, government officials and insurance company representatives specifically regarding doctors' fees which indicated some increases in fees of 50 percent, and considerable gouging in routine office visit fees for medicare patients.

The UCLA study discloses that information provided by representatives of Blue Cross, Occidental Life, and California Physicians Service to the Benefit Plan Administrators formed the basis for the following statements made to the UCLA representative.

(a) Thousands of medicare and Medi-Cal claims submitted are being held up and investigated because of suspected excessive charges on overutilization. The same applies in some respect to prescription drugs.

(5) A few individual doctors may be receiving, from the services alone, in excess of $100,000 a year.


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(c) On the basis of claims submitted, one doctor apparently was seeing over 200 patients a day-an average of one every 2 minutes.

(d) Some claims are being paid on the basis of $9 to $12 a visit on the California Medical Association relative value study. Such claims were unusual prior to medicare and $5.50 to $6.50 per unit generally considered the reasonable customary charge in Los Angeles County.

Claims reviewed—this is all during these studies—disclosed the following:

(1) One doctor charged each of his medicare repeat patients after July 1, 1966, for his first visit on the basis of a complete history and physical even though it was just another routine visit. This provides for an allowance of 112 to 212 times what he should have been allowed.

This doctor was therefore paid from $20 to $35 for a routine visit.

One doctor raised his routine visit charge, treating the same patient for the same condition from $5 to $6 per unit to $8 or $10 per unit.

Routine office visit charges for medicare patients of $15 to $20 were paid to one doctor.

One doctor, using an automated laboratory for blood work, was paid $140 for tests which probably were billed to him at less than $5.



Directly related to the health care costs of the elderly is the cost of drugs, and in particular prescription drugs. The concern of the elderly is reflected in the complaints received both by labor organizations and senior citizens' organizations and it is quite significant that where drugs can be purchased under the generic name the savings are substantial, which accounts for the demands of responsible senior citizens' organizations that prescription drugs be covered by medicare, thereby allowing the Federal Government to purchase drugs under their

generic name through the means of competitive bids. Senator WILLIAMS. Did you hear Dr. Todd's testimony? Mr. CARBRAY. Yes, I did.

Senator WILLIAMS. It seems to me that he said there was a surveillance system in the medical profession

Mr. CARBRAY. That's right.

Senator WILLIAMS (continuing). That brings these scalpers or gougers to heel.

Mr. CARBRAY. That is right, Senator, and that is why I prefaced my testimony with the statement that I did, because I do have respect for Dr. Todd, not only for his qualifications, but for his reputation as a real humanitarian in the field of medicine.

Senator WILLIAMS. Thank you.

Mr. CARBRAY. This sampling reveals the need for a comprehensive study in detail of both hospital costs and charges, should some hospitals refuse to cooperate, appropriate steps should be taken to assure disclosure of all records, even if by legislation if necessary, for we must bear in mind that many hospitals are operating under the banner of nonprofit ventures.

Senator WILLIAMS. Well, we have a double nexus with the Federal Government and hospitals. Not many of them have benefited under

Hill-Burton under that application, and of course medicare as the other leverage for Federal attention.

Mr. CARBRAY. Now, we feel that a similar comprehensive study should be made of doctors' fees; for during the past 2 years the press, and other news media, have reported many instances of excessive fees, and almost unbelievable increases in doctors' income since the advent of medicare and Medi-Cal.

Numerous samplings this year, during 1968, indicate hospital charges are averaging nearly $100 daily. This would indicate the upward trend continues.

RECOMMENDATIONS The current deductibles in the medicare program are in reality an economic roadblock to health services for millions of elderly in the low-income bracket and we feel they should be eliminated.

Compounding this injustice in California is the fact-and I might say that this is also true in many other States—I think 34 other Statesthat recipients of State old age assistance suffer a reduction in their State assistance checks in an amount comparable to the increase in Social Security benefits as the result of vetoes by the Governor in 1967 and 1968 of legislation which would have eliminated this injustice.

Prior testimony before this committee by officers of the National Council of Senior Citizens calls for appropriate amendments to the medicare program which would remove such deterrents to health services to the needy. The Los Angeles County Federation of Labor concurs in these amendments. In many instances the billing procedures of hospitals and doctors are suspect due to failure to provide a duplicate itemized bill for services rendered to the medicare patient.

In the absence of such proof of services rendered, how can the carrier, or the Secretary of Health, Education, and Welfare, combat the abuses that are alleged ?

May I suggest uniform billing standards as a means of combating such abuses? And it would seem to me that this would also help the program of the peers committee that Dr. Todd made reference to in this State.

I might supplement this with one thought that I just learned of yesterday that, in some instances, I am informed that some hospitals and some doctors likewise, have a code method of making bills-I haven't seen one, I heard of it yesterday—which even though a copy is given to the recipient of medicare, he doesn't really know what it

And it would seem to me that it is very simple for a physician or for a hospital to present that patient—that recipient of the medicare with the type of statement that would properly reflect the type of service that has been rendered to him.

I think this would be a constructive way of obviously, in my opinion at least, of eliminating some of the possibilities of skullduggery on the part of those who are unethical.

And again I want to say, I know it is a minority, not a majority, of the profession that we can say this about.

Thank you, Mr. Chairman.
Senator WILLIAMS. We appreciate your appearance very much.



(Subsequent to the hearing, Senator Williams asked the following questions in a letter to Mr. Carbray:)

a 1. You called for a comprehensive study in detail of both hospital costs and charges and additional legislation if necessary to assure disclosure of all records. May we have additional discussion of subjects that would be considered in such a comprehensive study, and suggestions for major provisions of the legislation you mentioned?

2. Do you have any additional information on the "code method of making bills” mentioned in your testimony?

3. What in your opinion will be the effects of the newly-announced 10 percent increase in deductibles and coinsurance for Medicare? (The following reply was received :)

NOVEMBER 18, 1968. Dear Senator WILLIAMS:

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(1) I am sure you agree with me that in the absence of complete and detailed records of hospital and nursing home operations a wholly comprehensive study of service and related costs is not possible. My reference to the need for legislative amendments is based on the refusal of hospitals, nursing homes and doctors to make such records available. I feel it is necessary that legislation be enacted which (a) requires the keeping of detailed records or services rendered, and related costs. (b) Make such records available on request for inspection by, an authorized representative of, the appropriate Federal Agency, the appropriate State Agency, and/or the authorized carrier. These requirements should be a condition of Certification by the Department of Health, Education and Welfare; for all hospitals and nursing homes wishing to participate in the Medicare Program. Similar conditions should apply to the Medicaid Program.

(2) I have no additional information on the “Code Method” of billing by doctors; but I shall continue to pursue this.

(3) The pending 10 percent increase in deductibles and coinsurance will only compound the prevailing hardship resulting from inadequate finances for the deductibles. I have had numerous protests from seniors accompanied by requests for an explanation.

Note: The recent hearing here resulting from the expose of abuses of the MediCal Program by Attorney General, Thomas Lynch, lends support for the previously expressed idea that the Medicaid Program should be federalized. Personal best wishes. Sincerely,


Executive Board Member. Mr. CARBRAY. Now, I would like to have Mr. Hartley and Mr. Davidson for just about a couple of minutes each of them has one specific thing they want to relate which relates to some of the testimony in my statement.

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Mr. HARTLEY. I have been asked to make a statement of charges as I have noticed in the past few months in my family from the hospital.

For a 3-day period in one of our Los Angeles County hospitals, a charge of $342 for 3 days' services. That doesn't include the physician's charges. That is paid elsewhere. On a second visit within the past 3 months, an 8-day stay—and I

3 will explain it this way–when I checked out I asked the attendant what the charges were for the full 8 days.

She told me that it was only made out for 6 days.
I said, “May I have the charges that you have on your book here?”

Six-hundred-and-thirty-some-odd dollars for 6 days. And that doesn't include a physician's charges.

Now, over and above this second charge, an anesthesiologist charge of $90 for his services for the operation.

An assistant doctor-surgeon-his charge was $60.

In the past, I will say 4 years—5 years, I will make it-I was in the hospital in the Middle West. The charges that came through on my Blue Cross statement, as the hospital charge per day, was about $35 per day.

The charges as produced by the present hospital visit means a very substantial increase, and if we are not covered by prepaid medical care, the senior citizen who is on a static income-he is on a pension in social security—it is impossible for him to absorb these increases.


We of the senior citizens and of the labor unions are vitally interested in those people in our organizations that are suffering from the increased costs that they cannot cover. We would like to see some legislation in the form that would give them assistance—that would alleviate some of the abuses that they are subjected to when they have to have medical care.

I thank you, gentlemen.
Senator WILLIAMS. Thank you, sir.
Mr. CARBRAY. Mr. Davidson.

Senator RANDOLPH. So as to save time, I want to comment on the gentleman-your associate—who spoke of the hospital charge.

The figure you gave for another area of the country was $30 a day. How long ago was it I want to make sure ?

Mr. HARTLEY. That was about 5 years ago.

Senator RANDOLPH. Five years ago. And the figure you gave was for

Mr. HARTLEY. Kansas City, Mo.

Senator RANDOLPH. And the figure you gave for Los Angeles_8 days—although charged for 6 days, but running it out on 8 days would make it about $80 a day; is that right? You said six-hundred-andsome-dollars?

Mr. HARTLEY. But that was for 6 days, only. The remaining 2 days was not on the bill. Senator WILLIAMS. Well now, who paid all of this money! Mr. HARTLEY. A prepaid medical plan pays for this. Mr. CARBRAY. A supplement to Mr. ORIOL. A supplement to medicare? Senator WILLIAMS. What is medicare right now? Mr. CARBRAY. They pay 80 percent. Senator WILLIAMs. They pay 80 percent? And yourMr. CARBRAY. Eighty percent for the physician. Mr. HARTLEY. Eighty percent for the hospital.

Senator WILLIAMS. Eighty percent for the hospital? And the balance was paid by the plan that you got into ?

Mr. HARTLEY. That is correct. That is correct.

Senator RANDOLPH. Mr. Chairman, I am trying to determine what the cost was per day.

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