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Well, perhaps I have talked too long about this, but I want the record to reflect that there is a purpose in the committee other than to write legislation, but then, to go out into the countryside, as it were, and to see how the legislation actually, in operation, is coping with the problems—sometimes solving the problems. In other words, a commitment which is a continuing one, with the necessity always, I realize, for review and perhaps extension and refinement of the law which may have been placed on the statute books at the outset.

And I thank all those who have contributed today in this spirit in this context.

Mr. ORIOL. Were there any other comments you wanted to make at this time, Mr. Mulder

Mr. MULDER. No; I was ready to answer any questions that the committee staff may have.

Mr. Oriol. Did you say that Medi-Cal participants are given screening of some sort-a physical, tests—test for physical condition? Is this a requirement?

Mr. MULDER. No; I wouldn't go that far. I say that, in California, we have attempted to have in Medi-Cal a program that utilizes the mainstream of health care services, so that people, whether they are poor or rich can use this system—the available resources—the same way.

Ár. ORIOL. That is why I raised the question. I thought you were requiring this on a wide scale.

I wanted to ask whether you have the facilities to do it with.

Mr. MULDER. No; we do not require it. We strongly recommend that each person in the program have a personal physician, and if that physician believes that this should be done—some screening should be done—the program will provide that.

Mr. ORIOL. Well, when you said screening, I immediately thought of multiphasic screening on a scheduled basis.

Mr. MULDER. Well, we do not have that.

Mr. ORIOL. Do you feel there is need for more of that type of facility within California, and if so, what age groups do you think it would most benefit?


Mr. MULDER. Well, there was a very successful experiment in Santa Cruz County, many years ago, where applicants for old age assistance were given opportunity, at the Public Health Department, for a battery of tests the results of which would then be sent to their personal physician.

To the extent that there is manpower and that facilities are available, I would like to see that extended, indeed. The physicians in Santa Cruz found this very helpful, and it helped the aged persons who had not yet sought out a physician, to do so. With the old program, the problem was that we only paid for the treatment of illness. It did not pay, at that time, prior to 1966, for diagnostic examinations in the absence of symptoms.

Mr. Oriol. I have another question.

If this is not properly addressed to you perhaps you could indicate that, and we will send it by mail to whomever you suggest.

The San Francisco Chronicle of October 10 carried a story about a study showing that the death rate of elderly patients went up alarmingly after they were removed—and apparently with some amount of haste—from Stockton State Mental Hospital. The study showed that the death rate was 27 percent higher than of those who stayed in the hospital. I believe this was part of the hospital population reduction program, but this sort of study raises some questions, I would think, about that project.

We will also address some questions by mail to the author of that study and will ask him some questions, too, but have you anything to discuss with us?

Mr. MULDER. No, I am not conversant with the article to which you refer. I suggest you address the question to Dr. James Lowry, the director of mental hygiene in Sacramento.

Mr. ORIOL. We will do that.
Without objection, we will enter that article in the record.
(The information follows:)

[From the San Francisco Chronicle, Oct. 10, 1968)


(By Carolyn Anspacher) The death rate of elderly patients, abruptly removed from Stockton State Mental Hospital under orders of the State Department of Mental Hygiene has shot up alarmingly since the “Hospital Population Reduction Project” was inaugurated last January.

According to a new, and carefully controlled study of geriatric psychiatric patient transfers, the mortality rate of the most helpless who had been removed to nursing homes and convalescent hospitals ran 27 per cent higher than those allowed to remain in the familiar hospital setting.

The research project was undertaken by Eldon C. Killian, a member of the Academy of Certified Social Workers, and a psychiatric social worker at Stockton State Hospital. It is being submitted with hospital approval to “Social Work”, the authoritative scientific journal of the profession.

He began his research last January when it was decided in Sacramento that the entire north area of Stockton State Hospital should be deactivated and, within the year, some 50 to 60 per cent of the slightly more than 800 geriatric patients moved out in a series of "waves”. Some according to the transfer plan, were to be taken to other “less crowded” mental hospitals—Agnews, Modesto or Napa.

Some were to go to nursing homes, convalescent hospitals, boarding homes or guests homes and family care homes. And some were to be kept at Stockton in south area wards.

For his study, Killian took three separate groups. The first group totaled 71 males and 8 female geriatric patients who were transferred by chartered bus from Stockton to other state hospitals during the first three months of this year.

The second groups, 21 male and 44 female geriatric patients (40 per cent of whom were non-ambulatory) were taken by ambulances and autos to "extramural facilities”-nursing homes, convalescent hospitals and the like.

The third group, 52 men and 57 women, remained at Stockton State Hospital, but in other areas of the institution.

An equal number of geriatric patients was selected from the hospital's January 1, 1967 census and each matched to those in the 1968 study group as to age, sex, race, organic or functional diagnosis length of hospitalization and ambulatory or non-ambulatory status.

Killian, found that the mortality rate was 4.98 times higher for the experimental group transferred from Stockton to other psychiatric hospitals than for its "control group”.

"The mortality jumps even more dramatically to 8.99 times higher for the experimental group transferred to other extramural facilities than for its control group,” Killian noted.

“Nine out of 65 died in this group during the four month followup, as compared to'l out of 65 in its control group."

Killian's study shows that in the second experimental group—those transferred to non-State homes and convalescent hospitals—26 out of the 65 patients were bedridden at the time and of these 26, seven died within the four-month follow up period. This was 27 per cent of the group.

Killian has concluded that the older, non-ambulatory, hospitalized geriatric patients who were transferred out of their hospital home (and some had lived at Stockton for a great portion of their lives) had a significantly higher mortality rate than the base rate of matched control patients who had not been transferred.

Killian believes that on the basis of his study, the mass unilateral transfers of old bedridden psychiatric patients from State hospitals can be seriously questioned.

“Is it possible,” he asks at the conclusion of his paper, “or an individual's environment to assume so much importance, in this case for the geriatric patient, that upon sudden removal from it, his body functions may be affected by the emotional trauma, including death ?”

And finally, as a footnote not included in his study, Killian added that on September 20, while the walls of his ward were being torn down around him, one elderly male patient at Stockton refused to leave. He was put into an ambulance and was dead on arrival at another area of the hospital. The death was attributed, not to grief nor shock, but to natural causes.

Mr. Oriol. Another question coming from the San Francisco Chronicle of September 20 quoted you as saying that you agree with Governor Reagan's other earlier estimates of deficits in the Medi-Cal program. And, I understand that there was supposed to be a surplus, as of last June 30. Is there a contradiction here? if so, what is it? This is a knotty question. Perhaps you would rather do it in writing, but if you want to discuss it here for a while, let's do that.

Mr. MULDER. Well, as I indicated, the program was started with great haste. The machinery was not perfect. There were delays in the processing of bills. There were delays in the compilation of the necessary statistical records which can be used for trending later.

The law provided that any provider of services could hold his bill for 6 months before sending it in. As a result, in the spring of 1967, we had an extremely poor body of information on which to make the projections. We did make the projections. We did the best we could. We consulted experts in the field, actuaries, who agreed that with the data we had, these estimates were not unreasonable.

Now, these estimates have turned out to be on the high side, but not as high as some people have said. Because when we found out that we were in difficulty, we took other actions as well.

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The Governor had appointed a survey task force which was contributed by private industry and in which permanent people in the medical association participated, and they made a number of recommendations as to changes that ought to be made in the medical program. These changes have been implemented and are still being implemented. The system has been improved in terms of the hardware and planning for the payment process.

Some legislation was introduced and passed which deferred certain obligations which would be due under an accrual basis, to the next

year on a modified accrual basis. And, as a result of all of this, we were able to live well within the budget.

In the current year we are within the budget.

From the better body of information we now have, it is our estimate that unless there are unforeseen contingencies, like the Long amendment-which we fortunately averted--that if these things do not happen, we will live through the year without the difficulties we have had in the past.

Mr. ORIOL. No deficit? But, will there be a surplus of any kind ? I don't understand what a surplus in a program of this kind is.

Mr. MULDER. We operate on a closed-end appropriation as distinguished from the Federal medicaid program appropriation. The program is financed by Federal funds to the extent that the certified people are eligible under the Federal law and regulations. There is also local participation from counties. The local participation from counties, as I think Mr. Unruh touched upon this morning, is frozen substantially at the 64–65 level. Therefore, any increase in either the count of recipients or an increase in the utilization of the program, or an increase in the cost of the program, by and large, becomes a matter of 50 percent by the Federal Government and 50 percent by the State. And the counties do not share in this increased cost. And that's why the pressure on the General Fund in this program is much heavier in an inflationary period than the pressure of normal programs.

Mr. ORIOL. As we review the testimony, we probably will have other questions which we will submit by mail.

Mr. Skoien is with you. Mr. Skoien and Miss Russell have been very helpful on this committee as they have been in other projects, and we appreciate it. I am glad to see you.

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

1. I believe you were present when Mrs. Dudley, Dr. Littlejohn, and Dr. Smith gave their testimony (a copy of Mrs. Dudley's statement is enclosed.) You may remember that Mrs. Dudley said that she has written to the State Department of Welfare and the fiscal agents to assure a more speedy method of processing claims from so-called ghetto areas under Medi-Cal. Mrs. Dudley and her associates presented an alarming description of wholesale departures by physicians from such areas because of such difficulties. I would like to have your comments in response to these statements.

2. Your statement emphasized that social workers under the Medi-Cal program are instructed to encourage Medi-Cal participants to seek the services of a personal physician, with special emphasis on the need for preventive services. What information do you have as to the availability of such services, particularly in low-income areas? What preventive health services are available for the elderly under the Medi-Cal program?

3. You mentioned that physicians services constitute only about 19 to 20 percent of the Medi-Cal dollar. May we have details on expenditures for other services or care, with special reference to health care services of special importance to the elderly?

4. Have you yet decided whether the San Joaquin Medical Foundation procedures will be applied on a broader scale in California ? If so, what are likely areas of use?

(The following reply was received :)


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As my extemporaneous testimony at the hearing indicates, Governor Reagan and his Administration are not opposed to publicly financed programs to provide needed health care to individuals and families who have insufficient resources. He has taken a dim view, however, of federal legislation which pushes states into massive programs which, by their very nature, tend to increase health care costs generally. In addition, the previous Administration and the Legislature had set a far too early effective date for the program which did not permit a well planned organization and system for its administration, so that when the Governor took office he inherited a most undesirable and inefficient operation.

The fiscal controversy of 1967 was the result of insufficient planning for the gathering and use of cost data. The fact that the fiscal year was concluded within the budget was not solely because of previous overestimation but largely the result of administrative actions taken by the Administration and constructive legislation worked out on a non-partisan basis. The Speaker's statement that the Governor preferred to eliminate the medically indigent from the program is not correct. The Supreme Court, which interpreted the statute which the Governor inherited, clearly ruled that this was the only course the Administration was permitted to take. Since the Administration was unalterably opposed to this step it asked for alternate orderly means of reducing program costs; the 1968 session fortunately did agree that the Administration should have more flexibility and passed legislation to that effect.

The Committee's record already contains my correction that the Governor has not "steadfastly refused even to consider the threat of imposing a fee schedule" on physicians; the 1965 law clearly contains the provision that physicians, as distinguished from other providers of services, should be paid on the basis of their usual and customary fees.

Many of the statements made by the Speaker meet with our full agreement. We most certainly share his concern that the Congress should not retroactively and without notice reduce federal support of the state-operated assistance and health care programs Our principal effort should be directed to an improvement of the existing program, particularly in terms of controls, so that fraud, abuse, and inapproriate utilization of program benefits can be eradicated.

You have also asked that I express myself on four questions appended to your letter.

1. The witnesses were correct that payments through the fiscal intermediaries, until recently, have been quite slow. For several months, however, we have determined that the properly completed claim which raises no question regarding utilization or propriety of fee is paid within 30 working days.

The claims processing system does not distinguish between providers in socalled ghetto areas and those from other parts of the community. We do realize, of course, that a physician whose major part of the practice is composed of MediCal patients has been more seriously affected by slow payments than other physicians. In cases where hardships were determined to exist the fiscal intermediary has been authorized to make interim payments.

Although we too have heard that physicians are moving from impoverished areas, we have not been able to verify this, and doubt very much if the Medi-Cal program is the real cause of any relocation of their offices.


2. Physician participation in Medi-Cal is relatively high; almost 90% of all practicing physicians participate to some degree, although we recognize that the majority of service is still provided by relatively few physicians. The availability of physician services in poverty areas is still less than elsewhere but we have noted a marked increase in the number of physicians adjacent to such areas.

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