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TABLE 6.-BLUE CROSS ADMINISTRATIVE COSTS (STATEWIDE), MAR. 1, 1966, THROUGH AUG. 31, 1968

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ITEM 2: EXHIBITS RELATED TO STATEMENT OF JUANITA C. DUDLEY,*

ASSISTANT REGIONAL DIRECTOR, WESTERN REGIONAL OFFICE,
NATIONAL URBAN LEAGUE
EXHIBIT A. LETTER TO DIRECTOR OF HUMAN RELATIONS AGENCY, STATE OF

CALIFORNIA

MAY 6, 1968. DEAR MR. WILLIAMS: Recently many of the Negro Professionals offering services to Medi-Cal recipients have brought to our attention two extreme hardships being imposed upon them by the slowness of services given by the Blue Shield Company. Upon discussing this with the Los Angeles office of Blue Shield it was suggested that their services would be greatly improved if two innovative changes were made, these are:

(1) Establishment of a Southern California Computer Center to process this region's claims;

(2) Adoption, state wide, of the San Bernardino Plan, which involves each recipient having 5 eligibility cards being given to them each month for use by practitioners to enable the elimination, in time, of the processing of

eligibility by Blue Shield. As these two innovations are feasible, we would strongly urge the adoption of same. Blue Shield states, that, as of today, they are processing January and February applications for payment which indicates a hardship on the practitioners.

It was most rewarding having an opportunity to talk with you personally during lunch at the Human Relations Commission Luncheon meeting in Sacramento last week. Sincerely,

JUANITA CARROLL DUDLEY, Assistant Regional Director, Health and Welfare.

EXHIBIT B. NEWSPAPER ARTICLE CONCERNING REPORT ON MEDI-CAL PROGRAM BY

CALIFORNIA DEPARTMENT OF JUSTICE**

LYNCH CHARGES MEDI-CAL FRAUD

SACRAMENTO.—Nursing homes, drugstores and other parts of the medical establishment are robbing the state's Medi-Cal program of at least $8 million and probably more every year, Atty. Gen. Thomas C. Lynch has charged.

His Department of Justice said a nine-month investigation into abuses of the $800 million program showed Medi-Cal was riddled with kickbacks, phony claims, “overserviced" patients and other “illegal and unethical activities.”

A 75-page report charged that physicians, dentists, druggists, optometrists, hospitals, nursing homes and others paid with Medi-Cal funds cheated the taxpayers out of about 1 per cent of the program's budget.

*See statement, p. 666.
**See full report, app. 4, pp. 812–836.

Lynch's chief deputy, Charles O'Brien, told a news conference that the temptation to abuse Medi-Cal was made easier by a vast bureaucracy operated by both the state and its fiscal intermediaries, Blue Cross and Blue Shield.

The report identified no bilkers and called for no indictments. O'Brien said the attorney general could not prosecute because records were too inadequate to make a case.

“The best prosecutor in the world would be hard-pressed to use these records,” he said.

State human relations secretary Spencer Williams demanded that specific cases of fraud be identified and prosecuted.

O'Brien acknowledged that while there might have been some deliberate “overutilization" by medi-care recipients, nearly all the abuses were by the medical profession.

“One of the worst ironies in the world is that when we are talking about law and order and increasing penalties for liquor store holdups, that striped tie, buttoned-down crimes goes unpunished,” he said.

About 1.5 million poor Californians receive free medical care under the program, financed by state, federal and local governments. Blue Cross and Blue Shield funnel the money from the state and the medical suppliers.

But O'Brien charged “the private sector has not handled it (Medi-Cal funds) the way the private sector handles its own funds." He said the intermediaries were paid on a cost-plus basis “so there is no incentive for improvement.”

He also asserted the state had no effective enforcement program "to discover, investigate and defer" frauders.

Professional and other organizations criticized the report as "generalized" and “vague.” They demanded proof of such claims as:

Druggists charge the state three times as much for the same medication as they charge the public.

Some nursing homes require "under the table” payments from patients to secure admission while others accept kickbacks from vendors in exchange for business.

Doctors, dentists, optometrists and other professional falsified claims for treatment that was never performed or for treatment that was unnecessary.

In one case, an optometrist sought state authorization for an expensive pair of sunglasses for a blind patient.

Some nursing homes pocketed for their own use state funds for incidental patient expenses. O'Brien said the Justice Department is investigating the possibility that organized crime had infiltrated the nursing home business, but that evidence so far has not indicated it is extensive.

Williams said the state has not and “will not tolerate fraudulent misuse of Medi-Cal funds by those who receive or provide services.”

He said he requested a meeting with Lynch's staff, “to secure specific cases of fraud and abuse which were uncovered." He added, 'we will continue to insist on prosecution in any case where there is evidence of wrongdoing.”

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EXHIBIT C. LETTER FROM ROBERT H. WEST, VETERANS AFFAIRS COORDINATOR, TO ADVISORY BOARD MEMBERS

JUNE 8, 1968. DEAR VETERANS AFFAIRS ADVISORY BOARD MEMBER: On Tuesday, June 18, Senate Bill 1263, sponsored by Urban League Veterans Affairs, will be heard before the Education Committee in Sacramento. This bill is an effort to recognize the college equivalency of armed forces technical training and service. Specifically, this bill, introduced by Mervyn Dymally, will allow 15 semester units for each year in the service as a medical technologist or laboratory technician up to 60 units or equivalent to two years of college work.

This college credit will encourage veterans to take advantage of GI Bill education and earn their degrees as medical technologists. Another beneficial feature of this legislation is to alleviate the shortage of trained medical technologists presently plaguing the world of medicine.

Senate Bill 1263 is a real breakthrough of the archaic bonds in our educational system. This recognition of armed services education is long overdue and can be a pilot legislation for federal efforts in this vital area.

This effort to solve the joint problems of veteran unemployment and unmet medical needs is but one of the enterprising, innovational ventures of your Urban League.

Please call me with any constructive comments on the subject of this bill. I might add that the outlook is extremely optimistic—at this time there is no opposition. Sincerely,

RICHARD H. WEST, Veterans Affairs Coordinator.

EXHIBIT D. LEGISLATION INTRODUCED, CALIFORNIA LEGISLATURE, DESIGNED TO PRO

VIDE AN EDUCATIONAL EQUIVALENCE TO VETERANS WITH CERTAIN KINDS OF TRAIN-
ING; SENATE BILL 1263

CALIFORNIA LEGISLATURE,
SENATE COMMITTEE ON SOCIAL WELFARE,

Sacramento, Calif., June 5, 1968.
Mr. RICHARD WEST,
Urban League,
Los Angeles, Calif.

DEAR DICK: As you are aware, I have introduced legislation in the current legislative session which is designed to provide an educational equivalence to veterans with certain kinds of training. Specifically, the measure is Senate Bill 1263, and it pertains to veterans who have had training and experience as clinical technicians in the armed forces of the United States.

We believe this legislation is in line with the recent efforts called for by President Johnson to assist veterans in the transition from the military to the civilian sector of life. Further, we are sure that the valuable and worthwhile experience these men have gained could be of immeasurable worth to the needs of the communities of our state.

In view of these factors, I am willing to devote the full resources of my office to seek the passage of Senate Bill 1263. Any assistance you can provide toward that end will be greatly appreciated. Sincerely,

MERVYN M. DYMALLY. [Enclosure)

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An act to amend Section 1261 of the Business and Professions Code, relating to

clinical laboratory technology. The people of the State of California do enact as follows:

SECTION 1. Section 1261 of the Business and Professions Code is amended to read:

1261. The board shall issue a clinical laboratory technologist's license to each person found by it to be properly qualified and it shall hold written, oral, or practical examinations to aid it in judging the qualification of applicants. The examinations for license to work in a clinical laboratory as a technologist shall cover the fields of biochemistry, hematology, and microbiology, except that the examination for a special clinical laboratory technologist's license shall be concerned only with the subject or subjects in which the license is to be issued. The minimum prerequisites for entrance into the examination shall be one of the following:

(a) Graduation from a college or university maintaining standards equivalent as determined by the department, to those institutions accredited by the Western Association of Schools and Colleges or an essentially equivalent accrediting agency with a baccalaureate and a major in clinical laboratory technique, the last year of which course shall have been primarily clinical laboratory procedure; provided, however, that if the curriculum did not include practical clinical laboratory work, six months as a clinical laboratory technologist trainee or the equivalent as determined by the department in a clinical laboratory approved by the department shall be required ; or

*Passed Senate, July 5, 1968; passed Assembly, July 29, 1968.

(b) Grdauation from a college or university maintaining standards equivalent, as determined by the department, to those institutions accredited by the Western Association of Schools and Colleges, or an essentially equivalent accrediting agency, with a baccalaureate and a major in one of the biological sciences or essential equivalent as may be determined by the department plue one year as a clinical laboratory technologist trainee or the equivalent as determined by the department in a clinical laboratory approved by the department. One year of practical experience in a public health laboratory may be accepted if such experience or if unversity or college courses included practical work in clinical biochemistry and hematology; or

(c) A minimum of three years of experience as a clinical laboratory technologist trainee or the equivalent as determined by the department doing clinical laboratory work embracing the various fields of clinical laboratory activity in a clinical laboratory approved by the department and 60 semester hours or equivalent quarter hours of university or college work in which are included the following courses, or essential equivalent as may be determined by the department; general inorganic chemistry–8; quantitative analysis—3; basic biological science—8; bacteriology–4. Additional college or university work which includes courses in the fundamental sciences may be substituted for two of the three years of experience in the ratio of 30 semester hours or equivalent quarter hours for each year of experience; provided, however, that individuals seeking admission to the examination on or after January 1, 1965, shall meet the prerequisites specified in subdivisions (a) or (b) of this section, or the prerequisities as set forth by the Council of Medical Education and Hospitals of the American Medical Association and the Board of Registry of Medical Technologists of the American Society of Clinical Pathologists, and the American Society of Medical Technologists, or equivalent accreditation body approved by the Department of Public Health, provided, however, that the total or combined time of college or university work and practical training and experience in an approved clinical laboratory be not less than five years or as specified in subdivision (a).

Experience as a clinical technician in any branch of the armed forces of the United States may be considered equivalent to the experience as a clinical laboratory technologist trainee, if such experience as a technician is approved by the board. Each year of training and experience as a clinical technician in such armed forces shall be equivalent to 15 semester hours, which shall be credited to the minimum number of hours required to qualify for registration as a clinical laboratory technologist trainee. The semester hours acquired in this manner shall not be in organic chemistry, quantitative analysis, basis biological science, and bacteriology, unless these courses have been completed at a college, university, or institution maintaining standards equivalent, as determined by the department, to those institutions accredited by the Western College Association or an essentially equivalent accrediting agency. The maximum number of hours granted shall not exceed 60 semester hours or its equivalent.

ITEM 3: EXHIBITS RELATED TO DR. ELSIE A. GIORGI'S STATEMENT*

EXHIBIT A. PROPOSAL FOR A COMMUNITY HEALTH PLANNING FOUNDATION

I. THE NEED

For a very long time in Medicine, we know much better than we do. The gap between technology and its clinical application becomes ever wider in spite of a very generous National budget. Our great potential for comprehensive care is dissipated through duplication and lack of coordination. Addition of numerous isolated, poorly thought out programs, have only served to escalate costs and add to the chaos and ferment.

What is needed is a new health care delivery model, which makes optimum use of what is already there, through coordination and unification, and simultaneously promotes dynamic health education towards improved health practices and proper use of health care services.

Advanced medical science has succeeded in the virtual eradication of a hard core of disease predominantly responsive to antimicrobial therapy and surgical extirpation. What is left are the degenerative, neoplastic, metabolic, and emotional disruptions—all very possibly linked in causation—for which there are no cures. Thus mortality figures improve, while morbidity increases.

*See statement, p. 686.

The inseparability of man from his genetic inheritance and his total environment; and the need to treat all if we are to produce optimum function and total health-is becoming increasingly mandatory as the diseases of stress become more and more predominant.

Total health planning of this order, requires a degree of technologic competence, not within the scope of an isolated medical sector, trained mainly in the biologic. It requires a broad scoped multi and interdisciplinary-consortium approach.

An enlightened public-recipient of health care services—demands change. Harried providers of services are ready for it. Large consumers such as labormanagement, government and industry threaten outright planning, ownership, and direct rendering of services. The Congress has mandated change and has recommended regional adaptation and partnership planning. The time was never so propitious. There is a great need to define and relegate the role of all involved and concerned if we are to plan most effectively.

Figure I depicts a suggested relegation of roles :

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a

Planning by (interdisciplinary con- Philanthropy (or Government): sortium)

health care planning foundation. Demonstration—Innovation

Government (Public health), other pub

lic and private health agencies. Implementation

Association of Practitioners in consul

tation with Health Care Planning In

stitute. Financial support-

Investment groups. Initial outlays (loans)

Large consumers :

Government.
Union-management.
Industry.

Cooperatives.
Continuing support---

Individual and large consumers: Self

paid and/or health insurance. Research and education.-

Government (public health) : Philan

thropy, schools.

II. THE PURPOSE

It is proposed that the consortium approach to planning be implemented through a non-profit Community Health Planning Foundation, sponsored by philanthropy. There is much precedent for this. Historically, the most significant changes in medicine have been promoted by institutions outside the existing structure. Striking examples are the Flexner report of 1910–1911, supported by the Carnegie Foundation, and the sweeping innovations in education and research, influenced by that report as well as the Rockefeller Foundation.

This is particularly necessary at this point in time, as it becomes increasingly obvious that the current policy makers seem unable or unwilling to take the initiative. Restrictions imposed on government public health units, force them, for the most part, into consultative and fiscal roles. The rigidity of the academic world and its poor motivation towards outright community service, have perpetuated its interest predominantly in scientific research and education. Organized medicine seems unable to overcome the inertia of “tradition."

Philanthropy seems to be the only vehicle flexible and financially strong enough to undertake this gigantic and much needed task. It is unimpeded by conflict of interests. It can attract the best minds in the country—those with broad scoped knowledge, experience, and creativity whose feet are on the ground, but not in cement.

III. THE FOUNDATION AT WORK The Foundation will have a three pronged approach-service, research, and education-all very closely interrelated. Figures II and III depict this graphically:

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