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PROPRIETARY HOME HEALTH CARE

TUESDAY, OCTOBER 28, 1975

U.S. SENATE AND HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON LONG-TERM CARE OF THE
SENATE SPECIAL COMMITTEE ON AGING AND THE
SUBCOMMITTEE ON HEALTH AND LONG-TERM CARE OF THE

HOUSE SELECT COMMITTEE ON AGING,

Washington, D.C. The subcommittees met, pursuant to notice, at 9:30 a.m., in room 6202, Dirksen Senate Office Building, Hon. Frank E. Moss and Hon. Claude Pepper, chairmen, presiding.

Present: Senators Moss, Clark, Percy, and Brock; Representatives Pepper, Randall, Edward, Beard, Marilyn Lloyd, Heinz, and Cohen. Also present: From the Senate Special Committee on Aging: Val J. Halamandaris, associate counsel; Margaret Fayé, minority professional staff member; Patricia Oriol, chief clerk; Eugene Cummings, printing assistant; and Dona Daniel, assistant clerk. From the House Select Committee on Aging: Robert Weiner, majority staff director; Elliot Stern, minority staff director; and Martha Jane Maloney, professional staff member.

STATEMENT BY SENATOR FRANK E. MOSS

Senator Moss. The hearing will come to order. This is a joint hearing by the Subcommittee on Long-Term Care of the Special Committee on Aging of the Senate, together with the Subcommittee on Health and Long-Term Care of the House of Representatives Select Committee on Aging.

We are indeed pleased to have the chairman of the House subcommittee, and the ranking Republican member of the House subcommittee to participate with us in this hearing.

The ranking Republican member of the Senate Special Committee on Aging, Senator Percy, has been delayed for a few minutes by another hearing, but as soon as he completes his statement there, he will join us, and we hope that other members of the two subcommittees will have an opportunity to come for at least part of the hearing. It is a very busy time, of course, in our congressional session, and so we have problems of high attendance. I see Representative Cohen is here, and we hope that others will be able to join us.

We appreciate your presence here today to discuss the August 21 proposed HEW regulations* which allow greater participation by proprietary home health agencies in the medicaid program.

*For text of proposed regulations, see pp. 198–206.

(1)

As the sponsor of section 224 of Public Law 90-248, authorizing medicaid payment for home health services, I take sharp exception to the proposed regulations permitting profitmaking agencies to provide such services.

THREE BASIC OPERATIONS

There are three basic objections:

One: The proposed regulations would negate a State's right to choose whether to permit the participation of for-profit home health agencies.

Second: I believe this regulation amounts to a major policy revision. As such, it is inappropriate for administrative rulemaking. The consequences are vast. If changes are to be made, they should be made by the Congress and not by the executive branch.

Third: I do not believe major administrative changes should be made in a vacuum. We have requested any and all data, studies, and supportive memorandums which HEW used as a basis for promulgating this proposed regulation. We have yet to receive any of the requested data. We are left to wonder if any studies have been made of the comparative quality or cost of for-profit and nonprofit home health care.

In addition to these specific comments, there are several general questions we would like to address today:

Is there a fundamental contradiction between health care and profit?

Is the profit incentive necessary to make needed health care services available to all Americans?

Will the selection and use of for-profit health agencies be less expensive than the services provided by nonproprietary entities?

Can any conclusions be drawn about the comparative quality of health services delivered by for-profit as opposed to not-for-profit institutions?

Finally, can the payment of profit to health care providers be justified when the source of payments is exclusively taxpayer's funds which the Congress has appropriated to help meet the health needs of the indigent, the aged, blind, and disabled?

It makes for a rather full schedule and we want to thank you all in advance for coming here today to assist us. Because of the number of witnesses we must hear today, we have asked you each to confine your oral comments to 5 minutes. The full text of your statement will, of course, be printed in our record.

We will also have the various groups come up by panel, so that will facilitate the timing somewhat.

I am now pleased to recognize and ask for any remarks he may have, the Chairman of the House subcommittee, Congressman Pepper.

STATEMENT BY REPRESENTATIVE CLAUDE PEPPER

Representative PEPPER. Thank you very much, Chairman Moss. On behalf of the Subcommittee on Health and Long-Term Care of the House Select Committee on Aging, we are delighted to accept your invitation to hold these joint hearings with your subcommittee. We look forward to working together with you on this and

many other matters in the future for the benefit of the elderly people in this country.

The regulations proposed by HEW on August 21 give cause for serious concern for those who want to see the best possible home health services rendered to our elderly people.

These regulations would deny the States the right they now enjoy of determining whom to license for the rendition of home health services. A State's decision to deny licensure would mean nothing if HEW provides Federal reimbursement before the State's denial of such licensure. We know from past experiences that local health situations and the ability to enforce against abuses vary. HEW's action would remove one of the most effective tools the States now have of prohibiting the rendering of services by agencies which the States themselves see as unfit or potentially abusive.

There are now approximately 43 proprietary home health agencies qualified as medicare/medicaid providers, compared to over 2,200 nonprofit agencies. My own State of Florida chose this year to allow the licensure of proprietaries but established extensive quality and service controls. The proposed HEW regulations lay down no criteria which proprietary home health agencies are required to meet. Nor do the regulations indicate any comprehensive planning for the implications of so sweeping a change in the health field. Before profitmaking agencies are allowed to receive Federal reimbursement without the control of State licensure, we want to see what cost and quality controls-and what comprehensive planning-will be implemented by HEW on the Federal level.

ACT PROVIDES GRANTS TO NONPROFIT AGENCIES

Finally, never has the Congress indicated that Federal funds should go to proprietary home health agencies. Past legislation, including the Health Revenue Sharing Act of this year, has provided grants to nonprofit agencies. The regulations now proposed are effectively superseding past legislative history and congressional authority. In my judgment, any such change should first be approved by the Congress.

I hope that HEW will give careful consideration to all aspects of this matter raised in our hearings today, before proceeding further with implementation of the proposed regulations.

Senator Moss. Thank you, Mr. Pepper. We appreciate your presence, and your kind opening remarks.

Mr. Heinz, do you have any opening remarks you would like to make?

STATEMENT BY REPRESENTATIVE H. JOHN HEINZ III

Representative HEINZ. Thank you, Mr. Chairman, I do; and I would like to thank you for the convening of these joint hearings between the House and Senate subcommittees.

At the outset, I would like to try to be as objective as possible, as we consider this issue. It is difficult not to prejudice the issue of the August 21 regulations before we gather the facts, by taking, as I think all of us are inclined to do, a stand for or against the inclusion of proprietary organizations in home health care.

In the delivery of home health services, nonetheless, in view of the expected expansion of such home health services, I think the issue is a vital and substantive one.

We will discuss today "proprietorism," I am sure in some depth, but I hope that the overall issue we must inevitably deal with, namely the Government's role in facilitating the provision of home health services, will also be considered.

Our role in the control of abuse of home health services; our role in planning for their expansion; in setting standards; in the establishment of and maintenance of fair and competitive environment for all providers: These are all the vital issues that the promulgation of these regulations bring into focus.

We have had some practical experience with Government spending of certain proprietary HMO's in nursing homes. It is an experience which should cause us to think twice and be extremely cautious, as we consider the regulations of home health services.

In California, there are serious allegations that some proprietary medical HMO's, through the employment of false and unscrupulous marketing practices captured a substantial part of the medicaid health market, and collected inordinately high overhead and profit, without delivering promised services.

In my own State of Pennsylvania, proprietary nursing homes apparently have indicated that they will refuse to take elderly medicaid recipients, unless increases are made in medicaid rates. Unlike the voluntary nonprofit organizations, they can boycott the medicaid nursing home program with relative impunity and require the nonprofits to handle the problem alone.

I do not think as a philosophical matter, that whether somebody is for profit, or nonprofit, is a clear determinant of the kind or quality of care that is provided, but there have been too many recorded instances, in my judgment, of avarice and unfaithful service by individual proprietary organizations.

SERVICES VULNERABLE TO ABUSES

Home health services are particularly vulnerable to such abuses, and, therefore, in my personal view, we should develop procedures and standards to assure appropriate quality in the delivery of home health care, regardless of whether or not that provided is proprietary or nonprofit. Mr. Chairman, I would hope as our witnesses come before us and speak today, they will try to address some of the following points:

First, I hope we can find out how appropriate State and regional agencies should evaluate and select home health care providers: Why should not these providers be selected on the basis of their track record, or on the expectation of their track record, as effective and efficient providers of care?

Second, I hope we can touch on what controls can and should be developed to prevent such market practices or skimming or dumping. Third, I hope we can find out how to utilize the regional planning bodies, such as the HSA's health systems agencies. to determine the need and the amount and kind of home health services in an area.

I hope we can touch on what the HSA's role, for example, will be to assure that we do not have providers fighting to provide service in

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