Second: Our letter of September 23, 1975, to the Administrator of the Social and Rehabilitation Service responding to the draft regulations; and

Third: A section-by-section analysis of the regulations which was prepared by our staff on request of the professional staff, Subcommittee on Health and Long-Term Care, House Select Committee on Aging.

Senator Moss. These will be included in the record.*

Mr. MARTIN. In closing, I just wish to reiterate our most serious concern which we know is shared by many of you in this room: As we move toward developing alternatives to institutional care, we must learn from the performance of medicare and medicaid relating to nursing home services, and we must avoid the fragmented, disjointed, and unplanned decisionmaking process which underscored the scandals in that portion of the health sector.

Thank you.

Senator Moss. Thank you very much, Mr. Martin, for your fine statement on behalf of these two great organizations that are deeply concerned with the problem of retired people. Your members generally are people that have reached an elderly position in life; they are likely to be in need of some of the services and care that we are talking about this morning. I do want to commend you and the organizations you represent for being alert to this problem, for writing to us about it, and setting in motion the inquiry we are trying to make today.

I do not think I have any specific questions for you. I just want to commend you again, and then yield to my colleagues to see if any of them have questions.

Representative PEPPER. Only, Mr. Chairman, to join you in commending Mr. Martin for the excellent statement he has made today, for the fine work he has done for the elderly over many years, and also to emphasize the chairman's commendation on your organization's being so alert.

NUMEROUS REGULATIONS PROPOSED BY HEW

There have been many other regulations promulgated or proposed by HEW, and I think many of them have been contrary to the interests of the elderly. It is significant to have an organization like yours knowledgeable on the subject, and keenly alert, indicated by your bringing regulations in appropriate cases to the attention of appropriate committees of the Congress.

Mr. MARTIN. Thank you.

Senator Moss. Mr. Heinz?

Representative HEINZ. Thank you, Mr. Chairman.

I would just like to commend Mr. Martin, who I think has been helpful to this committee on so many occasions, and I think I can also speak for the Senate committee for his excellent testimony, and we are deeply appreciative of your being here.

Senator Moss. Mr. Cohen.

Representative COHEN. In your statement, Mr. Martin, you refer to a Department of Health audit for the State of California on a

*See appendix 5, item 3, p. 243.

San Francisco provider. Did they reach the general conclusions based on one preliminary evaluation of a provider in terms of health care?

Mr. MARTIN. I think this is simply an illustration of what we are talking about of the possibility. I do not think they can reach general conclusions on the basis of one case.

Representative COHEN. Could you provide the members of the committee with the copy of that particular report?

Mr. MARTIN. Yes; we can.

Mr. LANE. I believe, Mr. Cohen, that will be addressed later today by one of the witnesses.

Senator Moss. We have a witness who will testify about that report. Representative COHEN. Thank you, Mr. Chairman.

Senator Moss. Mrs. Lloyd?

Representative LLOYD. Mr. Martin, I would like to commend you on your excellent statement and your contribution. Thank you for being here.

Thank you, Mr. Chairman.

Senator Moss. Thank you very much.

Thank you, Mr. Martin, and Mr. Lane; we do appreciate your coming before our committee.

Mr. MARTIN. Thank you.

Senator Moss. We will now hear from Hon. Edward I. Koch, U.S. House of Representatives, 18th District, New York, who has done a lot of fine work in this field. I have had the pleasure of sitting with him on some hearings held in his home State of New York, as well as here in Washington.

STATEMENT BY HON. EDWARD I. KOCH, REPRESENTATIVE FROM THE 18TH DISTRICT OF NEW YORK

Representative KоCH. Senator Moss, Congressman Pepper, my colleagues on the House side, first I want to thank you for permitting me to testify before you on this matter, and to tell you how much I appreciate what each and every one of you have done in the nursing home field, and also in the current area of home health care. As a result of the hearings we conducted in New York, Senator Moss, indictments have been handed down, grand juries were held, and people are being tried for abuses of the system. In my judgment, that would not have happened if you had not come to New York. So I want to thank you on behalf of the people of the State of New York, because it was very important that those abuses be brought to the fore. Unfortunately, these abuses are not limited to the State of New York. They infect the 49 other States as well.

Senator Moss. Thank you. I appreciate your leadership in that

matter.

You were out on the point when we got there, and I think our hearings were effective in setting in motion the investigations that have since followed, and which have had the effect of cleaning up some of the problems among New York nursing homes.

Representative KOCH. I oppose the regulation proposed by HEW because, in a sense, they force the inclusion of home health care proprietary services on the States. There are 40 States which have thus far decided they do not want that.

I do not know whether proprietary operators are any less worthy than the voluntaries, or the government instrumentalities, but I do know that a case has not been made that would require the mandating of inclusion of proprietaries.

LEGISLATION RECENTLY ENACTED IN NEW YORK

For example, in the State of New York, the legislature recently enacted legislation that would have mandated inclusion of proprietaries in home health care, and the Governor of the State of New York vetoed the bill. I quote Governor Carey. He said:

Although I recognize the quality of care that existing home health agencies are providing, I consider that the implication of opening up medicaid funding to a new class of profitmaking providers has not yet been fully explored.

And he vetoed the bill.

If the HEW regulations were to be promulgated, then the veto of the Governor would be ineffective.

I do not think we should do that without demonstrating that the proprietaries to be in the field will be as responsive as the voluntaries.

I asked HEW if it had ever evaluated the three different modalities with respect to nursing homes, the proprietaries, the voluntaries, the government-operated institutions. I was informed that the Department had conducted a study, but it was not one from which any conclusions could be drawn.

The study mentioned bedsores in the various institutions, for example, and said basically that their sample was not adequate for the purpose of drawing conclusions.

I have the study and I would be glad to furnish it to the committee. I asked HEW why the Department could not undertake a meaningful study and I have been advised that such a study is under way.

I would think that prior to HEW promulgating regulations in the home health care field, it conduct the study into the nursing home situation, and also conduct the study in the home health care field, to decide whether or not these proposals are appropriate.

It seems to me it would be the height of absurdity to enact a regulation which imposes a modality, without first having decided whether, in fact, that modality is worthy of being mandated upon the 50 States. I have no opposition philosophically to a proprietary institution in the nursing home field, or home health care field, providing that it does the job.

NOT AGAINST PROFIT

I am not against the principle of profit; I am not one of those who says if you have to remove profit from the nursing home care, let us get rid of the profit that the doctors and lawyers make.

I happen to believe in profit. I believe in the capitalistic system, but that does not mean in the area where everybody is involved in providing funds, that we ought to permit the proprietary system.

To sum up my testimony, it is that pending an exploration by HEW of whether the proprietaries are capable of doing the job, HEW ought not to mandate that system on the 50 States. If the testing HEW would undertake would establish that proprietaries are as good as the municipalities, and the voluntaries, and they are not the

greatest in the world, then there would be basis for mandating. Until that happens, I am opposed to the proposed regulations.

Senator Moss. Thank you, Mr. Koch.

You think it is premature to publish these proposed regulations if the study has not been completed?

Representative KоCH. Exactly, sir.

Senator Moss. The data you received indicated it was not a complete study, but some sort of a spot check?

Representative KоCH. Correct.

Senator Moss. I concur with your general philosophy, we are not against the making of a reasonable profit or return by those who give their time and effort to operating home health care facilities or nursing home, but there ought to be some pretty good guidelines and standards and audit requirements. In the past we have been able to turn up some severe abuses that can creep into these programs. These people are particularly vulnerable, they do not have the buyer resistance of others. That is the worrisome thing, is that not true?

Representative KOCH. Yes, it is. If I may add one comment—I would like to point out that the regulations, and the powers given under the medicare program, are far better in terms of protecting the recipients of government assistance the patients-than are the situations under medicaid.

There are things that the regional director under medicare can do in the area of nursing homes that the State cannot do in the area of medicaid nursing homes, and as you know, most people are in the medicaid nursing homes. Very few are in the medicare nursing homes. There are a large number of nursing homes that do not want to be regulated under medicare, and, therefore, they are not even eligible to take medicare patients, but will limit themselves to medicaid patients, because the regulations are less stringent.

PROVISION GIVES DIRECTOR AUTHORITY

Under medicare, for example, there is a provision which allows the regional director to reduce the services that an institution can provide, and bring in other providers, without closing down the institution. There are degrees of restrictions that the regional director can impose, depending on the violations, whereas with medicaid, in most situations, the director of the medicaid program's hands are tied because the provisions are absolute. Either keep the home going, or close it. The regulations with respect to nursing homes and home health care under medicare and medicaid should be identical so that the restrictions are the same at the State and Federal levels.

Senator Moss. Well, thank you very much for your response, and I am aware of the bill that you have introduced on the House side expanding the home health care for medicaid.

Congressman Pepper.

Representative PEPPER. Thank you, Mr. Chairman.

My colleague, Mr. Koch, I commend you not only on the excellent statement you have made here today, but for the very fine work you have done in the whole field of long-term care for the elderly.

The legislation, of which I have the privilege of cosponsoring with you, provides strict controls to guarantee the quality of care

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rendered to the elderly. Your bill calls for disclosures, audits, and proven fiscal methods.

Do you know of any reason why HEW could not, and should not, implement our proposals by regulation before the proprietary regulations that are effected here become final?

Representative KоCH. I think that is a perfect point, Congressman Pepper.

I want to take this opportunity to thank you for taking the lead on the House side. As you pointed out, among all of us, we have 50 bills which we are sponsoring which are pending in both the House and Senate. They ought to be passed, and there is not a reason in the world why those pieces of legislation could not be enacted by regulation.

Representative PEPPER. Thank you.

Senator Moss. Mr. Heinz.

Representative HEINZ. Thank you, Mr. Chairman.

I did want to commend you, Mr. Koch, on your testimony, and you made a very important suggestion which could best be summed up to HEW as "look before you leap."

Has HEW contacted you, since I know you have been very active in this area, about whether they are going to make such a study?

Representative KосH. Yes; HEW officials did tell me that they were. HEW told me in advance that the information furnished to me was not a sufficiently large sample to be statistically worthy of making a decision. HEW told me they are going to undertake a large sample in the nursing home field.

What I am suggesting, and what you are suggesting now, is why cannot that also be undertaken in the home health care area?

Representative HEINZ. I think the suggestion makes a tremendous amount of sense, and since HEW is scheduled to testify in a little bit, I think you have raised an excellent question that we will raise with them.

Representative KOCH. Thank you.
Senator Moss. Mr. Cohen.

Representative COHEN. Thank you.

I want to welcome my colleague here to the Senate Chamber. It seems ironic that perhaps we should come over here and hear you advocate an argument on behalf of States' rights. It is an unusual experience for both of us, I guess.

Representative KOCH. Not for me.

Representative COHEN. I mean to hear you argue it in this Chamber. Would you oppose home health care if the Federal regulations ban any proprietaries?

WOULD SUPPORT REGULATION

Representative KоCH. If the proprietaries were banned, based on a study undertaken by the Government which showed they would not be worthy of funding, I would support that regulation. I would likewise support a regulation which was predicated on a study which showed that proprietaries are competent. If HEW said you may not arbitrarily abandon them, I would not oppose such a regulation.

I think where you have Federal moneys involved, and here it is to the extent of 50 percent in the medicaid area, that there is legitimate involvement by the Federal Government in imposing regulations.