cost reductions which would result from the establishment of additional intensive home care programs.

The net value of an intensive home care program is about $200,000 per year. I am aware of five hospitals in Philadelphia which are interested in establishing programs, but cannot sustain the financial losses that would result from providing care to medicaid patients. This, in effect, increases the cost of health care in the city of Philadelphia by $1 million per year, a sum that would cover the cost of needed intermediate home health care to approximately 5,500 persons. It is my earnest hope that Congress will carefully examine the laws and regulations which now apply to home health care and develop new legislation that will promote and support the economical growth and development of a rational and effective home health care system in the United States.

Thank you.

Mr. HALAMANDARIS. Thank you for an excellent statement. We appreciate your reading it into the record. I happen to share many of your sentiments.

Ms. RAWLINSON. Thank you.

Mr. HALAMANDARIS. I would like at this time to come to our next panel member, a good friend of ours, Janet E. Starr, executive director of the Coalition for Home Health Services in New York State.

It is a real pleasure to welcome you here.

STATEMENT OF JANET E. STARR, EXECUTIVE DIRECTOR, COALITION FOR HOME HEALTH SERVICES IN NEW YORK STATE Ms. STARR. Thank you.

I am Janet E. Starr, executive director of the coalition for Home Health Services in New York State, a foundation-funded effort to stimulate the development of comprehensive programs of home health services in New York State. The coalition's purpose and program are described in the attached brochure. Its offices are located in Syracuse, N.Y.

I am here today in response to a request from this committee for technical advice and recommendations on the regulations proposed for home health services in medical assistance programs in the Federal Register of August 21, 1975.

The intent of the regulations to increase the availability of home health services and increase their use is one which the coalition wholeheartedly endorses. I wish to comment today on two portions of the proposed regulations: that which would permit single-service agencies to become medicaid providers and that which would permit certification of proprietary agencies.

THE NEED FOR COMPREHENSIVENESS

Experience with home health care in New York State demonstrates that a broad range of professional and supportive services must be available if home care is to meet the needs of the persons for whom this is the treatment of choice. Some patients may need

one or two services. Others may need several. These services may be provided directly or through contracts, but they must be coordinated, with provision for periodic reassessment of the individual's needs by a health professional. If a home care program does not offer an array of services adequate to permit responsiveness to patient needs, it will not be possible to care for many patients who could be cared for at home. Instead of providing a dependable alternative to institutional care, it will foster it unnecessarily.

The portion of the proposed regulations which permits singleservice agencies to become medicaid providers is ill-advised and regressive. It undercuts the progress made toward requiring a broad range of services. It ignores the fact that single-service agencies may contract with other sources of service to broaden the range of services offered. It is at odds with other sections of the proposed regulations which require that patient services be coordinated and that State plans make three services available: nursing, home health aide, and medical supplies and equipment.

Home health care is increasingly recognized as an integral part of the continuum of care that must be available to our citizens, but public policy has not taken this into consideration when health care resources are allocated. Home health service development has been underfinanced. Service availability is uneven and nearly nonexistent in some rural areas. Further piecemeal development seems unwise when planned development is imminent under Public Law 93-641, the National Health Planning and Resources Development Act. May I say, parenthetically, the law is rather sketchy on this point. I recommend that single-service agencies not be permitted to become medicaid providers.

The other portion of the proposed regulations on which I will comment is the one which would permit proprietary agencies to become medicaid providers whether or not the State has a licensing law. This is a very difficult and controversial issue. The coalition has not studied this, nor has it taken a stand on it. My comments, therefore, will be those of an individual speaking from the perspective gained during 14 years of work with home health services at the State and local level.

I don't know whether or not proprietary services should become medicaid and medicare providers of home health services. I feel there are fundamental issues that must be confronted before a public policy decision is made. The issues that concern me are outlined below:

ISSUE No. 1: CONSUMER PROTECTION

Proprietary services fill a need not being met by public and nonprofit organizations. They would not exist otherwise. However, they are not regulated in States where they are not licensed, and thus consumers of their services are not given the protection extended to consumers of services from nonprofit and public agencies. Proprietary agencies can provide services of high quality, but the consumer has no assurance of this and no accountability to the public is required. Presumably, allowing proprietary agencies to become medicaid providers would provide consumer protection and require accountability.

ISSUE No. 2: FREE SERVICE

Public and nonprofit home health agencies have a strong commitment to give free service to patients who cannot pay, yet do not qualify for third-party payments. Proprietary agencies serve only those for whom the full cost is paid. In at least one State where they have been licensed, and thus eligible for medicaid and medicare reimbursement, they have discontinued service to patients when third-party payment ceased. Many of these patients then sought help from nonprofit and public agencies, placing a severe strain on their resources, especially on those of the nonprofit agencies. This disruption of service and shifting of the patient between agencies increases the cost of care, to say nothing of the effect of the disruption on the patient.

Thus a second issue to be decided is whether and to what extent all home health agencies should be required to give free service. To exempt a portion of the agencies providing service from such a commitment is to place an undue burden on the others unless some form of redress is provided.

ISSUE No. 3: CONTROLS OF QUALITY AND USE

A third issue to be resolved is how to establish clearer controls of the quality and use of home health services. Berwyn F. Mattison, M.D., who is vice president of the coalition and former executive director of the American Public Health Association, says that home care standards have been aimed at the kinds of people providing care, without definition or guidelines for evaluating the care itself. He points out that there are no well-established criteria as to patient conditions for which home care is the optimum locus.

Leo Jivoff, M.D., the coalition's president and chairman of the Department of Rehabilitation Medicine at Upstate Medical Center in Syracuse, agrees and points out that new medicare regulations for the care of patients in skilled nursing facilities recognize the fact that the patient's functional situation is often more complex than the medical diagnosis by itself would suggest. "The same problem exists in defining home care needs," Dr. Jivoff says, "suggesting that determination of the services to be provided must necessarily be made by health professionals on the scene."

The whole question of controls on the quality and use of home health care should be reexamined. Home health care has unique problems of control that arise because it is carried out in the homes of individuals, rather than in an institution. Before proprietary agencies are permitted to become direct medicaid or medicare providers, we must consider whether their approach to home care as a business yielding a profit would have an effect on their implementation of criteria and guidelines.

ISSUE No. 4: REASONABLE PROFIT

The question of profits is another issue on which decisions must be made if proprietary agencies are to receive medicare and medicaid reimbursement. What amount of profit is reasonable? A report by the California Auditor General last year charged that of the pay

ments made by the State to 15 prepaid health contractors under Medi-Cal, 52 percent was expended "for administrative costs or resulted in net profits."

The safeguards needed to prevent unscrupulous profiteering must be identified and made a part of any regulations licensing proprietary agencies. In New York State we found that profiteering in nursing homes was possible under safeguards that were presumed to be adequate. A high-level State commission appointed to look at this question is now preparing its report. Whether or not the safeguards it and similar groups propose are applicable to home health care must be carefully investigated.

I recommend that a decision on licensing proprietary agencies as medicaid providers be delayed while we answer the issues I have raised. In the interim the regulations proposed on June 9, 1975, which would permit certified agencies to contract with proprietary agencies, should be made final. This would increase the amount of service available while making currently certified agencies responsible for supervision and quality. If offers a responsible way to begin to use proprietary services.

Thank you for the opportunity to bring these concerns to your

attention.

Mr. HALAMANDARIS. Thank you very much. It lays out the issues in an excellent manner. Hopefully, we can bring your words to the attention of HEW.

Ms. STARR. Thank you.

Mr. HALAMANDARIS. Our next witness is Ms. Mary Ann Pfau, coordinator of ambulatory and home care nursing services, nursing services department, the American Nurses' Association.

We are very pleased to have you here, and we are very, very proud of the work you do, and more than delighted to have you here.

STATEMENT OF MARY ANN PFAU, COORDINATOR OF AMBULATORY AND HOME CARE NURSING SERVICES, NURSING SERVICES DEPARTMENT, AMERICAN NURSES' ASSOCIATION

Ms. PFAU. Thank you.

I am Mary Ann Pfau, coordinator of ambulatory and home care nursing services, nursing services department, the American Nurses' Association. With me is Connie Holleran, deputy executive director, government relations division for ANA. Prior to my present position, I spent 5 years as a coordinator of a home health agency in California. During that time I was also responsible for coordinating patient care in approximately 20 nursing homes in the San Francisco metropolitan area. I developed and implemented a discharge program for a large medical center. In addition, I developed a concurrent utilization review program for that hospital that included utilization of home health services and nursing home services. My experience includes working with both medicare and medicaid.

The American Nurses' Association welcomes the opportunity to present its views on the proposed regulations for home health services under the medical assistance program as published in the Federal Register, August 21, 1975.

We are in agreement with the stated intent of these regulations, that is, to increase the availability of home health services. The American Nurses' Association has gone on record in support of expansion and provision for the orderly growth of home health services. Certainly, the medicaid recipient is frequently in need of such Two SETS OF STANDARDS

care.

However, we have major concerns regarding these proposed regulations. It appears that they would set up two sets of standards for home health services, one for the medicare recipient and one for the medicaid recipient. This could have serious negative impacts:

It would weaken the present methods for evaluation and control of the quality of care provided;

It would increase administrative costs in agencies which choose to provide services to both population groups;

It could create two levels of agencies: one which provides services to medicare recipients and one which provides services to medicaid recipients. This situation already exists in many parts of the country in the nursing home field. Certainly one does not want to repeat the problems of that industry; and

It also appears that an additional intent of these proposed regulations is to allow for the opening of new home health agencies to serve medicaid recipients. In most metropolitan areas the answer to the need for increased home health services is not to open more agencies. Most of the existing agencies are underutilized and would have little difficulty in expanding the quantity of their services. In areas lacking in any home health services, these proposed regulations would allow for provisions of services to medicaid patients. However, if the agency is not eligible for medicare reimbursement because of mandatory State licensure requirements, from which the proposed regulations would exclude the new agencies, medicare recipients in those same areas eligible for home health services would be unable to receive them.

OPPOSED TO Two-STANDARD APPROACH

The American Nurses' Association is opposed to the two-standard approach to the provision of home health services. Agencies and services to the medicaid recipients should comply with the regulations for medicare recipients or, preferably, there should be orderly expansion of the services to medicare recipients. The American Nurses' Association believes that creation of new agencies should be based upon demonstrated need.

The following is directed to specific sections of the proposed regulations. The quoted sections from the proposed regulations are followed by our comments:

Section 249.10(b) (7) (A).—Nursing service, as defined in the State Nurses Practice Act, provided by a qualified agency or, in the case where no such agency is available to provide nursing services, by a registered nurse or licensed practical nurse who is currently licensed to practice in the State and who is under the direction of the patient's physician.