Medicare-medicaid Administrative and Reimbursement Reform Act

4. Autopsy of individual with suspected familial or communicable disease where intense counseling of appropriate family members by the pathologist may be indicated.

5. Autopsy with forensic or environmental implications-examples include not only cases of suspected homicide, etc., but also situations where possible environmental influences (radiation, various dusts, asbestos, etc.) may have caused disease and may be the basis of future litigation.

It is important to emphasize that academic departments of pathology are often responsible for the more complicated autopsies since difficult clinical problems are often referred to these institutions for diagnosis and treatment. In addition, provision should be made in the law for new responsibilities and activities as such develop. For example, extensive grief counseling of parents of children with the sudden infant death syndrome (SIDS) now appears to be of significant value to the involved families and will probably be undertaken by all pathologists on a universal basis in the not too distant future. Thank you for your attention to the above.

ELLIS S. BENSON, M.D., ·President Association of Pathology Chairmen.

STATEMENT OF THE BLUE SHIELD ASSOCIATION

This statement on S. 1470 is presented on behalf of the Blue Shield Association, which represents 70 locally-based, not-for-profit, medical care prepayment plans. These plans cover 72 million private subscribers, and serve 12 million beneficiaries under the medicare program. In fiscal year 1976, including the transitional quarter from July through September of 1976, 32 Blue Shield part B carrier plans processed almost 72 million part B claims, or approximately 62 percent of the total medicare part B claims.

This subcommittee is to be commended for addressing the problem areas of medicare and medicaid and exploring the need for reform in these programs. The Blue Shield Association appeared before this subcommittee last year and expressed its views on this subject. We are pleased that many issues of concern to us at that time have either been resolved or eliminated from S. 1470.

We support your commitment to the development of reforms to deal with the increasing cost of these programs and to promote incentives to encourage increased efficiency. Your previous actions and consideration of this bill demonstrate an awareness of the enormity of the problems faced by both the government and private sector. Although there have been improvements in these programs, we recognize that some problems are still unresolved.

A major problem with medicare continues to center around reimbursement for services of physicians and other providers. This has been one of the chief causes of dissatisfaction among both beneficiaries and physicians. The inflationary trend in the economy has moved rapidly, and the Medicare reimbursement formula no longer achieves the original objective of a paid-in-full program. We pointed this out last year before this subcommittee. We again emphasize our concerns in this area. Under the present formula the beneficiaries' portion of health care costs has been steadily increasing. The reason for this is not clearly understood by the public and the consequences reflect adversely on both the program and carriers.

We recognize the difficulty of balancing a desire to keep costs down with the establishment of a range of fees which will be accepted as reasonable by physicians and other providers. However, until this problem is resolved, dissatisfaction among physicians and beneficiaries will continue to exist.

We have urged Congress on many previous occasions to choose between a true paid-in-full program or a limited liability program. Once a decision is clearly made both the public and providers can be properly informed of what the program does and does not provide. However, if the intent is to provide an 80 percent of reasonable charge program with provider cooperation and program acceptance. it is our opinion based on many years of experience that there must be predictability based on current reasonable charges to induce such provider cooperation.

Another area of concern to us is the need to improve program administration. This can best be accomplished by concentrating more at the operational or carrier level where the most effective and long-last reforms must begin. A posi

tive step would be to allow carriers to utilize fully their expertise and capabilities for which they were originally selected. We urge more consideration in these

areas.

One proven approach is to hold carriers accountable for end results and give them more discretion on the processes used to achieve those results. Excessive legislative and regulatory specification of the processes to be used is counterproductive and costly to everyone.

We support reasonable standards to be met by carriers. However, these should be fixed by regulation rather than by law. It should be the carrier's responsibility to achieve these standards, using effective methods of its own choice. Our experience shows that this is the best way to get results and we recommend that Congress follow this approach.

We would now like to offer comments on a few specific sections of S. 1470. Our statements are intended to be constructive and supportive of the desired improvements in medicare and medicaid.

Use of approved relative value schedule, section 15

In general, we support the intent of this provision. It is a commendable idea, especially if it is used to assure that a tool is available for carriers and providers in achieving proficient administration, cost effectiveness, and adequate pricing. The bill allows the Secretary to adopt a specific terminology system and its relative values for use by carriers in calculating reasonable charges for medicare. However, the language is silent on how the conversion factors, if any, would be determined. We urge that the report of this subcommittee make clear that these provisions are not to be interpreted to mean that the Secretary of HEW would establish a national fee schedule by setting the conversion factor. Such a "national fee schedule" that failed to take into account local and regional differences would be neither fair nor equitable. We also recommend that this section not be construed to prohibit the use by the Secretary of any existing terminology system. Existing systems should be considered before any attempts are made to develop a new system for use under this provision, to minimize proliferation of terminology systems.

We also have some concerns regarding subsection (e). This subsection appears to permit comparable use of the nomenclature and relative value systems developed under this proposal for activity not related to title XVIII. We would request that the subcommittee report state clearly that private business use by carriers of the title XVIII nomenclature and RVS would not be a violation of any existing laws or be subject to Federal Trade Commission or Justice Department action.

Finally, we recommend that the provisions of this section not be construed to allow or require the establishment of a single medical terminology system. While we support the establishment of uniform terminology for medicare and medicaid, cost considerations mandate that carriers be allowed the flexibility to use their own coding systems in their private business.

Agreement to accept assignment-section 10

This section would allow a physician an option to become a medicare "participating physician." As a "participating physician," the physician would accept an assignment of claim for each service performed for an individual involved in part B. In addition, participating physicians would be able to submit claims on a simplified basis, including multiple listing of patients. Physicians would receive an additional $1 for each such claim submitted.

We support the intent of this section in providing incentives to encourage physicias to accept universally assignments under the Medicare program. For any full payment program to work with consistent predictability, there must be a commitent in advantage by the physician. However, if this concept is to be successfully implemented, physicians must have confidence that reimbursement for their services will be fair and equitable and based on current reasonable charges.

While we support the provisions of this section that would reduce paperwork by having simplified claim forms and reimbursement for preparing these claims, we have doubts that these incentives alone are sufficient to encourage a significant improvement in participation by physicians. Blue Shield has traditionally utilized the participating physician concept. We would hope to have the opportunity to consult with the members of this subcommittee and its staff in this regard.

92-202-77-33

Regulations of the Secretary-section 32

If promulgation of any regulation is deemed urgent, this section modifies the time for such proposed regulation to become effective after it is published and sets a maximum time for regulations to become effective for this act. The language of the bill requires the Secretary to indicate whether prompt promulgation is urgent when a proposed rule or regulation is published in the Federal Register. Where such urgency is indicated, the rule or regulation would become effective within sixty days after the notice is published.

We appreciate the fact that a need may occasionally arise for rapid implementation of rules and regulations. Reasonable and timely implementation of such rules and regulations is a desirable goal. However, we would hope that the intent of this section is not to bypass the opportunity for effective comments and recommendations from interested individuals and organizations. In addition, we are of the opinion that a reasonable time should be allowed to receive comments on the Secretary's determination of the urgency of the situation.

Finally, as we have before, we recommend that interested parties be given additional opportunities to present their recommendations and comments. This could best be accomplished during the drafting stages of a proposed regulation. Repeal of section 1867-section 33

This section would repeal section 1867 of the Social Security Act. In effect, this would terminate the Health Insurance Benefits Advisory Council. We objected to this proposal last year and continue to do so. There is a need for an effective voice in this area. This function will become even more important if the reforms suggested in this bill are implemented. We recommend that this section be eliminated from S. 1470 and rewritten to strengthen HIBAC to make it an even more effective body. HIBAC plays a vital role as a consultative body on a wide variety of policy and regulatory questions.

CONCLUSIONS

To summarize, we recognize that some reform is still needed. In general, we support this proposal to the degree that it can be effective in accomplishing this goal. However, we believe flexibility and realistic incentives are key factors in achieving lasting improvements, and that additional legislative attention is needed to assure them.

Thank you for the opportunity to submit our views on S. 1470.

STATEMENT OF THE CALIFORNIA MEDICAL ASSOCIATION

The California Medical Association appreciates this opportunity to submit its comments regarding the proposed legislation, S. 1470, the Medicare-Medicaid Administrative and Reimbursement Reform Act.

We applaud the efforts of this committee to respond to the many problems that are faced in the medicare and medicaid programs. We are aware, as you are aware, that the most pressing of these problems is the continued escalation of costs of medical care. Our comments will be limited to the specific sections of the bill which deal with the physician community. The main thrust of our testimony concerns the practitioner reimbursement reforms, as well as several of the miscellaneous sections of the legislation.

Under the bill, there would be multiple classifications for physicians who care for medicare-medicaid patients. Present practice is to allow the physician to accept or reject assignment on each individual patient. This legislation proposes a new alternative called a "participating" physician. A participating physician is an MD or DO who voluntarily and by formal agreement accepts the medicare reasonable charge determination on assigned claims basis as a full billing amount for all services to all medicare patients. Once the physician has signed this agreement he would be allowed to submit his claims on a simplified basis. We understand that this would be a line-by-line submission of claims which would be given priority handling by the part B agent. In addition, the physician would receive a dollar per eligible patient as an administrative cost saving allowance that would be included with his reimbursement for the line item billed claims.

This use of inducements to encourage the acceptance of the Medicare assignment is recognition of the lagging assignment rate. This provision of the bill, utilizing the dollar bonus to the physician, does not reach the issue of why the assignment is so little accepted.

In addition, if there is a method available, such as the multiple-line billing, which can save administrative expense to medicare and the physician, why is it not universally employed for all assigned claims? Physicians are entitled to early and timely payments without the necessity of a statutory mandate. Payment should be prompt, whether or not the physician signs a formal agreement with HEW.

It should also be observed that in seeking to foster acceptance of assignments, the bill itself is ambivalent. In one section it seeks to provide inducements for assignments, while in another, as discussed below, it discourages assignments through imposition of further discriminatory payment mechanisms.

Under section 11, a new prevailing statewide charge level would be established. The bill specifically provides that the prevailing charge level shall cover 50 percent of the charges made for simiar services in the state. Based on this determination, a new imitation is then imposed through the operation of the economic index. To the extent that any prevailing charge in a locality is more than one-third higher than the statewide average, it could not be increased on an annual review.

This provision would not reduce the prevailing charge currently in effect, but would put the lid on increases in charges in urban areas, tending to equalize fees in varying parts of the state. This would be discriminatory and unequitable to the extent that wages and services vary markedly by location, and by rural and urban characteristics. Medicare has always based its payments on the differences in localities. It is essential that the law continue to recognize these significant differences in costs between urban and rural settings.

Section 12 of S. 1470 would establish a restrictive definition of physician services for physicians associated with hospitals. We strongly object to such a limited definition of service. A strict application of the language in this legislation would adversely and unfairly affect payment to pathologists and anesthesiologists. The California Medical Association feels that physicians should be permitted to arrange equitable reimbursement agreements with other consenting parties. It does not seem appropriate for Congress to direct the practice of medicine by defining which physician services qualify as medical care. PSRO's are given the charge to determine the propriety of medical services. The Congress should allow PSRO to begin to function before adding additional standards which could be in conflict with the existing review mechanism.

It cannot be assumed that contractual agreements necessarily result in excessive fees or in fact are unequitable, nor can it be assumed that equating the physician's customary charge with a reasonable salary plus additional hospital and physician costs will be an equitable approach. This legislation should not provide an inflexible limit as to permissible contractual situations between physicians and other parties, as these situations vary.

We would like to turn now to section 15 of the bill that deals with the use of an approved relative value study. The legislation calls for the development of a basic terminology which would be published in the Federal Register. Interested groups would have six months in which to propose values for the terms that have been developed. We feel that this section of the legislation could be beneficial to the standardization of terminology in relative values regarding the basic procedures of medicine. As the committee is aware, there has been much discussion with the Federal Trade Commission regarding the use of relative value studies. This provision would provide an opportunity for the studies to be fairly tested.

RVS studies do not have an independent effect on the aggregate cost of medical care, but they do assure that compensation is appropriate to the service in relation to other services. Standardization of procedures provides a common language for the profession. We would urge that existing relative value studies, which have been in use in this country for over 20 years, be recognized in evaluation of medical care.

We would also like to indicate our support for section 44 of S. 1470. This language would prohibit the release of the names of physicians who have been paid large amounts for treating Medicare patients. While this information should be available and is useful to administrative agencies, the publication of this information is unnecessary and has, in the past, been inaccurate. In addition, it has been an embarrassment to physicians who treat a large number of the elderly.

In summary, our support or opposition to specific sections of this legislation is outlined below:

The California Medical Association supports the use of the relative value concept. . . supports the nondisclosure of aggregate payments to physicians . . . has severe reservations about the proposed system for reimbursement of providers . . opposes the limits on the definition of physician services to specific categories of physicians, namely pathologists, anesthesiologists and radiologists.

There should be no discrimination with regard to participation in medicare-medicaid acceptance of assignments. Those physicians accepting assignments should be able to bill on a line item basis and receive the cost saving benefit proposed.

The section on definition of physician services needs to be broadened to allow for professional judgment and discretion in developing what truly is a physician service for a hospital based physician.

We believe that medicare payments can and should be revised. The payment mechanism should reflect the same sensitivity which Congress showed when it enacted the medicare law. Congress, in enacting medicare, stated its desire to provide quality medical care for the elder segment of our population. This high quality service provided for patients must be paid for at a proper level, and the physicians involved in caring for the elderly should be reimbursed on a usual and customary and reasonable basis. The California Medical Association urges you to consider our recommendations and comments, and in closing we would like to offer our expertise in any way possible to assist you in developing or modifying this legislation for the benefit of all.

COMMENTS OF THE CALIFORNIA MEDICAL ASSOCIATION

The California Medical Association appreciates this opportunity to submit its comments regarding the proposed legislation, S. 1470, the Medicare-Medicaid Administrative and Reimbursement Reform Act.

Under the bill, there would be multiple classifications for physicians who care for medicare-medicaid patients. Present practice is to allow the physician to accept or reject assignment on each individual patient. This legislation proposes a new alternative called a "participating” physician. A participating physician is an MD or DO who voluntarily and by formal agreement accepts the medicare reasonable charge determination on assigned claims basis as a full billing amount for all services to all Medicare patients. Once the physician has signed this agreement he would be allowed to submit his claims on a simplified basis. We understand that this would be a line-by-line submission of claims which would be given priority handling by the part B agent. In addition, the physician would receive a dollar per eligible patient as an administrative cost saving allowance that would be included with his reimbursement for the line item billed claims.

In addition, if there is a method available, such as the multiple-line billing, which can save administrative expense to Medicare and the physician, why is it not universally employed for all assigned claims? Physicans are entitled to early and timely payments without the necessity of a statutory mandate. Payment should be prompt, whether or not the physician signs a formal agreement with HEW.

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