In this time of fiscal crisis when we are urging smaller agencies to merge their resources by establishing linkages, centralizing administrative practice and policy, et cetera, to provide cost/benefit effective management, we believe these regulations could conceivably slow down or abort this process.

Small agencies must meet the same standards as the larger providers. This means that unless each is part of a larger entity, it must develop an organizational structure, business expertise, a statistical system, record system, utilization review procedures, advisory committees, supervision, inservice programs, et cetera. These items. spread over the small number of visits made, make the cost of providing services prohibitive. However, while the regulations may also force these small agencies to increase their staff, there is no guarantee that the range of services needed to deliver a satisfactory home health service will be developed.

We believe that the existing public and private, nonprofit agencies. should have an opportunity, through increased financial support, to fulfill the basic needs of the population for home care. These agencies have spent years gearing up to meet regulation requirements. They have coped with changing reimbursement policies, retroactive denials, and policies and regulations that have shifted through at least four layers before being applied at the local level. Therfore, we find it paradoxical that while the administration is attempting to "increase the availability of"-home health-"services and encourage their use in appropriate cases" through these regulations, the appropriation request just sent to the Congress includes none of the $8 million authorized in Public Law 94-63 for the development and expansion of home health agencies.

DUPLICATION OF SERVICES ANTICIPATED

With the implementation of these regulations, we can anticipate a further duplication of services in areas that already have certified home health agencies. It seems illogical-in fact, even naive-to believe that agencies with a profit incentive will set up businesses in the rural or under-served areas of the country where the need is so great and services so sparse. If the home health field is to be opened to a variety of providers, it is imperative that a certificate of need requirement for the home health sector be established as soon as possible. To our knowledge, provision for a certificate of need for home health was being considered by HEW. We were delighted to hear Mr. Weikel say today that HEW was, in fact, considering the development of this certificate of need requirement.

The council has two other areas of concern that it wishes to call to the attention of the subcommittees. We believe that these regulations, as written, change the definition of a home health agency as it appears in the original medicare law. We believe that a change of policy such as this is more appropriately the responsibility of the Congress than of a regulatory agency.

Second, although we have not developed this theme, it is our belief that the implementation of these regulations will have a significant effect at the State level. Not only are the States being

expected to certify organizations which are in many cases unlicensed, but they will be required to apply and monitor two sets of standards, often to single service agencies. Many States are now experiencing fiscal difficulties in the administration of the existing medicaid programs.

It is doubtful that they will have the capacity to adequately monitor and enforce these new regulations.

In summary, we would like to reiterate our general opposition to these regulations. In addition, we believe that if the definition of a home health agency is to be changed, it should be accomplished through legislation, not regulation.

We believe that only one set of standards for home health agencies providing governmentally reimbursable services must be adopted.

Therapy services must be included as basic-not optional-services in the State plan.

A certificate of need requirement for home health agencies must be developed.

We believe that the expansion of existing agencies should be encouraged through the appropriation of the funds already authorized under Public Law 94-63.

Mr. HALAMANDARIS. Thank you for your excellent statement. We really appreciate that.

It seems to me you have laid out the issues as well as anyone we have heard here today. You are to be commended.

MS. TIGAR. Thank you.

Mr. HALAMANDARIS. We will now hear from Ms. Eva Reese, executive director of Visting Nurse Service of New York.

It is a pleasure for me to welcome you here today. I am sorry there are not more Senators and Congressmen to hear your presentation. We are delighted to have you here, and we are looking forward to having you read your statement into the record. I think it will be an important contribution, and we are glad you are here.

STATEMENT OF EVA M. REESE, R.N., EXECUTIVE DIRECTOR, VISITING NURSE SERVICE OF NEW YORK

Ms. REESE. Thank you very much, Mr. Chairman.

Mr. Chairman and members of the joint committee, my name is Eva Reese and I am executive director of Visiting Nurse Service of New York.

Thank you for the opportunity to speak to you today from the perspective of a long-time provider of home health services.

Our voluntary community-based agency, which covers the bor-oughs of Manhattan, Bronx, and Queens in New York City, has provided care to patients in their homes since 1893. Last year our multidisciplinary staff of nurses, home health aides, speech and physical therapists, social workers, and physicians made some 425.000 visits to patients in their homes. In addition, more than 1 million hours of home health aide service were provided by our agency to patients requiring this service for period of more than 5 hours a day.

Our agency accepts referrals from all sources, regardless of the patient's ability to pay. Our funding is through medicare, medicaid, and some insurance companies, as well as direct payments from patients and philanthropic contributions.

Based on our experience, I would like to make the following comments on the proposed regulations published in the Federal Register, vol. 40, No. 163, on August 21, 1975, which relate to home health services under State medicaid programs. I have attached to my testimony a copy of my letter to the Administrator, Social and Rehabilitation Services, dated October 6, 1975.

POSITIVE CHANGES

The proposed regulations include several positive changes which will have beneficial effects on the provision of home health services to medicaid recipients in many States. These include:

(1) The clarification that the limited definition of skilled nursing and that prior hospitalization requirements of medicare part A do not apply to medicaid coverage.

(2) The requirement that State medicaid plans must cover at least nursing, home health aide, and medical supplies and equipment. In addition, based on our experience with chronically ill and home bound patients, we feel that consideration should be given to adding physical and speech therapy to the list of basic services.

NEGATIVE CHANGES

However, we do feel that the proposed changes have negative features which must be seriously considered. They include, first, the establishment of two separate standards of care for patients receiving home health services under the medicaid and medicare programs. The door is opened for Government funds to be paid through medicaid to proprietary agencies without the safeguard of State licensure while medicare patients would continue to have this protection.

Second, the bypassing of the State's licensure laws. It is, after all, at the State level that the monitoring of these agencies is carried

out.

Some of my comments you have already heard today about the possibility of bypassing the State for licensing, but I am puzzled, and I would like to state my puzzlement, if I may.

It seems that while we know that States must now have a law that permits licensing of proprietary agencies to receive medicaid funds, the States can pass such a law, and have, in a number of instances.

Under the proposed regulation, it seems the State would need to pass a law to prohibit licensure of proprietary agencies, and if such a law were not passed, then medicaid funds would become available to the proprietary agencies.

I might add that passing such a prohibitory law is hard to do, and my puzzlement is why the push to do this? Why not leave it as it is, since States do have the option to go in either direction? I would like to know what the rationale is under those circumstances as outlined in the regulations.

And third, the regulations' extension of medicaid payments to agencies providing a single service-nursing or home health aide

service. This is incompatible with our experience that most patients need more than one service. Furthermore, when a range of services is provided, it is essential that one agency accept responsibility for providing, coordinating, and insuring the quality of such services. The attached letter* speaks to this point in greater detail.

The value of the role of a single coordinating agency is found in: Avoiding duplication of service; controlling the amount provided in accordance with changing need; and encouragement of maximum patient and family independence at the earliest feasible time.

The taxpayers' dollars are not well spent on service that continues past well-defined need and that encouraged dependence. Neither does this serve the patient and family well. In other words, service should be based on need and appropriateness rather than potential profit.

By definition, profitmaking health care agencies do not make quality patient care their primary concern. This point has been made over and over again in the nursing home situation in New York State in which millions of tax dollars have been siphoned off for marginal or nonexistent services. Under these circumstances, enabling profitmaking enterprises to provide home health services under tax-supported programs invites similar abuse.

GOVERNMENT SHOULD ENCOURAGE EXPANSION

We, therefore, are strongly opposed to the removal of the current limitation which restricts proprietary home health agencies from qualifying as providers except where the State licenses such agencies. This action seems to us to be a very shortsighted means of expanding home health services. Rather than diverting resources to the profitmaking sector, the government should encourage expansion of existing voluntary and public agencies.

It is notable that in recent legislation, as Nancy Tigar mentioned, a total of $8 million was authorized for the entire country to provide expansion moneys for home health agencies-and, as of now, no one knows how much, if any, of that amount will be appropriated. This contrasts with $6 billion of Government money which has been spent in New York State alone in the past 10 years to build and equip hospitals and other building-centered programs. The voluntary home health services sector desperately needs support in order to lift its capacity for meeting needs. By their very nature, voluntary home health services have had no way of building up funds for expanding services.

Some proprietary agencies currently may be able to provide services at a lower charge per hour than are voluntary and public agencies. While this appears to be an attractive feature of including proprietary agencies in the medicaid program, it only takes into account the cost per unit-not the cost per patient. I suggest to you that the cost per patient served by a proprietary agency may exceed that of the nonprofit sector. It is also generally conceded that the costs of service by proprietary agencies will rise when they are required to meet the same standards as certified voluntary agencies

See appendix 5. item 7, p. 257

now must meet. I would like to give you a few figures that we find in our agency:

Costs in VNSNY-During 1974, our agency expenditures for care of the sick amounted to $14 million to provide care to about 33,000 admissions-an overall average of $424 per year. For those patients receiving only professional services-nursing, speech therapy, physical therapy, and social services-the average cost per admission was $176 for the year. When a patient received professional and home health aide visits-2 hours or less-the average cost was $767 per year.

Even in those cases where hourly home health aide service 4 to 24 hours per day-was provided, the average cost per case for our full range of services was $2,096 per year. More detailed information is given in the table below:

[The table follows:]

VISITING NURSE SERVICE OF NEW YORK; AVERAGE COSTS PER ADMISSION BY DIAGNOSIS, 1974
Care of the sick (excluding maternity services)

Ms. REESE. You should be cautioned that these figures reflect the cost of our services only, and do not include all the costs of maintaining a patient at home, such as rent, food, and clinic visits. Our agency is currently carrying out a project with the Comprehensive Health Planning Agency of New York City to determine the total costs of home care for some 500 chronically ill patients. This information is badly needed in the field of home health care. I might say we are adding such services as transportation and more medical services which we think should round out the field in home health

care.

The time is right for expansion of home health care to make it a realistic option in health care services. While the potential for expansion of services is encouraging, the possibilities for abuse in these regulations are frightening. There is much evidence that surveillance methods and staffing are a long way from being adequate to prevent a repeat of the tragedies in the nursing home situation. It is my sincere belief that nonprofit agencies, when properly funded, can expand their services to best meet the needs of patients who are sick at home.

Mr. HALAMANDARIS. Thank you very much for an excellent statement. We appreciate having that for the record. You made some excellent points that we will want to extract and send to HEW, tell