Representative LLOYD. We are about to run out of time.

Dr. Warner, in your testimony, you brought out the power grant game, and then there is the conflict of interest with our physiciansthat they would abuse some of the privileges. Don't you think that this should be addressed by the AMA?

Dr. WARNER. Some of the issues have been. The dispensation and sales of pharmaceuticals is a problem AMA has wrestled with for at least two or three decades now.

I think all of these ought to be brought to the attention of the appropriate professions.

Representative LLOYD. I think we should direct some questions to the AMA.

Thank you very much.

Representative PEPPER. Mr. Chairman, I am pleased that the distinguished chairman of the full House Select Committee on Aging, Representative William Randall, is here with us today.

STATEMENT BY REPRESENTATIVE WM. J. RANDALL

Representative RANDALL. Thank you, Mr. Chairman. I am going to try to get back this afternoon. Senator, how are you?

This joint meeting is something that is welcomed and perhaps we

should have more of them.

The House Administration Committee is concerned about avoiding duplication of efforts in regard to the aging, and I think this concern is justified.

Our objective on the House Select Committee on Aging is to remain advised and informed. So this joint meeting with our Senate counterpart is certainly very welcome.

We are gratified that the chairman of the committee has taken this course. I assure you, we on the House side will not drag our feet. We will make contributions as time goes on.

I am delighted to be here, and I will try to get back here this afternoon.

Senator Moss. Thank you, Mr. Chairman. We do appreciate having this joint meeting, because it enables us to hear witnesses who must travel long distances to come and, by working together, we can facilitate getting the information together.

Also, the Senator from Illinois, who is the ranking Republican member since we started with the witnesses-and we are pleased that Senator Percy is here. Do you have any questions or comments at this time?

STATEMENT BY SENATOR CHARLES H. PERCY

Senator PERCY. Mr. Chairman, I do not have any questions of our witnesses. I just quickly scanned the summary of the testimony, and I think it has been very valuable.

I do not think any of us have questioned the need to expand the availability of home health services as an alternative to unnecessary institutionalization in any of the hearings we have ever taken across the country, Mr. Chairman. You and I have participated in many hearings in many different cities, and I am sure the House experience has been the same.

We are foolish, foolish in cost-effective terms, to not expand home services. But questions arise as to the appropriate route to take, and I think the testimony we have had today, from what I see in the quick summary I have gone over, leads me to believe that the question we constantly return to whether the profit motive is consistent with health services, must be raised in this context.

I raise that, having spent virtually all of my industrial life-28 years in the profit system.

I did not think there is anything to equal it, as far as production of certain types of goods and services. But I am not so sure we should have used the profit system for all of our health needs.

For some reason or other, most of our hospitals are nonprofit. For some reason or other, 85 percent of our nursing homes are profitactivated. So we have tried both, and we have just one series of scandals after another.

I have met, Mr. Chairman, following every one of our hearings, whether they are in Chicago, Springfield, or New York, with representatives of the nursing home industry. I have urged them to not kill this experiment by a lack of policing themselves. They have a golden opportunity, and they are killing it by simply not cleaning up the conditions that exist in this industry.

Every single scandal we have had undermines the experiment we have made to see whether this could not be carried on.

Certainly, it makes sense to help senior citizens remain in their own homes whenever it is possible. But if required services can better be provided in a nursing home then we should provide them there.

Home health services help preserve an elderly person's dignity and independence, and help prevent and postpone institutionalization. Home health services also appear to be less expensive in many settings than maintenance in a long-term care facility.

TENS OF THOUSANDS NOT BENEFITING

We know from all of the testimony we have taken, that there are thousands, tens of thousands of Americans, who are not receiving the home health services that they need or want.

The question arises: How can we best extend needed services to our elderly.

I am afraid that HEW's answer is contained in the regulations the Department proposed on August 21. HEW asserts that the solution is to allow for-profit home health agencies to participate in the medicaid program.

This is hardly a novel notion. We constantly hear that the profit motive is needed as the carrot to attract providers into providing health care in public programs.

As a member of long standing of the business community, I can attest to the efficacy of the profit motive and the market mechanism. I am not certain, however, that the real problem is the shortage of home health agencies. The problem may be more one of the availability of home health benefits for the elderly. Perhaps we should be focusing our attention on ways to commit more dollars to home health programs.

Certainly I feel no concern at all about the nonprofits moving forward in this field. But I think there is a great deal of concern that we

will go ahead and do this in this field what we have already done in the nursing home field, and have a repetition, possibly hearings a few years from now, that will reveal the same sort of abuses that we have in the nursing home field.

I believe the new HEW directive amounts to a major policy decision. A change of this importance should be made by the Congress after appropriate hearings and deliberations.

Then, too, I think some legitimate questions can be raised about the appropriateness of the profit motive in the health field. This is particularly true when the health program is supported primarily with public funds. Our experience with proprietary nursing homes suggests that we should move slowly and carefully before endorsing for-profit home health services.

I do not have a closed mind on these issues. I think today's hearing will serve an important function. After evaluating today's record we will be in a better position to make a judgment.

However, I would hope that HEW would take this into account, and possibly stop, look, and listen before they move ahead with this set of regulations. They may not be providing what their hopes and expectations are and might possibly move us in a direction we are not prepared to move, and the industry itself is not prepared, and cannot certify it is ready to move.

Senator Moss. Thank you, Senator Percy.

Gentlemen, you have opened up an area of great concern to us, and that has rather lengthened our questioning, and I am sure we have many more questions we would like to pursue.

CARE PREFERABLE IN OWN HOME

Unfortunately, we have time constraints, and so we must terminate the questioning at this point. I want to tell you how pleased we are with having you come, and to lay out the problems that exist, and the alternatives that might be chosen in dealing with them. As Senator Percy indicated, we constantly uncover some new scandal in the field of health care of aged and we are anxious to try to fashion appropriate legislation and administrative regulations so that we might avert these problems. We all recognize the overwhelming need for appropriate care for elderly people, not in institutions, but preferably in their own home. I want to thank you all very much and forego one or two more questions I had.

Now, I think we are obviously into the afternoon, and I think maybe we could recess now for a short period and come back. We will recess until 1:15.

[Whereupon, the subcommittees were in recess at 12:15 p.m.]

AFTER RECESS

Senator Moss. The joint subcommittees will resume the hearings, and we will now call on Dr. Keith Weikel, Commissioner, Medical Services Administration, Department of Health, Education, and Welfare.

I ask you, Dr. Weikel, if you would present your testimony, but make it as brief as you can, because we do have very limited time. Dr. WEIKEL. Thank you, Mr. Chairman.

First, I would like to introduce the individuals accompanying me -representatives of the Department. On my right, Mr. Peter Franklin, Special Assistant to the Secretary; on my left, Dr. Claire Ryder, Director, Division of Policy Development, Office of Nursing Home Affairs; to the left of her, Mr. Gerald Sheinbach, Assistant Bureau Director, Division of State Operations, Bureau of Health Insurance, Social Security Administration.

STATEMENT OF DR. KEITH WEIKEL, COMMISSIONER, MEDICAL SERVICES ADMINISTRATION, DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE; ACCOMPANIED BY PETER FRANKLIN, SPECIAL ASSISTANT TO THE SECRETARY; DR. CLAIRE RYDER, DIRECTOR, DIVISION OF POLICY DEVELOPMENT, OFFICE OF NURSING HOME AFFAIRS; AND GERALD SHEINBACH, ASSISTANT BUREAU DIRECTOR, DIVISION OF STATE OPERATIONS, BUREAU OF HEALTH INSURANCE, SOCIAL SECURITY ADMINISTRATION

Senator Moss. We welcome you all to the subcommittees.

Dr. WEIKEL. Mr. Chairman, I am pleased to appear before these two distinguished committees to testify on HEW's proposed home health care regulations, which would permit proprietary agencies to participate in the medicaid program. I am looking forward to discussing these regulations with you and to hearing your views, for the Department is vitally interested in considering a variety of opinions before the revised final regulations are published. As you know, the proposed regulations were published for comment in the Federal Register on August 21. While the 30-day comment period was scheduled to close September 20, because of the quantity and quality of comments we were receiving, the period was extended to October 7, to give as many different individuals and organizations as possible a chance to comment. So far, we have received over 1,000 comments, which we are analyzing at the present time.

In addition, I have issued invitations to a wide variety of representative national and State professional and provider organizations and consumer groups, to discuss first hand all of the issues and questions related to the proposed amendments to these regulations, in order to achieve the most effective development of the final regulations.

I also welcome this hearing as an opportunity to discuss the proposed regulations with you and perhaps to clear up some misconcep tions as to how they would work in practice.

LONG-TERM CARE-38 PERCENT OF EXPENDITURES

The medicaid program devotes over $5 billion-or 38 percent of its expenditures-to the area of long-term care. Almost all of these funds are for institutional care. Over 1 million medicaid recipients spent some time this year in a nursing home, mental or tuberculosis hospital as a long-term care patient.

Many studies, including the GAO report to the Congress on home health care benefits under medicare and medicaid in July 1974, have

pointed to the underutilization of noninstitutional services. While acknowledging that hospital and nursing home care are necessary and essential elements of a continuum of care, so, too, are noninstitutional services for those individuals who no longer require institutional care or, more importantly, for those who can be maintained in their own homes, thus delaying or averting the need for institutional care in the future.

The excessive utilization of institutional care has been partly attributed, as well, to the fact that medicare and medicaid reimbursement has been more readily available for institutional services than for home health care. In addition, alternatives to institutional care did not exist in sufficient quantity or comprehensiveness, and when they did, their Federal reimbursement was restricted to skilled care over a limited period of time.

One alternative to institutionalization is a viable home care program. However, for some time it has been recognized that a clarification of existing medicaid home health regulations was necessary if the legislative intent of home health services under medicaid is to be achieved. Although home health care is a mandatory service, there are indications that many States have not adequately implemented it as a mechanism of noninstitutional care. For instance, reports from 45 States show that 7 had fewer than 100 recipients of such services during fiscal year 1974, and 3 had fewer than 10. This is obviously inadequate in our opinion.

BASIC ISSUES MISINTERPRETED

Before going into the details of the proposed regulatory changes, I would like to address two general, but basic, issues which are readily misinterpreted.

First, these regulatory changes are, in a sense, clarification and definition of the services that were mandated by Congress in the Social Security Act Amendments of 1967. The law requiring States to provide home health care under medicaid does not limit either the source or type of home health services as in medicare. In fact, Congress made it clear that medicaid should direct its attention to providing reimbursement for long-term care. Because existing regulations are either not clear or were too closely patterned after medicare conditions of participation, we must now define more clearly what services medicaid programs can reimburse, if these services are to reach all individuals in need of home care. These proposed regulations, therefore, are considered to be necessary to fully implement the law which was passed by Congress.

A second general concern expressed is that through these regulations the Department is usurping States rights to establish the dimensions of their medicaid program. The example cited is that these regulations would require States to include proprietary agencies as medicaid providers. In fact, the States, or even the medicaid agencies themselves, may specify that such agencies are excluded from participation and at least one State has done so. In addition to meeting Federal criteria for reimbursement, States may also require such agencies to be licensed by the State. The licensing standards, which are entirely a State responsibility may, and have been, set at a higher