lucrative areas-in upper income areas, for example-and failing to provide services in areas where the income of the area may be low. Fourth, I hope we can succeed in finding a way to promulgate standards for home health care, which provides for evaluation of that care by the recipients, not just those who provide it, or those who provide oversight of the providers.

MANY ANSWERS SOUGHT

Finally, I hope we can discover what regulations can be developed to prevent unscrupulous profiteering. What audit trails should be established to assure the availability of accurate data on accountability for use of funds. How should HEW, the State, or others use this information? What guidelines should there be for evaluating and controlling administrative costs, or determining if the dollars were spent to improve the status of the client?

Mr. Chairman, I think our hearing today can be interesting and productive, and I hope our witnesses will be patient, for it will be a lengthy hearing. We do have a fine list of witnesses, who have arranged to come before the subcommittees to answer some of these very important questions.

Representative PEPPER. Mr. Chairman, we are pleased to have Mr. Cohen of Maine, who serves on our subcommittee, with us today.

Senator Moss. We are delighted to have you join us, Mr. Cohen, and Mrs. Lloyd. Do you have opening statements?

Representative COHEN. I simply want to commend you for calling the joint hearings, and associating my remarks with Mr. Heinz of Pennsylvania.

I think he has pointed out the need as we approach this particular hearing, without any bias or jaundiced views toward agencies in the home health care delivery system, and so I would yield back my time so that we can hear the witnesses.

Senator Moss. Mrs. Lloyd.

Representative LLOYD. Thank you very much, Mr. Chairman.

I, too, am very glad to be here. I have no prepared remarks, but I am interested in getting into our hearing. We should proceed with an unbiased attitude, and try to reach some decisions in order to make a proper evaluation.

Thank you.

Senator Moss. Thank you very much. We are indeed pleased to have you with us this morning in the joint hearing.

We do have a long and illustrious list of witnesses. As I indicated. before, I am going to ask them to limit their presentations, although, of course, there will be time for questioning if we need to amplify some of the comments.

Our first witness will be Hon. John B. Martin, a consultant to the National Retired Teachers Association and the American Association of Retired Persons, and we are pleased to have Mr. Martin, a former Commissioner on Aging, and who is now a legislative consultant to these two great organizations.

We are pleased to have you, Mr. Martin, and please proceed.

STATEMENT OF HON. JOHN B. MARTIN, CONSULTANT, NATIONAL RETIRED TEACHERS ASSOCIATION/AMERICAN ASSOCIATION OF RETIRED PERSONS

Mr. MARTIN. Thank you, Senator Moss, Congressman Pepper.

I am glad to be here on behalf of the more than 8 million members of the National Retired Teachers Association and the American Association of Retired Persons.

Accompanying me is Mr. Laurence F. Lane, legislative representative for the associations. Mr. Brickfield, counsel to the associations, had hoped to be with us this morning; unfortunately, he has been called to New York City to consult with our membership in that area concerning strategies related to the city's worsening fiscal crisis. I trust the committee will accept his apologies for not being here this morning.

Our statement this morning will be brief to assure adequate time for following witnesses. Our message is clear: We believe there is a need to further explore the ramifications of the home health services regulations for the medical assistance programs published in the Federal Register of August 21, 1975.

The September 24, 1975, letter* which we sent to the chairman of the Senate Special Committee on Aging's Subcommittee on LongTerm Care spells out the specifics of our concern. While our associations strongly endorse the clarification of the eligibility for and the scope of home health services provided through the title XIX program, and which are addressed in S. 249 and S. 150 of the proposed regulations, we seriously question whether the proposed weakening of standards for providers as set forth in S. 249 and S. 150 of the proposed regulations will provide adequate protection for patients.

Our evaluation of the proposed regulations suggests the potential for developing a two-tier delivery system for home health servicesone for medicare and another for medicaid. Experience in the institutional long-term care sector has taught us that, given the choice of options in standards, the lowest common denominator predominates.

DIFFERING STANDARDS MAKE UNNECESSARY EXPENSES

The possibility of these regulations facilitating the development of a two-tier home health service program has broad ramifications in terms of cost to the Government, quality of patient care, and integration of such services within the continuum of community health services. Differing standards between medicare and medicaid participating providers delivering skilled nursing services proved both administratively cumbersome and unnecessarily expensive. As members of the subcommittee will recall, it was necessary for statutory amendments to rectify the division.

The proposed regulations offer the chance for weakening present patient care standards by changing the time constraints for established review. Likewise, the deletion of requirements for institutional planning could have detrimental effects upon community health services with the potential for exploitation by less than reputable agencies.

See appendix 5, item 3, p. 243.

Aside from the development of a two-tier delivery system, serious questions have been raised concerning the preemption of State licensure laws concerning proprietary home health agencies. Dr. Thomas, in his classic study of nursing home policy in New York State, points out:

One of the major problems for public policy that this history reveals is that the community found itself putting its resources into a set of facilities that was not its choice. It would appear that if public money is spent, there is a concomitant responsibility that it be well spent, and this requires at least some examination of alternative means by which it might be spent and the selection of that means that appears most reasonably calculated to achieve the intended consequence.

ABUSES IN NURSING HOMES

We should heed Thomas' admonition. Recent congressional discussion of abuses in the nursing home industry creates the potential for unintended exploitation of the provision of noninstitutional care. Succinctly stated, the movement toward rate review, utilization review, and disclosure has decreased the marketability of the nursing home business for proprietary interests. These trends, coupled with the governmental movement toward greater emphasis on in-home services, had led the proprietary market analyst to view home health services as fruitful ground for investment. Unless positive action is taken to insure public scrutiny of providers, the potential for exploitation of the home health profession looms as a reality. Expanded in-home care services without concurrent consideration of stringent requirements for a uniform national standard requiring full disclosure, quality care, and strict enforcement would be a step in the wrong direction.

Several ominous trends appear to coincide with the proposed changes in eligibility for participation.

First: There has been a growing number of franchising chains eager to lower the standards for participation so as to broaden their operations.

Second: In a number of States that currently license proprietary home health agencies, few of the operating agencies attempt to conform to the subpart L medicare conditions of participation. It would appear as if such agencies have the most to gain by the lowering of medicaid standards for participation.

Third: Preliminary evidence evaluating proprietary home health agencies, such as an audit performed by the Department of Health for the State of California on a San Francisco provider, indicates that profit may interfere with the provision of quality care. Given that several States, foremost the State of New York, have reevaluated the provision of home health care by proprietary providers, it may be premature to preempt State law by regulation without further congressional examination of the issue."

While it is difficult to summarize our comments concerning these important regulations, Mr. Chairman, I have attempted to give an overview of our concerns. I ask that the record of my statement include three enclosures.

First: Our September 24, 1975, letter to Chairman Moss requesting this hearing.

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. Martín, 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 KоCH. 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.