discriminatory against the new entrants, new organizations and especially discriminatory against the innovative organizations. Now, I have searched through the records and through the evidence presented to the Congress as it was deliberating over the question of including or drafting certificate-of-need requirements and I have found no evidence that there are too many HMO's in the country, too much ambulatory HMO capacity or too many HMO hospitals. There is no need in this country to control the development of health maintenance organizations. Therefore, it is our conclusion that health maintenance organizations should not be covered by certificate-of-need requirements under this law. The only basis put forward is the basis of the quality of treatment; that is, if you are going to cover fee for service hospitals, you should cover HMO hospitals. We think this, although apparently a fair analysis fails because of what has gone on in the last 3 or 4 years and I would like to give some examples. The basic problem is the planning process is so preoccupied with fee for service hospitals and providers it totally ignores HMO's. Last summer a State medical facility issued guidelines, a 277 page document directing States how to establish facilities under this act. There was not a single mention of HMO's. They were totally ignored. The national guidelines were issued in 1974, not a single mention of health maintenance organizations. On the local level I have been examining plans by the HSA's for critical review and it is extremely difficult to get them to mention HMO's. In Los Angeles they didn't even bother to put in the language required by the Federal regulations and State law until we brought it to their attention. So, on the outside it appears equal treatment is being provided but it is not in fact being provided. We think the only solution is to exclude all HMO's from the certificate-of-need requirements of this act and from section 1122 and, in addition, there is one other thing that needs to be done; that is, to prohibit States from covering HMO's in their acts. What happened is that after the public law was passed the States started the process of requiring the certificate-of-need laws. We opposed the inclusion of HMO's in that law because we are working with Congress to try to change that. In 1979 that issue was before the Congress and the Senate in the HMO amendments eliminated HMO's from the certificate-of-need requirement. This body did not. In Congress it was resolved by leaving HMO's in the act. At that time Chairman Rogers said that that matter would be resolved in 1977 when 93-641 was up for review. It was not because it was up for a simply 1-year extension. Nevertheless, he promised to examine the issue and treat HMO's and fee for service providers the same. That is what is attempted to do in this act. Nevertheless, since then many States, for only one reason, not because they felt it necessary to cover HMO's because they were compelled by the Federal Government to do so, have covered HMO's under their acts. Others are considering doing so in their sessions going right now. They don't want to do so in Oregon and Hawaii. They don't want to do so in Ohio, or in California. They will do so only if compelled. Once in, however, it will be extremely difficult for those HMO coverage provisions to get out. They will be opposed by certain vested interests within the States. We think in some States we will be able to persuade State legislatures they should be removed, but we are fearful of what will happen where little HMOs' are just getting started and have no capability to affect State legislation in their area. We think Congress has to address the issue and prohibit States from covering HMO's to the extent Congress decides they should not be covered under Federal law. I suggest there will be considerable disagreement with our conclusion and would like to advise what you should do if you don't exclude HMO's. We concur in the provision that HMO ambulatory provisions should not be covered. There is considerable criteria covered when you examine the application. The need should be based on the existing or reasonable anticipation of new members of HMO's. That way the HMO's can plan for growth and development. This should be particularly true in ambulatory care and equipment, and in modernization and remodeling. One of our biggest concerns is we will be prevented from keeping our facilities from being modernized, somebody will decide we should be prevented from spending our money to modernize our facilities. If hospitals of HMO's are to be covered, there is a serious problem. The reason usually given is HMO's should be able to use hospital facilities in the rest of the community. That is sometimes the case. In Colorado we do use a community hospital. It has been very successful in its organization. That is not always the case. You can't always find the beds, you can't always find physicians associated with HMO's and admitted to the staff. You can't always find financial arrangements are adequate. On page 7 we proposed some criteria to be used in determining whether HMO's can get hospital service in the communities or not. We feel if HMO's can't get hospital service in a community based on this criteria it should be allowed to construct its own hospitals. Two other points. We feel that the health systems plan and the State health plan and the State medical facilities plan should be required specifically to deal with the development of HMO expansion. The States in the HSA should be required to deal with and address the question of how many and how much HMO capacity there should be. The second issue, section 1527-this is not in my statement because I didn't have the bill at the time I prepared it-section 1527 (a) (6) provides certificate-of-need decisions should be consistent with the health systems plan. That sounds fair. The problem is that most health system plans won't address many of the projects for health nor certificates of need. For example, medical office buildings, the plans I have examined don't have any criteria for determining whether a medical office building in an HMO is needed, parking lots, clinical labs, leading of computers. We had to get a certificate of need to get a computer in California. Leasing space, as we rent an office building for our health plan officers, we have to lease it. None of the plans has dealt with those issues. We recommend you provide not that the application must be consistent with the plan but that it not be inconsistent with the plan, a substantial difference. If the plan is silent on the subject, you do not need to show consistency with it. In conclusion, as I indicated before, there is a substantial conflict in Federal policy between resource control and between HMO expansion. We think that the conflict right now is in the direction of very seriously hampering HMO development in this country and, therefore, we strongly recommend it be resolved in favor of HMO development. We will submit very soon proposed amendments which will accomplish this objective. [Testimony resumes on p. 1037.] [Mr. Lane's prepared statement and attachment follow:] Statement Before the Subcommittee on Health and the Environment of the Committee on Interstate and Foreign Commerce United States House of Representatives Submitted by Kaiser Foundation Health Plan, Inc. February 2, 1978 Mr. Chairman and Members of the Committee, I am James A. Lane, Vice President and Counsel of Kaiser Foundation Health Plan. The Kaiser-Permanente Medical Care Program The Kaiser-Permanente Medical Care Program is comprised of Kaiser Foundation Health Plan, a nonprofit corporation, Kaiser Foundation Hospitals, a charitable and nonprofit corporation, and six independent Permanente Medical Groups. It is an economically self-sustaining health care system that provides prepaid health care services to more than 3.3 million members in California, Oregon, Washington, Hawaii, Ohio and Colorado. It is a systematically planned and organized approach to the provision of health care that arranges direct health care services for its members in 26 acute general hospitals and 72 outpatient facilities. The Program employees more than 28,000 non-physician personnel. services are provided by more than 3,300 physicians associated with the independent Permanente Medical Groups. Professional The Kaiser-Permanente Program is the largest group practice prepayment program in the United States. It has succeeded and grown in the face of healthy competition from commercial health insurance, Blue Cross, Blue Shield, self-insured programs, and other HMOs, despite the opposition of some segments of organized medicine. The Program has pioneered many features, such as comprehensive prepaid services, including prevention and early detection of disease, quality assurance based on peer review, and effective cost control, particularly with regard to expensive hospital services, that Congress has sought to encourage and expand. Congress intended to encourage development and expansion of group practice prepayment programs when it enacted the Health Maintenance Act of 1973 and the HMO Amendments of 1976. This occurred because such organized health care systems have demonstrated their ability HMOS and P. L. 93-641 Therefore, it is ironic that as far as health maintenance organiza tions are concerned, P. L. 93-641 could be called the Anti-HMO Act of 1974. This is because the Act's required certificate of need program discriminates against and creates serious problems for HMOs in two ways. |