extended care benefits for people who cannot be cared for adequately at home, I feel the result would be better total care for the patient and less cost to the Government.

My third point concerns the many inadequacies in the reimbursement from the State Medicaid and Federal Medicare programs. While the Federal Medicare program pays on the basis of reasonable costs, the State Medicaid program in Rhode Island will pay reasonable costs with a maximum of $15 per day, regardless of what the facility's costs may be. Many newer and larger homes have costs in excess of $15 per day which means that if these homes are to accept State patients, they have to operate at a loss. This situation can only limit the quality of services available to all patients. Since Federal standards and requirements for both of these programs are becoming practically the same. I think it should be mandatory that reimbursement be the same. The indirect effect of the current reimbursement program on the patient is such that a patient may not be able to gain admission into an extended care facility because the management of that facility faces the danger of being reimbursed on a less-than-cost basis under the State program. The patient may be admitted as a Federal Medicare patient and after being in the facility for several days, a determination will be made that the patient is not eligible to receive benefits or may receive limited coverage under this program. The facility may then have to accept him for the maximum payment under the State Medicaid program. This gross inadequacy to the facility and the patient can be corrected by guaranteeing that reimbursement will be made until eligibility is determined.

FISCAL INTERMEDIARY-EXPENSIVE LUXURY

I would also like to examine the need for the fiscal intermediary in this program. Extended care facility administrators are burdened with a long siege of onsite audits which consume many man-hours. These audits, performed by highly skilled and highly paid employees of our fiscal intermediary seem to be a tremendous waste of the taxpayer's money. Since most of the regulations and determinations are made by Federal Government authorities, it is an expensive luxury to have a fiscal intermediary. Interpretations of the regulations which are supposedly the function of the fiscal intermediary are being made by BHI. This method leads to confusion and procrastination, and many interpretations are never resolved. Investigation must be made to determine if the cost of the fiscal intermediary is justified-can the same operations be carried out more efficiently by the Government at a lower cost.

In conclusion, I feel that provision must be made for the total care of the patient. That total care includes chronic and acute illnesses and consideration of the sociological factors. Medicaid reimbursement must parallel Medicare reimbursement and that reimbursement must be guaranteed to the patient and the provider. I believe that these recommendations could greatly enhance our present programs by improving the quality of care provided at a lower cost to the Gov

ernment.

Thank you very much for the opportunity to be here, Senator.

Senator PELL. Thank you for your statement, Mr. Buonaiuto. Our next witness is Albert Lees, who is president of the Rhode Island Association of Facilities for the Aged, which includes nonprofit nursing homes.

STATEMENT OF ALBERT V. LEES, PRESIDENT, RHODE ISLAND ASSOCIATION OF FACILITIES FOR THE AGED

Mr. LEES. Ladies and gentlemen, the Rhode Island Association of Facilities for Aged is a voluntary organization of not-for-profit extended care facilities, skilled nursing homes, convalescent homes, rest homes, retirement residences and feeding programs for the aged. We are organizations of church, State, and voluntary groups.

As administrators of these not-for-profit facilities we are quite concerned about the present Medicare program.

We would like to refer to our letter of June 17, 1971, addressed to the Honorable Claiborne Pell, wherein we outline our feelings as a professional group.

1. As stated therein we endorse the principles of Medicare as originally set, but fluctuating administrative interpretations as to what is "covered care" have created great confusion on the part of prospective beneficiaries and service providers. Firm guiding rules still do not exist. The program was instituted before it was administratively ready, and failure to provide precise information to eligible beneficiaries has resulted in financial hardship for the aged, because many canceled existing insurance in the belief that all hospital and nursing home care would be covered.

2. We believe the public assistance program needs reevaluation and revision. Presently, reimbursement rates do not cover costs in most if not all of the Rhode Island nursing facilities. The not-for-profit facilities must seek charitable contributions, raise rates for the fullpayment patients or use endowment funds to meet the difference between actual costs and reimbursement rates. Providers of services should be reimbursed on governmentally sponsored patients, at cost, by the sponsor.

3. We are opposed at this time to the so-called "universal medical care program," since neither facilities nor personnel are available to make it work.

4. We do, however, endorse the "catastrophic illness" principle, regardless of the age of the beneficiary, if the program specifically defines what care will be covered prior to implementation.

5. Provision for long-term chronic care must, at long last, enter the care for the aged scope of coverage.

6. We do not endorse any one of the 12 or so proposals, now under legislative consideration, to revise or supersede the Medicare and/or the Medicaid programs. Rather, we believe the best elements of the plans will be amalgamated by the appropriate legislative committees. We take no stand on the reimbursement mechanism (governmental versus nongovernmental insurance companies) but feel any program must be geared so that providers of service are assured of cost

recovery.

7. We recognize that the area of critical bed shortage, at least in Rhode Island, is in the intermediate care category. Skilled nursing

beds could be vacated if adequate intermediate care beds were available to which some patients could be transferred. We feel that a Federal grant program for construction of intermediate care beds, perhaps an extension of the Hill-Burton program, should be considered, so that this category of critically needed beds, locally, could be made adequate.

8. We recommend that the following be used as evaluation principles for any revisions of present programs or new programs:

a. Are physical facilities and trained personnel available to meet the program needs?

b. Have the specifics of coverage been furnished to prospective beneficiaries and service providers in advance of implementation. c. Is there assurance that providers will recover the costs of furnishing services.

d. Has sufficient time been allowed to develop administrative details before the scheduled date for program implementation? The American Association of Homes for the Aging has recommended improvements in health care for the aged in the United States through the program of GERI-CARE and we, as a State organization, also firmly recommend this program. We would like to further state that we believe that national health insurance should be a federalized program, administered the same as Social Security as it is inevitable that one day a great majority of our elderly citizens will be in need of long-term health care. The present program under Medicare of 100 nursing days is far short of the total needed at the present time for long term intermediate care.

As stated in our letter to Senator Pell our interests are objectiveour concern is for the aged American in need of help. Thank you. Senator PELL. Thank you very much. Now we have as our final witness on this panel Miss Shirley Whitcomb, who is a member of the Association of Home Health Agencies. Miss Whitcomb.

STATEMENT OF SHIRLEY WHITCOMB, MEMBER, ASSOCIATION OF HOME HEALTH AGENCIES

Miss WHITCOMB. Thank you. I am here as a representative member of the Association of Home Health Agencies of Rhode Island. We appreciate the opportunity to share our thinking with you regarding health care problems of people over 65 years of age. Rhode Island is fortunate in that there is complete coverage of all areas of our State by certified home health services. You have heard from active, independent, proud, capable people who can speak for themselves, and do. I am here to speak for the 2 percent of Rhode Island population over 65 served by home health agencies as well as for the countless thousands not well enough to come to a hearing such as this. We are using today the term home health agencies, but our audience will recognize my uniform as that of the district nurse or visiting nurse, which is also what our patients and their families call us.

For generations our role has been to care for the sick in their homes, to promote health, and to prevent illness. We have always known that the patient is happier, the family more content, and that health is restored faster when the patient is home. To the elderly, after a lifetime

of work and struggle, his home becomes a symbol of achievement, pride, and security. To remove him from this setting would mean breaking his spirit.

Some people would deteriorate into senility; others would die. I think we all have seen people who have become confused when hospitalized.

Removing them from this setting also would break their finances. Many older people are living on tightly balanced budgets with only Social Security or perhaps another small pension if they are lucky. No unexpected expenses could be met, including, in many cases, the premium on insurance protection.

MEDICARE-BOON TO PERSONS OVER 65

Thus, Medicare, when it was put into effect in 1966, was a boon to the person over 65. It paid his hospital bill, it paid for certain care in certain nursing homes or extended care facilities, and it paid for certain care at home. In fact, Medicare demanded some services that had not been provided by the traditional agencies previously, such as social services, physical therapy services, and so forth. But Medicare was a boon also to the district nursing agencies.

These agencies had long been aware that the patient in his home needed more services than just nursing. Many with large financial support had attempted to provide limited services such as physical therapy. But most of these agencies did not have financial resources to do this. Now this Medicare law not only paid for these services, but demanded them. It was soon learned, however, that there were some problems.

The 3-day hospitalization as a requirement for plan A out of hospital, or 100-percent coverage, became a hardship. Many people were not sick enough to require hospitalization. To put them in the hospital in order to fulfill this requirement for plan A; it was an expensive unnecessary hardship on the hospitals as well as the patients. Many people were so very sick that moving them in the first place and out of their homes in the second place for the short period of time before death was of no benefit and actually cruel. However, without the 3 days in the hospital, the full coverage of plan A was denied them. Deductible and coinsurance concepts were also confusing. Very few patients had read all the literature and, therefore, most knew nothing about this. Many patients had been told by well-meaning and trusted people that Medicare paid for everything. Even if the patients knew about some of these charges, few could meet them. Again, the fixed income of only Social Security or of a pension did not allow for these expenses.

AGENCIES GO INTO DEBT

Since Medicaid did not meet these charges and United Fund did not meet the deficit, the agencies were plunged into debt. Interpreting custodial care prevented payments to the agencies for preventive health service and care of patients with chronic illnesses. Consideration was made only of the limited restorative potential and a slim prospect for total recovery. Changes in the patient's physical and emotional condi

tion may alternate between acute and stable change, meaning change of regime and medication.

Intermediary letter No. 395 says patients who are "stabilized” and have "no more potential for rehabilitation" do not meet Medicare requirements. Who is to be the final judge? It might well be for our legislators to look into the total picture of preventive service. Some agencies are providing, currently, visits for the purpose of health teaching and supervision, with the goal being that of preventing illness and the anguish and financial load this brings.

FUNDS FOR GROUP MEETINGS

Group meetings to provide information providing proper nutrition, early care of some aspects of disease; for example, care of diabetic feet to prevent gangrene, are less costly and still valuable teaching methods. Currently these programs are financed by agencies from funds not related to the Medicare program. Yet, from the point of view of their long-term objectives, would this be a wise use of Medicare funds?

The Association of Home Health Agencies in Rhode Island would like to propose the following: First, in agreement with the Health Insurance Benefits Council to place all home health benefits under plan A with a maximum eligibility of 200 visits per year. Second, to remove the 3-day hospitalization stay requirement for home health benefits. Third, to provide for coinsurance with the second hundred visits per year. Also, a clear statement in the law of the intent to include coverage of home health services necessary to prevent hospitalization. And finally, to clarify the definition, adoption of the Rhode Island State Nurses Association official definition of professional nursing as Medicare's definition of skilled nursing care.

We are most grateful to this committee for the opportunity to present our concerns for the elderly patients who are entitled to quality care in their own homes with the dignity and family comfort they deserve. Thank you, Senator.

Senator PELL. Thank you very much. There are so many questions that I'd like to ask all these panels, but in organizing this morning I think we probably have succumbed to the temptation of covering too much and simply don't have the time to both ask the questions and hear the witnesses. So, if you have any further thoughts you'd like to put in the record, please submit them in writing. The record will be kept open for 7 days for additional statements.

Any other points any of you care to make before our next panel? In which case I thank each one of you very much. There is one particular question I would like to ask the doctor who is here. Does he have any suggestions of how we could make these forms simpler so that there will be less reluctance by physicians to handle Medicare and Medicaid patients?

Dr. KRAEMER. Much of this depends on the deductibles, coinsurance receipts and cumbersome bureaucratic regulations. It is a tremendous administrative problem, and I am sure that it would take many hours of mutual conference to make a statement that would be relevant to your question.

Representative James C. Wright, Jr., chairman of a House Public Works Subcommittee, recently offered these observations: