I think on that point, Senator Pell, I will rest my case and thank you very much. [Applause.]

Senator PELL. Thank you very much. Dr. Burgess is the chief of the Division of Planning and Standards of the Rhode Island Department of Health, and also associate professor of preventive medicine at Brown, which I neglected to mention. Actually, on Wednesday we hope we will be holding a House-Senate conference trying to get the acceptance of the House conferees for an amendment to aid the establishment of a medical school at Brown University.

The final witness on this panel is Dr. P. Joseph Pesare, Medical Care program director, Rhode Island medical assistance program, and he's been that for many years, in fact since 1952. He has strongly advanced the view that Rhode Island must be a leader in providing medical services for the poor.

STATEMENT OF DR. P. JOSEPH PESARE,* MEDICAL CARE PROGRAM DIRECTOR, RHODE ISLAND MEDICAL ASSISTANCE PROGRAM

Dr. PESARE. Thank you, Senator Pell. First of all, I want to take this opportunity to express my gratitude to you-the "so-called" elderly citizens of Rhode Island. I think you have effectively proven a point which I made back in the year 1965; namely, that our elderly citizens do have dignity which we must strive to preserve at all costs. This point was made at a meeting of State senators when they were discussing the future course which Rhode Island should be taking with reference to our Kerr-Mills program—also known as the MAA program— at a time when we were contemplating the development of a new State medical assistance program under the provisions of title XIX.

ELDERLY CITIZENS HAVE DIGNITY

I can vividly recall taking the position that our elderly citizens do have dignity; they would rather belong to a medical care program to which they had made financial contributions; they would not prefer to be totally dependent upon a State medical care program. I strongly opposed doing anything which would destroy that element of dignity which I saw in our elderly citizens.

It is interesting to note that one of the senators who was taking the opposite position was taken to task by an elderly lady who emphatically stated that the elderly would not want to be brought under the umbrella of a State program rather than belong to a medical care program to which they had made contributions and were, therefore, eligible for medical benefits.

In preparing for this meeting I gathered some rather significant and interesting statistics:

1. In the year 1970, there were 103,932 persons 65 years of age and over residing in the State of Rhode Island.

2. Of this total, 102,130 or 98.3 percent were entitled to benefits under the provisions of title XVIII(Ã).

3. 95.4 percent were entitled to benefits under part B of title XVIII. 4. It should be noted that these 99,170 persons are voluntarily paying premiums at the rate of $5.60 per month in order to qualify for supplementary medical insurance benefits.

*See appendix 1, p. 322.

5. 63,070 persons or 60.7 percent of the total population 65 years of age and over have bought into Blue Cross 65 at an annual cost of $85.80.

This particular figure represents a truly remarkable phenomenon. This, in itself, is a strong substantiation of the position taken by me during the year 1965.

6. In the year 1970, there were 24,328 persons 65 years of age and over who were eligible for our Rhode Island medical assistance program.

7. Of this total number of 24,328 persons, 94 percent voluntarily bought into part B of title XVIII in order to qualify for supplementary medical insurance coverage. In other words, 94 percent of our 24,328 eligible recipients 65 years of age and over are voluntarily paying $5.60 per month for premiums for part B of Federal Medicare. I say to you that these persons have no compelling reason to buy into part B of Federal Medicare except for the fact that they do want to maintain that dignity of which I speak.

Rhode Island has had a comprehensive Public Assistance Medical Care program since 1952. In the year 1952, Rhode Island was classified as one of five States providing a comprehensive medical care program for its public assistance caseload.

When I was asked to assume the position of Medical Director of the Public Assistance Medical Care program, I envisioned the scope of the program to be developed to include all those essential medical services which I would want for my own parents or members of my own family-regardless of ability to pay.

If you were to review the scope of medical services of the Rhode Island Public Assistance Medical Care program in 1952 and compare them to the scope of services within our State Medicaid program, in 1971, you would find very little difference. The essential medical serv

MONEY SPENT THROUGH STATE MEDICAL ASSISTANCE PROGRAM

It is true that we have been spending quite a bit of money in the delivery of medical services through our State Medical Assistance program. In the fiscal year 1962-63, Rhode Island spent a total of approximately $5,500,000. Of this total, approximately $2,500,000 was spent for nursing, convalescent and rest home care and the balance of $3 million was spent for all other medical services and supplies.

During this fiscal year 1971-72, the Rhode Island Medical Assistance program will be expending approximately $49 million to deliver comprehensive medical care to a total of approximately 94,000 persons. The following is a point which I would like to clarify at this time; 78 percent of these total expenditures of $49 million will go for the payment of four categories of medical services; namely:

1. Inpatient hospital services.

2. Hospital outpatient services-the clinics that were referred to earlier in this program.

3. Public hospitals.

4. Skilled nursing homes.

Consider the fact that these four categories of medical services will account for a total expenditure of approximately 78 percent of our total Medicaid budget for the fiscal year 1971-72.

I cite these statistics since there are many rabid critics of Medicaid in Rhode Island and throughout the country who maintain that the program is a very expensive one; that the administrators of the program squander State and Federal money; that we are in a chaotic

state and know not what we do.

I take exception to this unwarranted criticism. In Rhode Island, we can account for every dollar that is being spent for the Medicaid program, the channels into which these funds are going and the reasons for why they are being spent. I would ask you to reflect upon the fact that only 22 percent of our budget goes for all the other services included within the comprehensive scope of our Medical Assistance program; namely, physicians' services, pharmacy services, dental services, podiatry services, optometric services, and so forth.

SOME PROPOSE THE ABOLITION OF MEDICARE

There are those who maintain that the State Medicaid programs are so poorly organized and administered that they should be abolished. The same criticism has been leveled at Federal Medicare. There are those who maintain that a new system should be developed. I am not so sure that I concur with those who propose the development of a new system of national health services.

I am reminded of a statement made by Senator Abraham Ribicoff immediately after the enactment of Federal Medicare or Public Law 89-97. His statement was essentially as follows: We have obtained so much health legislation out of the last session of Congress that I am afraid we are going to be getting a case of indigestion.

In other words here was indication that we would not be able to implement all of the programs for which provisions had been made through the newly enacted Federal legislation or Public Law 89-97.

In the fall of 1965, immediately after the enactment of Federal Medicare, I heard the late-not the late for he is still very much alive— former Secretary of HEW, Wilbur Cohen, speak at a meeting of State program administrators in Washington, D.C.

Senator PELL. You are right, from the viewpoint of being effective, he is late, but his brain is alive and with us.

Dr. PESARE. At that time he took pride in the fact that we had gathered from the most recent session of Congress much more thay any of us had ever dreamed possible. This observation underlies my conviction that the mechanism or instrument required for the delivery of comprehensive medical services for all of our elderly citizens has been with us since 1965.

I will get off this subject by simply stating that I do not concur with those who maintain that what we need is a complete restructuring of the method of delivering health services in America. I maintain that what is required is to use more effectively the statutory mechanisms which we already have available to us.

I should like to briefly discuss some of the inadequacies in the machinery presently available for the delivery of comprehensive health services to the elderly.

First of all, I should like to raise this question of the drastic increases in premiums which must be paid in order to buy into plan B or SMI of title XVIII. I feel very strongly with you that a very seri

ous hoax has been perpetrated upon the elderly citizens of our Nation. These premiums were originally $3 per month. They have gone up steadily up to the present premium of $5.60 per month.

ELIMINATE INCREASES IN MONTHLY PREMIUMS

If the Federal Government is sincere in its desire to help the elderly citizens, then I say let them eliminate these increases in monthly premiums. Let them find additional funds from the General Treasury or through some other method of financing, instead of increasing the premiums which are already creating hardships for our elderly citizens.

With reference to the deductible for hospital charges, you will recall that it started as a $40 deductible; now it is up to $60; and there is indication that it will continue to rise. The Rhode Island Medicaid program does pick up the deductible for its eligible recipients. I am concerned about those who are not covered by Medicaid. Once again, I am of the opinion that the Federal Government could employ a more simple maneuver which would permit the utilization of already existent machinery more effectively.

In the beginning of Medicare, the coinsurance to be paid by the patient after the first 60 days of hospitalization was $10 per day; this has now increased to $15 per day. We don't need new and more expansive health insurance programs. We do not need new and larger bureaucracies. We do need the more effective utilization of the medical care programs presently available to our elderly citizens.

We are confronted with a very serious problem in the area of payments by Medicare for visiting nursing and home health services. It has become increasingly difficult to obtain any reasonable assurance that Medicare will assume responsibility for the payment of these services as provided within the provisions of Public Law 89-97. I do not blame the fiscal intermediaries; I know that they are following their instructions as outlined by the Social Security Agency. However, I do blame the Social Security Agency and those Federal authorities who permit the Medicare program to be administered in this fashion. It appears that they have lost sight of the intent for which Medicare was enacted by Congress. I am sure that you will agree that visiting nursing services are essential in order to keep people out of expensive hospital and extended care facilities and when these latter facilities are no longer required to get the patient home as quickly as possible. Since 1969, the Social Security Agency through its fiscal intermediaries, has indeed changed the rules as they apply to home health services. Within the last 2 years Medicare has rejected an unreasonably large number of bills for visiting nursing services. The visiting nursing agencies have been passing these bills on to Medicaid for payment for its eligible recipients. It doesn't require much imagination to appreciate the fact that this has added to the financial burdens of Medicaid programs. I consider this a serious injustice to State

programs.

Very few persons succeed in qualifying for Medicare benefits in extended care facilities. We should recall the fact that extended care facilities were included within the scope of the Medicare program so that those who were no longer in need of inpatient hospital services

would not tax our inpatient hospital facilities at rates which now range from $80 to $150 per day.

Are you aware of the fact that not more than 5 percent of approximately 340,000 certified extended care facility beds in the Nation are actually being used by persons who are entitled for benefits under Medicare and paid for by Medicare? This is a sad commentary on the performance of Medicare in fulfilling its obligations as they relate to extended care facilities. There is something very wrong with the system that allows this phenomenon.

In Rhode Island, not more than 7.5 percent of our elderly citizens who are eligible for benefits under Medicare and Medicaid manage to obtain medical care in extended care facilities at the expense of the Federal program.

So much for the problems and inequities generated by Medicare— as they relate to its beneficiaries and the State Medicaid program.

I should like to respond to one of the criticisms of the Rhode Island Medicaid program as expressed by one of the panelists during the morning session. She complained about the State requirement of prior authorization as a basis of obtaining certain drugs to be paid for by the State program.

LIBERAL MEDICAID PHARMACY PROGRAM

Your attention is called to the fact that Rhode Island provides for one of the most liberal Medicaid pharmacy programs in the Nation. We do not insist that our eligible recipients obtain only the least expensive drugs available without concern for quality. I am sure that you are aware of the fact that some States limit payment for generic prescription drugs which are cheaper than quality brand-name drugs. I have always maintained that if we were to adopt such a policy of limiting payment to the less expensive generic drugs for eligible recipients of Medicaid then we would, in fact, be supporting a policy of de facto discrimination against our eligible recipients of Medicaid. With reference to the requirement of prior authorization for certain drugs, it is a fact that this is a requirement. This requirement is intended to assist in protecting the health and welfare of our eligible recipients. You know as well as I do-and I am sure that Senator Pell will concur with me, that the Food and Drug Administration is trying to do a good job in clearing new drugs before they are marketed. However, it is indeed unfortunate that some drugs do get on the market and dispensed to people before they are proven to be safe for human consumption.

Yes, we do have a list of drugs which require prior authorizationespecially those drugs which are new, in order to make sure that these drugs are prescribed and dispensed carefully. We are very much concerned about the amphetamines, narcotics, injectables, et cetera. We are concerned about all new drugs until they have been on the market for a period of approximately 2 years, on the average. I am happy to note that the Federal Government is demonstrating real concern about the same problems.

All requests for prior authorization are handled on a priority basisusually within the same day on which the request is received. In conclusion, I should like to reiterate the following: