B. Not in operation; plan material submitted, not approved-2 jurisdictions: Alabama

C. Plan material in preparation—4 jurisdictions:

South Dakota 1

1

Texas
Wyoming**

F. Will not implement at present—10 jurisdictions:

BUDGET ESTIMATES PROVIDED TO CONGRESS DURING CONSIDERATION OF APPROPRIATION: The following figures are the budget estimates provided to Congress for medica assistance. A separate figure was not available for Title XIX until fiscal year 1971.

Medical assistance estimates to Congress:

The following are the actual Federal expenditures which have been incurred under Title XIX:

*Conference scheduled in Central Office for discussion of prospectus. **Conference has been held in Central Office on prospectus or plan.

1 Plan effective July 1, 1967, "or as soon thereafter as ... approved".

2 "Target date" set by State is October 1967.

3 Awaiting Governor's signature [On 8/4/67 was vetoed by Governor.]

State is interested. Has legal authority but no funds available.

Needs legislation.

Bill introduced in 1967 session was not enacted.

7 Bill passed by 1967 legislature was vetoed by Governor.

8 Interested but no action yet taken. North Carolina-Governor stated he will request study of effects of title XIX on existing programs.

Plan material in preparation; needs appropriation. Expects to implement in July 1968. Source: Bureau of Family Services. Division of Program Operations.

PROBLEMS IN THE SKILLED NURSING HOME FIELD

Senator TALMADGE. Mr. Secretary, section 225, I believe, provides that they reduce the payments for skilled nursing home care by onethird after 90 days. I have had a great deal of complaint from individuals in my State, from the Governor on down, from all of the people who operate the nursing homes, the profit and the nonprofit, and many of the families of those who are either there or hope to be there for some time. The Governor, I believe, states that it will cost my State $7 million in the first year and $10 million a year thereafter. In making some inquiry of some of the people involved in these nursing homes, it seems to me that we have some lax procedures for admission thereto. In the age in which we live, many families would be glad to get rid of their parents if they could put them in a nursing home where they will receive good care, particularly if the Government will pay for it.

Are you not going about this thing in the wrong way? Rather than dumping out some paralytic that cannot be cared for, after 90 days, wouldn't the procedure be to tighten up on some utilization procedures prior to admission? I would like your comment on that.

Mr. VENEMAN. I would be glad to, Senator. This question was raised earlier by Senator Jordan. I pointed out that there were two motivations for this provision. One was fiscal and the other was establishing priorities for the lower cost facility care. What we have suggested is that we would increase the Federal percentage for outpatient hospital services, for clinic services, and for home health services.

Senator TALMADGE. Suppose this patient were paralyzed. He cannot be an outpatient.

Mr. VENEMAN. We are not suggesting, Senator, under this particular formula that the patient be kicked out after 90 days. We are only suggesting that the Federal participation be reduced by one-third.

Senator TALMADGE. If the State can't step in and take up the costs it amounts to kicking him out.

Mr. VENEMAN. I think there are some discrepancies in the State figures. This was raised yesterday and in some of the figures cited by your State officials and those we estimated, there is a wide variation. For the State of Georgia, for example, you said $7 million is what your Governor said?

Senator TALMADGE. $6 million-plus the first year and $10 millionplus the second are the figures he gives to me.

Mr. VENEMAN. Ours would be just about half of that-not quite half. Ours would be more like $4.8 million.

Senator TALMADGE. The first year? How much the second?

Mr. VENEMAN. That would be on a full year basis. It has not been projected into the second year.

Senator TALMADGE. Would you not accomplish the same result by trying to make sure that the patient who was not entitled to skilled nursing home care was not admitted in the first instance, rather than discharging many after 90 days?

Mr. VENEMAN. You do not discharge, Senator. I think there are two things you have to keep in mind.

Senator TALMADGE. It is a question of semantics. If there is no money there, the patient is going to be discharged. It is just a question of who is going to be paying.

Mr. VENEMAN. I think from the beginning of this country, the States and local governments have traditionally taken care of the ill. In other years, it was done with local property tax revenue and local money. Subsequently, the States got into it and were taking care of it. More recently, the Federal Government has participated on a rather generous matching basis. We are saying maybe we ought to take a look at this and figure out whether or not we have placed this in the right perspective as far as the sharing arrangement is concerned and that on long-term care, where the patient is in there for an extended period of time, perhaps we should cut down on the Federal payment. That is essentially what we are doing.

In the mental hospitals, for example, we are suggesting that for care after 90 days, we reduce the Federal payment by a third. After a full year, it would become entirely a State and local cost. Thus we propose to reduce Federal matching for what had traditionally been a State responsibility.

As far as the utilization side is concerned, I couldn't agree with you more. That is the direction we are trying to go in, to make sure that the patient goes into the kind of facility that is necessary for the level of care he requires. I certainly think that Senator Bennett's suggestions that Secretary Richardson indicated yesterday we would be pleased to work with him on-in trying to strengthen the utilization review are steps in the right direction.

Senator TALMADGE. I had one nursing home operator report to me that he had a prospective patient drive up in his own automobile and he was doing the driving. Would you describe briefly how this utilization thing works? Suppose I decide to open a nursing home for profit. Pick it up and describe it to me from there on.

Mr. VENEMAN. As far as your being a nursing home operator is concerned?

Senator TALMADGE. Yes, I want to go into the nursing home business and I want to operate for profit. How do I proceed? I want to fill it up with patients.

Mr. VENEMAN. The first thing you have to do is make a deal with a few doctors.

Senator TALMADGE. First thing you have to have is the doctors, then the nurses.

Mr. VENEMAN. No, if we are talking about patients that are being financed through medicare or medicaid. First of all, you have to have a patient who meets the eligibility requirements. That patient can't arbitrarily drive up in his own automobile and say, I want to be a patient in the nursing home and assume

Senator TALMADGE. Whom does he have to be certified by?
Mr. VENEMAN. By a physician.

Senator TALMADGE. Any physician?

Mr. VENEMAN. In medicaid, a physician practicing under the

program.

Senator TALMADGE. Suppose I get a physician to go into partnership with me on the nursing home. Can he do the certifying to help me fill up the nursing home?

Mr. VENEMAN. I will tell you, Senator, this is a problem that comes up continuously as we talk about trying to tighten up medicaid, medicare, or any other statute for that matter. How do you write a law so

tightly that you eliminate any kind of deal that can be arranged between a couple of providers? It is a difficult thing to do. I think there are always those who will find a means by which they can commit fraud and get around the law.

Senator TALMADGE. I am not saying that often occurs, but I presume there are times that it does. I know that families would be anxious to get rid of their parents. Perhaps if they could get someone to cooperate, they can say, "Well, Daddy is getting old, let's put him over in such and such a nursing home."

You say Senator Bennett is working on a formula to tighten up the eligibility standards?

Senator BENNETT. May I get into it at this point?

Senator TALMADGE. Please do.

Senator BENNETT. In addition to the proposals for the future, I am reminded that in the 1967 law, there is a provision requiring an independent audit or review by a physician not connected with the case. I do not know how far that has been carried out, but theoretically, that was a way to tighten it up. So that is one more physician this man has to corrupt to be sure of his profit.

Mr. VENEMAN. And then, Senator, you mentioned that you want to make a profit at this. Actually, all you can charge medicare is reasonable cost.

Senator TALMADGE. Do you set the reasonable cost, you and the State? The State sets the medicaid and you the medicare?

Mr. VENEMAN. I will let Mr. Newman, the Commissioner of Medical Services Administration, respond. But I think under medicaid, it is primarily that the reimbursement is based upon actual costs that can be attributed to a specific case or on agreed-upon charges.

Senator TALMADGE. That is set by the State?

Mr. VENEMAN. Primarily it would be, because they have the responsibility for administering the title XIX programs.

Senator TALMADGE. Medicare is run by HEW.

Mr. BALL. Senator, I would assume that most of your questioning has been directed at the Federal-State program of medicaidSenator TALMADGE. That is correct.

Mr. BALL. Because the medicare program is really quite different. We are dealing with short-stay cases, only up to 100 days in medicare and it has to be preceded by a 3-day hospital stay, and the whole situation is really quite different. There is no matching formula; the States are not involved.

Senator TALMADGE. You are correct. You refresh my memory on that now.

I would appreciate your looking into that aspect of it. I think cutting off this matching formula there after 90 days is going to do irreparable harm to many of these nursing home operators, whether for profit or nonprofit. And if the State is not in a position to make up the deficit, it is going to mean people are going to be discharged; I do not know what's going to happen to some of them, because I have heard of some real pitiful cases that have been paralyzed, and the family had no assets and no resources. What do you do under a situation like that?

Mr. VENEMAN. If the family had no assets, no resources, and the man was paralyzed and obviously needed some kind of extended nursing home care, I do not think the mere fact that we reduced the Federal matching by one-third would motivate the State to send that patient out in the street. I think the State would assume its responsibility.

Senator TALMADGE. Well, if the State does not make up the deficit on the funds, they will have no alternative. You do not expect a nonprofit or a profit nursing home to make up the deficit, do you?

Mr. VENEMAN. No; I would assume the State would assume that responsibility, Senator, as they have in the past prior to medicaid. That is what I am saying.

The CHAIRMAN. Senator Fannin, I do not believe you have had your turn yet.

Senator FANNIN. Thank you, Mr. Chairman.

Just to follow through on what Senator Talmadge was discussing, I would like to suggest an example involving a nursing home patient, 70 years old. There is a question whether he could be admitted to a hospital. But, the only way he could have coverage is to go into a hospital. Isn't that a requirement? In other words, if he stays in that nursing home, the Federal Government will pay none of the charge. But if he transfers into a hospital, then for a certain length of time, he can have coverage. Is this correct?

Mr. VENEMAN. Senator Fannin, I think you are talking about a medicare patient

Senator FANNIN. Yes, medicare, not medicaid. I know the complaints I have from my State. Arizona is one of two States that does not have medicaid. The complaint I have had is that the patient staying in the nursing home receives no assistance, but if he transfers into a hospital, he can get assistance for a certain period of time. And the doctor can go ahead and commit him to a hospital, saying that he does need that care.

But in many instances, the doctor will admit that he would be better off and that it would be far less costly for him to stay in the nursing home.

Mr. BALL. Senator, you described the eligibility provisions of the medicare program correctly. Medicare will pay for an extended care benefit-typically this may be in a skilled nursing home that meets the standards of medicare-only after a stay in the hospital of at least 3 days. The thought was that the medicare benefit was not designed to be a long-term nursing home benefit. It was designed to be a benefit with a high content of medical treatment involved. It was to be transitional, after an individual has been sick enough to require hospital

care.

The medicaid program and public assistance generally were expected to pick up the need for really long-term care, rather than the insurance program.

Now, the case has been made to us several times by different groups that perhaps there is abuse of the medicare eligibility condition along the lines some doctors have pointed out to you. That is, the person is put into the hospital even though he does not actually require hospitalization in order to make him eligible for the extended care benefit later. I can only say to you that there is no statistical evidence from