to utilization review of services provided under title XIX of the act, was published in the Federal Register on July 17, 1968 (33 F.R. 10232). Suggestions made in response to that publication were (1) utilization review should be restricted to institutions, (2) existing peer review mechanisms should be used, (3) committee organization might not be feasible in small institutions, (4) both encouragement and opposition to delegation of hospital and skilled nursing home utilization review activities to title XVIII agencies. The Department's responses to the suggestions are, respectively, (1) utilization review is required by law for all services, (2) agreement that existing peer review mechanisms should be used to the extent possible, (3) committee size and composition is not fixed, so use of committees is considered feasible, (4) the Federal Government cannot demand, in a State-administered program, that delegation be made, but delegation is encouraged to avoid duplication of effort and expense and to achieve Departmental uniformity. Changes to reflect items (2) and (4), and to provide a statement on Federal financial participation, have been made. Accordingly, such regulations as so amended are hereby codified as Part 250Subpart A, § 250.20 of Chapter II of Title 45 of the Code of Federal Regulations as set forth below. § 250.20. Utilization review of care and services. (a) State plan requirements. A State plan for medical assistance under title XIX of the Social Security Act must: (1) Provide that a process(es) of utilization review is established for each item of care or service listed in section 1905(a) of the Act that is included in the State's medical assistance program. (i) The agency (ies) which monitors utilization review activities on inpatient hospital and extended care services under title XVIII of the Act may be designated by the single State agency to monitor those activities similarly for inpatient hospital and skilled nursing home services under title XIX. Such delegation may incorporate the monitoring of utilization review activities in provider institutions not participating under the XVIII. If such an arrangement is secured, the single State agency and the agency (ies) to which delegation is made should work closely together (in addition to any formal written agreement) in order to accommodate their mutual utilization review requirements. Such delegation is encouraged to avoid duplication of effort and expense and to achieve uniformity of utilization review requirements and methods. Such common effort is a means of striving for efficiency and economy in administration. (ii) For all items of care or service for which utilization review is not delegated under subdivision (i) of this subparagraph, the medical assistance unit of the single State agency will perform utilization reviews itself and/or monitor those utilization reviews which may be performed by agents for the State government, or by agencies of local governments, or by individual provider organizations or institutions as in subparagraph (2)(i). Review of professional services through existing peer review mechanism is encouraged to the fullest extent possible. (iii) Utilization review requirements for providers of inpatient hospital and extended care services under title XVIII will be considered to meet the utilization review requirements for providers of inpatient hospital and skilled nursing home services under title XIX, except as in subparagraph (2) (i) (b). (2) Provide that the medical assistance unit of the single State agency is responsible for all utilization review plans and activities under the medical assistance program. If utilization review is not delegated as in subparagraph (1)(i) of this section, the following will be met in each utilization review plan: (i) The activities of utilization review will be performed by a utilization review committee with representation appropriate to the medical care or service to be reviewed. Determination of committee composition and selection of committee membership will be made at the point where utilization review will be performed. (a) A professional practitioner, e.g., physician, dentist, optometrist, etc., may not review cases in which he is the attending practitioner or in which he has (or has had) significant professional responsibility. (b) The committee may include no member who has an ownership interest in the facility under review, except in the case of committees which conduct review on both title XVIII and XIX patients. (ii) Utilization review will be based on a statistically significant sample or other reasonable basis of pertinent data as determined appropriate to the medical care or service under scrutiny; for example, admissions, duration of stays, number of visits, number and kind of prescriptions, relation of tests or medications to diagnosis, etc. While some services may lend themselves to review both concurrently with and subsequent to the rendering of care (e.g. institutional care), other services may be best reviewed only subsequently. Since, for many provider services, the measurements will apply to patterns of care rather than to individual episodes of care and because of the difficulties inherent in evaluating medical necessity, a postaudit procedure will be employed. Utilization review will be made within the context of medical necessity (including overutilization and underutilization and appropriateness of care rendered) and availability of facilities and services. (iii) The utilization review process will not be limited to isolated cases, but will be considered in the context of overall utilization within an institution, or in a service area, or in a provider's total title XIX workload, etc., as appropriate to the medical care or service under scrutiny. (iv) A utilization review plan will be developed by the agency, orga nization, or institution which determines the committee composition as in subparagraph (2) (i), Each plan developed by an agent, organization, or institution other than the single State agency will be submitted to the medical assistance unit of the single State agency for approval. In all cases a utilization review plan will describe: (a) Objectives. (b) Authority, responsibility, accountability. (1) Composition of committee and subgroups, if any. (3) Format and/or description of records and minutes. (e) Data. (1) Methods of case selection. (2) Relationship of utilization review to title XIX claims administration and medical assistance unit of the single State agency. (f) Arrangements for committee reports, recommendations, and followup. (g) Responsiblilties of related administrative staff in support of utilization review. (v) A utilization review committee will maintain appropriate records and prepare regular reports of its activities and findings. The State Medical Advisory Committee will advise the responsible medical assistance unit of any recommendations or requirements on utilization review, consolidated reporting, etc. The medical assistance unit of the single State agency will maintain surveillance of the committees' activities and provide appropriate consultation to committees in order to insure adequate functioning. (b) Federal financial participation. Federal financial participation is available for the costs of utilization review, in accordance with the conditions, and at the rates, applicable under title XIX. (Sec. 1102, 49 Stat. 647, 42 U.S.C. 1302) Effective date. The regulations in this section are effective on the date of their publication in the Federal Register. Dated: January 18, 1969. Approved: January 18, 1969. Administrator, Social and Rehabilitation Service. MARY E. SWITZER, WILBUR J. COHEN, Secretary. [F.R. Doc. 69-2599; Filed, Mar. 3, 1969; 8:48 a.m.] Senator BENNETT. Also for the record I would like to know exactly what the House bill does with respect to changes in utilization review. Apparently, under the House bill, there are provisions for utilization review teams to be set up by the Secretary and we are particularly anxious to have some more information about what it would be proposed that these teams do, how they would operate, whether they would function in more than a proforma manner, whether they would be expected regularly to review all practitioner profiles for unusual patterns, or simply respond to patient complaint. This also would be for the record. Secretary RICHARDSON. We will be glad to do that, Senator. I think we certainly, as my testimony indicates, are thinking along parallel lines Senator BENNETT. I am sure we are. Secretary RICHARDSON (continuing). On the utilization of physicans and other professionals to look at the levels and quality of service, and we certainly want to cooperate with you and the committee in strengthening and improving these elements of the law. Senator BENNETT. Well, in your testimony, you say it would be impossible, for example, and I believe in many ways undesirable, to supplement entirely the present medicare administrative system of conducting utilization reviews and to substitute a new review organization. I agree with you, but we are anxious to know how the new idea can be meshed into the old so that we can come out with a satisfactory operating setup. Secretary RICHARDSON. I think this is a very important point, Senator, and we have started to work with the committee staff on it. We will be glad to continue to do so to see how the existing utilization review procedures can be meshed into the kind of approach which has been proposed in your bill. (Information supplied by the Department follows:) 1. Exactly what does the House bill do with respect to utilization review and audit activities? The House-passed provision which provides authority to terminate payments to suppliers of services does not replace or supersede the utilization review or audit activities now in operation under the Medicare program. What this provision does is to create an additional formalized review procedure that is designed to supplement and enhance present review and audit activities. Under this provision, the Secretary would be given authority to terminate payments under the Medicare program (parts A and B) for services rendered by any supplier of health and medical services found to be guilty of program abuses. The situations for which termination of payment could be made include overcharging, furnishing excessive, inferior, or harmful services, or making false statements to obtain payment. Also, there would be no Federal financial participation in any expenditure under titles V and XIX by the State with respect to services furnished by a supplier to whom the Secretary would not make Medicare pay ments. In cases involving the submittal of false statements, the Secretary would ma the decision to terminate payment without consultation with any group. However, the Secretary's decision to terminate payment in cases involving overcharging or cases involving services which either substantially exceeded the patient's needs or were grossly inferior or harmful to the patient would be contingent upon the concurrence of a program review team. The Secretary would establish one or more program review teams in each State following consultation with groups representing consumers of health services, State and local professional societies, and the appropriate intermediaries and carriers utilized in administration of title XVIII benefits. Membership in the program review teams would consist of physicians, other professional personnel in the health care field, and consumer representatives. In addition to reviewing individual cases, the program review team would be responsible for reviewing and reporting on statistical data on program utilization (which the Secretary would periodically provide), as well as the evidence regarding program abuse. While the entire team would perform this function and would participate in review of cases involving overcharging, only the professional members of the team would review cases involving the furnishing of excessive, inferior, or harmful services. The House-passed bill also contains a provision which provides authority to discontinue Medicare payment where a hospital or extended care facility admission has been determined by a utilization review committee to be medically unnecessary 2. What is there to assure that program review teams will function in more than pro forma fashion? We believe that the composition of the program review teams will do much to assure that the teams function in a conscientious and diligent manner. The professionals are charged with a great deal of responsibility under this provision because we believe that only members of the professional community can actually review the questionable practices of other professionals. Physicians have sought this additional responsibility and we believe that they will want to perform it well. We also believe that the presence of consumer representatives on the team will do much to assure the team's success. Their involvement as community representatives should help to make this whole activity an educational one rather than being strictly punitive in nature. 3. Will the teams be expected to regularly review all individual practitioner profiles for unusual patterns or would they merely respond to patient complaints? It is not intended that the program review teams would review all individual practitioner profiles. It seems to us at the present time that it would be infeasible administratively to require the program review teams to review all individual practitioner profiles. In addition to complaints from patients the program review teams would respond to complaints from a variety of sources. For example, questionable cases may be brought to the attention of the review teams by carriers and intermediaries, by health care institutions, and by the Government itself. We have an increasing capability through our own ongoing statistical programs to identify aberrant patterns and practices. For example, we have instituted a statistical program with our carriers under which they identify payments to physicians in excess of $25,000. Review of questionable cases identified through statistical or other means seems to us a more productive function for review teams to perform than review of all practitioner profiles. DIFFICULTY OF SMALL COMMUNITY HOSPITALS Senator BENNETT. Thank you. I ran into another practical problem today: Small community hospitals, whose rate of vacancy is probably larger than that of the big hospitals in the big cities, are complaining that on the basis of your current reimbursement, they cannot recover their costs because while theoretically they can recover what they actually cost, the cost of maintaining a small community hospital and having it available is not taken into consideration. They are wondering whether you should be considering any kind of a special consideration for hospitals of this kind, whether there should be any variation from your rule that they may only recover their actual "out-of-pocket costs." The reason being the cost of maintaining a facility for the small community is more of a burden than it is to maintain a large hospital with a continuing demand for its services. Secretary RICHARDSON. Well, I would have thought, Senator, that our present determinations of cost did include overhead, incorporating the ammortization and maintenance of standby facilities required in the community. We will have to take a look at this, because as I say, my impression is that these are legitimate elements of cost right now. Senator BENNETT. There is a man coming in to see me this week who claims he is actually losing out of pocket 10 percent of his operating cost. Secretary RICHARDSON. What is at issue here may be a question of disagreement over how the costs are measured rather than on the principle of whether or not they should be covered. We will be glad to talk with this gentleman. Senator BENNETT. We will probably be back with you to talk about this problem. I recognize how difficult it is to try to apply a blanket system of measurement to the big ones and the little ones and to the efficient ones and the inefficient. Secretary RICHARDSON. Of course, this is an important question as it applies, as my testimony indicates, to determining whether additional facilities should be constructed. The recognition of the existence of underutilization of present facilities through the planning mechanisms which the bill would establish is one of the things we want to encourage in order to prevent paying for unneeded facilities in the future. That is not to say that facilities are unneeded when they exist for standby reasons. But still, we want to be sure that a genuine standby need exists, and that we are not dealing with a situation in which somebody simply felt that his town wanted a bigger hospital than the one in a nearby city. Senator BENNETT. Well, I come from a State where more than 80 percent of its people live in five contiguous counties and those counties take up probably 10 percent of the total land area of the State. So if the people in the other 90 percent of the land area of the State are go be served, and the State is 450 miles long and 250 miles wide, we have to encourage the establishment of local community hospitals out in that area. I think it is natural that they would face a problem of underutilization. Secretary RICHARDSON. I think this is true, Senator. We would be glad to discuss the question with the representative of the hospital when he is here later this week. Senator BENNETT. Thank you, Mr. Chairman. The CHAIRMAN. Senator Anderson has some questions. PAYMENTS TO PHYSICIANS Senator ANDERSON. Under the House bill, medicare stops payment 3 days after a hospital committee, in a sample review of admissions, determines that hospitalization is no longer necessary. Do you endorse this feature of the House bill? Secretary RICHARDSON. Yes, we do, Senator. Senator ANDERSON. Do you not think that we should also stop payment to a physician for hospital services to that patient 3 days after such a determination? Secretary RICHARDSON. We do have provision for the cutoff of payments to physicians who abuse the system by making excessive services or charges. I am not sure what the timing provision of this is. Mr. BALL. Mr. Secretary, I wonder if I could supplement that just a little. I think it does not follow automatically, Senator Anderson, that because the individual does not need to be in the hospital, that the physician's services to the individual are unnecessary. He might need those services, you see, if he were in his own home or in an extended care facility. So I do not think you could automatically stop payment 47-530-70-pt. 1-7 |