In Kansas, there are 51 hospitals with three or less physicians on the Medical Staff and 37 of these "three doctor or less" hospitals are in my District. The prelininary definition circulated by HEW stating any physician "professionally involved in" the patients' care could not serve in a utilization review capacity simply makes compliance impossible. In our country, physicians cover each other for time off on a reciprocal basis almost daily. This would eliminate them from the review process. Hopefully, this definition has been or will be changed. We believe a more workable proposal would restrict only the attending physician from serving on the review. In our rural hospitals, it is the physician who admits the patient that sets the plan of care, not the physician who covers for time off.

It is important to stress that in a rural hospital with a small number of physi cians, the added and distasteful task of questioning of a colleague's judgment on a daily basis would lead to an impossible situation from a professional standpoint and aggravate the already critical shortage of primary care physicians in my District and throughout our rural areas. Communities in my District now actually recruit doctors much in the same fashion as professional athletic teams recruit for blue chip athletes. A number of doctors in my District have stated flatly that rather than questioning a colleague's judgment on a daily basis, they would leave their practice.

We further believe the same rules on utilization review should not be applied to all hospitals regardless of size because of the workload of admission review would be unreasonable for the small hospital medical staff.

I want to stress Kansas hospitals, for a number of years, have performed retrospective review and it has been an effective program. The Kansas Hospital Association has stated, "looking at questionable cases in retrospect gives all concerned time to make better judgments. A physician whose pattern of admissions is questionable can be warned and eventually placed on a pre-admission approval basis. The main value of utilization review is the exposure it gives to each doctor's practice. In my opinion, more effective results can be achieved by preventing patterns of faulty admission than by challenging admission on a case-by-case basis." I strongly recommend study be given to using this type of program for rural hospitals.

Let me simply conclude by saying we are hopeful those in charge of implementing utilization review regulations can grasp the difficulty of a one doctor hospital setting up a utilization review committee of two or more doctors.

TERMINATION OF INPATIENT ROUTINE NURSING SALARY COST DIFFERENTIAL

We believe strongly that the 84% nursing salary cost differential should be retained. In this regard, I am pleased to be a co-sponsor of legislation introduced by Congressman Mark Hannaford of California that would require continued application of the nursing salary cost differential. As in the case of the utilization review issue, various groups and associations have filed a law suit seeking injunctive relief from this decision. I am supportive of this action.

The Kansas Hospital Association has estimated the impact as a result of the loss of the nursing salary cost differential in Kansas would be somewhere between $2.1 and $2.4 million. In effect, HEW is telling rural hospitals that private patients must pay more or that additional local taxes must be levied. We do not consider cutting back the level of nursing care to our senior citizens a viable alternative.

The assumption, that the addition of patients under 65 means that Medicare is no longer a program solely for the aged and therefore the differential is not justified, cannot be substantiated upon study of the situation in my District. In Kansas, the under age 65 Medicare beneficiaries are less than two percent. The elimination of this differential will cause the hospitals in Kansas to force private paying patients and other third parties to subsidize Medicare.

In my District, many of the small hospitals serve a population which is almost 20 percent over age 65. This factor is most important to our hospitals in that more than 50 percent of their total service is provided to those on Medicare.

LIMITS ON HOSPITAL GENERAL ROUTINE SERVICE COSTS

It is our opinion that although this reduction from the 90th percentile to the 80th percentile will affect only a few hospitals in Kansas, it is still a change which must be carefully weighed. If HEW should in the future propose to further decrease this limitation, our hospitals could be forced to lower the quality of care for our senior citizens.

SEPARATE REQUIREMENTS FOR MORE THAN ONE TYPE OF CARE

Twenty hospitals in my District provide not only acute care, but also long-term care for their communities in the same facility. This obviously saves a great deal of money because of non-duplication of construction and services. These long-term care units are providing, in most of these communities, the only skilled nursing home care available and service primarily the aged. In fact, the average age of the residents is over 80 years.

Mr. Chairman, the problem is that the Medicare law does not give these hospitals a fair reimbursement due to the requirements for allocating costs in the areas of shared services. In fact, these hospitals would be better off financially if they would just close all of the long-term care units and ask the aged residents to move elsewhere. But, because they are community hospitals, they will continue the service as long as the community can afford it. I believe we need legislation to correct this very serious inequity.

LIFE SAFETY CODE PROBLEMS

Generally speaking, HEW, through the Kansas State Fire Marshall's Office, is enforcing safety standards for dual care hospitals and, of course, nursing homes. Time and again, local hospital boards are "made an offer they cannot refuse”— either equip the hospital with costly and hard to obtain safety systems, regardless of existing safeguards termed by local officials and the community as adequate, or face the loss of Medicare certification.

Virtually no one would oppose reasonable safeguards or the need for enforcement of reasonable safeguards to protect patients and residents of nursing homes. However, in one county in my District, the local hospital board had no alternative but to make at least $15,000 worth of improvements to a building that will be vacated in a period of a few short months, in that a new hospital is currently being constructed. I might add the original price tag was closer to $60,000. In this regard, the Kansas Hospital Association estimated the difference between the cost of original safety mandates by HEW for approximately 12 hospitals in Kansas and what was eventually agreed upon as a result of negotiation between HEW officials, the State Fire Marshall's Office, and local community representatives was close to a million dollars over the period of about one year.

I want to stress to my colleagues that represents almost $1 million that would have come from the pockets of patients and taxpayers for safety improvements that were later deemed not necessary. I find this practice and policy incredible. I make that statement knowing we must always be in a position of taking every precaution to protect the lives of patients and residents of nursing homes and hospitals.

PAPERWORK, ACCOUNTING, AND AUDITING REQUIREMENTS FOR SMALL HOSPITALS It costs small, "three doctor or less," hospitals a minimum of $5,000 a year just to complete all of the various forms and paperwork connected with the Medicare program.

This estimate was based upon information received from a small one doctor hospital in my District. Given this figure, the total cost each year for small hospitals alone to keep up with Medicare program paperwork totals at least a half million dollars in Kansas. We made no effort to try and compute the costs for hospitals with larger medical staffs, but it is clear the statewide costs run into the millions of dollars.

In writing to a national senior citizens organization for assistance regarding the problems involved with utilization review regulations, a hospital volunteer in one of our small communities received a reply that the UR regs were intended to cut costs for senior citizens, that the local hospital should have no trouble in hiring and paying for a patient review coordinator, and designating a committee of doctors to review admissions on a daily basis.

Mr. Chairman, we do not have the bookkeepers, the accountants, or the coordinators or whatever you want to label these folks or the funds to hire them. In the "what we don't have department," our primary need is doctors. In the "what we don't need department," is the continuing deluge of paperwork and forms.

POLICY INPUT

The quantity, rapidity, and complexity of Medicare regulations now being issued by HEW is simply overwhelming our rural hospitals. It is our judgment that because of the problems involved, little, if any, input is being received from the rural hospital sector prior to policy recommendations being made.

Mr. Chairman, if this trend continues without any consideration for flexibility within Medicare program policy, health care to thousands of rural citizens will be jeopardized.

Current utilization review regulations endanger the future of 51 Kansas hospitals with three or less physicians and pose serious problems for all Kansas hospitals.

The termination of the nursing salary cost differential would result in a loss to Kansas hospitals totaling an estimated $2.4 million; forcing rural hospitals to meet that cost by raising patient fees or increasing local taxes if the current level of nursing care to senior citizens is to be continued.

Medicare paperwork requirements in Kansas hospitals are running into millions of dollars. Utilization review requirements that doctors must review a colleague's judgment on a daily basis has already led to threats by rural doctors to leave their practice.

The estimated cost for safety improvements later deemed unnecessary for Kansas hospitals inspected to meet Life Safety Code requirements totaled almost $1 million last year.

I submit to you this is a bureaucratic nightmare. I am confident administrative changes will be forthcoming and if not legislative proposals may be able to provide some relief. In addition, I want to stress we do have folks in our regional HEW office in Kansas City who are familiar with our special problems in rural areas. Deadlines are extended, appeals are granted, and we do muddle through this overwhelming amount of Federal bureaucracy.

However, the point should be made that much of this effort and cost is totally unnecessary and it is clearly jeopardizing the inadequate health care delivery system we now have and are desperately trying to protect in our rural areas.

There are other concerns which I shall not mention at this time, but I am hopeful this Subcommittee will continue to examine the Medicare policy in light of Congressional intent and in view of what is happening in our rural areas as a practical result of current implementation of the Medicare program. In this regard, I do not think it was the intent of Congress for HEW to use the Medicare program as a club to enforce regulations that may well regulate us right out of the rural health care business.

Mr. ROSTENKOWSKI. Are there any questions?

Thank you for a good statement. We appreciate your concern and your testimony.

Mr. SEBELIUS. Mr. Erickson will be available to the committee at any time you want to discuss rural problems.

Mr. ROSTENKOWSKI. Mr. Mark Hannaford, our colleague from California. Welcome, Mark, to the committee. We are looking forward to some indepth testimony. We know of your concern with legislation in the area, and we look forward to having you make your observations.

STATEMENT OF HON. MARK W. HANNAFORD, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA

Mr. HANNAFORD. Mr. Chairman, I appreciate this opportunity, particularly today, when your committee is dealing with matters of historic importance in the House. I will not take a great deal of your time, and I am not sure how much depth my testimony will have. You had a great deal of depth from the experts in the field and the industry.

But I am here to speak in behalf of my bill, H. R. 7000, and I have prepared a packet of testimony, including a written statement, which I shall not take the time to read in detail, but I would like to submit the entire packet for the record. This includes a copy of the bill, a copy of the 180, at the last count, cosponsors from almost every State in the Nation and from both parties, a number of whom are

on your committee and your subcommittee; a letter that I wrote to Secretary Weinberger, asking him to recant his sins, and previous statements that I have made for the record, and so I will just comment very briefly beyond that.

We have on your subcommittee Mr. Corman and Mrs. Keys as cosponsors of this legislation. We have the ranking minority member, Mr. John Duncan, also a cosponsor, and we have Mr. Tim Lee Carter of the International and Foreign Commerce Subcommittee on Health-all cosponsoring the legislation.

So this is an impressive pedigree for the bill, I think, Mr. Chairman. You have had previous testimony from people from the industry. I understand that was this morning, and that it gave you some of the statistics as to what the actual cost of this differential is. We would hope the Secretary would negotiate if he is going to make a change. I suspect that he would not like to negotiate because such negotiations would probably result in an increased differential if we were to actually examine the costs of this differential.

I point out in my statement that Senator Church on Monday introduced an identical piece of legislation in the other House and he also is seeking cosponsors of his bill.

I have received endorsements from groups, and particularly hospitals, from all around the country. I am particularly interested in the hospitals in my district. The Long Beach Memorial Hospital estimates that the cost to them, which they would have to shift to other patients, is $100,000 a year. The Los Angeles County Hospital system estimated the cost to them to be $250,000 per year.

Now, to shift the costs of medical care for our senior citizens to other hospital users seems to me to be a remarkable means of taxation to pay for medical care.

But that is the only alternative to reducing the quality of the health care services for our senior citizens.

So I will not take more time, Mr. Chairman. I want to thank you and the colleagues who have torn themselves away from the floor, and I want to get back over and listen to some of that very important debate on the floor that your committee is handling there.

I would submit to any questions, or my staff would be available for questions at a later time.

[The prepared statement and attachments follow:]

STATEMENT OF HON. MARK W. HANNAFORD, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA

H.R. 7000, and the identical companion bills, H.R. 7430, H.R. 7431, H.R. 7657, H.R. 7658, H.R. 7659, H.R. 7660, H.R. 7661, H.R. 7694, H.R. 7737, and H.R. 7738-To amend Title XVIII of the Social Security Act to require the continued application of the nursing salary cost differential which is presently allowed in determining the reasonable cost of inpatient nursing care for purposes of reimbursement to providers under the Medicare program.

Mr. Chairman, Members of the Committee, I want to express my deep appreciation to you for the opportunity to appear before your Committee in support of my bill, H.R. 7000, and the several identical companion bills which have been introduced by more than 170 members of the House of Representatives, and which are now pending before your Committee.

The broad, bi-partisan sponsorship of this legislation includes over one-third of the total membership of the House-the largest number of sponsors of any bill introduced in the 94th Congress.

At this point, Mr. Chairman, I would like to include a copy of H.R. 7000 as well as a complete list of the co-sponsors:

[H.R. 7000, 94th Cong., 1st sess.]

A BILL To amend title XVIII of the Social Security Act to require the continued application of the nursing salary cost differential which is presently allowed in determining the reasonable cost of inpatient nursing care for purposes of reimbursement to providers under the medicare program

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the last sentence of section 1861(v)(1)(A) of the Social Security Act is amended by striking out “and (ii)” and inserting in lieu thereof the following: "(ii) provide in any event for the allowance of an inpatient routine nursing salary cost differential of at least 82 per centum, as a reimbursable cost of inpatient nursing care, in recognition of the above-average cost of furnishing such care to aged patients, and (iii)".

JUNE 11, 1975-CONGRESSIONAL CO-SPONSORS OF H.R. 7000,
BY REPRESENTATIVE MARK W. HANNAFORD (D-CALIF.)

Fauntroy, Walter, District of Columbia Mink, Patsy, Hawaii