"2. Any changes in the present method of reimbursement under the Medicare program should take into account the various forms of payment for health care in the private sector. "3. No method of physician reimbursement should categorize the beneficiaries in a manner of payment significantly different from the general public. "4. Beneficiaries should not be liable for physicians' fees beyond the deductible and coinsurance amounts. "5. Attempts to change the reimbursement method should carry the reasonable expectation that physicians' fees will be equivalent to the levels of other existing reimbursement programs.' The Council recommended: "1. Experimentation with the concept of 'participating physicians' in the Medicare program should be undertaken by the Administration in selected areas. The objective of such experiments would be to evaluate the willingness of physicians to participate in the program and at the same time eliminate the need for beneficiaries to pay out-of-pocket more than the deductible and coinsurance. "2. Experiments with any reasonable type and form of payment for physicians' services, such as fee schedule, capitation, and relative value scale, should be encouraged under Medicare for physicians desiring to participate in such a project as long as the costs are likely to be the same or less than those derived from the reasonable charge formula under the existing law. In the design of such experiments, it is necessary to give full consideration to regional differences, inherent inequities, inflation, and other variables." These conclusions and recommendations reflect the Advisory Council's concern that Medicare provide an adequate level of care at a reasonable cost to the patient while reasonably reimbursing the physician. I believe that proposals such as the one currently before this Subcommittee are not adequate to achieve these aims and do not take into consideration the effect the proposal will have on the elderly. Hon. DAN ROSTENKOWSKI, CONGRESS OF THE UNITED STATES, Chairman, House Ways and Means Subcommittee on Health. DEAR MR. CHAIRMAN: Enclosed is a statement which I wish to have included as part of the hearing record for hearings held today, June 12th, on recently published HEW regulations dealing with Medicare. I appreciate your accommodating me in this matter and hope the committee will consider carefully the attached material. Sincerely, GUNN MCKAY, STATEMENT OF HON. GUNN MCKAY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF UTAH Mr. Chairman, I am pleased that this Committee has chosen to conduct hearings to determine if HEW has exceeded their authority in various Medicare care regulations recently published in the Federal Register. Of grave concern to Utah hospital administrators and the Utah Medical community has been the decision to remove the 8%% nursing cost differential, as well as proposed regulations revising the Schedule of Limits on Hospital Inpatient General Routine Service Costs in the Medicare Program. The latter set of regulations proposes a standard that is most unfair and unrealltic as it applies to Utah. I would like to submit, herewith, for the record, statements from two members of the Utah health care community who are knowledgeable and respected spokesmen for their professions. They are Grant C. Burgon, Administrator of the Utah Valley Hospital in Provo, Utah, and John R. Walker, Executive Director of the Utah State Hospital Association. I believe their statements will be valuable in assessing the impact of these HEW regulations and I urge the Members of this Committee to consider carefully the information they have provided. The statements follow: UTAH STATE HOSPITAL ASSOCIATION, Hon. DAN ROSTENKOWSKI, DEAR REPRESENTATIVE ROSTENKOWSKI: On behalf of our member hospitals in Utah, all of those eligible participating in the Medicare program, we are pleased to submit these comments to the Subcommittee on Health for the oversight hearings to be held June 12, 1975 on Medicare regulations. We have been astonished at the apparent disregard of the Secretary of Health, Education and Welfare for the wording and intent of the law, as recent Medicare regulations have been developed. Both the regulations to eliminate the 82% nursing differential cost, published in the Federal Register April 3, 1975, and to revise the limits on routine inpatient costs, published April 17 have deliberately avoided Section 1861 (v) (1) of the law, PL 89-97, which requires that costs with respect to individuals covered by Medicare will not be borne by individuals not so covered. These regulations reduce reimbursement to hospitals below reasonable costs which will inevitably shift the costs underpaid by the Medicare patient to the non-Medicare patient. HEW in an April 7 news release has itself identified the amount involved in the elimination of the 8% differential as a "savings" to the Social Security Administration of $120 million. This adds up to a sizeable subsidy and violation of the law, which should be significant even to HEW. In eliminating reimbursement for the 81⁄2 nursing differential, HEW has ignored its own regulations, published in the Federal Register of August 1, 1970, which states that "further studies will be conducted to ascertain whether and how such a differential should be applied in the future." Such studies have not been conducted by HEW on which to base an action to decrease or eliminate the differential. HEW has only made assumptions that the nursing differential is no longer warranted. Experience of hospitals show that even a higher percentage of nursing time and cost is justified for the elderly Medicare patient than the 84% differential. A study at the University of Utah Hospital in 1974 showed that elderly patients, on the average, required 17.5% more nursing time than patients under age 65. Other studies indicate that as the average age of Medicare beneficiaries is increasing, even more than 81⁄2% additional nursing care is required, and accordingly "reasonable cost" reimbursement under the law would include expanding the differential not eliminating it. We cannot condone either HEW's action on the 82% factor which we feel is illegal, or their logic, which is absurd. Again, the regulations creating cost categories to limit reimbursement of routine inpatient costs under Section 223 of PL 92–603 are illegal and illogical. These regulations create artificial cost reimbursement limits according to broad categories of hospital size and sub-groups determined by per capita income in the Standard Metropolitan Statistical Area or state in which the hospital is located. In each group, hospitals whose costs exceed the 80th percentile plus 10% of the median of the group will be denied reimbursement. There is no consideration given to the hospital scope of service, or patient mix. Size and per capita income of the area are the only criteria for limiting Medicare payments. We feel this is clearly contrary to the intent of Congress. This intent, as identified in the Senate Finance Committee report on PL 92-603, was to identify hospitals whose costs would not be considered necessary for "the efficient provision of appropriate care." It was apparent that the Committee was concerned with identifying "inefficiencies" or "excesses", but also recognized that scope and intensity of care contributed to variations in hospital cost and concluded that "only cases with extraordinary expenses would be subject to any limits." These regulations do not identify and limit luxury or inefficiency, but instead penalize an anticipated one-third of Utah hospitals because of where they happen to fall in relation to size category, location, or both. Fourteen Utah hospitals are placed in SMSA Category IV with a ceiling of either $86.00 or $87.00. The size of these hospitals range from 38 to 570 beds. The scope of service is from routine medical care by general practitioners to highly complicated cardio-vascular management, orthopedic and neurosurgery, and nuclear medicine performed by highly specialized medical teams. Some of these hospitals have no role in medical or health education, others are involved extensively. And the physical plant and equipment of each hospital varies accordingly to the scope of service and size. Obviously the costs also vary and increase with the expanded services, but HEW limits the increase to only $1.00 and then only for the largest hospital. This is not controlling excesses or inefficiency, but unjustly penalizing quality; not what Congress intended. All other hospitals, in Utah, but one are given limits of from $62.00 to $65.00. These are Category V limits for SMSA, under 100 beds, and for non-SMSA from 1 to 169 beds, and are the lowest limits for any hospitals in the country. The reason for these low limits is that Utah has had comparatively low per capita income, because of large average family size, and because a high proportion of college students, which figures in per capita income calculations. Rural hospitals in the same size non-SMSA categories (1 to 169) in surrounding states have these limits: Colorado, Idaho, Wyoming-$75-80, Montana and Arizona-$89-90, New Mexico $67, and Nevada $76-83, contrasted to Utah's $62-65 which is 18.7% lower than the average of these surrounding states. Again Utah hospitals are unfairly penalized in comparison to other hospitals not because of inefficiency, but because of HEW premises. The costs of supplies, services, and wages faced by Utah hospitals, and comparable sized rural or metropolitan hospitals in neighboring Intermountain states, does not vary much. Most buy the same equipment and supplies from the same manufacturers and many from the same dealers. Wages are also comparable. Average daily costs for Utah hospitals are at the norm for both Intermountain region and national statistical comparisons maintained by the American Hospital Association, not at the bottom, like the HEW limits. This regulation is unjust as well as in conflict with the intent of Congress. Another unfortunate effect of these regulations is that they use per diem comparisons of Inpatient General Routine Service Costs, which again is detrimental to Utah hospitals, and to all others that have worked realistically to reduce their length of patient stays and prevent unnecessary admissions. In Utah we have pioneered in the development of the Professional Standards Review Organization and our utilization review activities have resulted in significantly shorter length of stay than the national average. This results in a lower total hospital bill. However, total per diem costs and routine inpatient per diem costs can be higher than before the advent of effective PSRO activity because the costs of special and routine care are condensed into a shorter period. A seven day stay shortened to five days could provide a real benefit to the Medicare patient by a significantly lower total cost. However, the increased per diem could accelerate the hospitals reaching the category cost limit, and in turn discourage and blunt the PSRO effort, strongly endorsed by Congress. In summary, we feel that these regulations are unjust and discriminatory, and that they are not in accord with either the law or congressional intent. We ask that the Committee institute legislative remedies to correct these injustices and defects, and that the Committee urge the Secretary of HEW to likewise immediately change and correct the regulations. Your interest and concern in this important matter are greatly appreciated. Sincerely, Congressman GUNN MCKAY, House of Representatives, Washington, D.C. JOHN R. WALKER, UTAH VALLEY HOSPITAL, DEAR CONGRESSMAN MCKAY: We appreciate your response to our lette expressing concern over the proposed regulation that would eliminate the 82% nursing cost differential for Medicare patients. In your May 22nd letter you asked for documentation of our assertion that Medicare patients do indeed require more care. Within our hospital, all patients are classified according to acuity of care. Classification one patients require minimal nursing care while classification four patients require complete nursing care. A study conducted by our nursing staff has determined that while Medicare patient days account for 25% of our total patient load, 50% of our class four patient days are Medicare patients as are 33% of our class three patient days. As we are concerned that the Social Security Administration is attempting to reduce their budget by shifting costs to the hospitals, and as we feel that HEW has exceeded their authority in promulgating this regulation we would encourage you to oppose this action. Sincerely, Enclosure. GRANT C. BURGON, Administrator. CLASSIFICATION I A patient requiring minimal nursing care whose condition is characterized by: 1. Self-sufficient in activities of daily living. 2. Few diagnostic tests. 3. Simple, uncomplicated treatments. 4. Few medications. 5. Acceptable behavior patterns. 6. Requirements for simple orientation and teaching to meet patient's needs. CLASSIFICATION II A patient requiring a moderate amount of nursing care whose condition is characterized by: 1. Need for assistance in activities of daily living. 2. Preparation for multiple tests or procedures or gathering of multiple speci mens. 3. Periodic treatment and/or observation. 4. Periodic administration of medications requiring evaluation. 5. Occasional deviations from acceptable behavior patterns. 6. Requirements for more detailed teaching. CLASSIFICATION III A patient requiring a considerable amount of nursing care whose condition is characterized by: 1. Almost complete or total care required as to activities of daily living. 2. Frequent, time consuming diagnostic tests and procedures. 3. Frequent treatments and/or observation. 4. Numerous medications. 5. Significant deviation from acceptable behavior patterns. 6. Requiring specific teaching. CLASSIFICATION IV A patient requiring complete nursing care whose condition is characterized by: 1. Total dependency on the nurse for activities of daily living. 2. Excessively time consuming diagnostic tests and procedures. 3. Comprehensive treatments and/or close observation. 4. Comprehensive medication regime. 5. Severe deviation from acceptable behavior requiring intensive emotional support. CONGRESS OF THE UNITED STATES, HOUSE OF REPRESENTATIVES, Hon. DAN ROSTENKOWSKI, Chairman, Health Subcommittee, House Ways and Means Committee, DEAR DAN: On behalf of the Maine Hospital Association, I am writing with reference to regulations promulgated by the Social Security Administration which would revise the limits on reasonable costs under Medicare. It is my understanding that this is one of the several regulations you intend to consider during oversight hearings on June 12th. While I appreciate the efforts of the Administration to contain costs, I find the new procedure under Section 223 particularly arbitrary when hospitals within twenty miles of each other serving similar populations are reimbursed at different rates because the hospitals lie in different political jurisdictions. Therefore, in the course of your hearings, I would appreciate your keeping my reservations in mind and apprising me of the recommendations of the Committee with respect to this regulation. Thanking you in advance for your assistance, I am Sincerely, WILLIAM S. COHEN, Member of Congress. CONGRESS OF THE UNITED STATES, Hon. DAN ROSTENKOWSKI, Committee on Ways and Means, Washington, D.C. DEAR DAN: I am writing in regard to the recent decision by the Department of Health, Education and Welfare to terminate the 82% inpatient routine nursing differential from Medicare reimbursement. I understand that H.R. 7000, which would continue the nursing differential, has been referred to the Health Subcommittee and that the problem of termination of this differential is to be considered in Subcommittee hearings this week. Accordingly, I am writing to urge favorable consideration and expeditious action in order to provide for the continuation of the nursing differential in order to assist hospitals in meeting the high costs of providing older patients with necessary medical care. With best wishes, JAMES R. JONES, STATEMENT OF HON. W. HENSON MOORE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF LOUISIANA Mr. Chairman, as the prime sponsor of H.R. 6464 and other bills to repeal utilization review procedures under Medicare and Medicaid, I appreciate the opportunity to present this statement to the Subcommittee. The U.S. District Court for the Northern District of Illinois, Eastern Division, has recognized sufficient merit in the case against utilization review by recently issuing a temporary injunction against its implementation (American Medical Association, et al, v. Weinberger, Complaint No. 75C560). Public policy should be made by the Congress, however, not by the courts nor the Executive and regulatory agencies, so I urge the Subcommittee to reconsider the impact of utilization review on our entire health care system. I say entire because in the latest version of its regulations, HEW has worked in a provision to expand UR far beyond the scope of its Congressional mandate. In fact, there is sufficient coercion in the new regulations to put all private patients under UR, instead of just those whose stay in an institution is publicly financed. They do this by denying reimbursement to institutions for physicians serving on UR panels unless all private, as well as public, patients come under the plan. We are threfore not talking about a possible method to eliminate waste in several public health care programs, a way which is doubtful at best and which I will discuss later on its merits. We are talking about a massive and expensive bureaucratic undertaking, which affects each and every hospital stay in the United States. According to information received from the American Hospital Association, in 1973 there were 32.5 million admissions to general hospitals alone. Figuring a reasonable workload, the day-to-day, case-by-case review of these admissions could involve as many as 13,500 non-physician reviewers and 1.6 million physician hours totaling over $300 million. Formal UR Committee time for appeals and the special medical studies required by the regulations could eat up nearly $60 million more. The time lost to attending physicians on appeals at a reasonable cost per hour could total another $8 million. HEW itself has estimated its costs at $30 million, which sounds rather conservative, and nobody has even attempted to estimate the costs which will have to be incurred by the several states in developing and administering required plans under Medicaid. These figures all add up to some $398 million plus state costs. Although this is based on reasonable, but admittedly hypothetical figures, it will have to serve until someone comes up with something more definitive. What are we going to get for all this money? HEW has estimated that Medicare and Medicaid payments can be reduced by $130 million. Spending some $400 million of taxpayer and consumer dollars to save $130 million seems to me a rather inefficient way to do business. 54-804-75-21 |