STATEMENT OF WILLIAM M. THOMPSON, M.D., CHIEF OF STAFF, HUNTINGTON INTER-COMMUNITY HOSPITAL, HUNTINGTON BEACH, CALIFORNIA; CHAIRMAN, COMMITTEE ON PROFESSIONAL LIAISON, MEDICAL ADVISORY COUNCIL OF AMERICAN MEDICORP. INC. SUMMARY The Medical Advisory Council is an association of chiefs of staff of 41 hospitals owned and managed by American Medicorp, Inc., a publicly held Hospital Management Corporation with Headquarters in Bala Cynwyd, Pennsylvania. The Medical Advisory Council is made up of Chiefs of Staff representing all medical staff members in these facilities. The total number of physicians, both allopathic and osteopathic, on these medical staffs is 8800. All hospitals are accredited by the Joint Council on the Accreditation of Hospitals, members of the American Hospital Association, the Federation of American Hospitals, the American Medical Association or the American Osteopathic Association, as appropriate. The Office of the Medical Advisory Council is: American Medicorp, Inc., 111 Presidential Boulevard, Bala Cynwyd, Pennsylvania, 19004. Dr. Thompson is Chairman of the Committee on Professional Liaison and, as such, represents the interest of the 8800 physicians on the medical staffs of the hospitals mentioned above. On presenting his views on the subject under consideration, he speaks with the authority of the Executive Committee and Board of Directors of the Medical Advisory Council, who in turn represents the 8800 physicians on the medical staffs of the hospitals. The Medical Advisory Council supports the temporary injunction against the implementation of the revised utilization review regulations, urges a permanent injunction be granted, supports HR7000 which would continue the 8%% nursing differential under medicare cost reimbursement, and rejects the concept of cost containment through reducing reimbursement levels for medicare and medicaid patients. STATEMENT The Medical Advisory Council of American Medicorp, Inc. is composed of chiefs of staff and chiefs of staff-elect representing about 9,000 practicing physicians in forty-one (41) community hospitals throughout the country. The Professional Liaison Committee is not a political group, but a committee that deals directly with practicing physicians in community hospitals seeking to speak with one voice on matters that concern them. There has been developed a system for rapid communication among these hospitals and physicians and this communication can be utilized to provide information to and from the hospitals and physicians and some central source. These hospitals and physicians have shown a dedication to high quality medical care with a strong commitment to continuing education of physicians and the hospital staff members. These hospitals and their medical staffs have the highly developed peer review system which is capable of adaptation to new concepts and they are also developing systems and new concepts of peer review both for the hospitals and for the physicians' private offices. Utilization review procedures effective July 1, 1975 The Medical Advisory Council concurs and approves of the current temporary injunction granted by Judge Hoffman in response to a request by the American Medical Association. We encourage the extension of that injunction and the ultimate awarding of a permanent injunction against the implementation of the new utilization review procedures on July 1, 1975. The focal point of our dissatisfaction with the new utilization review procedures is that they fail to accomplish what was intended-control of over-utilization of hospital facilities. If utilization control is the aim of the new utilization review regulations, we submit that better control can be effected by peer review by and among physicians. Medicare nursing differential The elimination of the 8%%% medicare nursing differential from cost reimbursement effective July 1st is a method to achieve a reduction in cost of health care, but it merely transfers that cost to others. It is a known fact, recently supported by studies done in Florida and California and available to HEW, that medicare patients require in excess of 20% additional care because of their age. To eliminate an 82% nursing differential from Medicare is an unfair and dangerous attack on the viability of each hospital in the country. The Medical Advisory Council supports HR7000, introduced by Representative Hannaford of California which would continue the nursing differential. We think this is an urgent matter for HEW reconsideration. The indigent care The original intent of the Medicare and Medicaid programs, as indicated by Congress, was to bring the elderly and the poor back into the main stream of medicine by subsidizing the cost of their medical care. We feel this intent has been eroded to the extent, as exemplified by Medi-Cal of California, that the poor have been substantially driven back to the county hospitals or to the high volume, low quality ghetto medical practitioner. This has been accomplished in our opinion by cutting reimbursement payments to the physicians and hospitals so that most physicians can no longer afford to treat such patients in their office or in their hospitals. A burden has been placed on the hospitals and physicians in a continuous attempt by which the government is apparently intending to reduce their expenditure in these two programs and transfer the burden to the physician and to the hospital. In our opinion, continuous pressure from HEW for cost reduction tends only to reduce payments to the level of cost or below, which necessitates a subsidization of such patients by regular, private pay patients, insurance companies, physicians and hospitals. When the reimbursement payments reach the level in which the physicians and hospitals can no longer subsidize patients' medical care, the patient is forced to return to the county hospital. The concern of the government agencies for cost control is understandable, especially in the current economic climate. However, to use the over-simplified means of eliminating or reducing reimbursement in the long run is extremely detrimential to the medical system of this country. The quality of medical care provided in the United States is the highest in the world. The system has flourished with a diverse method of health care delivery. Damaging even destroying the entire system to eliminate perhaps 5% of physicians who are unconscionable and over-utilize the facilities does not solve the true problem. In physiological terms, it is similar to destroying the host to be rid of the parasite. In the interest of cost control, the government agencies might better turn their attention to providing opportunity for physicians in hospitals to improve the practice management activities without in anyway altering their approach to medical care. There is no question that the physicians do consititute a "cottage industry" and that they would benefit from the type of practice expertise which is known in the business communities of this country. The Medical Advisory Council has turned its attention to providing management type training opportunities for physicians so that they may function in a more efficient, cost-reducing manner. There is a growing concern on the part of all physicians to be more cost conscious. Opportunities for education and the application of management techniques to medical practice will, in the long term, perhaps benefit everyone in terms of cost control without significantly affecting the level of medical care available in this country. The Medical Advisory Council has turned its full attention to this concept. Suggestions for cost control and research by HEW Cost efficiency and the standard of medical care available could be substantially improved by a thorough investigation into the following areas: (A) The Veterans Administration Hospitals (B) Urban County Hospitals (C) The fee basis for the poor and elderly This is not meant as a suggestion to close the VA hospitals or county hospitals. The suggestion is that patients under government programs are entitled to the same care as "private pay" patients. If the fees paid were the same, free enterprise would turn VA hospitals and county hospitals into competing hospitals, and able to withstand comparision with the "private sector”. The Medical Advisory Council supports the temporary injunction against the implementation of the revised utilization review regulations, urges a permanent injunction be granted, supports HR7000 which would continue the 82% nursing differential under medicare cost reimbursement, and rejects the concept of cost containment through reducing reimbursement levels for medicare and medicaid patients. STATEMENT OF AMERICAN NURSES' ASSOCIATION The American Nurses' Association, the professional organization of registered nurses, wishes to submit the following comments for the record of the Subcommittee hearings on selected issues in Medicare policy. We wish to comment specifically in opposition of the proposed regulation of the Department of Health, Education and Welfare to terminate the inpatient routine nursing salary differential as a reimbursable cost. We believe that the proposed termination is an arbitrary decision that would result in a reduction in the availability of nursing care for a group most critically in need of a high degree of such care. HEW cites 1972 amendments to the Social Security Act (PL 92-603) expanding the scope of Medicare coverage to include two additional categories of population (the disabled and those with end-stage renal disease) as one reason for discontinuing the differential. This change in the social security law in no way negates or destroys the need for recognizing the salary cost differential resulting from additional staffing for the above-age 65 beneficiaries. That need has been amply demonstrated by prior HEW studies. Such studies have shown that, on the average, the routine nursing care of the elderly patient is more costly than that for the remainder of the adult non-maternity patient population. It appears that despite these studies and with no new evidence to the contrary, the SSA would now terminate the cost differential. Registered nurses are acutely aware of the additional care which many patients over 65 require. For example, many of these patients have multiple diagnoses which makes the nursing care more complex and demands a higher level of supervision. The elderly patient's physiological responses and his senses are often slowed or impaired which means more time is involved in providing nursing care. He often receives a large number of medications and many times a great deal of skill and time is essential in order to assist the patient to take the medication and to observe for untoward effects of these drugs. Family members often need to be involved in patient teaching regarding care as well as in discharge planning. Some elderly patients may be confused, disoriented and may be very depressed, again requiring a great deal of knowledge, supervision, skill and time on the part of the nurse. In the area of electrolyte balance and fluid intake the elderly patients require careful monitoring. Dehydration is often a problem and one which calls for close observation and alertness. Nutritional states of the elderly are often poor and assistance with eating as well as ascertaining causes for the poor nutrition requires time, observation and supervision. HEW also contends that because of an increase in the number of special-care beds (intensive) found now within hospitals, the differential is not needed. However, the fact is that the elderly are not being cared for in these special areas in any significant numbers. Most of the over-65 group continue to receive most of their care in routine general care areas. The third explanation advanced by HEW is that changes in the Medicare cost apportionment requirement give special recognition to the greater degree of utilization to these special care units by requiring separate cost findings and apportionments for them. Again, as we have noted, the elderly, by and large, are not receiving care in these special areas. Therefore, the argument is based on a fallacious assumption. No study has shown a reversal of the original studies supporting the differential, the inclusion of two additional categories of beneficiaries does not render the differential inappropriate, and the nursing care for the elderly patients has not moved to the special care unit. Therefore, the American Nurses' Association is strongly opposed to the proposed change to terminate the nursing salary differential. It can only result in a lessening both in the quantity and quality of care for our over-65 age group of Medicare beneficiaries. We believe that this consideration far outweighs the modest cost reduction that might be realized by ending the differential. WELBORN BAPTIST HOSPITAL, DAN ROSTENKOWSKI, Chairman, Subcommittee on Health, DEAR CONGRESSMAN ROSTENKOWSKI: As a representative of the Board of Directors of the American Protestant Hospital Association and as Executive Director of Welborn Baptist Hospital, I am writing to indicate our support of House Bill H.R. 7000 which supports continuing the 82% nursing differential for aged Medicare beneficiaries. Our hospital would lose substantial cash flow by eliminating the 8%% nursing differential. For the past two years ending June 30, our records reflect that we were allowed the following differentials: June 30, 1973, $29,355; June 30, 1974, $28,191. The Department of Health Education and Welfare rationale for the elimination of the nursing differential is: (1) a significant decrease in the number of beneficiaries below age 65 (disabled and chronic renal disease patients) resulting in a more appropriate routine per diem amount; (2) a shift in caring in the aged from routine to special care and intensive care units; (3) the fact that Medicare and Medicaid separately calculate reimbursement for special care and intensive care areas. Regulation Section 405.430, which established the 82% nursing differential provided for periodic re-examination of the nursing differential by stating, "Further studies will be conducted periodically (1) to determine the amount of inpatient routine salary cost differential for the aged that is appropriate for the future, (2) to ascertain what variations in differentials should be established for such classes of providers as may be found appropriate, (3) to obtain other pertinent data of nursing care costs for maternity, pediatric, geriatric, and general medical and surgical patients." In the beginning when the 81⁄2% nursing differential was established, studies revealed that it took more nursing time to care for the elderly. This is still the case. It takes substantially more time to care for elderly people. This was found to be a legitimate cost to hospitals. The Department of Health, Education, and Welfare rationale is not what is occurring in the hospitals of today. There has been a small increase in other beneficiaries, but most of the patient days are applicable to Medicare beneficiaries over 65 years old. If this 8% nursing differential is disallowed, our cash flow will decrease by the above. We have no other source to recover other than from non-Medicare patients. We are alarmed that the bureau budget, the Department of Health, Education and Welfare, and the Social Security Administration can arbitrarily decide that the 82% differential is no longer a legitimate cost without further ascertaining by study the actual situation occurring in the hospital today. A study was made by the American Hospital Association in the beginning which documented that this was legitimate cost, and there are examples across the country where individual hospitals have done studies on their own for cost effectiveness to establish that the 82% is a legitimate cost. We are concerned about the continued effort to reduce reimbursement to hospitals through the Medicare, Medicaid, and other programs. We would encourage the support and help of those who are voting on House Bill H.R. 7000. If you have any questions in this regard, we would appreciate your calling them to our attention. Sincerely, DONALD I. GENT, STATEMENT OF THE AMERICAN SOCIETY OF INTERNAL MEDICINE, RALPH F. REINFRANK, M.D., PRESIDENT INTRODUCTION We understand the purpose of the "public oversight hearings" is to examine HEW rule-making procedures with respect to the Medicare program. The Ameri can Society of Internal Medicine has considerable concerns about the four sets of regulations cited, the manner in which they were promulgated, and whether or not they are in keeping with congressional intent. It is significant to note, however, that the authority for three out of four sets of regulations is derived from the Social Security Act Amendments of 1972 or the so-called "Christmas Tree Amendments." It is our belief that the mounting criticism of recent HEW regulations is the result not only of poor rule-making but also of poor legislation. Most of the 1972 amendments were passed with limited analysis and no public hearings. It seems obvious to us that the problems now surfacing in the implementation process of these amendments are a direct result of the regrettable manner in which the legislation was enacted. While our comments address problems we have identified in the proposed regulations and the regulatory process itself, we believe some problems may be solved only through amendments to the original legislation. We urge that you consider this alternative. Recognition of prevailing charge increases for physicians' and certain other services tied to economic indexes (Federal Register: April 14, 1975) Before commenting on the substance of these proposed regulations, we would like, again, to express the often stated concern that 30-day comment periods are, in many instances, inadequate for thorough review. This is particularly true in this case, as evidenced by the two-and-a-half year required to develop the regulations due to the complexity of Section 224(a) and the proposed regulations themselves. It seems a great disservice to Medicare recipients and the medical profession to allow only 30 days to review and comment on such important regulations. Our request for an extension of time to comment was denied. The preface to the actual proposed regulations states that, "The economic index will be based on information on charges in expenses of physicians' office practice and in general earning levels. . ." This statement is misleading and in conflict with information distributed at a pre-publication presentation by BHI officials April 11 attended by representatives of ASIM. In fact, the formula proposed at the pre-publication meeting is based on surrogate indices, not actual determinations of changes in expenses of physicians' office practice. Some specific concerns we have about the indices used in this formula for computing physician practice costs are: 1. Wages of office help are measured by changes in the earnings of non-supervisory workers in finance, industry and real estate. This may be an adequate measure of the trend of wages for clerical workers, but we do not think it reflects the wages for allied health personnel such as physicians' assistants, nurses and medical secretaries. 2. Office space costs are represented by the cost of housing for urban wage earners and clerical workers. Has there been any study of the correlation between this index and physician office space costs? We do not see that there is a necessary correlation. This substitute index may be particularly inequitable to those many physicians who rent space in prime areas. 3. For the variable in the proposed formula termed "Other Expenses of Physicians' Practice," it is proposed to use the Consumer Price Index (CPI). Besides duplicating the measurement of expenses included elsewhere in the formula, the CPI fails to take into consideration those expenses which are unique to medical practice. The appropriateness of the formula can be contested solely because it does not take into account the astronomical increases in medical liability insurance premiums. This is just one example of expenses unique to medical practice. Our concern is supported by data published in the March 31, 1975 issue of Medical Economics which states the physicians' practice expenses rose 17% in 1974 as compared with an advance of 12% for the CPI. Because the "Other Expenses of Physician Practice" constitute 34% of physician practice costs of the formula, any disparity will have a significant effect on the economic index limit. We have one serious concern regarding the computation for general earning levels: 4. The index of average weekly earnings is used as a measure of the change in the general earning levels of workers. Average weekly earnings are influenced by many factors including part-time workers, over-time, shift differentials, wage and salary rate changes, number of hours worked, industry mix, occupational mix, sex mix, age mix, etc. Changes in the index of average weekly earnings can be affected by shifts unrelated to wage and salary levels. For example, if in a recession high paying industries such as auto companies lay off a substantial number of workers, the index could decrease (or the increase could be depressed) even if the wage rates are not reduced. |