they have not been undertaken. The reasons set forth by the Department of Health, Education, and Welfare in the Federal Register for the termination of the nursing salary cost differential do not in any way alter the basis on which this differential was established, but simply refer to the extension of program benefits to certain categories of patients not covered in 1969 and the establishment and utilization of certain provider service facilities, i.e., intensive care, coronary care, etc., for all patients in need of such care.

For the twenty-two million persons, sixty-five (65) years old and over who comprise the very vast majority of those eligible for Medicare benefits, the additional nursing service provided for such patients is and will continue to be the standard procedure for hospitals.

Title XVIII requires the Medicare Program to pay its full costs and not be subsidized by other users of hospital services. Lacking evidence to the contary, we must conclude that this proposed denial of appropriate Medicare reimbursement is designed to force the subsidization of Medicare by the private patient, or a reduction in hospital services.

Although the contract under which hospitals participate in the Medicare Program is subject to Medicare law and applicable regulation, such contract should only be amended by agreement of all parties. The federal government, it appears, is attempting to amend such agreement by regulation and without the consent of hospitals.

We therefore request the above captioned proposed regulation be withdrawn and the studies of the nursing services referred to in Medicare Regulation 405.430 (c) be undertaken and the results reviewed with appropriate hospital representatives, before any new regulation concerning the 82% nursing salary cost differential is proposed.

Thank you for your consideration of our comments.

Sincerely yours,

Re Proposed regulations published in the April 17, 1975 Federal Register to revise the schedule of limits on hospital inpatient general routine service costs under section 223 of P. L. 92-603.

MR. JAMES B. CARDWELL,

Commissioner of Social Security, Department of Health, Education, and Welfare, Baltimore, Md.

DEAR COMMISSIONER CARDWELL: I am writing to you on behalf of the Chicago Hospital Council and its member institutions, with respect to the above captioned regulation.

The proposed revision in the limitation on hospital inpatient general routine service costs continues to lack the most feasible detailed basis upon which such cost limitations can be fairly determined. Standard Metropolitan Statistical Areas and bed size remain the basis upon which hospital cost reimbursement limitations are effected. The Secretary of Health, Education and Welfare is authorized under existing Regulation 405.460, to use additional factors such as educational programs, patient mix or scope of services in classifying hospitals. We find that no direct provision has been made in the revised classification system for these factors.

In addition, we believe the impact of the above captioned proposed revision will require an excessive number of hospitals to be effected by the new grouping scheme and by the reduction of the limitation formula from the 90th to the 30th percentile, which will cause such hospitals to incur the expense and delay of a review by their intermediary for reclassification, exception or exemption from the cost limits to be imposed if this proposed regulation is effected.

Other adverse consequences which we foresee if the aforementioned regulation is implemented as proposed are, a reduction in cash flow, increases in bad debts if supplementary charges to the Medicare patients are imposed, and in general a threat to the hospital's community health service and training role.

We therefore respectfully request your reconsideration of the above captioned proposed revision of the Schedule of Limits on Hospital Inpatient General Routine Service Costs, in order that a more equitable basis of comparison of costs among hospitals may be established, in accordance with Regulation 405.460.

Very truly yours,

HOWARD F. Cook,

President.

Statement of LARRY K. ULRICH, D.-MIN., on Behalf of the Church of the BRETHERN GENERAL BOARD

I am Larry K. Ulrich, 614 S. Wesley Avenue, Oak Park, Illinois. I am a minister of the Church of the Brethren and serve as Chairman of the Annual Conference. Committee on Health and Welfare, Church of the Brethren, which relates to our twenty-two hospitals and homes for the aged which, in turn, provides a ninetymillion dollar ministry of health care. I am Director of Pastoral Administration of Rush-Presbyterian-St. Luke's Medical Center and teach in the area of medical ethics as an Assistant Professor at Rush Medical College, Chicago, Illinois. This statement is submitted on behalf of the Church of the Brethren General Board located in Elgin, Illinois. The General Board is the top administrative body of our denomination which includes approximately one thousand congregations across this country.

In 1775 two of the most pressing concerns felt by the colonists were repressive taxation without representation and autocratic and despotic decision making by governmental leaders. Ironically, as we approach the bicentennial celebration of the birth of our nation, we are re-living similar contexts where autocratic decision making and repressive taxation are occurring through our Social Security Administration-an agency specifically mandated to care for our least fortunate

citizens.

The commitment to care for our aged

The Social Security Administration, through Commissioner James B. Cardwell, is in the process of implementing modifications in the policy and program of Medicare (P.L. 89–87) by breaking the covenant with and commitment to the medical care for the aged which Congress provided in Section 223 that the "reasonable cost of any services shall be the cost actually incurred, excluding therefrom any part of the incurred cost found to be unnecessary in the efficient delivery of needed health services . . .". This commitment by Congress in behalf of the American people was a guarantee to the aged that their medical care services would be provided irrespective of their ability to pay for those services.

Additionally, on July 30, 1965, when this Medicare law was enacted, explicit direction was given that such costs with respect "to individuals covered by the (Medicare) insurance programs . . . will not be borne by individuals not so covered." What is about to occur is that the proposed changes by the Social Security Administration will negate direction given by Congress to provide for adequate care at reasonable cost, and will in effect impose a repressive tax on every person utilizing hospital and health care facilities to compensate for the inadequate coverage to be provided through the Social Security Administration. Proposed regulations to terminate the in-patient routine nursing salary cost differential and to implement a new schedule of limits on hospital in-patient general routine service costs (Federal Register, April 17, 1975) is unjust and unlawful because Medicare patient costs will not be covered and will be passed on to non-Medicare patients.

We join with the American Protestant Hospital Association, with which our institutions are affiliated, in vigorously protesting the implementation of the proposed change in regulations, scheduled to take effect on July 1, 1975. We are joining the opposition that you have heard from the American Hospital Association, Catholic Hospital Association, the Federation of American Hospitals, the American Osteopathic Hospitals Asociation, and the American Association of Medical Colleges.

With the enactment of the Medicare legislation on July 30, 1965, the Social Security Administration recognized that aged patients require more nursing care than other patients. Through testimony presented by Commissioner Robert A. Ball before the Committee on Finance, United States Senate, Eighty-ninth Congress, Second Session, May 25, 1966, the Social Security Administration reaffirmed that "time and motion studies show older people use somewhat more nursing services" than non-Medicare patients. Mr. Ball stated, "(It) does take them somewhat longer to admit, it does take them a little longer to get through an x-ray process, and so on. ." Since this statement, there have been numerous studies showing that patients over sixty-five years of age request and receive more extended care than the general patient population, specifically requiring greater assistance in feeding, in ambulation, in maintaining personal cleanliness, in receiving medications, and sensitive and responsive medical care.

As the Medicare program began in 1966 there was a general "two per cent" factor to compensate for this additional medical and nursing care. Beginning in

July 1, 1969, and for the fiscal years following that date, the additional costs of Medicare nursing have been reimbursed through an in-patient routine nursing salary cost differential of 81⁄2 percent, which the proposed regulations would eliminate. Recent surveys by the Commission for Administrative Services in Hospitals show that Medicare aged beneficiaries require 28 percent more care than the under sixty-five patient population.

Source: Data compiled by Commission for Administrative Services in Hospitals.

Even with documentation that aged patients require above average nursing care in routine care units, and even with the explicit Medicare regulations requiring that "further studies will be conducted periodically. . . to determine the amount of an in-patient routine nursing salary cost differential for the aged that is appropriate in the future," (20 C.F.R.-405.430 (c) (1)), the Social Security Administration now proposes to eliminate this differential without having conducted such studies. This violation cannot be justified by the arguments presented by the Social Security Administration to support its proposed changes in compensation of delivered services. The S.S.A. has argued that there has been an expansion of special care units and that more Medicare patients are being treated in such units, and therefore it presents the thesis that the special needs are being met through intensive care of aged patients. None of our experience verifies that argument. Medicare has not and does not currently pay for the differential for care rendered in special or intensive care units. We would propose that if studies were conducted of these units, the results would show that aged patients require even more care within those units than other patients. The second argument presented by the S.S.A. for eliminating the nursing cost differential is that there are expanded coverages for disabled and end-care renal disease patients. This argument is also inaccurate. The highest estimate given for the total number of disabled and endcare renal patients is approximately nine percent of the total reimbursements. How can that possibly justify eliminating the nursing care differential for the aged patients?

Preliminary estimates show that during fiscal 1974, of the 48.4 billion dollars paid to hospitals and nursing homes for care of all patients, 17.1 billion dollars (35 percent) was paid by the federal government, principally through Medicare and Medicaid. Medicare and Medicaid patients represent over one-third of all hospital patients. The modifications and regulations to compensate for the care of Medicare patients threaten the very structure and feasibility to remain financially viable of our hospitals and nursing homes. The proposed classifications in schedule of limits on hospital in-patient general routine service costs being presented by the Social Security Administration does not and cannot cover the costs of aged patients, which will be passed along to other patients directly and indirectly through third party and insurance payers. Even within the proposed bed-size categories the dollar reimbursements show gross inequities by S.S.A.:

Notice that all hospitals in the preceding chart in S.M.S.A. Group 3 would have the same $89.00 ceiling (with the exception of hospitals with 100-404 beds, which would have an $88.00 ceiling) regardless of their size, patient mix, or scope of services. Similarly, jumps are made in this scale that do not reflect adequate administrative decision making, e.g., in S.M.S.A. Group 1, if you are a hospital with 684 beds, $133.00 would be paid per patient day, while a hospital with just one more bed (685) would receive $170.00 per patient day.

National health insurance commitments

The Church of the Brethren through its General Board and through statements approved by the 1974 Annual Conference has chosen to support a comprehensive national health insurance program. (See testimony presented before the House Ways and Means Committee on July 1, 1974, and before the Subcommittee on Health, Committee on Ways and Means, on March 6, 1975.) This endorsement is on the basis that when our government makes a commitment, that commitment will be honored. This is vital for the interpretation of a national health insurance program. If the proposed regulations changing the reimbursement procedures by the Social Security Administration are allowed to occur, we believe that American citizens cannot trust that if a national health insurance program were initiated the same promises would be kept a decade later. The experience of refusing to cover all "reasonable costs" by the Social Security Administration for the aged is a disastrous precedent which would jeopardize any sense of continuity for comprehensive national health care.

It is tragic that in these days we are re-living the same issues of 1775. It will be even more tragic if the Congress allows inept and autocratic decisions to be implemented which will harm the aged and jeopardize future health care planning. Fulfilling commitments to our aged citizens through medicare

On behalf of the Church of the Brethren General Board and the Annual Conference Committee on Health and Welfare, I urge you to implement all the necessary steps to reinstitute control of the Social Security Administration to follow legal guidelines established by Congress and to guarantee adequate health care for our aged citizens through Medicare. We support the principle to require the continued application of the nursing salary cost differential of at least 81⁄2 percent which is presently allowed in recognition of the above-average cost of furnishing adequate care to aged patients. This principle is the basis of the current Hannaford bill, H.R. 7000, to amend title XVIII of the Social Security Act.

SOUTHERN CALIFORNIA ORTHOPEDIC,
SURGICAL/MEDICAL GROUP, INC.,
Los Angeles, Calif., June 12, 1975.

MR. JOHN MARTIN,

Chief Counsel,

House Ways and Means Committee,

Washington, D.C.

DEAR MR. MARTIN; Please give consideration to continuation of blocking implementation of HEW's present utilization review regulation, requiring hospital review committees to evaluate decisions by attending physicians who are hospitalizing Medicare patients.

Having spent a great deal of time involved in this type of work, I feel that the cost effectiveness is extremely low and the probability of complicating medical decision making is increased. I would be glad to discuss this further with you or representatives of your office.

Sincerely,

SONNY P. COBBLE, M.D.

PHILADELPHIA, PA., June 12, 1975.

Hon. DAN ROSTENKOWSKI,

Chairman, Subcommittee on Health,
Committee on Ways and Means,
Washington, D.C.

DEAR MR. CHAIRMAN: Coopers & Lybrand, an international firm of Certified Public Accountants, is deeply concerned about the policy formulation and implementation of regulations as they affect hospitals under the Medicare program. We support the development of fair and proper regulations relating to health care legislation, not only as a socially conscious firm but also because we have many years of experience and a wide practice in the health care field. Our partners and professional staff serve as auditors and financial advisors to hospitals and other health care providers, third party payors, and federal, state, and local governmental bodies concerned with financing and delivery of health care. As a result, we believe we are uniquely qualified to furnish impartial and objective comments on the subject regulations. This statement is submitted solely on behalf of Coopers & Lybrand and not for any clients whether they be providers of health care, intermediaries, or the government.

We will limit our comments to two of the four regulations mentioned in the May 19th press release: (1) the schedule of limits on hospital inpatient general routine service costs; and (2) the termination of the inpatient routine nursing salary cost differential.

LIMITS ON INPATIENT ROUTINE COSTS

In summary, we believe that:

The regulations do not follow the legislative intent in that the grouping of hospitals does not give recognition to specified cost factors.

The methodology based on per capita income is improper and leads to exaggerated results.

The range of bed sizes is too wide to provide reasonable classifications.

The exception procedure is grossly inadequate.

Failure to follow legislative intent

The report of the Ways and Means Committee (No. 92-231) on the Social Security Amendments of 1972 (P.L. 92-603) states:

To the extent that differences in provider costs can be expected to result from such factors as the size of the institution, patient mix, scope of services offered, or other economic factors, wide, but not unlimited recognition should be given to the variations in costs accepted as reasonable.

The Department of Health, Education, and Welfare's methodology does not meet congressional intent, does not group "similar" hospitals, and has the potential to deny reimbursement of incurred costs that are in every way reasonable. It fails to recognize those elements which Congress intended to be employed in the grouping of similar hospitals.

Congress stressed patient mix, nature and scope of services, and economic conditions as well as location and bed size as factors which should be considered in analyzing institutional efficiency. The only factors considered in the preparation of the schedule were bed size. location, and per capita income. It is not possible to distinguish between excessive costs and higher quality or intensity of care based on this methodology. This is a serious and fundamental deficiency which must be corrected.

In addition to failure to comply with legislative intent, the regulations are lacking in logic and rationale. The basic problem lies in the acknowledgment in the proposed regulations that no direct provision has been made in the revised classifications for the effects of factors such as educational programs, patient mix, or scope of services, for the reasons that bed size has been shown to be correlated with these factors and that the variables tested to reflect these factors more directly did not show promise of significant improvement. In a very general way