Mr. JOHN MARTIN, Committee on Ways and Means, GALVESTON COUNTY MEDICAL SOCIETY, DEAR GENTLEMEN: Following comments are directed to the Ways and Means Committee with respect to the "Oversight Hearings" scheduled to be held on June 12th by the Health subcommittee. 1. Utilization Review Regulations, scheduled for implementation on July 1st have been studied by appropriate committees of hospitals in our County and efforts to comply with these regulations have pointed up the uselessness of this approach, and the burden placed upon the medical staff to comply will result in decreased efficiencies and ultimately hinder carrying out the mission of the hospital which is the rendering of the highest quality medical care possible. 2. This is to strongly object to the criteria for determining reasonable charges for physicians using an economic index selected by the secretary, HEW. PAUL J. CUNNINGHAM, M.D., President. Mr. JOHN MARTIN, Committee of Ways and Means, SAN AUGUSTINE, TEX., June 2, 1975. Longworth House Building, Washington, D.C. DEAR MR. MARTIN: It is my understanding that on June 12, the Health Committee of the House Ways and Means Committee will hold over-sight hearings on some of the Medicare regulations. I would certainly like to express to you my opposition to the PSRO concept in general and in particular the utilization review regulations schedule to go into effect on July 1; second, criterion for determining reasonable charges for physicians by using economic index selected by HEW secretaries, as many of those in Washington, D.C. and bureaucratic offices in general are beginning to see the whole Medicare concept has been one gross expensive burden on the working American public that has caused the cost of medical care to escalate considerably since its conception. I think Congress and those bureaucracies associated with Medicare need to fully realize and understand that a large part of the Medicare and medical cost dollar is now going to those in positions of administration, regulation, overseeing, etc. This is an area that has been traditionally between the doctor and patient. It is this big-brother attitude by government or care from cradle-to-grave that has caused many of the problems we are now seeing in the practice of medicine as well as a bankrupt social security system that is trying to carry the burden of Medicare. Why not let's all work together and go back to the concept of direct payment from patient to doctor and eliminate the unnecessary expense that we are all witnessing and having an increased harmony between doctor and patient without third party interference. Sincerely, CURTIS R. HALEY, M.D. HARDIN COUNTY GENERAL HOSPITAL, JOHN M. MARTIN Jr., Chief Counsel, Committee on Ways and Means, DEAR MR. MARTIN: My name is Phillip Langst ›n and I am the Administrator of the Hardin County General Hospital located in Savannah, Tennessee. I am enclosing my full statement of opposition to the termination of the 8%% nursing salary differential. If the proposal to eliminate the differential is carried out our hospital will have to follow one of the following avenues: A. Reduce our staff and therefore lower the quality of care to all our patients. B. Raise our rates so all non-medicare patients will make up this difference. C. Pass this cost on to medicare patients in the form of non-medicare covered services. My enclosed letter details how this legislation affects just one small rural hospital and points out why the nursing salary differential should continue to be figured into the Medicare reimbursable cost to health care providers. Respectfully submitted. PHILLIP W. LANGSTON. STATEMENT OF PHILLIP W. LANGSTON, ADMINISTRATOR, HARDIN COUNTY GENERAL HOSPITAL, SAVANNAH, TENN. As the administrator of the Hardin County General Hospital located in Savannah, Tennessee, I must strongly protest the proposed elimination of the 8%% in-patient routine nursing salary cost differential as published in the Federal Register, Volume 40, Number 65, April 3, 1975. Our census last fiscal year averaged 55 patients per day and of that 54% of our patient days were medicare days. Based on last years figures our hospital will lose $.58 per patient day or approximately $5000.00 per year. In 1971 SSA acknowledged that aged medicare patients required more nursing care than the routine non-medicare patient. It is my understanding that the differential was devised to help cover this increased level of care these patients require. If the proposal to eliminate the differential is carried out we will have to follow one of the following avenues: A. Reduce our staff and therefore lower the quality of care to all our patients. B. Raise our rates so all patients are forced to make up this difference. C. Pass this cost on to medicare patients in the form of service not covered by medicare. As a hospital administrator, I cannot with a clear conscience see taking any of the above options as an answer to recouping this loss. My hospital is located in a rural area and we are the only hospital in a growing community of 19,000 population. Because of these factors we provide medical care to more than our share of elderly patients. It is difficult enough under present medicare reimbursement policies to meet costs and have fiscal resources left over to update plant and equipment, inservice personnel, increase patient services and give minimal salary increases. In closing, I urge the committee to reconsider the decision to eliminate the 82% nursing differential. I do not see any way this can contribute to better patient care which should be the main objective of all professionals in the health care field. STATEMENT OF THE HOSPITAL COUNCIL OF NORTHERN CALIFORNIA, L. G. WOODCOCK, DIRECTOR, FISCAL SERVICES Mr. Chairman, The Hospital Council of Northern California is an association of 150 acute care hospitals. Our membership is extremely concerned with the REVISION IN THE SCHEDULE OF LIMITS ON HOSPITAL INPATIENT GENERAL ROUTINE SERVICE COSTS-REDUCTION FROM 90TH TO 80TH PERCENTILE (FEDERAL REGISTER MAY 30, 1975). Revisions to the Social Security Act, Section .1861(v)(1), contained in P.L. 92-603, Section 223, relate to the determination of "reasonable cost" and specify that such cost shall be the cost actually incurred, subject to the exclusion of costs found to be unnecessary in the efficient delivery of needed health services. Section 405.460(a) was amended, effective July 1, 1974, to place a limit on the per diem reimbursement for inpatient routine service costs based on the hospital's inclusion or exclusion within a Standard Metropolitan Statistical Area as defined by the Office of Management and Budget. The limit was set at the 90th percentile plus 10 percent of the median. The 1975 regulations reduce the limit to the 80th percentile, plus 10 percent of the median, subdivide the SMSAS in per capita income groupings, and delete provision for consideration of the effects of factors such as educational programs, patient mix, or scope of services. The Commissioner states that these changes "improve the initial system," and "better identify hospitals whose costs are substantially higher than those deemed necessary for efficient delivery of hospital inpatient general routine services." On the contrary we believe that the revised regulations and the lower per diem limitation will simply and effectively reduce payment to hospitals far below a level which could by any rational determination be considered reasonable. We would also like to note that amendments to Social and Rehabilitation Service regulations will have a "domino effect" by reducing reimbursement to all providers of Medicaid services also. Appended below are comments by member hospitals as to the effect this regulation change will have on their Medicare reimbursement. For the sake of brevity the comments are excerpts from letters received. In each case the name and address of the hospital has been appended. "The proposal of the Social Security Administration to revise the limitation on inpatient service costs under the provisions of Section 223 of Public Law 92-603 is unreasonable and will be of serious detriment to our hospital and the people that we service. "Redding is 170 miles from Sacramento and the cost of providing specialized services in Redding is even more expensive because of being further removed from the major centers, i.e., supplies, services, etc. involve additional travel time. "Based on our proposed budget for our current fiscal year, this would mea an loss in cash of $80,000 dollars." MERCY HOSPITAL, REDDING, CALIFORNIA We strongly urge the Social Security Administration to withdraw its proposal to revise the limitations on Medicare reimbursement of inpatient service costs. Whereas it is anticipated that routine service costs for 1975 will be approximately $113.00 per patient day, as compared to a proposed limitation of $112.00 per patient day, we will be immediately effected. As a result, we will be forced to pass the burden of unreimbursed costs along to patients in order to survive. It is our contention that the SMSA groupings are invalid in that they do not recognize the difference in services as between hospitals of like bed size. Furthermore, they do not consider the differing socioeconomic makeup of the patients served in a particular geographic area a factor which determines the amount of bad debt losses incurred and the amount of charity care provided. With respect to charity care, I might add that the proposed changes place a particularly heavy burden on hospitals such as ours, which are required under the Federal HillBurton regulations to provide a certain amount of charity care." HERRICK MEMORIAL HOSPITAL, BERKELEY, CALIF. 94704 Our estimated per diem cost for general nursing care units for our fiscal year ending 9/30/75 will be $96.26. It is estimated that this same cost for the fiscal year ending 9/30/76 will approximate $106.00. The scheduled maximum reimbursement for a 99 bed hospital in California SMSA Group III for the fiscal year ending 9/30/76 appears to be $92.55—or a cost difference of $13.45 per patient day. Apply this figure to the anticipated Medicare patient load and you arrive at unrecovered costs of $103,000. Since we are talking about cost that has to be recovered, we would have to increase our rates to our tax-paying, nonprogram patients by a minimum of $12.00 per patient day. VALLEJO GENERAL HOSPITAL, VALLEJO, CALIF. 94590 The basis of the proposed regulations is that certain geographic areas within a state have income levels and related economic characteristics which are significantly different from those of other geographic areas in the same state. The regulations, therefore, establish different reimbursement levels for the geographical areas using the SMSA classification system to provide the boundaries of those areas. The result is an extremely arbitrary system because hospitals located in different parts of a given SMSA can and do have significant variations from that SMSA as a whole. Hospitals located on the fringe of a SMSA may have their operating costs substantially, or even totally, affected by the economic factors of the adjoining county or SMSA. Our Hospital, being located in the San Francisco Bay Area, appropriately illustrates the result that such an arbitrary selection of dividing lines can have: Under the revised schedule of limits, Stanford is in "SMSA Group II" since we are geographically located in Santa Clara County (San Jose SMSA). The new limit for this group and our bed size is $96.00 per day, a decrease of $30.48 from the current limit of $126.48. This will result in a minimum decrease in reimbursement of approximately $1,495,000 at current cost levels. If the proposed limitations are ultimately implemented, they will result in a substantial shift of Medicare costs to the non-Medicare patients in violation of the fundamental principle incorporated into the Medicare law, i.e., no part of the share of the total institutional cost attributable to services furnished Medicare patients should be borne by other patients. STANFORD UNIVERSITY MEDICAL CENTER, STANFORD, CA. 94305 Beyond protest there is little that our hospitals can do to prevent the implementing of these regulations. However, in a real world of ever-increasing costs and ever-increasing reductions in the reimbursement of these costs, it is not difficult to see the end result. True, the hospitals could refuse to accept Medicare patients except on an emergency basis. Since thirty to sixty percent of the patients are Medicare beneficaries, this would lead to the immediate closing of most hospitals. Or the hospitals can continue to accept less than cost reimbursement on an everdiminishing scale and close down one-by-one. The only alternative is legislative action to require the Social Security Administration to adhere to the purpose of the Medicare program and to reimburse hospitals (note that we say hospitals, since these punative regulations are directed at no other segment in the healthcare field) for the full reasonable cost of providing care to Medicare beneficiaries. Mr. JOHN M. MARTIN, Jr., HUNTINGTON MEMORIAL HOSPITAL, Chief Counsel, Committee on Ways and Means, DEAR SIR: I am President and Chief Executive Officer of the Huntington Memorial Hospital in Pasadena, California, a 565 bed community non-profit hospital in which one-half of the patients are of 65 years of age or older. I address you as the executive head of this institution and in doing so voice the view of our corporate board whose address is 100 Congress Street, Pasadena, California 91105. The conditions of Medicare Law 89-97, gave some recognition, in the 81⁄2% allowance on reimbursement of cost, for the additional care, particularly nursing attention, required by most of the elderly sick. This minimal allowance of 8%%% has not met equitably the costs which we have determined in our own study and also through industrial engineering examination by independent consultants. By detailed examination the nursing care of patients 65 and older is demonstrated to be 122% of the standard established for other patients, both seriously ill medically and/or in acute post operative recovery. For our established load of 52,000 Medicare patient days the deletion of the 82% allowance will result in reducing our annual revenue by $120,000. The impact of this leaves us the recourse of either reducing the standard of patient care and/or further increasing cost rates to other patients. Neither of these alternatives is acceptable as an equitable arrangement nor morally just. I do not believe that those responsible for the provision of financial support to aged beneficiaries under the Social Security program would wish to endorse either of these alternatives cited. May I assure you that the stated plan for further study and testing of the nursing differential was an appropriate stance for the Secretary of Health, Education, and Welfare to take. To now arbitrarily, and without examination of this cost factor to hospitals, delete the allowance summarily is unbelievably short-sighted. It has been mentioned that Medicare benefits now extend to patients of less than 65 years of age. By recent analysis we find that less than 41⁄2% of our patients come under this coverage. While our own hospital has not been handicapped by the Medicare Schedule of Limits on Hospital Inpatient General Costs, this too results in unfair reimbursement to some hospitals whose community service load characteristics are not recognized in such arbitrary payments. I join my colleagues in other hospitals to protest the proposed new revision of this arrangement, which as announced will only worsen the inequity. Legislative consideration of these serious threats to hospitals throughout the nation is respectfully asked and we endorse HR 7000, submitted by Representative Hannaford. Sincerely, W. KEVIN HEGARTY. STATEMENT OF THE IDAHO HOSPITAL ASSOCIATION, JOHN D. HUTCHINSON, EXECUTIVE VICE PRESIDENT INTRODUCTION The following statement has been prepared by the Idaho Hospital Association for the Subcommittee on Health of the House Committee on Ways and Means. This statement represents the views of the membership of the Association as approved by resolution of the Board of Trustees of the Idaho Hospital Association. The Association represents 46 of the 47 general acute and rehabilitation hospitals of the State, in addition to the 3 state and 2 federal hospitals. The statement deals directly with the hospitals of Idaho's opposition to the implementation of the utilization review regulations for Titles V, XVIII and XIX, the elimination of the 8%% Routine Nursing Salary Differential and the reduction in the schedule of limits on hospital inpatient general routine service costs from the 90th percentile to the 80th percentile plus 10% of the median. UTILIZATION REVIEW REGULATIONS The Idaho Hospital Association maintains that the utilization review requirements which must be fully operational by July 1, 1975, in order to meet the conditions of participation for Titles V, XVIII and XIX are unnecessary, counterproductive and will increase the cost of providing hospital or nursing home services rather than reduce them. This will especially be true in rural states such as Idaho. The "purpose" of these regulations is theoretically to reduce the number of admissions which are not medically necessary or could be cared for on a different level, as well as assign an acceptable length of stay. The effect is to reduce federal payments or reimbursements to hospitals and nursing facilities without reducing the admissions or lengths of stay significantly. The average length of stay for all patients in Idaho is 5.38 days compared to a national stay of 7.82 days. While the percent of admissions to population is .3% higher than the national average, the beds per 1,000 population is 3.5 compared to 4.3 nationally and the occupancy rate is 64.2% compared to 75.7%. These statistics tend to show that Idaho is not admitting patients who do not need to be there and that when patients are admitted, they are assigned a short length of stay. This is true for all diagnostic and operative categories. Therefore, while Idaho is comparable in its admissions per 1,000 population, patients tend to be more acutely ill, stay for a shorter length of stay and use fewer beds. In addition, the cost for providing care is minimal. The average cost per case in Idaho is $608.62 compared to $895.83 nationally or to compare case cost per capita in Idaho it is $93.73 while nationally it is $135.27. The result of such regulations then is to require hospitals to spend additional sums of money to employ specialized people to perform admission certification duties, provide assistance to the medical staff to develop procedures and methodologies, and establish another layer of paperwork. All of this costs additional sums of money of which the hospital only receives a portion back-that percentage related to the federal program percentage of patient days in the facility. The other commercially insured and private patients must make up the difference. The result may be a small savings in reimbursements, but an increased cost in administration. In Idaho, where the length of stay is low and usage of services is low, the administrative costs will far outweigh any savings associated with Title V, XVIII and XIX reimbursements. If one looks at the ability of rural hospitals or even medium-sized metropolitan hospitals to meet these regulations, one soon discovers that it is extremely impractical if not almost impossible. Of the 47 acute care or rehabilitation hospitals in Idaho only 2 are larger than 200 beds (212 and 227), 33 are under 50 beds, 3 are between 50 and 60 beds, and the rest are over 100 beds. The average bed size is 59 compared to 155 nationally. This means that these hospitals are using their personnel to the fullest. There is currently a shortage of licensed nursing personnel and medical records personnel in many of these areas. In order for a hospital to meet the requirements, it is necessary to have highly qualified nonphysician professionals available to do the screening and assign lengths of stay. These people must also be able to relate to physicians and make clinical assessments and determinations. While in some instances these duties would not require full-time attention, the general experience is that all the responsibilities do require a fulltime person if the job is to be done right. To take this type of individual away from patient care or other duties creates even greater pressure on the small hospital |