one and therefore inappropriate to be raised in a hearing. An implication that medical questions cannot be resolved in evidentiary hearings arises out of two recent Supreme Court cases. In Richardson v. Wright the Supreme Court implied, without directly holding, that hearings involving suspension and termination of Social Security disability pay. ments (which depend upon medical evidence) are not required by due process to be oral hearings; written submissions were sufficient. The Court has also held that due process does not require opportunity to cross-examine adverse medical witnesses in Social Security disability eligibility hearings. ** But to the extent that these cases imply that disputes over medical judgments cannot be resolved by administrative hearings, the implication is unfounded. Since Medicare beneficiaries can raise issues of medical necessity in appeals of intermediary retrospective denials, it would be inconsistent for SSA to contend that a hearing was inappropriate at the point of a UR Committee decision that further care was not medically necessary. The hearing procedures under Part B differ from those under Part A. apparently because Part B was conceived by Congress to be a private insurance system to supplement Part A hospital insurance. Since private insurers have never been held to an obligation to provide an appeal mechanism for their private enrollees, Congress determined that persons enrolled in Part B should not have access to the Social Security hearing system. Congress did require, however, that Part B carriers establish an internal grievance procedure. No matter how valid the characterization of Part B as private insurance was in 1965 (and the characterization was of doubtful validity then, in light of the overall statutory scheme), it is erroneous today. Part B, in which the Supplemental Medical Insurance Trust Fund (financed exclusively with general revenues) contributes at least one-half of the premium while the individual contributes the other half to the SSA, is no less a government program than Part A which is financed by Social Security taxes on earnings."" The fact that individuals contribute concurrently towards the cost of Part B, while individuals eligible for Part A contributed years earlier to the Social Security Trust Fund, is certainly no ground for distinction. Both Part A and Part B are regulated extensively by the SSA, although administrative responsibility for paying claims and setting rates of payment is contracted to private insurers. While Part A intermediaries are chosen by the Part A providers and Part B carriers are designated by the Secretary, both insurers perform parallel administrative functions. Neither insurance company assumes any risk. Therefore, one must question the validity of per 184. 405 U.S. 208 (1972). 185. Richardson v. Perales. 402 U.S. 389 (1971). 186. See Justice Brennan's dissent in Richardson v. Wright, 405 U.S. 208, 216-20 (1972). 187.42 U.S.C. §§1395t and 1395w. 188. The federal government will contribute more than one-half the premium after June 1973, since the 1972 Social Security Amend. ments limited annual increases in the beneficiaries' share of the premium to a percentage no greater than annual percentage increases in Social Security benefits. 42 U.S.C. § 1395r. 189.42 U.S.C. § 1395i. 190. Compare 42 U.S.C. § 1395h with 42 U.S.C. § 1395u. mitting a separate Part B hearing structure which functions exclusively within the insurance carrier. A hearing officer who is employed by a carrier under instructions from SSA!! to cut costs may not be impartial and may raise an issue of the hearing officer's conflict of interest. The hearing officer has no subpoena power, unlike the Administrative Law Judges in the Bureau of Hearings and Appeals;11 therefore a Part B beneficiary cannot compel presence of witnesses or documents at the hearing. Although due process of law requires the opportunity to present evidence and crossexamine adverse witnesses," this may be impossible without subpoena power. *** Due process also requires an impartial hearing officer, but it is difficult to prove that the insurance carrier's hearing officer is in fact prejudiced because of his employment by the carrier. Statistical evidence demonstrates that the Part B hearings reverse initial determinations less frequently than Part A hearings, so it may be possible to show inherent unfairness of an internal hearing system. '** Although these considerations alone might not render the Part B hearing itself unconstitutional, potential for abuse in the internal hearing system is compounded by lack of judicial review of the Part B hearing decision. An appeal step outside the insurance carrier-ideally to the courts-" could conceivably remedy the defects in the system as it obviously does under Part A. No such recourse is provided under Part B.'** 191. Cf. BLUE CROSS, supra n. 9 at 122-23. 192. 20 C.F.R. § 404.926. 193. DAVIS, ADMINISTRATIVE LAW TREATISE 408 (1958); Goldberg v. Kelly, 397 U.S. 254, 268 (1971). 194. But see Silver v. Castle Memorial Hosp., 497 P.2d at 571 (Haw. 1972). Although subpoena power derives from statutory authority. 5 U.S.C. § 555(d), 42 U.S.C. §405, and generally belongs only to government officials, it could be made available to Part B hearing officers by designating them special Administrative Law Judges for purposes of conducting Part B Hearings. 195. DAVIS. supra n. 193 at 153-61. See Hornsby v. Dobard, 291 F.2d 483 (5th Cir. 1961). 196. These SSA statistics are available from NHeLP. Elliott v. Weinberger. 371 F.Supp. 960 (D. Haw. 1974). See Justice Brennan's dissent in Richardson v. Wright, 405 U.S. at 222 (1972). 197. DAVIS, supra n. 193 at 448, notes that irregularities in the hearing procedure can logically be cured only by de novo court proceedings. The judicial review afforded to Medicare beneficiaries is not, however, de novo, 42 U.S.C. §405(g). Davis does, however, cite cases where even such narrowly limited review does cure procedural problems at the hearing. DAVIS, supra n. 193 at 449-50. 198. Of the 76 cases challenging the SSA's denial of Part A payments, courts have reversed 54 of the adverse Administrative decisions. 199. Until the 1972 Social Security Amendments some courts had held that the Medicare statute permitted judicial review of Part B coverage issues because the cases involved "entitlement” to benefits rather than "amount of benefits". Beneficiaries could raise "entitlement" questions under both Part A and Part B through the Social Security hearing process, 42 U.S.C. §1395ff, 79 Stat. 330, Pub. L. No. 89-97, § 102(a) (1965), and could obtain judicial review. However, beneficiaries could only appeal questions regarding amount of benefits under Part A. Before the clarifying 1972 amendments to §1395ff, the court in Bohlen v. Richardson, 345 F.Supp 124 E.D. Pa. 1972), aff'd sub nom, 483 F.2d 918 (3rd Cir. 1973), held that judicial review of Part B coverage issues was available since the beneficiaries were denied coverage completely-thus the question was whether the beneficiary was "entitled" to Part B payment. Congress reiterated its original intent that beneficiaries were not entitled to judicial review of Part B coverage issues. S. These differences in the hearing procedures under Parts A and B raise two possible constitutional weaknesses. The first is an equal protection infirmity based upon the creation of two classes of similarly situated Medicare beneficiaries with respect to hearing procedures. Since neither a fundamental right nor a suspect classification is at issue, however, the federal government would merely have to advance a rational basis for the distinction in treatment between Part A and Part B beneficiaries. 202 Although recent Supreme Court cases establish that a court must not merely accept any rationale which the government advances for treating differently two different groups of people, and must carefully scrutinize the reason advanced for the discrimination, 201 many courts still apply the restrictive tests of equal protection enunciated in Dandridge v. Williams and Jefferson v. Hackney, In United States Department of Agriculture v. Moreno, the Supreme Court undertook a strict scrutiny of the rationality of the reasons advanced for congressional discrimination in food stamp eligibility rather than accepting any alleged rationale for the distinction. The only apparent basis which Congress could assert to justify discriminating between the appeals processes under Part A and Part B of Medicare is that the amounts in controversy are generally lower under Part B (involving physician services) than under Part A (where institutional services are concerned). However, such a distinction is insignificant for those persons who can. not afford either service and who are wrongfully denied payment for physician care and are unable to appeal the denial of payment. One can certainly conclude after examining the Medicare program and the virtual identity of the administration and purposes of Parts A and B that there is no rational basis for creating different hearing mechanisms for Part A REP. NO. 404, 89th Cong.. 1st Sess. 55 (1965), by amending 42 U.S.C. §1395ff(b). H. REP. NO. 92-1605, 92d Cong.. 2d Sess. 61 (1972). It is clear that courts no longer have jurisdic. tion to review Part B coverage issues. Bohlen v. Weinberger, 483 F.2d at 922. 200. Shapiro v. Thompson, 394 U.S. 618 (1969). 201. Graham v. Richardson, 403 U.S. 365 (1971); Levy v. Louisiana, 391 U.S. 68 (1968); Bolling v. Sharpe, 347 U.S. 497 (1954). 202. Dandridge v. Williams. 397 U.S. 471 (1970); Gainville v. Richardson, 319 F.Supp. 16 (D. Mass. 1970). 203. United States Dep't of Agriculture v. Moreno, 413 U.S. 529 (1973); United States Dep't of Agriculture v. Murry, 413 U.S. 508 (1973). 204. Supra n. 202. 205. 406 U.S. 535 (1972). 206. Supra n. 203. and Part B beneficiaries. The second constitutional weakness, based on a due process argument. is the inequitable aspects of the Part B hearing system itself (the hearing officer and his powers) or alternatively the unavailability of judicial review to cure those procedural infirmities. It should be observed, however, that Part B beneficiaries probably have no constitutional right to judicial review, at least if the Part B hearing system is equitable. This was the principle of Ortwein v. Schwab in which the Supreme Court upheld a state law imposing a $25 filing fee upon welfare recipients seeking judicial review of an adverse administrative hearing decision. Welfare recipient plaintiffs had challenged the filing fee on both due process and equal protection grounds. The court rejected both argu. ments, stating "this Court has long recognized that even in criminal cases due process does not require a state to provide an appellate system.' .20 Perhaps the real issue, however. was, as Justice Douglas noted in his dissent, not the availability of an appellate process but the availability of initial access to the courts to review an adverse administrative determination. 100 Justice Douglas criticised the court for holding implicitly that there is no due process right to judicial review, a right for which he argued forcefully but in vain. The Supreme Court has apparently never held that due process requires an absolute right to judicial review. ." Therefore, it will be difficult, although not necessarily impossible, to challenge the unavailability of judicial review under Part B. IX. CONCLUSION It is the author's hope that this article will fill the need of advocates for elderly and disabled Medicare beneficiaries for an introduction to the complex subject of the benefits to which such persons are entitled. In order better to assist Legal Services offices, NHeLP would like to know your experiences in the field of Medicare. NHeLP is also willing to answer the many questions on the subject which this article could not address. 207. 410 U.S. 656 (1973). 208. Id. at 660. 209. Id. at 662. 210. Id. at 662-3. 211. DAVIS, supra, n. 182, at 98-99 and 154-80. STATEMENT OF THE NATIONAL SENIOR CITIZENS LAW CENTER, SALLY HART WILSON, STAFF ATTORNEY The National Senior Citizens Law Center is a Community Services Administration funded program concerned with the legal problems of the poor and elderly. Its main office is located at 1709 West 8th Street, Los Angeles, California (213483-3990), and its Washington, D.C. office is located at 910-17th Street, N.W., Suite 216 (202-872-1404). It provides backup assistance to legal services attorneys throughout the nation in handling lawsuits and other legal matters for their elderly clients. Naturally, then, the Medicare system is of vital interest to this office and to its clients. With respect to the issues selected for discussion at this hearing, the National Senior Citizens Law Center wishes to raise, briefly, the following two points: 1. In analyzing the regulations that tie increases in prevailing charges to economic indexes (Federal Register, April 14, 1975), it is important to recognize that these "charges" have long been too low because of the effect of inflation on the method by which they are determined which seriously disadvantages beneficiaries. 2. The Department of Health, Education and Welfare has been unconscionably slow in issuing these as well as mnay other regulations necessary to implement changes that Congress made in the Medicare law in 1972. Inadequate compensation of Medicare beneficiaries' Part B claims results from the interference of inflation with the process of determining “reasonable charges." A recurring complaint received by the National Senior Citizens Law Center from its elderly clients is that they do not receive adequate compensation for their Medicare Part B claims. It appears that this inadequacy results from serious malfunctions in the Part B "charge" determining system in times of inflation. Part B of the Medicare program, which covers physicians' fees, ambulance services, physicial therapy, home health services, etc., is supposed to compensate its participants for 80% of the "reasonable charges" for such services. "Reasonable charges" are determined by the fiscal intermediaries (insurance ocmpanies) that administer the Medicare program, according to a complicated formula which determines the lowest of the "actual charge," the providers' "customary charge" for the service, and the "prevailing charge" for that service in the community. The figures for each of these "charges" are supplied by an incredible mass of data gathered by the insurance companies and kept in computerized form on their "charge screens." The problem occurs because this data inevitably lags, to a greater or lesser extent, behind current charges being made by providers. In a time of galloping inflation, the charge screens used to determine the level by which Medicare beneficiaries are compensated for Part B claims would fall far below the 80% of a "reasonable charge" for which the law provides compensation. It is common for Medicare beneficiaries to report that they seldom receive from Medicare more than 50% of their doctors' bills. The remainder of the bill they are, of course, required to pay out of their own fixed incomes. This underpayment of Part B claims has reached scandalous proportions and defeats the intent of Congress in creating the Part B program. Regulations proposed by the Secretary of Health, Education and Welfare in the Federal Register on April 14, 1975 would implement provisions of the 1972 Social Security Act Amendments which limited any increases in the determination of "prevailing charges" for physicians' and certain other services covered under Part B to no more than increases in a national economic index for the relevant period. The National Senior Citizens Law Center has no problems with this provision-designed to curb inflationary increases in physicians' fees-taken in the abstract. However, when applied to the real situation that currently exists, whereby compensation for Part B claims falls grossly under that "reasonable charge" level intended by Congress, the regulations will inflict great hardship on the elderly. By further reducing the already inadequate level of actual cumpensation for physicians' services covered under Part B of the Medicare program, the proposed regulations will result in serious hardship to the elderly who are dependent on Medicare for their medical needs. First, the elderly will be forced to bear, from their own limited resources, an even larger percent of their medical expenses than they have had to bear in preceding years. To the extent that the Medicare program does not pay their physicians' entire bill for medical services, the elderly will be required to pay for the remaining portion of each bill themselves. Although Congress intended that Medicare beneficiaries would pay no more than 20% of the "reasonnble charge" of doctors' bills, it appears that they are required to pay a far greater percent from their own small incomes, a disparity which the proposed regulations will increase. Second, to the extent that the elderly, because of insufficient income, have been unable to pay their doctors the difference between the Medicare compensation rate and the actual bill, physicians have been unwilling to accept Medicare beneficiaries as patients. As this difference increases, it can be predicted that many more physicians will refuse to accept Medicare beneficiaries as patients, and it will be even more difficult than it has been in the past for the elderly to obtain the medical care that they need. Third, many of the elderly who are too proud to incur obligations that they cannot meet will decline to seek medical services for lack of funds with which to pay the difference between the Medicare Part B compensation level and the physician's actual charge. All three of these detrimental consequences of the low rate at which Medicare compensates its participants for Part B claims will be exacerbated by the restrictions contained in the regulations published in the Federal Register on April 14, 1975. The National Senior Citizens Law Center feels that the solution to the serious problems described above does not lie in a repeal of the provisions of the 1972 Social Security Act Amendments which are the basis for these regulations. We feel that some limitation on super-inflationary increases in physicians' charges are desirable. However, such limitations should not be made in a way that inflicts undue harm on the elderly whom the Medicare program is intended to help. We suggest that the fiscal intermediaries who administer the Medicare program should first be required to eliminate the current inadequacies in their compensation system that fails to register inflationary increases in a timely manner. If the intermediaries' compensation-determining system were corrected to accurately reflect real prevailing charges, then the National Senior Citizens Law Center would not be troubled by the automatic inflation-limiting provisions of the proposed regulations. The Department of Health, Education and Welfare is unreasonably delaying implementation of the 1972 Social Security Act Amendments pertaining to the Medicare program. Several of the specific sets of regulations designated for consideration at these hearings are necessary to implement provisions of the 1972 Social Security Act Amendments. It is incredible that proposed regulations implementing a 1972 law are just now being promulgated. Furthermore, these delays are typical of H. E.W.'s pattern of inaction with respect to the 1972 changes in the Medicare program. One example which shocks the conscience is the delay until January 6, 1975 of H.E.W. in issuing final regulations implementing provisions of the 1972 amendments that limit the liability of Medicare beneficiaries for disallowed Medicare claims. This law was designed to reduce the number of instances in which Medicare beneficiaries found themselves personally indebted for medical services that they in good faith expected Medicare to pay. In enacting this law, which is of great importance to the elderly, Congress provided that it would become effective with respect to all claims filed immediately after enactment of the law-October 30, 1972. Despite Congress' expressed provision that Medicare beneficiaries immediately be protected by Section 213 of P.L. 92-603, the elderly were effectively deprived of its beneficial provisions for 21⁄2 years because of H.E.W.'s inaction in implementing it. One wonders how many thousands of unexpected medical bills elderly people were forced to pay themselves and in spite of Congress' intentions because of that delay. A second, similar provision of the 1972 Social Security Act Amendments still remains totally unimplemented by H.E. W. That provision, now codified at 42 U.S.C. Sec. 1395f (h), provides that Medicare beneficiaries in need of nursing home care can be assured in advance that their care will be paid for by Medicare for a specific length of time according to type of illness. Because H.E.W. has taken no action to implement this three-year-old law, the elderly are still deprived of its protections. The National Senior Citizens Law Center believes that the intentions of Congress are being seriously hampered by unreasonably long delays of the Department of Health, Education and Welfare in taking steps necessary to implement the 1972 Medicare amendments to the Social Security Act. We urge the members of Congress to take steps to ensure that elderly Medicare beneficiaries actually receive the benefits that Congress intended in enacting that legislation. JOHN M. MARTIN, Jr., NEBRASKA HOSPITAL ASSOCIATION, Chief Council, Committee on Ways and Means, Longworth House Office Building, DEAR MR. MARTIN: Attached to this correspondence you will find a written statement which I am submitting on behalf of the Nebraska Hospital Association for inclusion in the record of the Oversight Hearings, which I understand are to be conducted by the Subcommittee on Health on June 12, 1975. In summary, it is the position of the Nebraska Hospital Association that the new regulations on utilization and review, to be implemented July 1, 1975, taken together with the scheduled termination of the eight and one-half percent Medicare nursing salary differential, will futher shift to the private patient cost burdens which are legitimately that of the Medicare program. Further, it is our contention that the impact of this action will be felt most critically by small rural hospitals . . . of which Nebraska has a great many and could conceivably result in some of these institutions ceasing operations altogether. For this reason, we believe that the imposition of these new regulations is in direct contravention of the intent of Congress and should, therefore, be rescinded by Congressional action. If the Subcommittee or its Staff desires additional information from our organization, we shall be most happy to provide it. Sincerely, Enclosures. RONALD L. JENSEN, Associate Executive Director. STATEMENT OF THE NEBRASKA HOSPITAL ASSOCIATION SUBMITTED BY Mr. Chairman and members of the Subcommittee on Health, exclusive of state institutions, there are 101 member hospitals of the Nebraska Hospital Association. Of that number, 84 are institutions of fewer than 100 beds. Most of these hospitals are located in small, rurally based communities, many of them of less than a thousand population. At the same time, the patient mix of these hospitals contains a significant number of elderly Medicare recipients . . . often a majority of the population utilizing the hospitals' services. Nebraska does, after all, number third among all the states in the proportion of its total population aged 65 and above, and to a great extent our elderly population tends to be concentrated in Nebraska's small towns and rural areas. This information is offered to demonstrate that any significant tampering with the rules and regulations governing the Medicare program, its operation and the reimbursement which providers receive through the program, is of no small moment to the great bulk of Nebraska hospitals. In many of our communities, the provision of acute care to the elderly is the major function of the community hospital, and consistent with this, such care also constitutes the hospital's major source of revenue. . . revenue which must be present in an amount sufficient to underwrite the costs of operation, if the institution is to survive. Over the past decade, these hospitals, their officials and trustees, have found themselves increasingly painted into a regulatory and fiscal corner by the continuing series of rules, regulations and administrative decrees which have governed their continued eligibility for participation in the Medicare program. These institutions have been forced to institute a plethora of additional recordkeeping procedures, physical plant alterations, equipment acquisitions and personnel additions or face loss of eligibility for Medicare reimbursement. The Medicare program does, of course, reimburse the hospitals for costs of these actions, but only to the extent that said cost is deemed allowable, and then only that portion of the total outlay which can be directly attributable to Medicare patients. This means, quite simply, that the balance of the cost. . . whatever portion of the total cannot be attributed to Medicare pateints, as well as any costs not deemed "allowable," must be passed along to the non-Medicare patient. And while the general patient population could conceivably benefit from some of the changes and adjustments instituted at the behest of Medicare, it can be seriously questioned whether that benefit has been anywhere near proportionate to the increased costs which the private patient has been forced to shoulder because of Medicare regulations. |