Now, two recent regulatory actions by the Social S3curity Administration promise to further aggrevate an already critical situation, and could, conceivably, force the closing of many smaller rural hospitals. Specifically, the actions referred to are the revised utilization review regulations, effective July 1, 1975, and the elimination of the 8Q nursing service differential for Medicare patients, effective with cost reporting periods beginning July 1, 1975. Taken together, these regulatory actions shall impose a fiscal and administrative burden which threatens to break the backs of many fine community hospitals. UTILIZATION REVIEW Hospitals participating in the Medicare program have, since its inception performed utilization review, and have no quarrel with the value of the activity in its present form. However, the new regulations, by requiring the participation of two physicians . . . and prohibiting the participation of any person "professionally involved" in the care of the patient being reviewed. . . is all but unworkable in a hospital which may have only one or two physicians on its staff. And there are many Nebraska hospitals in exactly this situation. Essentially, the only way these institutions can hope to comply with this fiat is to employ physicians from outside the community to participate in the review process. And in turn it can be expected that the community's local physician(s) will need to reciprocate by participating on the review committee for the community twenty-five or fifty miles up the road. We are, therefore, faced with a situation where practitioners in rural areas, many of which are critically medically underserved, will be taking time away from the care of sick people to run hither and yon about the countryside to Monday-morning-quarterback the professional medical judgment of their colleagues. If human life and well-being were not involved, the situation would be almost ludicrous. In addition to the hurdle imposed by assessing personnel to perform the arduous and detailed reviews called for in the regulations, small hospitals, and larger ones too, for that matter. . . are going to again find it necessary to add personnel to their clerical staffs (many of which have quadrupled since 1965) to cope with the literal mountain of paperwork which the new regulations will impose. Not only is much productive time squandered in chasing forms about, but this kind of effort is expensive, and again, it is all but certain that the Medicare reimbursement formulae will force a significant portion of the cost of the exercise onto the health care bill of the private patient. . .. as a back-door form of taxation and in contravention of the expressed will and intent of Congress. THE EIGHT-AND-ONE-HALF PERCENT NURSING DIFFERENTIAL Even more critical than the imposition of the new utilization review regulations, as far as the continued viability of the small community hospital is concerned, is the elimination on July 1, 1975 of the 82% Medicare nursing salary differential. As stated previously, it is not uncommon for Nebraska hospitals serving rural populations to number Medicare patients as constituting a majority of their patient days. Further, it is a well-documented fact that these aged patients do require a greater outlay of nursing manpower, as demonstrated in the original Social Security Administration study which affixed the differential at 81⁄2%. Part of SSA's justification for eliminating the differential is the increase in the numbers of specialized hospital areas (intensive care units) which has come about since the completion of the original study. Two facts should be kept in mind when considering this argument. The first is that these specialized care units were never meant to replace the routine care received by a patient, and that only specifically controlled patients are admitted to such units after compliance with predetermined criteria. The Medicare program acknowledges these factors in the restrictions in its own reimbursement formulae regarding the formation and utilization of specialized care areas. The other factor which must be recognized is that few of the smaller hospitals, which will be most critically affected by elimination of the differential, have intensive care units. And in these institutions, as in larger hospitals, the number of aged patients must be seriously considered in arriving at the staffing level of a nursing station. A few of the factors that differentiate an aged patient from a younger patient with the same disease entity are as follows: 1. Older patients tend to be less flexible than younger patients, and it is more difficult and takes more time for them to adjust to the hospital environment. 2. The recuperative powers of older patients are generally slower than those of younger patients. 3. The activity of daily living functions at a slower pace for older patients. For example, it takes them longer to ambulate, to eat, etc. 4. Older patients very frequently have eating idiosyncrasies and bowel problems. . . all of which require nursing time. 5. Deficiencies in hearing, eyesight, memory, and orientation frequently occur with older patients and require nursing time and support. Finally, we feel it is not out of place to examine in human terms the imposition of the two regulatory actions under discussion. A decade ago, when initiation of the Medicare program was at issue, there were three basic tenets which seemed to surround its bright promise: A) That quality medical care for our parents and grandparents constitutes a right earned by their past contributions in building our Nation; B) That the cost of providing that care through a social insurance system would not in any way be shifted onto the burden of misfortune of the privately supported patient, and; C) That the federal government would never seek to interfere in the practice of medicine, substituting bureaucratic fiat for professional judgment. Through the years, the increasing contributions required of the beneficiaries, the continuing restrictions in the reimbursement formulae, and the ever more burdensome and ridiculous regulation of the delivery of care have tattered the veil of that original promise. The imposition of these new administrative actions will tear it to shreds. NEW HAVEN COUNTY MEDICAL ASSOCIATION, New Haven, Conn., May 28, 1975. Hon. DANIEL ROSTENKOWSKI, M.C., DEAR REPRESENTATIVE ROSTENKOWSKI: For some time it has been apparent that there is often a considerable difference between legislation passed and its administrative implementation. Therefore, we are pleased to learn that your Subcommittee on Health of the House Ways and Means Committee will hold a special hearing on June 12, 1975 dealing with certain proposed or existing Medicare regulations. The New Haven County Medical Association comprising 1,131 members is pleased to comment. The American Medical Association has instituted its first lawsuit in history against the Department of Health, Education and Welfare on the grounds that the Department has exceeded authority unconsitutionally in the are of utilization review procedure for hospitals and skilled nursing facilities scheduled to begin July 1, 1975. We support the AMA's position. The New Haven County Medical Association is extremely concerned about the efforts of the Department of Health, Education and Welfare to evade its obligation to pay its fair share of the health care dollar for the health care of the citizens for whom Congress has legislated federal responsibility under Titles V, XVIII, and XIX of the Social Security Act. Under proposed rules, amendments to Regulations No. 5, Subpart E of the Social Security Administration (20 CFR Part 405) published in the Federal Register on April 14, 1975 with only thirty days for comment, the Secretary proposed a discriminatory methodology for imposing price controls on one segment of society the medical profession-utilizing a proposed but ill defined "economic index." The constitutionality of this proposal is suspect. The proposal is vague and incomplete. His stated purpose is to have Medicare reimbursement "follow, rather that lead, any inflationary trends." Chairman Rostenkowski, regulations already call for reimbursement for physicians in 1975 to be based on fees prevailing in 1973 as adjusted from 1971, and, which of course, were responsive to the Cost of Living Council's directives then in effect. Furthermore, regulations call for Medicare fees to be paid at a percentile of what the prevailing rates are. It is difficult to understand why the Department should assert that Medicare fees should be different from the usual fees normally charged to the general public. Similarly, in its reimbursement to hospitals, regulations call for Medicare to pay less than the usual charge since Medicare will not bear any part of the more expensively maintained pediatric or obstetrical patients as do the other nonMedicare patients. Contra-wise, the Medicare paper work expenses are shared all paying patients. In addition, it is proposed to reduce from the 90th percentile to the 80th percentile the schedule of limits on hospital in-patient general routine service costs, and terminate the in-patient routine nursing salary cost differential as a reimbursable cost of a provider. It is again difficult to understand why the Department should assert that Medicare hospitalization charges should be different from the usual charges made to the general public. The New Haven County Medical Association firmly believes that the legislation which has placed the financial responsibility for Medicare upon the federal government should be administered even-handedly to assure quality care and not be administered with an intention to lessen the government's fair share of the costs of delivering that care. Failure of the Social Security Administration to pay its fair share results in high out of pocket costs for the Medicare recipients themselves and also for the general public who have to finance their own health care and, in part, subsidize the Medicare program. This issue has portent for any system of National Health Insurance that is proposed and suggests that a minimum of federal administration and a maximum of private sector involvement would be most beneficial to the public at large. Chairman Rostenkowski, we thank you for the opportunity to comment and to, hopefully, encourage changes in the administration of the program to the benefit of the American people who we, too, serve. Very sincerely yours, GEORGE A. BONNER, M.D., President. NEW MEXICO HOSPITAL ASSOCIATION, Mr. JOHN M. MARTIN, Jr., DEAR MR. MARTIN: We are pleased to be advised that the Subcommittee on Health, Committee on Ways and Means, will be holding public oversight hearings on the Medicare program, policy and regulations. The New Mexico Hospital Association represents the hospitals of New Mexico and, as requested, we are enclosing a current listing of our hospital membership. (in cmte files) We understand that Leo J. Gehrig, M.D., Vice President of the American Hospital Association, will be making a statement for the approximate 7,000 hospital members of that association before your committee; and, we assure you that the New Mexico Hospital Association is fully in support of Dr. Gehrig's position. Among matters on your agenda we are particularly concerned about are the following: 1. HEW Utilization Review Regulations which was secheduled to be implemented July 1, 1975: These regulations are vague, conflicting, and would be impossible for smaller hospitals to maintain compliance due to their limited medical staffs. Some exemptions should be provided for smaller hospitals. 2. Termination of the 82% Nursing Salary Differential and Section 223, P.L. 92-603, Regulations Reducing Limitations on Hospital Routine Service Costs: Both of these HEW regulations would violate the "resonable cost" provisions of the Social Security Act. Any assistance that your committee can give our hospitals in correcting the hardships provided within the above quoted HEW Regulations would be in the public interest. Sincerely, JAMES L. LACOMBE, HOSPITAL ASSOCIATION OF NEW YORK STATE, INC., Re oversight hearings on medicare regulations on termination of the 82% inpatient routine nursing salary cost differential. Mr. JOHN M. MARTIN, Jr., Chief Counsel, Committee on Ways and Means, Longworth House Office Building, Washington, D.C. On behalf of our 300 not-for-profit member hospitals and homes in the State of New York, we file the attached written statement for inclusion in the record of the public oversight hearings on the above cited regulations in relation to Medicare 54-804 0-75-29 program policy called for June 12, 1975 by the Subcommittee on Health of the Committee on Ways and Means. The attached statement supports our request that the proposed termination of the 82% inpatient routine nursing salary cost differential, to be effective June 23, 1975 as published in the Federal Register on May 23, 1975, be deferred to permit actual field studies to determine whether aged patients require more routine nursing services and, therefore, whether a nursing cost differential is necessary and appropriate as an allowable cost and a reimbursable cost under the statutes which established the Medicare program. GEORGE B. Allen, President. STATEMENT OF THE HOSPITAL ASSOCIATION OF NEW YORK STATE, INC. (Amendments to Regulations No. 5 of the Social Security Administration (20 CFR Part 405) Section 405.430 (a), (c)(1), (d) (1) and (2), and (e)(1) Effective June 23, 1975) TERMINATION OF 8% INPATIENT ROUTINE NURSING SALARY COST DIFFERENTIAL The introductory comments in the Federal Register of May 23, 1975, responded to comments received by the Commissioner which contradicted the SSA's previously published assumptions about a number of "changes" which were attributed with having given rise to the decision to propose to ".. terminate recognition of this cost differential". While these "changes" were described and assumptions were made, no evidence was provided to support the allegations. We have investigated these assumptions and our conclusions, which are summarized herein, contradict the conclusions stated by the Social Security Administration. It is apparent from the responses cited on May 23, 1975 that most respondents had similar criticisms. Rather than to offer conclusive evidential support, the Commissioner dismissed them arbitrarily and capriciously. Extension of medicare benefits While the Social Security Amendments of 1972, P.L. 92-603, extended Medicare benefits to a limited number of disabled individuals as well as those with end-stage renal disease, hospitals in New York State advise that these beneficiaries represent a minor portion of the total number of Medicare inpatients. Most Medicare inpatient days of care are still aged days rendered in routine care nursing areas. Thus most Medicare patients utilize more inpatient routine nursing services. Number of special-care beds Our member hospitals report that special-care beds (intensive care, coronary care, etc.) represent a small portion of their total bed complements. Therefore, even if there had been a large percentage increase in the number of these beds, in absolute terms they would still represent relatively few beds. Furthermore, there are no indications that aged Medicare patients now use a substantially larger portion of special-care beds than they had used in previous years. Extra nursing care to aged patients Our member hospitals report that their experience with aged patients, 65 and over, housed in routine nursing units require more nursing care than younger patients. This experience would support earlier studies which resulted in the establishment of the inpatient routine nursing salary cost differential. Aged patients need much assistance in moving and turning in bed to avoid skin problems. They need more help out of bed. They need help in eating. They need help to do numerous simple things younger patients readily do for themselves. Data on costs and utilization Medicare cost reports provide for reporting of aged days and for related costs. Therefore, there remains an ongoing capability for hospitals to report the cost and utilization data needed to calculate the inpatient routine nursing salary cost differential. Statutory requirements Section 1861 (v) (1) (A) of the Social Security Act established the basic principle of Medicare reimbursement that payments to providers of care must be based upon the identified costs of services to program beneficiaries. The law states. "Such regulations shall (i) take into account both direct and indirect costs of providers of services . . . in order that, under the methods of determining costs, the necessary costs of efficiently delivering covered services to individuals covered by the insurance programs established by this title will not be borne by individuals not so covered. Termination of the 82% inpatient routine nursing salary cost differential would avoid payment by Medicare for this identified cost of services to program beneficiaries. Commissioner Cardwell in the May 23, 1975 Federal Register implies that avoidance of this statutory fiat is acceptable because "... Medicaid payments will increase. . . ." Not only does this suggestion seem to violate the Law but also it is erroneous because the Medicaid program in New York State does not reimburse under that method but pays prospective reimbursement rates under an exception approved by the Secretary. Cost allocation methods and RCC/AC Implementation of this statutory mandate resulted in the requirement by the Social Security Administration that costs of ancillary services be allocated to the program using the ratio of each department's charges for services to Medicare beneficiaries to charges to all patients applied to the department's costs (RCC/ AC). However, average cost for all routine care departments adjusted by the inpatient routine nursing salary cost differential was determined as a more appropriate method for fulfilling the law as it applied to routine nursing care costs. The differential was adopted by the Social Security Administration after it had conducted studies which established that aged Medicare beneficiaries did require more routine nursing care and that such additional care did result in higher costs. Impact on New York's not-for-profit hospitals We anticipate that elimination of the inpatient routine nursing salary cost differential could cause hospitals in New York State to be underpaid by more than $13 million for costs of care to aged Medicare beneficiaries. These costs would have to be borne by "individuals not so covered" with the result that these regulations would be in direct violation of the statute. Conclusion We find no evidence to support the amendments to terminate the inpatient routine nursing salary cost differential. In fact, such termination would violate statutory requirements by avoiding costs of caring for Medicare patients and transferring them to other payors. The Social Security Administration has not provided documentation nor conducted new studies to support their contention that this change is either necessary or appropriate. Accordingly, HANYS concludes that implementation of these amendments would constitute an arbitrary and capricious confiscation of hospital assets and urges that they be rescinded forthwith. We also urge that no such change be made in Medicare reimbursement unless nationwide field studies substantiate some other more appropriate method. [The following letter and enclosure were forwarded for the record by Congressman Henry J. Nowak :] Hon. HENRY J. NOWAK, HOSPITAL ASSOCIATION OF NEW YORK STATE, Longworth House Office Building, Washington, D.C. Albany, N.Y., May 16, 1975. DEAR MR. NOWAK: Last Fall, President Ford's administration announced plans to cut the Department of Health, Education and Welfare budget by some measures which would not require Congressional approval. One such budget-cutting plan was to change the 90th percentile groupings under § 223 of the Social Security Amendments of 1972 (P.L. 92-603) to the 80th percentile. We estimate that this proposed change will deprive some 23% of our member hospitals of over $28 million. Congress included § 223 in the statute to insure that the Medicare program would not pay for costs resulting from either inefficiencies or from provision of luxuries. The hospitals of New York have been subject to similar legislation since 1970 under Chapter 957 of the Laws of 1969. Due to our long experience with |