similar requirements, New York's hospitals, perhaps, are in an especially good position to evaluate the proposals of the Social Security Administration. Accordingly, we assert that the SSA regulations and the proposee limits are not consistent with the intent of Congress. The SSA approach represents a potential attempt to confiscate the dwindling assets with which our hospitals are trying to meet the health needs of New York's infirm citizens. Our comments on the proposed change addresses the basic issues and is attached. The financial condition of many a New York hospital is already perilous. We need your help. Please investigate this attempt to subvert Congress' purpose. Make your concerns known to Commissioner Cardwell, Secretary Weinberger, and President Ford. The Federal budget must be sound-but not at the expense of our nation's hospitals or its aged sick. Sincerely, Enclosure. GEORGE B. ALLEN, President. COMMENTS OF THE HOSPITAL ASSOCIATION OF NEW YORK STATE (Proposed Revised Schedule of Limits on Hospital Inpatient General Routine Service Costs in the Medicare Program for Cost Reporting Periods Beginning On or After July 1, 1975) The Social Security Act was amended by Public Law 92-603 Section 223 to introduce the requirement that costs must be ". necessary in the efficient delivery of . . ." services. Providers of health services were put on notice that their activities would be scrutinized in order to determine that they were performed efficiently. Conversely, the Secretary was obliged to devise and to promulgate an equitable and an effective system to analyze the functioning of each provider to identify any inefficiencies and the costs related to them which would not be covered. Lacking such specific identification of costs related to inefficient activities, providers would neither be able to identify areas for potential improvement nor would they be able to take steps to protect their basic rights in the event of real differences of opinion which might ultimately be the appropriate subject of administrative or judicial review. On June 6, 1974 amendments to Subparts D and F of Regulations No. 5 (20 CFR Part 405) and an Interim Schedule of Limits were published in the Federal Register to be effective July 1, 1974 for the purpose of implementing Section 223. Included in that publication was an acknowledgement that the proposed classification system and limits was subject to further refinement to permit improved identification of hospitals whose costs are excessive flaw in the system acknowledged in June 1974, has been completely overlooked in the publication of the revised schedule in the April 17, 1975 Federal Register. The deficiency must be corrected without further delay lest the statutory requirements continue to be frustrated and misapplied. This basic An examination of exerpts from the House Ways and Means Committee's Report No. 92-231 on H.R. 1, the "Social Security Amendments of 1972" (pp 82, 83, 84, 85) is also helpful to insure that proposed regulations are designed to implement the intent of Congress. "Your committee believes that it is undesirable from the standpoint of those who support government mechanisms for financing health care to reimburse health care institutions for costs that flow from marked inefficiency in operation or conditions of excessive service." (Emphasis added.) "Conditions of excessive service" was later clarified by the description of a "non-luxury institution" and the allowance to charge patients for excess costs presumed to be for luxury services. We would support regulations which were designed to accomplish the intent of Congress as described in this paragraph. However, we neither support the present regulations not the proposed revised schedule of limits. Both are arbitrary and lacking in adequate supporting data. Further examination of the record from Report No. 92-231 discloses that Congress' intent was that ". the costs of the 'hotel' services (food and room costs). . . be among the first. to be subject to regulation under $223. It would seem that an approach which would specifically exclude costs of medical supplies, drugs and medicines, nursing care, teaching programs, etc., would conform more closely to that intent. Such an approach might also result in a program which would be more equitable and easier to administer. Pursuit of a hotel services oriented methodology might also be more readily adaptable to considerations of occupancy rates and ".. the cost of excessive amounts of idle capacity..." which the Committee had also addressed. . New York State's hospitals have lived with a similar statutory provision since the enactment of Chapter 957 of the Laws of 1969 by the New York State Legislature. The law provides that rates of payment certified by the State Commissioner of Health be reasonably related to the costs of efficient production of health services. He must consider elements of cost, geographical differentials, economic factors in the hospitals' locale, the rate of change of these economic factors, costs of similar hospitals, and incentives to improve services and effect economies. Based upon the extensive experience of the Hospital Association of New York State with State statutory requirements, we would make the following additional comments and suggestions: 1. Defer implementation of the subject proposed revised schedule of limits. Substitute an interim schedule based upon costs at the 90th percentile level as a temporary measure. Reconsider the regulations and the methodology to conform more closely to the intent of Congress to identify costs resulting from inefficiencies and from luxury services. 2. Define what constitutes provider costs necessary to the delivery of needed health services. A proposed methodology might presumable flow from such definitions. They might also serve as the basis for an administrative review procedure. 3. Revise the classification system. Groupings based on per capita income might be appropriate if the statement in the Federal Register of April 17, 1975, "It is believed that income levels tend to reflect wages and costs of construction, goods and services;" were proven to be valid as applied to the costs of providing health services. Such proof is neither provided nor offered. The illogical results of using this questionable classification system seem to be prima facie evidence of its inappropriateness. Non-SMSA Group II limits exceed SMSA Groups III, IV, and V limits despite substantial evidence that hospitals in SMSA's are more frequently involved in programs which result in higher cost levels. A more comprehensive system is needed. 4. Provide separate methods to reflect different provider characteristics in more proscribed service areas. These should include: (a) Sponsor: (1) Voluntary, (2) Governmental, (3) Proprietary. (b) Teaching programs number and size: (1) Post graduate medicine, (2) Nursing school, (3) Other special schools, (4) None. (c) Scope of services-number and size: (1) Unique and costly services including nuclear therapy, dialysis, open heart surgery, etc., (2) Special nursing care units such as intensive care, coronary care, burn centers, etc., (3) Outpatient clinics, (4) Other. (d) Specialty hospitals with unusual patient mix due to concentration on one or a few disease entities. (e) Patient mix. (f) Unionization of personnel complement. 5. Specify objective and equitable means to identify costs so that differences in reported costs which may result from accounting or other procedural differences between hospitals and which are appropriate and acceptable do not impede the ability to fulfill the requirements of the statute. Direct comparisons of summary financial data on cost reports usually yield results which are not comparable. 6. Adjust standards to contemplate cost divergencies resulting from physical plants constructed in different years. Price level depreciation problems must be considered. Perhaps capital costs should be excluded from the computations. 7. Expand provisions for administrative review and publish the criteria as part of the prospective limit methodology. Provide for self-implementing exceptions parameters to minimize the need for appeals. Recognize the special problems faced by small hospitals. Define the terminology. 8. Liberalize the emergency services provision of § 405.461(d) to permit a patient charge when a patient elects to stay after his physician certifies him fit for transfer. The Hospital Association of New York State protests the proposed revised schedule of limits in the strongest terms. When it appears that implementation of this methodology would cost approximately 23% of our membership over $28 million, we must condemn it as arbitrary, capricious, and confiscatory. When it contradicts the House Report No. 92-231 statement that, "And your committee recognizes that these provisions will apply to a relatively quite small number of institutions;" we must object to it as contrary to the intent of Congress and to the statutory obligations of the Secretary. We oppose this proposed change without qualification. Hon. DAN ROSTENKOWSKI, U.S. SENATE, Washington, D.C., June 10, 1975. Chairman, Subcommittee on Health, Ways and Means Committee, DEAR MR. CHAIRMAN: I understand you will be holding a hearing on June 12 on the Social Security Administration's proposed regulations to eliminate the Nursing Care Differential for Medicare reimbursement. I am enclosing copies of a number of letters I have received from administrators of North Dakota hospitals protesting this regulation. As you will see, they are extremely concerned that the loss of this reimbursement will only result in higher costs for the non-Medicare patients. I understand that the Social Security Administration believes most hospitals place those Medicare patients needing extra nursing attention in their acute care sections and that Medicare reimbursement could be made for this care. I hope your Subcommittee will keep in mind, however, that many smaller hospitals, such as those found in North Dakota's rural communities, may not have acute care sections. I am personally very concerned about the adverse effect the elimination of the Nursing Differential could have on these smaller hospitals, and I hope your Subcommittee will look into this problem. Thank you for your consideration of the views expressed in this correspondence. I think Congress should look into this matter, and I commend your Subcommittee for taking the lead in this matter. With kind regards, I am Sincerely, Enclosures. COMMISSIONER, QUENTIN N. BURDICK. ST. LUKE'S HOSPITAL, Crosby, N. Dak., April 18, 1975. Social Security Administration, Department of Health, Education, and Welfare, Washington, D.C. DEAR SIR: I am writing to you regarding the termination of inpatient routine nursing salary cost differential of 81⁄2 percent for caring for Medicare patients. HEW, through a study, determined patients over 65 did in fact require more nursing service time than younger patients. Nothing has happened to change this fact. If this differential is terminated the extra cost will have to be passed on to the other patients which is not the way Title XVIII is supposed to operate. The Medicare program is to pay the full costs of its Medicare patients. Sincerely yours, LYNN N. ROBERTS, Administrator. MERCY HOSPITAL, COMMISSIONER, Williston, N. Dak., April 17, 1975. Social Security Administration, Department of Health, Education, and Welfare, Washington, D.C. DEAR SIR: In regard to recent changes in Medicare reimbursement where there will be a discontinuance of 82% nursing differential, speaking in behalf of the Governing Board, Advisory Board and Medical Staff of the Mercy Hospital of Williston, we are highly upset with the fact that the differential would be dropped at this point in time. Last year this differential for the Mercy Hospital of Williston amounted to $8,434 based on 9,922 patient days at 85 cents per patient day. This money is not retrievable through any other source and wold constitute a direct hardship to financially operate the institution. After reading over the section 20 CFR Part 405, Regulations No. 5, there is no indication here that an additional study has been run to ascertain if, in fact, the Medicare patient does not need the additional care as previously determined. If it bothers someone's conscience that Medicare now covers disabled and end state renal disease, these can be factored out quite easily. It would seem to me only prudent that Medicare cover the costs and not be subsidized in any manner by other third party payors or private payors. Whereas HEW estimates there is a savings of $120 million dollars, this is merely an estimate in degree and cannot necessarily be substantiated at this point in time. All hospitals do have basic costs; and if the Mercy Hospital were to lose this segment of reimbursement, where would we go to make up this difference. If you have some magic formula, pleas e let me know. I would be happy to institute the same at this hospital. Sincerely, IRVIN "MIKE" KRAUSE, SAINT JOHN'S HOSPTIAL, Fargo, N. Dak., April 17, 1975. Senator QUENtin Burdick, Washington, D.Č. DEAR SENATOR BURDICK: The Social Security Administration has given notice in the Federal Register that it proposes to discontinue the 82% Nursing Differential Under Medicare. We object to this change strenuously since it would be inequitable and completely contrary to the intent of the Medicare law. Medicare beneficiaries 65 years of age and over require and receive a greater degree of nursing care than do younger patients, both in general medical-surgical wards and in the special care units. This fact was proven by studies made by the Social Security Administration and as a result of these studies, this differential has been allowed since 1969. Nothing has changed in this area, and yet the Social Securtiy Administration now proposes to eliminate this differential. The Department of Health, Education and Welfare estimates that $120 million would be saved as a result of the discontinuance of the differential, but the fact of the matter is that this sum would not be “saved,” but rather, would be passed on to the non-Medicare patient, which is the only other source of funds we have. The Medicare law requires that the Medicare program pay for its' full cost and that no cost of the Medicare program is to be paid by non-Medicare patients. Clearly then the proposal would be contrary to the Medicare law. In our particular institution the elimination of this differential would cost us $28,735 per year. This is not money that would be saved. Rather, the care would still be rendered to these over-65 patients and the cost would have to be recovered from some source. Therefore, as I indicated above, the $28,735 would have to be recovered from the non-Medicare patient and this would clearly be in violation of the Medicare law. Therefore, we are totally opposed to the elimination of the 82% nursing differential for patients over 65. Sincerely yours, ROBERT WOLTER, Administrator. GARRISON MEMORIAL HOSPITAL, Garrison, N. Dak., April 15, 1975. COMMISSIONER, Social Security Administration, Department of Health, Education, and Welfare, Washington, D.C. DEAR SIR: We urge you not to discontinue the 82% Nursing Care Differential that is now allowed under Medicare. Medicare patients require above average nursing care. 40% of our 8500 patient days are medicare. The termination of the cost differential would require nonmedicare patients to make up for this loss of revenue. We discount 4.4% of the Medicare bill which amount to more than $10,000 yearly and this proposed change would further decrease our annual revenue. Thank you. Sincerely, Sr. MADONNA WAGGENDORF, O.S.B. RICHARDTON COMMUNITY HOSPITAL, Richardton, N. Dak., April 14, 1975. QUENTIN Burdick, Russell Senate Office Building, Washington, D.C. DEAR SIR: In North Dakota where hospitals are trying very hard to operate effectively with Medicare already requiring us to discount over three million dollars a year, we feel it a gross injustice to remove the eight and one half percent nursing differential allowance. There is no question that Medicare patients require a greater amount of nursing time than other patients, so this is again going to have to be made up by private pay patients. You can no longer say that Medicare program pays its own way. It simply raises charges to other patients and this is not fair. Even in our little twenty eight bed hospital where we just barely make ends meet, the loss of the differential means about $2,000.00. If our hospital has to close, Medicare would have to pay rates about ten percent higher for these patients in any nearby hospital. We would appreciate any action you could take to continue the eight and one half percent differential. Yours truly, SISTER HELEN, O.S.B. Administrator. ST. JOSEPH'S HOSPITAL, Dickinson, N. Dak., April 15, 1975. Senator QUENTIN BURDICK, Washington, D.C. DEAR SENATOR BURDICK: It has come to our attention that the Health, Education and Welfare Department intends to discontinue the eight and a half percent Nursing Differential Under Medicare. We are greatly concerned about this action. Medicare patients, age 65 and over, do require and receive a greater degree of nursing care than other younger patients. A bit of reflective thought and common sense will verify this rationale. HEW estimates that a $120 million could be saved if nursing differential is discontinued. It would not alter the nursing cost for an institution, therefore, that cost would be passed on to non-Medicare patients. There is no evidence available to us that the Health, Education and Welfare Department has completed any new studies to document its thesis that patients 65 years of age and over do not require a greater level of nursing service than younger patients. Also Title XVIII requires that the Medicare progfam pay for its full costs and that it not be subsidized by other users of hospital services. Sincerely, Sister ANITA, Administrator. UNIVERSITY OF NORTH DAKOTA, Re medicare nursing differential. Social Security Administration, Department of Health, Education, and Welfare, Washington, D.C. DEAR COMMISSIONER: I am very disappointed to learn of the intention of the Department of Health, Education, and Welfare to discontinue the 8 percent Nursing Differential for patients served under the Medicare Program. While it may not seem like much, this will mean a loss of between 15 and $17,000.00 per annum to our facility. I doubt, however, that the impact is any less on even larger facilities. Our facility, as a rehabilitation hospital, serves a patient population which typically has patients admitted due to a catastrophic health incident, has patients who, by the nature of their problems, will stay an extended period of time, and because of this will normally be very short of financial resources. Supposedly, this is the population of people that the original Medicare Act and its amendments was designed to assist. Unfortunately, the patient under this program is not receiving nearly the total cost of his/her hospitalization nor is the facility, providing services to this patient, able to achieve actual cost for providing this service. We as health facilities are being asked to improve our level of service as mandated by the requirements of the Medicare Act such as Utilization Review, etc., but at the same time are asked to accept less than the fair share of cost attributed to the program, first by the elimination of the current financing mechanism under Medicare and now by the elimination of the Nursing Differential. In fact, it has been our experience that this differential should be expanded to cover the additional costs in other departments than just nursing. |