ST. JOSEPH'S HOSPITAL INC., Lewiston, Idaho, June 12, 1975. Re Written testimony public witnesses subcommittee on health, Committee On Ways And Means involving compliance with medicare regulations. DEAR MR. MARTIN: By this written testimony I wish to be recorded as opposing and protesting implementation or compliance with Medicare regulations in the following four specified areas: 1. For the following reasons it is totally unrealistic and economically unsound for either government reimbursement programs or for hospitals within wide ranges of geographic regions to have a reduction in payments for hospital inpatient general routine service costs for the 90th to the 80th percentile. I strongly cbject to this reduction for not only unsound economic reasons and improper financial responsibilities of private and/or other third party payors to pick up the financial difference required of hospitals if government reimbursement programs are reduced. I object further on the grounds that this hospital is being compared with other hospitals in wide geographic ranges throughout the United States, and also compared to hospitals ranging in intermediate sizes to hospitals up to and including 400 beds or more. I see no logical justification based on financial responsibility for this reduction to occur. I believe that the reduction would result in, as noted above, increased costs to the private payors and would tend to reduce "quality standards of care" that are now so relevant to the consumers of hospital services. 2. I also object to and protest the termination of the inpatient routine nursing salary cost differential of 82% as a reimbursable cost for Medicare patients. An analysis, both financial as well as nursing time studies, has been prepared in our institution as well as many others, both individually and groups throughout the nation, which significantly and logically concludes that care received by patients of older age groups are in fact in excess of 8%% differential particularly applied to the age group of 65-75 and over. This reduction again appears to be nothing more than a selected means to reduce governmental reimbursement costs, but without sound logical financial reasons for so doing, but again with the continued need to increase the rates of reimbursement from private individuals and/or third party payors for financially, economically, sound operations of this hospital. It is becoming rather significantly evident that such controls, regulations, and safeguards of governmental reimbursement programs are not only reducing quality standards of care but are in effect shifting the burden of financial responsibilities to other payor groups. Quality standards of care should be just as significant and necessary for the human dignity of any man regardless of age or economic ability and such patient is entitled with certain personal responsibilities for this optimal care. These stringent unrealistic regulations are in fact strangling the financial responsibilities of hospitals including that of St. Joseph's Hospital. 3. Though currently in a stop gap condition due to court injunctions and other logical reasons, utilization review procedures for hospitals and skilled nursing facilities have been postponed. I strongly object to the conditions for participation in the Medicare Program based on the regulatory responsibilities that prevail in those regulations printed in the Federal Register November 92, 1974 and followed in April 1 of 1975. They again increase costs to hospitals and to consumers over and beyond that which in effective utilization review procedure already adopted by this hospital is maintaining and controlling length of stay, and in our institution, this is being on an average less than 5 days as the average length of stay. I would say that this is success without government intervention. 4. I further oppose the recognition of prevailing charge increases for physicians and certain other services tied to the economic indices which regulation and recognition is published in the Federal Register of April 14, 1975. This statement has been prepared by John B. Ernsdorff, Associate Administrator, St. Joseph's Hospital, Inc. 415-6th Street, Lewiston, Idaho 83501. Furthermore, this statement is recognized by the majority of the North Central Idaho Comprehensive Health Planning Council, a 314B Agency. Sincerely, JOHN B. ERNSDORFF, Mr. JOHN M. MARTIN, Jr., ST. JOSEPH'S HOSPITAL, INC., Chief Counsel, Committee on Ways and Means, Lewiston, Idaho, June 10, 1975. Longworth House Office Building, Washington, D.C. DEAR MR. MARTIN: I wish to go on record opposing the elimination of the 8%% Medicare Nursing Differential and Section 223 of Public Law 92-603-Limits on Hospital In Patient General Routine Service Costs. Based on my 1973-74 Medicare Cost Report, I would have lost the dollar equivalent of one payroll if the 82% Nursing Differential were eliminated. Estimating for my current fiscal year I would lose $68,824 or an additional $18,226 over the previous year. To recover the $68,824, I would be required to increase my room charge on an average of $2.50 per patient day. I don't understand the reason for eliminating the 82%. Information supplied to me by the nursing director indicates that it requires 22% more nursing time to to take care of a Medicare versus a non-Medicare patient. As a further penalty, from the above, the additional $2.50 room charge per patient day could push me over the limit being imposed on "Hospital Inpatient General Routine Service Costs." Because of a current building program, the 1975-76 budget will call for a room charge of $79.00. With the additional $2.50, the rate would be $1.50 over the limit and an additional loss of $15,000. This is based on 10,000 Medicare days. All told, I would lose $83,824 for the current year if the changes were in effect at this time. St. Joseph's Hospital and the community of Lewiston cannot afford to underwrite this dollar loss at the benefit of the Medicare Program. Sincerely yours, MARV SCHULTZ, Director of Fiscal Services. CONGRESS OF THE UNITED STATES, Hon. DAN ROSTENKOWSKI, Chairman, House-Subcommittee on Health, HOUSE OF REPRESENTATIVES, Committee on Ways and Means, Washington, D.C. DEAR DAN: I am enclosing a copy of a telegram I have received from Sister Louise Anthony, Administrator of St. Raphael Hospital in New Haven, Connecticut, regarding H.R. 7000. Inasmuch as your subcommittee is presently considering H.R. 7000, I thought you might be interested in Sister Anthony's views on this legislation. I am very concerned over the adverse effects which would result if the Department of Health, Education, and Welfare's proposal to terminate the 82% cost differential for nursing services is allowed to go into effect. Thank you for your consideration of this very important matter. Sincerely, CHRISTOPHER J. DODD, Member of Congress. [Mailgram] Representative CHRISTOPHER J. Dodd, House Office Building, Washington, D.C. NEW HAVEN, CONN., May 23, 1975. We at the hospital of St. Raphael urge your support for H.R. 7000, a bill prohibiting the Social Security Administration from withdrawing funds used to support the additional nursing services needed by medicare patients. There is no justification for believing that these older and more ill patients need less nursing then they did when the medicare program started. The opposite is true, and in our case alone this S.S.A. proposal will result in a substantial loss of revenue that must be charged to other patients to maintain necessary levels of nursing care. Sister LOUISE ANTHONY, Administrator, St. Raphael Hospital. Mr. JOHN M. MARTIN, Jr., SAN ANTONIO COMMUNITY HOSPITAL, Chief Counsel, Committee on Ways and Means, DEAR MR. MARTIN: San Antonio Community Hospital is a 309-bed, nonprofit, community, general hospital, located in Southern California, which has provided health care services to the communities of Upland, Ontario, Chino, Montclair, Alta Loma, Etiwanda and Cucamonga for over fifty years. Our hospital is the predominant medical facility in the service area, rendering services to over 16,000 in-patients and 50,000 out-patients per year, approximately 25% of which are older patients, who are provided health care under the Federal Medicare Program. The purpose of this letter is to express our endorsement of and to urge your support for H. R. 7000, introduced by Mr. Mark Hannaford, to require the Social Security Administration to continue the Medicare routine nursing salary cost differential in recognition of the above-average cost of furnishing routine nursing care to aged Medicare patients. We feel that H.R. 7000 should be vigorously supported for the following reasons: 1. Evidence is in existence that elderly patients require more routine nursing care than younger patients; therefore, the cost of such nursing care for older patients is greater than for younger patients. The nursing salary differential reimbursement has always recognized this fact. The Social Security Administration has provided no credible evidence to justify the removal of the differential in nursing salary as reimbursement for the additional cost of nursing care for aged Medicare beneficiaries. 2. The proposal to eliminate the nursing salary differential appears to be another step, whether intentional or otherwise, to reduce the federal cost of the Medicare Program, with a resultant adverse financial impact on health facilities and patients who participate in the Medicare Program. For San Antonio Community Hospital, approximately $25,000 in annual reimbursement for the care of aged Medicare patients will be denied, if the nursing salary differential is not continued. When multiplied by the many providers of care to Medicare patients in the United States, millions of dollars in Medicare reimbursements will be lost by such providers. 3. In order to continue to provide high quality health care services to the community, hospitals must be paid for their services. If the nursing salary differential is discontinued, reimbursement for the additional routing nursing care received by elderly Medicare patients will have to be absorbed by higher rates charged to non-Medicare patients. This is a very clear violation of the intent of the Medicare regulations which state that the cost of caring for Medicare patients shall not be borne by patients not so covered. According to the literature, SSA has estimated that costs totalling $120 million annually will be shifted to non-Medicare patients. 4. Listed below are other examples of federal legislation which have resulted in the shift of costs from Medicare patients to non-Medicare patients: (a) Elimination of the 2% allowance for certain costs in 1969. (b) Routine care cost limitations described in Section 233 of P.L. 92-603. (c) Revised Medicare reimbursement regulations which so restrictively define allowable "cost" that the payment received by providers of care to Medicare beneficiaries is much less than the reimbursement required from non-Medicare patients. Costs of patient care services cannot continue to be shifted away from Medicare patients without eventual financial insolvency for many fine health care institutions and the resultant decline in the quality of the nation's health care delivery system. With this in mind, I urge your support, and that of all those you can influence, for Mr. Hannaford's important bill, H.R. 7000, which is currently pending before the House Ways and Means Committee. Sincerely yours, JOHN L. TOWERS, SAN BERNARDINO COUNTY MEDICAL SOCIETY, San Bernardino, Calif., June 5, 1975. Re June 12, 1975 hearing on HEW rulemaking procedures. JOHN MARTIN, Esq., Chief Counsel, House Ways and Means Committee, Subcommittee on Health, Washington, D.C. DEAR MR. MARTIN: Speaking on behalf of the physicians of San Bernardino County, California, I wish to express our interest in and appreciation of the Subcommittee on Health's hearing to review the rule-making procedures of the Department of Health, Education and Welfare. HEW is a large organization with a monumental task and ever-growing power. It is appropriate that the Congress review the Department's activities to assure that the intent and authority of the Congress is not undermined by those who for expedience or inadvertance would exceed the bounds defined by the laws passed to them for implementation. I regret that as physicians we seem more and more to be placed in an adversary role with our government. I could not begin to itemize the vast numbers of physician and staff hours and member dues expended to respond to the barrage of rules and regulations which have been presented to us over the last few years. And this is but one county of 900 physicians. The waste to our profession and our patients on a national level must be staggering. Without going into great detail, let me call your attention to only three of the regulations which have occupied our time and which have been, as we understand it, contrary to the intent of Congress. RULES FOR PHYSICIANS FEES I call your attention to our letter of May 6, 1974 protesting the latest regulations involving reimbursement to physicians for services to Medicare beneficiaries. The proposed regulations exceed the intent of the law by using Medicare to establish a system of regulation of physicians fees. Rather than repeat the text here, invite your attention to page two of our letter (enclcsure 1) which details our observations and concerns. UTILIZATION REVIEW REGULATIONS If memory serves me correct, the UR Regs have been attempted on three occasions under the pretext of an interim measure pending implementation of PSRO. However, in their original form, the regs mandated pre-admission certification which was left to local option under PL 92-603. I have enclosed a copy of our response to the original regulations (enclosure 2). HEW persisted, however, and finally issued regulations requiring UR to be implemented by February 1. That was postponed until July 1 and Judge Julius Hoffman, acting in a suit brought by AMA, has now issued a preliminary injunction stopping implementation of the regs on the basis that patients might be injured. He also indicated there is evidence to suggest that the regulations violate that portion of the Social Security Act which forbids federal supervison or control over the practice of medicine. PSRO Finally, I have enclosed an article from the February 13, 1975 New England Journal of Medicine by David Willett, J. D. (Associate Legal Counsel, California Medical Association) entitled "PSRO Today: A Lawyer's Assessment." Our observations to date support Mr. Willett's analysis and conclusions. I urge your consideration of his article (enclosure 3). These are just samples of a rather disturbing series of regulations which are materially interferring with our attempts to comply with the spirit of the PSRO law, with our ability to practice quality medicine and with our rights in a free economic system—and all appear, to us, to exceed the spirit, if not the letter, of the law. Thank you for considering these matters. Enclosures. VARNER J. JOHNS, Jr., M.D., ENCLOSURE 1 SAN BERNARDINO COUNTY MEDICAL SOCIETY, May 6, 1975. Hon. J. B. CARDWELL, Commissioner of Social Security, Department of Health, Education, and Welfare, Washington, D.C. DEAR COMMISSIONER CARDWELL: On behalf of the San Bernardino County Medical Society Board of Directors and membership I wish to register our objections to the proposed rules for physicians' fees published in the Federal Register, Vol. 40, No. 72, Monday, April 14, 1975, (Social Security Administration (20 CFR Part 405) (Regulations No. 5) Federal Health Insurance for the Aged and Disabled-Subpart E refers). The California Medical Association is filing objections to the proposed economic index formulae. Their objections to the index include, in substance, adverse effects on the acceptance of assignment with resulting heavier burdens for the beneficiary; economic discrimination against physicians as a class as opposed to other sectors of the economy; a disregard for the legitimacy of a physician's "real" income as a factor in justifiable or reasonable reimbursement levels; violation of the concept of increases "in the aggregate", as expressed in the enabling legislation (Section 224 of PL 92-603); the lack of a truly refined index as specified by the Senate Finance Committee; discrimination between differing types of physician practice in terms of the net effect on income; and, finally, a questionable reversion to 1973 levels of reimbursement based on 1971 data-or, as we view it, an extension of economic stabilization far in excess of the authorization of the Economic Stabilization Act or the intent of Section 224 of PL 92-603. The San Bernardino County Medical Society shares the concerns of the CMA in these areas. Our membership, however, is deeply concerned over these regulations for some additional reasons. The Medicare system has traditionally been viewed as "health insurance", not welfare. In its design and operation, Medicate relies on the payment of premiums and deductibles and refers patients who cannot afford this health insurance to their state Medicaid program (Medi-Cal in California). Medicare has, to an extent, far greater than the state welfare programs, attempted to avoid interference in the traditional delivery system. Under this philosophy of minimal interference, the payments to physicians have been based on the fees actually charged by the physician to the extent those fees remain within the reasonable parameters reflected in the fees charged by their peers within their own locality. The Bureau of Health Insurance has not attempted to regulate fees as much as it has attempted to advise patients what fees were Usual, Customary and Reasonable, and then to rely on what BHI referred to as the "prudent buyer concept" of the market place. Within the proposed regulations for implementation of an economic index, we see a significant change in this traditional relationship. No longer, it appears, will Medicare pay the actual fair market value within the community. Now it will pay that which DHEW regulates as fair market value. Assuming that the defined "earnings levels of workers" and the "office expense" components comprised a truly refined and equitable economic index, which is questionable, and that truly valid data existed to compute and equitably apply such an index, which is doubtful, it is inconceivable that the statement in Sec. 224 of PL 92603, "... except to the extent that the Secretary finds, on the basis of appropriate economic index data, that such higher level is justified by economic changes. . .' could in any way be construed as justifying that a physician's real spendable net income, especially in an inflationary period, is not a valid component in establishing a fair market value for his services. It is even more inconceivable that such a statement could be construed as mandating the Secretary to change the traditional Usual, Customary and Reasonable reimbursement system to a system of economic stabilization and fee regulation. We see the intent of Section 224 as attempting to set some guidelines to assure that the Federal Government pays only that which is a reasonable and fair price for services rendered to Medicare beneficiaries. To exceed that intent, to subtly begin the process of regulation of fees, as has been done under the Medi-Cal program in this state, risks identification of Medicare with welfare concepts and, like Medi-Cal, risks having fewer and fewer physicians willing to accept the burden of excessive regulation and inadequate reimbursement. With approximately 60,000 Medi-Cal recipients in this County, our Society has received notice from no less than five physicians within the last two months that their Medi-Cal patients |