increase with the size of the hospital. However, there are so many exceptions to this generalization that to associate medical specialty and teaching hospitals with community or investor owned hospitals is highly questionable. If this proposed rationale were to prevail, the result would obviously impose a penalty on quality care, improved treatment of complex illnesses, and the advancement of medical practice. As a result, we recommend that consideration be given to all of these factors including a three tier educational classification, medical school, other teaching and nonteaching.

Reference is also made in the proposed regulations to the possibility that a provider may apply for an exception if it can demonstrate that its costs exceed the applicable limit by reason of educational activities or by the special needs of the patients treated. This is an inadequate substitute for sound classifications for the following reasons:

1. Intermediaries will apply the limits in setting interim rates creating a cash hardship until a lengthy exception process has been completed.

2. An even more severe hardship results where a provider, after obtaining area-wide planning approval of an expansion program, attempts to issue revenue bonds but cannot satisfy the feasibility requirements until a prospective exception has been obtained. We are not aware that a prospective exception is provided for and, even if it were possible, the length of time required to obtain the exception could materially effect the marketability of the bonds and the construction costs.

In summary, the revised schedule uses the rhetoric of hospital efficiency but careful analysis reveals a formula divorced from the real world economic environment in which hospitals live. If implemented, the goal of fair reimbursement will be compromised and the ideal of efficiency will be given a backhanded blow. We urge you to take appropriate legislative action to prevent SSA from implementing this illogical revised schedule of limits on hospital inpatient general routine service costs.

Mr. JOHN M. MARTIN, Jr.,
Committee on Ways and Means,

SPARKS REGIONAL MEDICAL CENTER,

Fort Smith, Ark., June 10, 1975.

Longworth House Office Building, Washington, D.C.

DEAR SIR: This letter is written for your consideration during your committee hearings scheduled for June 12, 1975, regarding proposed changes in Medicare regulations.

We are especially concerned with the proposal to eliminate the 81⁄2 percent nursing differential. Sparks Regional Medical Center is a 531 bed non-profit facility providing over 60,000 medicare days of service each year. Elimination of the nursing differential will decrease our medicare reimbursement by $40,000 annually. We feel that elimination of the differential will force other payors to pay an unfair amount for their care as Medicare will no longer be paying for the additional care which is required for the aged type patients.

We feel that the reasons for which the nursing differential was originally established are still very valid and that the differential should be continued. In our opinion, any valid study would indicate that aged patients receive more costly inpatient routine nursing care than other adult non-maternity patients.

Because of our interest in providing health care to all persons at a fair and equitable rate, we urge you to reconsider the appropriateness of eliminating the nursing care differential related to medicare reimbursement.

Sincerely,

Mr. JOHN M. MARTIN,

MARVIN ALTMAN.

SPARTANBURG GENERAL HOSPITAL,
Spartanburg, S.C., June 2, 1975.

Chief Counsel, House Ways and Means Committee,
Washington, D.C.

DEAR MR. MARTIN: At the suggestion of Mr. James R. Mann, Representative from the Fourth District of South Carolina, I am sending you the enclosed statement which I wish to have included in the record of hearings on June 12, 1975. It is my understanding that the Health Subcommittee of the House Ways and Means Committee will hold public hearings concerning the Medicare Program on the aforementioned date and I feel my comments are germane to these hearings. If there should be any information you desire or if I can be of any assistance to the Subcommittee in their hearings, do not hesitate to contact me.

Sincerely yours,

Enclosure.

CHARLES C. BOONE, Director.

STATEMENT OF CHARLES C. BOONE, DIRECTOR, SPARTANBURG GENERAL

HOSPITAL

I am Charles C. Boone, F.A.C.H.A., Director of Spartanburg General Hospital of Spartanburg, South Carolina, a county owned, 600 bed institution providing health care to citizens of Piedmont North and South Carolinas.

I wish to strongly protest the proposed elimination of the 8.5 differential now applicable to Medicare patients. Elimination of this differential as proposed by the Secretary of HEW would subsequently affect the financial stability of many hospitals, including Spartanburg General.

The 8.5% cost differential when initiated was an attempt to pay hospitals fairly for the care of older patients since studies performed at the direction of the Secretary proved older patients required a more intensive level of nursing care. The contention has been made that with special care units such as Intensive Care, Coronary Care, and Dialysis, the need for this differential is no longer valid. This is obviously incorrect since these special units are utilized for all patients and only a small percentage (one-third) of them are Medicare patients. The 8.5% has been shown to be inadequate in the past and continues to be at the present time. However, it is certainly better than nothing. I believe it is always best to be honest about such a situation and it is obviously the intent of the Secretary to arbitrarily cut expenses. This should be stated to the press rather than the devious methods of trying to hide the facts. It is also very obvious that if this 8.5% is eliminated the paying patient in the hospital will have to pay a "sick tax" to pick up part of the Federal Government's share of providing care of the aged.

I would appreciate very much your reconsidering the withdrawal of 8.5% differential since obviously at this time there has not been sufficient hospital input into the decision and should you have any additional information with which I can be of help, please let me know.

OAK BROOK, ILL., June 6, 1975.

Hon. DAN ROSTENKOWSKI,
House Office Building,

Washington, D.C.

DEAR REPRESENTATIVE ROSTENKOWSKI: Medicare payment for medical services rendered from July 1, 1974 through June 30, 1975 is based on the 75th percentile of fees for the same services charged during calendar year 1973. Thus, a significant lag of almost 2 years exists for reimbursement determinations.

The unilateral decision of HEW to fix permanently medicare reimbursement to 1973 calculations or to any calendar year is inappropriate and I don't believe Congress intended such during enactment.

To allow this HEW Medicare Regulation to stay and tie reimbursement to any year will only strangle the medical care reporting system and reimbursement and frustrate the patient recipients.

Your investigation of these actions is very appreciated.

Sincerely,

THOMAS W. STACH, M.D.

STATEMENT OF THE TEXAS NURSES ASSOCIATION DISTRICT No. 9, CANDY LOCKHART R.N., CHAIRPERSON, LEGISLATIVE COMMITTEE

My name is Candy Lockhart R.N. I am co-chairperson of the legislative committee of Texas Nurses Association District No. 9 in the Houston, Texas area. Ms. Susan Tollett is also co-chairperson of the legislative committee.

We are presenting a statement on behalf of Texas Nurses Association Legislative committee a local branch of American Nurses Association with over 8,000 registered nurses actively working in the Houston area. Our organization is composed of all registered nurses who practice professional nursing in a variety of settings.

We appreciate the opportunity to present the thinking of registered professional nurses on an issue of extreme importance, to the health and well being of all Americans and on an issue that will have a significant impact on the quality of patient care.

We will limit our comments to the following two issues.

1. Utilization review procedures for hospital and skilled nursing facilities as conditions for participation in the medicare program.

2. Termination of the inpatient routine nursing salary cost differential as a reimbursable cost of a provider.

BASIS FOR COMMENT

The nursing profession with over 50,000 active registered nurses working in Texas and the largest number of health care professionals in the state TNA feels we are in an advantageous position to render expertise on the following subjects because of their combined abilities and close working relationships to patient care problems.

SUMMARY AND RECOMMENDATIONS

Utilization review procedures

1. The deadline for enforcement no longer be extended past July 1, 1975 and facilities be granted no other time extensions.

2. Technical assistance by the department be granted if rural areas continue to find it difficult to participate in the program.

3. The review procedure take a different look at combining the medical and nursing records in a Problem Oriented System to cut down on chart review.

4. To appoint qualified registered nurses to participate on the review committees where it is feasible because of the mal-distribution of physucians in certain parts of the United States.

Termination of the inpatient routine nursing salary cost differentials

1. No research has been conducted to counteract the original study granting the 8%% cost differential as cost feasible.

2. Reimbursement for disabled patients and patients with end-stage renal disease will and has not affected this cost differential.

3. The geriatric patient is one with multiple diagnoses and without the 82% cost differential it would be economically impossible to provide the degree of skilled nursing care needed by this category of patients.

Utilization review procedures

The utilization review procedures for hospital and Skilled Nursing Facilities as conditions for participation in the medicare program were imposed as progressive means to regulate the cost of health care for the aged as well as the quality of care delivered. We would urge the compliance of institutions by the proposed effective deadline of July 1, 1975. We also urge that no other extensions of the effective deadline be granted. The institutions should be encouraged not to abate their efforts to participate in the program but be assisted to find alternative ways of compliance.

An analysis of the problems existing in the utilization review process should be completed to form the basic framework for an effective program in order that facilities be able to participate. In a survey we conducted in the Houston area the following areas were identified by facilities as major problem areas.

1. Cooperation of the attending physician in implementing recommendations. 2. Cooperation of the attending physician in performing reviews.

3. Cooperation of administration in implementing recommendations.

4. Cooperation of administration in performing reviews.

5. Cooperation of the Nursing staff.

We would urge the committee to take into account the utilization of nurse clinicians and nurse practitioners on utilization review committees as alternates individuals when physician presence in rural areas is an unreal stic requirement. This would require technical assistance and approval. We agree with the secretary that the most feasible method rather than in House committees would be community or region based committees.

The independent medical review will help to assure the quality and appropriateness of services in relation to the current needs of the patient. We recognize as a priority the need to develop better information systems. We offer the suggestions of combining the physician and nurse progress note and the patients charts be reflected on the Problem Oriented system. We feel the utilization of the PORS would eliminate the duplication of checking both physician and nurse progress notes. If they are PORS organized it would provide more data and be more pertinent to the observed patients condition.

Termination of the inpatient routine nursing salary cost differentials

The Texas Nurse's Association, District 9, opposes termination of inpatient routine nursing salary cost differential as a reimbursable cost of the provider. This proposed amendment to the Medicare Regulations is an anti-inflationary measure which will affect the elderly who are already outcasts of our economic society. These are the individuals who are least capable of helping themselves. It is recognized that anti-inflationary measures must be taken. However, it is imperative that these measures not deprive our elderly of needed health care.

We have consulted with nurses, hospital administrators, and social workers in the Houston area, and there is an overwhelming opposition to the proposed amendment. The 160, 000 elderly in this area would be detrimentally affected if the proposed amendment were enacted. The specific rationale is contained in the following four points:

1. Originally studies were conducted which supported the need for 81⁄2% routine nursing salary cost differential for the medicare geriatric patient. No studies have been conducted to support the deletion of this differential.

2. Reimbursement for disabled patients and patients with end-stage renal disease is budgeted separately. Therefore, these individuals are unaffected by this regulation.

3. If an average per diem reimbursement were provided, Hospital and Nursing Home administrators would be encouraged to place patients in intensive care units who are now being cared for in the regular hospital unit. The geriatric patient usually has multiple diagnosis and requires complex physical care. With

out the 82% cost differential it would be economically impossible to provide the degree of skilled nursing care needed by the geriatric patient who is now cared for in the regular hospital unit.

Placement of the patient who needs skilled nursing care in intensive care units would be economically unsound for the Federal Government since these units are usually three times the cost of the regular hospital unit. It would also tremendously overload the intensive care unit, which should operate to provide acute, highly specialized care rather than skilled nursing care.

4. If routine nursing salary cost differential were deleted then the additional cost which is incurred in the care of the geriatric patient would have to be absorbed by the remaining population of patients in the facilities. Therefore, it would beocme an inflationary, rather than anti-inflationary measure.

STATEMENT OF THE TEXAS HOSPITAL ASSOCIATION, O. RAY HURST, PRESIDENT

SUMMARY

The Texas Hospital Association strongly opposes the implementation of regulations terminating the routine inpatient nursing cost differential as the regulations are illegal, expressly in opposition to Congressional intent and would result in additional costs which must be borne by non-Medicare participants.

The Texas Hospital Association strongly opposes the implementation of regulations implementing the revision in the schedule of limits on hospital inpatient general routine service costs as arbitrary and irrational and an apparent effort to reduce budgetary expenditures under the guise of refusing to pay for inefficiency. The Texas Hospital Association supports the concept of Utilization Review, but encourages Congress to consider programs which will assure quality of care along with effecting cost control.

STATEMENT

The Texas Hospital Association, which represents over 630 institutional and 2700 personal members appreciates the opportunity to provide written comments to the Health Subcommittee of the House Committee on Ways and Means. Our comments will address three major areas of concern in these oversight hearings: 1. Termination of the routine inpatient nursing cost differential

2. Revision in the schedule of limits on hospital inpatient general routine service costs

3. Utilization Review

Our comments will address the rationale through which these various proposals have been developed, their applicability to current hospital situations, as well as the effect these various proposals will have on hospitals in Texas.

Termination of the routine inpatient nursing cost differential

The Texas Hospital Association strongly opposes the termination of the_8%% routine inpatient nursing cost differential as an element of the Medicare Reimbursement Formula. Such termination is expressly contrary to the letter and intent of the Medicare Law (P.L. 89-97) which clearly directed that costs with respect "to individuals covered by the [Medicare] insurance programs. . . will not be borne by individuals not so covered" [42 U.S. C. § 1395 x (V) (A)]. While directly in contradiction with the express intention of the Medicare legislation, the Department of Health, Education and Welfare continues to promulgate regulations which serve to reduce Federal expenditures (not costs) in the Medicare Program and result in these non-recoverable costs being reallocated to non-program participants, in opposition to the intent of the original legislation.

The rationale expressed by H.E. W. in no longer recognizing the 82% routin nursing cost differential states:

1. Medicare coverage has been extended to beneficiaries below age 65 disabled beneficiaries, and beneficiaries with end-stage renal disease. 2. Since the 1969 study documenting the differential, there have been marked increases in the numbers and use of special care beds (intensive care, coronary care, etc.) where more intensive nursing care is provided. 3. In recognition of the greater use of costly special care beds, special costs finding and apportionment is allowed under Medicare and, therefore, it is appropriate to discontinue the 8%% nursing differential.

The rationale employed by H.E. W. to justify discontinuation of the nursing differential refuses to recognize a number of highly significant facts which would refute the argument for termination.