Commission is a state regulatory agency created in 1973, and charged with authority over hospital budgets and rates. For reference, a copy of the enabling state legislation is enclosed. Since its inception, the State Hospital Commission has completed and adopted a uniform system of accounts, and all hospitals in the state will be utilzing the required chart of accounts by July 1, 1975. This, therefore, places all hospitals under a uniform set of definitions for all cost centers, a uniform set of procedures for describing all revenue centers, and establishes uniform units of measure to identify both costs and revenues. For the first time, reports from all hospitals will then be comparable based on the uniform system of accounts. In addition, the State Hospital Commission has implemented its authority to establish prospective budget and rate regulatory systems within the state. We have completed and adopted a totally integrated system for budgeting, cost allocation, and rate setting to be utilized by all hospitals in submitting their budgets and rate requests to the Commission for approval. These systems have been reviewed with your staff in the Office of Research and Statistics, and we have also provided them with copies of all the materials, definitions, and forms which have been adopted by the Commission. In addition, we have worked extensively in developing more descriptive systems for classification of hospitals. Utilizing a multiple set of variables reflecting both the internal and external factors influencing hospital costs, and utilizing several methodologies for cluster analysis, we have established a statistically valid classification system which defines seven peer groups of hospitals within the state. These groupings were further validated by the application of a multivariate regression analysis model. The resultant classification system will be used by the Commission in analyzing hospital budgets and in approving rates for reimbursement. With the extensive work already completed within the state to establish uniform accounting, budgeting, and rate setting systems, as well as a relatively sophisticated system for classification of hospitals, the adoption of the revised schedule of limits on hospital inpatient general routine service costs may well result in substantial disparity between the actual costs as identified within the state uniform system and the levels of reimbursement which would result from the revisions. We therefore request your consideration of the alternative systems as devised and adopted within the State of Washington, and consider the option of allowing the State of Washington to utilize its system in lieu of the proposed regulations to define the limits of reimbursement allowable under Section 1861(v)1 of the Social Security Act. Not only will the state system as adopted assure the Social Security Administration of the appropriateness of hospital inpatient general routine service costs, but it will also provide the same assurances with regard to special and ancillary services. Since the entire state system is developed on a prospective base, the Social Security Administration can further be assured of the predictability as well as appropriateness of total hospital costs for a complete budget year. We would very much appreciate an opportunity to describe the Washington system in more detail, and would be pleased to come to Baltimore to meet with you or your representatives to further explore these alternatives. Sincerely, LUDWIG LOBE, Chairman. WASHINGTON STATE MEDICAL ASSOCIATION, COMMITTEE ON WAYS AND MEANS, HEALTH SUBCOMMITTEE, Longworth House Office Building, (Attention of Mr. John Martin) REPRESENTATIVE ROSTENKOWSKI AND SUBCOMMITTEE MEMBERS: The Washington State Medical Association is engaged constantly in cooperative efforts with local, state and federal governments, and with local community organizations for the purpose of "making things work and getting the job done" in bringing health and medical care services to the people of our state in their home town, neighborhood, or the closest practical and feasible location. We are delighted that you have initiated an "oversight" session to examine Medicare regulations and policies in the light of Congressional intent. We providers share with Congress and the Department of Health, Education and Welfare the awesome responsibility to make Medicare and succeeding programs work. Others can better address the specifics regarding the proposed rules you are examining. We appreciate this opportunity to make a contribution to your examination from the viewpoint of one state in which all of the principals are tyring to do a good job. Specifically, we find most of the Medicare rules and regulations, proclamations, and directives of the Social Security Administration to be aimed at reasonable corrective action in a massive program. Unfortunately, "something" happens between the recognition of the need for corrective action and the writing of rules and regulations. Attached is a letter recently sent to Secretary Weinberger in which we quote Alice M. Rivlin, Ph. D. Dr. Rivlin's comments in the first paragraph on the top of Page 3 indicate she initially felt the effectiveness of the Headstart Program could be increased by tighter management from Washington, D. C. Dr. Rivlin's point in the second paragraph is the "something" which we believe happens as providers, such as physicians and hospitals, attempt to implement HEW regulations. Dr. Rivlin speaks of over 25,000 school districts involved with the Headstart Program. HEW regulations affect 300,000 physicians, 8,000 hospitals, 25,000 nursing homes, 750,000 registered nurses, 500,000 practical nurses, 143,000 pharmacists, 118,000 dentists, for a total of approximately 5,000,000 health and medical care providers and para-professionals, when other health workers are added. For the Department of Health, Education and welfare to be effective in implementing health programs, it seems to us there is apparent need to provide responsible local management and control systems. These management and control systems should be outside state government, which shares with providers the frustration of attempting to implement regulations formed at the national level. A program that may have potential to provide local managment and control is the Professional Standards Review Organization (PSRO) program, provided the PSROS are looked upon as contractors in the same way as other government contractors and suppliers. At the present time, the PSRO seems to be continuing the management concepts referred to in Dr. Rivlin's first quoted paragraph. The concept of tight management of programs from Washington, D.C., applied to the diverse, complicated and especially patient-oriented health and medical care delivery system are stifling and counterproductive. We feel this is the problem with the regulations you are now examining, and with many past and future problems dealing with Medicare and other programs in the health and medical care field. We would urge the Subcommittee on Health to give careful consideration to the local management and control concept envisioned in the PSRO program. If there is a strong advisory, review, and perhaps approval mechanism at the local level, such a network could produce reasonable, acceptable and workable rules and regulations based on the interest of patients, providers and financing agencies. This approach could provide a current solution for the relatively short-term problems created by the regulations you have under review. We would be pleased to discuss these concepts with you and your staff with regard to long-term problems and solutions. Again, in our opinion, Congress has the opportunity to come up with approaches that will eliminate the stifling effect of centralized management by proclamation of agency-designed rules and regulations. As pointed out in the enclosed letter to Secretary Weinberger, "our efforts to cooperate with the federal government to improve the delivery of high quality medical services and contain their costs are thwarted repeatedly by contradictory statements, rules, regulations and interim policies which emanate from a host of HEW bureaus, services, programs, administrations and offices." A final enclosure is a copy of a letter recently sent to the Social Security Administration regarding the regulation of physicians' fees. We would ask the members of Congress how they might respond if they were given thirty days to comment on a regulation bound to have an impact on the services, they provide, and a reduction in their incomes. Sincerely yours, Enclosures ARCH H. LOGAN, Jr., M.D., President. Mr. CASPAR WEINBERGER, WASHINGTON STATE MEDICAL ASSOCIATION, Secretary, Department of Health, Education, and Welfare, Washington D.C. DEAR MR. SECRETARY: We are frustrated. Our efforts to cooperate with the federal government to improve the delivery of high quality medical services and contain their costs are thwarted repeatedly by contradictory statements, rules, regulations and interim policies which emanate from a host of HEW bureaus, programs, administrations, and offices. For example: Professional Standards Review Organizations (PSRO) and the Utilization Review Regulations. As you doubtless know, the leadership of the Washington State Medical Association has invested a sizeable quantity of time and a large amount of membership dues money to educate and inform the doctors in our State regarding the PSRO law, its intents, purposes, probable structure, and eventual operational characteristics. These efforts have been successful and a cooperative attitude towards PSRO was developed. A major factor in obtaining a cooperative stance towards PSRO was the concept inherent in the PSRO law that "doctors would review doctors," "develop criteria," and generally work toward efficient and effective mechanisms for assuring the appropriateness, quality, and reasonable cost of care, with financial support and oversight from the federal government. Then came the Utilization Review Regulations, now to become implemented on July 1, 1975. Mr. Secretary, you wouldn't believe how many contradictory statements, suggestions, policies, and guidelines we have heard since the regulations were first published on November 29, 1974. Everybody seems to want to get into the act: The Social Security Administration, Bureau of Health Insurance; the Social and Rehabilitation Service, the State agency for Title XIX and the State agency for conditions of participation for hospitals under the Title XVIII program; the Part A intermediaries; the Office of Professional Standards Review; the Bureau of Quality Assurance; the National Professional Standards Review Council; project officers; contract officers; and the local PSRO for the state of Washington. This bewildering babel of pronouncements, policies and guidelines must have set back the programs of all concerned. Surely there must be a better way to do it. It is an almost impossible task when we who wish to cooperate receive this wide variety of contradictory guidelines, criteria, objectives, policies and interim policies. How can you expect us and our colleagues to cooperate when it is not at all certain the government is capable of defining the areas of cooperation. The notification of rule making on the UR regs weakens our hard-won cooperative stance on PSRO. The chaos surrounding the regulations and our efforts to comply would lead any reasonable person to conclude that the doctor-responsibility inherent in the PSRO law is no longer a viable concept. Another instance disruptive to our health care efforts lies in the disorder of accrediting institutions. For many years the Joint Commission on Accreditation of Hospitals (JCAH) has been the accepted authority, has presented criteria for performance, and when satisfied, the institution was "accredited" and approved for payment under a variety of intermediary programs including Medicare and Medicaid. Now there appears a challenge for this authority by HEW. There appear site visit teams within already JCAH approved institutions, using different criteria, and haughtily disapproving the already approved institutions. The State agency responsible for distributing federal health care funds learns only by accident this team is to appear and tags along at its own request being only tolerated by the site visit team. The institutions and the State are confused and frustrated by different criteria, by approval by one and disapproval by the other. If you have a contest up there, better to settle it at your level. Please don't come into our, and other, states, to joust and completely disrupt the honest efforts of us who are trying honestly to comply with the laws. We could cite similar situations with regard to other government health and medical care programs. In the final analysis, consideration must be given to finding some other way to operate personal health services programs than by regulations, proclamations, and by divided and competitive administrative authority. In this setting, the cooperation of dedicated health professionals is weakened or lost. We must do something about this before a national health insurance program is enacted. It may be we are dealing with a process that needs a thorough re-thinking, a development that Dr. Alice M. Rivlin, a former HEW Assistant Secretary for Planning and Evaluation, has called "a new realism about the capacity of a central government to manage social action programs effectively." Doctor Rivlin has described the evolution of her thinking in these terms; "I, for one, once thought that the effectiveness of a program like Headstart or Title I of the Elementary and Secondary Education Act could be increased by tighter management from Washington. Something was known about 'good practices,' or effective ways of reaching poor children; more could be learned and transmitted to the local level through federal guidelines and regulations and technical assistance. As knowledge accumulated the guidelines could be tightened up, and programs would become more effective. "This view now seems to be naive and unrealistic. The country is too big and too diverse, and social action is too complicated. There are over 25,000 school districts, and their needs, problems, and capacities differ drastically. Universal rules are likely to do more harm than good. Nor, given the numbers of people involved, is it possible simply to rely on the judgment or discretion of federal representatives in the field." (The above statement excerpted from Systematic Thinking for Social Action, by Alice M. Rivlin, Washington, D.C.: The Brookings Institution, 1971, pp. 123-24.) Mr. Secretary: In our case, it is the patient who suffers through confused and restrictive regulations and their application. We want to cooperate. What can you do to help us? ARCH H. LOGAN, Jr., M.D., President. SOCIAL SECURITY COMMISSION, WASHINGTON STATE MEDICAL ASSOCIATION, Department of Health, Education, and Welfare, Washington, D.C. DEAR SIR: This letter is written in opposition to regulations published in the April 14 Federal Register that ostensibly were authorized under Section 224(a) of PL 92-603, the Social Security Amendments of 1972. The Washington State Medical Association strongly objects to the Social Security Administration promulgating regulations which would have the effect of erecting further economic barriers to care for the elderly. The proposed regulations treat physicians' fees in an inequitable manner when compared with other types of services paid by the public. The basis for establishing reasonable fees payable by Medicare are established as follows: 1. Actual charge data for each calendar year is accumulated. 2. This data is then used to calculate the 75th percentile of customary charges to establish a prevailing fee which is the maximum payable. 3. On the first of July, following the end of the calendar year, the allowable fees have been adjusted to reflect the new data of the previous calendar year. While this system did recognize the necessity to adjust fees, the fees allowed were a year behind in being current. An even more critical point is that increases that would have been allowed based on the calendar 1972 and 1973 charge data were subject to the Economie Stabilization Act and were limited to aggregate increases of 22 percent per year. The proposed regulations now would begin with that data of calendar year 1973 and apply the economic indexes for allowable increases. It is obvious that allowable physicians' fees, therefore, have not operated under market conditions since July, 1972 and then reflected only those charges that were made in calendar 1971 This combination of limitations has unduly subjected allowable fees for physician services under Medicare to the most stringent controls of any section of the economy. This may serve the purposes of saving dollars to the Medicare program but certainly does not serve the beneficiaries of the program. As physicians receive less and less adequate payment, the assignment rate on Medicare claims drops and the beneficiaries must pay more out of pocket for the services. Furthermore, the economic indexes indicated in the proposed regulations, and the example included in the Federal Register suffer from a lack of backup data and precise definition. In the interests of patients and in order to make it possible for physicians to care for Medicare beneficiaries, we request that the proposed rules be withdrawn and rewritten to provide just and reasonable formulae for allowable fees. Sincerely, ARCH H. LOGAN, Jr., M.D., President. [The following letter was forwarded for the record by Congressman Thomas N. Downing:] Hon. THOMAS N. DOWNING, WHITTAKER MEMORIAL HOSPITAL, Congress of the United States, House of Representatives, DEAR CONGRESSMAN DOWNING: This letter is written on behalf of Mr. P. B. Boone, Chairman, Board of Trustees; Mr. Solomon Travis, President, WMH Association; and myself. Jointly, we solicit your support in squashing the Social Security Administration's proposal to terminate the eight and one half (82%) percent nursing salary cost differential for Medicare patients. All available information clearly substantiates that this category of patients requires substantially more nursing care than do other categories of patients. Our hospital, like most hospitals, is functioning in a very turbulent environment at present. Already creating havoc are problems with meeting new legislative requirements (PSRO), a poor economic scenario, and a rapidly increasing malpractice crisis. Additionally, hospitals in Virginia are already being forced to pass along losses sustained secondary to the January reduction in days of coverage for Medicaid patients. Continued arbitrary actions, such as the present proposal, will surely destroy the health delivery system in this country. It is during times such as these that we feel particularly privileged to have you representing us and we look forward to struggling with you in the future. Sincerely, CHARLES E. BOWEN, Hon. DAN ROSTENKOWSKI, Chairman, Subcommittee on Health, CONGRESS OF THE UNITED STATES, Committee on Ways and Means, Washington, D.C. DEAR DAN: I understand that next week you will be holding hearings on regulations proposed by the Department of Health, Education and Welfare to terminate reimbursement under Medicare for nursing cost differential. In separate letters to me, the Hawaii Hospital Association and an official of a major non-profit hospital in Hawaii have pointed out the hardship such a change would work on non-Medicare patients, whose rates would undoubtedly be increased to make up for revenue lost from the differential termination. I believe the issues raised in these letters are very serious ones, and am therefore enclosing copies thereof for your review. I know you will give your fullest consideration to the points set forth in these thoughtful communications. Aloha and best wishes. Sincerely, SPARK MATSUNAGA, Member of Congress. |