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waivers will increase the use of home care services, thereby reducing reliance on hospitals and lowering the incidence of conversion from Medicare to Medcaid in nursing homes. The major project objective is to gather information to determine client impact, cost effectiveness, and strategies for implementation in the State's long-term care system.

Status: The project currently has 616 experimental clients and 501 control group clients. In December 1982, HČFA approved the State's request for a two-year continuation through September 1984. The State expects to begin implementation of the Medicare waivers in Spring 1983. The project has completed two reports-one on project activities in fiscal year 1980-81 and another on nursing home utilization in the project area. A final evaluation report is expected in Fall 1984. Modifications of the Texas system of care for the elderly: Alternatives to the institu

tionalized aged Period: January 1980-December 1985. Grantee: Department of Human Resources, Austin, Tex.

Description: The purpose of this project is to reduce the growth of nursing homes in Texas and, at the same time, expand access to community care services for needy Medicaid individuals. It is being accomplished by directly changing the operating policies of the State's Titles XIX and XX programs; in particular, by eliminating the State's lowest level of institutional care-intermediate care facility (ICF) II. Existing organizations responsible for the State's Titles XIX and XX programs are responsible for project implementation.

Status: The project is in its fourth year and progress thus far has been good. Of the 15,486 individuals in the “Intermediate Care Facility-II Cohort” group

in March 1980, only 7,455, or 48 percent, were still receiving ICF-II services in March 1982. The institutional population decreased 8 percent from March 1980 to March 1982, from 64,876 to 59,747, and monthly expenditures for the institutional population de creased 6 percent, after adjusting for inflation. In fiscal year 1982, a monthly average of 42,491 individuals were receiving community-based services, up 11 percent from fiscal year 1980. Long-term care demonstration project of north San Diego County

Period: September 1979-December 1983.
Funding: $1,063,463.
Grantee: Allied Home Health Association, Inc., San Diego, Calif.

Description: The purpose of the project is to demonstrate that a Medicare-certified provider of home health services is an appropriate and cost-effective resource for the administration of a long-term care system. The project is comparing client benefits and costs between existing long-term care services and those provided under the project for 500 Medicare beneficiaries. Case-management and client-assessment services are provided by the grantee and waivered services are provided by 19 suppliers of health and social services.

Status: The project is in its fourth and final year. As of September 30, 1982, there were 433 experimental and 206 control patients. During the project's first two years, major efforts involved computerizing the Management Information System, developing and field-testing the assessment instrument, negotiating contracts with providers and suppliers, and training project personnel. During the third year, emphasis was placed on service delivery and preliminary evaluation activities. During the fourth year, emphasis will be placed on evaluation activities and winding down the project. Delivery of medical and social services to the homebound elderly: A demonstration of

intersystem coordination
Period: November 1979-September 1983.
Funding: $599,358.
Grantee: New York City Department for the Aging, New York City, N.Y.

Description: The purpose of the project is to document the characteristics of a homebound elderly population in New York City, assess their health care needs, and estimate the costs of delivering needed care. A coordinated health care delivery model has been established to carry out this project on behalf of the 400 experimental Medicare clients. The project includes a project advisory committee that is comprised of representatives of relevant city departments, and four neighborhood-based service delivery sites.

Status: The project is in its final year. It reached its full caseload of 400 clients in March 1982. Staff at the four service sites perform case management. Each site also has agreements with various providers to directly render the waivered services and

with other agencies to facilitate the coordination of service delivery for clients.
During the final year, emphasis is focusing on service delivery, evaluation activities,
and efforts relating to the wind-down of the project.
Long-term care demonstration design and development

Period: September 1978-September 1983.
Funding: $1,243,368.
Grantee: Mt. Zion Hospital and Medical Center, San Francisco, Calif.

Description: The Mt. Zion Hospital and Medical Center is conducting this Medicare demonstration to implement a hospital-based, long-term care services delivery system in a designated service area in San Francisco, California. This model builds upon components of Mt. Zion's existing geriatric services program. A consortium of five service providers under the direction of Mt. Zion cooperate to provide a range of health and social services to the frail elderly in the designated catchment area.

Status: The project has received waivers to permit provision of certain health-related and social services that are not otherwise provided under Medicare. The project became operational in August 1980, and by August 1981 had reached its pro jected caseload of 200 experimental group members and 100 control group members. The operational phase of the project is scheduled to end on June 30, 1983. The final report is expected in September 1983. Ancillary community care services: A health care system for chronically impaired el

derly persons Period: October 1979-September 1983. Grantee: Department of Health and Rehabilitation, Tallahassee, Fla.

Description: The State is conducting a Medicaid demonstration project in five counties. The purpose of the project is to develop and test ancillary community care services for the chronically impaired elderly 60 years of age and over. All eligible clients receive a comprehensive medical-social assessment administered by a physician and social worker. The participating counties are responsible for developing client-care plans based on the assessment, conducting case management, and contracting for services with local providers.

Status: The total number of project participants is 971, with 761 randomly assigned to the experimental group and 210 assigned to the control group. All sites reached full caseload by June 1982. The project is currently in its fourth and final year. Beginning in April 1983, the project sites will work with community agencies to develop an orderly plan for transferring clients from the project to the existing service delivery system. The final project and evaluation reports will be submitted in Fall 1983. Home health aides

Period: January 1982-June 1986.

Description: Recipients of Aid to Families with Dependent Children (AFDC) will be trained and employed as homemakers/home health aides to provide services to elderly or disabled individuals who, without this support, would require institutionalization. The objectives of the demonstration are to reduce welfare dependency and to prevent or delay the institutional placement of the eligible service clients. This study will measure the costs and benefits of the program, including its contribution to the improvement in employment and earnings capacity of the AFDC recipient and the reduction in the need for institutional care of the functionally impaired home care service client.

Status: The implementation phase of the project began January 1, 1983. Seven States are involved in the project. At this time, some of the States are recruiting and training the AFDC recipients selected to participate in the demonstration. However, the States are at various stages of development. The States involved are Arkansas, Kentucky, New Jersey, New York, Ohio, South Carolina, and Texas. Design development and evaluation of the AFDC homemaker/home health aid dem.

onstration project
Period: June 1982-June 1986.
Funding: $454,174.
Contractor: Abt Associates, Inc., Cambridge, Mass.

Description: The purpose of this project is to develop a research design to evaluate the Aid to Families with Dependent Children (AFDC)/Homemaker Home Health Aid demonstration and to provide technical assistance to the seven States participating in the demonstration. Following the design, the actual evaluation will occur

under separate contracts with the seven participating States. The three major evaluation objectives are to:

Assess the costs and effectiveness of the training and employment of AFDC recipients as homemaker/home health aides on subsequent, continued, and nonsubsidized employment.

Assess the costs and outcome of providing home health aide services to persons at risk of institutionalization who would otherwise not receive these services.

Assess the net cost effectiveness and provide policy-relevant projections on largescale implementation.

Status: The contractor has completed three major deliverables: a data resources report; a report on issues in the design implementation; and the final research design. Comparison of the cost and quality of home health and nursing home care

Period: June 1980-January 1985.
Funding: $1,225,359.
Grantee: University of Colorado, Denver, Colo.

Description: The study assesses the cost, quality, and cost-effectiveness of nursing home and home health care provided by free-standing agencies and hospital-based facilities. Detailed data on patient conditions and services are being collected for a national sample of nursing home and home health patients. A subset of patients will be tracked over time to observe outcomes.

Status: Major research design and data collection activities have been completed.
The third-year activities include initial cost-effectiveness comparisons among the
various care modalities.
Pursuit of institutional alternatives

Period: December 1982-December 1983.
Funding: $242,478.
Grantee: North Carolina Health Care Facilities Association, Raleigh, N.C.

Description: This study explores the potential participation of North Carolina nursing homes in alternative institutional programs that provide services to the elderly. Alternative programs to be examined for ambulatory and nonambulatory patients are home health care, adult day care, meals on wheels, restorative services, and outpatient services (physical and psychosocial). The legal, organizational, financial, and facility resource requirements will be identified.

Status: This project was initiated in December 1982.


Project description

HCFA is planning a demonstration project to develop and test alternative methods of paying HHAs on a prospective basis for services furnished to Medicare beneficiaries and Medicaid recipients. Objectives

The purpose of the demonstration is to determine whether prospective payment mechanisms would reduce Medicare and Medicaid expenditures for HHAs without deterioration in the quality of care by removing disincentives to cost efficiency in the existing retrospective cost reimbursement system. Demonstration design

HCFA will solicit proposals and select a contractor to develop the demonstration design, including recommendations as to the number and location of States and HHĂs to participate in the project. HCFA will probably test between two and five payment methodologies. After HCFA selects the final demonstration design and participating sites, the contractor will help HCFA monitor the ongoing status of the program. Current status

HCFA is currently preparing the Request for Proposals to develop the demonstration. HCFA anticipates that a contrct will be awarded in late 1983. Evaluation

After the initial demonstration design is established, HCFA will solicit proposals and award a separate contract to evaluate the demonstrations.

(b) Over the last three years, one of the Department's major goals has been to gain control of the dramatically escalating costs of the Medicare and Medicaid pro grams. Since there is no clear evidence, even in the most recent report on the subject by the General Accounting Office, we are not proposing expansions in home health care. However, it is important to remember that many of the restrictions limiting the provision of home health care have been eased or eliminated over the last three years. For example, there is no longer a limit on the number of home health visits Medicare beneficiary may receive, and he/she will not be required to pay a deductible or coinsurance for home care. States also now have the flexibility to establish programs of home and community-based services in order to keep Medicaid patients out of institutions.

Question 5. Medicare is focused on acute care, rather than preventive care, and some have suggested that such a policy is, in the long run, more expensive.

(a) Do you see any expanded role for preventive health care under Medicare or Medicaid?

(b) Would you support additional incentives for expanded preventive care?

(c) Would you support the creation of an optional Part C of Medicare, paid through general revenues and premiums for long-term care and health maintenance and monitoring?

Answer. (a) The Administration recognizes that expanded coverage of preventive health care under the Medicare and Medicaid program might contribute to the wellbeing of beneficiaries. However, Congress carefully considered coverage of these services and decided to maintain Medicare as essentially an acute care program. The current Medicare and Medicaid program limitations on these services do not reflect a judgment about their value to beneficiaries, but rather a decision about the best ways of using the funds available to these programs.

(b) Under current law, States have a great deal of discretion in determining the services to be covered under Medicaid, including preventive health care services. Eighteen States provide for preventive health services.

The Administration does not favor an expansion of Medicare coverage to include a full range of preventive health care services at this time. Expanding Medicare coverage to include a full range of preventive and routine health care services would involve significant additional program costs during a period of fiscal constraint. Nevertheless, we are continually reevaluating the Medicare program to determine what changes might be undertaken, within the limitations of available funds, to make the program more responsive to the health care needs of our beneficiaries.

(c) The Administration does not favor the creation of an optional Part C under the Medicare program long term care and health maintenance. Section 2176 of Public Law 97–35 provides authority under Medicaid that allows States to establish case management programs to coordinate long-term care services.

In addition, the results of HCFA's long term care demonstrations either recently completed or underway should provide more knowledge on how to best design a system for long term care and health maintenance.

Mr. RINALDO. Our first panel of witnesses includes representatives of national, State, and local senior citizens' organizations, who will comment on medicare reform from the perspective of beneficiaries.

I would like to call them to the witness table: Herbert Miller, the chairman of the New Jersey Coordinating Council of Organized Older Citizens, one of the largest senior citizen organizations in the State of New Jersey; David Keiserman, member of the New Jersey Council of Senior Citizens Executive Board, and a delegate to the 1981

White House Conference on Aging; Donald Bond, President of the Princeton Chapter of the American Association of Retired Persons, and a specialist in health care delivery in sparsely populated areas; and Esther Abrams, also a resident of Princeton, and a national executive board member of the Older Women's League.

So that everyone in the audience can adequately hear you, let me point out that we have only one microphone. That is the large

1 "The Elderly Should Benefit from Expanded Home Health Care, But Increasing These Services Will Not Insure Cost Reductions,” GAO IPE-83-1, December 7, 1982.

one. So it would be appreciated if you would pass it from person to person as you give your testimony.

If your written statement is longer than 5 minutes, it would be appreciated if you would summarize your testimony. However, the full statement will be included in the record. We will begin with Mr. Miller.



STATEMENT OF HERBERT MILLER Mr. MILLER. First let me thank you, Congressman Rinaldo, for calling this hearing and giving us the opportunity to present some of the views of the members of our particular organization. And I will try to go as fast as I can, but I have some sad notes on here that I think are appropriate.

We would like to have these suggestions and recommendations considered by Congress when they finalize their ideas of what can be done. We think that broader legislation should be enacted to contain the hospital costs. Most people cannot afford to pay the premiums and the deductibles now. Many stay away from the doctors and are self-medicating themselves because of the fact that the doctors' fees are so exorbitant.

Medical practitioners must be made to realize that their fees should be more reasonable. Some of their fees are unconscionable.

Doctors should voluntarily accept the medicare assignments and if they are unwilling, then a law should be passed to order them to accept the assignments. In this regard, the Government should establish a schedule of reasonable fees by geographical location which should be agreed upon by the medical association.

What we are suggesting here is that you make the contract between the Government and the doctor, instead of the Government and the senior citizens.

Procedures should be established to detect abuses of the system by any member of the medical profession. Severe penalties should be imposed on those caught in fraudulent practices.

Just to give you an example, one of the patients came to the doctor with a pain in the leg, and the doctor said, Well, I cannot do anything about that until I first take some X-rays, et cetera, et cetera, et cetera. And to this day it has never been diagnosed, but he presented a bill of $400. And when the patient complained about it, he said, Well, in this case I might accept a medicare assignment. But he billed medicare $155 to get just $100 back. I think there is something wrong in the law that allows doctors to do that.

One of the greatest concerns we have is facing the possibility of being financially wiped out because of an extended illness. The

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