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that is in the hospitals. I think there is another containment cost involved in that.

If the hospitals were not required to have all of this modern equipment, it would not be available to the doctor. But as long as it is there, we go back again to malpractice. As long as it is there, one case in point. This doctor was asked during a trial, did this hospital have such and such equipment? Yes. Did you use it? No. Guilty. There is something wrong here. Doctor's judgment is a doctor's judgment. They should not be subjected to a suit later on, if in his judgment he did the right thing. I think we all make mistakes in judgment, but we are not subject to somebody coming along later and saying: We are taking you to court. You made a wrong judgment.

This should be looked into very thoroughly by Congress.

Mr. KEISERMAN. In home health care, to address home health care is the question, I would like to refer to the fact that many services that doctors render that patients have to go to doctors for, can be furnished in the home by technicians, therapists, registered nurses, licensed nurses, licensed practical nurses. You may laugh when I say that even maternity is covered by medicare for disabled people. And there has been a tremendous saving by the using of midwives.

And this is the type of savings that can be obtained by having trained technicians, nurses, persons who work with seniors, who can come into the home, furnish necessary services, at a much lower cost than doctors will charge in their offices. Also, it will keep a lot of seniors out of hospitals. Seniors, to get this type of care today, either has to go to a doctor or has to be taken to a hospital. If this can be furnished by technicians, licensed, registered, trained persons, it would definitely keep people out of hospitals and out of doctors' offices.

As I pointed out to Congressman Rinaldo, the utilization through assignment does not save the program money. It saves the senior money. But the senior would still be using the assignment, the money is still being paid to the doctor. If you can use technicians and nurses whose rates are far lower, this of course would save tremendous sums of money. It could possibly even save the $400 billion that is being thrown at us. I do not know if it is scare tactic, but I resent it, these tremendous sums that are thrown at us. They announced how bad the social security program was.

Mr. RINALDO. These figures came from the Congressional Budget Office.

Mr. KEISERMAN. I don't dispute these figures. The thing is they sound tremendous when you hear them, but they can be addressed just as the "saving” of social security was gotten through this compromise. Nobody was hurt too badly. I would have liked to have seen some other things that would be done. Everybody was hurt somewhat. I did not like certain parts of the program, as I said. I would have liked to see other things done. One of them was that $18 billion, which the Government admits it owes, but somehow or other Congress neglected to include that in the package. It has nothing to do with what we are discussing now, of course.

But what I am trying to bring out is that these figures, I do not know if they are thrown out to scare seniors so that they are happy

to accept whatever is given to them, or whether or not actually it cannot be addressed and saved with some of these simple things that I am referring to.

Mr. SMITH. If you could write the regs, if you were in that position to say what would and would not be included in a home health care provision, what specifically-you mentioned midwifery, and the possibility of children being born at home? What other kind of services?

Mr. KEISERMAN. I had mentioned others. Nurses coming into the home, rendering services, dressing after an operation. A person can come home, if a registered nurse can come in and render the services needed, for instance, to rebandage, to dress wounds, to bathe the patient, things of that sort.

The senior citizen organizations, every major one, fortunately, we are all alined and affiliated. In fact, we will be meeting this Wednesday again. Has come out with home health care as its foremost priority. Home health care is our foremost priority here in the State of New Jersey and for some reason Congress has never addressed it. And every organization is pushing for it.

Mr. RINALDO. I am hoping we can get the committees to move on that. I agree with you. It is important. I am a strong supporter and we have

been pushing it and I think it is certainly one item that I think will contribute dramatically to a reduction in costs. I have sponsored legislation to promote initiatives for home health care.

Mr. MILLER. I do not think we should be specific when we write the home health care legislation. Use the doctor's judgment, whatever he feels is necessary. Let medicare put that in their coverage.

Mr. Smith. I am suggesting that there would be some parameters that would be allowed and not allowed.

Mr. MILLER. I think if my doctors said: Well, rather than you stay in the hospital here, I will take you home now that you have passed the crisis and you can be treated at home. But, again, I say, he is after the equipment. If I have a wheeze in my chest and I go to him, he says, I want to take an X-ray. He does not have an Xray machine. He sends me to the hospital because the equipment is there. Home health care should be reimbursed by medicare. Keep the patients out of the hospital. Most of us do not want to go to the hospital in the first place.

Mr. Smith. Mr. Miller, as part of the record, I am very strongly in support of home health care inclusion and I have been for quite some time and join our chairman in that concern.

You mentioned the situation of hospices. I have been to a hospice the Red Bank hospice, and I have seen the kind of care that can be provided to our terminally ill patients, those people who have entered the irrevocable process of dying. And I was greatly impressed by the love, support, as well as by the cost-effectiveness of the hospice program, again emphasizing the need for a re-direction into the home health care area.

Mr. MILLER. Still, it was passed last year and it does not take effect until November of this year. Why?

Mr. RINALDO. One of the problems is, while Congress passed it last year, it is incumbent upon the agency to come up with the rules and regulations. And that is what really seems to be the main contributing factor to the delay in implementing it.

I do not think anybody here would want to see any governmental program implemented hastily, and perhaps then create a situation where we are faced with exorbitant costs and the program is abused. So that is the reason for it. And my understanding is that they are moving ahead as quickly as possible.

Mr. KEISERMAN. I hope so.

Mr. SMITH. Mr. Keiserman, is your organization against prospective reimbursement?

Mr. KEISERMAN. We are against unnecessary reimbursement. We are not against reimbursements if they are necessary and if other actions are taken to cut costs and to make the program more valid. But just to keep increasing the costs to seniors at a savings to the program, and that is all that is happening, we are opposed to that. We would like to see some innovative ideas tried, some other things done.

Mr. SMITH. Well, as was pointed out in testimony previously, there have been-we have the New Jersey experience on the DRG's and as Mr. Bond indicated in his testimony, I think it was on page 6, “the New Jersey study convinces us that proper safeguards and all-payer nationwide prospective reimbursement system to hospitals will help control rising costs.” And apparently he seems to be in favor of it.

Mr. BOND. That is correct.

Mr. SMITH. I think it may provide a way of keeping a control on hospital costs. The key is having a program, of course, that is fair and equitable and does not result in some doctors opting not to be involved with the services.

But from your testimony, the reason I am asking the question, I was unclear whether or not you are for the DRG.

Mr. KEISERMAN. I was all for it until I read yesterday's Star Ledger, where hospitals are being encouraged to save money by sending our prematurely ill patients.

Mr. SMITH. Of course an abuse can creep into any good and wellintentioned program. Has the council taken a position on DRG?

Mr. KEISERMAN. There has been no study made of the results of it. How can we? I am hoping a position, a study will be made.

By the way, may I ask the Congressmen, has this DRG program savings been taken into consideration in speaking of this tremendous deficit?

Mr. SMITH. I am sure an analysis can be drawn up, if one has not already, that would show the savings if it was adopted fully. We do have one piece of information, $12 billion of savings over 3 years.

Mr. KEISERMAN. The prospective reimbursement at the national level would end after 2 years, and then it would be at the discretion of the Secretary to set the rates, so that is one point.

The second point is there has been a study by Joel May, president of the Health, Research and Educational Trust of New Jersey, and Jeffrey Wasserman, vice president for Research of the same organization on the New Jersey DRG evaluation and it was completed in December of 1982.

Mr. SMITH. I would appreciate a copy of that, if possible.

What I would like to add-I do not know nationally if we have it, but I know here in New Jersey we have, that hospitals must obtain a certificate of need before they can build, expand and spend a lot

of money. Now, I do not know if this is true throughout the country, but if it is not true, Congress should look into making this mandatory, because hospitals, sometimes just for prestigious reasons, they just want to be big, will spend hundreds of millions of dollars in expansions throughout the Nation and add it to the bills, which could be very unnecessary.

Mr. SMITH. I am sure all of you would agree, too, just based on your home health care emphasis, that you also see an equal emphasis should be placed on outpatient delivery of testing as well as

care.

Mr. KEISERMAN. Yes, definitely.

Mr. SMITH. Finally, I have one more question, and that is to Mr. Bond. You spoke extensively of prospective payments and you warned that there is a new complication, and the way you put it, it may slow the adoption of new medical techniques if they involve additional costs that are not in the DRG schedule. Could you elaborate on that?

Mr. BOND. This is the point I was making. Let us say there are 460 diagnostic groups reported. A new technique is reported in the medical journals. A physician sees the applicability of it to a patient that he has, but it does not involve any of the types appearing on the DRG schedule. What should he do? Should he have the hospital carry those out and have an overrun on that? Should he decide not to use the latest technique because of the lack of a category to put that in? That is the general question I was raising on that.

Mr. SMITH. Thank you for your comments.

Mr. RINALDO. Thank you. And I certainly want to thank the panel for the reactions of the organizations and your own reactions on these very, very serious problems.

Mr. KEISERMAN. Thank you very much, sir.
Mr. BOND. Thank you.

Mr. RINALDO. I would like to acknowledge the presence of Mayor Jack Rafferty of nearby Hamilton Township who is here this morning. Without objection, I will insert his prepared statement in the hearing record.

We now call the final panel on medicare reform, cost containment and benefit restructuring: Anne Somers, a professor at the University of Medicine and Dentistry of New Jersey; Faith Goldschmidt, health economics services, New Jersey Department of Health; and Winifred Livengood, the executive director, of the Home Health Agency Assembly of New Jersey.

Your testimony as presented, the written testimony, will be included in the record in full. And we would appreciate a summary.

PANEL TWO, COST CONTAINMENT AND BENEFIT RESTRUCTURING–CONSISTING OF ANNE SOMERS, PROFESSOR, DEPARTMENT OF ENVIRONMENTAL AND COMMUNITY MEDICINE AND FAMILY MEDICINE, RUTGERS MEDICAL SCHOOL; FAITH GOLDSCHMIDT, HEALTH ECONOMICS SERVICES, NEW JERSEY DEPARTMENT OF HEALTH; AND WINIFRED LIVENGOOD, EXECUTIVE DIRECTOR, HOME HEALTH AGENCY ASSEMBLY OF NEW JERSEY

STATEMENT OF ANNE SOMERS Mrs. SOMERS. Thank you, Mr. Rinaldo, and Mr. Smith, ladies and gentlemen. My name is Anne Somers. I am a professor in the Department of Environmental and Community Medicine and Family Medicine at Rutgers Medical School, which as you know is a branch of the University of Medicine and Dentistry of New Jersey. I am also a research associate, industrial relations section at Princeton University.

I have been a close observer and student of the medicare program since its inception. My husband, Herman Somers, and I served successively on the original HIBAC, the Health Insurance Benefits Advisory Council to medicare between 1968 and 1975. And we authored the first serious study of the program, "Medicare and the Hospitals”, published by the Brookings Institution in 1967. We anticipated a great many of the problems which are generally recognized today, including the cost problem.

Now, I regret to say, we have a different point of view. We are both beneficiaries. But at least it has given us a well-rounded experience, and the opportunity to view medicare from many points of view, some more advantageous than others.

My general views have been set forth in several recent articles, especially a paper entitled “Rethinking Medicare to Meet Future Needs” that I gave to the National Leadership Conference on Health Policy in June 1982.

Mr. RINALDO. If you will yield, we would like a copy of that to be included in the record if you have one.

Mrs. SOMERS. You will have it. And a second paper on “Medicare and Long-term Care," which was published in the New England Journal of Medicine, last July. I would welcome the opportunity to discuss them in greater detail with you or Mr. Smith or any members of your staff.

What I have tried to do-in what was even for 10 minutes a very brief time-is boil my views down to a series of six statements. Obviously, it has to cover a lot of territory. The challenge you have thrown out to us is both imaginative and urgent.

In an effort to be both precise and comprehensive, I inevitably run the risk of sounding somewhat dogmatic. But the topic is so complex and so important, that it really must not and cannot be dealt with effectively on a piecemeal basis.

One, the original goal of the medicare program, that is, to provide needed health services of good quality to all Americans 65 or over, without a means test, was not only humane and idealistic, but feasible.

In reforming medicare, we must be very sure that we do not destroy, but instead we protect and strengthen, this original goal.

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