APPENDIX "B"

GUIDELINES FOR DEVELOPING PROSPECTIVELY DETERMINED RATES

(From American Hospital Association policy statement on the implementation of the Statement on the Financial Requirements of Health Care Institutions and Services, May 6, 1970)

1. The rates of payment for services during a specific period of time should be determined and agreed upon prior to rendering service.

2. The prospective rates should be in accordance with the principles set forth in the Statement on the Financial Requirements of Health Care Institutions and Services.

3. In each individual institution, the prospective rates should result in apportionment of financial requirements without discrimination among all purchasers of care with equal charges for comparable services.

4. The establishment of prospective rates must be supported by current and predicted costs derived through appropriate budget and accounting systems.

5. Institutional performance measurements and comparative evaluations should be based on operating cost rather than full financial requirements; the nonoperating financial requirements should be separately evaluated.

6. In designing the payment system, consideration should be given to the method of handling any significant unbudgeted gain or loss in the previous period. 7. Provision should be made for a mechanism for determining emergency adjustments of prospectively determined rates.

8. Appropriate appeal mechanisms should be established to protect the rights of all parties.

9. The organizational entity responsible for administrative control over the payment process should be established on a statewide basis with appropriate local involvement in the determination of rates.

10. Designing and administering the payment method, cognizance should be given to the continuing relationship between provider and purchaser.

APPENDIX "C"

AMERIPLAN HEALTH BENEFITS

(1) HEALTH MAINTENANCE AND CATASTROPHIC ILLNESS BENEFITS PACKAGE This package would be the keystone of Ameriplan. It would consist of benefits for health maintenance and benefits to protect every person in the United States against the major costs of catastrophic illness or accident. These benefits would be paid for by the Federal government in whole for the poor, and in part for the near-poor through general federal revenues, and for the aged and all others by a tax collected through the Social Security mechanism.

Benefits to protect against the cost of catastrophic illness or accident would become operative depending upon annual family income level, size of family, and amount of health care expenditures. Accordingly, the poor would receive the benefits immediately after exhausting the benefits of the Standard Benefits Package, whereas persons with higher incomes would have to expend a predetermined amount before becoming eligible for these benefits.

To be eligible for the Health Maintenance and Catastrophic Illness Benefits Package, to which all persons would be entitled, each person would have to demonstrate that he has purchased or been provided with the Standard Benefits Package and has registered with a Health Care Corporation.

All persons would be uniformly covered by this package, offered by prepayment plans and private health insurance companies. Its benefits would consist of four components of care-primary, specialty, restorative, and health-related custodial care. These four components of care would provide all of the care most frequently required, such as physicians' services and acute hospital care, and would emphasize ambulatory services.

This Standard Benefits Package would be paid for in whole for the poor and in part for the near-poor through general Federal revenues. For the aged, the Stand

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ard Benefits Package would be paid for by a tax collected through the Social Security mechanism. All other persons would purchase the Standard Benefits Package from prepayment plans and private insurance companies.

(3) SUPPLEMENTAL BENEFITS

One of the basic precepts of Ameriplan would be that within reasonable limits those who are able to pay for their care should do so. Accordingly, for those persons there would be a gap between the benefits provided under the Standard Benefits Package and the benefits for protection against the cost of catastrophic illness or accident, provided in the Health Maintenance and Catastrophic Illness Benefits Package. Various packages of supplemental benefits to fill this gap would be available through prepayment plans and private health insurance for those who wish to purchase them.

ITEM 7. SUMMARY OF PREPARED STATEMENT OF DR. P. JOSEPH PESARE,* MEDICAL CARE PROGRAM DIRECTOR, RHODE ISLAND MEDICAL ASSISTANCE PROGRAM

I. PROBLEM AREAS AND AREAS OF INJUSTICE AS THEY RELATE TO THE FEDERAL/ STATE EFFORT TO PROVIDE FOR THE HIGH QUALITY MEDICAL CARE OF THE ELDERLY CITIZENS 65 YEARS OF AGE AND OVER

A. CRITICISM OF INCREASING EXPENDITURES FOR MEDICAL ASSISTANCE

1. People apply for and are accepted on a Medical Assistance Program primarily for medical reasons and the need of fulfilling medical needs. This represents one of the reasons for the dramatic increase in the utilization of serivces. included within the scope of the Medicaid Program within a period of less than one year after its implementation.

2. I fail to comprehend the alarm and apparent surprise demonstrated by certain representatives of Federal and State Legislatures, community action leaders and administrators of the State Programs themselves, as it relates to this increase in the utilization of medical services by persons accepted on the program. In my opinion it simply means that we do have a live program in action rather than a paper program-which is of no real service to the people for whom it was developed.

3. We have vigorously opposed certain proposals made by certain critics of the State Medicaid Program. Proposals which have originated from frustration as it relates to their inability to cope with the expanding financial burdens imposed by these programs. There have been suggestions that we should not be permitting these eligible recipients to reach out and obtain medical services and supplies from the practitioners of their own choice. There have been those who maintain that these should be cleared through State-organized and administered clinics.

We do not feel that this approach can be justified. We feel that this approach would detract from the dignity of these recipients in need of necessary medical services and supplies. We are proud of the fact that in the Rhode Island Program, eligible recipients are entitled to obtain medical services and supplies from the private practitioners, Neighborhood Health Centers or hospital clinics of their own choice.

B. INCREASED EXPENDITURES IN MEDICAID PROGRAMS AS A DIRECT RESULT OF RESTRICTIVE INTERPRETATION OF FEDERAL MEDICARE POLICY SINCE 1969

1. Skilled Nursing Home care

(a) One of the underlying reasons for the increased expenditure for Skilled Nursing Home care must be attributed to the recently-imposed rigid interpretation of policy pertinent to qualification for admission to Extended Care Facilities as conceived by Federal Medicare.

(b) Since 1969, very few cases have been approved for the maximum 100-day Extended Care Facility allowance under the provisions of Federal Medicare

*See statement, page 276.

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(Part A), therefore, making it necessary for Medical Assistance to assume responsibility for the payment of the full cost of Nursing Home care at a time earlier than the anticipated maximum of 100 days.

(c) I would continue to pose the basic question pertinent to the intent of Public Law 89-97 as it applies to the utilization of Extended Care Facilities. I simply urge a more liberal approach to this important area of admissions of seriouslyill patients to Extended Care Facilities.

2. Visiting Nursing Services

(a) Our State planning for the cost of Visiting Nursing Services was predicated upon the fact that these services would, for the greater part, be paid for through the Federal Medicare Program. However, an apparent redefinition of standards and Federal Medicare policy, in 1969, has created a very real and serious problem for the Visiting Nursing Associations who are providing home visits to the elderly and to the State Agency which is responsible for 23.4 per cent of the population 65 years of age and over in Rhode Island.

(b) It appears that, since 1969, a substantial number of our eligible recipients whom we considered eligible for home health services under the provisions of title XVIII (A) and (B) no longer qualify for these skilled nursing services. The situation becomes all the more difficult to comprehend when we can obtain no satisfactory or logical answer to our queries as to why this restrictive policy. (c) We object very strongly to this new policy by Federal Medicare. If these essential nursing services cannot be provided at home, then we may rest assured that they will be provided through unnecessary extended hospital stays or through unnecessary admissions to Extended Care Facilities, Skilled Nursing Homes or Intermediate Care Facilities.

(d) Title XIX has chosen not to eliminate the elderly and chronically ill from eligibility of payment for visiting nursing services. Title XIX chose to make payment to Home Health Agencies for essential proper skilled nursing ordered by a physician. No restrictions were required in terms of the patient being chronically ill or requiring long-term health care. The result of this more reasonable title XIX policy is, of course, calculated to an increased expenditure of title XIX funds for visiting Nursing services.

C. INCREASE IN FEDERAL MEDICARE PREMIUMS, DEDUCTIBLES AND CO-INSURANCE 1. When Federal Medicare was implemented on July 1, 1966, the monthly premium for the benefits under Part B was $3.00 per month. The premium has gradually increased up to the present assessment of $5.60 per month-an increase of 86 percent.

2. In addition, the deductible for hospital payments increased from $40 in 1966, to $60 in 1971, an increase of 50 per cent.

3. The co-insurance for hospitalization has increased from $10 per day to $15 per day after the 60th day of in-patient hospitalization-an increase of 50 percent.

ITEM 8. PREPARED STATEMENT OF DR. P. JOSEPH PESARE* MEDICAL CARE PROGRAM DIRECTOR, RHODE ISLAND MEDICAL ASSISTANCE PROGRAM

PROVISIONS, POLICIES AND PROBLEMS RELATING TO MEDICAL CARE FOR THE ELDERLY THROUGH THE MEDICAID AND MEDICARE PROGRAMS

I. Historical background

A. Provisions for payment of the costs of medical care by vendor payments under the Federal-State Public Assistance programs have been in effect since July 1, 1952, in all four categories. Until late in 1964, the State used a "pooled fund" into which per capita payments were made each month for recipients of Public Assistance money payments. The scope of services provided was comprehensive except that payment for nursing home care was provided within the money payment for maintenance.

B. On October 1, 1964, the State implemented a Federal-State program of Medical Assistance for the Aging for persons 65 years of age and over who were

*See statement, page 276.

not recipients of Public Assistance but who met certain criteria of medical and financial need. To help finance the program, the enabling legislation, which was enacted in April 1964, created a "Medical Care Fund" consisting of employees' contributions of 1⁄2 of 1% of wages paid by employers (or earnings from selfemployment) up to $4,800 in any calendar year, "except that an employee adhering to a faith depending on spiritual healing is exempt from these provisions.” A full scope of services was provided, including post-hospital nursing home care. Rhode Island did capture the spirit of the Kerr-Mills Act and did provide for a comprehensive scope of medical services and supplies.

C. On July 1, 1966, the Rhode Island Medical Assistance Program was enacted under the provisions of title XIX of the Social Security Act.

CHARACTERISTICS OF THOSE WHO ARE POTENTIALLY ELIGIBLE FOR MEDICAL ASSISTANCE 1. The Rhode Island Medical Assistance Program provides payment for medical services rendered eligible Money Payment Recipients-those persons receiving Money Payments through the categories of Old Age Assistance, Aid to the Blind, Aid to the Permanently and Totally Disabled and Aid to Families with Dependent Children.

2. In addition, the Rhode Island Medical Assistance Program provides payments for medical services rendered to those persons who are determined to be Medically Needy Only. These are persons whose income and resources are sufficient to permit them to provide for their basic needs in the community but are not sufficient to pay for their medical needs.

(a) This group includes those persons who are:

(1) 65 years of age and over.

(2) Blind.

(3) Disabled.

(4) Children under the age of 21, deprived of parental support or care because of death, incapacity, absence or unemployment of parents. (b) They may have an income of $2,500 for a single individual; $3,500 for two: and an additional $400 for each additional dependent child.

(c) Their assets may not exceed $4,000 of one individual; $6,000 for two; and an additional $100 for each dependent child.

3. Also included within the Rhode Island Medicaid Program are children under age 21 placed in licensed foster homes and in institutions operated by voluntary organizations.

4. Persons 65 years of age and over who are in-patients in mental health facilities represent another group of eligible recipients of the Medical Assistance Program.

II. Application process

A. Application for the Rhode Island Medical Assistance Program may be made by requesting an application form either in person or by phone or mail at the local welfare office in the community in which the person resides.

B. The form is then completed by the applicant or someone acting in his or her behalf and brought or sent to the office designated for the area in which the applicant lives.

C. An eligibility determination is made within 30 days of the receipt of the completed application except for those cases requiring additional medical information; in such cases, a decision will be made within 30 days. In every instance, the applicant is notified in writing regarding eligibility or ineligibiltiy. If the person is determined ineligible, the reason for his ineligibility is clearly stated.

D. SPECIAL PROBLEMS RELATING TO APPLICATION BY THE ELDERLY

We are aware of special problems relating to persons 65 years of age and over who apply for Medical Assistance. We realize many are homebound-residing in Skilled Nursing Homes and Intermediate Care Facilities. We have made special effort to reach out to these people in the following ways:

1. Assigning special social caseworkers to assist persons residing in Skilled Nursing Homes and Intermediate Care Facilities and confined to their own homes in making application for Medical Assistance.

2. Working closely with Social Service Departments of all hospitals to assist all who are potentially eligible.

3. Maintaining a close liaison with the Division on Services to the Aging.

4. Advertising the program through radio and television programs, brochures and leaflets.

We have tried to utilize every channel through which the potentially eligible may apply.

E. PERIOD OF ELIGIBILITY

1. The eligible aged, blind and disabled are certified for one year on a preenrollment basis.

2. Eligible family groups are certified for six months.

3. Before the certification period ends, a new application will be sent to each eligible person or family. This application must be filled out and returned to the local office of the Department of Social and Rehabilitative Services. Written notice of eligibility renewal or discontinuance will be sent to the person or family.

F. EFFECTIVE DATE OF ELIGIBILITY

1. Upon establishing eligibility, an individual is entitled to in-patient hospital services and in-patient physicians' services for a three-month period prior to the first of the month of application. For all other medical services provided under the program, an individual is eligible from the first day of the month of application, provided all conditions of eligibility were met in the month in which the services were rendered.

2. This is a refinement which was implemented prior to the implementation of the Rhode Island Medical Assistance Program and subsequent to the Kerr Mills Medical Assistance for the Aging Program implemented in 1964.

It was implemented because, in many instances, it was a serious current illness which necessitated application for this type of Medical Assistance.

The eligible recipient is in need of assistance prior to the date of application— not after the date of certification of eligibility.

3. People apply for and are accepted on a Medical Assistance Program primarily for medical reasons and the need for fulfilling medical needs. This represents one of the reasons for the dramatic increase in the utilization of services included within the scope of the Medicaid Program within a period of less than one year after its implementation.

4. I fail to comprehend the alarm and apparent surprise demonstrated by certain representatives of Federal and State Legislatures, community action leaders and administrators of the State Programs themselves as it relates to this increase in the utilization of medical services by persons accepted on the program. In my opinion it simply means that we do have a live program in action rather than a paper program-which is of no real service to the people for whom it was developed.

G. IDENTIFICATION OF ELIGIBLE RECIPIENTS

1. The check stub attached to the financial assistance check is used by Money Payment Recipients (OAA) as the method of current identification of eligibility during the month of issuance.

2. For persons certified as Medically Needy Only, an eligibility identification card is issued by the State Agency which specifies the eligibility period and expiration date.

3. In addition, all eligible recipients of the Rhode Island Medical Assistance Program are provided with a Plastic Plate which is used by pharmacists and certain other vendors as an imprinting device for billing purposes.

The State Agency has been the target of criticism by certain providers of medical services and a few recipients who maintain that this represents an impediment to the procurement of necessary medical services.

In answer to these criticisms, I would simply suggest that the State Agency would find it extremely difficult, if not totally impossible, to administer a comprehensive medical care program on a reasonable and sound basis if we were to attempt to function without a reasonable method of identifying those who are eligible for the benefits provided by the program.

III. Estimate of number of Rhode Island residents 65 years of age and over A. According to the latest corrected census report provided by the U.S. Department of Commerce, Bureau of Census, for the year 1970:

Rhode Island has a total population of 949.723 persons. The total number of persons-age 65 and over-is listed at 103,032, approximately 10.8% of the total population.