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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. N.B.-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.

3. 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 resultant of this more reasonable Title XIX policy is, of course, calculated to an increased expenditure of Title XIX funds for visiting nursing services. For the fiscal year 1970-1971, we had anticipated a visiting nursing agency expenditure of $157,274; our actual expenditure was $185,964.00.


In order to qualify for home health benefits under Parts A and B, the following must exist:

1. Federal Medicare provides payment for home health benefits following hospitalization of at least three days consecutive duration. (For Part A Only)

2. A doctor determines that home health care is needed and sets up a home health plan within 14 days after discharge from the hospital or a participating extended care facility. (For Part A only)

3. The home health care is intended for further treatment of a condition for which services were received as a bed patient in the hospital or extended care facility. (For Part A Only)

4. The beneficiary must be homebound.

5. The services received must fulfill the criteria of intermittent skilled nursing services.

a. Skilled nursing services include two components:

(1) The rendition of direct skilled nursing services, such as the changing of in-dwelling catheters, and the application of dressings involving prescription medications and aseptic conditions.

(2) Skilled nursing observation and evaluation such as may be required in those cases where symptoms are quite likely to occur which will indicate the need to revise the patient's treatment regimen.

Reaction. These criteria are quite broad. As a physician, I fail to comprehend or accept the very rigid-unilateral determinations that are made in denying benefits to specific cases.


1. 86 year old woman-diagnosis of chronic brain syndrome

Service provided-enema.

2. 77 year old woman-diagnosis of diabetic neuropathy Service provided-insulin.

3. 82 year old woman-diagnosis of ASHD with pacemaker

Service provided-checking vital signs.

4. 85 year old woman-diagnosis CVA-left paralysis

Service provided-physical therapy.

5. 93 year old woman-diagnosis fractured ankle

Service provided-general care and instruction.

6. 82 year old woman-diagnosis of Entropion/trichiosis

Service provided-remove ingrown eyelashes.

7. 82 year old woman-diagnosis of vascular ulcer left ankle, fracture right humerus

Service provided-physical therapy and dressing.

8. 89 year old woman-diagnosis of chronic brain syndrome, decubiti on back Service provided-injection and general care.

9. 88 year old woman-diagnosis of mild congestive heart failure

Service provided-Thiomerin injection.


1. Ambulance services is one of the benefits provided under Part B of Federal Medicare. We call your attention to the fact that 100 percent of our Old Age Assistance caseload are entitled to benefits under Part B of Federal Medicare as the State Agency purchases this coverage for its eligible Money Payment Recipients 65 years of age and over, and that 94% of the Medically Needy Only are also entitled to Part B benefits. This means that the State Agency recognizes and assumes responsibility for payment of ambulance services provided persons 65 years of age and over:

(a) when there is a deductible to be met.

(b) when there is a co-insurance factor to be met.

2. A major problem confronting the State Agency and our elderly citizens relates to the failure on the part of the Federal Medicare Program to assume responsibility for certain ambulance services which are truly required. However, Federal Medicare maintains that certain ambulance services fall beyond the scope of their program.

VI. The rise in Federal medicare premiums, deductibles and co-insurance factors A. As of April 1, 1968, the State Agency entered into a buy-in arrangement with the Federal Government to purchase Federal Medicare SMI benefits for all Old Age Assistance recipients.

Our latest estimates indicate that approximately 94% of our Medically Needy Only Recipients 65 years of age and over have voluntarily purchased coverage through Part B of Federal Medicare. We consider this a very significant indication that the vast majority of persons are eager to maintain their dignity in making every effort, even at personal sacrifice, to preserve their independence as it applies to payment for their medical services despite the fact that Federal Medicare has made it increasingly costly for them to continue to qualify for these benefits.

I consider this one of the most serious injustices of the Federal Medicare Program.

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%.

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

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%. For those who are eligible for the State Medicaid Program, the State has assumed responsibility for the payment of the increased deductible and coinsurance segments. However, I am thinking, at this point, about the persons who are not eligible for the State Medicaid Program and who must assume personal responsibility for these payments.

N.B.-Why has the Federal Agency permitted the creation of this hardship for approximately 80,000 elderly persons in Rhode Island?

I am aware of the arguments presented by the Federal Agency to the effect that the Federal Medicare Program represents an insurance program and, therefore, must maintain financial solvency. I fail to comprehend the wisdom of the Federal Legislators who have permitted these increases to be assumed by the beneficiaries of the Federal Medicare Program.

Certainly, if there is one area in which the Federal Government could be of very definite assistance to these elderly persons, it would be in this area of assuming responsibility for increases in monthly premiums, deductibles and the co-insurance factors that have been levied against this group.

Appendix 2


Subsequent to the September 20, 1971, "Problems of Medicare and Medicaid," hearing in Providence, R.I., Senator Pell requested additional information from certain witnesses. The following replies were received:

ITEM 1. SUPPLEMENTARY MATERIALS IN ANSWER TO SPECIFIC QUESTIONS RAISED BY SENATOR PELL: SUBMITTED BY DR. P. JOSEPH PESARE, MEDICAL CARE PROGRAM DIRECTOR, RHODE ISLAND Question No. 1: You mentioned your support for the use of visiting nurses. I have heard that Rhode Island Medicaid only pays visiting nurses $8 for a visit that costs them $12.01. Is this true?

Answer: It is true that the Rhode Island Medical Assistance Program, as of January 1, 1971, does pay $8 for a visiting nursing home visit. However, to make a simple comparison between our fee schedule and the Visiting Nursing Association cost figures does not provide the whole picture of the inter-relationship between the Rhode Island Medical Assistance Program and Visiting Nursing Services within the context of our total Medical Assistance Program. The following factors have to be considered to give added dimension to the Department of Social and Rehabilitative Services' involvement in providing payment for visiting nursing services.

1. Visiting Nursing Associations are the only private voluntary health agencies for which the Rhode Island Medical Assistance Program has provision for making payment for services rendered eligible recipients of the Rhode Island Medical Assistance Program.

This favorable consideration has continued to prevail despite repeated attempts by a large number of other private voluntary health agencies to be included within the scope of our program.

It was in recognition of the essential and unique role of the visiting nurses in providing home health services oftentimes in lieu of direct physicians' services that provision of payment for this service was included as of 1957.

2. There is only one area in which the Rhode Island Medical Assistance Program makes provision for payment according to actual 'reasonable cost' of the service rendered; namely, hospital in-patient and out-patient clinics and emergency room services. This exception has been forced upon us by the legal requirement of P.L. 89-97 as it relates to payment for in-patient hospital services.

It is no secret that Rhode Island, together with many other States, has continued to object to this Federal regulation. In Rhode Island, this hospital expenditure continues to represent the 'back-breaker' of the State Medicaid Program. 3. Physicians servicing eligible recipients of the Rhode Island Medical Assistance Program are paid $10.00 for a home visit as compared to the $8.00 we pay for a visiting nursing visit. I think it is obvious that this differential is not very significant in view of the professional qualifications of the members of each of these two professions. Further, physicians are limited to making two visits per month without having to request prior authorization.1 The visiting nurses, on

1 For persons with chronic illness. In the case of acute illness, prior is required. For Administrative Purposes: An acute illness is defined as a disease which usually runs its course within a period of 30 days.

A chronic illness is defined as a disease which usually extends beyond the period of 30 days and requires periodic review and evaluation.



the other hand, are allowed to make up to six visits per month without requesting prior authorization and up to 15 visits per month on the basis of prior authorization.

4. It should also be noted that the Rhode Island Medical Assistance Program does not impose rigid restrictions on the authorization of payment for visiting nursing services in accordance with the patient's diagnosis and the level of skilled nursing care required as is the practice of Federal Medicare. I respect and appreciate the value of visiting nursing services too highly to even contemplate employing the unreasonable regulatory restriction utilized by Federal Medicare in making payment for nursing visits on the basis of certain limited specific diagnoses.2

5. In order for Rhode Island to continue to afford and administer a comprehensive and liberal Medical Assistance Program, it goes without saying that the continuous use of judicious and reasonable controls is imperative.

The employment of an open-ended appropriation in meeting the costs of delivering health services through payment on the basis of so-called 'reasonable cost' without concern for fiscal responsibility would place the State of Rhode Island in the unenviable position of other States such as New York and California which have been compelled to curtail certain essential services and supplies.

Question No. 2: We have also heard testimony that the reason some skilled nursing homes do not accept Medicaid patients is because the State Medicaid Program does not reimburse them for the full cost of their services. Is this true, and why?

Answer: Skilled Nursing Homes are reimbursed for their services on the basis of their reasonable audited costs up to a maximum per diem rate. The current maximum rate is established at $15 per day.

N.B.-Approximately 75 percent of the Skilled Nursing Homes in Rhode Island are presently classified as homes whose per diem rates on the basis of reasonable audited costs are less than the $15 per day maximum. This phenomenon of 75 percent of the homes falling within less than the established maximum per diem rate is not created by the State Medical Assistance Program. This statistic does indicate that the $15 per diem maximum rate is not so unrealistically low as to fail to fulfill the requirements of the majority of Skilled Nursing Homes.

The Rhode Island Medical Assistance Program is presently providing payment for 1,700 of its eligible recipients residing in Skilled Nursing Home facilities.

Of this total of 1,700 recipients of Medical Assistance who are also eligible for benefits under the Federal Medicare Program, only 125 or 7.5 percent of our 1,700 eligible recipients are in Extended Care Facilities at the expense of Federal Medicare.

It should be further noted that Federal Medicare is currently assuming responsibility for approximately 300 of its eligible recipients (of which 125 are also covered by the Rhode Island Medical Assistance Program) within the State of Rhode Island who are presently residing in certified Extended Care Facilities. It is quite obvious that Federal Medicare is assuming a very small portion of the burden in this area.

The Rhode Island Department of Social and Rehabilitative Services is doing an effective job in placing its eligible recipients in Skilled Nursing Homes. We can assure you that there are no patients who are hospitalized or continue to be hospitalized unnecessarily because a Skilled Nursing Home placement cannot be effected.

I wish we could say as much for the Federal Medicare Program.

While it may appear that there are a number of Skilled Nursing Home Administrators who are unhappy about the reimbursement formula of the Rhode Island Medical Assistance Program, it is nevertheless true that most Skilled Nursing Home Administrators are willing to accept Medical Assistance recipients in need of such care-in preference to the eligible recipients of the Title XVIII Program despite the fact that the Title XVIII Program does not impose a limitation on the maximum rate of reimbursement.

A rather curious phenomenon-not so curious when we consider the frequency with which retroactive denials of payment are made by the Medicare Agency. The 25 percent of Skilled Nursing Homes whose per diem costs are in excess of the maximum rate of $15.00, as established by the Rhode Island State Agency, do continue to accept Medical Assistance recipients on a quota system.

2 Please refer to page 336 which lists a few examples of the types of cases for which Federal Medicare has refused to assume responsibility for payment.

This means that they will accept a certain number of our recipients at lesser than their reasonable audited cost when beds are available. These facilities, for the greater part, represent the newer-more recently constructed facilities— elaborately constructed for the purpose of attracting both private paying patients and beneficiaries of Federal Medicare.

If the maximum rates established by the Rhode Island Agency were not in effect, we would find many of our Medical Assistance recipients who are presently receiving excellent care in the older type facilities going to those newer facilities at a much higher cost to the State Agency.

The cost of providing Skilled Nursing Home care can very readily increase without a concomitant increase in the quality and level of care provided for those eligible recipients.

I can assure you that it is not always the most expensive provider of medical service or Skilled Nursing Home Facility which provides the best quality and highest level of care.

Question No. 3: I am going to list a number of changes being made in Medicare and Medicaid by H.R. 1, and I would like you to comment on each of them.

Answer: (a) The reduction of one-third Federal matching in grants for Medicaid patients staying in general hospitals after 60 days and the reduction by one-third Federal matching in grants for stays in Skilled Nursing Homes after 60 days would result in Rhode Island losing approximately $2,500,000 in Federal matching funds.

This loss would be experienced despite consideration of a projected gain of 25 percent in Federal funding in the areas of out-patient hospital services, clinic services and home health services.

This proposed increased matching obviously is to encourage a more extensive use of services provided outside of hospital and nursing home settings.

The fact remains, however, that the need for long-term care for the severely-ill or handicapped will not be eliminated through the implementation of this device of cutting back Federal matching funds for institutional care. The Rhode Island policy already promotes the maximal use of medical services outside of hospital and nursing home settings.

The principal effect of these curtailments in Federal reimbursement would be to burden the State with increasing costs of providing care for our aged and disabled citizens in our long-term care facilities (State Institutions).

(b) The position of H.R. 1 which requires that persons eligible for the Medicaid Program pay a premium set at graduated rates for receiving Medicaid services will probably decrease utilization of medical services by eligible recipients. One may argue that this decrease in utilization of medical services will reduce costs. However, I think that the small savings realized from the decreased utilization will be more than offset by the increased administrative expenses incurred in establishing and maintaining a system to implement this provision.

It should be noted that this premium factor may deter persons of limited income from seeking necessary medical care which will negate the concept of the original Title XIX legislation which stressed preventive medical care rather than long-term chronic care. I would venture to predict that these savings would seriously detract from the utilization of preventive medical services and lead to a significant increase in payments for therapeutic services in expensive hospital settings.

In the month of January, 1969, we conducted a very careful program analysis for the purpose of determining the areas in which Medicaid expenditures could be reduced without sacrificing the quality of care. We took a very careful and close look at the possibility of requiring our eligible recipients to pay a premium or participate in partial payment for medical services through the medium of payment of a deductible and co-insurance factor.

The results of this careful analysis led us to the conclusion that we would not be achieving a significant financial saving and would undoubtedly impose unreasonable barriers to the utilization of essential preventive medical services. The reduction in utilization of these preventive medical services would only result in a more extensive use of the more expensive therapeutic services— namely, hospitalization and Skilled Nursing Home services.

(c) Yes, the increase in the deductible and co-insurance factors as outlined in H.R. 1 will increase Medicaid costs. We are most distressed at the increases in the Part B premium, the Part A deductible and co-insurance factors which have already been implemented. We are strongly opposed to further increases in these


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