[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]
HEARING ON RURAL HEALTH CARE SERVICES: HAS MEDICARE REFORM KILLED SMALL
BUSINESS PROVIDERS?
=======================================================================
HEARING
before the
COMMITTEE ON SMALL BUSINESS
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTH CONGRESS
SECOND SESSION
__________
WASHINGTON, DC, JUNE 14, 2000
__________
Serial No. 106-64
__________
Printed for the use of the Committee on Small Business
U.S. GOVERNMENT PRINTING OFFICE
67-561 WASHINGTON : 2000
COMMITTEE ON SMALL BUSINESS
JAMES M. TALENT, Missouri, Chairman
LARRY COMBEST, Texas NYDIA M. VELAZQUEZ, New York
JOEL HEFLEY, Colorado JUANITA MILLENDER-McDONALD,
DONALD A. MANZULLO, Illinois California
ROSCOE G. BARTLETT, Maryland DANNY K. DAVIS, Illinois
FRANK A. LoBIONDO, New Jersey CAROLYN McCARTHY, New York
SUE W. KELLY, New York BILL PASCRELL, New Jersey
STEVEN J. CHABOT, Ohio RUBEN HINOJOSA, Texas
PHIL ENGLISH, Pennsylvania DONNA M. CHRISTIAN-CHRISTENSEN,
DAVID M. McINTOSH, Indiana Virgin Islands
RICK HILL, Montana ROBERT A. BRADY, Pennsylvania
JOSEPH R. PITTS, Pennsylvania TOM UDALL, New Mexico
JOHN E. SWEENEY, New York DENNIS MOORE, Kansas
PATRICK J. TOOMEY, Pennsylvania STEPHANIE TUBBS JONES, Ohio
JIM DeMINT, South Carolina CHARLES A. GONZALEZ, Texas
EDWARD PEASE, Indiana DAVID D. PHELPS, Illinois
JOHN THUNE, South Dakota GRACE F. NAPOLITANO, California
MARY BONO, California BRIAN BAIRD, Washington
MARK UDALL, Colorado
SHELLEY BERKLEY, Nevada
Harry Katrichis, Chief Counsel
Michael Day, Minority Staff Director
C O N T E N T S
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Page
Hearing held on June 14, 2000.................................... 1
WITNESSES
Buto, Kathleen A., Deputy Director, Center Health Plans &
Providers Health Care Financing Administration, U.S. Department
of Health and Human Services................................... 3
Evans, Zachary, President, Mobile Medical Services............... 6
Woods, Karen, Executive Director, Hospice Association of America. 8
Goldhecht, Norman, Vice President, Diagnostic Health Systems..... 10
Dombi, William A., Vice President for Law, National Association
for Home Care.................................................. 12
APPENDIX
Opening statements:
Talent, Hon. James........................................... 34
Velazquez, Hon. Nydia........................................ 39
Manzullo, Hon. Donald........................................ 41
Prepared statements:
Buto, Kathleen A............................................. 43
Evans, Zachary............................................... 52
Woods, Karen................................................. 56
Goldhecht, Norman............................................ 81
Dombi, William A............................................. 87
Additional information:
Hospice of Acadiana, Inc. Written Testimony.................. 96
HEARING ON RURAL HEALTH CARE SERVICES: HAS MEDICARE REFORM KILLED SMALL
BUSINESS PROVIDERS?
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WEDNESDAY, JUNE 14, 2000
House of Representatives,
Committee on Small Business,
Washington, DC.
The Committee met, pursuant to notice, at 10:04 a.m. in
room 2360, Rayburn Office Building, Hon. James M. Talent
(chairman of the Committee) presiding.
Chairman Talent. Well, let's open the hearing. I will go
ahead and give my opening statement and if the ranking member
gets here, she can give hers. If not, we will recess just long
enough for the vote.
Today the Committee will be examining the fate of small
businesses health care providers three years after the Medicare
reforms incorporated in the Balanced Budget Act of 1997. These
reforms promised us an improved ability to reduce waste, fraud
and abuse in the Medicare system and to achieve substantial
savings. Certainly savings have appeared. Perhaps fraud and
waste have been curbed but there are some concerns that service
for Medicare recipients is suffering as a result.
Over the past two years, many of us have read the newspaper
articles or seen the reports on television concerning the
bankruptcies of major nursing home chains and the financial
problems of HMOs that provide significant Medicare services.
Most recently, we saw SIGNA Healthcare abandon Medicare
services. The common reasons given revolve around the
reimbursement and fee schedules established by the Health Care
Financing Administration after the 1997 BBA changes.
However, as significant and oftentimes disturbing as those
events were, a little noticed change was sweeping through the
health care industry and devastating the provision of care
available, particularly in rural areas. Small businesses
involved in the provision of ancillary services to nursing
facilities, hospices and home health care patients were failing
or reducing service in rural areas at a record pace. These
small businesses offered lab services, physical therapy,
occupational therapy, wound care, intravenous therapy, portable
electrocardiogram, x-ray, and pharmacy services to rural areas.
These providers offer a range of medical services that a
rural nursing facility would find impossibly expensive to
duplicate. Unfortunately, the providers are fast disappearing
and it appears that the reason may be the Medicare reforms
enacted in 1997. Since the enactment of BBA '97, a number of
previously covered ancillary services have been eliminated. In
addition, many other Medicare services have been effectively
eliminated in rural areas by the reduction or elimination of
the transportation reimbursement rates. Ancillary service
providers for Medicare patients at a rural facility now receive
no reimbursement for travel to the facility and are forced to
either provide services at a loss or suspend service to those
facilities altogether.
At the same time, other provisions of BBA '97 are taking
their toll. The Prospective Payment System was instituted in
1998 to consolidate the billing of Medicare A services through
nursing facilities. Facilities are billed directly and then
reimburse the ancillary care providers. Unfortunately, this has
resulted in some facilities taking advantage of their position
as ``gatekeepers'' to extract discounts from small providers.
In addition, many facilities are increasingly slow in providing
reimbursement.
This creates an addition strain on the system--ancillary
providers faced with this situation refrain from providing
service. While this could be considered by some as good because
it prevents unnecessary use, it also creates a scenario for
misuse. Services previously provided at bedside are now
provided at hospitals, with the added cost of ambulance
transportation and the added stress to the patient. We know
these services are shifting to hospitals. Only last year
Congress acted to increase reimbursement to rural hospitals in
recognition of that added strain. The question is, have we only
treated the systems?
Today we will discuss these problems and I hope begin a
dialogue to restore the small business sector of the health
care industry. We have a number of witnesses who will testify.
What I will do is recess the hearing so that we can go and
vote and then come right back and we will start with our first
witness.
[Recess.]
Chairman Talent. I will recognize the gentlelady from New
York for her opening statement.
Ms. Velazquez. Thank you, Chairman Talent.
Today we examine the need for access to health care in
rural America and the unintended consequences that the Balanced
Budget Act of 1997 created. In study after study, it has been
determined that those Americans living in rural areas tend to
be poorer, older and less insured. Indeed, nearly 22 million
Americans live in federally designated areas where there is
complete shortage of adequate health care professionals or
medical facilities. And to make that situation worse, those who
often need health care the most--senior citizens--represent
one-fifth of the total rural population.
This is without a doubt a travesty for this country.
However, while the need is still great, the commitment by the
federal government is diminishing. This is due in large part to
the Balanced Budget Act of 1997 that has hit small rural health
care providers especially hard.
Thus, small companies were paid through by a simple cost
reimbursement system. Simply put, they were reimbursed for
reasonable related to providing these services. In most cases,
the costs often involve transportation of critical important to
these remote sites but these expenses are only reimbursed on a
fixed basis, regardless of how far they travel to get to the
facility they serve.
Unfortunately, these companies are now forced to carry an
extra burden without proper compensation for reasonable costs
of doing business and it is for this reason that we must take
all of these issues into consideration, whether we are talking
about patient care or protecting small business, to ensure that
every American, no matter where they live, will have that
continued access to basic health care.
I have looked forward to the start of this hearing. I
believe it is important to reveal the unique issues revolving
around access to quality rural health care or the lack thereof.
We are all interested in hearing from the small businesses that
provide health care services in rural areas and how we might be
better able to continue their growth and success.
It is not in the spirit of equality that America has
promised all of us to be denied the basic necessities shared by
all only because of where you live. Many of these people in
these ruralareas who these companies service are farmers.
Farmers have committed their lives and their families' lives to
ensuring that each and every day all of us have food for our families.
I look forward to working with Chairman Talent and the
other members of the Committee in seeking ways to mitigate the
negative impact the Balanced Budget Act of 1997 has on our
Nation's small businesses. We are faced with the serious
dilemma with this issue and we must find a solution to prevent
a serious problem from becoming a potential health care
disaster for business and for to people they serve.
Thank you, Mr. Chairman, and I look forward to hearing from
our panels today.
Chairman Talent. I thank the gentlelady and without
objection, anybody who wants to submit other statements for the
record, they will be entered into the record. I have one from
Mr. Manzullo and I am sure there are other members, as well.
[Mr. Manzullo's statement may be found in appendix.]
Chairman Talent. We will go to our witness panel. The first
witness is Kathleen A. Buto, who is the deputy director of
health plans and providers for the Health Care Finance
Administration. Thank you for being here.
STATEMENT OF KATHY A. BUTO, DEPUTY DIRECTOR, CENTER HEALTH
PLANS AND PROVIDERS, HEALTH CARE FINANCING ADMINISTRATION, U.S.
DEPARTMENT OF HEALTH AND HEALTH SERVICES
Ms. Buto. Thank you, Chairman Talent, Congresswoman
Velazquez, for inviting us to participate in this hearing today
to discuss our efforts to support small businesses that provide
health care in America's rural areas.
We understand that rural providers face unique challenges
in serving the medical needs of our beneficiaries. Assuring and
enhancing access to quality care for rural beneficiaries is a
priority for us and we are committed to continuing to work with
you to ensure that these unique needs are met.
In fact, we have established a Rural Health Initiative
Group within our agency to increase and coordinate attention to
rural issues in all areas of our work. Each of our regional
offices now has a rural issues point person and you and your
provider constituents can call directly to raise and discuss
issues, concerns and ideas. A list of these contacts is
attached to my written testimony.
We are also working to enhance our relationship with the
Small Business Administration and ensure our policies are
responsive to the needs of small business communities,
including those located in rural areas. This cooperative effort
includes training sessions for our staff on small business
issues--more than 100 staff were trained last year by the SBA--
cross-agency review of regulations, and participation in forums
that were held around the country by the SBA ombudsman.
Let me move to some of the issues directly under the
jurisdiction of Medicare, because I know you are interested in
those. We are proceeding with several projects to evaluate
Medicare coverage for telemedicine services and, of course,
this is particularly of interest in rural areas, to find ways
to get some of the more sophisticated services available in
urban areas more directly to rural beneficiaries.
For example, in February we initiated a project with
Columbia University to explore how teleconsultations in urban
New York City and rural Upstate New York affect patient care
and outcomes.
Additionally, we are working with the Agency for Healthcare
Research and Quality to assess the cost-effectiveness of
telemedicine services and the need to expand telemedicine
beyond current payment regulations. We are anxious to share our
results with Congress and we look forward to doing that later
this year.
We have already implemented the majority of provisions in
the Balanced Budget Act of 1997 that assist rural providers.
Working together, Congress and the Administration last year
enacted the Balanced Budget Refinement Act, which includes a
number of reforms and other changes to the BBA that address
some of the BBA's unintended consequences. A number of these
refinements are particularly helpful to providers in America's
rural areas and their patients. We also have taken a number of
important administrative actions to assist rural providers that
complement the legislative changes included in the BBRA.
The BBRA allows more hospitals to be designated as critical
access hospitals or rural referral centers. It holds rural
hospitals harmless for four years during the transition to the
new outpatient Prospective Payment System. It extends the
Medicare-Dependent Hospital program, which assists small rural
hospitals serving mostly Medicare patients, for five years. And
it gives sole community hospitals an enhanced annual update for
fiscal year 2001.
For skilled nursing facilities, it provides an immediate
increase in payments for facilities that treat high-cost
patients. It creates special payments to facilities that treat
a high proportion of AIDS patients and excludes certain
expensive items and services from the PPS consolidated billing
requirements.
Importantly, BBRA provides an across-the-board increase of
4 percent in fiscal year 2001 and 2002 and gives nursing homes
options on how their rates are calculated. It places a two-year
moratorium on the physical and occupational therapy caps that
were included in the BBA, which appeared to be presenting
particular problems for patients in these facilities.
BBRA also delays a scheduled pay cut for home health
agencies until after the first of the year 2001 under the
Prospective Payment System for home health services. It
provides an immediate adjustment to the per-beneficiary limits
for certain agencies, and gives assistance payments to help
cover some of the costs associated with collection of data as
part of the home health PPS system. It excludes durable medical
equipment from consolidated billing.
And we have taken a number of administrative steps to help
rural and other providers. For example, we are making it easier
for rural hospitals to be reclassified and to receive payments
based on higher average wages in nearby urban areas. We are
using the same wage index that is used to calculate in-patient
rates for the Outpatient Prospective Payment System and we are
postponing the expansion of the hospital transfer policy, which
we understand has had an adverse impact on rural hospitals.
We are extending the time frame for repaying home health
overpayments from one year to three, with the first year
interest-free, and we are postponing the requirement for home
health agencies to obtain surety bonds. We will refine the
classification system for skilled nursing facilities in a
budget-neutral way to increase payments for medically complex
patients.
We are also redoubling our efforts to more clearly
understand and actively address the special circumstances of
rural providers and beneficiaries through our rural health
initiative. We have been meeting with rural providers, visiting
rural facilities, reviewing the impact of our regulations on
rural health care providers, and conducting more research on
rural health care issues.
We are participating in regularly scheduled meetings with
the Office of Rural Health Policy in the Health Resources and
Services Administration to make sure that we stay abreast of
emergingrural issues and we are working directly with the
National Rural Health Association on a number of issues and to evaluate
rural access to care issues and policy changes.
Our goal is really to engage in more dialogue with rural
providers and ensure that we are considering possible ways of
making sure rural beneficiaries get the care they need. We are
looking at best practices and areas where research and
demonstration projects are warranted and we want to hear from
those who are providing services to rural beneficiaries about
what steps can be taken to ensure that they get the care they
need.
We are committed to ensuring rural beneficiaries continued
access to quality care and we are all concerned about the
disproportionate impact that policy changes can have on rural
health care providers.
We are grateful for the opportunity this hearing provides
to discuss these important issues and to explore how we might
address them in a better and more responsible manner.
I thank you again, Chairman Talent, for holding the hearing
and I would be happy to answer your questions.
[Ms. Buto's statement may be found in appendix.]
Chairman Talent. We will have questions in a few minutes,
after the other witnesses have testified and I thank you for
being here.
Our next witness is Zachary Evans, who is the president of
Mobile Medical Services from St. Joseph, Missouri. Thank you
for coming such a long way, Mr. Evans, and we would love to
hear your testimony.
STATEMENT OF ZACHARY EVANS, PRESIDENT, MOBILE MEDICAL SERVICES,
ST. JOSEPH, MO
Mr. Evans. Thank you, Mr. Chairman and distinguished
members of this Committee. I would like to request at this time
that my entire written statement be entered into the record.
It is a pleasure to have the opportunity to testify before
you today on an issue of great importance to our industry and
small business owners nationwide.
As Chairman Talent said, my name is Zach Evans and I am the
president of Mobile Medical Services, Incorporated. I am also
the immediate past president of the National Association of
Portable X-ray Providers.
My small business was established in 1992 and is located in
St. Joseph, Missouri. I currently employ five individuals on a
full-time basis.
I appear before you today to explain the dramatic impact
upon my company and others like it across the country of severe
cuts in Medicare reimbursement rates. These reductions,
mandated by the Balanced Budget Act of '97, have hit small
businesses the hardest and have, in turn, forced small
businesses to cut back on nonprofitable services.
This impact is particularly alarming because it has
ultimately led to a reduction in essential medical services for
thousands of Americans, particularly those in rural areas.
In essence, what are seeing are the early symptoms of a
potentially fatal disease that afflicts our Nation's health
care delivery system. The reduction in Medicare reimbursement
rates mandated by BBA '97 has resulted in the complete
elimination of profit margins for small business providers of
some vital services, particularly in the rural areas.
As a provider of medical services which are transported to
the patient's bedside, reimbursement rate reduction has forced
me to view nursing facilities or private homes that are located
in rural areas as financially unsound clients. This means that
I and other small business providers of portable x-ray services
cannot afford to provide a service which is not only safer,
more comfortable and convenient to the patient but less
expensive for Medicare.
It is profoundly ironic that as companies such as mine are
forced to deny service to rural patients because of Medicare
cost-cutting, the only alternative, transportation by
ambulance, significantly drives up Medicare costs.
These service cut-backs to rural areas must be viewed as
the early warning signs of a more far-reaching problem. As
small business providers are forced to shrink their service
area to remain solvent, rural patients and facilities will be
forced to spend more to obtain these medically necessary
services. This cycle of cost-cutting leading to higher costs
for poor services is potentially lethal to the health care
delivery system as a whole.
Perhaps the most dramatic cut mandated by the BBA was the
total elimination of the transportation fee for portable EKG
services. Clearly if a service provider receives no
transportation reimbursement for a service, traveling long
distance to rural facilities is simply not economically
feasible. In my company's case, I lose an average of $50 for
every EKG I perform. This average includes service to local
facilities. If I were to calculate our losses based on distance
traveled, you would see a steadily rising column of red ink,
increasing with every mile we travel to the facility or home.
I am no politician but I do feel that I understand voter
sentiments sufficiently to predict the obvious. Americans would
be appalled to learn that EKGs will not be available to elderly
rural patients simply because they reside outside of the more
profitable urban and suburban areas.
I can say, however, that Americans would be proud to learn
that you, Mr. Chairman, led the fight last year to reinstate
the EKG transportation rate. For that effort, I would like to
take this opportunity to thank you on behalf of the providers
and patients alike for standing up for this vital cause. I hope
that with your strong voice on our side, we may prevail this
year and obtain the EKG transportation rate before more
patients who are denied this basic care.
Unfortunately, EKG services only represent a small portion
of the portable x-ray business. What has happened regarding EKG
services is now spreading to the x-rays. My company once
offered 24-hour-a-day, seven-day-a-week service to all
patients. We have been forced to cut our services to patients
located 25 miles distance or more, to between an 8 a.m. and
3:30 p.m. Monday through Friday. Additionally, we are currently
turning down all new requests for services outside of a 25-mile
radius.
This represent a massive reduction in services, yet we are
currently considering dropping these remaining facilities
altogether. For our company alone, that decision would deny
vital medical services to approximately 15 homes with an
average of 80 beds each or a total of 1,200 patients.
1,200 patients denied service from one small company in
Missouri. I know that dozens of other small business portable
x-rays providers are either considering or have already enacted
similar cuts. I have to stress that these service cuts will not
save my company or others like it without some form of rate
increase. These cuts can only slow our losses somewhat. Without
a rate change, portable x-ray services will inevitably vanish,
leaving ambulance transportation, with its higher cost and
lower patient satisfaction, as the sole alternative.
By the actions of the chairman last year and through many
conversations with the Small Business Committee staff, I know
that this Committee is truly supportive of the Nation's small
business community. I sincerely hope that all members of this
Committee will join us in calling for reasonable solutions to
this critical problem.
Thank you again for the privilege of sharing my views and
experiences with you today.
[Mr. Evans' statement may be found in appendix.]
Chairman Talent. Thank you very much.
Our next witness is Karen Woods, who is the executive
director of the Hospice Association of America. Miss Woods?
STATEMENT OF KAREN WOODS, EXECUTIVE DIRECTOR, HOSPICE
ASSOCIATION OF AMERICA
Ms. Woods. Thank you. Good morning, Mr. Chairman and
members. I am very proud personally and professionally to be
able to represent hospice agencies, to represent the patients
that they care for and their caregivers.
The Hospice Association has been very concerned about the
changes that occurred with BBA '97. Our main focus is looking
at accessibility and quality of end-of-life care and feeling
that all of us deserve quality end-of-life care and we have
certainly seen this hampered by changes in BBA because of the
way it has affected how hospice operation can work.
This is a national issue and it seems to be doubly impacted
upon rural hospices because of all the information that we have
heard already, just information on the ability to hire staff,
to maintain that staff, to provide that service on an
appropriate reimbursement rate.
Currently, only 20 percent of Americans receive terminal
care from hospice programs. When you consider that as a
national average, again you can certainly say that in a rural
area, that is going to be much less than 20 percent. This means
that most people are dying with a terminal illness without the
care and support that they need and that families are not
provided support following the death.
Considering the issue of low population density in rural
areas, it makes it inherently difficult to deliver services and
specifically with such a targeted area--people with a terminal
illness--to get the care where it can be provided, and that
care is in the patient's home.
The rural health agenda, some information that we have
provided was telling us that rural Americans are faced with
issues that create barriers to care because of an inadequate
supply of primary care physicians, as well as other health care
providers, such as nurses, home care aides, social workers and
counselors, and that is a reality. And those particular
disciplines are the heart and soul of a hospice home care team.
In conversations with providers that we represent, we have
been getting information about the impact and some of the
things I am going to list are just in broad terms what they are
feeling. Definitely the shortage of nurses, home care aides,
therapists and social workers, making it very, very difficult
to recruit and then maintain these people. And the Medicare
benefit is defined in a way that the hospice programs are
required to provide certain core services where they cannot
contract with people; they have to be full-time employed, and
this is very difficult when the supply is low.
There has also been a decrease in the hospice market basket
updates and that obviously has affected every aspect of hospice
care and the services provides.
Insufficient reimbursement barely allows them to maintain
appropriate wage and benefit packages for their staff.
There is definitely a lack of funding for innovative
modalities, such as telehealth care. Now certainly when the
Medicare benefit was designed, telehealth, telemedicine did not
exist, but in an, I will say, restrictive per diem rate, there
is no edge and no give for new technologies.
Hospice programs are faced with restrictive regulations
that in some areas prevent them from contracting with
specialized nursing services. There may be one particular
procedure that normally the day-to-day functions of a hospice
nurse does not need to address, but because of regulation, they
are restricted from contracting with a specialist to do so.
They are required to have their home care aides supervised
only by a registered nurse. It would be nice if a licensed
practical nurse could do that. It would certainly allow for a
little freedom and less expensive staffing.
There is also restrictive regulatory definitions of service
areas. Mileage and driving time are the criteria. The criteria
is not the quality outcome. It makes it very difficult and
sometimes almost impossible for a hospice program to provide
service in a rural area.
We were talking to a program in Nevada and there is an hour
drive time. That is the limit. If they cannot make it to the
patient in an hour's drive time, they cannot service the area.
And in the rural area, that is probably not quite halfway to a
routine visit.
We have had a report from some members in the southwest
region of Kansas and they were talking about the domino effect
of BBA '97. Just this past May, on May 31, the regional
hospital center closed its home health agency and the home
health agency, in turn, needed to close its hospice program.
Their concern is there is a county without any home care
services. They said if this was an urban area, competition
would certainly move in and they would have patients referred
to other agencies as they closed their doors. There is no one
to turn the care over to, so these patients are left
unattended. To be left unattended in your last dying weeks
without the support and care of a hospice program I think is a
criminal act.
We have added some information in an appendix to our
comments and I would just like to go through those. These are
some suggestions, recommendations that we have and actions that
we would think would be good to take.
Looking at funding grant programs for training therapists,
medical social workers, nurses and home care aides and other
hospice personnel with a focus on providing home and community-
based practice in areas where shortages exist.
Would like to amend a particular section of the Social
Security Act to include a provision allowing specialized high-
tech nursing services to be provided by contract under the
direction and supervision of a hospice.
Would like to see legislation enacted that would allow
LPNs, especially in rural America, to supervise home health
aides and certainly under the general supervision of a
registered nurse.
Would like to see federal programs that finance hospice
services to adjust reimbursement to allow for appropriate wage
and benefit levels for all clinical staff.
Would like to see clarity in the definition of hospice
multiple site service areas and certainly looking at uniform
reasonable and an up-to-date policy that focusses on the
ability to provide quality care, rather than imposing arbitrary
and ineffective time and distance requirements.
Would like to see legislation clarified around the issue of
telehealth and have that as a service provided by a hospice and
that Medicare should provide appropriate reimbursement for
technology costs for rural hospice providers. And I was pleased
to hear that HFCA is looking at that very issue.
And we would like to see the restoration of the reductions
in the market basket updates that were enacted by BBA '97 and
also the 1999 Omnibus Appropriations Act.
And I thank you and again thank you for your attention to
this very important issue.
[Ms. Woods' statement may be found in appendix.]
Chairman Talent. I thank you and your members for your
service to people.
The next witness is Norman Goldhecht, who is the vice
president of Diagnostic Health Systems from Lakewood, New
Jersey.
STATEMENT OF NORMAN GOLDHECHT, VICE PRESIDENT, DIAGNOSTIC
HEALTH SYSTEMS, LAKEWOOD, NEW JERSEY
Mr. Goldhecht. Thank you, Mr. Chairman and members of the
Committee. I ask that my entire written statement be entered
into the record.
I appreciate the opportunity to appear before you today. My
name is Norman Goldhecht and I serve on the board of directors
of the National Association of Portable X-Ray Providers as the
regulatory chairman. I am also an owner of a portable radiology
company in New Jersey.
Mr. Chairman, the portable x-ray industry has been
seriously threatened by the passage of the Balanced Budget Act
of 1997. We are now truly seeing its effects and they are
devastating to small business. Our industry is made up of
predominantly small businesses, small businesses that cannot
withstand the razor sharp cuts in revenue we have experienced
over the last several years.
There are three areas that I would like to focus on this
morning. I do not wish to sit here and simply complain about
the problems my industry is currently enduring. I want to offer
some suggestion as to how we might move toward resolving our
problems, thus ensuring that we survive the massive changes to
the Medicare system currently under way.
The three topics I wish to focus on are as follows. A rural
modifier, transportation of EKG, and consolidated billing.
As far as the rural modifier, portable x-ray providers
service many skilled nursing facilities, SNFs, and home-bound
patients that reside in rural areas of this country. We must
travel considerable distances to and from these sites to offer
these patients our valuable and cost-effective services.
Our industry has been one of the first cost-saving
alternatives for the Medicare system. Based on a 1995 cost
report performed by the Center for Health Policy Studies, the
average charge to Medicare was appropriate $87 for a typical x-
ray performed by a portable x-ray provider. The average cost to
transport that same patient by ambulance was $420. If the
patient is admitted to the hospital, the cost rises to
thousands. It should also be noted that the transportation
portion of our fee is prorated among the number of patients we
see per visit. The ambulance fee is per patient.
We are recommending an additional fee when our services are
required in a rural area. We understand that this is an
established practice in other areas and we feel that the
additional travel that is required would warrant such a
request. The fee would be reimbursed in the form of a special
CPT code only to be used and billed when a provider performs
services in a rural area.
Transportation of EKG service. Currently we do not receive
any additional reimbursement to travel to a nursing facility
when performing an EKG. This reimbursement was taken away from
an industry when the Health Care Financing Administration
deemed CPT code R0076 a noncovered service. The service had
previously been covered.
My current reimbursement for the EKG technical component is
$16.49. This is the same reimbursement that a physician's
office or a hospital receives if they were to perform the test
in their office. Each time an EKG is performed, we must
dispatch a technician who must travel anywhere from five to 50
miles or more. Clearly this does not cover the expense of the
exam.
We feel the simple solution is to reinstate EKG
transportation as a covered service.
Consolidated billing. The pending onset of consolidated
billing is a major issue facing our industry. We have been
working with several agencies to seek a resolution. The BBA
mandated Prospective Payment System, PPS, and consolidated
billing for skilled nursing facilities. The basic premise of
these acts is that they take away the control of the billing
aspects of our members and give them to the nursing facilities.
While consolidated billing has been delayed, PPS has been
in effect for over a year and we have seen the effects. Under
PPS, residents that are Part A patients of a SNF have to be
billed directly to the SNF and the SNF will reimburse the x-ray
provider for the service. The problems that we have encountered
are that the SNFs sought large discounts and have delayed
payment from 90 to 180 days and in some instances, due to the
large number of nursing home chains that have declared
bankruptcy, we have never received payment.
This has put the small businesses in our industry in
financial difficulties, and while PPS only represents a small
portion of the work that is performed by our providers, it has
given us a look into the future of consolidated billing.
Consolidated billing will require our members to bill the
SNF for the services performed to the residents that are
currently being billed to Medicare Part B. This will certainly
cause the small businesses a hardship. The SNFs will demand
discounts from our current fee schedules. The consolidated
billing requirement of BBA '97 requires that all ancillary
providers performed in the SNF be billed directly to the SNF,
rather than the provider billing Medicare directly.
Although consolidated billing has been delayed, the
principles behind the system cause serious problems with the
small businesses. Medicare currently pays providers within 21
days of receiving a valid claim and pays interest when they do
not pay promptly. Additionally, a provider never has to be
concerned about receiving reimbursement or having to give a
discount in order to provide services.
The onset of consolidated billing would cause providers to
wait, on average, 90 days or up to 180 days or even longer for
payment. The SNFs would also require the providers to give
discounts for the added billing expense that they would incur.
The main objective of consolidated billing was to reduce
fraud and abuse. It was to make the SNFs the gatekeepers of
services performed in their facilities so that they might
monitor the billing that is being done. This is a budget-
neutral issue, as the amount of money the government is paying
is only being transferred from the providers to the SNFs.
This is why we have suggested the voucher system. This
would require the providers to submit a bill at the end of each
month to the SNF for all services performed. The SNF then would
have to sign off on an approved voucher and the provider then
could bill Medicare and receive payment directly. This would
accomplish a needed compromise. The facilities verification
would cut down on fraud and abuse while allowing the providers
to receive payment directly and promptly. It should be noted
that if the SNFs receive payment directly from Medicare for
services that the provider has delivered, they would have a
direct interest in having more services performed. If they
require providers to discount their services, they would
receive additional funds, meaning the more services performed,
the more revenue to the SNF. Since the SNF is a requester of
services, they control how many services are to be performed.
The voucher system is a budget-neutral solution which
allows us to solve the problems that can arise with
consolidated billing while still accomplishing the government's
main objective.
Thank you, Mr. Chairman and members of the Committee, for
the opportunity to address you today. I would be happy to
answer any questions.
[Mr. Goldhecht's testimony may be found in appendix.]
Chairman Talent. I thank the gentleman.
Our last witness is Mr. William A. Dombi, Esquire, who is
the vice president for law of the National Association for Home
Care. Thank you, sir.
STATEMENT OF WILLIAM A. DOMBI, ESQ., VICE PRESIDENT FOR LAW,
NATIONAL ASSOCIATION FOR HOME CARE
Mr. Dombi. Thank you, Mr. Chairman and Ms. Velazquez and
members of the Committee for the opportunity to testify here
today.
The question posed in this hearing is whether Medicare
reform has killed small business providers. With home health
agencies, the answer is an unqualified yes. Home health care is
a dying breed in this country at this point as a direct result
of the Balanced Budget Act and the institution of payment
reforms with the Medicare home health benefit.
Mr. Talent, in your State of Missouri, Health Care
Financing Administration statistics indicate that 79 home
health agencies have closed since the Balanced Budget Act,
which represents more than a third of the agencies in that
state, but the updated numbers are 103. So we have an
accelerating pace of closures. In addition, 32 out-of-state
home health agencies are no longer servicing residents in the
contiguous areas between the state of location and the State of
Missouri.
With respect to home health in the Virgin Islands, it has
become the virgin island. You do not have home health agencies
available to provides services on all of the islands. And each
of your states is in a similar position, both in metropolitan
but in particularly rural areas.
Rural areas are subject to closures due to the changes in
reimbursement, primarily for two reasons. One, Medicare, with
its changes in reimbursement, did not respect the differences
between rural home health agencies and nonrural home health
agencies. The reason is that the system was designed with the
concept of averaging and we all know that the only way
averaging works is if there is only one participant in the
process because with averaging, there are people above and
below the line and rural home health agencies are generally
below the line. They have costs which for years have been
documented to be 12 to 15 percent greater than the cost of
nonrural home health agencies. The level of utilization of
services has been documented to be over 15 percent greater due
to the nature of the patients served in those rural
communities.
Home health agencies, by definition are small businesses,
94 percent by HCFA's definition are small businesses. And for
rural home health agencies, when we speak rural, we speak of
float planes in Alaska. In Montana we talk of snowmobile
delivery of services and in the Delta we talk of boats just
transporting people from house to house.
When we look at the definition of rural, the nearest
McDonald's is 100 miles away, and that is a long way to go to
get a hamburger and you are not going to get home care
delivered out into those locations.
The policies and practices of the Health Care Financing
Administration have added to the problems. In one respect, they
tout their successes relative to rural health care providers,
but they do not mention home care rural health care providers
in that respect. In virtually every case where a home health
agencies has a debt with the Medicare program as a result of
the reimbursement changes, the Health Care Financing
Administration has opposed reorganization of that debt in
bankruptcy court. They have institutionally opposed the use of
the compromise authority they have on any of the debts.
And, as a result of that, public health agencies and local
taxpayers throughout the Midwest and the rest of the country
have been forced to subsidize the Medicare program. Small
business owners have subsidized them for years and have closed
down as a result of that, as well.
The Prospective Payment System for home health begins
October 1, 2000 if everything goes on schedule and I know this
Congress and the home care industry and the Health Care
Financing Administration hope that PPS is the solution to the
problem caused by the IPS of the Balanced Budget Act, and I
think the answer to that for rural small home health agencies
is: no. It is a perpetuation of the problems caused by the
Interim Payment System. It still works on the basis of
averages. And despite the authority that Congress specifically
gave to the Health Care Financing Administration to recognize
geographic differences in home health service delivery, the
Health Care Financing Administration has failed to put in place
a rural differential and that will lead to further
deterioration in the foundation of delivery of home care
services.
Why is there a need for a differential? Well, in
Washington, D.C. a home health agency will drive probably four
to five miles to get to a patient's home. In Northern Virginia
the same and in the areas of Baltimore, the same in Maryland.
But when you are in Montana, you are driving two and a half,
three hours between patients' homes. Productivity levels are
significantly lower.
Home care is a local service. Unlike the closure of rural
hospitals where patients were then transported by ambulance to
the rural hospitals, you are not going to transport the patient
to a home care setting. You transport home care to that
patient.
In addition, with prospective payment at this point in
time, the Health Care Financing Administration still refuses to
allow the use of telehealth services within the prospective
payment method that is being offered to the home health
agencies. No flexibility is being provided to them.
Additional problems--labor and workforce, and part of those
are due to Health Care Financing Administration policies.
Hospitals are allowed to reclassify their location for purposes
of wage index adjustments when the hospital competes with
metropolitan-based hospitals for the same labor force. Home
health agencies, under the current system and the prospective
payment system, are not allowed to do that.
And finally, a HCFA policy that is causing great problems
in rural areas is their definition of what is an allowable
branch location. A branch location, by definition, cannot be
more than one hour away from the parent sites and in order to
perform supervision and oversight of the branch, you cannot
rely upon electronic transmissions. In other words, telephones,
fax machines, email and everything else cannot be considered in
determining whether a parent home health agency can adequately
supervise a branch site.
Branch sites will allow rural home health agencies to
expand their territory, expand their patient base, which is
necessary to survive under the prospective payment system. With
a rural home health agency, one single patient at $12,000 of
cost and $3,000 of reimbursement on the episodic 60-day basis
will bankrupt that home health agency, and that is due to the
small size and adverse selection by coincidence that will occur
for those rural home health agencies.
Within this testimony, I have offered several solutions. We
need to change the branch office definition. We need to bring
in a rural home health agency differential in terms of
reimbursement. We must make the wage index applicable to home
health agencies, the same way it is applicable to the
hospitals. And we have to create some workforce flexibility to
respect the fact that rural areas and small businesses
providing home health services do not have a labor control that
you see with larger employers across the country.
I plead with you to try your best to give rural home health
agencies the opportunity to serve rural patients. We have a
dying breed and by next year, if the system continues as
proposed, we will not have a foundation for home health
services to provide to the rural communities to restore. Thank
you for your time.
[Mr. Dombi's statement may be found in appendix.]
Chairman Talent. I appreciate that testimony. Go a little
bit more into the branch office for me, if you will. HCFA is
discouraging home health agencies from establishing branch
offices. Is that what is going on?
Mr. Dombi. The Health Care Financing Administration
actually has a variety of policies on this issue, depending
upon what regional office that you are dealing with and varying
interpretations, as well. But predominantly, the interpretation
begins with the question: Is the branch office more than 60
minutes away from the parent site? And if it is, it is
presumptively a nonqualified branch office.
They have made occasional exceptions and there have been
some recent----
Chairman Talent. And if you are not qualified it means you
cannot provide service out of that branch office?
Mr. Dombi. You cannot locate a branch there and provide
services and receive Medicare reimbursement. And as it comes to
the question of oversight and supervision of the branch by the
parent office, you have to have staff from the parent actually
go to the site of that branch on a regular ongoing basis and
the parent's staff must be capable of also seeing the patients
served by that branch in order for there to be considered
adequate supervision.
Chairman Talent. Is the concern fraud or something here? Is
it the quality of service or what?
Mr. Dombi. We have asked the question how do you assess the
appropriateness of supervision and oversight if the branch is
10 miles away and frankly, we have not yet received an answer
to that question because we think the answer should be the same
answer that is applied when it is an hour away or two hours
away or three hours away.
So we do not know the rationale. We suspect that the
rationale is more that branch offices traditionally with HCFA
were actually unknown entities. They did not have a formal
reporting mechanism for branch offices, so they did not have a
formal oversight mechanism for branch offices, either.
Chairman Talent. Do you want to comment on that?
Ms. Buto. Yes. Actually, the chairman was right. I think
the concern about branch offices did grow out of a concern
about a variety of things coming together. One of them was
whether the branches really were providing bona fide home
health services under the conditions of participation. And then
you get into issues is it such as, just an office and you have
unsupervised staff; is this really a home health agency? Is it
really tied to an entity?
This set of requirements came out of that concern and some
of them were looked at by the Inspector General's office and
other oversight agencies that pointed out this concern.
So Mr. Dombi is right that this is something where the
regional offices have some discretion and that we are, I am
told, working with the industry to try to come up with more
uniform standards that can be applied. There is an underlying
issue of whether the branch itself, in fact, is a real part of
the home health agency or whether it is an unsupervised office
that really would not meet Medicare conditions of participation
for quality and supervision. So that is really where it comes
from.
Chairman Talent. One of the reasons I ask about this is
because it seems to me one area of some relief here is to be
pretty ruthless in eliminating requirements that raise costs
and do not have any relationship to quality.
In other words, in a field where the problems are so severe
and the money constraints are so great, every dollar that we
waste with some stupid regulation that says a branch office can
only be an hour away, it cannot be one hour and five minutes
away, is really almost criminal because we do not have the
dollars to waste.
I am not saying he is right. One of my complaints about
HCFA over the years has been almost a nonchalance regarding how
much money may be wasted in filling out a form or some
regulation that does not accomplish anything and I wonder if
you share that sense of urgency at all.
Ms. Buto. Oh, absolutely. And I think definitely the point
about the right balance and allowing branch offices because
they are needed for access purposes is a good point and I think
we have to figure out how to do that in a way that everybody is
confident that, in fact, this is a home health agency or a
branch of a home health agency and I believe that it is
possible to do that without having unwarranted requirements
that simply waste money.
If I could just comment on one other thing that Mr. Dombi
said. I know that the numbers show that a number of home health
agencies have closed or consolidated, and we frankly do not
know how many of them have consolidated versus really closed.
We and the inspector general's office and the GAO have all
looked at and we have also been in touch with our state health
insurance counselors, who, like ombudspersons, who take
complaints from beneficiaries about access to home care and we
are not finding that has been a major problem.
In many of the areas where these agencies have closed and
there has really been a relative handful of states, those
states tend to be the states where we had a doubling or so of
agencies within the last few years and they are the ones where
disproportionately we are seeing a reduction. But I just wanted
to address the issue of the closures because many of them are
consolidations.
Chairman Talent. Well, let me go into that and get this on
the record with you because ever since the Congress passed the
act of '97, I have been myself besieged with home health care
providers and I am sure everybody in this Committee has had the
same experience and these are people who we know in the
communities we represent and know to be credible people. I mean
they may be mistaken but they are not walking into my office
and lying to me about the situation. Anybody can be mistaken.
And over and over again, and I know every member of
Congress has had this experience, and I guess what I am trying
to say to you is that is so inconsistent with the response that
really there is not a problem, which is kind of what you just
said.
Now I appreciate your candor and I do not want to jump down
your throat for it. In fact, it is almost a relief to me that--
it would be a relief to me to believe that the agency believes
there is no problem. I would rather believe that than that you
know that there is a problem and you just do not care about it.
Do you know what I mean? At least we should be able to
establish whether there is a problem or not but I have just
been told over--obviously, it is anecdotal; my office does not
have the capability of conducting an empirical survey or
anything--that, in fact, they are closing down; they are not
able to provide the same level of service. People have to be
suffering out there.
Is there anybody here who has not had that experience?
Ms. Buto. I did not want you to think I was saying there
was not a problem for home health agency providers. I think the
interim payment system has been a problem for many home health
agency providers and some of it has been because it is based on
a cost experience in the past.
So essentially what it did is it said let's take your cost
experience that occurred several years ago and you may have
grown in terms of the number of visits you provide and so on.
We are going to essentially roll you back to that earlier
period and set tight limits based on what your experience was
back then, on what your overall cost was that will be
recognized. There is no question that I think that has had an
impact.
What I was addressing was the beneficiary impact as we know
it and has been surveyed by GAO and others, but I do think and
we are quite anxious to move to the prospective payment system
where we believe by paying on an episode basis, the system will
be better for home health agencies, it will provide the greater
flexibility for them. They will not be under the same kinds of
constraints and there will be more ability to move.
I was interested to hear Mr. Dombi say if we continue on
the current path, I guess I am wondering if he is not favoring
going to the prospective payment system because I actually
thought he was. But I do believe that the October 1 system will
be better. It will not be perfect. Some of the things we have
done to really scale back on recovery of overpayments are
designed to help home health agencies so they do not face
drastic reductions. So I did not want to leave you with that
impression.
Chairman Talent. It seems to me logical that there will be
a tendency on the part of the facilities to want to overuse
services and then make some money back through discounts from
the providers, particularly since they are complaining that
they are not being compensated enough. Do you think that that
is going to be a problem?
Ms. Buto. The home health agencies, you mean----
Chairman Talent. As I understand the PPS and somebody
correct me if I am wrong, you are going to be billing through
the skilled nursing facilities. Is that correct?
Ms. Buto. Oh, you are talking about the consolidated
billing.
Chairman Talent. Yes.
Mr. Dombi. That does not apply to home health services.
Chairman Talent. Okay. It applies to the other ancillary
services.
Ms. Buto. Yes. It would be things like x-rays, as the
gentleman was saying, would be billed through the skilled
nursing facility and as he said, it has already been billed
that way for the prospective payment for skilled nursing
facility.
Chairman Talent. Are you concerned about the phenomenon
they are talking about the skilled nursing facilities, in
effect, driving--using it as an extra revenue producer for
them? In other words, they will overuse services, try to create
discounts with the ancillary providers and then they get to
keep what is left. So, in effect, we achieve the opposite of
what we want. We get services overused and we also have the
pressure on the small businesses.
Ms. Buto. Well, of course, first of all, we have not put
this system in place because it is one of the more difficult--
it involves both skilled nursing facilities and all these other
providers having to--we have to have a way to collect those
claims and actually validate them.
We are hearing a lot of this kind of concern. I just want
to tell you on the other side, and we do not know exactly what
is going to happen, but both we and the oversight agencies have
this among the things we will be monitoring the most closely to
see what actually is going to happen.
But the concern on the other side, that led to the
enactment of the consolidated billing provisions, was that we
were getting billed without much oversight by the nursing
facility which had the patient by a number of different
suppliers--physical therapy, DME, x-ray, et cetera, suppliers
providing things like supplies that are used in their nursing
home.
In addition to Medicare, there often was a Medicaid payment
involved because many of these individuals get both nursing
home coverage through Medicaid and Medicare.
What was found in a variety of different surveys by
oversight agencies and our auditors was duplicate payment,
payment that was very hard to trace to medical necessity, and I
think the general recommendation that came out of those studies
was we need an accountable entity here that looks at what is
being provided to that patient and it ought to be the facility.
So I understand what the gentleman is saying about the
potential that the facility will try to get discounts and so
on. We understand that. I think we are going to be concerned
about access to these critical services if that really seems to
be a problem.
On the other hand, HCFA, as you know, is constantly
barraged with criticism for setting prices. We do not know what
prices are, we cannot predict what the marketplace is going to
do, and that is why we are moving to these kinds of systems
where we give more of that flexibility to providers to make
those trade-offs and try to really strike the best bargain for
their patients.
Chairman Talent. What about Mr. Goldhecht's idea of like a
voucher where the facility would still have to approve--that is
how I would understand it.
Mr. Goldhecht. Correct.
Chairman Talent. They would approve your billing but they
would be paid directly.
Ms. Buto. And again they would be paid on a fee schedule,
as I understand it, that we set.
Again I think we would have to go back to one of the
underlying premises of the PPS, which is did we want to give
the facilities more of that control or do we want to continue
setting the price and sort of guaranteeing a price to every
supplier?
HCFA is behind and supports the idea of turning that
decision-making over to the facility, but we are obviously
going to worry about access issues. That is where we are, and
no one has raised the voucher issue before to us and we would
certainly be glad to take it under consideration as we think
about possible changes in the system, but that is a new idea.
Chairman Talent. Let me raise two more issues before I
recognize the gentlelady from New York and they are related.
Parts of the testimony today just seem to me to be again so
inherently plausible and I want to get your response to it.
One of them is the concern about ending reimbursement for
the cost of transportation or travel really for an EKG service
that we have heard about today. So now we are in a situation
where--I guess this is Mr. Goldhecht's testimony--the current
reimbursement for the EKG technical component is $16.49 and
that is what you get regardless of how far you have to travel
to give this EKG.
Mr. Goldhecht. Right.
Chairman Talent. So it just seems to me that obviously the
cost for small businesses are going to be greater if you have
to travel two hours to administer the EKG than if you can do it
in five minutes. And if the reimbursement schedule or system
does not recognize that, it is flat out obvious that you are
going to be underpaying for certain kinds of EKGs.
Why isn't Mr. Dombi right in saying the same thing about
the need for a rural differential for home health? If you
calculate on an average, you are obviously going to be
underpaying people who have greater costs to provide the
service.
Now, what is HCFA thinking, that they will just cost-shift
or something or that the average is high enough that they can
share it? And then the problem with that is if you are a rural
provider, you do not have any lower cost services. You are
traveling to everybody you are serving.
Ms. Buto. The issue that you are raising and that----
Chairman Talent. Ms. McCarthy just wrote two words here:
gas prices, which is something that we are all thinking about
now and you might want to talk about that, also.
Ms. Buto. Well, let me directly address that. Medicare does
not routinely pay for the cost of transportation and whether we
should or not, and I think this Committee would say we should--
for instance, if a rural physician as to travel, we do not pay
his gas costs. A rural nurse-practitioner, et cetera. We do not
do that as a rule.
The issue of whether we should I think is a legitimate
question. It would require a change in the law and not just for
home health, but for a variety of other areas of the Medicare
program. I think you can argue that this would be true for a
whole variety of providers and suppliers who must travel
distances to get to individuals.
On the issue of the EKG transportation fee, we originally
established that to recognize basically the van costs and the
need to transport large equipment, as we do for portable x-ray,
to remote locations or to other sites.
In the time since we established that fee, EKGs have become
a lot more portable. I had a life insurance examination
recently and the technician brought over the EKG and the blood
work tools and so on in a briefcase.
Recognizing the issue of mileage, which you are raising,
the original point of that transportation fee was to recognize
the fact that large equipment or delicate equipment needed to
be transported by van, and that is how we established the rate.
And the other thing that has happened since then is that
because an EKG is more portable, nursing facilities and other
providers now have more of this equipment on hand than they did
when the rate was originally established.
So that is the rationale. I understand your point about gas
and transportation and mileage, but that is really not the way
that fee was established.
Chairman Talent. Mr. Evans wants to say something.
Mr. Evans. I would like to make a comment on Miss Buto's
information she gave you.
While technology has shrunk and made things lighter and
more portable, the costs have also gone up. I am sure that
before you got these new timers, the old timers were probably
big and bulky and a lot different than what you have now.
My concern is that not only has the cost gone up for the
technology; you still have to transport that in some way. You
still have to transport that piece of equipment some way. It is
more cost-effective for us to put all of our equipment into one
unit and have it go from site to site in one unit. However, in
our case, if we have an EKG 20 miles to the north and an x-ray
30 miles to the east, we actually take that equipment out of
that, put it in one of the smaller vehicles and let a
technologist go do this other exam.
So I guess my point is we try to be very, very cost-
effective and watch the dollars that Medicare is giving us. I
used to own a home health agency and went through some of the
problems Mr. Dombi was speaking of. It seems to me, and this is
my own viewpoint, that the people that are still in business
today, they went back, as Miss Buto talked about, going back
and looking at the numbers of what happened years ago, not
based on whether gas prices rise or your business grows or
whatever. It seems to me that the only home health agencies
that are still in business are the ones that raised the prices,
that had high costs back years ago.
My concern is overall that we stop looking at this through
rose-colored glasses and actually look at what is happening in
rural America and make the changes based on what is happening
in rural America.
Mr. Goldhecht. Mr. Chairman, I just want to clarify
something Ms. Buto had said. She had mentioned that the
equipment got lighter and easier, more compact and that nursing
facilities might get it. Well, I can tell you first-hand that I
do not know any nursing facilities that own EKG equipment. Most
of the larger chains have gone bankrupt and they are not
looking to make any capital purchases.
That being said, the volume, the sheer volume of a typical
skilled nursing facility does not warrant them buying a piece
of equipment that they might use three times a month. That is
why they have a service like us. And whether the equipment has
gotten lighter, less expensive to purchase, the cost of
transport is the cost of transport. That has always been the
case.
I have been in business for 15 years. I can tell you that
the difference between what I paid for an EKG machine 15 years
ago and what I pay today is negligible. That is not going to
keep me in business or put me out of business. The cost that it
takes me to send somebody down the road five miles, 50 miles,
75 miles, that is what is killing my business.
Chairman Talent. Because they are not administering EKGs
when they are driving a van or a truck or something.
Mr. Goldhecht. Right.
Chairman Talent. Is there a private pay segment of the
market? And if so, what do they pay?
Mr. Goldhecht. I am happy you asked that question. What is
the problem with our industry is that specifically portable x-
rays, we have been designed for the skilled nursing facility.
You and I can go to a radiologist's office, a hospital, and get
an x-ray. It is much cheaper that way. But the skilled nursing
facilities cannot send their patients out. It is much more
costly.
So any act that Medicare changes the reimbursement or takes
away reimbursement affects 100 percent of our business. We do
not, unlike laboratories or ambulance companies that do work
for hospitals, do work for private physician's offices, they
can offset some of that cost. We do not have that.
Chairman Talent. So there is no private pay. There is not
anybody paying privately for EKGs.
Mr. Goldhecht. Right.
Mr. Evans. Excuse me just a minute. If you do not mind,
Norman, I am going to interject here.
In my case, yes, I do have some private payers that we work
with for EKGs.
Chairman Talent. What do they pay for a comparable----
Mr. Evans. Depending on the client, as we negotiated our
contracts, $100 to $175. However, and I want this to be part of
the record because I think this is very important, we are 85 to
90 percent dependent on Medicare.
Chairman Talent. Sure.
Mr. Evans. I do not have that many private patients.
Chairman Talent. What I am getting at is Medicare is paying
$16 and a private pay is paying $100 to $175.
Mr. Evans. Correct. And just to be accurate here, the
transportation was bundled into that $16 rate.
Chairman Talent. Isn't that a suggestion that maybe we are
undercompensating, Ms. Buto? If the private sector, which--as I
understand, you had a problem with fixing prices. I always
restrain myself. I tend to get mad at HCFA and then I say, you
know, in the first place, a lot of itis Congress, not HCFA. And
in the second place, it is very difficult to plan prices and all the
rest of it for a segment of an economy. I mean planned economies tried
it for years and it was very difficult, so you have a very difficult
job.
I mean to the extent there is a private pay market and they
are willing to pay $100 to $175 for what you are paying $16
for, it suggests to me that you are below the competitive rate.
Ms. Buto. Maybe, but I would like to know where that comes
from and how widespread it is and the reason is that we have
not really had any complaints, from skilled nursing facilities,
who use these portable x-ray providers, that they cannot get
them at this rate.
Again, it is a tough thing for us to get into if, in fact,
the service is willing to be provided at the rate and I think
what I hear people saying is maybe they can provide it at this
rate, but they are concerned that deeper discounts will be
required if we go to this bundling, consolidated billing
approach, that will further erode what they are getting.
I would like to see the information from the private
payers. It may be something we need to look at.
Chairman Talent. I recognize the gentlelady from New York.
I appreciate the Committee's patience.
Ms. Velazquez. Thank you, Mr. Chairman.
Ms. Buto, I am concerned about the statement that was made
by Mr. Dombi. He made reference to the fact that your agency
does not respect the differential in terms of rural and urban
areas and that you failed to put in place a rural differential
in terms of reimbursement. What is your comment regarding that?
Ms. Buto. This prospective payment system and the interim
payment system are very, very driven by the way the statute is
written. If there was a rural differential in the statute--and
I do not know; maybe during the discussions on the legislation,
that was discussed--if there was one in it, it would be there.
There are other areas where, for instance, physician
payment, there is a rural bonus that is provided to physicians
in rural areas and undeserved areas. There are very specific
areas.
The other thing he mentioned, which is being able to
reclassify your wage index so that you get higher payment, in
hospitals, rural hospitals can reclassify to an urban area, get
a higher wage index and get higher payment that way. That is
not available--he is right--to home health agencies.
Again, that is something that is driven by the statute and
statutory changes could be made along those lines, but they
have not been considered before, that I know of. Maybe they
were and I just was not aware of it.
And, again, it is the kind of issue, just like the gasoline
issue, that I think affects more than just home health, affects
more than just portable x-ray. It is an issue that would need
to be looked at for rural providers more generally.
Ms. Velazquez. Yes?
Mr. Dombi. If I might respond to that. In fact, the
Congress did look at the issue and specifically in the
prospective payment statutory language said that the Health
Care Financing Administration or the Secretary of HHS, in
designing a prospective payment system, has the authority to
reflect geographic variations between home health agencies.
The system that has existed up until now for home health
agencies has been a per-visit cost reimbursement system with
cost limits. Since 1979, the first year of those cost limits,
the Health Care Financing Administration has had a difference
between a rural cost limit and an MSA, a metropolitan
statistical area cost limit, and there is no specific language
in the statute that mandated that.
So they have both regulatory power from preexisting
practices and statutory authorization to do so and we have, in
the discussions and in the formal comments we have given to
HCFA relative to the prospective payment system, have said that
they should consider a distinction between the rural and the
nonrural home health agencies.
I would like to go on the record for one thing just for Ms.
Buto's sake. We still do support moving to a prospective
payment system away from the interim payment system but the
difference is minor. It is a difference of the degrees of
temperature in hell because the interim payment system is home
care hell for our constituents and the prospective payment
system promises to offer a solution for some of the providers
of services but I do not believe that the solution is there for
the rural small home health agency.
Everywhere I go--in fact, yesterday I was in Idaho and the
question that was raised to me when I was explaining the
prospective payment proposed system was, ``How will it affect
we in the rural areas?'' And my answer was, ``You would have no
different system than you have anywhere else.''
One last remark in case I do not have any other
opportunity. My understanding is Ms. Buto is leaving the Health
Care Financing Administration and I would like to take a little
bit of leave here and give her my thanks for all the work she
has done with the Health Care Financing Administration.
We have had our differences of opinion over the 18 years I
think that you have been there but I have always found her to
be receptive, professional and certainly rational in her
positions. So I would like to thank her for that and wish her
successor well.
Ms. Buto. Thank you.
Ms. Velazquez. You wanted to say something more?
Ms. Buto. No, I was just going to say that I misunderstood
what he was saying. And he is right about the interim payment
system. And he is right about the issue of the cost limits in
the past. I thought he was talking about the interim payment
system, where there the structure was a regional per-
beneficiary limit. It was very structured and we may have had
some flexibility there. I thought we followed the statute
pretty closely in order to get it done in just a few months. It
had to be done in about four months.
So he is right that in terms of the comments we have gotten
on the new system, we are looking at issues like this.
Ms. Velazquez. Ms. Buto, why does Medicare reimburse rural
areas at a lower rate than urban?
Ms. Buto. Well, a lot of what Medicare is doing now and
even some of the new systems are based on historical costs and
on wages. The fact that it is harder to actually go out and
attract professionals to an area does not really get factored
into that so much.
So what we look at when we do these surveys of wages is
wages paid, and wages have been in many respects lower across
the board, although there are definitely exceptions, in health
care in rural areas versus urban areas. So that is what you are
seeing.
What Medicare, and the Congress has actually done a lot of
this over the years, is to try to look at evening that out. In
some respects, the Medicare Plus Choice Program, the HMO
program that we have in Medicare, looked to raise the payments
in rural areas well above what we were paying our regular fee-
for-service providers to try to attract HMOs to serve those
areas. It has not, unfortunately, succeeded the way I think
people had hoped it would.
In the physician payment area, the geographic adjustment
factor where you adjust the geographic costs actually is not a
total adjuster, and that was done, again, to give more money to
rural areas.
So if you look at various ways in which Medicare pays for
services, there are many instances where special provisions
were attempted to be made for rural areas--the bonus payments
for physicians, et cetera.
I think fundamentally what I guess I have concluded over
the time I have been there and, as Bill said, I have been there
quite a long time, is it is very hard just to get changes in
the number of providers who are willing to serve areas based on
reimbursement. It helps, but it does not seem to be the whole
solution and I know that people are really struggling with how
can we get telemedicine services and other things into the
system so they will broaden the access?
Ms. Velazquez. One area that we care about on this
Committee is regulations. Can you explain to us what has your
agency done to monitor how regulations from the Balanced Budget
Act of 1997 have affected the small rural health care
providers?
Ms. Buto. We have done and we hope to issue soon an
analysis of some of our findings. We have done fairly extensive
both anecdotal gathering up of information from our regional
offices.
We basically said to them, look, we cannot wait for data.
That takes too long. We need to hear the stories that you are
hearing out there of what is happening to providers. We have
gathered that information together.
We have actually looked at things like Bureau of Labor
Statistics has information on a monthly basis on hours worked
in various industries and we have looked at that and home
health and SNF and so on, to see whether it appears there is
any change. Whether you can directly attribute it or not, we
wanted to know if there were changes in the way services are
being delivered.
We have now a capacity to look at cash or payments that are
being made on a daily basis to providers through our
contractors and we actually set that up during the Y2K exercise
so that we could monitor what was actually happening in case
there was a breakdown somewhere.
So we are trying in a number of ways to look at current
indicators of what the impacts are by area, including rural
areas. Rural areas are probably at the top of our list of
vulnerable areas, as well as inner city areas. That is one of
the areas we are concerned about and one of the reasons why we
really supported, in the BBRA, a number of the changes that
would allow rural providers to have either better reimbursement
or a less drastic change in their reimbursement in some cases.
So it is an area, as I said in my testimony, where we want
to continue to focus. We have two senior people at HCFA,
executives, Tom Hoyer in the central office of HCFA and Linda
Ruiz in the Seattle Regional Office, who are contacts, our
rural outreach executives, who we tasked with meeting both with
rural providers and also gathering the data and analyzing it
for us across the board so we can see what is happening.
Thank you. Thank you, Mr. Chairman.
Mr. Bartlett [presiding]. Thank you.
We will now turn to Ms. Christian-Christensen.
Ms. Christian-Christensen. Thank you, Mr. Chairman.
I want to thank the witnesses for being here this morning
and particularly for the recommendations that you have offered
so far as to how to address this issue.
Having been a family physician in the Virgin Islands, I
feel like I have been beat up by HCFA almost all my life. I am
particularly interested in the testimony and the responses to
the questions that have been made so far.
We closed our home health care agency, as you said. I have
looked at hospice when I was a practicing physician and because
of issues like the kind of staffing that was required--you
cannot be temporary--we do not have a hospice. Our skilled
nursing facility is struggling, struggling. And I am not even
sure where to begin.
Let me ask, I think I heard Mr. Dombi say that all of the
flexibility that was available to HCFA was not being utilized.
Do you feel that even though the Balanced Budget Act has put a
lot of restrictions and caused you to have to implement new
policies supposedly to reduce fraud, do you think that HCFA,
Ms. Buto, has exercised all of the possible flexibility with
regard to rural and small businesses?
Ms. Buto. We have tried, and I am sure people here will
tell you that we have not gone far enough. I think certainly in
the home health prospective payment system, we are really
trying to make sure that what we are doing here is making sure
that beneficiaries can get access to good quality services and
we want to be able to pay agencies more for more complex cases
and to give them more flexibility to serve those individuals.
We got a lot of comments on the rule, the regulation that
we proposed. They were good comments. We have made a number of
changes to accommodate concerns that were raised. So we are
hoping--that regulation is very much on schedule--that home
health agencies will look at it and say you have made some
appropriate changes to accommodate our situation. I am hoping
that that will be the case and that that will be the case for
rural and small home health agencies.
Ms. Christian-Christensen. The interim payment system is
probably the issue that my home health agency talks to me most
about and what you are doing is delaying--well, the interest is
forgiven for the first year. You are delaying the payments. But
I just have the sense that it is still going to be an
inordinate burden on the home health care agencies and don't
you think we ought to forgive those--wouldn't that be a better
remedy? I realize that for those----
Ms. Buto. There is no question that it would be a better
remedy for those agencies. I cannot give you a definite answer
on that because the federal debt collection rules require us to
collect those overpayments and I am one of those people who has
to sign off and am liable if I do not----
Ms. Christian-Christensen. When I was a physician I was
always told it is not the carrier, it is not HCFA, it is the
Congress that is doing this.
Ms. Buto. These are federal debt collection rules. I am not
saying that this is entirely the Congress. These are rules that
we have to live with, as federal agencies.
Ms. Christian-Christensen. Would you like to----
Mr. Dombi. Yes. Within the Federal Debt Collections Act is
authority for the Health Care Financing Administration to
compromise any debt that is owed back to the Medicare program
and they have institutionally chosen not to apply that
authority to the interim payment system debts, which would seem
to be the first type of debt that you would, because these are
cost- reimbursed providers that delivered care to patients who
happen to have needs that exceeded the level of limits that
were imposed through the Balanced Budget Act.
So the compromise authority is there and we would gladly
take any assistance that we could get from this Committee to
convince the Health Care Financing Administration to use the
authority it has to compromise rather than to close a home
health agency. The option that they are offering right now, is
pay back money when you have no money coming to you because you
are still cost-reimbursed, or close.
And we have seen the actions in bankruptcy courts, as well,
where the Health Care Financing Administration's position is
close rather than compromise. We have had bankruptcy courts
offerto the Health Care Financing Administration the
opportunity to take $1 million on a $1.5 debt and the Health Care
Financing Administration said, ``No, close them down.''
Ms. Christian-Christensen. So there is an administrative
remedy that you can pursue.
We did attempt; I think we will try again and we would be
willing to work with others to do that.
I guess this question again is for Ms. Buto. The Balanced
Budget Act of 1997 attempted to reduce Medicare reimbursement
rates in an effort to save money for Medicare. Has HCFA
performed any studies or are any studies planned that will
assess the savings or costs to Medicare by the new PPS?
Ms. Buto. The upcoming PPS or you mean what has already
been saved as a result of the changes in the BBA?
Ms. Christian-Christensen. The one that is in place.
Ms. Buto. The interim payment system. Oh, yes. I think the
most recent public document that is probably worth this
Committee taking a look at is the summary from the Trustee's
report of the Medicare Trust Fund, which actually looks at what
is happening.
You know, the short-term solvency has been extended to 2025
largely due to changes that have arisen as a result of the
Balanced Budget Act, which is, of course, one of the intended
consequences, but I think one of the issues that was a surprise
to us and is certainly a surprise to providers is that Medicare
actually spent less in 1999 than it did in 1998 for the first
time in its history. That was unexpected. Again, a lot of that
is associated with, if not entirely due to, changes that were
made in the statute for Medicare payments.
Home health is one area where the most dramatic change
occurred, if you look at it, but our actuaries say that
spending in a lot of sectors, including hospitals, was less
than expected and we also saw--we did not see changes we have
seen over time, like an increase in the case mix or the
complexity of cases that are billed to us in hospitals. We did
not see any increase. So the actuaries, in consultation with
other experts, attribute that to the effort of a lot of the
oversight agencies, like the GAO and the OIG, efforts to look
at fraud and abuse.
Ms. Christian-Christensen. Are you looking at also, Miss
Buto, at ways to address the staffing issue for hospices? Is
HCFA looking at ways to address that? Because in a rural area
where you have maybe a physical therapist at a hospital that
could provide the service at a hospice and you are not allowed
to use it, there is just no way to provide the hospice service.
Are you looking at ways to address that, also?
Ms. Buto. You know, the hospice program is one area where I
think we are willing to look at a variety of issues around both
the structure of it and I think some issues were raised around
the wage index, as well. We are willing to look at that.
The most important thing that I think will be helpful in
this evaluation is that Congress required hospices to begin
submitting cost reports last year. I know that costs have gone
up in a variety of areas, like drugs, for instance,
pharmaceuticals, we just do not have the data to show what
those costs have been.
We will now have, probably at the end of this year, or the
beginning of next year, enough data to begin to look at what
the actual costs are, and that will help us in any reevaluation
of hospice.
Ms. Christian-Christensen. I yield back my time, Mr.
Chairman.
Mr. Bartlett. Thank you very much.
Mrs. McCarthy.
Mrs. McCarthy. Thank you.
I sit here with fascination because here we are on the
Small Business and you have a doctor and a nurse, a nurse that
actually has done a lot of home care over her career. But I
understand also the issues of the rural areas very, very
strongly and the hospice and everything else, I can only relate
to when I did private duty nursing and how hard, and I live in
a suburban area, how hard--we had a hard time staffing a
patient. I mean it was really quite difficult. We had a bunch
of friends work together and we went in as a team. So dealing
with that issue, just on the rural area, I do not know how you
do it.
Obviously we in Congress all had good intentions on the
Balanced Budget Amendment, and we did, but it is a mess. When
we talk about rural areas, I talk about suburban areas, I talk
about my hospitals, my home health care agencies that I have
worked for, somehow this has to be addressed.
And I know what we did, putting rules and regulations down
to you, has been really a mess but my concern is even though we
are trying to work together and you are certainly implementing
and work with the small businesses to try to clarify a number
of things, knowing how government works, it takes too long and
that is my concern because the bottom line, as we sit here and
discuss this, is the patient. That is the bottom line and it is
going to be the patients that are suffering.
I think as we try to address this. Hopefully we can do
that, especially for small businesses. I find the majority of
small businesses that have been in the health care system are
good people and they are there to take care of those. But my
concern is, especially the traveling that has to be done in the
rural areas, we did not take that into account. Unfortunately,
Congress does not think of an awful lot of things when we write
those, even though we try to reach out to as many people, but I
do not think anybody thought it would be the disaster it has
become. And I am hoping that we, as a Small Business Committee,
will be able to work with those committees to make this the
right thing.
Health care is, in my opinion, in an uproar right now, on
every level, on every single level. An awful lot of us have
been trying to come up with answers but unfortunately, there is
not an answer for everybody.
What I am hoping out of this Committee hearing is that we
will be able to facilitate the movement a little bit faster so
businesses do not go out of business. I sit here and I listen
to every single one of your testimonies and I have probably
been in the situation where even I was in a nursing home at one
time and we had to bring in an outside x-ray.
Now, of course, they did not have to travel that far but I
think what people do not understand is how important it is not
to transport the patient to a hospital, not to take that
elderly patient out of a nursing home setting, to be able to
have it there in the surroundings.
And I do not think any of the things that we have done--
maybe they did not work with nurses; I do not know. We probably
could have given you an earful on every single level. But we
have to come up with solutions. We have to save our small
businesses. We have to make sure there is no fraud and abuse.
We all agree with that. But who suffers in the end? Our
business people and our patients.
And with that, I yield back the balance of my time.
Mr. Bartlett. Thank you very much.
I have a question, I guess for Mr. Dombi first and then
anyone else who would like to comment. At some point as we
raise the cost of doing business for our small businesses that
provide health care, at some point they are going to fail. And
if you are talking about home health care, if they cannot get
care at home, then they are going to move into a hospital where
care is very much more expensive. Is this happening?
Mr. Dombi. At a recent hearing, I believe of the House
Budget Committee, testimony was presented by hospital
administrators indicating that they are seeing an increase in
the number of patients that normally would have been in home
health care and extended lengths of stay.
Now traditionally, the Health Care Financing Administration
tries to monitor these things but they are four or five, maybe
10 years behind statistically, so they may not see that. But
certainly those are the reports.
The other thing which we find quite fascinating is I
believe for the first time in the history of the Medicare
program, the expenditures under the skilled nursing facility
benefit now exceed the expenditures for the home health
benefit.
And I believe we have a public policy in this country to
deinstitutionalize people and keep them integrated into the
community and when you see a rise in nursing home expenditures,
it explains somewhat maybe some lengths of stays in hospitals
but it also explains the effect on home care beneficiaries.
This year it is projected that there will be three-quarters
of a million less users of Medicare home health services than
in 1997 and those patients have to go somewhere because they
are the most expensive patients. That is why they are having
access problems.
I was pleased to hear Ms. Buto say that they have not found
in their studies any major problems in access because I believe
just last year the Health Care Financing Administration was
saying they have not found any problems at all, so at least we
have made it into the problem category to some extent. But I
know the Inspector General's office is concerned about access
issues. I know that the General Accounting Office is. I know
MedPAC is concerned about it. And I know that Ms. Buto and Tom
Hoyer and others are also very concerned about access problems
because they are growing, rather than shrinking.
Mr. Bartlett. Ms. Buto, who has the responsibility of
monitoring home health care reimbursement and the effect that
that has on these providers closing and therefore moving
patients into other facilities which are very much more
costly--which would therefore defeat the very thing we started
out to accomplish, and that was to reduce health care costs?
Ms. Buto. I do not actually buy the notion that they are
moving from home health into skilled nursing facilities. Again
we are, and I would be interested to see if Mr. Dombi has
information on this but----
Mr. Bartlett. Are they just dying at home, then? Because if
they are not getting the care at home, they are going to go
somewhere for care or they will just die at home.
Ms. Buto. I guess what I was trying to say earlier is that
many of them are still getting care at home. One of the changes
in the Balanced Budget Act was that venipuncture alone, the
need to have a blood draw, is not now, under the law, and
probably really should not have been, a reason for getting home
health care with all the aide services and so on.
A number of people were affected by that change in the law
and there is no question about that. However, we did make sure
that they could get lab services provided to them to have blood
draws.
But as to the issue of who is responsible, it is our
responsibility. We need to know whether there is an impact on
beneficiaries, who are the number one reason why we are here,
of any reimbursement change, and that is the reason why I was
describing earlier that we have the regional offices both
looking at anecdotes, where they think there is a problem, or
an individual case or they think some agency might be affected
adversely, and reporting those to us and in addition, looking
at other indicators that could tell us what is happening out
there as a result of the reimbursement changes.
We have invited the National Rural Health Association and
they have agreed to help us survey rural providers on a
systematic basis to get information they have in rural
communities about the impacts of the Balanced Budget Act and
NRHA has agreed to work with us on that. They are also helping
us develop information for beneficiaries in rural areas, so
that we can find out from beneficiaries if they are having
problems.
So it is our responsibility. There is no question about it.
Other agencies, and the industry itself, also pay very close
attention and gather information and collect surveys, but it is
principally our responsibility to make sure that beneficiaries
get access to care.
Mr. Bartlett. We have had testimony from several witnesses
indicating that they are now providing services at less than
cost, that they do not have the ability to cost-shift because
they do not have enough private pay patients to cost-shift, and
they are telling us that they cannot continue this forever,
that if they do not get some relief, they are going to have to
shut down.
Now if they shut down, then the patients that were getting
care at home are going to be moved into a more costly facility.
You are saying that that is now not happening.
Ms. Buto. I am saying I do not know if it is happening.
Mr. Bartlett. But they are telling us that it is imminent
that it is going to happen. Can this problem be solved through
the agency or does this require a congressional action to solve
this problem?
Ms. Buto. I guess what I would like to say is that the new
home health--and I think you are talking about home health
agencies here--I believe will be a major improvement over the
situation that they are now operating under. Again it may not
be perfect; Congress may want to look at making additional
changes.
There also is something looming. I think the additional 15
percent reduction that is in the statute, that was postponed
until January, I believe. Obviously we are looking at that and
I am sure you are looking at it, too, to see whether that is
going to create more difficulty for home health agencies. But
we ought to take a look and see what the reaction of your
constituents is to the new system, which we think will be an
improvement and will make their lives easier.
Again, if it is not enough, we may want to both consider
more changes.
Mr. Bartlett. Mr. Evans.
Mr. Evans. I just wanted to make one comment that I think
is a common thread, whether you are talking about home health,
portable x-ray or hospice. With all the changes that are coming
down the pike and the changes that you do not know when they
are going to be enacted or you think they are going to be
enacted or you plan for them to be enacted, there is no way to
plan. There is no way to run your business and to plan.
We have five vehicles that need to be replaced. They have
an average of 204,000 miles on them. The highest mileage one
has 350,000; the lowest has 95,000 on it. We cannot plan. We
cannot plan to change equipment because we do not know what the
next--we know what is planned from HCFA, for instance,
consolidated billing they are saying now is January 1 of 2001.
Will it happen? We do not know. It was supposed to happen
January 1 of 2000. The common thread is you cannot plan.
And one other comment I wanted to make as far as where
these patients are going, I think you hit the nail on the head.
They are going to the hospitals. And the problem is that when
these hospitals get them, because of PPS and how it affects the
SNFs, not necessarily the home health agency but the SNFs
themselves, these patients are not--the SNFs do not want them.
The skilled nursing facilities do not want a high chronic or
acute diseased patient. They cannot afford to under this
system.
So you hit the nail on the head. It is a problem. It is a
big problem.
Mr. Bartlett. My last comment and question has to do with a
systemic problem that has been bothering me. Apparently in
health care, we as a country have given up on what is the usual
procedure for improving quality and reducing costs, and that is
competition. In health care, rather than competition, we appear
to be turning to practices that we have applauded the failure
of in other countries.
What we are trying to do, as I see it, in health care in
containing costs is simply to use a combination of rationing
and payment at below cost. I talk to a lot of people who run
nursing homes and the Medicaid payments are less than their
costs. I talk to people in hospitals. The Medicare payments are
less than their cost and the only way that they can stay in
business is to cost-shift.
Now when they cost shift, I as a taxpayer am still
ultimately paying the bill and it is a false economy to believe
that by cost-shifting, we can reduce the cost of health care
because providers cannot remain in business being reimbursed at
less than the cost of doing business. They tried that for 75
years in the Soviet Union and it did not work.
And I am wondering how we got off track and how we
concluded that we could not provide better health care at less
cost with competition and why we had to turn to the practices
that have failed other countries; that is, the practices of
rationing and reimbursement below cost. Where did we go wrong
and how do we get back on track?
Mr. Evans. If I could make one comment, I also own a
cardiopulmonary stress test that we go into doctor's offices
and perform and just to add onto what you said, Mr. Bartlett,
when we go a physician's office and a physician's office is
owned by a hospital, that hospital does not want us around.
They do not want, even if it is cost-saving, they do not want
us there.
It seems to me like everybody, and I do not care whether it
is HCFA or a hospital or whoever, everybody is very protective
of their own territory.
I echo what you are saying. I agree with what you are
saying.
Ms. Buto. Can I comment on that, as well? Medicare has had
a very hard time using competition. We were given authority in
the Balanced Budget Act to competitively bid durable medical
equipment services and we also were given authority to do--and
these are both demonstrations; they were not across the
country--limited demonstrations. The other was competitively
bid our contribution to an HMO, or HMOs in an area.
The HMO provision was set up in such a way that we had
three advisory committees advising us on the design and the
method for doing the competition. We took their advice. The
advisory committee was chaired by an executive at GM and
included people like Mr. Reischaurer, former CBO director, and
Chip Kahn, who used to be Ways and Means staff director--a
number of people who know a lot about health care. That
committee has now essentially had its authority at least frozen
for the moment by Congress for a couple of years. We cannot
start the demonstration because of concerns coming from that
local area.
The other demonstration was more successful. We were sued
by the industry and prevailed, ultimately, in the lawsuit. But
we had a full and open competition. We were able to meet with
beneficiaries. We continue to meet with beneficiaries. They are
very satisfied. And we were able to get a lower price but we
had to actually go through court to sustain the ability to do a
pilot project to do competition.
So, I think there is a legitimate concern on the part of
people in the health care community when Medicare does
competition. We are the 900-pound gorilla and I understand
that. I think we have to do it carefully, openly. It ought to
be fully visible to the public. But we have found it extremely
hard because of local concerns and concerns about what will
happen to whole groups of providers if we engage in
competition.
But I agree with you. It is something we feel very strongly
we ought to be trying more of in Medicare.
Mr. Bartlett. I appreciate that there are problems and you
identified those problems, but the very fact that we recognize
that it is very difficult to provide competition in health
care, I think, speaks to a fundamental problem of how did we
get here when nowhere else in our society do we have problems
providing a better product or a better service with better
efficiency and lower cost through competition and we are now
admitting that we cannot do that in health care.
I am just wondering, where did we go stray and how do we
get back on track because I just have to believe the delivery
of health care has to be amenable to the same forces that
operate everywhere else in our society, and that is that
competition always does two things. It makes the service or
product better and it makes it cheaper. And we have not found
that true in health care and I just think that rather than
nibbling at the margins of the problem, we need to get back and
take a broad look at how we got to where we are, which is not
where we ought to be. We should not be rationing and we are
rationing. And we should not be forcing providers to provide
health care at less than cost because that simply results in
cost-shifting and there is zero economy in cost-shifting
because we, as the taxpayers, end up paying the costs anyhow
because we are not going to have people sitting on the curb
dying.
So I just hope that in our desire to fix the system that we
now have, which is clearly broken, that we spend some time in
looking at how we got here and what do we need to do to get
back to where we have true competition, where we will have
improved quality and lesser costs because that works everywhere
else in our society.
And I just hate to see us trying to do in our country what
failed in the Soviet Union for 75 years, and that is a
centrally controlled system. It did not work there, it is not
working here and it is not going to work for the future.
So we would solicit your help in helping us to understand
where we went wrong, because I think that here, as in most
cases when we have problems in our society, they began where I
am sitting, not where you are sitting--where we went wrong so
that we can try to get back to where we ought to be.
Well, I want to thank you all very much for a very good
hearing and unless there are additional comments from the
panel, we will adjourn the Committee. Thank you very much.
[Whereupon, at 12:15 p.m., the Committee was adjourned.]
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