[House Hearing, 107 Congress] [From the U.S. Government Publishing Office] THE REGULATORY MORASS AT THE CENTERS FOR MEDICARE AND MEDICAID SERVICES; A PRESCRIPTION FOR BAD MEDICINE ======================================================================= HEARING before the COMMITTEE ON SMALL BUSINESS HOUSE OF REPRESENTATIVES ONE HUNDRED SEVENTH CONGRESS FIRST SESSION WASHINGTON, DC, JULY 11, 2001 __________ Serial No. 107-17 __________ Printed for the use of the Committee on Small Business U.S. GOVERNMENT PRINTING OFFICE 74-521PS WASHINGTON : 2001 For Sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpr.gov Phone (202) 512�091800 Fax: (202) 512�092250 Mail: Stop SSOP, Washington, DC 20402�090001 COMMITTEE ON SMALL BUSINESS DONALD MANZULLO, Illinois, Chairman LARRY COMBEST, Texas NYDIA M. VELAZQUEZ, New York JOEL HEFLEY, Colorado JUANITA MILLENDER-McDONALD, ROSCOE G. BARTLETT, Maryland California FRANK A. LoBIONDO, New Jersey DANNY K. DAVIS, Illinois SUE W. KELLY, New York WILLIAM PASCRELL, New Jersey STEVEN J. CHABOT, Ohio DONNA M. CHRISTIAN-CHRISTENSEN, PATRICK J. TOOMEY, Pennsylvania Virgin Islands JIM DeMINT, South Carolina ROBERT A. BRADY, Pennsylvania JOHN THUNE, South Dakota TOM UDALL, New Mexico MIKE PENCE, Indiana STEPHANIE TUBBS JONES, Ohio MIKE FERGUSON, New Jersey CHARLES A. GONZALEZ, Texas DARRELL E. ISSA, California DAVID D. PHELPS, Illinois SAM GRAVES, Missouri GRACE F. NAPOLITANO, California EDWARD L. SCHROCK, Virginia BRIAN BAIRD, Washington FELIX J. GRUCCI, JR., New York MARK UDALL, Colorado TODD W. AKIN, Missouri JAMES R. LANGEVIN, Rhode Island SHELLEY MOORE CAPITO, West Virginia MIKE ROSS, Arkansas BILL SHUSTER, Pennsylvania BRAD CARSON, Oklahoma ANIBAL ACEVEDO-VILA, Puerto Rico DOUG THOMAS, Staff Director PHIL ESKELAND, Deputy Staff Director MICHAEL DAY, Minority Staff Director C O N T E N T S ---------- Page Hearing held on July 11, 2001.................................... 1 WITNESSES Berkley, Shelley, Member, U.S. House of Representatives.......... 3 Toomey, Patrick J., Member, U.S. House of Representatives........ 5 Hulsebus, Michael, D.C., Hulsebus Chiropractic................... 12 Whitson, David, M.D., P.C., Medical Offices of David Whitson..... 14 Seeley, Brian, Seeley Medical, Inc., for the Power Mobility Coalition...................................................... 17 Chase, Phillip, The Chase Group, for the American HealthCare Association.................................................... 19 Goldhecht, Norman, Diagnostic Health Systems, for the National Association of Portable X-Ray Providers........................ 23 APPENDIX Opening statements: Manzullo, Hon. Donald........................................ 37 Velazquez, Hon. Nydia........................................ 40 Prepared statements: Toomey, Patrick J............................................ 43 Berkley, Shelley............................................. 47 Hulsebus, Michael............................................ 49 Whitson, David, M.D.......................................... 56 Seeley, Brian................................................ 60 Chase, Phillip............................................... 70 Goldhecht, Norman............................................ 78 Additional Information: Statement of Steven M. Mirin, M.D., Medical Director, American Psychiatric Association........................... 83 THE REGULATORY MORASS AT THE CENTERS FOR MEDICARE AND MEDICAID SERVICES: A PRESCRIPTION FOR BAD MEDICINE ---------- WEDNESDAY, JULY 11, 2001 House of Representatives, Committee on Small Business, Washington, DC. The Committee met, pursuant to call, at 10:05 a.m. in Room 2360, Rayburn House Office Building, Hon. Donald Manzullo [chairman of the committee] presiding. Chairman Manzullo. The Small Business Committee will come to order. Good morning. This is the Committee's second hearing to examine the regulatory problems at the centers for Medicare and Medicaid services, CMS, formerly known as HCFA. I will not recognize the new name until I am convinced that HCFA is the a new organization with a new operating philosophy. So I will not use the new name anymore. At that point when I no longer use HCFA, then the reforms we are seeking will have been implemented. In the previous hearing the Committee heard about the deluge of paperwork that health care providers towered under in the effort to provide service to the injured and the informed. Today's hearing will address the regulatory morass swamp in health care providers and potential solutions to the draining of that swamp. [Laughter.] It is like Pogo in that swamp down there? [Laughter.] Are you doing okay? We are having some fun today, are we not? You bet, you bet. The Committee's next hearing at the end of this month we expect to hear from Thomas Scully of the head of HCFA, and Sean O'Keith from the Office of Management and Budget, about administrative actions that they can take to resolve the problems identified by the Committee. The health care provider renders service to an eligible Medicare beneficiary and should be reimbursed at a rate that enables the health care provider to stay in business. That seems like a simple proposition. However, sometimes simple tasks are rendered unduly complex by excessive federal government procedure. In the case of Medicare, the simple proposition of reimbursing providers for services rendered now covers more than 130,000 pages of federal laws, regulations and informal guidance. The U.S. Court of Appeals, Judge Leon Higginbothim, once noted about Federal Milk Marketing Orders, ``It is difficult to imagine a case intertwined with greater confusion and delay and a problem which but for the administrative process was not extremely complex.'' Well, what does that mean? It means you cannot understand it. Today's hearing will demonstrate that Judge Higginbothim's statement can be applied with equal, if not greater, force to the operation of the Medicare program. The regulatory morass of HCFA has spawned a hydro-headed monster feared by all and accountable to no one. This morass cannot last because the diversity affects the ability of small businesses to provide adequate health care to beneficiaries. I am interested in navigating through this, and I would like to thank Mr. Toomey and Ms. Berkley for their leadership on this issue. The ultimate beneficiaries will be patients and taxpayers because higher quality care will be offered at a lower overall cost to the economy. And I will recognize the Ranking Member of the Full Committee, the distinguished gentle lady from New York, for her opening statement. [Mr. Manzullo's statement may be found in the appendix.] Ms. Velazquez. Thank you, Mr. Chairman. Today we continue our examination of the Health Care Financing Administration system, known today as the Center for Medicare and Medicaid Services. During our last hearing, this Committee examined the main burdens CMS imposes on health care providers. Foremost among these are onerous and often contradictory paperwork requirements that doctors must go through simply to receive payment for services. Even more disconcerting, doctors can face unannounced audits for unintended errors. In addition, doctors are forced to pay the difference in disputed agency billings up front, before the dispute is resolved--effectively, they are considered guilty until proven innocent. Tragically, these impositions discourage doctors from caring for the most needing among us--the aged, and the poor. Today, Mr. Chairman, we focus on solutions to these problems. The Medicare Education and Regulatory Fairness Act, proposed by my colleagues Congresswoman Berkley and Congressman Toomey, goes far to overcome these challenges. First, this bill will reduce the administrative burden on doctors by easing complex billing requirements and creating an expedited system for dispute claims resolution. Second, doctors will get advance notice for any audit, so they are not caught by surprise when CMS comes knocking. Lastly, this bill bars up-front repayments in fee disputes, requiring the agency to prove the doctor has committed an error, rather than the other way around. This legislation addresses many of the inequities created by the most recent reforms, enforcing the fair play we expect from our government. Nevertheless, I hope we will be careful as we move forward. Unintended or unexpected consequences of our reform proposals could divert energy and funds away from the primary mission of CMS, which is to compensate fairly the doctors who provide services to the poor and elderly. For example, our attempt to level the playing field between doctors and CMS should not limit enforcement efforts against fraud or abuse. As a recent news report has suggested, there are still some people out there trying to bilk CMS for their own profit. In loosening the grip CMS has on providers, we need to avoid a return to our earlier system, which was rife with chronic mispayments or improper payments. CMS has reduced payment error rates from 14 percent in 1996 to 6.8 percent in 2000--and we can encourage them toward their goal of a five percent error rate set for next year. Finally, the driving force for our reform remains the continued viability of Medicaid and Medicare. Thankfully, through strong fiscal discipline and good success in reducing fraud and errors, the Medicare Trust Fund will remain solvent through 2025. We can continue and improve on that success. To conclude, Mr. Chairman, CMS provides a vital service to those who most need medical are; our poor and our elderly. We will work together to build a system where doctors do not fear caring for their patients while we fight waste, fraud and abuse. Thank you. [Ms. Velazquez's statement may be found in appendix] Chairman Manzullo. Thank you very much. We have two panels. Our first panel consists of two members, Congresswoman Shelley Berkley from Nevada, and Congressman Pat Toomey from Pennsylvania. Congresswoman Berkley, please. Ms. Berkley. Thanks. Chairman Manzullo. And I am going to put on the five-minute clock. Normally members ignore red lights and green light, but let's take a stab at it anyway. Thank you. STATEMENT OF THE HONORABLE SHELLY BERKLEY, A CONGRESSWOMAN FROM THE STATE OF NEVADA Ms. Berkley. Thank you, Chairman Manzullo, Ranking Member Velazquez, and Members of the Committee for this opportunity to speak before you today. Let me begin by telling you how pleased I am that the Small Business Committee is studying this problem of the regulatory burden in the Medicare system. I do not have to tell you that many health care providers are in fact small business people. Many of them have small practices with only a few staff members. They are finding it increasingly difficult, sometimes impossible, to keep up with the constantly changing regulatory obligations of the Medicare system. And to give you some idea of what they are contending with, I have with me the books that most doctors will tell you represents the core of their medical education when they are in medical school, and I have in front of you five cases of Medicare regulations that the doctors after they graduate medical school after having mastered what is in these books, then they have to master what is in those crates. It is not very balanced, I would say. Asking a small practice, or any practice for that matter, to deal with that massive amount of paperwork is unfair, unnecessary, and counterproductive. Finding a way to reduce this burden can mean the difference between helping small practices stay open, particularly in rural areas, or watching them shut down one by one. In order to help this important segment of the small business population, the Medicare regulatory burden must be addressed. And I want to share with you how I became involved in this. I received a telephone call from a friend of mine telling me about a problem that a fellow doctor was having. Apparently he had attended a HCFA seminar in Las Vegas and got into a debate with a HCFA representative who was talking about the different regulations. And in the exchange, from what I understand, it got very heated. Then, of course, the seminar ended. The doctor went home. Two weeks later he received a letter from HCFA advising him of an impending audit. He is absolutely certain that the reason that he got this letter was for retribution for having spoken out about some of the regulations that were being proposed, or initiated I should say. What happened to this doctor should not happen in America to anybody. HCFA came in. They totally disrupted his practice for months after months after months. His practice ground to a standstill while the auditors took over his office, went through hundreds of thousands of dollars of billings. A year later he received a letter, after almost the destruction of his practice, saying that he owed $900. There was never any question of fraud, never any question of abuse. What there was was a difference in the coding, and after hundreds and hundreds of thousands of billings being gone through by HCFA, totally disrupting the man's practice, they told him he owed $900, and it was terribly, terribly unfair. As I helped my constituent, I found myself wading deeper and deeper into the amazing amount of paperwork, regulation and explanation that health care providers must deal with on a daily basis. As time went on, I began to hear one story after another from hardworking providers who have had increasing problems working within Medicare. One letter I received from a constituent is particularly compelling. It was sent to me by a doctor who has fought his way, unsuccessfully, through the regulatory process. He writes, ``Although I have spent my entire 30-year career dedicated to the care of my patients, I will be forced to retire. There is no way for me to express the pain and anguish that I feel at the prospect of this happening. At this point I can think of nothing else to do except to ask for your help. How can this be happening in our country?'' It is time to do something to protect our nation's community of law-abiding physicians from overly burdensome federal acts so that they can remain in the Medicare program, treating and caring for our nation's older Americans. This need is precisely the reason why Congressman Toomey and I introduced the Medicare Education and Regulatory Fairness Act, MERFA, last March. This important legislation seeks to provide regulatory relief to health care providers in the Medicare system. The bill achieves this goal by reforming some of the practices of CMS, clarifying current regulations and providing education about Medicare regulations to providers. MERFA responds to the problems health care providers face by reforming the audit practice to limit random audits, make the practice of returning overpayments to CMS more fair, and limit the use of extrapolation. MERFA provides basic rights concerning appeals and delays recovery of overpayments until the entire appeals process has been completed. MERFA also creates several effective education functions to ensure that billing and documentation errors are minimized. Finally, MERFA requires CMS to make sure that new documentation guidelines for physician services are pilot tested before implementation. Physicians and other health care providers do not want to spend valuable time on paperwork. They know there is some that must be done, but they more importantly want to save lives, ease sickness and serve their patients. MERFA will help them do that. Medicare needs to be user friendly, a user friendly system for both patients and providers. This bill is a step in that direction. Once again, I want to thank you for testifying and thank you for an opportunity appear in front of you. Thank you very much. [Ms. Berkley's statement may be found in appendix] Chairman Manzullo. Well, thank you. I presume you do not want those documents made part of the record. Ms. Berkley. In the interest of not overburdening with regulation, no. Chairman Manzullo. Thank you. By the way, statements of all witnesses and members of Congress will be made part of the official record without objection. Congressman Toomey. STATEMENT OF THE HONORABLE PATRICK J. TOOMEY, A CONGRESSMAN FROM THE STATE OF PENNSYLVANIA Mr. Toomey. Thank you, Chairman Manzullo. It is a pleasure to be here to testify today before the Committee. I want to thank you, Mr. Chairman, also Ranking Member Velazquez, and my fellow Committee members. Perhaps in light of the fact that I am member of this Committee, you will go easy on me during questioning. Mr. Chairman, first, I would like to thank you for one other thing, and that is your longstanding leadership on the need to reform Medicare for health care providers and the patients that they serve. I would also like to thank my fellow Committee members, many of whom are co-sponsors of this legislation. Representative Berkley and I introduced MERFA just four months ago, and today we will be announcing that we have over 220 bipartisan co-sponsors. Medicare reform for providers is indeed an issue whose time has come. As we heard in this Committee's hearing on May 9, health care providers of all kinds are suffering under excessive paperwork and regulations. In my view, Medicare's burdensome regulations are a symptom of the fundamental structural flaw in the program. As long as the federal bureaucracy attempts to dictate the circumstances under which it will allow, and the price it will pay for thousands of different individual medical procedures, Medicare will always be a maze of regulations and will not provide the effective, efficient medical insurance that our senior citizens deserve. Ultimately, we need to transform Medicare into a market-based system in which patients are also consumers. Patients should be in control of the money that is being spent on their behalf. Now, H.R. 868, the Medicare Education and Regulatory Fairness Act, is not nearly that ambitious. Fundamental, comprehensive reform of Medicare will take more of a consensus and more time. But, in the meantime, health care providers need relief now, and that is what our bill does. Congress needs to step in and restore some balance between HCFA and the health care providers. And if we do not step in, HCFA's practices will have serious detrimental effects on the quality of our seniors' medical care. I would like to outline what I believe are several unintended consequences of some of HCFA's current practices. First, a number of HCFA's practices are counterproductive. In an effort to try to lower the cost of health care, HCFA attempts to reduce fraud by imposing enormous paperwork burdens on all health care providers, including the overwhelming majority of whom are honest and would never commit fraud. Paradoxically, this burden actually increases the cost of providing health care for senior citizens. Second, HCFA's practices can be counterproductive when they reduce the amount of time health care providers have to spend with their patients. Third, seniors' medical records have become more of a way for physicians to communicate with Medicare bureaucrats than as a way to communicate with their colleagues. As Dr. David Whitson will testify in the next panel, sometimes these documents are no longer even clinically useful medical records. Rather than being medical records, they have become billing records. Fourth, and perhaps most disturbing, is the perverse incentive for health care providers to deliver ordinary care-- the service that will not raise eyebrows at HCFA--not necessarily the best care. For health care providers, the risks and costs of defending against HCFA are so great that it produces an incentive for them to bill Medicare for common services, which means providing patients with common services, even when the best care might call for more intensive or just different services. Finally, the shear complexity and associated costs of compliance are so great that solo and small group practices often simply cannot afford to comply. So what does MERFA do to correct these unintended consequences? MERFA reforms how HCFA issues new regulations and policies, for one. It ensures health care providers have a modicum of due-process rights when there is a dispute with HCFA, and it allocates administrative funding for the specific purpose of educating providers about proper billing and documentation. Our goal is to ease some of the regulatory burdens that health care providers face so they can spend more time with their patients and less time dealing with HCFA bureaucrats. Here are a few examples of some of the specific reforms in MERFA: MERFA will clarify that health care providers only need to comply with the regulation issued by HCFA when it is finalized, and that a regulation cannot be applied retroactively; it allows providers the option of entering into a repayment plan for overpayments rather than HCFA automatically offsetting future payments; it prevents HCFA from unilaterally recouping an alleged overpayment while an appeal is still pending; it would allow providers up to one year to return overpayments without penalty or audit if they discover the mistake before HCFA does; it requires funds to be used to educate providers about property documentation and billing. It creates a safe harbor so providers can voluntarily submit claims for education purposes without fear that that would trigger an investigation; and it would require HCFA to pilot test new Evaluation and Management Guidelines before mandating them for all physicians nationwide. I would like to point out that there are some new sheriffs in town--George W. Bush as President and our own Don Manzullo as Chairman of the Small Business Committee--provide the leadership that has made regulatory reform popular in Washington, and we need to make sure that health care providers do not miss out on that spirit and that momentum. A majority of House members now recognize the need to rein in some of HCFA's excesses. In the administration, Secretary Tommy Thompson and Administrator Tom Scully have made encouraging remarks. There are over 60 health care provider groups in support of our bill, and with the Small Business Committee's help, we can make HCFA reform a reality for our health care providers and the patients they serve. Thank you very much. [Mr. Toomey's statement may be found in the appendix.] Chairman Manzullo. Thank you for that excellent testimony. Congresswoman Berkley, if you want, you can give me the name of these people at HCFA that harassed your constituent, and we will write the story. We will put it up on web site, on the Small Business Committee web site. Ms. Berkley. I will check with the doctor. The one doctor in particular was so intimidated by what transpired that he has kept an amazingly low profile, and I have invited him to participate with me, and quite frankly, he is fearful of going public with his story for fear of additional retribution. But I will share this with him and see if he would not be more willing to go more public. Chairman Manzullo. In the next panel, you will listen to a fearless one, who is my chiropractor, who took in the entire system and---- Ms. Berkley. He would have to be fearless to be your chiropractor. [Laughter.] Chairman Manzullo. That was pretty good. I do not have any questions. I am a co-sponsor on your bill. I wish you God speed on it, and I trust that we can do something with this organization. I had an incident yesterday. I was on the phone for 15 minutes with a HCFA carrier. The difference between Social Security where the people are in direct contact with people who work for the agency, and we have a relatively--in fact, a very good relationship. And the problem with HCFA is that it is one-step removed from these contracting organizations. But there is a lady who is dying of liver cancer who wanted to get--her husband wanted to get a lift chair, and for 30 days he had been arguing with a woman at one of thesecarriers who insisted that she was not going to violate the privacy and wanted an incompetent woman to sign a privacy release. And I got on the phone and I argued with her for 15 minutes, and I finally said, ``Who is your supervisor?'' ``Well, they are not available.'' I said, ``Would you like to come before my Committee on a subpoena?'' I said, ``I am not kidding.'' I have had it with these incompetent bureaucrats that waste all of our money instead of helping people. And, finally, it go to, she gave me the name of the executive of the organization, and he called and he was extremely apologetic because I finally got to a person who understood that a person who is incompetent cannot even sign an X, because if you move their hand for them, then you are guilty of a felony. And all that because they had no idea what they were doing, and fortunately it was an isolated incident with this one particular organization, but it is stories like that that build up and build up. Mr. Toomey, I would add another name to the new sheriffs in town besides George W. Bush and myself, and that is my distinguished ranking minority member, Mrs. Velazquez. At times she may appear to be very tame. Ms. Berkley. I wonder who her chiropractor is. [Laughter.] Ms. Velazquez. Thank you, Mr. Chairman. I have been historically--well, first of all, thank you for being here and we will work together with you in easing the burden of paperwork regulations and regulations. But, Ms. Berkley, all those books that you have, those are regulations? Ms. Berkley. No, no, these are the--these are the textbooks---- Ms. Velazquez. Oh. Ms. Berkley [continuing]. Of medical school. Ms. Velazquez. Oh, okay. Ms. Berkley. Those are the regulations. Ms. Velazquez. And those are the regulations. So how do you--can you tell me how do you think those regulations got there in the first place? Ms. Berkley. I think the--the only thing I could think of is that through the years, through additional regulation upon regulation upon regulation, they just grow and grow. I suspect that much of what is in that cart--the container--probably contradicts what is in that container. And if I could share an anecdote. When I was first running for Congress, I started--my husband started courting me, and we were dating during my campaign. He is a doctor. He is a nephrologist. He used to bring--now this may not sound very romantic, but he used to bring HCFA regulations on our dates for me to read. And I am an attorney by profession, he is a practicing physician for many years, and he would show me these regulations that I could not make any sense out of. And you know, they keep getting promulgated and promulgated and expecting physicians and health care providers to not only digest the information, which is often contradictory, but to master it and to follow it until the next regulation comes, which may contradict the one that they are operating under, with no education, no opportunity to learn the new regulation before it is implemented. So I think a lot of the--many parts of MERFA addressed that particular problem as well. Ms. Velazquez. Yes, but the point that I just would like to make, if you allow me, is that, look, all those regulations that have been promulgated and that are reflected in those regulations are a result of the Health Insurance Portability and Accountability Act of 1996, the Balanced Budget Act of 1997, the Balanced Budget Act of 1999, the Medicare/Medicaid Benefits Improvement and Protection Act of 2000. Passed by who? By us, Congress. Ms. Berkley. Yes. Ms. Velazquez. So we have to go to the root of the problem here, and it is not just HCFA, but also we need to recognize that this is a result of congressional mandates that we passed here in Congress. Ms. Berkley. I do not disagree with you, and I think what Congressmen Toomey pointed out is quite accurate, the unintended consequences often of what is done in Congress, this is the unintended consequence. Ms. Velazquez. Thank you. Ms. Berkley. Thank you. Chairman Manzullo. Congresswoman and Physician Christian- Christensen. Mrs. Christian-Christensen. Thank you, Mr. Chairman, and I want to welcome my colleagues also this morning, and I want to thank you for the second in a series of hearings on HCFA. I think this Committee has a unique and very important perspective to bring to the issue of HCFA and the reform as it affects our small business health care providers. Like you, Mr. Chairman, I feel that a new name is not a new agency make, and I am awaiting real reform before I really adopt the name of Center for Medicare and Medicaid Services as well. Having been victimized myself by this agency, I am really proud to be a co-sponsor of your bill. We welcome the bill. I think it makes a real effort in addressing some of the issues and frustrations that physicians have been facing, and some of which we will hear about on the next panel. I think, among those reforms are the pilot testing. So many times our carrier would inform us of some new reg, and by the time we got used to it, it is changing, or it just wasn't working. So I think that pilot testing is very, very important. The repayment plan, it should not have taken legislation to have--to make that happen. It just makes good sense in the spirit of cooperation because, as even HCFA will tell you, most of the areas where they find discrepancies are not really deliberate fraud and abuse. They are mistakes. So it should not have had to take us, but we are glad that you are doing it. And I hope that--your bill is drafted, but the copy you showed me earlier this morning about the one particular. I took care of a lot of patients who were coming from low-income levels, and even the co-payment was difficult for them to meet. And I will admit here that--even though it is on the record-- that many times I just forewent the co-payment. Of course, I lived in absolute fear that I would be called up for the $2 or $5 or whatever it was, and be sanctioned and maybe be denied the ability to take care of Medicare patients. So I hope, Shelly, it is retroactive, and it covers any allowances that I have made. I just wanted to ask one question. [Laughter.] One of the purposes of MERFA is to make Medicare carriers and the intermediary audit process more equitable and increase Medicare education efforts. What is HCFA's and OIG's official position on this bill? Have they offered one? And hasthe private insurance agents industry offered an official position? Mr. Toomey. Not surprisingly, the OIG is not terribly supportive of this bill. They have made a series of observations, some of which we believe are valid considerations that ought to be taken into account. Others, we think are not. And, frankly, as we move forward in this process, both Ways and Means and Commerce have jurisdiction and what we ought to do, and I believe what they are doing, both of those committees, is taking input from those folks and balancing their concerns with the legitimate concerns of the providers. I will say in informal discussions with the new administrator of HCFA, he was very, very sympathetic to the intent. He observed that there might be some technical things that need to be adjusted as a practical matter, but that he was very open to this effort to end. I think that is going to be very helpful. Mrs. Christian-Christensen. Thank you. I have no further questions. Again, thanks for being here and thanks for the bill. Chairman Manzullo. Congresswoman Kelly. Ms. Kelly. Thank you, Mr. Chairman. Inasmuch as I just got here and have not heard the testimony, I am not going to ask any questions. I know where to find these two individuals at a later moment when I do have questions. Thank you. Chairman Manzullo. Thank you. Congressman Baird. Mr. Baird. Thank you, Mr. Chair. Thank you for convening this hearing and to the sponsors. I am also proud to be a co- sponsor. I went to a little hospital called Morton General, way up in the hills, and they had been audited that very year. Activity had been found that they had 12 instances of overbilling, double billing, not overbilling. And I thought they should receive a award for their efficiency, 12 out of an entire year, and instead they got menacing and threatening letters. So I applaud this bill and that is part of why I co- sponsored it. One quick question, and then--a specific detail question. In some of the summaries, it talks about providers covered in the bill, including physicians. It is my understanding that many other providers, including my own profession of psychology, face similar challenges, and I trust that they would also be protected under the provision of MERFA. Is that the intent? Ms. Berkley. It is our intent to be as inclusive as possible. And if there were any omissions of a health care provider, part of the profession, we are urging them to please to contact either one of our offices, and we will incorporate them. Mr. Toomey. And if I could just add, I completely agree with Representative Berkley, and we have manifested that with letters to the relevant committee chairs, that this should include all health providers. Mr. Baird. Terrific. I would like to follow up and make sure we get some others included. One sort of philosophical question, but it is important. I think the Chair raised an interesting point, the difference with dealing with formerly HCFA folks versus Social Security. In this intermediary, the so-called hired guns, there is somewhat of a paradox in that that is the very model of privatizing government services, which is--I am not trying to be partisan here, but that has been sort of the mantra of the majority party now, and yet it is that very privatization that in some cases has made it more difficult for us to deal with them. And I just wonder if there are comments from the sponsors of the bill about that. Mr. Toomey. We could probably have a discussion that would go on for a very long time on this topic. I think that the word ``privatization'' can, of course, mean many, many different things to different people. Having a private corporation to perform the functions within a very highly bureaucratic government structure may not necessarily provide great relief. However, I think if we move in the direction of empowering patients to make the decisions about the kind of insurance product they would have, the kind of coverage they have, and diminish the control that the government has, that, I think, would be extremely helpful. Mr. Baird. I appreciate that point. I think my concern is in the nature of trying to root out waste, fraud or abuse, we have basically created consultative gun slingers--these bounty hunters--that go out, and they effectively act like that towards practitioners, and the practitioners who have been on the receiving end have said essentially you have created a virtually unaccountable organization to investigate well- intended practitioners with virtually no consequences. If we have a problem with Social Security, I think they are pretty receptive to us calling us and pulling their chain a little bit. Or frankly, what I do with Social Security, if I call them up, oftentimes I say good work when they do a good job---- Chairman Manzullo. That is right. Mr. Baird [continuing]. Because so oftentimes they do excellent work and we need to commend it. But I am greatly concerned about this whole issue. I hope your bill addresses that in part. But I think separately this Committee or this body might want to evaluate whether it has been such a successful experiment to have these consulting bodies. I yield back my time. Thank you, Mr. Chairman. Chairman Manzullo. I appreciate that very much. We are in the process of obtaining some of these contracts between HCFA and the providers, and I am interested to see the so-called performance contracts, where they work on a cut of the money that they get from the providers. If any do not want to send those to me voluntarily, we will just issue a subpoena duces tecum. They can bring them to Washington and put them on my desk. Mr. Toomey. I applaud you, Mr. Chairman. Chairman Manzullo. So that is the role that we are going to take on this. I appreciate it very much. Ms. Berkley. Thank you. Chairman Manzullo. And let us know what more we can do on your bill. Ms. Berkley. Thank you. Chairman Manzullo. Thank you. Let us have the second panel, please. Okay, we have our second panel in place. You are going to share a microphone. We are going to start from the left and go all the way down this side here. Our first witness is Dr. Michael Hulsebus. Dr. Hulsebus is from Byron, Illinois, which is not too far from Egin, Illinois, and his father, Bob Hulsebus, pioneered chiropractic in the State of Illinois. He was one of the early pioneers, and Mike is here with his brother, Roger Hulsebus. The boys come in pairs to watch each other. And I am very proud to be their congressman. I would just state that they set the example of whenever a provider has a medical problem, a problem with HCFA, to immediately contact a member of Congress because we can do a lot of things here in Washington to help them out. So our first witness will be Dr. Hulsebus. The light in front of you will be green is go, yellow, you have got a minute to go, and then red. We will try to keep everybody's testimony to aboutfive minutes so we have plenty of time for questions. Michael. STATEMENT OF MICHAEL HULSEBUS, HULSEBUS CHIROPRACTIC Dr. Hulsebus. Thank you, Mr. Chairman and members of the Committee. As you stated, my name is Michael Hulsebus. Chairman Manzullo. Hang on a second. Are you having a problem with those--Michael, why do you not start over with your statement. Dr. Hulsebus. Okay. Well, thank you, Mr. Chairman and members of the Committee. My name is, like he said, Michael Hulsebus. I am a doctor of chiropractic from Rockford, Illinois. I appreciate the opportunity to address this Committee as it reviews the actions of the Health Care Finance Administration and it's dealing with the chiropractic profession. I am also speaking here on behalf of the American small business operators who must deal with a growing mountain of red tape and procedure wrangling to survive. It would seem in the best interest of the free enterprise system to simplify the processes dealing with small businesses, whose operators need an assist. I am glad to tell my story, but dismayed to think it is not unique. While there was an end to my situation, I know there are other chiropractic and health care professionals who have been forced out of the system because they could not assemble the forces necessary to fight this battle. After the Health Care Financing Administration removed Blue Cross and Blue Shield from administering Medicare in 1999, it then retained several contractors across the United States, including Wisconsin Physicians Service for services, who administers the program in my home state of Illinois. Since then there has been a clear pattern of targeting the chiropractic profession from elimination from the program. This happened even though the Office of Inspector General issued a report in September 1998 saying the chiropractic profession is not an area of major concern, and the limited resources of this program would be best served by focusing on other and more costly benefits. In post-payment reviews, like the one I went through in 1999,the carriers issue a demand for records, along with threat of expulsion from the program. Then they contact an analysis of the records to determine whether the treatments are ``medically'', not chiropractically, necessary or whether treatments constitutes maintenance care. If determined to be not medically necessary or to be maintenance care, the claims are rejected. Throughout this review process, the chiropractor is subjected to potential claims of criminal fraud, of a quasi- criminal nature. The physician is provided minimal options from the outset, none of which recognize the fundamental principle with the Constitution that every citizen is innocent until proven guilty. In the usual course of the post-payment review process, the physician is provided with three options: Number one, admit guilt, and pay or agree to pay; number two, admit guilt, but seek the reexamination of the charts; or deny guilt, and be required to produce the records of every Medicare patient cared for by the clinic, subject them to review by the consultant and face the ultimate consequences. The ultimate consequence could be expulsion from Medicare program or possible criminal sanctions. Under the regulation, it is the physician, in conjunction with the patient, who is primarily responsible for the determination of the necessity and duration of care, including the existence of a subluxation, which the chiropractor is uniquely qualified to determine. However, Health Care Financing Administration and the provider have arbitrarily limited the number visits that will be compensated. Chiropractic methodology and patient input had been largely ignored. Making this even more complicated the previous admitted failure to properly communicate with the profession as to what is required under the guidelines, and what documentation is necessary. Since March 1999, when I first received a demand for documentation, I have been forced to engage in unjustified and substantial amount of work, efforts and expense, all to defend myself against alleged overpayments which were ultimately allowed after a costly two-year review process. Among my concerns at this points are the following: The methods--utilized for the identification of chiropractics for post-payment review, and the apparent efforts to target the chiropractic profession, in post-payment reviews and the adoption of guidelines that further restrict the scope of acceptable services, and the varied interpretation of policy from state to state and--consultant--and to consultants. The admitted failure to properly communicate and educate the profession---- Chairman Manzullo. Michael, why do you have a sip of water there. Dr. Hulsebus. Sure. The admit failure to---- Chairman Manzullo. Settle down a little bit. We will give you a little bit more time. Dr. Hulsebus. Sure. No problem. The admitted failure to properly communicate and educate the profession as to the guidelines and requirements imposed. My experience with the review process has been contravention of the Congressional intent and the directives that created the Medicare program. The processing and punishment rather than the creation ways to meet the goals of the program. With the new guidelines now in place, it would be expected that the situation will not improve without your intervention. And I want to thank you very much for everything you have done, and I appreciate that, and I will entertain any questions. [Mr. Hulsebus's statement may be found in the appendix.] Chairman Manzullo. Thank you for your testimony. Congressman Toomey, do you want to introduce your constituent, the next witness? Mr. Toomey. Mr. Chairman, thank you very much. I would like to do that. I am very grateful that Dr. David Whitson has taken time out of his practice and his busy schedule to be with us today. I would like to introduce him to the Committee. Dr. Whitson is a constituent of mine from Allentown, Pennsylvania in the Lehigh Valley where he was born and raised, educated, and has practiced as a solo family practitioner since 1975, and I can assure my colleagues from personal experience, as well as the words of many friends back home, that Dr. Whitson is well known, not only for his medical expertise, but the compassion and genuine personal concern that he has always shown for his patients. Dr. Whitson is also kind enough to serve on a Health Care Advisory Council that I formed, and he has given me very valuable input on health care issues, in particular. It was any suggestions that he had made and the input that he had given with regard to Evaluation and Management guidelines that helped us to draft MERFA in the form that it has. So I am very grateful for all of his help, grateful that he is with us today, and I would like to introduce Dr. David Whitson. STATEMENT OF DAVID W. WHITSON, M.D., P.C., MEDICAL OFFICES OF DAVID WHITSON, ALLENTOWN, PA Dr. Whitson. Thank you, Congressman Toomey. Chairman Manzullo. We look forward to your testimony. Dr. Whitson. Thank you. I would like to thank you, Chairman Manzullo, Ranking Member Velazquez---- Chairman Manzullo. Excuse me, Doctor. Could you pull the microphone a little bit closer, the other microphone. Thank you. Dr. Whitson. I would like to thank you, Chairman Manzullo, Ranking Member Velazquez and the other Committee members for the opportunity to testify. Most cancers start slowly and stay quietly hidden until they insidiously infiltrate an organ, a system, and then the entire person. Eventually when they have grown to sufficient power and size, they start their terrible destructive, destructive, crippling and often fatal course. Ladies and gentleman, there is a cancer growing in the health care system in the United States, and in my opinion, it has the power to cripple and destroy the best medical care available in the world. The cancer began at the seemingly innocent attempt to control costs for senior citizens when Medicare recruited physicians to participate in its program. Well-intentioned, it has mushroomed into a bureaucratic nightmare of paperwork, rules, regulations and reviewers whose job seems to be one of forcing physicians into decreased payments for their services cloaked under the evaluation and management guidelines. It is imperative that this cancer be controlled before our once proud medical system is crippled beyond repair. Mine is the story of living the American dream. From modest beginnings with considerable hard work and support derived from our government and other generous people I was able to achieve my dream, a solo family doctor, and have done so for 26 years. But my dream is in grave trouble. For the last five years, the business aspect of medical practice has become a nightmare. Medicare has mandated, and almost all other insurance companies have happily followed suit, that I must document ridiculous and excessive information regarding each and every patient encountered to the brink of absurdity. The feeling, if it is not written down, you did not do it, has ruined medical recordkeeping, turned medical records into fodder for malicious attorneys chasing lawsuits, Medicare and insurance companies whose folks are seeking refunds, and changed the focus of the physician from the patient to the record. It has to stop. It really doesn't matter economically what I do when I see a patient. It matters to the patient. But Medicare cares only about what I write down. If I examine a patient's eye, it is now inadequate to record the eye is normal. If I want proper reimbursement for the proper time and complexity of the exam and decisions I make, I must record almost every aspect of my exam and thinking process about why I think the eye is normal. So my record must say, ``Eyelid, normal cover; moves normally; surface of the eye has normal color, normal tearing and no evidence of injury; pupil reacts normally to changes in light and reactions normally when patient changes from looking near or farther away; front part of the eye appears quiet, suggesting no inflammation; lens is normal, suggesting no cataract or foreign body; back part of the eye is fine, showing no infallation; retina looks normal, including a normal nerve, artery, vein, and no evidence of detachment,'' et cetera. I am stopping out of consideration for your time and the clock. My point is if I know I ask the right questions of my patient and did a thorough eye exam on my patient, and I decide the eye is normal, my note in my chart that the eye is normal should suffice. I or another physician who might need to review my patient's chart should know it's normal. If on a second exam an abnormality is noted, we can safely assume it occurred in the interim. Under current E&M guidelines, I must include all the details I elucidated into the chart. This confuses the chart. It makes mountain of reading for myself or another physician should we need to review it, and really adds no useful information. It simply adds words. However, if one assumes the adage, ``If it isn't written, it wasn't done,'' any malpractice attorney or Medicare or insurance reviewer wishing to down code the visit starts to drool if he looks and my record and see it is concisely saying ``eye is normal.'' Ladies and gentlemen, I am tired. I am being beaten down. I am a very good family doctor who wants passionately to practice medicine and I would greatly appreciate your help. The private insurers follow Medicate. The absurdity of the E&M coding nightmare has to stop. Physicians like me who love family practice need your help before we become extinct like all the mom and pop businesses in this country. Huge corporations, who lack the tremendously valuable personal touch I feel is such an inherent assets to good medical care, will deliver medicine, rather than individuals who know and truly care about each person they see. Physicians and patients are not interchangeable as insurance companies would have you believe. It takes a long time to build trust with patients. Once established, it makes a physician much more efficient and effective in helping that patient, but there is no code for the time that it takes to build that trust. Congressman Toomey and his co-sponsors have attempted to initiate some positive reform. It is not enough, but it does represent hope for dedicated family physicians like me. In reference to my opening remarks, I truly hope someday medicine can cure all cancers. It is also up to you to help the possibility of that cure. Medical practice in this country is in trouble. Before medicine can cure anything, we must use the necessary time, effort and legislation to cure medicine of the cancers that threaten its quality, its providers and its longevity. Thank you for the kind attention. [Mr. Whitson's statement may be found in the appendix.] Chairman Manzullo. Thank you very much, Dr. Whitson. We are going to--there is a vote, we have to go vote and we will stand in recess until we return, probably about 10 or 15 minutes. [Whereupon, a recess was taken.] Chairman Manzullo. Okay, we will reconvene our hearing. Our next witness is Brian Seeley, who has grown up in the home medical equipment industry; works at a family business located in Cleveland. In 1988, Mr. Seeley purchased a small company in Ormond Beach, Florida. It has grown into two location, selling appliance in north-central Florida, and it is considered a full-time home medical equipment and service company. Seeley Medical has 13 employees. He is a member of the board of directors for the Power Mobility Coalition where he works closely with industry leaders concerning reimbursementcriteria access and product document. We look forward to your testimony, Mr. Seeley. STATEMENT OF BRIAN SEELEY, SEELEY MEDICAL, INC., ORMOND BEACH, FLORIDA, FOR THE POWER MOBILITY COALITION Mr. Seeley. Thank you, and good morning, Mr. Chairman, distinguished members of the Committee. As was stated earlier, I represent the Power Mobility Coalition, which is a coalition of supplier and manufacturers who provide power mobility equipment and services, such as motorized wheelchairs and scooters for beneficiaries nationwide. The PMC members represent well over half of the nation's power mobility market in all regions of the country. According to HCFA's own Medicare data, more than 95 percent of all suppliers of durable medical equipment generate billings of less than $350,000 a year annually, and 99 percent generate less than five million annually. While HCFA has overall responsibility for the Medicare program, many of its responsibilities related to reimbursement and medical policy have been delegated by the agency to the carriers. These are the four regional DMERCs around the country. Unfortunately, the carriers have used this authority to create new policies, often in direct contrast to existing policy published by HCFA, developed by Congress. A deeper concern is that HCFA is aware that policies are not being adhered to by the carriers, and by omission are allowing these policies to stand. These actions and HCFA's lack of oversight of the carriers has lead to an erosion of the due process accorded to small businesses who choose to provide items and services to Medicare program beneficiaries. Three examples of these violations of our due process I would like to cover today are the audits, extrapolation and appeals. Medicare audits should be conducted base on good cause and adhere to established standards and guidelines. In fact, HCFA has told carriers, ``subject providers only to the amount of medical review necessary to address the nature and extent of the identified problem.'' But one of HCFA's carriers that oversees 17 states uses the number of power wheelchairs sold by suppliers in that region as the reason for an audit. If you sell more than seven chairs per month in that reason as a provider, you will be audited by that carrier. This creates a chilling effect on the ability of small businesses to provide equipment and services to the patients who qualify for them. Mr. Chairman, the development of new technology in the power mobility industry has made this equipment available to a larger number of disabled persons. It is now possible for beneficiaries to obtain smaller, more light-weight and maneuverable motorized wheelchairs for use inside a patient's home. This is not an instance of over utilization. This is an instance of technology. The criterion used by HCFA's carriers is inconsistent with the policies set forth by Congress. Congress has established the Certificate of Medical Necessity, CMN, as a document which determines all medical necessity requirements for claims submitted to the Medicare system. When creating CMN forms, HCFA explicitly declared in writing, I quote, ``These forms contain medical information necessary to make an appropriate claims determination.'' Yet HCFA's carriers recently told suppliers in writing, and I quote, ``CMN represents nothing more than a Medicare pre-payment tool, and CMN itself does not provide sufficient documentation of medical necessity.'' The suppliers complied with the rules established by Medicare program, but they are punished by the carriers which applies new and arbitrary criteria after the equipment has been delivered to the patient and after the claim has already been paid. An example of the lack of due process is the use of the extrapolation by HCFA's carriers in their calculation of so- called overpayments. Let me explain extrapolation. A carrier may draw a sample of claims, sometimes it is as few as 10. All those claims are paid to the supplier. It is determined that 50 percent of them should not have been paid even though the patients' physicians certified the need for the equipment and the patient qualified for the equipment. We are talking about five claims. That amount is then extrapolated to the universe of claims. If there 100 claims in that universe, a small business will owe repayment of 50 electric wheelchairs rather than just five. That can represent up to $350,000 to a small proprietor. To a company like mine, that would put me out of business. The overpayment amount is due within 30 days of the carrier's determination, and even though the supplier wins, most, if not all, of the overpayment back on appeal the business is severely damaged. This process is creating hardships for dealers and has forced many businesses to face bankruptcy. This is unfortunate because, according to HCFA's own figures, 80 percent of the denials are reversed on appeal. When a Medicare carrier audits the power mobility supplier, a carrier/reviewer will make a determination as to whether he believes the equipment is medically necessary. If the determination is negative, the reviewer who has never examined the patient reverses the determination previously made by the treating physician. The suppliers must then go through a lengthy appeal process. I would like to thank you, Mr. Chairman, for providing the Power Mobility Coalition with the opportunity to bring these important issues to your attention, to the attention of the Committee. An audit process that targets class of suppliers rather than targeting abuse, extrapolations which can easily put a small supplier out of business, and a lengthy appeals process that withholds proper payments to supplier with an ultimate reversal rate of 80 percent. We look forward to working with you to achieve reasonable solutions to these issues. Our entire industry and tens and thousands of disabled beneficiaries are counting on you. Thank you. [Mr. Seeley's statement may be found in the appendix.] Chairman Manzullo. Mr. Seeley, I would suggest that if you are having continuing problem with this--what the acronym used for the carrier? Mr. Seeley. The regional carriers, the DMERCs? Chairman Manzullo. The DMERCs, if you feel that they are acting in violation of the law, you send us a letter. I will ask that the HCFA inspector general do an investigation. And if I believe that what they are doing is illegal, I am going to ask them to cancel the contract. Mr. Seeley. Thank you, Mr. Chairman. We will do that. Chairman Manzullo. That is what we have to do, every time there is a violation you bring it to our attention. We have within the Small Business Administration the Office of Advocacy that has a legal staff. We work with them. We have about a half a dozen lawyers on staff that are experts in the regulatory analysis. He does read regulations on Saturday night. [Laughter.] Not so much a social life, but use our Committee. We work on abipartisan basis. We were effective in canceling a contract when the Air force had decided they have 106,000 baseball caps made, and instead of giving--using it for procurement, they subcontracted with the Government Printing Office because they thought that hats were printed and not manufactured. And we called one individual and we stopped that contract. So we are not adverse to using any of our tools possible to raise as much hell possible, because you cannot afford to go to court with it, and that is why we are here to be your advocate. Okay? Mr. Seeley. I appreciate that, Mr. Chairman. Chairman Manzullo. Our next witness is Phillip Chase. Mr. Chase has been in the health care delivery business for over 30 years, including both owner/operator as well as senior manager level position in one of the largest health care delivery systems in the country. He has a keen interest in health policy development and implementation, which has been a constant focus for him throughout his career. We look forward to your testimony, Mr. Chase. STATEMENT OF PHILLIP CHASE, THE CHASE GROUP, THOUSAND OAKS, CALIFORNIA, FOR THE AMERICAN HEALTH CARE ASSOCIATION Mr. Chase. Thank you, Mr. Chairman. Chairman Manzullo, Ranking Member Velazquez, and members of the Committee, thank you for having the opportunity to appear before you this morning and share some insights in regards to effective reforms to the Health Care Financing Administration, now known as CMS. As the Chairman spoke, I am Phillip Chase. I am here today on behalf of the American Health Care Association. The American Health Care Association is a nonprofit association representing 12,000 not-for-profit and for-profit health facilities for skilled nursing, assisted living, and subacute care, and facilities for the disabled. Let me briefly speak of myself. I have 30 years of experience as the owner and operator of skilled nursing facilities in California. Currently, I am the administrator of the Center at Park West, a 99-bed skilled nursing facility. I know firsthand the financial problems of the nursing home profession as an owner, as well as the day-to-day problems as an administrator trying to negotiate around complex CMS regulations to provide high quality care to my client residents. Before I begin my testimony, I want to say that from what my AHCA's representatives tell me in Washington, it is a new day at CMS, and with a new willingness to develop solutions to problems that face us. We are greatly encouraged by the statements of Secretary Thompson and by Administrator Scully. What I am going to do today is identify some systems that we believe deserve your oversight and attention. There is a dangerous storm now brewing over the long-term care horizon, Mr. Chairman. We have a demographic crisis that, if not addressed, will severely threaten the quality and availability of care for the wave of baby boomers who are about to enter in the long-term care system. Financially, skilled nursing facilities are, at best, treading water. We are facing a staffing crisis of epidemic proportions in every part of the U.S. Our turnover rates exceed 80 percent annually and recruitment is nearly impossible. The staffing crisis is compounded exponentially by the regulatory system that forces caregivers to focus on extraordinary amounts of time on cumbersome paperwork at the expense of direct patient care. This is a burdensome system and it leaves a highly negative impact on patient care by driving good providers and caregivers to leave their profession. I am here today not to ask for less government--I am here today to ask for smarter government--government that works in the best interest of promoting and maintaining quality care for beneficiaries and work to create a positive and healthy environment for our caregivers. Since the Institute of Medicine study in 1983 and the Nursing Home Reform Act of 1987, facilities have been forced to work closely with HCFA's regulation to try to understand how to negotiate through that process. The system of oversight that exists today--although well intended--grew uncontrollably, as you heard earlier, and has evolved into an ineffective bureaucracy that needs major reform. Today, providers face a system of oversight that is entirely subjective and process-oriented, and focuses more on punishment, not on quality of care. The system bears little resemblance to the OBRA '87 that was envisioned. The current environment is a type of ``Catch- 22'' scenario in which the low number of citations is interpreted as poor oversight, while a high number of citations is determined to be poor care. The Institute of Medicine study, December of 2000, reinforces this conclusion. Therefore, the question before us: What reforms or changes can CMS make that would be more significant to improve its environment? They are of two types, Mr. Chairman. The first is the much- needed administrative changes in how CMS carries out it regulatory process; the second, to address the issue of financing in terms of Medicaid and Medicare. With regard to the regulatory improvement, let me share with you a few insights. The first I would ask you to consider is to allow a consultative environment. Currently the language within HCFA's orders to state agencies is--there is a no collaboration policy. They are not permitted to collaborate with providers in terms of how to solve issues. We believe this is unfortunate. Their expertise and the nature of their job is seeing other providers and how they work gives them some opportunities to share with us successful programs and stories. So we believe that a change to the state operations manual where they could be consulted would be very useful in that regard. The second is to allow providers to follow physicians' orders. We recently had a survey in my facility wherein a state surveyor actually told me not to follow physicians' orders. This obviously is not appropriate, and we are caught in the middle because the surveyor is telling us to act a certain way, yet our regulations and our ethics require us to follow physicians' plan of care. The solution is to modify the CMS--I'm sorry--the State Operations Manual in a way that the surveyors clearly understand that physicians' orders should stand as the marking process in the care of our clients. The third issue is to stop CMS from holding nurse aide training programs. If you have a survey citation in which you have patients deficient care, your training program for CNAs may be suspended. And because of the length of time it takes for you to get adjudication to a proper hearing as to the fairness of that particular deficiency, in the meantime you have lost your ability to provide the training program for much needed staff as I mentioned earlier. Next, implement a fair and timely appeal process. Currently, providers who want to dispute citations they believe have been issued in error have first to appeal to the agency. That agency acts as the enforcer, the judge and jury, and often fails to render an objective ruling on a dispute. Only after the full administrative process has been pursued, the informal resolution process, the administrative law judge process, and finally the department appeals board, and then to the secretary can either the provider then go to the court system to seek a remedy. This is not verytimely. It can be anywhere from a year to a year and a half before that process is completed, and very costly to me as a small business provider. On the penalties that continue--one of the penalties that continue while I appeal this determination is this nurse aide training program, which is very vital to our sustaining our staff and maintain our level of care. A further ramification of this is that, although I have no claims, my liability record in terms of provider of care to my clients, my premiums for liability has skyrocketed from two years ago where I paid $60 a day in 1999, to this year paying $550 a day. That is almost a ten times increase. Chairman Manzullo. How are you doing in time? You are a minute 30 over. Mr. Chase. Thank you, sir. Chairman Manzullo. Can you finish in 30 seconds? Mr. Chase. Yes, sir. As a small provider, small business provider, the lengthy appeal process needs to be addressed and looked into. The next issue that I want to bring to your attention is the removal of disincentives to provide. I was able to take over from an existing provider who was about to be closed down, and part of the ``cost'' that I incurred was that I got stuck with his penalties and fines that he had experienced in his cooperation, and I as a successor in interest ended having to pay his fines and ended up having to pay for his cost settlement because I inherited his provider number. Today the Medicaid system pays for about 70 percent of the seniors in our nursing homes across the country, about 1.4 million clients. CMS does have the ability to work with states in addressing that payment system in a way that we can bring that to a conclusion, bring that to a more positive resolution. In conclusion, Mr. Chairman, I think we have the opportunity at this point to work with members of the Committee and the new administration to seek ways in which the patients' needs and their care can be properly addressed in order to provide small business opportunity to provide a quality environment to these clients. Thank you. [Mr. Chase's statement may be found in the appendix.] Chairman Manzullo. So it is the superfund law that applies to succeeding owners of long-term health care facilities? Mr. Chase. I have not gone to HCFA directly to ask for some reconciliation to these issues, and they have not---- Chairman Manzullo. Do they have authority to do that, the tacking of the fines of---- Mr. Chase. Yes, they do. Chairman Manzullo [continuing]. That they screwed up in the first place? Mr. Chase. It is a part of the provider agreement contract. Chairman Manzullo. What I would like you to do is to send me a letter; put in there that provider agreement, and then ask in your letter what statutory or regulatory authority HCFA has in order to slap you with the penalties that were incurred by your predecessor. Mr. Chase. Yes, sir. Chairman Manzullo. We will take that letter and we will send it to HCFA, and we will get an answer from them. Mr. Chase. All right, thank you for your help. Chairman Manzullo. Okay? Mr. Chase. Thank you. Chairman Manzullo. You bet. This is amazing. My mother was in a nursing home for a period of time, and I could commensurate with what she had to go through on it. Our next guest is Norman, is it Goldhecht? Mr. Goldhecht. Correct. Chairman Manzullo. Mr. Goldhecht is currently the Executive Vice President of Diagnostic Health Systems, DHS, located in Lakewood, New Jersey, where he oversees operations, billing and cardiac services. I guess the cardiac services are related to the operations of billing? Mr. Goldhecht. That's true. Chairman Manzullo. Prior to joining DHS in 1985, Mr. Goldhecht worked for the Lovebright Diamond Company where his primary functions including invoice clients and tracking accounts receivables. We look forward to your testimony, Mr. Goldhecht. STATEMENT OF NORMAN GOLDHECHT, DIAGNOSTIC HEALTH SYSTEMS, LAKEWOOD, NEW JERSEY, FOR THE NATIONAL ASS'N OF PORTABLE X-RAY PROVIDERS Mr. Goldhecht. Thank you, Mr. Chairman, and members of the Committee. I appreciate the opportunity to appear before you today. My name, as you mentioned, is Norman Goldhecht, and I serve as the Regulatory Chairman of the National Association of Portable X-Ray Providers, and I also operate a mobile radiology company in New Jersey. I am particular pleased to have the opportunity to once again testify before this Committee as my company serves many patients in the New Jersey and New York area who are constituents of the members of this Committee. Mr. Chairman, I represent an industry predominated by small and micro businesses. Our companies provide services to our nation's elderly in a particularly safe, convenient fashion, as we, literally, provide care at the patient's bedside. Because the vast majority of our patients rely on Medicare, our industry is highly dependent upon HCFA and its regulatory processes and pricing. The regulatory process and specific policies of HCFA are critical to our ability to provide our much needed services. It is for this reason that we are so grateful to this Committee for, again, seeking to ensure that the small businesses of America are appropriately considered when HCFA policies and procedures are reviewed. I would additionally like to thank Chairman Talent, the immediate past Chair of this Committee for sponsoring legislation last year to assist our industry in providing quality care for the elderly and infirm. Although Chairman Talent, and fellow original sponsor, Chairman Crane, were unable to prevail in the much needed legislation, the NAPXP and all of its members greatly appreciate their efforts and the efforts of all the members and staff who assisted them. The negative effects of HCFA policy are first felt and most keenly in our rural and less prosperous communities. American small business provides the most cost-effective and thus available service in far-flung communities and other less profitable areas. While our federal agencies are most likely to hear and understand the well-financed perspectives of big business interests, the needs of our citizens living in regions offering lower profits to the small businesses who provide the only service available are frequently ignored. As I present our situation to the Committee, I must stress that our situation is grave. If we areunable to effect change upon the current HCFA policies, our industry will continue to shrink until only those patients fortunate enough to live in high density, high profit areas will find our services available. To the elderly patients in a facility in rural Illinois, or Colorado, or Texas, the need for an X-Ray or an EKG in February will require an ambulance ride to a hospital. There, the patient will be subject to all the of the waiting and discomfort we all associate with a trip to the hospital followed by another ambulance ride home. Contrast this with quality care offered in the comfort of the patients' rooms, surrounded by reassuring sights and sounds without concern of adverse weather conditions or road hazards. Fortunately, this Committee has already provided an appropriate mechanism for improving for most of our policy problems. Passage of the Regulatory Flexibility Act should have dramatically decreased the number and scope and type of problems our industry has experienced at the hands of HCFA. Unfortunately, while RFA presents a clear mandate for small business impact analysis in the regulatory process, it is all too often ignored. HCFA's failings in this area are cited directly by SBA Chief Counsel Glover in his annual report on RFA Fiscal 2000. If the NAPXP were to request one result from this Committee's actions, it would be that the RFA be vigorously employed and enforced. I would like to list three areas where HCFA's policies have failed to serve our industry or the Medicare system. Rural access: Portable x-ray providers service many skilled nursing facilities and homebound patients that reside in rural areas. The providers must travel considerable distances to and from these sites. Increasingly, our member companies are opting not to service these areas, and thus patients. We are, frankly, amazed that a policy which has the effect of creating a regional ``wrong side of the tracks'' disadvantage to millions of our nation's elderly is tolerated. By refusing to additionally compensate providers of rural services in response to their clearly higher costs and lower profits, HCFA is actively engaged in a policy which simultaneously denied equal patient care, and drives rural small business service providers out of existence. E.K.G. transportation: Currently, portable x-ray providers do not receive any additional reimbursement to travel to and from a skilled nursing facility while performing an EKG. The 1995 GAO study of this situation showed an already disproportionate relationship between portable EKG services in rural versus urban settings. Which member of this Committee would wish to explain to their constituents that are receiving fewer diagnostic procedures simply because they reside in the wrong area of the country? Consolidated Billing: The Prospective Payment System for SNFs mandated by the Balanced Budget Act has been very damaging to our industry. While our industry initially offered cautious support of this policy in the interest of improving fiscal health to the system as a whole, enactment has caused many of our worst fears to be realized. Mr. Chairman, I recognize the challenges faced by the this hard working Committee in dealing with these often complex issues. Again, I, and all of the members of the NAPXP, pledge our support for the efforts and thank you for the opportunity voice our concerns. I would be happy to answer any questions of the Committee. [Mr. Goldhecht's statement may be found in the appendix.] Chairman Manzullo. I appreciate all of your testimony. There is a nursing home back in our district that got audited by HCFA, and they were cited and threatened with a fine because they did not serve parsley garnish on a plate even though it was on the menu, and also they served porkettes instead of pork chops for dinner. Now, I was discussing with my colleague here that, you know, we pass the laws, but there must be a bunch of people out there that have nothing to do but to walk around and harass people. I do not even know what a porkette is. I guess that is what happens when you raise beef cattle. I don't know. Dr. Hulsebus, the question I want to ask of you, you practice with your brothers; is that correct? Dr. Hulsebus. That is correct. Chairman Manzullo. And one of them is here. Dr. Hulsebus. Yes. Dr. Robert Hulsebus began practicing in 1949, and my father is a chiropractor, as we stated earlier, and we have a large practice in Illinois. And when Medicare came in and--carrier, rather, and audited us, they said they randomly picked, they picked our chiropractic and some other chiropractic clinic down in Baulton, Illinois, by the name of Dr. Frank Beamus. We were all second generation chiropractors and we had large chiropractic facilities. And when we were audited, we have always cooperated and always tried to communicate with the carrier to try to comply with everything they have asked us to do. We have asked for guidelines and tried to cooperate, and our chiropractors, myself included, are on boards and past presidents of state organizations, and we are very, very active. And basically we are told by the carriers we couldn't talk to them. And we received letters from them and mandated payment. Chairman Manzullo. They would not sit down with you and explain to you what, if anything, you did wrong? Dr. Hulsebus. Not at all. Chairman Manzullo. And then they went after you and your brothers, and what is the total amount of fine that they wanted from---- Dr. Hulsebus. Well, it is a quarter of a million dollars, and you have to understand that chiropractic care, the only paid benefit is that of chiropractic adjustments of the spine, which averages $35 a visit. Chairman Manzullo. So there is really one Medicare coding that that you could use; is that correct? Dr. Hulsebus. Correct. Chairman Manzullo. And that is to manipulate the spine? Dr. Hulsebus. Correct. Based on 80 percent of our care, roughly, not necessary. And it is the same care we have been doing to the patients for--ever since Medicare started. Chairman Manzullo. Now, we had these people come in our office in Rockford. Dr. Hulsebus. The program integrated people. Chairman Manzullo. That did not answer my letter for 90 days. Dr. Hulsebus. Right. Chairman Manzullo. And they came in the office in Rockford, and tell us what happened there. Dr. Hulsebus. Well, basically, we sat down with them and told them we would like to dialogue and have open communication, and they said they reviewed our claims and they had a non-qualified person, a non-chiropractor that is, review the claims. And they just said we just find the claim is not necessary. And yet we had been audited by Blue Cross/Blue Shield before that, that said all the claims were payable. And we asked them how they came about their audit and how they came about their decision on whether it was necessary or not, and they said, well, they had a nurse, registerednurse review them and they also had the medical director. Well, we asked them, ``Well, did you review each claim? Did you look at the x-ray of each patient?'' because in chiropractic it is mandated that each patient must have an x- ray to demonstrate the need of the care for supplementation. And they said ``No. We didn't look at the x-rays.'' And I said, ``Well, how can you determine whether care is necessary or not if you don't use the criterion material in order to determine whether it is necessary or?'' Chairman Manzullo. And that is when we came to the conclusion they do not know the difference between x-rays and the X-files. Dr. Hulsebus. Exactly. It was just so ridiculous, the whole thing was. They never looked at anything. They made their claims in January and they did not---- Chairman Manzullo. They went from $250,000 down to zero. Dr. Hulsebus. Down to--basically, we went from $250,000 to about $40,000 down to nothing. In the end, we prevailed on the whole thing, and all the care was necessary and everything was great. Chairman Manzullo. Right at the end you got them down to $1,500, and then you took that to the administrative law judge, and then won, and then HCFA wanted to appeal that. Dr. Hulsebus. Correct. We went in front of a judge and he looked at the whole thing, and said there is nothing in here that should not be paid. The carrier makes no sense in the way they did this, and there is no reason for this at all. He recommended total payment. And then they wanted to appeal it again. And then your office stepped in, and asked what was going on and---- Chairman Manzullo. Well, I think we did more than that. Dr. Hulsebus. Oh, yeah, I know you did a lot more than that. Chairman Manzullo. But the--if you had not had a relationship with a member of Congress---- Dr. Hulsebus. Mr. Manzullo, we went to four different law firms. We spent a tremendous amount of money and we tried everything we could. You know what our research were, we do not even know what a post-hearing review is. There was no law firm that we could contact that could help us. And finally we went to yourself and asked for help and immediately--you know, you looked into it, and said there is something wrong here. You tried to contact them, I can vouch for that, and they would not even cooperate with you. And the carriers totally would not cooperate with us, tell us what we were doing wrong. All we want to do was correct the problem, if there was a problem. We could not find out what the problem was, even through your office. Chairman Manzullo. And to this date, there still are no guidelines---- Dr. Hulsebus. There are no guidelines. Chairman Manzullo [continuing]. From HCFA as to what is expected of the chiropractors. Dr. Hulsebus. And there are no guidelines, and we still do not know if what we do is right or wrong, and we just continue to try to provide the services that is best for our patients and try to go along with it. We do not know what to do. Dr. Hulsebus. I appreciate your coming. I guess the lesson learned here is that we have to educate members of Congress on how to go about to deal with HCFA, and educate the medical profession that they should contact members of Congress in order to--in order to have us represent you before HCFA. What a story, huh? It is amazing. Ms. Velazquez. Ms. Velazquez. Thank you, Mr. Chairman. Mr. Goldhecht, oftentimes regulations that are required by a regulated community were not only required by statute, but required within a certain time frame. In other words, the statute passed by Congress was the problem. Do you believe that growing amount of CMS paperwork requirements are the result of congressional mandate? Mr. Goldhecht. That is part of the problem that our industry faces. A lot of the requirements and audits that we received are related to paperwork that is somewhat out of our control. For example, a lot of the procedures, when we performing, using Mr. Chase's example, Mr. Chase's facility, a nurse calls a facility--calls our facility or provider to order an x-ray to be performed. They get a physician order, and we go out and perform, and they will provide us with a slip. Yet we are obligated to document all of that to make sure that is done properly. If the audit comes, they will come and audit us to make sure that their doctor or the doctor that is on their staff performed what he needed to do, which we have no affiliation with, no control with, yet we are going to be liable, and we are going to get audited and have to document all that. But more so, some of the regulations that has recently been mandated are more troublesome. For example, in my testimony, the EKGs, the removal of EKG transportation, we basically are paid the same amount a physician is paid to perform an EKG. He performs it in his office. We perform it by traveling. We are not paid for that travel time. That expense is incurred, and the reimbursement that we get paid, what my company gets paid is a little bit less than $16.15. It is a major problem. Ms. Velazquez. Thank you. Mr. Chase, in the time that we have gone through the transitions of the BBA, BBIA, HCFA and BIPA, have you used the rule-making processing, and are you using the process to give you comments as to where you think there are problems? Mr. Chase. Yes, ma'am, we do. Our association is very active in dialoguing with the agency and providing our input brought on by providers in the field who are experiencing the real live issues and those these changes will impact us, and we do try to provide our perspective on those regulations. Ms. Velazquez. And do you think the agency listens to your comments? Mr. Chase. Not as successfully as we would like. It has to be told a number of times over and over again before it appears to finally click with them. It is frustrating. Ms. Velazquez. Mr. Goldhecht, in your experience, could you say that there is any major program, Medicare, Medicaid, private insurance, that stands out as being outstandingly better or worse than another in terms of providers? Mr. Goldhecht. Unfortunately, no one is better than the other. Medicaid for our industry is probably the one. Medicare and the private--the private insurance companies usually suit to what Medicare deems reasonable. The problem is what is reasonable and what is not, especially when you talk about a micro industry like ours. It is just overlooked in general, and that is the biggest obstacle that we have. Ms. Velazquez. Mr. Michael Hulsebus? Dr. Hulsebus. Yes. Ms. Velazquez. Regarding the legislation that was sponsored by Mr. Toomey and Mrs.Berkley, what is the difference between the operations that apply to the appeals and coverage process and the provisions contained in MERFA? Dr. Hulsebus. I am not sure if I understand your question correctly. Mr. Chase. Like, for example, should we be giving the agency time to promulgate the BIPA regs before we start reforming the system again? Dr. Hulsebus. Again, I am not real clear on your question. Ms. Velazquez. If anyone will comment on that. Dr. Whitson. I think part of what they are trying to do, what Congressman Toomey's bill is trying to do is basically stop--if an agency like Medicare finds me in violation and finds under an audit that I have done some things that they want to down code, they can then extrapolate that to a large amount of money, and demand that money from me within 30 days or it starts bearing interest, and then fine me even more. Part of the new regulations, I think that is in the new bill, would be that they would not be able to do that until I have had a chance to appeal it and I could indeed, if I were found negligent in my recordkeeping, I could take up to a year to repay that rather than basically have the ability to put me out of business, which they have at this point, even before I appeal it. Ms. Velazquez. Okay, Mr. Chairman, I do not have anymore questions. Chairman Manzullo. Thank you. Mr. Toomey. Mr. Toomey. Thank you, Mr. Chairman, and if I can follow-up on the last question. I agree with the way that Dr. Whitson has characterized the legislation, but I would point out that our legislation is broad in its scope in that it only applies to the first audit, and the subsequent audit would not limit HCFA the way the first one would be audited, which is part of why I find it very hard to imagine why people would disagree with us. I was hoping Dr. Whitson could just comment a little bit more about something that he touched upon during his testimony, and that is, is there any way that you could quantify for us, whether it is in dollars or in personnel time or your own time or the number of staff you have, the entire burden that you face in dealing with the regulatory environment, and especially if you could sort of characterize that in terms of the effect that you see that having on solo family practitioners. Do you see it having an effect on the number of solo practitioners in the Lehigh Valley where you practice medicine? And do you see it having an impact on the future of these small practices that so many patients so very much want to have? Dr. Whitson. I see it having--I see it having a huge impact. I am becoming a dinosaur. I cannot think of very much other solo family practitioners in the Allentown area, and there used to be a lot of us. I now get things in the mail like this all the time. I got two yesterday. I used to enjoy going to medical conferences. I enjoy going, but I used to enjoy it more because now a lot of the medical conferences are about coding. They are about documentation and coding guidelines. Yesterday, coincidentally, which is not an usual day, I got two. This one says, ``Certified professional coder Boot Camp.'' Okay, I can go for three days, and this is dedicated to the business of medicine. Ladies and gentlemen, Congressmen and Congresswomen, I continually want to be a better physician, but I do not want to be a better coder. Unfortunately, I am in a situation that if I do not do that I am the target. I have not done what my colleague here has done, and ask for help from Congressman Toomey, and perhaps I should have because I have been rather outspoken in my dislike of managed care. I have viewed health maintenance organizations as wealth maintenance organizations basically for insurance companies, and I think insurance companies have now been placed squarely between patients and doctors. Because they are placed between doctors and patients, it really does not enhance the care I can give them. It simply enhances what I have to give the insurance companies, and that is more and more reports. I can remember the good old days, I hate to sound that old, when the regulations were not that bad, and to take it to an extreme example, if we think about the three by five cards that the old family doctors used to use that are so often made fun of, I am not so sure we have not gone to the complete opposite extreme. The good old family doctor who knew each and every patient, he had that history, but he had it right up here in his memory, and he knew that patient personally. So when he saw something and put down a couple of words about what that office visit was about, the next time he saw the person he knew why he came in the last time, and he knew what he should be concerned about this time. Now, if I want to dictate into my record, I cannot write it, I have got to dictate it because I have got to put much too much down. I still want to dictate pertinent things. I want to know what was wrong with the person, what I might be concerned about, but also in my notes I want to put down if the person's husband is sick, or if something is really important in that person's life because it will impact on their medical care. The insurance companies could care less. For them I must dictate, as in my initial testimony, all the line by line, item by item things that really I know are normal and the patient knows are normal, but I have got to document for the insurance company or the insurance company will say I never should have gotten paid 40 or 50 dollars for that visit. I should have gotten paid $15 for that visit, and that would not pay my office overhead. Some doctors are starting to use templates. It is scary. They can have them in their palm computers or they can have a big computer system if it happens to be a big corporation with a lot of doctors, and a lot of them have even set their computers to default to normal findings. So when they see a person, they can just flip the mouse and it checks everything in all the review systems or medical things that should have been examined, and that does not prove they were examined, but it will certainly stand up very well if they are subject to an audit. I think this is a tremendous problem for the little guy, for the independent practitioner. In the past five years I have had my first malpractice claim that was over my head for two and a half years, dismissed by a jury in 10 minutes, because of an attorney who used the coding or inadequate documentation that they thought was inadequate because of this silly rule that if you did not write it down, you did not do it, which is just incorrect. And my concern is that Medicare--where Medicare goes everyone else goes. Malpractice attorneys, private insurers, Blue Cross and Blue Shield, I think it is having a tremendous deleterious effect. I doubt that there will be many solo practitioners or small practices left unless this is changed. Thank you. Mr. Toomey. Let me just say and then I will yield the balance of my time, Mr. Chairman, but I want to thank the witnesses all for their testimony. This has been extremely helpful. The Ranking Member made the point that many of the problems have grown out of legislation that Congress is guilty of. Others have grown out of regulations, I think, that is dreamed of its own. But together we have got to deal with this problem. It is an absolute tragedy that we have allowed health care in the United States to get to thepoint where wonderful family practitioners like Dr. Whitson are basically being forced out of business or becoming employees of large groups or hospitals, or losing a very, very important and valuable choice for patients. We have got to bring this to an end. I want to thank you all for your support for this legislation, and I yield the balance of my time. Chairman Manzullo. Thank you. Dr. Christian-Christensen? Mrs. Christian-Christensen. Thank you, Mr. Chairman. I too want to thank our panelists for being here and for not only being here yourself but for giving voice to all of the hundreds of thousands of health care providers and all of the years of the frustration that we have faced with HCFA. You have also not only been able to help us understand better what you face in dealing with HCFA, but you are preparing us for our next hearing, which we will be questioning the HCFA officials, so we thank you for the preparation that you have been able to lay down for us for that hearing. I probably have maybe about two questions. We recognize that Congress has created some of the problem, but how much of it can be addressed by more uniformity within the contractors and more monitoring of the contractors because it seems as though from one city, or one region to another what we have done has been interpreted differently and is administered differently? How much do you think we can fix the problem by addressing the contractors, the contractees? Mr. Chase. I will start. Certainly in the survey certification process where the state agencies are out to review our compliance, if you look at the 50 states and how they operate directly under the guise of HCFA, there are regional interpretations that are so significantly different than what happens in one area versus the other. And our ability to use or to bring our point to bear is limited because we are dealing with only our particular licensing agency, and they answer only to HCFA, and we have to deal with them on an ongoing basis. So the differences that occur and exist from region to region are very significant and they are frustrating for us. We worked very hard with Congress, firstly, and then with the agencies to develop reasonable and new regulations that is meaningful to the quality of care you will find in a facility and yet to have third party interpretations that are not consistent around the country is very, very frustrating and unfair. Mrs. Christian-Christensen. Okay. Do you think the MERFA begins to address the collaboration issue? I think that was also your issue, Mr. Chase, the collaboration issue? Chairman Manzullo. Donna, you are not on? Mrs. Christian-Christensen. Oh, sorry. The collaboration issue, do you think that MERFA begins to address that issue? Mr. Chase. I think it is a first step. It allows us to at least recognize that there is an issue that we need to work with together on behalf of the clients that we both are concerned with. We do not want to be in this environment that currently exists. We want to be able to work together for the benefit of the client. They are the ones that both Congress, HCFA, and ourselves should be concerned and focused on, and that is not yet the case. Hopefully, this will give us the first step in that process. Mrs. Christian-Christensen. Thank you. I really appreciate again all of you again for coming. I am revisiting all of my worst nightmares from practice, especially listening to you, Dr. Whitson, is it? Dr. Whitson. Yes. Mrs. Christian-Christensen. As a family physician myself, but we really appreciate your being here. Thank you. Thank you, Chairman. Chairman Manzullo. So you left the uncomplicated world of medicine to come to this easy place. [Laughter.] Appreciate your questions. Mr. Issa. Mr. Issa. Thank you, Mr. Chairman. And I apologize for missing a little bit of the testimony. Chairman Manzullo. Excuse me, Mr. Issa. You told me that several times. Mr. Issa. That's alright. You know, my grandfather's name was Dafanse Swanza Be Issa, so he decided to be big Dave Issa, and I have been living with this pronunciation for my whole life. I take almost any pronunciation, Mr. Chairman, especially from you. [Laughter.] Getting to a lighter note, your testimonies. I think I heard a consistent pattern in the time that I have been here and reading through your testimonies, and it seems to encompass two things: One, you are not terribly keen about any HMO.-- unless I misunderstood that. But there is a particular concern that the worst offender is the federal government when it tries to play HMO and/or health care provider. Is there anyone that is not going to nod yes on that? Okay, so assuming that is the case, we are looking at reform and helping you in this case, and, of course, Mr. Toomey's bill. It seems like in the case of HMOs, for the most part, patients that come to you, they and/or their employer have chosen that plan. In a sense the employee has decided to stick somebody between you and them to get a cheaper price. And we may not fully agree whether it is the employer or the employee, but between the two of them one of them has made that decision because in most cases they offer an HMO and a PPO and a POS, all of which you probably do not like, but you know, different flavors. I guess my question would be, is there any real potential for the government ever to be the best of the health care reimburses or is it an inevitability that they are always going to be the worst? Perhaps what we should be looking at is not reforming, but to a great extent trying to privatize, trying to move the dollars to the patient and then let the patient make the choice. And I put that out to you today in the hopes that you will come back and tell me is this viable? Is this a direction Congress should be looking, to put the dollars of the Medicare and Medicaid recipient back into their hands with the understanding that they are going to put it into some other plan, but a plan that would not be the federal government making the decisions. I would welcome any of your comments. Dr. Whitson. That is exactly the only way to answer this problem. I can remember years ago when the government first recruited physicians to join Medicare, and many of my older patients who then were going to be on Medicare would come and try to pay for their office visit, and I would say, ``No, no, now this is going to be paid for by the government.'' They would say, ``No, we don't want that.'' They were smarter than I was. Basically, what has happened is the patient has been taken out of the equation. Let the patients be the consumers. Let them have some financial stake and some financial risk in what care they decide to have. A lot of my patients were forced into HMOs. They did not have a choice. Unfortunately, health care became a benefit of employment. As technology increased, some people think doctorscharge too much. I think it was mostly technology. But as it increased, it became a very burdensome thing for the employers, and they wanted a cheaper way out. But they were not giving apples for apples. They were giving apples for oranges and patients were forced into that situation. But I think the only way out is the federal government giving the choice back to people and giving them some financial incentive to make choices. Do not go where it is really expensive. Do consider what treatment options are best for you, and do consider what they cost, and then that will trickle down to the private insured's. Mr. Chase. Let me add from my perspective dealing with the senior community. My concern has always been that that would be the long-term goal, but in the short term, we have the existing world as we know it, and the Medicare program, as managed by HCFA, set up by Congress in terms of the benefits to the beneficiaries, in my view is more fair to the client beneficiary than is the managed care system. Managed care system by definition is pay at a reduced rate by the government to the third party administrator, and then he has got to pay for his salaries and staff and advertising, promotions, et cetera, to the net cents available to--as you provide care, it is probably 65 cents on the dollar, where Medicare at least keeps the dollar whole and promulgates that service down to the continuum. So in dealing with seniors, I always encourage them to maintain their Medicare status because I believe they have a better shot at receiving a quality outcome than they do associate with managed care as their attempts to be more efficient in the process. Mr. Goldhecht. To further back up that point, the Medicare process as it is today as far as the skilled nursing facility, which my industry deals with, it is a much better system for that patient as it exists right now. The HMO that has tried to manage those patients has failed terribly, and specifically with our industry, they have not reimbursed certain codes because they just felt like they didn't need to, and this puts us in precarious situation because we are contracted with the nursing home to perform services to their residents regardless of their insurance. If that patient has an insurance that does not recognize some of our codes, we have to perform the service anyway. If a private insurance company all of a sudden decides, well, you know, we are not going to pay for this code, and we say, well, if you do not pay for it, you will have to put that patient on ambulance, they know we are going to go anyway because we have a contract with the facility. So therefore we are in a situation between the patient, the facility and the service. So unless there are these intrinsic things that, and this is just one example as our industry adhere to this, there is going to be massive fallout. Mr. Issa. I want to thank you. With respect to the Chairman's time, can I allow another answer? Chairman Manzullo. Sure. Mr. Issa. Please. Mr. Seeley. I was simply going to make the point, Congressman, that is a difficult question from my industry's perspective to answer. When I deal with the agency in my community as well, and when comparing HMOs, for most of the HMO plans, I have been contracted with HMOs to Medicare, I would say in concept---- Chairman Manzullo. Would you excuse me just a second. Dr. Hulsebus has to catch a 1:30 in Baltimore. And Mike, it is nice seeing you, but you should leave now. Dr. Hulsebus. Okay. [Laughter.] Thank you. Mr. Issa. Thank you, Doctor. Chairman Manzullo. We know Rockford is not a straight shot. We will see you later. Thank you. Mr. Issa. Yes, Brian. Mr. Seeley. The only problem exists that if the Medicare system we are given the opportunity that is on paper to work the way it should be, the way we are told it should be. If HCFA would oversee its intermediaries the way Congress has instructed them to oversee, it might be a pretty darn good system. The problem is that on the intermediary level for our industry they act autonomously. HCFA knows they act autonomously. There is no consistency so we do not know how the system actually is working or should work. Mr. Issa. Well, I appreciate your comment. One odd thing when you notice that many were working at reforming the existing system, as a freshman who is going to be here for awhile, I am looking and saying, you know, I do not have the power to reform the system. I will go with my leadership and help them. But over the next several years I hope we will see you all again in the effort to find bigger, final solutions, if they exist, even if they are outside the box. And judging from the ascendancy of my Chairman, with a lot of hard work, I could end up chairing--what is it, eight years, six years? Chairman Manzullo. I do not know if you want that. [Laughter.] You know, there is something else to this place besides legislation. What the Hulsebuses did because of their tenacity is they took on the entire system, and HCFA said that there were no longer torture chiropractors nationwide. You saw his demeanor. He can barely talk about it, and I can barely talk about it myself. But these are people that are trained to heal. And those boys were tortured so much, that that became a cause celebre for me. The reason I'm asking you is to get letters to us. Get them to Barry Pineles. He's an expert on regulatory reform. He'll work with the Democrat minority staff. And if we go after these abuses one by one, that could set a standard for different areas. So, sometime I think that the law is the last thing you want to do. You pass laws to add more regulations. If we could find the abuse and uncover them one by one, we'll do that. That's why we're here. Ms. Velazquez. Ms. Velazquez. Yes, Mr. Goldhecht, I have one more question. What has been the effect on your industry of implementation of the prospective payment system? Mr. Goldhecht. How much time do we have today? [Laughter.] There are two major flaws that happened to our industry that has directly related. One is that in lieu of getting paid directly from part B, we are now paid from the SNF. The SNF have there own problems with their payments, but as it flows down to our level, they have negotiated prices with us that are below the HCFA fee schedule and in some cases, below what our costs are. In doing so, it has put a pressure on us. We have gone to HCFA many times and told them, ``you are putting us in a precarious situation'', here we are as a part A patient, we are doing this service for below cost and next door, the bed next door, there is a part B patient, and we are performing a service at the Medicare fee schedule. That is clearly a violation of kickback laws. They turned this to OIG and OIG says it is HCFA problem and we go around the revolving door. The second problem that is probably just as big, if not bigger, is that there is no prompt payment from SNF to any kind of vendor. They get paid from HCFA. They don't have any obligation to pay the provider timely. And in those several contracts that exist, HCFA's response to us is, well, that is a private relationship between you and the SNF, and I tend to disagree that we perform the service. They have collected the funds. Surely it is our funds. We have just--they are the vehicle for us to get it, and that is probably the biggest obstacle. Ms. Velazquez. Mr. Chase, as a nursing home owner, how current are you paying--are you paying these providers and how quickly do you get these payments out? Mr. Chase. We try to stay within about 90--between 90 and 120 days. The issue is Congress showed some wisdom here, as you know, in April the PPS system was adjusted and that was some relief. And as that cash flows begins to become a reality in our bank accounts, I think we can make a concerted effort to be more appropriate and more timely in that payment. But the PPS system was a tremendous hit to the profession. About 20 percent of my colleagues across the country are in Chapter, and a certain number of others certainly are near being in Chapter because of the public program and what PPS did. And, finally, your wisdom in April, and hopefully you will have an opportunity here this year or next to continue that payment because there is a cliff on that fix that you put in place last year. It expires at the end of September of 2002, and we need Congress's support to continue that cash flow so that we can be a fair partner to our ancillary key members so we can provide that quality care and product to our clients. Ms. Velazquez. Thank you. No more questions, Mr. Chairman. Chairman Manzullo. Thank you. For the record, could somebody--was it you, Mr. Goldhecht, that used the word ``SNF'' Mr. Goldhecht. Yes. Chairman Manzullo. Could you---- Mr. Goldhecht. Skilled nursing facilities. Chairman Manzullo. All right. Okay. We are having this hearing involving the HCFA people in about two weeks. I would ask any of the groups that you would like us to ask a question of them--oh, I see a lot of pens going down--to get those in writing, get those to both staffs. We will take a look at them. It gives us ideas as to questions to ask, and it will be very interesting to hear. We have great expectations for Mr. Scully--I do not know why he would take that job. [Laughter.] But I admire him because he has gone into, I think, the worst managed agency in Washington, with an attempt to clean it up. We have talked to some of the people at HCFA. There are some marvelous physicians over there that are working very, very hard to try to do something, really dedicated public servants that have got into it because they were tortured by the system, and a lot of my colleagues have been tortured by that system. So we are looking forward to a great hearing. And again, I want to thank you for the tremendous testimony, traveling a good distance to come down here. I do not know who is taking care of your practice, David, as a sole practitioner. But again, thank you very much. This hearing is adjourned. 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