[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]
MEDICARE REGULATORY AND CONTRACTING REFORM
=======================================================================
HEARING
before the
SUBCOMMITTEE ON HEALTH
of the
COMMITTEE ON WAYS AND MEANS
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTH CONGRESS
FIRST SESSION
__________
FEBRUARY 13, 2003
__________
Serial 108-4
__________
Printed for the use of the Committee on Ways and Means
U. S. GOVERNMENT PRINTING OFFICE
87-019 WASHINGTON : 2003
____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; (202) 512-1800
Fax: (202) 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001
COMMITTEE ON WAYS AND MEANS
BILL THOMAS, California, Chairman
PHILIP M. CRANE, Illinois CHARLES B. RANGEL, New York
E. CLAY SHAW, JR., Florida FORTNEY PETE STARK, California
NANCY L. JOHNSON, Connecticut ROBERT T. MATSUI, California
AMO HOUGHTON, New York WILLIAM J. COYNE, Pennsylvania
WALLY HERGER, California SANDER M. LEVIN, Michigan
JIM MCCRERY, Louisiana BENJAMIN L. CARDIN, Maryland
DAVE CAMP, Michigan JIM MCDERMOTT, Washington
JIM RAMSTAD, Minnesota GERALD D. KLECZKA, Wisconsin
JIM NUSSLE, Iowa JOHN LEWIS, Georgia
SAM JOHNSON, Texas RICHARD E. NEAL, Massachusetts
JENNIFER DUNN, Washington MICHAEL R. MCNULTY, New York
MAC COLLINS, Georgia WILLIAM J. JEFFERSON, Louisiana
ROB PORTMAN, Ohio JOHN S. TANNER, Tennessee
PHIL ENGLISH, Pennsylvania XAVIER BECERRA, California
J.D. HAYWORTH, Arizona KAREN L. THURMAN, Florida
JERRY WELLER, Illinois LLOYD DOGGETT, Texas
KENNY C. HULSHOF, Missouri EARL POMEROY, North Dakota
SCOTT MCCINNIS, Colorado MAX SANDLIN, Texas
RON LEWIS, Kentucky STEPHANIE TUBBS JONES, Ohio
MARK FOLEY, Florida
KEVIN BRADY, Texas
PAUL RYAN, Wisconsin
ERIC CANTOR, Virginia
Allison H. Giles, Chief of Staff
Janice Mays, Minority Chief Counsel
______
Subcommittee on Health
NANCY L. JOHNSON, Connecticut, Chairman
JIM MCCRERY, Louisiana FORTNEY PETE STARK, California
PHILIP M. CRANE, Illinois GERALD D. KLECZKA, Wisconsin
SAM JOHNSON, Texas JOHN LEWIS, Georgia
DAVE CAMP, Michigan JIM MCDERMOTT, Washington
JIM RAMSTAD, Minnesota LLOYD DOGGETT, Texas
PHIL ENGLISH, Pennsylvania
JENNIFER DUNN, Washington
Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public
hearing records of the Committee on Ways and Means are also published
in electronic form. The printed hearing record remains the official
version. Because electronic submissions are used to prepare both
printed and electronic versions of the hearing record, the process of
converting between various electronic formats may introduce
unintentional errors or omissions. Such occurrences are inherent in the
current publication process and should diminish as the process is
further refined.
C O N T E N T S
__________
Page
Advisory of February 6, 2003, announcing the hearing............. 2
WITNESSES
Centers for Medicare & Medicaid Services, Hon. Thomas A. Scully,
Administrator.................................................. 7
______
Alliance of Specialty Medicine, and American College of Emergency
Physicians, Michael Carius, M.D................................ 74
American Health Care Association, and Evangelical Lutheran Good
Samaritan Society, Judith A. Ryan.............................. 68
American Hospital Association, and Province Healthcare Company,
Tony Fay....................................................... 42
American Medical Association, J. Edward Hill, M.D................ 46
Center for Medicare Advocacy, Inc., Vicki Gottlich............... 79
Mayo Clinic and Foundation, Douglas L. Wood, M.D................. 16
National Association for Home Care & Hospice, Michigan Home
Health Association, and Munson Home Health, Janet B. Wolf...... 52
Verizon Information Technologies, Inc., Michael Luebke........... 39
SUBMISSIONS FOR THE RECORD
AdvaMed, statement............................................... 90
Alliance to Improve Medicare, statement.......................... 93
American Association for Homecare, Alexandria, VA, statement..... 95
American Association of Health Plans, statement.................. 100
Association of Administrative Law Judges, Milwaukee, WI, Hon.
Ronald G. Bernoski, statement.................................. 100
Emergency Department Practice Management Association, McLean, VA,
statement and attachment....................................... 105
National Association of Chain Drug Stores, Alexandria, VA,
statement...................................................... 110
MEDICARE REGULATORY AND CONTRACTING REFORM
----------
THURSDAY, FEBRUARY 13, 2003
U.S. House of Representatives,
Committee on Ways and Means,
Subcommittee on Health,
Washington, DC.
The Subcommittee met, pursuant to notice, at 12:10 p.m., in
room B-318 Rayburn House Office Building, Hon. Nancy L. Johnson
(Chairman of the Subcommittee) presiding.
[The advisory announcing the hearing follows:]
ADVISORY
FROM THE
COMMITTEE
ON WAYS
AND
MEANS
SUBCOMMITTEE ON HEALTH
CONTACT: (202) 225-1721
FOR IMMEDIATE RELEASE
February 06, 2003
HL-1
Johnson Announces Hearing on Medicare
Regulatory and Contracting Reform
Congresswoman Nancy L. Johnson (R-CT), Chairman, Subcommittee on
Health of the Committee on Ways and Means, today announced that the
Subcommittee will hold a hearing on the progress of regulatory reform
since House passage of the bipartisan ``Medicare Regulatory and
Contracting Reform Act of 2001.'' The hearing will take place on
Thursday, February 13, 2003, room B-318 Rayburn House Office Building,
beginning at 12:00 noon.
In view of the limited time available to hear witnesses, oral
testimony at this hearing will be from invited witnesses only.
Witnesses will include the Honorable Tom Scully, Administrator of the
Centers for Medicare and Medicaid Services (CMS); Dr. Douglas L. Wood
from the Mayo Clinic, Chairman of the Secretary's Advisory Committee on
Regulatory Reform; and representatives from provider and beneficiary
groups. However, any individual or organization not scheduled for an
oral appearance may submit a written statement for consideration by the
Committee and for inclusion in the printed record of the hearing.
BACKGROUND:
On August 2, 2001, Chairman Nancy Johnson and Ranking Member Pete
Stark (D-CA), joined by every Member of the Subcommittee, introduced
H.R. 2768, the ``Medicare Regulatory and Contracting Reform Act of
2001,'' the first major bipartisan Medicare legislation developed by
the Committee on Ways and Means in the 107th Congress. This package
would have extended important regulatory relief to our nation's health
care providers and modernized Medicare's contracting processes, while
protecting the program and taxpayers from potential fraud and abuse. A
modified version of the bill, H.R. 3391, passed the House unanimously
on December 4, 2001. Additionally, most of the provisions were included
in H.R. 4954, the ``Medicare Modernization and Prescription Drug Act of
2002,'' which passed the House on June 28, 2002.
The Medicare Regulatory and Contracting Reform Act would improve
provider compliance with Medicare policies through provider education
and technical assistance. It would create time frames for issuance of
new regulations, prohibit retroactive application of the issuance of
new regulations, improve provider appeals, reform recovery of
overpayments, and improve new technology integration. The
Administration has adopted a number of the provisions in the Act, such
as the process for prepayment review of claims and giving notices to
beneficiaries and providers when a claim is rejected due to a local
medical review policy.
The Secretary also has taken on the important task of bringing
together a task force comprised of beneficiaries and providers, as well
as experts from the Office of the Secretary, the Centers for Medicare
and Medicaid Services, and the Food and Drug Administration, to create
the Secretary's Advisory Committee on Regulatory Reform. This task
force focused on solutions that could be implemented immediately, and
would reduce both obstacles to patients' access to care and the amount
of time that doctors, nurses, and other providers spend on paperwork,
which, in turn, reduces time spent on patient care. The November report
included 255 recommendations, 26 of which have already been
implemented.
In announcing the hearing, Chairman Johnson stated, ``Good,
responsible professionals are frustrated by a system that seemingly
emphasizes policing providers rather than helping them deliver better
care to our seniors. Our bill was designed to refocus oversight, and we
are making progress. We want health care providers to spend their time
with patients, rather than filling out piles of paperwork, and we want
to make it easier to be a Medicare provider. Program integrity must be
protected--and so must the ability to deliver quality care.''
FOCUS OF THE HEARING:
The hearing will give the Administration and other witnesses an
opportunity to comment on the Medicare regulatory and contracting
reform legislation passed by the House last Congress, and the
Subcommittee's subsequent work on these issues. We will also hear from
health care providers who would be affected by the proposed reforms in
the legislation.
DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:
Please Note: Due to the change in House mail policy, any person or
organization wishing to submit a written statement for the printed
record of the hearing should send it electronically to
[email protected], along with a fax copy to
(202) 225-2610, by the close of business, Thursday February 27, 2003.
Those filing written statements that wish to have their statements
distributed to the press and interested public at the hearing should
deliver their 200 copies to the Subcommittee on Health in room 1136
Longworth House Office Building, in an open and searchable package 48
hours before the hearing. The U.S. Capitol Police will refuse sealed-
packaged deliveries to all House Office Buildings.
FORMATTING REQUIREMENTS:
Each statement presented for printing to the Committee by a
witness, any written statement or exhibit submitted for the printed
record or any written comments in response to a request for written
comments must conform to the guidelines listed below. Any statement or
exhibit not in compliance with these guidelines will not be printed,
but will be maintained in the Committee files for review and use by the
Committee.
1. Due to the change in House mail policy, all statements and any
accompanying exhibits for printing must be submitted electronically to
[email protected], along with a fax copy to
(202) 225-2610, in Word Perfect or MS Word format and MUST NOT exceed a
total of 10 pages including attachments. Witnesses are advised that the
Committee will rely on electronic submissions for printing the official
hearing record.
2. Copies of whole documents submitted as exhibit material will not
be accepted for printing. Instead, exhibit material should be
referenced and quoted or paraphrased. All exhibit material not meeting
these specifications will be maintained in the Committee files for
review and use by the Committee.
3. Any statements must include a list of all clients, persons, or
organizations on whose behalf the witness appears. A supplemental sheet
must accompany each statement listing the name, company, address,
telephone and fax numbers of each witness.
Note: All Committee advisories and news releases are available on
the World Wide Web at http://waysandmeans.house.gov/.
The Committee seeks to make its facilities accessible to persons
with disabilities. If you are in need of special accommodations, please
call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event (four
business days notice is requested). Questions with regard to special
accommodation needs in general (including availability of Committee
materials in alternative formats) may be directed to the Committee as
noted above.
Chairman JOHNSON. The hearing will convene. Today this
Subcommittee holds the first hearing, our first hearing of the
108th Congress, to improve the operations of the Medicare
program and reduce the regulatory burdens for seniors and
Medicare providers.
In December 2001, we unanimously passed the bipartisan
Medicare Regulatory and Contracting Reform Act, and we included
most of its provisions in the Medicare Modernization and
Prescription Drug Act of 2002, which passed the House in June
of that year.
However, because the Senate did not act, regulatory and
contracting reform is still before us. I might remind you, it
would still be before us anyway because that bill was a start,
not an end; but indeed, 2 years later, we start from the same
point. If there is one thing I hope to accomplish this year, it
is passage of a strong, thoughtful, Regulatory and Contracting
Reform act. We certainly need it.
Medicare regulations consume more than 130,000 pages, three
times the number of pages of the Tax Code and the tax
regulations. This complexity has not only meant that Medicare
answered, as the U.S. General Accounting Office (GAO) study
from a couple of years ago showed the power of complexity to
destroy a system, Medicare themselves answered 85 percent of
the questions called in wrong or incompletely. They did not
even look at whether the answers, where they were not actually
wrong, were right and complete. These were boilerplate
questions. These were the frequently asked questions. These
were not complex or serious questions about a unique exception
to the rule.
I make that point, and it is an old point, because this
system is destroying itself. We are still increasing the
problem.
If any of you have met with your nursing homes about
compliance with the Health Insurance Portability and
Accountability Act of 1996 (HIPAA), you will know that
probably, as in my State, they all collaborated. They went
through this long process, and now they are proud to say they
have a notebook this thick about compliance with HIPAA.
If you are a nursing home administrator out in some rural
area, some small town, or in some tough neighborhoods of a
city, you have all you can do to keep quality care and nurses
on the floor, and personnel out there and people cared for. You
have payor regulations and all these other regulations, and now
you have this notebook full.
The consequence of this system is going to be twofold. We
need to understand it. We are going to destroy small providers.
Think who cares for our seniors in the small cities and small
towns across America, particularly in the rural areas: only
small providers.
Health care has been a wonderful opportunity for women to
become entrepreneurs because they are such skilled caregivers.
Many of them care for family members, and then end up working
for a home health agency. They then end up founding their own
home health agency. We are destroying small business in the
health service area if we continue down this track, because
there will be no way that they can understand what is going on.
So, complexity and hyper-regulation, are barriers to the
presence of health care providers in our small cities. It is a
barrier to even patients getting the care they need. It has
become a barrier to quality developments.
I just want to thank each one of you that are giving
testimony today, because some of you point out that
relationship between the regulatory structure that we put on
Medicare and our inability to improve quality. It is
catastrophic that the only sector that is not in continuous
improvement is health. With all the modern technology, new
medicines, and all the new diagnostic techniques, we are not
focused on continuous improvement. We are focused on silos and
tiny silos; how much are we going to pay for this one thing?
You can't do continuous improvement, you can't improve
quality, you can't keep small people in, and you can't give
seniors access to health care if we don't do something about
the regulatory burdens, and problems, and the complexity of all
those things in Medicare.
Our first witness is the Administrator of the Centers for
Medicare & Medicaid Services (CMS), Mr. Tom Scully. I want to
thank you, Tom, for your responsiveness to our concerns, and
for your initiative in this area. We have not been able to pass
one dribble-drop of legislation, but you have moved forward
aggressively in many of these areas. I commend you for this.
It could have been done before you. This has been a
longstanding problem. You have taken the initiative to care
about the regulatory complexity and burden of paperwork in
Medicare. If you look at that study done by
PriceWaterhouseCoopers for the American Hospital Association
(AHA) a couple of years ago, there was no sector in which the
paperwork time was not at least 50 percent of the patient care.
In some sectors, it was 100 percent.
Pay attention. All of you out there have to stand up
stronger. We have to work together more. We can't tolerate
this.
I really commend you, Tom, for your aggressive leadership.
I want to thank our first Chairman, Dr. Douglas wood, who is
the Chair of the task force developed by Secretary Thompson and
Tom Scully to go at this issue. I am very pleased he is here to
testify. So, many of those testifying have the experience of
that task force behind them, because they sat with people face
to face and listened, which we have very little time to do. No
one else does at all.
So, of the 255 recommendations, about 26 have been
implemented and others are on the way. However, we have to move
faster on that, and we have to see how we can work with CMS to
move faster. I know they need legislation in some areas. It is
not hard to make the case for the urgency of regulatory relief.
If we can't hear it ourselves, we should not be sitting on this
Subcommittee and we shouldn't be sitting in Congress, because
our colleagues are now coming up to us.
So, I look forward to working with you all to not only pass
the provisions in the bill that are needed, but to pass new
provisions. I thank so many of you in your testimony for
bringing new ideas to the table, and for using this exercise to
unveil some of the underlying and more serious problems in the
Medicare structure that are preventing us from moving forward
on quality care systems. Mr. Stark.
[The opening statement of Chairman Johnson follows:]
Opening Statement of the Honorable Nancy L. Johnson, Chairman, and a
Representative in Congress from the State of Connecticut
Today this Subcommittee holds its first hearing of the 108th
Congress. We will take another look at improving the operations of the
Medicare program and reducing the regulatory barriers for seniors and
health care providers. In December 2001, we unanimously passed the
bipartisan Medicare Regulatory and Contracting Reform Act. We included
almost all these provisions in H.R. 4954, the Medicare Modernization
and Prescription Drug Act of 2002, which passed the House in June 2002.
Because the Senate did not act, regulatory and contracting reform is
still before us. Today, Mr. Stark and I introduced the Medicare
Regulatory and Contracting Reform Act of 2003, as a placeholder
recognizing we will receive a lot of good suggestions at this hearing.
I hear about the need for regulatory reform from my constituents in
Connecticut nearly every day. This is not surprising. Medicare
regulations consume more than 130,000 pages. That's four times the
number of IRS!
The purpose of this hearing is to re-examine the impact of
regulatory burden on seniors, doctors, hospitals, nursing home and home
health care agencies. As part of working to reduce regulatory burden,
the Medicare Regulatory and Contracting Reform Act would improve
provider compliance with Medicare by improving provider education and
technical assistance. It would limit when new regulations could be
issued, prohibit retroactive application of new regulations, improve
provider appeals, change the recovery of overpayments, and improve new
technology integration. The bill also will modernize the process for
selecting Medicare administrative contractors through utilizing
competition to attract the best the private sector has to offer.
Witnesses on our first panel--CMS Administrator Tom Scully and the
task force chair Dr. Douglas Wood--will help us to understand the
progress that has been made at the Department on providing regulatory
relief. The Administration has adopted a number of the provisions in
our bipartisan bill, such as the process for prepayment review of
claims or giving notices to beneficiaries so that they understand when
their claim is rejected due to a local medical review policy.
The Secretary of Health and Human Services established the
Secretary's Advisory Committee on Regulatory Reform to focus on
solutions that could be implemented immediately. The goal was to reduce
obstacles to patients' access to care, and to reduce the amount of time
that doctors, nurses, and other providers spend on paperwork, which, in
turn, reduces time spent on patient care. The task force's November
report included 255 recommendations, 26 of which have already been
implemented.
However, despite the considerable progress you have made, too many
health care providers are spending too much time struggling with
paperwork rather than treating patients.
As we think about regulatory relief, however, it is vitally
important that we not allow ourselves to believe that all regulation is
inappropriate--in fact, patient protections, financial accountability
standards, and operational guidance are a vital part of the Medicare
program. So we will have to be sensitive to this balance between
accountability and relief as we hear from our witnesses today and as we
move forward in refining our legislation. But, I am confident that as
we work together we will get it right. No matter what shape a
modernized Medicare program ultimately takes, we all know that one of
the most important measures of its success will be whether we can
protect program integrity while ensuring that health care providers can
focus on patients rather than paper.
Mr. STARK. It sure looks like we have our work cut out for
us, Madam Chair.
Just a few things. I doubt if any of the testimony we hear
today will do anything but put money in the pockets of
providers, and I suspect we won't hear anything about helping
the patients or the beneficiaries, who, if they had one or two
Members on that commission you are talking about, they were
lucky.
Also, if there was--I will spot you 140,000 pages of
regulation--I don't know where you are picking them out, but if
that is where they are, they are worth $100,000 a page a year.
Because if we have had 14 billion of fraudulent payments a
year, for every page you throw out you are costing $100,000 a
year to the government. So, I would say let us keep them and
let us enforce some of the rules.
I have no interest myself in creating unnecessary
paperwork, but I would suggest to you that--and to the
witnesses who will testify--that I would like them to compare
the paperwork they have to providers for wellpoint or Aetna or
anybody else when they are collecting money, or BlueCross, at
any place they are going to provide for non-Medicare
beneficiaries or for Medicaid; in many States, just as much
paperwork.
I am sure that my constituents would be overjoyed to hear
that you want to reduce the paperwork on the hospitals and the
doctors, but they would be 10 times more overjoyed if you all
would come forth with a prescription drug plan, or a way to
include the 40,000 uninsured in this country, or the children
who you are cutting off the rolls this year with your welfare
reform, because they are much more concerned about whether the
hospitals and doctors will continue to get rich, and they would
like to see our beneficiaries get some decent medical care.
I look forward to hearing from the witnesses as to what
they are going to do to improve care for the beneficiaries.
That would be an interesting bit of testimony.
Chairman JOHNSON. Thank you, Mr. Stark.
Mr. STARK. You are welcome.
Chairman JOHNSON. Mr. Scully.
STATEMENT OF THE HONORABLE THOMAS A. SCULLY, ADMINISTRATOR,
CENTERS FOR MEDICARE & MEDICAID SERVICES
Mr. SCULLY. Thank you, Chairman Johnson and Congressman
stark, for having me today to talk about Medicare's regulatory
and contracting reform issues. The Committee has been
incredibly supportive of everything we have been trying to do
the last couple of years to streamline and improve Medicare. It
is obviously a huge priority for the Administration and for the
Department.
Before I walked over here, Secretary Thompson said to
please tell you that this is probably his top priority to
finally get this done. He said, Scully, you had better get
contract reform done this year. So, I am under direct orders.
I certainly understand the scrutiny of our regulations.
When I came here 2 years ago--I certainly try never to take any
shots at my predecessors, and Nancy-Ann Min Deparle is a good
friend of mine. She had other things to focus on, including a
lot of legislative mandates in 1997 and Y2K. I came in at a
quieter time legislatively. I have been able to focus more of
my efforts on trying to change some of the things at the Health
Care Financing Administration (HCFA) and turn it into a warmer,
friendlier, more responsive agency.
The first step was to change the name, which some people
thought was not necessary, but I think it has worked out very
well. I think it has changed the attitude of the employees and
of the people who work in the agency. Sometimes as I somewhat
jokingly say, my guess is when Enron comes out of bankruptcy, I
think they will have a new name.
I think we had a similar perception problem in HCFA. The
new name has helped change the attitude. It is a huge, complex
agency, administering a huge, complex program. We are never
going to completely tame the monster, but I think we have done
a good job at trying to get started.
One of the things that I initiated 2 years ago which I
think has helped--we created 12 what we call open-door policy
groups. We have had meetings at least once each month with each
one. I Chair three of them. One of the senior people at CMS
Chairs each one. There is one for minority involvement, there
is one addressing the disabled, for hospitals, doctors, nursing
homes; virtually every group we deal with.
I hope it has provided--we will hear from providers and
beneficiary groups--provided a much greater access to the
agency. It has also created, I believe, the correct approach
from the staff, that it is okay to talk to them on the outside,
explain what you are doing, and justify the policies.
I don't expect everybody to like our policies. I expect
them to be fair, thoroughly explained, thoroughly vetted. If we
are doing the right thing, I am happy to back up the staff and
defend them. We have had 135 of those open-door policy meetings
in the last year and a half. We have had 14,000 people in the
health care community involved in those meetings. I think they
have been very successful.
I also think we probably were not particularly popular with
Congress. I have attended 47 open-door town hall meetings with
Members of Congress on both sides of the aisle in the last year
and a half. I think going out and talking to your own providers
in the community and trying to give them the impression that
CMS is open and available to talk to them, we are trying to be
a lot more responsive, has helped. It has helped change the
perception of the Agency.
Also, one of the major concerns, fair or unfair, we have
heard in the last couple of years is about enforcement,
unfairly picking on doctors and providers. I think we are every
bit as fair as we have been in the past, but I also think we
have changed our approach to be less aggressive and more
reasonable with people who are first-time offenders and don't
have a long track record.
We have adopted some new standards. We will get into those
in a second. I hope you will find from the provider community--
we should be extremely aggressive with bad providers. There are
some out there. I think we should also be reasonable with
providers who made marginal mistakes that don't have a long
track record.
In addressing this whole issue when Secretary Thompson came
in 2 years ago, he created the secretary's Advisory Committee
on Regulatory Reform, which has been chaired by Dr. Wood. We
have spent a lot of time with Dr. Wood. He is not only Chair of
the Committee, he is also on the Practicing Physician Advisory
Council, which is CMS's Physician's Advisory Committee. I am
not sure if he ever gets back to Minnesota, since I see more of
him than his family does. He has been extremely involved and
unbelievably helpful to the Secretary and me in the last year
and a half as we try to address these issues.
Madam Chairman and Congressman Stark, there are a whole
variety of what I call HCFA frustration bills over the last
couple of years to deal with problems that were perceived and
real at CMS/HCFA to try to change the way we do business. There
are huge issues, I will try to go through some in my allotted
time, that are very big.
The first one is transferring the Administrative Law Judge
(ALJ) function from Social Security to CMS, to the U.S.
Department of Health and Human Services (HHS). Many people
don't realize that since the beginning of the program, Social
Security has heard our appeals--provider appeals. If you are a
beneficiary--excuse me--and you have a concern about your bills
being paid, you don't go to HHS, you go to Social Security. It
hears 90,000 appeals a year. We process about 1 billion
Medicare claims a year. Social Security has a backlog of about
440 days to complete a case. Obviously, that is unacceptable.
As you know, you and Chairman Thomas and many others pushed
through some pretty significant reforms in sections 521 and 522
of the Beneficiary Improvement Protection Act (BIPA) 2 years
ago. Secretary Thomas has been pretty angry with me, as you
know, that we have not carried it out yet. We are anxious to do
that. We think we need to significantly reform the process. We
were frustrated Congress did not appropriate money to do it the
last couple of years. I spent a lot of time trying to get the
appropriators to get started this last year and we did not get
any.
We got $129 million in the 2004 budget that just came out.
It is not as much as we think is necessary to do the job, but
we do think we get some modest changes to sections 521 and 522
to get some changes. We can go forward with fixing the provider
appeals process and the beneficiary appeals process to make
them smoother, faster, fairer, and more efficient. It is going
to take a lot of work.
Our current budget assumes we are going to do this on
October 1 of this year. I think it is going to be very
difficult. I have spent a lot of time talking to Jo Anne
Barnhart, the Social Security Administrator. I think, with
Social Security's help and cooperation, we can get started in
moving forward on that. I can tell you that we are committed to
doing that because I think both providers and beneficiaries
have been extremely frustrated, with some justification, about
the slowness and inefficiency of the Medicare appeals process.
We have made, as you know, Madam Chairman, a number of
suggestions for modest changes that we think will in fact
improve sections 521 and 522 and make it easier and faster for
us to carry out and basically meet the spirit and targets of
what you were trying to do when you tried to--when you very
rationally tried to reform those programs.
Just to run through a couple of other regulatory issues
that we have also taken on that Dr. Wood has looked at, in most
of the bills in the House you have required us to consolidate
promulgation of rules to once a month. We are already doing
that in the vast majority of cases. We did that starting last
year. We put out a compendium on the fourth Friday of every
month of all the rules to come out. We put out a quarterly
provider update that basically gives a heads-up as to what
regulations are coming during the quarter, ahead of time, so
people can follow them.
The goal here, which I think we've met, is to not require
every hospital and physician group and provider in the country
to have to hire a lawyer to comb through the Federal Register
to follow these rules. It is an incredibly time-consuming
process. I used to get paid a lot to do that myself when I was
a lawyer. It is a very time-consuming process. I hope the
provider groups will tell you that we have significantly
simplified that and made it much easier.
We have also come up with a much more simple way of
tracking our error rates, which is the Comprehensive Error Rate
Testing Program. That is also in many of the bills. Also, most
of the bills require prompt responses to Medicare contractors.
We are already doing that as of now within 45 business days,
which most of the bills have, to respond to contractor
inquiries. Random prepayment review--most of the bills in the
House and Senate has prohibited this. We have already adopted a
policy where we only use random prepayment reviews where there
is a contractor-wide program for doing so, which most of the
bills require.
Non-random prepayment review, which most bills also suggest
should not be done in the future, has been limited under our
new policy to where we can show a very aggressive track record
of particular billing and a high level of payment problems.
I could go on for others, but the bottom line is, most of
the provisions in the bill that I think were listed in most of
the CMS/HCFA reform bills in the last 2 years I think we have
addressed pretty aggressively. We are getting there as quickly
as we can.
On contracting reform, a big, big issue for us--and I know
I am already over my 5 minutes but I will do this quickly. When
I went to the Office of Management and Budget (OMB) in 1989 we
had over 100 fiscal intermediaries (FI) and carriers. Our goal
was to get it down to 10. When I came back 10 years later, we
still had 51. In the last year and a half we have gotten the
number of carriers and FIs, down to 46. We really think to
manage the program--the hospital, still, theoretically picks
their hospital intermediaries, we are allowed to pick the
carriers--but generally we still have mostly local BlueCross
plans that do a great job around the country, but we have 71
percent of the work, both in Part A and B, done by the eight
biggest contractors.
We believe we could move more work to contractors who are
in this in the long haul, incentivize them, and they can be
partners of the government in the long haul. We can manage the
resources better and be more efficient. We already, as I
mentioned, have the bulk of the work done by eight contractors
in both parts of the program. We believe contractor reform will
allow us to manage the program more effectively and
efficiently.
As I mentioned, theoretically in Part A, BlueCross is the
contracting entity. While that has worked well over the years,
we think we should have the flexibility to hire other non-Blue
contractors and to contract directly. Now there are only two
non-BlueCross contractors or fiscal intermediaries: EDS
heritage, and mutual of Omaha. We believe there might be many
other people that might have the technology and expertise in
paying claims that can help us.
Many of the BlueCross plans have done a terrific job, they
are committed to being good partners in the long run, but in
the modern era where there are many people that can pay health
care claims we should have a competitive system to have the
best contractors to be our partners in the long run.
To wrap up, Madam Chairman, I will say we spent $540
billion as our budget this year for Medicare, Medicaid, and the
State Children's Health Insurance Program (SCHIP). We run that
on a $2.5 billion administrative budget, which about $1.5-$1.6
billion goes to the contractors. It is a very big program to
run. Trying to do it while we minimize fraud and only have the
minimum amount of harassment necessary to providers and be more
open and effective is obviously our goal.
It is a big program. We spend a lot of taxpayer money. We
need to be aggressive in enforcing those regulations, and we
will be. Secretary Thompson and I also believe that, in tandem
with being aggressive on the regulatory side, we need to push
out much more quality information.
As you know, we have been very aggressive with work in the
nursing homes on quality information. We have a new program
coming out with home health agencies that is similar to the
nursing home quality measures in about 2 weeks. We have worked
very well with the hospitals so far in doing voluntary hospital
measurements. Our goal is to move forward with the hospitals to
have really good quality measurements. We can start really
measuring what every hospital provides quality-wise.
We believe in addition to aggressive regulation, giving
patients and consumers more information to make their choices
is every bit as important a regulatory tool as putting out
hundreds of thousands of pages of regulations.
We also believe it is a very important regulatory tool to
work with the Federal Trade Commission (FTC) on antitrust
enforcement. If you really want physicians and hospitals and
health care plans to have the right balance in every local
market to make sure the market does not get out of whack with
any of the major provider sectors, they need to be working with
the FTC. The FTC needs to work with many of our big programs to
make sure there is a rational balance in each local market
between hospitals, physicians, and managed care plans. In a
well-functioning market, they should all be working with each
other almost every day. That is the way we believe it should
work.
We believe it is our duty, also, and we are working very
closely with the FTC to make sure that the antitrust laws are
aggressively enforced in health care. That is as important to
us as the regulatory roles.
That is as fast as I can talk, Madam Chairman. Thank you
very much.
[The prepared statement of Mr. Scully follows:]
Statement of the Honorable Thomas A. Scully, Administrator, Centers for
Medicare & Medicaid Services
Chairman Johnson, Congressman Stark, distinguished Subcommittee
members, thank you for inviting me to discuss Medicare regulatory and
contracting reform. We all want to improve our ability to serve our
nation's elderly and disabled, and I want to thank you for your
continued interest in increasing the efficiency and quality of the
Medicare program. Over the past two years, I have appreciated your
support of our efforts to eliminate unnecessary regulatory burdens and
improve contractor oversight at the Centers for Medicare & Medicaid
Services (CMS). I applaud your commitment to these important issues.
Building on these efforts, there is now a clear opportunity to improve
Medicare even further in this legislative session.
As you know, strengthening and improving the Medicare program
remains one of the Administration's top priorities. Additionally, the
Administration remains committed to updating and streamlining
Medicare's regulations and administrative procedures to reduce the time
devoted to paperwork and encourage high-quality health care for all
seniors. The Secretary's Advisory Committee on Regulatory Reform, which
my fellow witness today, Dr. Wood, chaired and for which he traveled
all over the country, heard from patients and providers about the
Department's regulations and opportunities to improve them. I would
like to personally thank Dr. Wood for his hours of work chairing the
Committee, as well as his service on the Practicing Physicians Advisory
Council (PPAC). Even before this report was complete, we had begun
working on many of the changes the Committee recommended. These
recommendations, along with a host of other efforts within CMS and the
Department, have led to great strides in making CMS a better business
partner and in making Medicare a more efficient program. We are
reviewing all of the Committee's recommendations to identify those that
can be implemented quickly, and those that will require more
significant development and resources.
In some cases, reform requires legislation. H.R. 3391, the Medicare
Regulatory and Contracting Reform Act, includes reforms that are vital
to streamlining Medicare's administrative processes and reducing
regulatory burden. While we do have some concerns with this
legislation, most of them are largely technical in nature and we look
forward to working with you and your staff to resolve them quickly.
SECRETARY'S ADVISORY COMMITTEE ON REGULATORY REFORM
First, I want to take this opportunity to convey my gratitude for
Dr. Wood and the members of the Secretary's Advisory Committee on
Regulatory Reform that developed more than 250 specific
recommendations, a majority of which pertain to CMS. President Bush,
Secretary Thompson, Assistant Secretary for Planning and Evaluation
Bobby Jindal and I share the view that, in an effort to protect public
health and safety, federal regulations must be crafted to ensure access
to high quality health care. The Secretary asked Bobby Jindal to lead
the initiative and established a steering committee on which other HHS
officials and I participated to provide guidance and direction to an
ongoing review of HHS regulations. We are addressing a significant
portion of the Committee's report by reducing the burden of
inefficient, as well as unnecessarily complex and confusing
regulations. As you know, we have already implemented recommendations
made by the Committee that will reduce the burden of data collection on
beneficiaries and providers. These are common-sense solutions to ensure
that health care professionals can spend more time with patients and
less time with paperwork. For example:
LMedicare reduced the frequency that hospitals must
gather detailed information from Medicare beneficiaries about
other insurance. Hospitals will now be able to gather this
Medicare Secondary Payer information--used to make sure the
correct insurer pays each health care claim--once every 90
days. This change means hospitals will not have to ask patients
repeatedly for the same data.
LWe have launched a new effort to streamline
Medicare's paperwork requirements for home health nurses and
therapists so that they can focus more on providing quality
care to their patients. The Outcomes and Assessment Information
Set (OASIS) requirements were reduced by approximately 27
percent, and these changes will streamline Medicare's home
health patient assessment requirements to include only those
elements needed to promote quality of care and to ensure proper
payment.
LMedicare has streamlined its paperwork requirements
for nurses and other clinical staff caring for Medicare
beneficiaries in nursing homes. While certain longer
assessments are still required, nursing homes caring for
Medicare beneficiaries can now use a shorter assessment form to
gather information needed to pay Medicare claims. The change
cuts the time it takes to complete the assessment form from 90
minutes to 45 minutes, while continuing to collect data needed
to measure quality of care in nursing homes.
I also want to mention, in addition to the Secretary's Advisory
Committee, we have been inviting nursing homes, home health agencies,
physicians, hospitals, other providers, and beneficiaries to
participate in ``Open Door Forums'' to discuss their ideas for
simplifying Medicare regulations. We have had 135 of these meetings,
with more than two thousand in-person participants and over eleven
thousand participants on our toll-free call-in lines. We have been able
to make many improvements based on their concerns, as well as based on
other activities that we are pursuing. Most importantly, it has helped
change the image of CMS as an ``impenetrable bureaucracy.''
LLEGISLATIVE OPPORTUNITIES FOR REGULATORY AND CONTRACTING REFORM
Clearly, we have worked diligently toward eliminating unnecessary
regulatory burdens in Medicare and improving our management of the
private-sector contractors that process and pay Medicare claims. We
need to make the Medicare contracting system more consistent with
standard federal government contracting procedures, which are typically
governed by the Federal Acquisition Regulation (FAR). The President's
FY2004 budget includes provisions to implement Medicare appeals reform,
to continue pursuing contracting reform, to address provider education,
and for program integrity efforts to ensure that the Medicare program
pays appropriately for covered services. We remain committed to these
activities--they are integral to strengthening and improving the
Medicare program so we can better serve America's seniors and disabled
citizens.
While H.R. 3391 addresses many important issues that respond to the
concerns of our partners, in a number of these areas, we believe that
some of the proposed legislative changes have been overtaken by our
current administrative practices, and could prove duplicative or
counterproductive. In addition, codifying these areas could prevent CMS
from administratively making further improvements in the future--by
reducing management flexibilities and constraining our ability to
manage taxpayer dollars as efficiently as possible.
Appeals
One area where we have concerns with the legislation is in Medicare
appeals. As required by law, we provide a multi-level process for
Medicare beneficiaries, providers, and suppliers to appeal when they
disagree with a Medicare contractor's decision to deny Medicare claims
for items or services. We recognize the need to make this process more
efficient and accurate. As I speak, we are working aggressively to
implement the Medicare appeals reform as required by the Medicare,
Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000
(BIPA). The President's budget includes a request for funding to cover
implementation costs. We are proceeding toward the transfer to CMS of
the Medicare hearing function currently performed by the Administrative
Law Judges (ALJ) in the Social Security Administration (SSA). We have
already had extensive discussions with SSA to explore administratively
transferring the Medicare hearing function to CMS.
There are several technical areas that we consider priorities in
making the BIPA appeals provisions more efficient. We are moving
forward and have published Notices of Proposed Rulemaking on both
sections 521 and 522. However, we are concerned that the current BIPA
section 521 timeframes for decision-making at each level of the appeals
process are not viable. Extending these timeframes for review at each
appellate level would create a more workable timetable and would reduce
the number of cases that proceed to higher and more costly levels of
adjudication. Specifically, I would recommend that the timeframes at
the contractor level should remain at 45 days for Medicare Part B
reviews and 90 days for Medicare Part A reconsiderations. In addition,
the timeframes might be extended to 60 days at the qualified
independent contractor (QIC) level and to 180 days at both the ALJ and
Departmental Appeals Board levels. Finally, we have asked for
consideration of legislation that would reduce the current number of
QICs from 12 to ``not fewer than 4.'' This number would do the job, but
be far more efficient and faster to implement. If needed, the Secretary
could add more QICs in the future.
We truly need to implement sections 521 and 522 and, with your
support, we expect to make great headway this year.
Regulations
In addition to improving the appeals process, we are committed to
reducing regulatory burden on providers so that they can spend more
time taking care of patients and less time filling out unnecessary
paperwork. As I mentioned, we have already undertaken numerous actions
to reduce burden and streamline administrative processes. For instance,
in October 2001, we began publishing regulations on the fourth Friday
of every month (except in cases where a statutory deadline or
extenuating circumstances demand otherwise), and we began issuing a
quarterly publication that I am extremely proud of, called the
Quarterly Provider Update. It lists all the regulations that CMS plans
to publish in the coming quarter, as well as the publication date and
page reference to all regulations published in the previous quarter.
The Quarterly Provider Update is available on the CMS website with
links to the complete text of published regulations. One year later, on
October 1, 2002, we implemented a ``subscriber service'' that allows
the public to receive automatic updates to the Quarterly Provider
Update. Less than five months later, we have nearly five thousand
subscribers, and that number grows daily. Now, instead of providers
hiring regulatory experts to comb through thousands of pages of the
Federal Register every day, they can simply subscribe and receive
updates as they occur.
We are committed to both of these endeavors--they are integral to
providing our partners the information they need to serve seniors and
disabled citizens. Of course, some regulations have statutorily imposed
publication dates or other extenuating circumstances that do not lend
themselves to a one-day-a-month publication schedule, but the bulk of
our activities have been simplified. We believe this flexibility is
critical. In addition, we also are including in the Quarterly Provider
Update all program memoranda, manual changes, and any other instruction
that could affect providers in any way. All of these instructions are
included one quarter prior to their effective date to allow providers
time to react before new requirements are placed on them. Since we have
already taken administrative steps to streamline this part of the
regulatory process and be more accountable to beneficiaries, providers,
and the public, such provisions do not need to be included in
legislation.
Provider Education
Another integral part of our regulatory reform efforts is our work
to improve performance through provider education and outreach. We have
expanded our Local Provider Education and Training program (LPET). This
year we doubled funding for LPET, which is targeted to respond to
problems identified through the review of claims. Providers are
receiving more education related to their claims submission. Clinicians
deliver most of the education, and respond to specific coverage or
coding issues. Contractors meet with providers in group settings,
individually, or communicate using the Internet. As a result, our
contacts with the provider community are more collaborative and
productive.
In another step to address provider education, H.R. 3391 would
require contractors to provide general written responses to specific
provider and supplier billing and cost reporting questions within 45
business days of receipt of inquiries. I take some pride in reporting
to you that since May 2000, CMS contractors have been required to do
this, and so it need not be included in legislation.
Comprehensive Error Rate Testing
H.R. 3391 would also require the Secretary to develop a methodology
to assess the specific claims payment error rate of contractors.
However, we currently have a practice in place to assess specific
claims payment error rates of contractors, and to codify a procedure
might limit our flexibility to make further improvements in the future.
We developed the Comprehensive Error Rate Testing (CERT) program to
improve the processing and medical decision making involved with
payment of Medicare claims. The CERT program, which began in August
2000, will produce national, contractor, provider-type and benefit
category specific paid claims error rates. Unlike the former improper
payment calculation, the CERT program will allow CMS to estimate
specific error rates for individual contractors, providers and
benefits. The new information will continue to be aggregated to produce
national level estimates like those calculated by the Office of the
Inspector General (OIG), but with much greater precision, because so
many more claims will be reviewed. The CERT system will examine 24
times more claims than the current process has been able to review.
This will give us greater ability to see how well the Medicare
contractors are performing and allow us to pinpoint problems, fix them,
and ensure that our rules are being followed. Our intention has been
and will continue to be that the Medicare Trust Funds benefit from
improved claims accuracy and payment processes.
Review, Recovery and Enforcement
Regarding review, recovery and enforcement, I am also happy to
report that in many of the instances to follow, we are already
performing to the intent of your legislative provisions.
For example, H.R. 3391 would prohibit random prepayment review,
except to develop a contractor-wide or program-wide claims payment
error rate, or under additional circumstances that may be provided
under regulation. Currently, we only use random prepayment review to
develop contractor-wide or program-wide claims payment error rates.
However, this important tool may offer other benefits to the Medicare
program in the future and we believe that the flexibility to determine
the appropriate use of random review is integral to managing our
programs effectively.
Also included in H.R. 3391, is a provision stating that contractors
may not initiate non-random prepayment review of a provider based on
the initial identification by that provider of an improper billing
practice--unless there is a likelihood of sustained or high level of
payment error. Currently, the only time CMS contractors initiate non-
random prepayment review is when there is a high level of payment error
or the documented educational interventions have failed to correct the
problem. Our contractors perform the medical review through a process
called Progressive Corrective Action. In this process, contractors
perform data analysis to determine whether patterns of provider claims
submission and payment indicate potential problems. If through data
analysis a potential problem is detected, a contractor may perform a
``probe'' sample. Only when the probe review reveals that there is a
major error will a contractor perform high level prepayment review.
In fact, in a recent study, the General Accounting Office examined
three Medicare carriers and determined that the Progressive Corrective
Action policy has reduced medical reviews of claims and has increased
carrier education to individual physicians. According to the report, 90
percent of physician practices had no claims selected for complex
medical review by carriers. For the few practices that were reviewed,
typically the carriers requested documentation to support no more than
two claims for the year.
Additionally, under our Progressive Corrective Action policy, we
currently perform several activities that are included in provisions in
H.R. 3391. First, when a contractor audits a provider or supplier,
under H.R. 3391, the contractor would be required to:
LGive the provider and supplier an opportunity to
provide additional information and take into account
information provided on a timely basis;
LGive the provider or supplier a full review and
explanation of the findings of the audit; and
LInform the provider or supplier of their appeal
rights.
Second, H.R. 3391 would require the Secretary to establish a
standard methodology for Medicare contractors to use in selecting a
sample of claims for review in the case of an abnormal billing pattern.
Both activities are current practice under our Progressive Corrective
Action policy, and do not need to be included in legislation.
Contracting Reform
As you know, the Administration's primary goals for Medicare
contracting reform include providing CMS with more flexibility to adapt
its business model to meet the evolving needs of the Medicare program
and bringing competitive discipline to the world of Medicare
administrative contracting. We also believe that contracting reform
will provide opportunities to improve communication between CMS,
contractors and providers, and will promote our ability to reward
contractors that perform in an excellent manner. I want to thank this
Committee for its sustained interest in and support for Medicare
contracting reform.
We have been working to consolidate contractor functions for some
time. When I went to OMB in 1989, we had well more than 100 fiscal
intermediary and carrier contracts and our target was to get that to
ten. Thirteen years later, I came to CMS and there were still more than
50 separate intermediary and carrier contracts. Over the past decade,
we have seen a substantial consolidation in the number of these
contractors, so that, at present, we are at 46 and counting: Medicare
claims are processed by 27 fiscal intermediaries (4 of which also
specialize in the handling of home health and hospice bills) and 19
carriers (4 of which specialize in the handling of DME claims). My goal
is to find the best contractors, incentivize them appropriately, and
work with about 20 to 25 who are in it for the long haul.
While H.R. 3391 certainly addresses many important contracting
reform issues, I have several additional suggestions I would like to
present to you regarding certain policy and technical details. We would
be pleased to work with you and your staff on these issues.
For example, the legislation prescribes definite time periods for
re-competition of Medicare administrative contracts--every 5 years,
provided that the contractor has met or exceeded all applicable
performance requirements. We are concerned that these contract period
limitations may be too short in some circumstances.
Currently, Medicare contractors are reimbursed for their claims
processing and benefit administration activities on a cost-
reimbursement basis, which leaves little financial incentive for the
contractors to excel in their performance. This is not realistic in
today's business environment, given the magnitude of these contracts.
The contracting reform legislation would provide us with the ability to
address this issue on a broad scale.
Moreover, we are moving forward to test the effectiveness of
performance-based payment mechanisms for Medicare contractors on a
pilot basis under current law. For fiscal year 2003, for example, we
are using a demonstration authority to conduct performance-based
contracting pilots with three significant Medicare contractors: CIGNA,
UGS and Palmetto. If these efforts prove successful in defining
outcomes and achieving some efficiencies, the demonstration could be
expanded to include additional Medicare contractors. In addition, we
have effectively implemented contracting reform as part of the Medicare
Integrity Program. All Program Safeguard Contractors are under
performance-based contracts containing award fee plans. These endeavors
will give the Agency valuable experience in applying new contracting
tools that will become broadly available under HR. 3391.
CONCLUSION
From my experiences in the hospital sector and in health care
generally, I know how important it is that Medicare work more
efficiently, and that its regulations be less burdensome. Time and
again, this Administration has confirmed its commitment to regulatory
and contracting reform. I want to thank you for your unflagging efforts
to pursuing these reforms and for your interest in increasing the
efficiency of the Medicare program. Improvements in our efficiency
result in improvements and speed in paying providers for treating their
patients, our Medicare beneficiaries. We have already made great
strides in this area, and we strongly encourage your legislative
efforts to that end while allowing us to retain the flexibility to
continue improving administratively. We look forward to working with
you, Chairman Johnson, Mr. Stark and this Subcommittee, to enact needed
reforms as soon as possible. We owe it to Medicare beneficiaries and
all of Medicare's partners--providers, contractors, and others, to
achieve these reforms. Thank you for the opportunity to discuss this
important topic with you today. I look forward to answering your
questions.
Chairman JOHNSON. For you, that is some statement. Thanks
very much. Dr. Wood.
STATEMENT OF DOUGLAS L. WOOD, M.D., VICE CHAIR, DEPARTMENT OF
MEDICINE, MAYO CLINIC AND FOUNDATION, ROCHESTER, MINNESOTA
Dr. WOOD. I will see if I can go as fast.
Chairman Johnson, Congressman Stark, and other
distinguished Members of the Subcommittee, I am privileged to
have this opportunity to share with you my insights about
regulatory reform.
I am a practicing cardiologist and Vice-Chair of the
Department of Medicine at the Mayo Clinic. It was my honor to
serve Secretary Thompson as Chair of his Advisory Committee on
Regulatory Reform.
I appreciate your interest in our work. I hope in the very
short time that I have with you today I can leave you with a
better understanding of how we did our work and what we tried
to do. I hope it will be helpful for you in thinking about
legislative proposals that you might continue to undertake in a
way that would improve the Medicare program for its
beneficiaries as well as for those providers who care for our
older Americans. The statement that I provided has additional
detailed information.
Our group represented all sectors of health care, including
consumers. We did not organize along industry lines as we
conducted our work but, rather, we tried to take the
perspective of consumers and beneficiaries as they encountered
the Medicare program and the health care system.
We worked hard to be able to accomplish the large task to
evaluate Medicare and Medicaid and the Food and Drug
Administration (FDA) for opportunities to improve the
regulatory burden. In that, we visited hospital emergency
rooms, we went to inner-city clinics, we went to rural clinics
where nurse practitioners were trying their hardest to care for
patients in the face of what they considered to be stifling and
suffocating regulatory limitations.
We carefully studied the original intent of law and
regulation. We heard testimony from providers and the public
about how regulations worked in everyday application.
Everyplace we went, we took time to listen to people. We had
open-comment sessions where anyone from the public could come
and share with us their particular insights.
We learned that the regulations in the program have become
so complex that beneficiaries now are being denied services
that they should be receiving. In some circumstances, the
regulations are so difficult that rural health care providers
decided not to avail themselves of resources that are available
to them because the regulations that govern the programs make
it so complicated to apply that it is almost equivalent to
applying for a research budget in the National Institutes of
Health.
We approached our work with a clear vision of direction and
set of principles for selection of issues and actions. We
concentrated on those areas that we thought would have the most
adverse effect on the patient/provider relationship, which
indeed is the most important aspect of health care.
We were asked by the Secretary to identify potential
solutions to regulatory problems as quickly as possible, and we
worked hard at that. The Secretary and Mr. Scully announced
recommendations of their own to address some of the suggestions
that we had made at our meetings, including some improvements
to the Medicare card that gave Medicare beneficiaries an easy
number to follow to call for help, and a Web site that they
could then also access for help.
I am pleased to say that both the Secretary and Mr. Scully
have remained actively engaged in the evaluation of our
remaining recommendations and the execution of improvements in
those regulations.
During our work we studied areas of concern by developing
panel discussions for an in-depth analysis of issues, and those
panels have been summarized on page 7 of my written statement
to give you a sense of some of the major areas that we
discussed. Those were derived from the perspective of listening
to beneficiaries as well as listening to people in the field.
The recommendations that were made, as noted by Mr. Scully,
number 255 specific recommendations. There were also a series
of long-term recommendations. Some of the themes of these
adopted recommendations, along with a number of recommendations
in each theme area, can be found on page 8 of the written
testimony.
Now, I would call your attention to the fact that more than
50 of these recommendations are actually aimed at specifically
helping beneficiaries. There are more than 80 of them that in
some way or another refer to improvement of communication in
the Medicare program. In its work already, HHS has accomplished
about 30 of these recommendations and has started work on some
of the others. I know that the Secretary has commissioned a new
strike force in HHS to continue the implementation.
Now, there are some other things that could be done. If you
look in appendix C, Unfinished Business, you will find some
opportunities to help us make the program work better, with
some legislative support; in particular, finding ways that we
can integrate data across programs to eliminate the barriers
and the silos that provide barriers not only to access but to
the ability to provide quality information that helps consumers
make the best choices about their health care.
My group actually failed the mother-in-law test. My mother-
in law, when she heard about my activity, said, I want you to
fix one thing. Can you please find a way that I can get the
same thing paid for in Missouri that I get in Minnesota, or
vice versa? Her biggest concern is that when she comes to Mayo,
she can't get certain things paid for that she can get paid for
in Missouri. She couldn't quite understand that. That is the
advanced beneficiary notice problem and need for prior coverage
determination in Medicare. We are pleased there are some
provisions that are in legislation that will in fact address
that.
There are some other opportunities. They will be
highlighted by other folks today as they provide their
testimony. We are certainly interested in doing all we can to
help you understand where those opportunities might be.
Again, thank you for the opportunity to come today.
Obviously, the Secretary's Advisory Committee is interested in
all of the support that you and your colleagues have in helping
to improve the Medicare program for its beneficiaries across
the country. Thank you.
Chairman JOHNSON. Thank you very much.
[The prepared statement of Dr. Wood follows:]
Statement of Douglas L. Wood, M.D., Vice Chair, Department of Medicine,
Mayo Clinic and Foundation, Rochester, Minnesota
Chairwoman Johnson, Mister Stark and members of the Subcommittee, I
am privileged to have this opportunity to share with you my insights
about regulatory reform. I am a practicing cardiologist and Vice-Chair
of the Department of Medicine at the Mayo Clinic in Rochester,
Minnesota. I was honored to serve Secretary Thompson as Chair of the
Secretary's Advisory Committee on Regulatory Reform. I appreciate your
interest in our work and hope that in my short time with you today I
can leave you with a better understanding of our work and
recommendations. I especially hope that the information I have for you
will be helpful in your work to improve the Medicare program for its
beneficiaries and the providers who care for older Americans. This
written statement provides more detailed supplemental information for
my oral comments.
Schedule of Work
The Secretary's Advisory Committee was chartered by Secretary
Thompson in August 2001, but its start was delayed by the terrorist
attacks on this great nation and the subsequent anthrax exposures here
in Washington. We began our work in earnest in January, 2002 and
provided a final report \1\ to Secretary Thompson by November of 2002.
Our report included more than 250 specific recommendations to the
Secretary as well as some thoughts about long term changes in the way
that HHS conducts its business.
---------------------------------------------------------------------------
\1\ Bringing Common Sense to Health Care Regulation, Report of the
Secretary's Advisory Commit on Regulatory Reform, 2002.
---------------------------------------------------------------------------
Work Process
Our group represented all sectors of health care, including
consumers. We worked in subcommittees to be able to accomplish the
large task we were given, specifically to evaluate Medicare, Medicaid
and the FDA for opportunities to reduce regulatory burden in health
care and improve regulatory processes in the Department of Health and
Human Services. We solicited written comments, electronic comments on
our web site,\2\ and we conducted listening sessions with CMS and FDA
staff as well as beneficiary advocates and contractor executives. We
visited different parts of the country to understand the impact of
regulations on the process of care. In our work, we visited urban
hospital emergency rooms and inner city clinics, we went to rural
hospitals and clinics, we went to nursing homes and we went on home
health nurse visits. We carefully studied the original intent of law
and regulation and we heard testimony from providers and the public
about how regulations worked in everyday application. At every meeting,
there were multiple sessions for public comment where any interested
person could come and share comments with us.
---------------------------------------------------------------------------
\2\ http://regreform.hhs.gov.
---------------------------------------------------------------------------
Regulatory Complexity Is a Barrier to Beneficiaries
We learned that the regulations in the Medicare program have become
so complex that beneficiaries have been denied services they were
entitled to receive. We learned of contractor medical director
decisions that persons near death and entitled to hospice benefits
could not receive them as intended. We learned that providers and
patients in rural areas did not take advantage of programs intended to
help them because the procedures to apply for resources and to sustain
them required nearly the amount of work to apply for a NIH sponsored
research award.
Committee Mission
We approached our work with a clear vision of our direction and
principles for selection of issues for action.
Mission
To improve the level of services for patients and consumers. We
will do this by:
(1) cutting red tape,
(2) removing obstacles to smoothly functioning relationships
in the health care system, and
(3) reducing burden appropriately so time and resources
currently devoted to program requirements can be redirected
towards patient care.
We recognize the need to enhance the trust of Americans that
they will be well-cared for, served, and protected.
We concentrated on those areas that appeared to have the most
adverse effect on the patient-provider relationship, the most important
aspect of health care.
Principles for Issue Identification
Early in the planning for the committee work, it was apparent that
we would have limited time and many opportunities. It would be
important to prioritize our efforts if we were ultimately going to be
successful in our work. Thus, at our first meeting, we discussed and
adopted principles for identification of issues that the Committee
would address. These principles were:
LDevelop recommendations about issues that have the
most significant and direct effect on improving care and
service to patients and consumers
LSelect issues for deliberation on which meaningful
progress can be made during the year, but that may not be
entirely resolved, in addition to identifying and ``fixing''
several concrete problems. The Committee will identify a mix of
immediate fixes (what can be done now), short-term fixes (what
can be done in 6 to 12 months), and long-term fixes (beyond one
year).
LAttempt to identify problems that are likely to
persist even in a period of program stability. For example,
much of the burden in the past few years has stemmed from the
extraordinary pace at which Congress has been modifying the
Medicare program, along with confusion and delays in
implementing the changes.
LConcentrate on existing programs and focus on
solutions to remove impediments to realizing current goals
What We Did Not Do
LPursue new policy goals (i.e., find new places to
regulate).
LPrioritize or make recommendations on issues that are
anecdotal or relevant only to specific special interests.
Assess the adequacy of payment levels or the fairness or
accuracy of payment methodologies
LEngage in ``what-if'' scenarios about program
function (e.g., effect of changes in fee-for-service, Medicare
+ Choice or provider participation rates)
We were asked by Secretary Thompson to identify potential solutions
to regulatory problems as soon as possible and not to wait for the
preparation of a final report to make recommendations for solutions to
regulatory problems. HHS staff members were actively engaged in our
work, attending every meeting, listening to all the testimony and to
the thoughts and recommendations of the Committee. Indeed, the staff
members began work on several of our recommendations as soon as they
were identified and had completed some of these tasks even before we
prepared our final report. Secretary Thompson and Administrator Scully
announced solutions to some of these problems at our meetings,
including improvements to the Medicare card to make it easier for
beneficiaries to find contact phone numbers for information. Secretary
Thompson and Mr. Scully remain actively engaged in the evaluation of
our remaining recommendations and execution of improvements in
regulation.
SACRR Panels
During our work, we studied areas of concern in detail by
developing panel discussions for in-depth study of significant issues.
In this approach, we asked HHS staff with responsibility for a specific
area to provide the Committee with a summary of the legislative and
regulatory history of an area of regulation. We then invited people
with specific expertise and experience in each of the areas to share
their real world experience with the impact of regulation on their work
with beneficiaries. Wherever possible, we also sought to identify best
practices among CMS regional offices, Medicare-Medicaid coordination
activities and FDA and CMS activities that we could use as a basis for
recommendations for future improvements. The Panels were developed to
address major concerns identified in public comment and early
deliberations of the Committee. The panels explored the following
areas:
EMTALA
OASIS and Home Health
MDS and Nursing Homes
Beneficiary Communications/Limited English Proficiency
Beneficiary Education
FDA
FDA-CMS Interaction
Dual Eligibles
Rural Health Care
Multiple Reviews
HIPAA Privacy
HIPAA Transactions/Security
Administrative Simplification
Medicare + Choice
Provider-Patient Relationships
Federal-State Coordination
Adverse Events
Provider Enrollment/Forms
Advanced Beneficiary Notices
CLIA
After each panel discussion, the Committee identified specific
areas for evaluation, and assigned these to subcommittees for more
detailed analysis and recommendations. The subcommittees then presented
the Committee with issue statements that could be evaluated by HHS
staff to better understand the potential implications of possible
recommendations.
Recommendations of the Committee
The Secretary's Advisory Committee on Regulatory Reform adopted 255
specific recommendations. Some themes of adopted recommendations (along
with the number of recommendations in that area in parentheses) are
listed below.
------------------------------------------------------------------------
EMTALA 13
------------------------------------------------------------------------
Beneficiary Education & Communications 33
------------------------------------------------------------------------
OASIS 14
------------------------------------------------------------------------
MDS 22
------------------------------------------------------------------------
Medicare + Choice 15
------------------------------------------------------------------------
HIPAA Privacy 17
------------------------------------------------------------------------
Rural Health 10
------------------------------------------------------------------------
Multiple Reviews/Audits 65
------------------------------------------------------------------------
HIPAA Transactions 8
------------------------------------------------------------------------
Federal-State Coordination 19
------------------------------------------------------------------------
Adverse Events 6
------------------------------------------------------------------------
Contractor Relations 29
------------------------------------------------------------------------
Provider Enrollment/Forms 11
------------------------------------------------------------------------
ABNs 7
------------------------------------------------------------------------
CLIA 12
------------------------------------------------------------------------
Cost Reports 5
------------------------------------------------------------------------
HHS has already accomplished 30 of the recommendations and has
started initial work on about half the rest. The Secretary has
commissioned a new strike force in HHS to continue implementation of
the Committee's recommendations.
Long Term Recommendations
The Committee also made several recommendations for the Secretary
to improve the regulatory function at HHS to achieve better service to
beneficiaries, improved coordination between groups within HHS and
better communication with the industry.
While health care innovation has progressed rapidly, rules that
govern federal health care programs have not kept pace. We encouraged
the adoption of technology to improve access to care, streamline
enrollment processes for beneficiaries and providers, better serve
beneficiaries and providers with information about benefits and claim
status, streamline program operation, and most important, improve the
quality of care for beneficiaries. The savings that would accrue from
streamlining program function and improving quality of care could be
reinvested in extending benefits or reducing costs to beneficiaries and
taxpayers.
Areas Requiring Legislative Solutions
During the course of our work, we encountered problems that could
not be solved on a regulatory level, but instead would require a
legislative solution. These are identified with asterisks in Appendix B
of our report, but I will highlight some of them for you. I have also
prepared an analysis that shows a relationship between our
recommendations and provisions of House resolutions.
One of the most vexing problems faced by Medicare beneficiaries is
their inability to determine whether a physician's service, or a
laboratory or x-ray test, or a specific procedure or technology is
covered by Medicare. This is an excessively complicated process for
patients and providers alike, and it was our recommendation that
Medicare should provide an advance coverage determination for its
beneficiaries. This will require legislative authority and your
resolution is consistent with the Committee's recommendations.
For the long term, the Secretary's Advisory Committee suggested:
Lthe creation of a public-private partnership to
establish quality standards that would strengthen the safety of
services and reduce unnecessary or duplicative services
La new emphasis on changes in the statutory basis for
reimbursement within existing expenditure constraints that
would reward quality outcomes, recognize the need to balance
acute care services with the growing need for services provided
to the chronically ill and those requiring long-term care
La more global system of payment within governmental
program that gives patients more choice and greater ability to
be prudent users of public resources
Lintegration of information systems to be patient or
beneficiary oriented rather than program oriented.
Conclusion
The Secretary's Advisory Committee on Regulatory Reform provided
255 recommendations for easing the burden of regulation and improving
service to Medicare beneficiaries and others. And, we made specific
suggestions for future operations within HHS. The Committee members
recognized that effective delivery of health care resources requires a
balance of regulation, financing and a societal expectation. While our
group effectively addressed the regulatory aspects of this complex
relationship, we did not address financing nor did we carefully study
or try to articulate a societal expectation. For this, we are grateful
for the leadership of the members of this subcommittee. We appreciate
your interest in the work of the Secretary's Advisory Committee on
Regulatory Reform. In the report of the Secretary's Advisory Committee,
those recommendations that might require congressional legislative
action are denoted with an asterisk by the recommendation number.
Comparison of Regulatory Reform Provisions of H.R. 4954 and the
Secretary's Advisory Committee on Regulatory Reform
------------------------------------------------------------------------
Secretary's Advisory
H.R. 4954 Provisions and Section Committee on Regulatory
Reform Recommendation Number
------------------------------------------------------------------------
Establishment of coordinated survey 116, 117
demonstration project
------------------------------------------------------------------------
Extension of outpatient payment 119
protection for certain rural hospitals
------------------------------------------------------------------------
Hold harmless payments for outpatient 119
departments in small rural hospitals
------------------------------------------------------------------------
OASIS Task Force 54-64
------------------------------------------------------------------------
Required issuance of guidance concerning 134
discrimination against limited English
proficient persons
------------------------------------------------------------------------
Information Technology Demonstration 224-226
Project
------------------------------------------------------------------------
Local Coverage Determinations 69, 163
------------------------------------------------------------------------
Issuance of regulations 16, 97, 185
------------------------------------------------------------------------
Regular timeline for publication of final 16, 97, 185
rules
------------------------------------------------------------------------
Communication with providers 25-27, 30-31
------------------------------------------------------------------------
Small provider technical assistance 157
program
------------------------------------------------------------------------
Use of central toll-free number 25-27, 30-31, 128
------------------------------------------------------------------------
Prior determination of coverage 163
------------------------------------------------------------------------
Development of evaluation and management 99
guidelines
------------------------------------------------------------------------
Improved coordination between the FDA and 241-243, 236-237
CMS
------------------------------------------------------------------------
Covering and paying for new technology 241-243
and laboratory tests
------------------------------------------------------------------------
EMTALA 17-24, 164
------------------------------------------------------------------------
Chairman JOHNSON. Administrator Scully, I was very pleased
you discussed the forums that you have had. I think that has
been very important to opening up the process for all of us.
Your quarterly provider update has been very helpful, and begun
to strengthen the give and take between the government and the
people who provide the services.
Your Progressive Corrective Action Program is a help. I
think we would have a ways to go in that regard. I would call
your attention to page 6 of the American Medical Association
(AMA) testimony. You don't have to look at it right now. Bottom
line, the issue is that when government people come in and draw
a sample, a physician ought to be able to give additional
information so that the interpretation of those cases is
accurate. If the interpretation--it is a matter of
interpretation anyway, and I understand there are some gray
areas--but for physicians to say, wait a minute, you did not
notice this part of the chart--that should be there.
For a consent decree process to get going without some
evaluation of the base initial data is really a terrible
frustration and a great unfairness in the current process.
While you move towards addressing that, I do think the bill
addresses it more accurately. That will be one point of
discussion for us.
My question to you is--and I want you to answer briefly
because I have one question for Dr. Wood and then we will move
on--I think you need to tell us a little more clearly why you
think we need to extend the time frames for the review process,
because the time frames are really quite long. If you want us
to extend this, I think you ought to direct yourself to that
portion of your testimony for a minute.
Mr. SCULLY. I think the reality is that the time frames for
the review process--right now we are looking at 440 days.
Realistically, I don't think we can pull them off, to be honest
with you. In the current bill you kick the next process--for a
certain number of days the entire process is going to backlog,
in my opinion, right back up to the Provider Review Board. The
best intentions of speeding up the process, it just
functionally cannot be done. We don't have enough money to pull
it off.
Right now, in theory, I am supposed to take the $89 million
that Social Security spends right now--they get $89 million
from our budget directly, the trust funds, to do 8 to 10
percent of their caseload, which is Medicare. They have ALJs
all around the country doing that.
We are supposed to take this on with exactly the same type
of money as of October 1, do the same types of hearings, put
all these processes in place and speed it up. I just don't
think it is feasible at this point. I think the bill has
obviously very good intentions of streamlining and speeding up
the process. I just don't think the targets are, at this point,
remotely doable.
If we can put this in place, get it up and running--
essentially, outside of putting together a prescription drug
benefit--which I hope I have the opportunity to do in the next
couple of years--this is by far the biggest administrative
challenge for this Agency, taking over Medicare appeals and
making it work hopefully more smoothly than Social Security on
essentially no budget now.
We would like to get it up and running, but with the
timetables we have right now it is almost certain to just back
up in the entire system and essentially backfire and possibly
make it worse rather than better.
So, I hope we can put it in place with some more realistic
time lines and it turns out we can actually do it efficiently
and we can look at tightening them up in the future. I think
realistically--the two major concerns I have are the time
lines, and also the legislation requires us to put together 12
Quality Improvement Contractors. As I discussed, we could
probably do four, have exactly the same functions, spend less
money, and consolidate the operations. I think there are some
technical changes that make it much easier for us to pull this
off. It is a massive management job. We are taking on a whole
new appellate process that has not existed in the Agency
before. I hope with Social Security's help, I hope we can do
it.
We are going to have more focus and energy and attention on
Medicare. It is a relatively small part of their portfolio. In
some cases, it has been a stepsister to their core function.
Chairman JOHNSON. We will talk further with you about it
because 422 days is a long time. We will look at that more
closely. Dr. Wood, thank you for your testimony and the time
you have given to this process in the last year and a half in
your Commission.
I was disappointed that you did not make more progress with
the Outcomes Assessment Information System (OASIS). I
appreciate there has been a 27-percent cut. Would you talk a
little bit about my concern with OASIS and those things
actually reflected in your comments in your summary.
Particularly, I would like to hear about some of your broader
statements, like the emphasis on changes in the statutory basis
for reimbursement with existing constraints. It would reward
quality outcomes and recognize the need for the balance of
acute services with the growing need for services provided to
the chronically ill and those providing long-term care.
That kind of recommendation, that kind of view, is embedded
in your comments about where we need to go in the future, and
it strikes me that my frustration with OASIS is part of that.
Dr. WOOD. I would agree. Actually, when we consider how
some of these data sets were created, they were oriented
towards specific programs or silos. The OASIS form could be
considerably shortened if we had a way we could track
beneficiaries throughout the system.
I will give a specific example. A patient who might have a
fractured hip would be hospitalized, where there would be then
a gathering of data that would be covered in Part A and
separate data in the Part B payment system. If they then go to
a nursing home, they might in fact have some data in the
minimum data set (MDS). If they then go to home health, there
would be something in OASIS.
None of those systems actually talk to each other. None of
the providers have an opportunity to see what the providers
before them have done. You could eliminate a substantial
additional amount of information from OASIS if in fact there
was a single data set that followed a patient through all of
their specific interactions.
I think CMS operations could be improved as well in that
regard. It would be particularly more effective in managing
quality because you could then find opportunities for things
that might happen in a hospital that have an impact, for
example, on home health, or have an impact on nursing homes.
We have a hard time doing that. We are certainly
appreciative of the emphasis on quality at CMS, but we just
don't think the current systems are capable of providing that
additional functionality. That is the basis of how we would
approach that.
We had a short time, and there were a number of things we
would like to finish. That would be one of our major
objectives.
Chairman JOHNSON. Thank you.
Mr. SCULLY. I just want to jump in on OASIS, because I am
not sure we discussed this. Knowing your concern about OASIS, I
think OASIS is a great system. It was created by a contract
that CMS/HCFA had with the University of Colorado. Months ago,
I had people who wrote it and spent a day with me. They had to
trim it back by two-thirds, I told them, or I was going to do
it myself essentially. I spent a whole day with them. I was
just asking because it got approved this week.
Some of the stuff that was in the OASIS requirements I
think was done because somebody wanted it for their doctoral
thesis. These people created this thing over years. This was
their baby and they did not want to reduce any of it. I went
through and we reduced it by 27 percent. I think we got the
number of questions down from 96 to about 60. I spent a lot of
time. I am pretty convinced we got it back to what you actually
need for patient care.
The one complaint I still have and I'm thinking about
changing is that we collect OASIS on every patient in the
country. We actually use it for Medicare and Medicaid, but for
the private sector patients we collect it and don't use it. I
am saying we either have to find a way to use and disseminate
it or quit collecting it. We spent a lot of time on OASIS. I
think in the next few weeks you will see the fruition of the
first level of work, a significant ratcheting back of the data
collection on OASIS.
Chairman JOHNSON. Thank you very much. Mr. Stark.
Mr. STARK. Thank you.
Madam Chairman, Mr. Scully, sometime before or after dinner
today, we are all going to have to vote on an omnibus
appropriations bill which I am informed includes $54 billion
over 10 years to ``fix'' the physician reimbursement question.
Can you tell us what you are going to do?
Mr. SCULLY. Well, it is not totally up to me, Congressman
Stark. As you know, I have been saying from the first day that
I discovered this glitch in the system--and you and I worked
very much on this in 1989 when it was passed, so I have some
pride in the Resource Based Relative Value Scale because I
think it was worked pretty well. With the best of intentions,
some changes remained in 1997 that limited our ability to fix
the formula and it backfired. I discovered this last year in
September.
Mr. STARK. Do you have a plan to take this $54 billion we
are about to vote on and fix the system?
Mr. SCULLY. I have to get a ruling from Justice as to
whether I have the power to do it. My sure intent, if I am told
I am allowed to do it by Justice, I will do it as of March 1.
Mr. STARK. What will you do?
Mr. SCULLY. I don't actually believe it is the correct
update--it is an OMB scoring matter.
Mr. STARK. The $54 billion will correct it if you are
allowed to follow up----
Mr. SCULLY. The resulting update this year, instead of
being negative 4.4, it will be plus 1.6 as of March 1.
Mr. STARK. So, if the U.S. Department of Justice doesn't
let you do this----
Mr. SCULLY. Essentially the last version I saw of the
omnibus bill is it basically keeps us from being sued over
making the change. I always thought this was a mistake. I
wanted to fix it from the beginning.
Mr. STARK. The fix you have in mind would take care of it
for next year with the----
Mr. SCULLY. If I have the authority to fix it, it would I
believe correct some flaws in the formula that originated in
1998 and 1999 and get it back on the correct track for the next
10 years. You will still get, because of a variety of factors,
most likely a negative update next year, but it would be
smaller.
Mr. STARK. Have you determined what your prescription drug
benefit plan will be?
Mr. SCULLY. No, we have not. I hope we are going to have
something out soon.
Mr. STARK. The Secretary, the 26th of February, is coming
to the House Committee on the Budget, and on February 27 is
going to testify before the Senate Committee on Finance. Will
you have your pharmaceutical plan by then?
Mr. SCULLY. The Secretary sure hopes so. We are working on
it.
I will tell you that I think--I know there are a lot of
disagreements between the House and Senate, the different
parties, about where to go. It is pretty significant that the
President has committed $400 billion over the next 10 years to
spending on prescription drugs. Some people would like to spend
more, but it is more than double what was in last year's
budget. It is a strong signal coming from the President to work
with Congress to get this done this year.
Mr. STARK. The advisory Committee recommended a number in
their recommendation 192 that you have an interagency advisory
committee to identify and enroll Medicare beneficiaries who are
eligible for State assistance. Has that occurred?
Mr. SCULLY. Do we have an advisory committee? Yes.
Mr. STARK. That you have an interagency working group to
identify eligible beneficiaries. Is that true?
Mr. SCULLY. I spent an awful lot of time on dual eligibles.
We have spent a significant amount of time increasing
enrollment. I am not sure what interagency task force.
Mr. STARK. Could you let us know?
Dr. WOOD. Yes.
[The information follows:]
Recommendation #192 reads:
Convene by September 1, 2002, with recommendations by July 1, 2003,
and have a pilot ready to implement by September 1, 2003, an
interagency working group consisting of CMS, State Medicaid Directors,
and the Social Security Administration (SSA) to work on an improved
system for timely and accurate identification, enrollment, and
notification of dual eligibles.
The Secretary's Advisory Committee on Regulatory Reform adopted
Recommendation #192 in June 2002 along with several other
recommendations addressing dual eligibles. We are in the process of
addressing these recommendations.
In addition to addressing notification, application, and enrollment
of dual eligibles through the Secretary's Advisory Committee on
Regulatory Reform, our evaluations of the Qualified Medicare
Beneficiary (QMB) and Specified Low Income Beneficiary (SLMB) programs
have taught us many things including the importance of personal
assistance in the enrollment process. We are always looking for ways to
improve these processes for our Medicare and Medicaid beneficiaries.
Mr. STARK. Dr. Wood, you had a number of recommendations to
improve outreach and identify dual-eligibles. The President's
proposal this year suggests that we require more, not less,
documentation from lower-income individuals. As a matter of
fact, they even are going to require more identification from
second-graders to get the school lunch program. My son, when he
goes to second grade, is going to have to take my income tax
return along with his buddies to see whether or not he
qualifies for assistance in his school lunch program.
You also recommended the State-based volunteer-run health
insurance counseling program, SCHIP. Are you familiar with
that?
Dr. WOOD. Yes.
Mr. STARK. Are you aware that CMS this year has deleted
from the Medicare new handbook the telephone numbers to contact
SCHIP? Is that the kind of progress that you think we should
continue to make?
Dr. WOOD. No. In fact when we talked about some of these
issues in our Committee, our concern was finding a way to make
the enrollment processes simpler, especially for those who----
Mr. STARK. The quarrel is not with your Committee, but the
Administration is not following your advice.
Dr. WOOD. That would not be consistent with the
recommendations.
Mr. STARK. Okay. Further, your Committee's goal was not to
address payment methodologies; is that correct?
Dr. WOOD. That is right.
Mr. STARK. In number 127, with the highest number of
dissenting votes I might add, you specifically advocated
changes to the Medicare+Choice payments. Now, while I was
pleased to see you include risk adjustors in there, which the
Administration disagrees with, why in that issue did you
violate your principle?
Dr. WOOD. Actually, I think if you look at 127, we also
identified that that was an area that would require
considerable discussion and work at a legislative level, and it
could not be readily fixed from a regulatory perspective.
Indeed, the effort here is again to try to find a way that you
can expand access and choice. That was the discussion that
occurred at the Advisory Committee.
Mr. STARK. Thank you.
Mr. SCULLY. Mr. Stark, I spent a lot of time on SCHIPs.
They do a great job. The decision was because we spent so much
time and effort on trying to generate focus with seniors on 1-
800-Medicare, which we frequently refer calls to SCHIPs, some
of the consumer testing showed we confused people with so many
phone numbers. I sat on those lines for hours. I think the
SCHIPs do a great job. I meet with them regularly.
If we think that is somehow inhibiting the SCHIPs work, I
would be more than willing to look at putting them back in the
handbook. It was not done to discourage people from using
SCHIPs.
Mr. STARK. Like the memo to the intermediaries----
Mr. SCULLY. I was not happy with that one. That was not
accurate either. The way that was written, I could have sworn
that somebody was writing it for publication in a newspaper.
The way the memo was written, it said to spend all beneficiary
education. That is in fact exactly not what happened; we didn't
spend any for education. We told the contractors not to
undertake--if you look at the category it fell into, they could
not do any new things like health affairs, any new outreach
initiatives.
We did not do anything as far as not taking phone calls.
Because we were operating under a continuing resolution and a
funding freeze, we said no new health fairs in the communities,
but we always took the phone calls, always answered the mail,
always took responses.
I think it was a significant misrepresentation of what we
are doing.
Chairman JOHNSON. Thank you. Mr. Ramstad.
Mr. RAMSTAD. Thank you, Madam Chair.
I want to thank both our distinguished witnesses for your
testimony. I certainly want to welcome you, Dr. Wood, a friend
from the Mayo Clinic in the great State of Minnesota. I want to
thank you for your work as Chair of the Secretary's Advisory
Committee on Regulatory Reform. You have performed valuable
public service, and your recommendations are certainly
important: 255 unfunded mandates. In total.
I commend the reading of the full transcript of Dr. Wood to
every colleague on the Subcommittee. It is very, very well
written, very informative, and I think can be very helpful as
we seek to change some regulatory policy.
Dr. Wood, in your testimony you laid out some areas that
require legislative solutions, really, for needed long-term
changes. Two of the recommendations involve changing the
statutory basis for reimbursement within existing expenditure
restraints that would reward quality outcomes--which is music
to our ears--and a more global system of payments that gives
patients more choices and a greater ability, really, to be
prudent in their health care choices as health care consumers.
It seems to me--and I have certainly discussed this a
number of times with Administrator Scully and with colleagues
here--the poster child for these needed changes is the highly
flawed reimbursement formula for Medicare managed care.
Improvements have been made, I realize, but the current
adjusted average per capita cost formula is still based on the
history of fee-for-service costs in different counties. It is
arcane, archaic. I think it is unfair. It rewards high cost and
inefficiency, and certainly penalizes States like ours, the
State of Minnesota, that deliver high quality care in a cost-
effective way.
I assume, Dr. Wood--and I don't mean to be presumptuous,
but I assume that you agree that the current system for managed
care reimbursement is flawed.
If so, what would your recommendations be, in 4 minutes or
less, for reform?
Dr. WOOD. That is a pretty tall order, but I agree that
there are very fundamental problems. The Committee's focus here
was not to try to come up with a scheme of financing that would
solve some of these problems, although our vision for the
future is that we have to find a circumstance where we can
provide information to beneficiaries so that they can make
appropriate choices to meet their specific needs. Then, every
beneficiary is somewhat different. You can't have everybody
trying to follow one program and only one set of rules and
regulations, regardless of where you might be.
From our perspective, we have thought of a number of
different ways that you could provide that choice.
Fundamentally, having a way to get good, reliable, useful
information in the hands of beneficiaries so they can make
decisions about what options they had, what plan, whether it
would be a managed care plan or an insurance plan or whatever;
what gave them the access to physicians, the access to other
services, drug benefits or whatever, and what gave them the
range of services that would meet their particular health
needs.
We are particularly concerned that as many seniors with
chronic conditions get older, we have not organized a system to
deliver very good chronic care or to help make the decisions
about where you can get certain resources. We have to be able
to do that.
Now, we are quite happy that there is a group of folks like
you who can wrestle with the financing circumstances, and we
were quite happy to think about just the delivery issues. As we
get to those ultimately, coming back to Chairman Johnson's
earlier question of why didn't we do more, in some areas we got
to a point where it became apparent that we would have to do
some fundamental change of the delivery system that would have
some reimbursement implications.
That would have been something that would have simply been
hard for us to overcome and would have delayed our ability in
getting the recommendations in place. So, that is the reason we
did not go into great detail in that regard.
Mr. RAMSTAD. It seems to me that the reimbursement
implications are so pervasive in the system and that they
certainly are part and parcel of reform, and certainly any
recommendations that would be forthcoming from you or your
group would be very much appreciated. Thank you again for your
leadership on the important Advisory Committee on Regulatory
Reform.
In the remaining couple of minutes I have, I just want to
ask Administrator Scully, we have talked many times about the
unconscionably long coverage, coding payment, and appeals
decision process with respect to medical devices, medical
technology, the bureaucratic delays, and the poor interagency
coordination, which certainly don't serve the patient or the
system well.
I am just again asking that you will work with us on the
Medicare Innovation Responsiveness Act to streamline the system
and better coordinate the various functionaries, those who work
on these issues. We really need to improve accountability,
openness, and coordination. So, I am hopeful that you will work
with me on this legislation this year, and we can get even more
of it passed than we did last year.
Mr. SCULLY. Absolutely. I also hope you will find that the
people--and this is our chief doctor on the staff--have been
much more open and willing to meet with people on the outside.
I have pushed them to do that. People are not always going to
make our decisions. We have to make tough coverage decisions.
Mark McClellan is a new administrator and a good friend. We
have talked a lot about one of the frustrations we have is
where FDA would spend a couple of years looking at a product or
device, and then they would have to start all over again with
CMS. Some of that is statutory. FDA cannot share all their
information with us. We have started talking and getting ahead.
For example, we actually approved drug-eluting stents,
something Secretary Thompson and I got very involved with. The
FDA still has not approved it, but we actually went ahead and
approved it. We felt that was a device that was going to
improve the delivery of health care in a major way, so we
actually went ahead and created a code to pay for it as of
April 1, on the assumption that FDA will approve it. I don't
think they have, but I think they will in the next month or so.
We have tried to answer the critics about some of the slow-
moving bureaucracy, of having to wait a couple of years with
FDA and then start again from scratch with CMS. I think we have
made some significant changes. We have to make a lot of tough
calls on drugs, devices, international classification of
diseases, which we discussed before the hearings. They are
complicated issues that involve billions of dollars and lots of
patients, and we take them very seriously. I think we have
gotten much faster and better.
Mr. RAMSTAD. Thank you. Just a final comment, Madam Chair,
if I may.
You have created, Administrator Scully, an atmosphere of
openness and optimism at CMS. For that we are grateful. There
is hope that even more changes can be made to streamline the
process. You have made significant steps under your leadership.
Thank you for that.
Mr. SCULLY. Thank you.
Mr. RAMSTAD. Thank you, Madam Chair.
Chairman JOHNSON. Thank you. Ms. Tubbs Jones has yielded to
Mr. Kleczka because he has to go back to Florida. Mr. Kleczka.
Mr. KLECZKA. Thank you. I concur in the remarks of Mr.
Ramstad when it comes to your service, Mr. Scully. I have
really enjoyed working with you since you have taken over the
helm of CMS. You have been responsive, even though I recognize
that you are not exactly a cheerleader for the Medicare
program, but you have been very responsible.
With that being said, let me attack you now. Congressman
Stark talked a little about the physician payment fix, the $54
billion in the bill we are going to be taking up today. Do you
anticipate that the Administration is going to come back for
some further legislative fix later this year?
Mr. SCULLY. On the physician payment thing specifically?
Mr. KLECZKA. Right.
Mr. SCULLY. I don't think that has been decided. I think
the update would be 1.6 for the rest of the year if we make the
change. It would put the formula back on the right track, I
believe.
It obviously depends a lot on many complicated factors,
including gross domestic product growth, physician spending.
The reason we enacted it in 1989--and I was then the OMB guy
who spent a lot of time with Mr. Stark passing it--was because
physician spending was growing 15 percent a year. The idea was
to control volume and tie volume to performance and various
categories together.
I think a negative 5.4-percent update last year was
incorrect and should never have happened. This year a negative
4.4 percent would have been unconscionable. I worry about it. I
have six physicians in my family, and I worry about it because
we would have had access problems with patients. I think we had
not seen them yet, but I have no doubt they were coming.
I was very concerned that we would start seeing physicians
not taking Medicare patients. If physicians want to be our
partners in the long run for the program, they have to expect a
reasonable reimbursement. I think it was not a provider
giveback, in my opinion. It was a mistake. I don't believe
anyone ever really expected us to have negative updates in
payments for physicians.
Mr. KLECZKA. Clarify in my mind why you need a Justice
Department ruling. Do you feel that there are going to be some
lawsuits emanating from this change?
Mr. SCULLY. There have been lawsuits. In the Clinton
Administration, there was a series of lawsuits between the AMA
and the Administration over this exact issue. It was decided
that the interpretation at the time was correct, however, we
misinterpreted it.
Essentially I have wanted to fix this for a year and a
half. The Justice Department's ruling, correctly I believe, was
that we did not have the administrative authority to do it.
When the statute was changed in 1997, it was tightened in a way
I did not have the administrative authority to change it.
What the language in the omnibus bill says essentially is
that our decisions are not reviewable. It does not say we
should do it, it says we cannot be sued if we do it. I have not
yet gotten the ruling from Justice but my anticipation, having
discussed it with them, is that if it does pass that we will be
putting in a reg.
I actually had to tell the contractors yesterday what the
rate was, and I have held off as long as I can. I am hopeful it
is going to be 1.6, not minus 4.4. I expect if it passes they
will let me go ahead.
Mr. KLECZKA. Is the language in the bill we are voting on
today going to do the job, or are you still in doubt?
Mr. SCULLY. It will probably do the job, in my opinion.
Mr. KLECZKA. Probably?
Mr. SCULLY. I have every expectation when it passes out and
we get a final rule from the Justice Department, I have the
expectation we will do a positive update.
Mr. KLECZKA. I will leave questions on prescription drugs
to my colleague, Ms. Tubbs Jones. Let me ask one question on
your testimony. On page 6, you talk about the Local Provider
Education and Training (LPET) Program. You indicate that this
year's funding will be doubled. Can you give us a figure? What
dollar amount are we talking about? The bottom of page 6, Tom.
Mr. SCULLY. Give me one second to put my--I didn't need
this last year. I am trying to look at my budget.
Mr. KLECZKA. This year we doubled funding for the LPET.
Mr. SCULLY. It is not a chart I have. I think it has been
doubled. The overall contractor budget in the 2004 budget is
$1.776 billion, and I believe the provider education amount is
somewhere around $100 million. I will have to get that for you.
Mr. KLECZKA. Is that the doubled amount?
Mr. SCULLY. The doubled amount. I am not certain. I will
have to check.
Mr. KLECZKA. The quote here, Mr. Scully, is, ``this year we
doubled funding.''
Mr. SCULLY. Yes. We doubled funding in the budget for
provider education and training.
Mr. KLECZKA. That amount is $100 million?
Mr. SCULLY. I believe that is about right. I should know
that off the top of my head. I apologize.
[The information follows:]
As part of our efforts to improve performance through provider
education and outreach, we have expanded our Local Provider Education
and Training Program, also known as the L-PET program. Contractors
spent $17,779,500 on L-PET activities in FY 2002. In FY 2003, we have
distributed $35,243,000 to the Fiscal Intermediaries and Carriers. L-
PET is targeted to be a response to problems identified through the
review of claims. Providers are receiving more education related to
their claims submission. Clinicians deliver most of the education, and
respond to specific coverage or coding issues. Contractors meet with
providers in group settings, individually, or communicate using the
Internet. As a result, our contacts with the provider community are
more collaborative.
In addition to L-PET, we have taken many other steps to improve
provider education, such as through interactive websites like MedLearn,
satellite broadcasts, conferences and town hall meetings, and Open Door
Forums.
Mr. KLECZKA. The last question is on the contracting. You
indicated the 5-year rebidding might not be the best time
frame. Do you have a suggestion other than that?
Mr. SCULLY. Some of this is a blend of the institution's
views and mine. I am not actually uncomfortable with the 5- to
6-year rebidding.
I think because of the financing, the staff is concerned
that some of the contracts--there may be some States that have
done a great job over the years. The staff is concerned you
have to rebid every contract every 5 or 6 years, including the
ones that have done a terrific job and stayed, relatively
smaller States. It might be better to have the flexibility to
do it every 7 or 8 years. It is more a matter of resources. If
we are forced to rebid a contract every 5 years, it might not
be the best prioritization of resources.
I personally want to tell you, I am not uncomfortable with
doing it every 5 to 6 years. I think rebidding contracts is a
good idea.
Mr. KLECZKA. You are trying to reduce the number of
intermediaries. How are we going to go about doing that, just
with the contracting price, the lowest type of system?
Mr. SCULLY. Yes. We bid them out and we would pay them
differently and we would try to make them compete for contracts
regularly, and try to get the number down to 20 or 25.
A lot of our contractors are in Wisconsin; Wisconsin
physicians and United Government Services, which is a subset of
BlueCross Wisconsin or Cobalt. They happen to be two of our
biggest and best. My guess is they get a lot more work out of
this because they have been two of our best contractors.
I think what is happening now, because a lot of the
BlueCross plans are going for profit, as you know in your
State, they don't look at the contract business as being such a
great business. A lot are getting out of it. What you have
found is a consolidation of BlueCross programs, and other
people who want to be in this for the long haul. Fortunately,
United Government Services seems to be one of them. We would
like to find people who want to be partners for 20 years. We
would like to give them work, have better consistency, and run
the program more efficiently. We think the best number is
between 20 and 25 contractors, not 47.
Mr. KLECZKA. Dr. Wood, do you have a comment on that?
Dr. WOOD. From a personal perspective, I would share that
observation. There are some of my colleagues who believe we
have to remain fragmented into small areas. The overall
objective should be a high quality of service. I happen to be
an area covered by Wisconsin Physician Services. I deal with
medical directors that are in different States, but it works
reasonably well.
Mr. KLECZKA. With two major contractors coming from
Wisconsin, and I coming from Milwaukee, Wisconsin, home of
Cobalt, I happen to agree with both you gentlemen. Thank you,
Madam Chair.
Chairman JOHNSON. Mr. Crane.
Mr. CRANE. Tom, in the short time that you have been with
the Agency, you have made considerable progress in giving
beneficiaries information, nursing homes and other providers.
Can you highlight one of the changes that you believe made a
significant difference in the lives of seniors?
Mr. SCULLY. Well, the one we made the most traction on so
far is nursing homes. I think it is not just seniors. I really
believe that probably the number one place I got complaints
about quality and about senior concerns were nursing homes,
coming to the job.
We also have extensive data on every nursing home patient
in the country through MDS. It wasn't easy, it was difficult,
but we had the data to put together fair tracking of quality
between nursing homes.
I also think, in the last year, when I started out, I think
the Service Employees International Union has been great--which
is the biggest union--the nursing homes, for profit and non-
profit, and the consumer groups did not have great relations,
did not talk to each other much. In the process of doing these
quality measures, they worked together incredibly well. They
came with a consensus on quality measures. We got them done in
less than a year. We now have all 50 States with published
quality measures. I think it has dramatically, in my opinion,
improved the relations between the various groups involved in
nursing homes.
I guess the criticism I got to begin with is, no senior
would ever understand the article in the Chicago paper rating
nursing homes. Maybe they don't. What it has created is an
enormous buzz, in my opinion, around the nurses, around the
employees, around the community, in the nursing homes, to talk
about quality, and who has the best bed sore problem or the
worst bed sore problem, the worst activities of daily living
problems. It has created a whole level of discussion around
nursing home quality that I think has dramatically improved the
awareness of the people that are in the nursing homes and their
families.
I think it has had a big impact already, and I think it has
just completely changed the dynamics between the patients, the
nurses and their unions, the nursing homes, much for the
better. I think it has worked out very well.
Mr. CRANE. We understand that both CMS and the Secretary's
task force supported elimination of local intermediary
utilization restrictions for emergency visits. When will that
important change for beneficiaries take place?
Mr. SCULLY. Local intermediary restrictions on emergency
room visits?
Mr. CRANE. Yes.
Mr. SCULLY. Mr. Crane, I am not sure. I will have to check
on that and get back to you. I apologize. I wasn't aware that
we still had local intermediaries making restrictions on
emergency room visits.
[The information follows:]
The Secretary's Advisory Committee on Regulatory Reform did not
address local intermediary utilization of emergency services.
On December 20, 2002, in response to a request by state officials,
CMS sent a letter to state Medicaid directors to make sure states
understood managed care plans could only place the same restrictions on
beneficiaries--related to utilization of emergency services--as those
in fee-for-service programs.
Medicaid law requires that enrollees in Medicaid managed care plans
can get emergency care using the ``prudent layperson'' standard, and
the right to post-stabilization services when the patient goes to a
hospital that is not in the managed care organization's network. States
may limit the numbers of emergency room visits paid for, but the
Emergency Treatment and Active Labor Act (EMTALA) requires hospitals
and emergency rooms to screen and treat all individuals, including
Medicaid enrollees, who come to an emergency room for health care
services.
The law does not distinguish between health care services provided
in emergency rooms to Medicaid beneficiaries in either fee-for-service
or managed care. States do have the authority to set the limits on how
much and how often Medicaid will pay for someone to get care in an ER.
Five states have established limits in their Medicaid fee-for-service
programs, to encourage patients not to use the emergency room as their
doctor's office. To ensure uniformity and equality for beneficiaries,
they may also include such limits in Medicaid managed care plans.
However, no one who is in need of emergency care will be turned away
from an emergency room.
CMS's December 20 letter is consistent with those provisions.
Hospitals and emergency rooms must continue to provide care for
emergency services. If an emergency service exceeds the limit that is
established in a state's benefit package, the service will still be
furnished but the state may not have to pay for that service. This is
the identical policy available to Medicaid beneficiaries who are not
covered by a managed care plan.
Mr. CRANE. Dr. Wood, the task force under your direction
covered an extensive amount of ground and made many specific
recommendations. What overarching theme or conclusion would you
draw from your experience?
Dr. WOOD. I think it would be most important to recognize
that many of the problems that exist probably reflect that
there are a number of different programs that have developed in
almost a silo-like fashion, and that as you make law and
regulation for one, you then create barriers to access and
transition between them.
If we would go at it the other way and think about what do
you need to do to provide the spectrum of services for
beneficiaries so that they can use them when they need to, and
that there is almost a seamless integration, we could
substantially improve the functioning of the system.
I think we would also find not also operational but quality
savings as well, because you could get back an ability to
understand what is in the data about where are the best places
to get things done, and we could identify opportunities for
improvement in the system; coming back to a concern that I know
Chairman Johnson has, that we have not been good at continuous
improvement. That requires good measurement and data systems to
be able to do that.
Mr. CRANE. Thank you.
Chairman JOHNSON. Ms. Tubbs Jones, welcome to our
Subcommittee.
Ms. TUBBS JONES. Thank you, Madam Chair, for allowing me to
participate in the Subcommittee. Good afternoon, Dr. Wood, Mr.
Scully.
My first Committee hearing on health care. I come from the
great city of Cleveland, Ohio, home of the Cleveland Clinic,
University Hospitals, Metro Hospital, St. Vincent's, and the
list goes on. So, even though I am not on the Subcommittee, it
is a very, very important issue for my constituency, and I am
going to try and be quick.
Let me ask you, Dr. Wood, in the course of the work that
you did at the study, what did people say to you about a
prescription drug benefit?
Dr. WOOD. Going around the country and listening to public
comment, that was often one of the most significant issues that
arose. The perspective of people that would come and talk with
us really reflected what they considered to be their specific
needs.
If you consider that most older Americans have one or more
chronic conditions, it is hard for them to get successful
treatment of those chronic conditions when they don't have
access, or they have limited access, or they are having to make
choices about prescription drugs which are an important part of
the care of chronic conditions.
We also heard concerns about access to providers, rules
that would limit opportunities to get even things like durable
medical equipment in an easier fashion. Those are all very
complex circumstances, but I think they reflect that we haven't
probably been as good as we could be in keeping the Medicare
problem modernized to meet the needs of a growing number of
people who have chronic conditions that require considerably
more support than was the case when the program was designed
many years ago and we were dealing mostly with acute illnesses.
Ms. TUBBS JONES. What would you recommend?
Dr. WOOD. Well, actually if you go back to the long-term
recommendations of our Committee, and look at some of the
unresolved issues, I think that you would see that we would
like to see a reorganization of the program that would allow
you to meet those ongoing chronic conditions. I might ask you--
--
Ms. TUBBS JONES. Specifically with regard to a prescription
drug benefit. I am sorry.
Dr. WOOD. Well----
Chairman JOHNSON. This hearing is not on the prescription
drug bill. It really is on how the regulatory aspect of
Medicare can be used to improve the quality.
Ms. TUBBS JONES. Clearly, in his own testimony, Madam
Chair, if you would allow me, he said that was the largest
concern of the people that he talked to as he was out there. I
just thought that since he was an expert, that I might make use
of his experience on the issue. If you want to restrict me, so
be it.
Chairman JOHNSON. I am not going to restrict you. The point
is that we are going to have lots of hearings on that subject,
but the testimony on this hearing was really excellent.
Proceed, Dr. Wood, any way you want. I don't want to get too
far off.
Ms. TUBBS JONES. That is my last question of him.
Dr. WOOD. I would simply answer that we heard that as a
Subcommittee. In fact, the testimony is on the Web site. That
was not a subject that was in our charge. So, we simply marked
that as something that would need to be covered by a
legislative solution.
Ms. TUBBS JONES. If I can be clear on my question. You are
a physician. You practice law.
Dr. WOOD. Yes.
Ms. TUBBS JONES. What would most benefit your clients?
Dr. WOOD. Not only my clients, but the people who came to
talk to us; they would like a prescription drug benefit.
Ms. TUBBS JONES. Okay. I am going to leave that alone. Mr.
Scully, how are you, sir?
Mr. SCULLY. Great. You can ask me that.
Ms. TUBBS JONES. I am looking forward to having the
opportunity--you haven't had time. You all haven't figured that
out yet from last week. That is the answer I kept getting. You
haven't worked it out yet.
Mr. SCULLY. We are getting close.
Ms. TUBBS JONES. Who do I contact in your office to set up
some programs for the nursing homes and health care providers
and so forth in my congressional district if I wanted to help
facilitate responses to questions with regard to providing--to
dealing with Medicare issues and Medicaid issues?
Mr. SCULLY. You can certainly talk to me. I have mentioned
I have been in 47 congressional districts in the last year. Not
quite. I am happy to go to Cleveland whenever it works out. I
have done a lot of both sides of the aisle. I think that I have
a number of special assistants, Marty Corry, who is here today
who works with me and will be happy to help you out.
Ms. TUBBS JONES. I don't have but a second left, but let me
ask one other question of you. In this appellate process--in
one of my prior lives, I was a judge. I am curious are there
expedited appeals for emergency situations, or is there a
process?
Mr. SCULLY. There is a process. I think there is a way for
them to be sped up through Social Security, but there is no
specific process for that. It is one of the reasons, to be
honest with you, why we are interested in taking it over in
Medicare, because I think we will be much more sensitive to
Medicare appeals.
I have inserted myself in a bunch of them. There doesn't
seem to be a process beyond that for people with acute
problems.
Ms. TUBBS JONES. Real quickly, Madam Chair. In some of the
other Federal agencies, what they have done is fast-tracked
certain types of cases. I used to work for the Equal Employment
Opportunity Commission, and we did a fast track on certain
types of cases. As you are going through the process, I would
ask you to maybe consider what types of cases might be fast
tracked or expedited in some way. I thank you, Madam Chair.
Chairman JOHNSON. I thank the panel for their comments.
There will be a lot of discussion of particularly some of the
contractor issues and the medical director concerns. There is a
difference between the technology issues and the other aspects
of regional administration, or at least some of the other
aspects of regional administration that may not yield
themselves to quite such large groupings as ultimately four or
five contractors.
So, we are going to get into that. I hope that your people
will look carefully at some of the testimony that we are going
to hear today from the emergency physicians, from the home
health agencies, and some of the small ones where repayment
takes a little different situation and it takes on a different
color than in some of the other areas.
The physicians are going to testify that the extrapolation
issue isn't consistent across the country, to say the least.
So, we do have a lot of work before us, both on implementing
the recommendations that have been made and dealing with the
provisions in the bill, but also enlarging on them. We must not
miss this opportunity to enlarge upon them. Thank you very
much.
Mr. SCULLY. Can I say one thing, because I didn't know
this. There is an expedited appeals process for discharges from
a hospital, for someone to appeal the hospital discharge. It is
expanded in the HCFA provisions that Chairman Johnson worked on
for discharges from nursing homes and home health.
Chairman JOHNSON. I think Mrs. Tubbs Jones's underlying
comment that as we look at the appeals issue, we should look
for a way we can break it up, or have certain kinds of
processes at the beginning so that so many don't go to appeals.
This 422 days is really a question--you know. Untimely justice
is often not justice at all. So, we will talk with you about
that much more extensively.
It is a point of considerable difference between the bill
and the Agency, I wanted to at least bring it up at the
hearing. Thank you very much.
Mr. SCULLY. Thank you.
[Question submitted to Mr. Scully from Chairman Johnson,
and his response follows:]
Centers for Medicare & Medicaid Services,
200 Independence Avenue, SW
Washington, DC 20201
Functional Equivalence
Q: I understand it is current agency policy is not to introduce new
matter in final regulations. In the oupatient final rule, you
established new criteria called ``functional equivalence'' (same price
for drugs that serve the same biological process). When did CMS allow
for public comment on this new standard?
A: Functional equivalence is a term CMS developed as a result of
comments received during the comment period on the notice of proposed
rulemaking on the 2003 update for Medicare's outpatient prospective
payment system to describe the relationship between Aranesp and
Procrit. As we explain in the final rule, it became apparent that
darbepoetin alfa, while not structurally identical to epoetin alfa,
uses the same biological mechanism to create the same clinical effect
in the body. To encapsulate this phenomenon, we used the term
``functional equivalence.''
The term ``functional equivalence'' is not a criteria or a
standard, but a descriptive term used to capture a relationship between
two drugs. As you may know, the comment period is a vital part of the
process we use to issue every regulation. We place high value on all
comments we received from interested parties. In fact, it was through
comments received during the comment period on the proposed rule
regarding the relationship between Aranesp and Procrit that led us to
employ the term ``functional equivalence.''
Chairman JOHNSON. Now we will convene the concluding panel.
I have read your testimony. It is really excellent. I hope some
of the other Members will be able to get back. If not, I am
pleased to know that their staff are here, because you do raise
in your testimony a lot of very fundamental questions and make
some very good suggestions as to how to go forward.
We do have quite a long panel. We are going to give each
person 5 minutes. You know the rules. Your whole testimony gets
submitted for the record. You get 5 minutes and then we get to
question.
I do want to say that if there aren't more Members to
question, I am going to invite you to comment on one another's
testimony too, because this isn't about silos, this is about a
system. So, a number of things that some of you are saying in
one area, the others might want to comment on as well. Michael
Luebke, President of Verizon Information Technologies. I am
going to take you in the order that you are at the desk. Mr.
Luebke.
STATEMENT OF MICHAEL LUEBKE, PRESIDENT, VERIZON INFORMATION
TECHNOLOGIES, INC., TAMPA, FLORIDA
Mr. LUEBKE. Good afternoon, Chairman Johnson, Ranking
Member Stark, and distinguished Members of the Committee. I
would like to thank Congresswoman Johnson for the opportunity
to contribute to the process of continuing to improve upon and
build a better health care system for our citizens.
My name is Mike Luebke, and I am President of Verizon
Information Technologies, a wholly owned subsidiary of Verizon
Communications. My organization is responsible for the
commercial sales and marketing of select Verizon
telecommunications, information technology, and health care
products and services. Our parent company, Verizon
Communications, is a premier data, video, and voice network
services company. We employ nearly 250,000 people in 40
Nations.
Today I would like to take a few moments to tell you why we
support your contract reform initiative and why it is
beneficial to Medicare administration.
Frequently I hear people say, I didn't realize Verizon was
in the health care business. The fact is it is a very natural
fit for us. The information technology demands of a
telecommunications company are very similar to the information
technology demands of the health care industry. Verizon's
extensive health care experience is derived from providing
information technology services to Medicare carriers and
intermediaries, commercial managed care insurers, and State
government Medicaid programs.
Verizon is one of the largest and most efficient technology
companies in the United States and a leader in information
processing and security. We have enjoyed lengthy relationships
with our health care customers. Some of them have been
leveraging our information technology solutions for nearly 15
years. We have a successful track record of providing
information technology services to many premier health care
organizations.
Our data centers process nearly 1 billion health care
transactions a year. In addition, we are responsible for
processing the transactions for close to 20 percent of all
Medicare Part B claims. We are considered throughout the health
care industry as a quiet and effective leader for information
technology services, security, and efficiency.
Verizon has been following the development of contractor
reform since its inception, and I applaud Representative
Johnson for her ongoing efforts.
Verizon supports the Committee's Medicare Regulatory and
Contractor Reform initiatives. These initiatives will create a
competitive environment that encourages innovative companies
like Verizon to offer their significant core competencies in
information technology to the government.
The result of opening competition and focusing on core
competencies brings with it the best in commercial practices
and pricing, continuous technology innovation, and an overall
lowering of administrative overhead.
Recent world events have placed, very appropriately, a
renewed focus on security and, in particular, information
security. Through contractor reform, companies like Verizon
will be able to compete to offer to CMS and all Medicare
beneficiaries the benefits of a secure environment for their
data. For example, Verizon has in place for its own business a
hardened data center environment, protected from power outages,
natural disasters, and unauthorized access. In addition, our
data center security already exceeds the proposed HIPAA
requirements. These two examples demonstrate how CMS could take
advantage of features that Tier I data centers such as Verizon
have put in place to gain cost efficiencies.
We are anxious to bring the Federal Government the very
best in proven commercial practice. With contractor reform, I
strongly believe that Verizon, along with other qualified
companies, will be able to dramatically enhance CMS's ability
to efficiently and effectively provide state-of-the-art claims
processing and information security.
For example, the contractor reform initiative would allow
the government to consider the viability of carving out and
consolidating information technology and data center functions.
This is consistent with the trend in the commercial sector and
has accounted for significant savings and process improvements.
I believe that this legislation will provide more companies
like Verizon with a significant opportunity to contract
directly with CMS. The CMS will then have access to the leading
companies in information technology and security. The passage
of this legislation will allow companies to assist the
government to meet or exceed the goals set forth by Congress
and HHS over the next several decades.
Opening the doors for competition will unleash the power
and skills of the private sector, resulting in the application
of state-of-the-art technology and lower administrative costs,
and will allow more commercial companies to participate and
bring the best commercial practices in information technology
to the government.
The passage of contractor reform initiatives will be one of
the most significant contributions to reforming Medicare. The
opening up of competition to organizations that have the
ability to converge and integrate a multitude of technology
advances will allow and provide incentives for future progress
and cost efficiencies.
I thank you for the opportunity to speak with you today. I
look forward to any questions that you may have. Thank you.
[The prepared statement of Mr. Luebke follows:]
Statement of Michael Luebke, President, Verizon Information
Technologies Inc., Tampa, Florida
Good morning, Chairwoman Johnson, Ranking Member Stark and
distinguished members of the Committee. I would like to thank
Congresswoman Johnson for the opportunity to contribute to the process
of continuing to improve upon and build a better healthcare system for
our citizens.
My name is Mike Luebke and I am President of Verizon Information
Technologies, a wholly owned subsidiary of Verizon Communications, Inc.
My organization is responsible for the commercial sales and marketing
of select Verizon telecommunications, information technology, and
health care products and services. Our parent company, Verizon
Communications Inc., is a premier data, video, and voice network
services company. We employ nearly 250,000 people in 40 nations.
Today I would like to take a few moments to tell you why we support
your contractor reform initiative and why it is beneficial to Medicare
administration.
Frequently, I hear people say, ``I didn't realize Verizon was in
the healthcare business.'' The fact is, it's a natural fit for us. The
information technology demands of a telecommunications company are very
similar to the information technology demands of the healthcare
industry. Verizon's extensive healthcare experience is derived from
providing information technology services to Medicare carriers and
intermediaries, commercial managed care insurers, and state government
Medicaid services. Verizon is one of the largest and most efficient
technology companies in the United States and a leader in information
processing and security.
We have enjoyed lengthy relationships with our healthcare
customers, some of which have been leveraging our information
technology solutions for nearly 15 years. We have a successful track
record of providing information technology services to many premier
healthcare organizations. Our data centers process nearly 1 billion
healthcare transactions a year. In addition, we are responsible for
processing the transactions for close to 20 percent of all Medicare
Part B claims. We are considered throughout the healthcare industry as
a quiet and effective leader for information technology services,
security, and efficiency.
Verizon has been following the development of contractor reform
since its inception and I applaud Representative Johnson for her
ongoing efforts.
Verizon supports the committee's Medicare Regulatory and Contractor
Reform initiatives. These initiatives will create a competitive
environment that encourages innovative companies like Verizon to offer
their significant core competencies in information technology to the
government. The result of opening competition and focusing on core
competencies brings with it the best in commercial practices and
pricing, continuous technology innovation, and an overall lowering of
administrative overhead.
Recent world events have placed--very appropriately--a renewed
focus on security and, in particular, information security. Through
contractor reform, companies like Verizon will be able to compete to
offer to CMS and all Medicare beneficiaries the benefits of a secure
environment for their data. For example, Verizon has in place for its
own business a hardened data center environment, protected from power
outages, natural disasters, and unauthorized access. In addition, our
data center security already exceeds the proposed HIPAA requirements.
These two examples demonstrate how CMS could take advantage of features
that tier one data centers such as Verizon have put in place to gain
cost efficiencies.
We are anxious to bring to the federal government the very best in
proven commercial practice. With contractor reform, I strongly believe
that Verizon, along with other qualified companies, will be able to
dramatically enhance CMS's ability to efficiently and effectively
provide state-of-the-art claims processing and information security.
For example, the contractor reform initiative would allow the
government to consider the viability of carving out and consolidating
information technology and data center functions. This is consistent
with the trend in the commercial sector and has accounted for
significant savings and process improvements.
I believe that this legislation will provide more companies like
Verizon with a significant opportunity to contract directly with CMS.
CMS will then have access to the leading companies in information
technology and security. The passage of this legislation will allow
companies to assist the Government to meet or exceed the goals set
forth by the Congress and the Department of Health and Human Services
over the next several decades.
Opening the doors for competition will unleash the power and skills
of the private sector, resulting in the application of state-of-the-art
technology and lower administrative costs. It will allow more
commercial companies to participate and bring the best commercial
practices in information technology to the government.
The passage of contractor reform initiatives will be one of the
most significant contributions to reforming Medicare. The opening up of
competition to organizations that have the ability to converge and
integrate a multitude of technology advances will allow and provide
incentives for future progress and cost efficiencies.
I thank you for this opportunity to speak with you today. I look
forward to answering any questions that you may have.
Chairman JOHNSON. Very impressive. Mr. Fay.
STATEMENT OF TONY FAY, VICE PRESIDENT, GOVERNMENT AFFAIRS,
PROVINCE HEALTHCARE COMPANY, BRENTWOOD, TENNESSEE, ON BEHALF OF
THE AMERICAN HOSPITAL ASSOCIATION
Mr. FAY. I am Tony Fay, Vice President of Government
Affairs for Province Healthcare Company in Brentwood,
Tennessee. I am here today on behalf of the American Hospital
Association's nearly 5,000 hospital, health system and health
care provider members. Thank you very much for this opportunity
to discuss regulatory relief for the health care providers of
America.
Province Health Care owns and operates 20 acute care
hospitals in rural markets in 13 States. We also provide
management services to 36 primarily non-urban hospitals in 14
States, and we are deeply committed to developing hospitals and
health care systems that serve the unique needs of rural and
nonurban communities.
We are very pleased that again this Congress, you and your
colleagues, recognize the dilemma that health care providers
face in complying with the myriad of health care rules and
regulations. During the 107th Congress, the House
overwhelmingly passed H.R. 3391, the Medicare Regulatory and
Contracting Improvement Act. This included a number of
recommendations from the AHA's Regulatory Reform Task Force.
Thanks to your efforts and those of HHS Secretary Tommy
Thompson, we are making great progress in relieving some of the
regulatory burdens facing health care providers and Medicare
beneficiaries. I had the deep pleasure of serving on Secretary
Thompson's Advisory Committee on Regulatory Reform, a Committee
which the AHA fully supported. This provided the opportunity
for a firsthand look at the impact that the regulatory burden
has on patient care and beneficiaries.
The Committee's report to the Secretary included 255
detailed recommendations, some of which are currently being
implemented by CMS and HHS. A number of these were heartily
endorsed this AHA. Just to enumerate a few:
One, adopting recommendations on the Emergency Medical
Treatment and Active Labor Act (EMTALA), such as creating an
advisory committee and amending the local medical review policy
as it relates to emergency department services.
Two, streamlining the Minimum Data Set on OASIS, thus
reducing the amount of staff time spent on these assessments;
and, conversely, increasing the amount of time spent on patient
care.
Three, revising policy for collecting and using Medicare
Secondary Payer information.
Four, amending the HIPAA privacy rule and changing certain
consent regulations which would have hindered patient care.
Five, addressing key concerns of rural providers.
These revised policies are helping to alleviate the burden
on caregivers. Madam Chair, working with you and your
colleagues and the HHS, we can go further to reduce the red-
tape burden on caregivers while strengthening our basic health
care system.
We urge this body to consider the following additional
areas for regulatory reform:
First, reduce the size and complexity of the Medicare Cost
Report and modify or eliminate its Medicare cost-specific
accounting principles. The Cost Report is a relic of a bygone
era, used prior to the implementation of the current
Prospective Payment System (PPS).
Second, recognize that EMTALA should not apply to
inpatients. Once a person is admitted as an inpatient, the
hospital has actually taken on responsibility far more than is
required under EMTALA.
Third, allow providers direct access to court to challenge
decisions made by CMS. While I am not an attorney, I can tell
you that currently the only way to appeal decisions made by CMS
is to fail to follow the rules, become terminated from the
program, and then appeal to the courts for relief. No other
Federal agency operates in this manner.
Fourth, further simplify the data collection process that
uses the OASIS and MDS forms, and try to harmonize the forms so
that they can be used interchangeably between sites of service.
Fifth, establish commonsense guidelines for regulations.
Regulations should be clear, they should be unambiguous, and
they should be well documented. They should also enable better
communications between all parties involved--regulators, health
care providers and patients--and they should be cost effective.
Last, regulations and the related interpretive guidance
that often follows them should meet the following criteria.
They should establish a safe haven for innovation and encourage
the pursuit of excellence through best practices. They should
be applied prospectively with no disruption to patient care
activities, and they should include updated interpretive
guidance and CMS manuals which are updated on a commonsense
publication cycle.
Madam Chair, our first priority is to our patients. While
some regulations contribute to this goal, others drain away
much needed resources, placing a strain on our hospitals and
the men and women who work there. We believe the health care
field should be regulated, but in a commonsense fashion that
allows health care providers to do what they have been trained
to do: care for the ill and injured of our communities.
Thank you very much for your time today. On behalf of the
members of the American Hospital Association and its members,
we look forward to working with you and your colleagues further
to provide relief from regulatory burden.
[The prepared statement of Mr. Fay follows:]
Statement of Tony Fay, Vice President, Government Affairs, Province
Healthcare Company, Brentwood, Tennessee, on behalf of the American
Hospital Association
Good morning, Madam Chairman. I am Tony Fay, vice president of
government affairs for the Province Healthcare Company in Brentwood,
Tennessee. I am here today on behalf of the American Hospital
Association's (AHA) nearly 5,000 hospital, health system, network and
other health care provider members. We're pleased to be able to testify
on proposed regulatory relief and reforms for the health care field.
Province Healthcare owns and operates 20 acute-care hospitals in
non-urban markets in 13 states. We also provide management services to
36 primarily non-urban hospitals in 14 states. At Province, we are
committed to the development of hospitals and health care systems that
serve the unique needs of non-urban communities.
Regulatory Progress
Patients are the priority--no matter the time, no matter the
condition and no matter the hospital. Our facilities are open 24 hours
a day to provide health care services to our friends and neighbors in
the communities where we work and live.
But every time the nurses, physicians and other health care workers
care for a patient, a host of regulations and statutes govern their
very actions, especially if the patient is a Medicare or Medicaid
recipient. More than 30 agencies oversee some aspect of that health
care delivery process--and that's just at the federal level. State
agencies add yet another layer--or two. More than 130,000 pages govern
the Medicare system--a sheaf of paper three times larger than the IRS
Code and its federal tax regulations.
Unfortunately, these regulations and statutes do not always enhance
the patient care experience. In fact, quite the opposite. They absorb
valuable time and resources--time that could be spent caring for the
next patient to come through the emergency department doors.
We are gratified, Madam Chairman, that again this Congress, you and
your colleagues recognize this dilemma and are examining the regulatory
maze that health care providers face. During the 107th Congress, the
House unanimously passed H.R. 3391, the Medicare Regulatory and
Contracting Improvement Act, which included a number of regulatory
relief initiatives proposed by the AHA's own Regulatory Reform and
Relief Advisory Committee. While the Senate introduced similar
legislation, it did not pass.
HHS Advisory Committee on Regulatory Reform
But we're still a long way ahead of where we started, thanks in
part to you and your colleagues and the interest you've taken in an
issue that directly impacts our patients, and thanks in part to Health
and Human Services (HHS) Secretary Tommy Thompson and his own Advisory
Committee on Regulatory Reform.
His committee, on which I served, consisted of health care
professionals, academics and others committed to ensuring quality
patient care with less burdensome regulations. The AHA fully supported
this committee, and with our member hospitals, provided opportunities
for the Advisory Committee and HHS to see first-hand the consequences
of regulatory burden on patient care. The Advisory Committee's report
to Secretary Thompson included 255 recommendations, many of which were
adopted--some of which are currently being implemented. And a number of
these recommendations were heartily endorsed by the AHA, such as:
LAdopting recommendations on the Emergency Medical
Treatment and Labor Act (EMTALA), including establishing an
advisory committee and ensuring that local medical review
policies for outpatients services are not applied to emergency
department services.
LStreamlining the Minimum Data Set (MDS) for most
nursing homes by convincing the Centers for Medicare & Medicaid
Services (CMS) to reduce the size of the MDS, and thereby
reducing by half the staff time spent on completing it.
LConvincing CMS to streamline the OASIS form by
eliminating 27 percent of the information items currently
reported by home health agencies and two of the 10 assessments
currently required, reducing the time spent by nurses on OASIS
data reporting by 25 percent.
LUrging CMS to revise its policy for collection of
Medicare Secondary Payer information from every 30 days to
every 90 days for recurring outpatients services in hospitals,
and from every 60 days to every 90 days for hospitals serving
as reference labs.
LChanging the Health Information Portability and
Accessibility Act privacy rule so that patients will no longer
have to wait to receive care until a consent form is signed,
and providers will have ready access to needed patient
information in order to continue to provide timely, quality
care.
LAddressing key concerns of rural providers. The
committee recommended consolidating the definition of rural to
one definition. In the past, ``rural'' meant something
different for hospitals versus health clinics. The committee
also recommended focusing on investing in best practices, as
well as providing more information to rural providers about the
more than 200 HHS programs that affect rural communities and
their health care entities.
What Needs to Be Done
We've made great strides in addressing the burdens dealt with by
hospitals and caregivers every day. But by continuing the collaborative
working partnership between hospitals, HHS and Congress, we can make
even bigger strides to reduce the red-tape burden on caregivers and
strengthen our ability to continue providing the world class medical
care that is the hallmark of our health care system.
Specifically, we would urge you and your colleagues to examine
additional areas for reform.
LThe Medicare Cost Report--This is a relic of a
previous cost-based payment system, which was used prior to the
current prospective payment system. This should be evaluated
and overhauled to reduce its size and complexity, and modify or
eliminate the arcane Medicare-specific cost accounting
principles.
LEMTALA--We believe that EMTALA provisions should not
apply to inpatients. Congress enacted EMTALA to ensure that
people have access to emergency services regardless of their
ability to pay. Once a person is admitted as an inpatient, the
hospital has taken responsibility for more than is required
under EMTALA. At that point, the usual hospital-patient and
doctor-patient relationships exist, creating duties of care for
the hospital and physicians, and giving patients legal recourse
if those duties aren't met. In addition, keeping all hospital
staff current on EMTALA--not just the statute and formal
requirements, but the continually evolving informal guidance--
takes additional time away from providing direct patient care.
LAllow providers direct access to courts to challenge
decisions--Unlike other federal agencies, Medicare program
policy decisions made by the Secretary are insulated from
judicial review. Health care providers are required to exhaust
all administrative processes and remedies before they can file
suit against HHS. However, there is effectively no such process
to exhaust on questions about whether the Secretary has
exceeded his authority or failed in his duty.
LUnder Shalala v. Illinois Council on Long-Term Care, 120 S.
Ct. 1084 (2000), the Supreme Court held that all matters
arising under the Medicare Act must be channeled through the
Secretary and that court review was available only following
the administrative process. This continues to permit HHS to
rebuff any and all lawsuits against the Secretary for failing
to channel a claim, even when there is no administrative
process available. This means that the Secretary can act
outside the scope of his authority, without following required
procedures and be insulated from judicial review--unlike other
federal agencies.
The only time an administrative process is available to hospitals
is if they are terminated from the program. Consequently, as currently
interpreted, the only means for hospitals to challenge an unlawful
action by the Secretary is to fail to follow or ``violate'' the rules
in order to be terminated from the program.
LSimplify data collection process--Currently OASIS and
MDS use very similar data collection tools, but they are unable
to communicate with one another and share data.
LEstablish Guiding Principles for Regulation--
Regulation is essential to protecting patients and building
public trust and confidence in the system. But unnecessary,
poorly targeted or poorly implemented regulations may be of
little benefit to the public, often frustrates health care
providers and the patients they serve, and can even interfere
with appropriate care delivery. We would suggest that the
following be used as guiding principles for the promulgation of
health care regulation:
LThe need to regulate behavior and the underlying
objective of a regulation must be clear, unambiguous and well
documented. For hospitals, regulations should be used to
protect patients from harm, ensure that quality and other care
and safety standards are met, inform the public about their
care, prevent fraud and abuse, control expenditures under
government programs and ensure fair functioning of the market
for competing providers.
LRegulation should facilitate channels of
communication between regulators and providers, and
accountability of providers to their patients and communities.
LRegulation should be cost effective. It should be
linked to specific objectives and regularly assessed as to
whether it achieves its objectives; should be based on sound
scientific, technical, economic and other relevant information;
minimize the cost of compliance assessment for both the
regulated and regulators; and embody the greatest degree of
simplicity and understandability possible.
LRegulations should establish a safe haven for
innovation and encourage the pursuit of excellence through best
practices.
LRegulations should be applied prospectively and their
implementation appropriately staged to avoid disrupting patient
care activities, unnecessary costs and overwhelming
administrative functions and information systems.
LInterpretive guidance and CMS manuals should be kept
up to date and harmonized with underlying regulations. All too
often, the guidance and manuals are out of date and thus
present conflicting rules for providers and patients.
Conclusion
Our first priority is to provide high quality care to our patients.
While some regulations contribute to this goal, others drain away much
needed resources, placing a strain on our hospitals and the men and
women who work there.
We believe the health care field should be regulated--but in a
common sense fashion that allows health care providers to do what
they've been trained to do--care for the ill and injured of our
communities.
Thank you for your time today. On behalf of the American Hospital
Association and its members, we look forward to working with you and
your colleagues further to provide relief from overly burdensome
regulations.
Chairman JOHNSON. Thank you. Dr. Hill.
STATEMENT OF J. EDWARD HILL, M.D., CHAIRMAN, BOARD OF TRUSTEES,
AMERICAN MEDICAL ASSOCIATION
Dr. HILL. Good afternoon. My name is Edward Hill, and I am
Chair of the Board of Trustees of the American Medical
Association. I am a practicing family doctor in Tupelo,
Mississippi. Of course I am very pleased to be here.
I would like to thank Chairman Johnson and Ranking Member
Stark for all of their work on regulatory reform in the
Medicare program and for advancing the Medicare Regulatory and
Contracting Reform Act, MRCRA, last year. The AMA was a strong
supporter of that bill, and we believe that physicians still
need the regulatory relief in the MRCRA bill.
The AMA was pleased to participate in the HHS Regulatory
Reform task force headed by Dr. Wood also. We were very
supportive of his recommendations, especially those on EMTALA
and Evaluation and Management (E&M) documentation guidelines.
We also appreciated the efforts of the Physicians
Regulatory Initiative Team (PRIT). They have led to important
clarifications in CMS policy. For example, in my practice,
preoperative visits had been routinely denied prior to the PRIT
action. However, the AMA believes that regulatory reform as
outlined in MRCRA is still needed as many Medicare carriers
have not altered their overpayment audit practices relating to
extrapolation, to appeals, and to repayment schedules.
The AMA believes that the need to educate physicians has
not diminished since the House last considered MRCRA. The GAO
highlighted this problem in 2002. It found that contractors
gave inaccurate or incomplete answers 85 percent of the time,
and these were answers to frequently asked questions that were
posted on the carrier's Web site.
The AMA was pleased to learn about the new CMS carrier
manual changes on physician education. The new standards for
Web pages and frequently asked questions will be very useful.
We urge CMS and the Subcommittee to closely monitor whether
these changes are actually occurring. The CMS should also
incorporate these education requirements in its annual
evaluation of carriers. However, even with these changes,
physicians still cannot call their carriers with billing or
coding questions and receive clear, accurate, written answers
nor can physicians rely on live telephone conversations or
enhanced carrier Web sites when they are audited. Physicians
can face punitive overpayment demands even when they follow
carriers' advice.
The MRCRA would allow physicians to rely on carriers'
advice if they were audited. Physicians still need the
extrapolation reforms in MRCRA. The AMA believes that these
reforms have not occurred uniformly at the carrier level.
For example, carriers still use extrapolation to magnify
alleged overpayments. Problems found in a very small sample of
claims are extrapolated to all similar claims over a 1- to 2-
year period. This is not statistically valid, and it is often
the first indication that a physician has of a billing problem.
The MRCRA would have allowed CMS contractors to use
extrapolation only when there was a high error rate or when
documented education efforts had failed.
Administrator Scully testified last year that physicians
and providers should have the same rights as taxpayers when
they are audited by the Internal Revenue Service. That is, as
long as interest accrues, taxpayers do not repay alleged
overpayments that are on appeal. Unfortunately, at this point,
physicians do not have these rights. Currently physicians must
remit alleged overpayments within 30 days, even if they are
appealing an overpayment audit finding.
According to HHS statistics, it takes 3 years to get to the
highest administrative appeal level. The MRCRA would have
required payment of alleged overpayments after the first level
of appeal. This was a solid compromise between repayment after
all appeals are exhausted and the current situation where
physicians must remit all alleged overpayments prior to appeal.
Finally, CMS has withdrawn proposed E&M documentation
requirements. However, it is working with AMA and national
medical specialty organizations to develop clinical examples
and standards for new guidelines. As this progresses, any new
guideline must be tested to ensure their accuracy prior to
implementation. The MRCRA is needed to ensure that the
guidelines increase clinical pertinent documentation and
decrease irrelevant documentation.
The MRCRA would also establish pilot projects to test the
viability of the guidelines. It would ensure that a sufficient
number of physicians were participating in the pilot projects
by prohibiting audits that target those physicians.
So, we appreciate the Subcommittee's consideration of the
AMA's concern, and we appreciate your work on a number of
issues that have already improved patient access and quality of
care. We very much value the Subcommittee's work on regulatory
reform issues and CMS's efforts to improve physician education.
We believe, working together, we can ensure that physicians
obtain more complete due process rights and billing and coding
answers that can be relied upon. So, we thank you for your time
and particularly the time that the Subcommittee staff has
devoted to this issue. Thank you.
[The prepared statement of Dr. Hill follows:]
Statement of J. Edward Hill, M.D., Chairman, Board of Trustees,
American Medical Association
The American Medical Association (AMA) would like to thank the Ways
and Means Health Subcommittee, Chairwoman Johnson, and Ranking Member
Stark for holding this hearing on the continuing need for regulatory
reform in the Medicare program and the impact that certain burdensome
regulations are having on physician practices.
Background
The AMA is very appreciative of last year's findings by the
Secretary of Health and Human Services (HHS) Regulatory Reform Task
Force. We were pleased to participate in the Task Force's efforts, and
we were very supportive of its recommendations. In particular, HHS
adoption of the Task Force recommendations on EMTALA, evaluation and
management documentation guidelines, advance beneficiary notices and
communications with physicians and providers would significantly
decrease the regulatory burdens that physicians currently face. Even
before the Task Force report was finalized, the Centers for Medicare
and Medicaid Services (CMS) initiated several changes in the area of
simultaneous and continuous call for emergency care that the AMA had
strongly advocated, and we are awaiting publication of final
regulations to determine the extent to which EMTALA regulatory burdens
will be improved.
The AMA has also been pleased with several CMS-generated reforms
that have recently occurred. As a result of the Physicians Regulatory
Initiative Team (PRIT), CMS has lengthened the period of time before
prescriptions for diabetes tests strips must be renewed from six months
to one year. In addition, successful PRIT efforts resulted in CMS
clarifying its policies so carriers now know that preoperative
physician visits are covered under Medicare. These changes, while
seemingly minor, are decreasing the regulatory red tape for significant
numbers of chronically or acutely ill patients and for their
physicians.
At the same time, other significant areas remain where the AMA
believes that regulatory reform is still needed. In particular, the AMA
continues to hear from physicians regarding onerous audits and
overpayment demands. Many Medicare carriers simply have not altered
their overpayment audit practices related to extrapolation, appeals,
and repayments of alleged overpayments. For example, one nine-person
pathology practice continues to be subject to repeated audits of the
same surgical pathology service, even though the carrier has never
identified any billing errors or demanded overpayments. This practice
is considering discontinuing the provision of surgical pathology
consultation services to the hospital's Medicare patients, simply
because of the time, expense and hassle factor associated with these
audits. For the most recent of these audits, the carrier demanded
charts on 200 patients.
The AMA believes that enactment of the Medicare regulatory reform
bill that the House passed in both sessions of the 107th Congress would
impose uniform standards on carriers. Such standards would ensure that
physicians maintain due process rights during overpayment audits.
The AMA was a strong supporter of the ``Medicare Regulatory
Contracting Reform Act,'' (MRCRA), and we very much appreciate the work
of this Subcommittee and in particular Chairwoman Johnson's and Ranking
Member Stark's efforts in advancing MRCRA. Indeed, the House approved
the MRCRA provisions twice, and we strongly urge it to do so again this
year either separately or as part of overall Medicare reform.
Education
The AMA believes that a pressing need to educate physicians exists
which has not decreased since the House of Representatives last
considered MRCRA. This education deficiency was detailed in the
February 2002 General Accounting Office (GAO) report ``Medicare:
Communications with Physicians Can Be Improved,'' which found that when
GAO called contractors (callers identified themselves as calling from
the GAO), contractor employees gave inaccurate or incomplete answers to
questions 85% of the time. GAO further reported that these questions
had been previously identified by the contractors as ``frequently asked
questions'' and posted on the carriers' Web sites.
In its report to this Committee a year ago, the GAO also noted that
CMS defined an accurate response as being any response that was not
inaccurate. In other words, as long as the carrier did not provide the
wrong information to the questioner, the response was considered
``accurate,'' even if the carrier did not provide necessary and
complete information to allow correct billing. To exacerbate matters,
the carriers would not give physicians written answers to their billing
and coding questions, even though answers given via the telephone were
often incorrect. The GAO report stated:
Information given to physicians by carriers is often
difficult to use, out of date, inaccurate, and incomplete.
Medicare bulletins that carriers use as the primary means of
communicating with physicians are often poorly organized and
contain dense legal language . . . Although CMS is tasked with
assuring that carriers are responsive to physicians, the agency
has established few standards for carriers to meet in their
physician communications activities. CMS provides little
technical assistance to help carriers develop effective
communication strategies.
CMS has taken certain steps to improve its communications with
physicians. In this regard, the AMA was very pleased to learn that CMS
issued carrier manual changes on January 24, 2003, on Provider/Supplier
Education and Training. These strong measures have the potential to
significantly improve carriers' communications with physicians. The
carrier manual standards related to web page content and frequently
asked questions are very strong and will be helpful to physicians
seeking information. However, the AMA urges CMS and the Subcommittee to
monitor closely the carriers' abilities to effectively complete these
new functions without commensurate funding increases. In addition, the
AMA strongly urges CMS to incorporate implementation of these education
requirements in its annual evaluation of carrier performance.
Despite the improvements made by the carrier manual, physicians are
still not able to call their carriers with billing or coding questions
and be assured that they will receive clear, concise and accurate
answers, or written answers. Nor does it allow them to rely on answers
generated by live telephone conversations or through the enhanced
carrier Web sites when they are audited. Physicians have expressed
concern that they face punitive overpayment demands even when they
adhere to advice given to them by their carriers, and that carrier
personnel are unwilling to provide their names so that physicians can
contact them to follow-up on information that has been provided. MRCRA
would have allowed this type of reliance, which the AMA believes is
essential for physicians seeking to treat Medicare patients.
Extrapolation
Physicians are still in need of the extrapolation reforms that
MRCRA offered, and the AMA believes that these reforms have not
occurred uniformly at the carrier level. Although GAO reported in May
2002 on a study of three carriers' auditing practices, and found that
they had decreased dramatically their use of extrapolation due to CMS'
Progressive Corrective Action Plan, this reduction has not been
uniform, permanent, nor has it occurred at the consent settlement
level. In consent settlements, carriers continue to use
``extrapolation'' to magnify the alleged overpayments found in a very
small probe sample of claims to all of these type of claims submitted
by a physician or provider of services over a one-to-two year period.
This technique lacks any semblance of statistical validity, but it can
lead to overpayment demands in the hundreds of thousands of dollars.
Even more egregious, the letter demanding repayment of these huge sums
is often the first indication physicians have that there are problems
with their billing practices. MRCRA would have remedied this situation
by allowing CMS contractors to use extrapolation to project an
overpayment only in instances where there was a high error rate or
where documented education efforts had failed. The AMA was gratified
that the House recognized that carriers' use of extrapolation was a
serious problem, and we urge the Subcommittee to address these
extrapolation issues through legislation.
Repayment Plans
CMS has not instituted changes that would establish uniform
repayment plans for physicians. Currently, carriers require complete
repayment of alleged overpayments by physicians within 30 days unless
physicians demonstrate that immediate repayment would create financial
hardship. Demonstrating hardship often involves showing that the
practice has no access to the money and cannot borrow it. Anyone who
has applied for a loan is likely to understand how difficult it can be
to complete an application, assemble the requisite documentation, and
attempt to get a ``yes'' or ``no'' answer from the bank within 30 days.
Carrier overpayment demands for almost immediate repayment have
harmed certain physician practices' viability, resulting in them being
unable to provide an adequate level of service to their patients. The
AMA urges the Subcommittee to consider provisions to ensure that if the
overpayment represents more than ten percent of the physician's
Medicare revenue, then the physician would be able to repay the program
over a three-year period. When alleged overpayments represent a high
proportion of practice revenues, immediate repayment demands can pose a
major economic hardship to the practice.
Evaluation and Management (E&M) Documentation Guidelines
Although CMS has withdrawn proposed documentation requirements, it
is currently working with the AMA and national medical specialty
organizations to develop new clinical examples and standards for new
guidelines. As this process progresses, any new proposed guidelines
must be tested to ensure their accuracy prior to national
implementation. The AMA believes that legislation like MRCRA is needed
to establish that the guidelines must meet important objectives, such
as increasing clinically pertinent documentation and decreasing
irrelevant documentation, and to establish pilot projects to test the
viability of any proposed evaluation and management documentation
guidelines. In addition, MRCRA would have also ensured that a
sufficient number of physicians participated in the pilot projects by
prohibiting audits for documentation that occurred as part of the pilot
project.
Consent Settlements--Due Process
Carriers continue to employ the consent settlement process which
does not permit physicians to contest the validity of a probe sample
without being forced to submit to a statistically valid random sample
(SVRS) of 200-400 claims, which is very disruptive to a physician
practice. CMS has indicated that 90 percent of settlement offers are
accepted. The AMA believes that this high acceptance rate is not a true
measure of ``consent,'' but instead is evidence that the only other
options available to physicians are even more onerous than repaying the
large sums that are often demanded. Physicians should not be forced to
agree to an SVRS in order to maintain their appeal rights. Physicians
should be permitted to submit additional justifications of billing
claims and to engage in constructive discussions with their carriers to
argue that an initial overpayment allegation is incorrect. If the
physician decides not to submit justifications for a claim, then he or
she would either have to pay the alleged projected overpayment or agree
to an SVRS. This ability to justify the claim is an essential due
process right that should be afforded to physicians--especially in
light of the probe sample's use in determining projected overpayments.
Repayment During Appeals
Currently, physicians must remit alleged overpayments in full
within 30 days even if they are in the process of appealing an
overpayment audit finding. The AMA strongly supported the
Subcommittee's efforts to permit physicians, providers of services, and
suppliers to repay an alleged overpayment after a reconsideration has
occurred. Administrative law judge (ALJ) decisions took an average of
389 days in the first quarter of 2001 and departmental appeals board
decisions (DAB) took an average of 661 days to complete. If the
physician, provider of services, or supplier is successful at the DAB
level, it is likely that three years have elapsed since the physician's
payment of an alleged overpayment to the CMS contractor. MRCRA was a
solid compromise between not requiring repayment until all appeals were
exhausted and the current untenable situation where physicians must
remit all overpayments prior to appealing a finding.
CMS Administrator Scully testified last year that physicians,
providers of services, and suppliers should have the same rights that
taxpayers have when they are audited by the IRS; that is, as long as
interest accrues, taxpayers do not have to repay alleged overpayments
while administrative appeals are pending. Unfortunately, at this point,
physicians do not have the same rights as taxpayers when they are faced
with an IRS fine, but are forced to repay alleged overpayments within
30 days.
Provider Enrollment
Under current law, physicians, providers of services, and suppliers
cannot appeal a contractor's decision to deny or revoke a Medicare
provider number. For most health care practitioners, the denial or
revocation of a provider number is an extremely serious occurrence that
prohibits them from submitting any claims for reimbursement to the
Medicare program. Physicians can request that the carrier reconsider
their application, and then can request a hearing by an entity or
person appointed by the Secretary of the Department of Health and Human
Services, but beyond this level, there is no recourse.
This issue may be further exacerbated by the new requirement that
CMS has instituted (without a public notice and comment period) that
contractors must revalidate enrollment information every three years.
As contractors have been given neither uniform standards nor funding to
conduct these revalidations, this could lead to an avalanche of
experienced physicians and providers being suddenly rejected from the
Medicare program.
Additional Provisions
The Secretary has not, at this point, established standards for
random prepayment audits, as would have been required under MRCRA.
MRCRA's proposed standardization of random prepayment audits would have
ensured that contractors no longer have unlimited discretion as to the
circumstances that would trigger random prepayment audits. Under the
bill, prepayment audits would have had defined endpoints, instead of
placing an enormous strain on practices' cash flow as claims are held
up for payment while audits continue. Without the legislation, there
are no existing procedures to remove physicians from prepayment review
once their billing practices are sufficiently compliant with Medicare
policies.
The AMA also appreciates the additional resources that MRCRA would
have directed towards administrative law judges. This funding would
have increased the number of administrative law judges and improved
education and training opportunities for the judges and their staffs.
None of this has occurred.
Within the context of contractor reform, we are concerned that CMS
is reducing its reliance on the services of carrier medical directors.
In particular, the Arkansas carrier has decided that the Louisiana
medical carrier will serve not only as the medical director for
Louisiana, but also for Oklahoma and New Mexico (aforementioned states
are under the Arkansas carrier's purview). The Arkansas carrier's
medical director will be serving in this capacity for both Arkansas and
Missouri.
The AMA believes that each state should have the benefit of a
state-specific, full-time medical director. As we stated in a letter
co-signed by over 130 national and state medical organizations, ``A
single carrier medical director (CMD) serving multiple states
undermines the effectiveness of the CMD . . . and CMDs provide unique
access to the local physician community that is difficult, if not
impossible, to replace by contractor non-physician personnel.''
We appreciate the Subcommittee's consideration of the AMA's
concerns. We very much value the Subcommittee's work on regulatory
reform issues and the efforts that CMS has undertaken to improve
physician education. However, the AMA believes that we can work
together to ensure that physicians obtain more complete due process
rights and billing and coding answers that can be relied upon by the
physician. We thank you for the time that your Subcommittee, and
particularly, the Subcommittee staff has devoted to this issue.
Chairman JOHNSON. Thank you very much. Ms. Wolf.
STATEMENT OF JANET B. WOLF, PRESIDENT, MUNSON HOME HEALTH,
TRAVERSE CITY, MICHIGAN, AND PAST PRESIDENT, BOARD OF
DIRECTORS, MICHIGAN HOME HEALTH ASSOCIATION, OKEMOS, MICHIGAN,
ON BEHALF OF THE NATIONAL ASSOCIATION FOR HOME CARE & HOSPICE
Ms. WOLF. Thank you, Madam Chair, Representative Stark, and
Subcommittee Members for inviting me to testify on the value of
Medicare regulatory reform to beneficiaries and providers. My
name is Janet Wolf. I am president of Munson Home Health, a
not-for-profit subsidiary of Munson Health Care, a northern
Michigan health system based in Traverse City. Munson Home
Health provides services to 32 rural counties.
Madam Chair and Members of the Subcommittee, you are to be
commended for developing H.R. 3391 that unanimously passed the
House. Unfortunately, it did not become law. Once again, you
are taking a leadership role in redrafting and advancing new
legislation to simplify the highly regulated and often
burdensome Medicare program.
As a home care provider, I join the Munson Home Health
Association (MHHA) and the National Association for Home Care
(NAHC) in supporting the provisions of your bill to prohibit
retroactive application of substantive changes in regulations
or policies, extend protection against compliance actions
related to changes until 30 days after the change is issued,
protect providers against sanction in cases where they have
followed written guidance from a Medicare contractor, improve
Medicare contractor compliance, improve provider education, and
establish a provider ombudsman.
Regarding Medicare appeal reform, NAHC strongly supports
many of the modifications to the Medicare appeals process as
set out in BIPA. The NAHC submitted extensive comments in
response to that proposal. For the Committee's reference, a
copy of those comments is attached.
Recommendations include preserving the independence of the
ALJs, ensuring a speedy appeal process, ensuring that recovery
of overpayments is not initiated before the conclusion of the
first step in the appeal process.
In reference to recovery of overpayments, we would like to
recommend that the Subcommittee protect providers from
retroactive overpayment recovery when the overpayment is caused
by administrative action more than 1 year previous, and include
consideration for extended repayments under hardship criteria
standards, such as no greater than 10 percent of the Medicare
revenue per year, and permit minor errors or omissions to be
corrected without formal appeals process.
Concerning the issue of flexibility in applying the
Medicare conditions of participation (COPs), NACH recommends
the Subcommittee consider three potential approaches to this
overregulation:
One, amend Medicare law to clearly provide that the COPs
apply only to Medicare patients.
Two, instruct the Secretary of HHS to take steps to tailor
the COPs to the various type of patients served by a home
health agency distinguishing the Medicare-type patients from
those receiving just personal care or private duty shift
nursing service.
Third, support enactment of a provision that would allow a
home health agency to operate with several internal divisions,
with Medicare certification applying to distinctly designated
divisions, similar to the process used in nursing facilities.
The broad-based application of the Medicare COPs to all
patients creates extra cost, bureaucracy, and paperwork burdens
and ultimately we all pay for these costs.
Madam Chair and Subcommittee Members, with regards to
OASIS, over the last couple of years, NACH has been actively
engaged in pursuing the streamlining and reduction of the OASIS
instrument through the submission of testimony and
recommendations to this Subcommittee, as well as working with
the HHS Secretary's Advisory Committee on Regulatory Reform and
with CMS Administrator Tom Scully.
Most of this effort was triggered by this Subcommittee's
encouragement to CMS. I refer you to attachment 2 for more
details.
In December 2002, several of these changes were implemented
by CMS, including elimination of 2 of the OASIS collection time
points and 17 data items. This is a good beginning. We have
listed 15 of the Secretary's Advisory Committee recommendations
in the testimony. Many of these recommendations, however, have
not been implemented.
Madam Chair, we support these recommendations and ask that
the Subcommittee intervene in this process and press for full
and immediate implementation. While there is industry-wide
support for an outcome-based assessment, home care agencies
have consistently requested that CMS eliminate the nonessential
and redundant OASIS components. OASIS must be quickly
streamlined to reduce agency costs and improve staff
satisfaction.
The OASIS continues to be the number one reason for nurses
leaving the home health setting and the only reason nurses
leave my agency. This is also a major problem for patients.
The NAHC recommends that the Subcommittee also instruct the
Secretary to implement nine additional items for OASIS
simplification. You can see these in your testimony, and I
welcome questions on why any of them are important.
Finally regarding hospice regulatory reform, we urge you to
direct CMS to move forward and publish the conditions of
participation through a notice of proposed rulemaking. The
hospice conditions have not been updated since 1983.
In closing, I cannot thank you enough, Madam Chair, for
your longstanding efforts on behalf of our Nation's home health
providers and the patients and families they serve.
This concludes my formal remarks, but I would be happy to
answer any questions.
[The prepared statement of Ms. Wolf follows:]
Statement of Janet B. Wolf, President, Munson Home Health, Traverse
City, Michigan, and Past President, Board of Directors, Michigan Home
Health Association, Okemos, Michigan, on behalf of the National
Association for Home Care & Hospice
Thank you, Madame Chairman, Representative Stark, and Subcommittee
members, for inviting me to present testimony on ways to bring
regulatory relief to beneficiaries and providers, and specifically to
discuss the many benefits that would result from enactment of Medicare
regulatory reform legislation. My name is Janet Wolf. I am President of
Munson Home Health, a not-for-profit subsidiary of Munson Healthcare, a
northern Michigan health system based in Traverse City. Munson Home
Health provides services in 32 rural (non-MSA) counties. I am also the
Past President of the Board of Directors of the Michigan Home Health
Association (MHHA), a voice for home care in Michigan, and a member of
the National Association for Home Care and Hospice (NAHC).
NAHC is the largest national organization representing home health
care providers, hospices, and home care aide organizations. Among the
nearly 6,000 organizations NAHC represents are every type of home care
agency, including nonprofit agencies like the VNA, for-profit chains,
public and hospital-based agencies, and free-standing agencies. MHHA
represents some 300 providers including Medicare-certified home health
agencies, hospice agencies, private-duty provider organizations, home
medical equipment and pharmacy infusion providers in Michigan.
In September 2001, NAHC had the honor of being called before this
panel to provide testimony on a number of the regulations and policies
that impact a provider's ability to deliver high-quality patient care
in an efficient manner. We are pleased to be back here today to
personally extend our most sincere thanks for the many efforts that
you, members of this Subcommittee, your staff, and others have made to
ease burdens on home care and other providers.
Madame Chairman, you and all of the members of the Subcommittee
particularly, are to be commended for developing HR 3391, the
``Medicare Regulatory and Contracting Reform Act of 2001.'' In 2001,
this bipartisan legislation unanimously passed the House 408-0.
Unfortunately, there was no action by the Senate to conference the
differences between their bill and your unified House bill--HR 3391. We
are glad that you are once again taking a leadership role in redrafting
and advancing new legislation to simplify the highly regulated and
often burdensome Medicare program. Medicare regulatory reform
legislation will go a long way toward easing the impact of some of the
most troublesome policies of the Medicare program. In reviewing HR
3391, you have included a number of provisions that address specific
problems that hospices and home health agencies have struggled with in
recent years, including:
New Requirements for Regulatory and Policy Issuances
Among the changes that would have been enacted as part of HR 3391,
you have included several provisions related to regulatory or policy
issuances that will be of tremendous help to providers. First, the
legislation prohibits any provision published in a final regulation
that is not a logical outgrowth of the proposed regulation from taking
effect until after appropriate opportunity for public comment.
Additionally, your bill generally prohibits retroactive application of
substantive changes in regulations or other policies, and extends
protection against compliance actions relative to the change until 30
days after issuance of the change. Home care has faced great
difficulties in the past with policy issued with retroactive impact,
such as the revision in standards for allowable branch offices. The
bill should prevent this in the future.
The bill also protects providers against sanction in cases where
they have followed written guidance from one of Medicare's contractors.
Home health agencies have followed written guidance from intermediaries
on cost reporting only to find the intermediary later rejecting its own
approval. This has led to unfounded allegations of overpayments. NAHC
is appreciative of your actions with respect to this particular
provision in clarifying what constitutes a sanction. We are pleased
that providers shall not be subject to any sanction, including any
penalty or requirement for repayment of any amount if the provider
received and relied on written guidance from the intermediary.
Contractor Accountability
NAHC applauds your efforts as part of HR 3391 to improve Medicare
contractor compliance and accountability through development of
specific performance measures. We also believe that the emphasis you
have placed on provider education is a sound foundation for improved
provider relations with the contractors and greater understanding of
the Medicare program. Of particular note is the bill's provision for
technical assistance and program information to providers as one of the
contractors' key functions. The availability of program information is
so vital to the ability of providers to operate in compliance with the
program that NAHC recommends inclusion of a similar provision
applicable to Medicare's contractors for survey and certification, the
state survey offices. An educational role for state survey offices is a
key way to secure quality of care for patients.
Section 302 of HR 3391 establishes a Small Provider Technical
Assistance Demonstration Program. We believe that this is an excellent
approach for evaluating billing and other practices of small providers
to ensure compliance with Medicare law. As you know, Madame Chairman
and members of the Subcommittee, the vast majority of home health
agencies and hospices are small businesses that could greatly benefit
from participation in such a demonstration. We support this effort
wholeheartedly.
Medicare Provider Ombudsman
Your establishment, under Section 303, of a Medicare Provider
Ombudsman is a concept that NAHC has long advocated, and is very much
in keeping with the spirit of your efforts and those of others who are
working to ease regulatory burdens.
Medicare Appeal Reform
NAHC strongly supports many of the modifications to the Medicare
appeals process as set out in the Medicare, Medicaid, and SCHIP
Benefits Improvement and Protection Act of 2000 (BIPA) and in Title IV
of HR 3391. Currently, the Centers for Medicare and Medicaid Services
(CMS) have issued proposed rules to implement the BIPA provisions. NAHC
submitted extensive comments in response to that proposal. For the
Committee's reference, a copy of these comments is attached (Attachment
1).
In considering further refinements on Medicare appeals, NAHC
suggests that the Committee consider three goals in that reform. First,
the independence of the administrative law judges (ALJ) that preside
over fair hearings should be preserved. Of particular concern is the
proposal by CMS to require ALJs to abide by informal policy guidelines
unless the ALJ can explain why those guidelines should not be followed.
These guidelines do not have the force and effect of law and should not
be afforded presumptive validity. Second, it is crucial that the
appeals process operate within reasonable and structured time deadlines
as current delays may often mean that the appeals process survives
longer than the patient or provider. Third, the Subcommittee should
preserve the non-adversarial nature of the appeals process. CMS
proposes to allow its contractors to act as parties in the appeals
process with full rights to be represented by counsel, present evidence
and argument, and pursue further appeals. In many of the administrative
appeals, the cost of such action would outweigh the value of the matter
in controversy.
Recommendations
1. Congress should ensure that the independence of ALJs is
maintained.
2. Congress should ensure that there is a speedy appeals
process.
3. Congress should prohibit the institution of an adversarial
appeals process.
Recovery of Overpayments and Prepayment Review
In Section 405 of HR 3391, several protections were made available
to providers of health services under Medicare in relation to the
recovery of overpayments. NAHC strongly supported the efforts to
establish these protections. In particular, the amendment that would
prohibit any recoupment of an overpayment until after a decision had
been rendered through the first step in the appeals process provided a
reasonable mechanism to insulate providers of services from wrongful
payment recoveries. Under the home health and hospice programs, many
denied claims are reversed on appeal. By delaying any recoupment until
after the close of the first appeals step, providers of services can
avoid unnecessary financial jeopardy where there is an error in the
overpayment determination.
The bill also appears to limit the postponement of the overpayment
recovery to circumstances where the provider has initiated the appeal.
While providers are afforded improved appeal rights under the pending
CMS proposal, currently a provider does not have a direct appeal right
and must proceed as the beneficiary's representative in order to have
the dispute reviewed. For example, a claim denial based on an alleged
failure to submit a document can only be appealed by the beneficiary
even though the provider suffers the financial consequences. We would
suggest that the language of this provision be modified to provide the
pre-recovery protection in all instances where the issue in dispute is
under appeal.
HR 3391 also established standards for the approval of an extended
repayment plan on overpayments allowing for up to three years for
repayment in cases of hardship and up to five years for circumstances
involving an extreme hardship. Home health agencies are just now
completing repayment of the significant amounts of money that the
Medicare program considered an overpayment under the former
reimbursement system known as the Interim Payment System (IPS). During
that recovery action, it became apparent that even a 36-month repayment
plan was too short a time if home health agencies were expected to
continue access to care. Last year's legislative proposal would have
helped home health agencies to secure further needed protection. NAHC
encourages the Subcommittee to continue support for this necessary
improvement in Medicare administration. At the same time, we strongly
recommend that the definition of ``hardship'' be amended. The bright
line test for ``hardship'' to qualify for a repayment plan is set at 10
percent of the provider's Medicare income. While that standard may make
it administratively simple to apply, it does not adequately address the
financial jeopardy faced by home health agencies and hospices with
overpayment obligations at less than 10 percent. With most of the cost
of delivery of home health and hospice services related to labor,
immediate repayment of an overpayment at a level less than 10 percent
would have significant impact on cash flow and wage payment
obligations. We would urge that some discretionary authority be
extended so that special circumstances are considered as exceptions to
that rule.
Under the Subcommittee's bill, Medicare contractors would be
permitted to request the periodic production of records or supporting
documentation for a limited sample of submitted claims to ensure that
the previous practice is not continuing. Madame Chairman, the
duplication of records can be costly and time consuming. It is our hope
that this particular provision was designed to encourage contractors to
limit their requests to what is absolutely necessary, rather than to
affirm some of the contractors' current practices.
Use of statistical sampling by Medicare's contractors has been a
significant problem for home health agencies at times, and we applaud
your efforts to limit its use only to cases in which there is a
sustained or high level of payment error or where documented
educational interventions have failed to correct the payment error.
This should ensure that sampling is used only in appropriate
circumstances.
We would urge the Subcommittee to include an additional provision
in its regulatory reform proposal. That provision would provide
protection to health care providers where the ``overpayment'' relates
to an error in the administration of the Medicare benefits by the
Medicare program itself. Currently, home health agencies are facing a
liability of an unknown amount as a result of Medicare's inability to
appropriately process a Medicare home health PPS claim. Specifically,
Medicare home health PPS rules require a payment adjustment when a
patient is admitted to another home health agency or readmitted to the
same home health agency within the 60-day episode period following a
discharge. The payment adjustment involves a ``partial episode
payment'' adjustment for the first episode of care within the 60-day
period. CMS determined over a year ago that its system failed to make
these payment adjustments from the beginning of home health PPS,
October 1, 2000, for many partial episodes. Home health agencies were
unable to account for many of these adjustments since they were unable
to track an individual's post discharge home health services provided
by a different agency. Furthermore, even when providers became aware of
the need for adjustments, they were unable to submit corrected claims
due to system problems. CMS now intends to retroactively make
significant payment adjustments.
NAHC recommends that the Subcommittee include legislation that
would limit the ability of CMS to institute retroactive payment
adjustments on any claims from more than one year previous. Providers
cannot maintain financial integrity by carrying a financial liability
of an unknown amount from one fiscal year into another. Equities
dictate that providers of services should be held harmless for payment
process errors of CMS that extend over a long period of time.
Recommendations
1. LCongress should enact overpayment recovery process
protections as set out in HR 3391 with modification to address
providers with overpayments equal to less than 10 percent of
total Medicare annual revenue.
2. LCongress should enact a provision to protect providers of
services from retroactive payment recovery when the overpayment
is caused by an error of the Medicare administration and the
error involves an action from more than one year previous.
Ability to Correct Minor Errors and Omissions on Claims
Section 407 of HR 3391 establishes a process for correction of
minor errors and omissions on claims without pursuing an appeals
process. The vast majority of home health and hospice claims that are
denied are rejected because they do not meet one or more of the
technical requirements set out by the Medicare program. Under current
practice, if an agency fails to meet a technical requirement in
developing and filing claims--examples of which are failure to record
the verbal order date on the plan of care, secure physicians'
signatures on all verbal orders prior to billing (including minor
treatment changes), or date the receipt of signed orders if the
physician has not dated his or her signature--the claim is denied and
the agency's only recourse is to undergo a costly and lengthy appeals
process. This can delay payment to the agency for up to a year and a
half, and unnecessarily burden providers and intermediaries. Your
legislation would address this long-standing problem by establishing a
process under which health care providers would be given an opportunity
to correct these minor errors or omissions without having to initiate
an appeal. We consider this change in the law as a significant advance
for providers, patients, and the Medicare program that will achieve
great savings while providing timely Medicare payment for necessary
care.
LProvide Flexibility in the Application of Medicare Conditions of
Participation to Non-Medicare Patients
CMS, and its predecessor, the Health Care Financing Administration,
has long held to the position that the Conditions of Participation for
Medicare home health agencies should apply equally to all patients
served by the home health agency regardless of payor source or the
nature of services provided. This position has failed to address the
wide variation in home care services provided to individuals served by
a home health agency. The range of services may begin with personal
care and homemaker services and extend to high tech infusion therapy
and private duty nursing for technologically dependent patients. The
Medicare Conditions of Participation are designed around the concepts
within the Medicare home health benefit that focus on part-time or
intermittent services for patients requiring skilled care while
confined to the home.
NAHC recommends that the Subcommittee consider three potential
approaches to this over-regulation.
1. LAmend Medicare law to clearly provide that the Conditions
of Participation apply only to Medicare patients. It should be
noted that Medicaid home health services must be provided by a
provider that meets the Conditions of Participation under
Medicare.
2. LInstruct the Secretary of HHS to take steps to tailor the
Conditions of Participation to the various types of patients
served by a home health agency distinguishing the Medicare-type
patient from those patients receiving personal care only or
private-duty-shift nursing services.
3. LSupport the enactment of a provision that would allow a
home health agency to operate with several internal divisions
with Medicare certification applying to distinctly designated
divisions. This approach would mirror that allowed for nursing
facilities where distinct part Medicare certification is
permitted. Currently, CMS allows for a home care organization
to operate with separate home care entities if such elements as
separate incorporation, separate staff, and separate consumer
identity are established. These separations should be
unnecessary.
The broad-based application of Medicare Conditions of Participation
to all patients of a home care organization creates needless cost,
administrative bureaucracy, and unjustifiable paperwork burdens.
Ultimately, these costs are absorbed by individual patients, Medicare,
and non-Medicare payors of service.
The Outcome and Assessment Information Set (OASIS)
Over the last couple of years, NAHC has been actively engaged in
pursuing the streamlining and reduction of the OASIS instrument through
the submission of testimony and recommendations to this Subcommittee,
as well as working with the Department of Health and Human Services'
Secretary's Advisory Committee on Regulatory Reform and with CMS
Administrator Tom Scully (Attachment 2). Much of this effort was
triggered by this Subcommittee's encouragements to CMS. I am pleased to
report that the Secretary's Advisory Committee has recently submitted
recommendations to not only reduce regulatory burdens on home health
and hospice providers but has also provided recommendations to
streamline and modernize OASIS. The following recommendations were
adopted by the Secretary's Advisory Committee.
1. LExpand the time for completion of the OASIS instrument,
from 5 days to 7 days. Has not been implemented by CMS.
2. LChange the lock-in time for the OASIS instrument, from 7
days to 14 days. Has not been implemented by CMS.
3. LDelete elements that are duplicative or not used for
payment, outcome, quality management, or survey purposes. CMS
should particularly scrutinize data elements, MO190, MO340,
MO640-680, and MO780. Has been partially implemented by CMS.
4. LEliminate separate forms for significant change in
condition when it occurs in the five-day window of the follow
up assessment. Has not been implemented by CMS.
5. LEliminate OASIS encounters that are not used for payment,
outcome quality management, or survey purposes. Has been
partially implemented by CMS.
6. LCreate the option to use one form for all situations of
care or change in status. Has not been implemented by CMS.
7. LShare OASIS risk-adjustment methodology with all users.
Make the information available on the CMS website. Has not been
implemented by CMS.
8. LProvide access to the studies on the validity of OASIS
data, adverse event measurements, and OASIS quality and
outcomes. Has been implemented by CMS.
9. LEnsure data collection efforts facilitate the development
of care plans. Has not been implemented by CMS.
10. LConsider the impact of the Health Insurance Portability
and Accountability Act (HIPAA) on home health agencies with
respect to the timing of any changes to OASIS. Will require
ongoing oversight by CMS.
11. LAdopt a continuous quality improvement process to keep
OASIS current with medical practice and changing delivery
systems. CMS has organized a 3-year technical expert panel for
this purpose.
12. LEstablish a scientific and technical advisory panel to
guide OASIS use (measure work-ups, interpretation of data
quality, interpretation of results, quality reporting, and
assessment of need for new measures). CMS has selected members
to serve on the technical advisory panel.
13. LConduct field tests of new OASIS measures before they are
put into use. CMS has added one new OASIS measure for HIPAA
compliance but it has not been tested.
14. LClarify the definition of ``significant change.'' Consider
using re-hospitalization as a proxy for ``significant change.''
Has not been implemented by CMS.
15. LConduct an independent evaluation of the cost-benefit of
using the OASIS form. Has not been implemented by CMS.
As of December 2002, CMS implemented a few changes aimed at
decreasing the burden of OASIS data collection. These changes included
elimination of two OASIS collection time points and seventeen data
items. Thirteen of the seventeen data items consist of demographic
information which have been moved to a ``tracking sheet'' to be
completed by agency office staff. NAHC sees these changes as an
excellent first step in the OASIS streamlining process and will
continue to work with CMS to promote adoption of additional refinements
to reduce OASIS items that are unnecessary for quality outcomes or for
payment purposes.
Madame Chairman, we also support the Secretary's Advisory
Committee's recommendations and ask that the Subcommittee intervene in
this process and press for full and immediate implementation. While
there is industry-wide support for an outcome-based assessment, home
care agencies have consistently requested that CMS eliminate the non-
essential and redundant OASIS components and requirements. OASIS must
be quickly streamlined to reduce agency costs, increase direct patient
care time, and improve staff satisfaction. OASIS continues to be the
number one reason for nurses leaving the home health setting.
NAHC also recommends that the Subcommittee instruct the Secretary
to immediately implement the following additional items for OASIS
simplification. These recommendations can be implemented by policy
changes or incorporated into the soon-to-be-published Conditions of
Participation.
1. LAmend the Medicare Conditions of Participation for Home
Health and eliminate the requirement to collect OASIS data for
skilled non-Medicare patients and non-Medicaid patients because
this data is not being submitted to the CMS data repository for
outcome measures.
2. LInstruct the Secretary of HHS to take steps to make OASIS
electronic program specifications and the risk adjustment
methodology available to the public.
3. LRequest that CMS lengthen the definition for ``inpatient
stay'' from 24 hours to 72 hours.
4. LRequest that CMS move to expand the time for completion of
the OASIS instrument from 5 days to 7-10 days.
5. LInstruct CMS to change the lock-in time for the OASIS
instrument from 7 days to 14 days.
6. LInstruct CMS to widen the recertification window from 5
days to 7-10 days, allowing for greater flexibility for agency
scheduling the OASIS assessment during a scheduled patient
visit.
7. LInstruct CMS to eliminate the SCIC assessments since they
are not used for any outcome measurements and unfairly penalize
providers when exclusively used for payment purposes.
8. LRequest that CMS only use the 23 payment questions along
with an agency assessment form for all LUPA episodes, including
one-time-only Medicare visits.
9. LEliminate the requirement that an RN must complete the SOC
assessment in all instances where RN services are not the
primary service ordered.
Hospice Regulatory Reform
Madame Chairman and members of the Subcommittee, the hospice
conditions of participation have not been updated since 1983. In 1995,
CMS began the process of drafting new language that would streamline
the Conditions of Participation. We urge you to direct CMS to move
forward and publish the Conditions of Participation through a Notice of
Proposed Rulemaking. Furthermore, we would also request that you
consider a couple of regulatory changes that would help to simplify the
Medicare hospice program. We are supportive of the provision within
Title VIII Subtitle E--Miscellaneous Provisions, Section 846 of HR
4954, the ``Medicare Modernization and Prescription Drug Act of 2002,''
which authorizes the use of arrangements with other hospice programs to
provide core hospice services. This provision provides the flexibility
needed to allow hospices to contract with other hospices during periods
of high patient loads, staffing shortages, or temporary travel of a
patient outside of the primary service area of their hospice. We
suggest that you go one step further and allow hospices to make
arrangements for highly-specialized clinical services. In the best
interest of patient care, it is sometimes appropriate for hospices to
utilize high technology treatments to achieve efficient and effective
pain management. Some high-technology pain management interventions
require highly specialized clinicians to administer such treatments.
These incidents are infrequent and therefore it is impractical and
prohibitively expensive for hospices to have such specialized
caregivers on staff.
Conclusion
Madame Chairman and members of the Subcommittee, the issues
addressed by your legislation may seem quite technical in nature, but
they will make a tremendous difference in day-to-day operations of all
types of providers. We in the home health and hospice world have sought
a number of these solutions for many years and will work diligently for
their enactment.
In closing, I cannot thank you enough, Madame Chairman, for your
long-standing efforts on behalf of our nation's home health providers
and the patients and families they serve.
This concludes my formal remarks but I would be happy to answer any
questions that any members of the panel might have.
______
ATTACHMENT 1
LNAHC COMMENTS TO CMS REGARDING CHANGES TO THE MEDICARE
CLAIMS APPEAL PROCEDURES
January 14, 2003
Centers for Medicare and Medicaid Services
Department of Health & Human Services
Hubert H. Humphrey Building
200 Independence Avenue, S.W.
Room 445
Washington, D.C. 20201
Re: CMS-4004-P, Changes to the Medicare Claims Appeal Procedures
To Whom It May Concern:
Thank you for the opportunity to provide comments to the Proposed
Rule for Changes to the Medicare Appeals Process implementing Section
521 of the Medicare, Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 (BIPA), Public Law 106-554. The National
Association for Home Care & Hospice (NAHC) is the largest trade
association in the country representing home health agencies, hospice
programs and home medical equipment providers. Overall, the proposed
changes to the appeal process are reasonably consistent with the BIPA
requirements. In addition, the proposed rules address some longstanding
confusion regarding Medicare appeals that results from the
``bootstrapping'' of many of the Social Security Administration appeals
rules. While NAHC's general evaluation of the proposed rules is
positive, these comments focus on areas of concern.
Qualified Independent Contractor
The changes enacted in BIPA require the creation of an entirely new
entity in the Medicare claims review process, the ``qualified
independent contractor (QIC).'' NAHC believes that it is necessary for
the Centers for Medicare and Medicaid Services (CMS) to restrict the
organizations eligible to qualify as a QIC. Specifically, NAHC believes
that it is necessary to establish independence of the QIC from the
fiscal intermediaries and carriers that issue initial determinations
and redeterminations.
Recommendation
Prohibit fiscal intermediaries and carriers or parties related to
intermediaries and carriers from becoming a QIC.
The Role of Contractors in ALJ and MAC Proceedings
CMS proposes to allow Medicare contractors to participate in
Administrative Law Judge (ALJ) and Medicare Appeals Council (MAC)
proceedings. Further, CMS proposes to allow the contractors to obtain
``party'' status at these stages of appeal and to have authority to
obtain MAC review of any unfavorable ALJ decisions.
The proposal to provide participation and party status for Medicare
contractors is a significant alteration of the appeals process,
changing it from a non-adversarial proceeding that has existed from the
beginning of the Medicare program into an adversarial process that is
only likely to increase costs and heighten controversies.
Recommendation
Eliminate party and participation status for Medicare contractors,
specify that the ALJ reviews are de novo, and allow ALJ and MAC
consideration of contractor actions and reviews only for purposes of
establishing appellate level jurisdiction. In the event that this
recommendation is not accepted, specify that prevailing party
attorneys' fees are available under the Equal Access to Justice Act in
any appeals in which the contractor participates or achieves party
status.
Limitation on New Evidence
The proposed rules significantly restrict the opportunity to offer
additional and new evidence before an ALJ, requiring a full and early
presentation of evidence at the QIC level. NAHC is aware that CMS has
held to a longstanding belief that the high reversal rates on appeal
are primarily due to the presentation of new evidence to the ALJs.
However, the introduction of any new evidence at any step in the
appeals process is designed to secure a fair and accurate
determination. It is in the best interests of Medicare beneficiaries
and providers of services to get that full and fair determination as
soon as possible. As such, there is no indication that material
evidence is withheld at any stage of the appeals process in hopes of
improving chances of success months and months later down the line with
succeeding appellate levels.
CMS should distinguish between the submission of new evidence that
involves readily available clinical documentation from the provider of
services directly implicated in the Medicare claim in dispute from
other evidence such as expert opinion, clarifying treating physicians'
opinion, and documentary evidence from providers of services not
directly involved in the disputed claim. Most often, the new evidence
submitted is done so to address issues raised by the preceding
appellate level or to clarify matters that have been determined to be
somewhat confusing.
Recommendation
Eliminate restriction on the submission of new evidence.
Alternatively, apply the restriction on new evidence only to clinical
documentation from the provider of services directly involved in the
disputed claim.
The Role of LCDs, LMRPs, CMS Program Guidance, and Manual Instructions
CMS proposes to require that QICs ``give deference'' to local
coverage determinations, local medical review policies, and CMS program
guidance, including manual instruction. CMS proposes that QIC be
required to follow these instructions ``unless the appellant questions
the policy and provides a reason that the QIC finds persuasive as to
why the policy should not be followed.'' The effect of this standard is
to provide informal policy positions of CMS and its contractors with
the force and effect of law. It also requires appellants to directly
challenge the application of these informal polices in circumstances
where they may not be fully aware of the application of these policies
to the issues in dispute nor have full access to these informal
policies.
Recommendation
Eliminate requirement that QICs ``give deference'' to informal CMS
and contractor policies. Alternatively, require that decisions issued
by contractors specifically reference any informal policies applied in
the decision making and provide information as to how the affected
individual or provider can obtain copies of those policies. Further,
require the QIC to inform the appellant of its intention to apply a
particular informal policy to the issue in dispute and allow the
individual an opportunity to challenge the application of that policy.
QIC Reviewer Competency
CMS proposes that QIC reviewers ``have sufficient training and
expertise in medical science and/or legal matters.'' 42 CFR
Sec. 405.968(c). This standard does not sufficiently set out a
qualification that requires knowledge and experience in the area of
healthcare that is in dispute. For example, training and expertise in
medical science does not necessarily entail a knowledge of clinical
necessity and medical appropriateness in a particular health setting,
the ability to evaluate the terminal illness of a patient seeking
hospice coverage, or the application of the ``confined to home''
standard under the Medicare home health benefit.
Recommendation
CMS revise the proposed rule to require sufficient knowledge and
expertise in the area of health care in dispute.
Claim Reopening
CMS proposed to clarify rules and require that reopening of
determinations at any level within the process be available only after
a party's appeal rights have been exhausted or the time limit for
appealing expired. In doing so, CMS indicates that clerical errors must
be handled through the reopening process. As such, it appears that
human and mechanical mistakes, such as clinical, mathematical,
computational or inaccurate data entry must be addressed through the
appeals process before any reopening action and correction can occur.
Alternatively, reopenings for these corrections of minor errors and
omissions would have to await the exhaustion or expiration of any
appeal rights. Hopefully, this is a misreading of the proposed rule.
The reopening authority also improperly distinguishes between
reopening requests from Medicare beneficiaries and providers of
services and those reopening actions by the contractor on its own
initiative. The same time frames and standards for reopening should
apply to all parties and participants in the Medicare decision-making
process. The reopening standards should provide for a reasonable level
of finality with limited authority of the contractor to initiate
reopening of its own decisions to address any perceived errors that
have come through its own lack of diligence and effective claim review.
If a contractor seeks to reopen a claim, it should be required to
establish good cause for that reopening with a notice of intent to all
affected parties and a right of appeal on the finding of good cause.
For example, if a contractor reopens a series of claims two years after
the original adjudication, the affected provider should be able to
challenge that the contractor does not have good cause for the delayed
action.
Recommendation
Eliminate any restrictions on reopenings that are designed to
correct minor errors and omissions allowing such a reopening request to
be made prior to the exhaustion or expiration of appeal rights.
Further, CMS should modify the reopening standards to establish rights
and responsibilities on an equal basis for Medicare beneficiaries,
providers of services, and Medicare contractors.
Expedited Proceedings
The proposed rules implement an important new right of appeal set
out in the BIPA provisions regarding an expedited appeal process
available to beneficiaries subject to service terminations or
discharge. It is important that CMS recognizes that the expedited
appeals proceedings do not include reductions in an ongoing course of
service. However, the proposed rules need additional clarification to
address terminations of services where there are no physicians' orders
or appropriate certifications to continue care. The BIPA provisions and
the proposed rules properly require that a physician certify the
failure to continue services is likely to place the beneficiary's
health at risk, but do not directly explain that other technical
requirements for the continuation of services and coverage must be in
place as well. For example, a strict reading of the proposed provision
would allow for a right of expedited appeal even in situations where
the physician has ordered the discontinuation of home health services
or refused to certify the patient as confined to the home. Allowing an
expedited appeal in such circumstances would raise serious questions
regarding the authority of the home health agency to continue to
deliver care during the pendency of the appeal or the right to secure
Medicare coverage thereafter.
The proposed rules on the expedited appeals process also indicate
that the provider cannot bill a beneficiary for the disputed stay of
services until the beneficiary has received an expedited QIC
determination. While such an approach may be necessary to fairly
effectuate the expedited appeal rights of Medicare beneficiaries, it
places providers of services at financial risk without any
consideration of that risk within current reimbursement rates.
Recommendation
CMS should clarify that other technical requirements for Medicare
coverage be in place, such as physicians' orders for continued care and
certification of homebound status, in order to trigger any expedited
appeal rights. Further, CMS should require that Medicare beneficiaries
be informed through the initial determination that financial liability
for noncovered care will exist in unsuccessful expedited appeals.
Finally, CMS should adjust payment rates to those providers whose
existing payment rates do not include any bad debts resulting from the
inability to collect after a beneficiary's unsuccessful expedited
appeal.
Representative Fees
The proposed rules indicate that no award of attorneys' fees may be
made against the Medicare Trust Fund and that a provider acting as a
representative beneficiary may not charge the beneficiary with any fee
associated with representation. These proposed rules do not address the
application of the Equal Access to Justice Act to adversarial
administrative proceedings that may occur under the new rules allowing
CMS or its contractors to achieve party status. Further, these rules do
not address representation of beneficiaries by non-provider individuals
or entities. It appears the only rule governing representative's fees
to beneficiaries allows for fees to be limited to no more than 25
percent of past due benefits, a standard applicable to Social Security
cases.
Recommendation
The proposed rule should be revised to reference the availability
of fees under the Equal Access to Justice Act under those circumstances
where the administrative proceeding is adversarial. Further, the
proposed rules should be modified to specifically address any fee
limitations applicable to a Medicare appeal by a non-provider
representative or Medicare beneficiary.
New Issues on Appeal
The proposed rules address the introduction of new issues at the
ALJ stage of appeal. However, the rules do not address those
circumstances where the contractor or QIC raise new issues distinct
from that originally in dispute. The initiation of new issues for
review at other steps in the appeals process have often created great
confusion for Medicare beneficiaries and health care providers while
forcing the introduction of new evidence that is otherwise not
contemplated as necessary.
Recommendation
Prohibit Medicare contractors and QICs from raising new issues
during an appeal. Any issues distinct from those in dispute should be
raised through the reopening process.
Failure to Meet Time Limits for Review
The rule establishes timelines for completions of all levels of
review as required by BIPA. While the parties are given rights to
accelerate the appeal in the event of the appellate level failure to
meet timeliness standards, CMS should consider the imposition of
additional contractor penalties where they fail to comply with required
time limits.
Recommendation
Implement penalties, including payment of interest, when CMS
contractors fail to complete appellate review within the established
timeframes.
NAHC wishes to extend the thanks of the entire home health and
hospice community for CMS' efforts to issue this proposed rule. The
difficulties attendant to a wholesale restructuring of the appeals
process are readily recognized and NAHC appreciates CMS good faith
efforts to implement these important BIPA provisions and to modernize
the appeals structure otherwise. We look forward to the publication of
the final rule.
Very truly yours,
William A. Dombi
Vice President for Law
National Association for Home Care & Hospice
______
ATTACHMENT 2
LOASIS SIMPLIFICATION RECOMMENDATIONS BY THE HOME HEALTH
INDUSTRY TO CMS ADMINISTRATOR THOMAS A. SCULLY
October 12, 2001
Mr. Thomas A. Scully
Administrator
Centers for Medicare and Medicaid Services
U.S. Department of Health and Human Services
314G Hubert H. Humphrey Building
200 Independence Avenue, S.W.
Washington, D.C. 20201
Dear Mr. Scully:
All of our organizations (listed below) representing home health
care thank you for the opportunity to submit recommendations for
streamlining the Outcomes and Assessment Information Set (OASIS) data
set and related requirements. We understand that the Centers for
Medicare and Medicaid Services (CMS) is currently considering reducing
paperwork and streamlining patient assessment requirements for home
health providers as was done previously for other Medicare providers.
Our purpose is to provide input to that process.
Because our focus was on reviewing OASIS from clinical, practical
and consumer viewpoints, we did not address OASIS case mix payment
issues, which we believe should be reviewed separately by CMS and
provider representatives within the context of case-mix reform.
However, we did address the costs that providers have incurred--and
continue to incur--for meeting OASIS regulatory mandates.
The formation of this task force was in response to the hundreds of
letters, e-mails and phone calls that the provider organizations have
received from their memberships. While there is industry-wide support
for an outcome-based assessment process, members have consistently
requested that CMS eliminate the non-essential and redundant OASIS
components and requirements. They continue to plead for OASIS reform
because of the toll that the increased OASIS paperwork is having on
their ability to recruit and retain nurses and because of the
staggering costs involved in implementing and maintaining OASIS
regulatory compliance.
OASIS is often cited as the number one reason why nurses are
leaving home health care. As a result, it has exacerbated the already
scarce supply of available and qualified nurses nationwide. A home
health nurse typically must spend more time complying with federal
paperwork requirements than providing hands-on care during one 60-day
episode of patient care. In addition, the cost of OASIS far exceeds the
reimbursement since home health agencies are not compensated for the
cost of professional staff time or for the technology that has been
necessary for OASIS and PPS implementation.
Finally, since the OASIS data set is not a comprehensive
assessment, home health agencies are required to incorporate OASIS into
the individual agency's comprehensive assessment process. However,
surveyors have adopted a punitive approach toward agencies whose
comprehensive assessments do not fit into their subjective view of how
a comprehensive assessment should appear.
GENERAL RECOMMENDATIONS
1. LThe requirements to collect and transmit OASIS information
should only apply to Medicare patients because:
LThe policy of requiring OASIS for all patients does
not comport with CMS' goal to move home care oversight from the
current process-driven orientation to an outcome-driven
orientation. We believe that collecting OASIS data from only
Medicare patients (and measuring their outcomes) is likely to
be the best and most efficient process for determining an
agency's overall level of quality care because it is a clean
set of data from a more homogenous patient population. If an
agency is consistently achieving good outcomes for its Medicare
case load, it would be highly unlikely that the same agency
would provide less quality care to its non-Medicare patients
(especially in light of requirements to comply with all other
Medicare conditions of participation for all patients.)
LCMS's primary rationale for mandating OASIS
requirements--as stated in the OASIS final regulation--is to
use this information for payment purposes for Medicare
beneficiaries:
L The immediate publication of rules requiring the
collection and reporting of OASIS data and OMB approval of
these requirements (OASIS) pursuant to the Paperwork Reduction
Act of 1995 are essential because these data are required for
the development of the home health prospective payment system,
required by statute in October of 2000 (Page 3765 of the
January 25, 1999 Federal Register).
In other words, OASIS was mandated for payment purposes before
its original intended use for measuring patient outcomes (i.e.
quality of care). Collecting only Medicare data now is
consistent with the current use of OASIS.
LLimiting OASIS to Medicare patients is especially
important because nurses and patients alike are experiencing
difficulties due to the length and frequency of assessments.
This is particularly true in cases where patients have minimum
to moderate health care needs. Limiting OASIS to Medicare
patients will help alleviate stress on patients and nurses and
reduce the cost of OASIS administration for home health
agencies.
2. LAllow home health providers to have access to the studies on
the validity and reliability of OASIS data and adverse event
measurements, which are now being used to evaluate home health agencies
with potential negative consequences.
3. LProvide rationale for why many of the items (that are
indicated below by a ``*'') were determined by CMS to be good
indicators of quality care. For these items, and for changes to OASIS
in general, we also strongly recommend that CMS develop a process to
evaluate the suitability of any OASIS items whose need is not readily
apparent. The process should include providers, researchers and
consumer advocates and contain a general public comment phase. Each
item on the form should be required to have above average inter-rater
reliability and should be judged by its incremental performance in
patient classification systems or outcome risk adjustment
methodologies, or be necessary as an outcome measure. Any review
process must be designed to explicitly balance the natural desire for
more information with the need for efficient data collection and
patient privacy.
4. LAllow agencies to use a single, universal form for all OASIS
data collection time points (i.e., start of care, transfer/discharge,
resumption/change of care and recertification). Questions specific to a
particular assessment would be easily identified on the universal form.
A universal form would prevent the confusion over what form to use for
a particular visit. If a nurse mistakenly fills out the wrong form,
which may be nearly identical to other OASIS forms, he or she must
complete the minimum 45 minutes of OASIS paperwork again.
5. LEliminate the current OASIS assessment requirement for
significant change in condition. The ambiguity of what is considered to
be ``a significant change in condition'' has essentially forced each
home health agency to establish its own significant change policy,
particularly involving cases where there is not a hospitalization. This
subjectivity leads to questionable validity and usefulness of the data
for outcome measurements.
6. LEliminate the requirement to perform an OASIS assessment in
cases where it is known that a patient will require only a single visit
or is a predictable LUPA patient.
7. LAllow any practitioner of a qualifying service to conduct the
initial assessment and comprehensive assessment regardless of whether
skilled nursing is included on the plan of care.
8. LAmend the required ``complete and lock dates'' as follows: 10
calendar days to complete OASIS and 14 calendar days from the day of
completion to enter and lock the data.
9. LRevise the guidelines for the OASIS resumption of care (ROC)
assessment so that it is only required for patients who have been
hospitalized for more than 72 hours. The need for a ROC could serve as
a proxy for what is considered to be ``a significant change in
condition'' until a better definition is developed and agreed on by CMS
and national provider representatives.
10. LIncrease reimbursement to home health agencies to reflect the
true costs of OASIS, including the cost of professional time spent
training and completing forms, and the cost of technology systems
necessary to implement OASIS for OASIS and PPS compliance. A recent
report by the General Accounting Office (GAO) clearly identified ``an
increase in time spent for patient assessments after the implementation
of OASIS mandate. These HHAs also reported additional costs associated
with verifying and transmitting data to HCFA, as well as with training
new hires to collect OASIS data.'' (OASIS Data Use, Cost and Privacy
Concerns, GAO, January, 2001). It is important to point out that the
GAO study only focused on the extra time associated with start-of-care
assessments. Although we disagree with GAO's assessment that HHAs will
be able to finance these extra costs from PPS payments, we do generally
agree with the additional magnitude of the extra costs as identified in
the GAO study. CMS' before-the-fact assertion that agencies will have
no additional costs after the going through the learning curve is
erroneous and needs to be re-examined in light of the significant
actual experience to the contrary.
11. LInform home health agencies and surveyors that basic
demographic data is not required on the comprehensive assessment form
if available elsewhere on the agency record for formatting and
reporting to the State Agency.
12. LEliminate the requirements to perform two or more assessments
when those particular assessments fall within a close proximity of time
(e.g. cases involving a change in payer) and when the additional
assessment is performed to accommodate the CMS systems rather than for
clinical purposes.
13. LEliminate requirements to make home health visits that are
``non billable'' solely for the purpose of fulfilling CMS OASIS time
frames. Allow completion of the assessment on the next billable visit.
These requirements have increased the cost to the Medicaid waiver
programs for long-term and chronic patients.
14. LRequire CMS compliance with coding rules, including ICD-9
coding, as mandated by HIPAA.
15. LEliminate duplication and inconsistency between OASIS and the
485 (plan of care) forms.
RECOMMENDATIONS FOR INDIVIDUAL OASIS ASSESSMENT ITEMS
The task force identified the following assessment items as items
that should be either: (1) deleted for identified reason; (2) deleted
unless it is determined after examination that the item is useful for
casemix and/or risk adjustment; (3) revised; or (4) redefined to
improve the item's comprehension by nurses and therapists (several of
these questions and options are so intricate that precision is lost in
the collection of the data).
------------------------------------------------------------------------
MOOOO Description Action/Reason
------------------------------------------------------------------------
M0140* Race/Ethnicity Examine and
determine the
usefulness of
this item for
casemix and/or
risk adjustment;
delete item if it
is determined to
be not useful.
------------------------------------------------------------------------
M0160* Financial Factors Examine and
determine the
usefulness of
this item for
casemix and/or
risk adjustment;
delete item if it
is determined to
be not useful.
------------------------------------------------------------------------
M0190 Inpatient Delete
diagnosis (unnecessary and
unreliable
responses).
------------------------------------------------------------------------
M0200* Treatment change Examine and
determine the
usefulness of
this item for
casemix and/or
risk adjustment;
delete item if it
is determined to
be not useful.
------------------------------------------------------------------------
M0210 Changed diagnosis Delete (unreliable
responses).
------------------------------------------------------------------------
M0220* Prior conditions Examine and
or inpatient stay determine the
usefulness of
this item for
casemix and/or
risk adjustment;
delete item if it
is determined to
be not useful.
------------------------------------------------------------------------
M0260* Overall prognosis Examine and
determine the
usefulness of
this item for
casemix and/or
risk adjustment;
delete item if it
is determined to
be not useful. In
addition, the
item is already
documented on the
485 form.
------------------------------------------------------------------------
M0270* Rehab prognosis Examine and
determine the
usefulness of
this item for
casemix and/or
risk adjustment;
delete item if it
is determined to
be not useful. In
addition, the
item is already
documented on the
485 form.
------------------------------------------------------------------------
M0280 Life expectancy Delete (inherently
subjective).
------------------------------------------------------------------------
M0290* High risk factors Examine and
determine the
usefulness of
this item for
casemix and/or
risk adjustment;
delete item if it
is determined to
be not useful.
------------------------------------------------------------------------
M0310-M0330 Living Limit item to only
arrangements start-of-care
(SOC) assessment.
Complete
thereafter only
if a change in
living
arrangement
occurs.
------------------------------------------------------------------------
M0340-M0360 Living Retain and
arrangements simplify to
``yes'' ``no''
responses.
------------------------------------------------------------------------
M0400 Hearing Simplify to
general terms
that clinicians
can easily
understand.
------------------------------------------------------------------------
M0420-M0430 Pain Examine other more
reliable pain
scales.
------------------------------------------------------------------------
M0440 Skin lesions Redefine to
identify active
pathology and
specify the types
of lesions that
would be
considered ``skin
lesions'' in a
manner that is
understandable to
the nurse and
eliminates his/
her subjectivity.
------------------------------------------------------------------------
M0460 Most problematic Redefine using
wound medical
terminology that
is understandable
to the nurse and
eliminates
subjectivity.
This is
especially
important because
a ``most
problematic
wound'' may be a
different wound
for each
assessment.
------------------------------------------------------------------------
M0468 Stasis ulcers Redefine to
include arterial,
venous diabetic
and neuropathic
ulcers.
------------------------------------------------------------------------
M0560-M0620 Neuro/Emotional/ Redefine to
Behavioral improve
reliability of
assessment by
simplifying
options in a
manner that is
understandable to
the nurse,
eliminates
subjectivity, and
facilitates a
level of trust
between provider
and patient who
may have issues
related to
depression. In
addition, the
items should be
optional if the
patient reserves
his/her right to
privacy.
------------------------------------------------------------------------
M0630 Psychiatric Delete (very
Nursing Services limited provision
of psychiatric
nursing in home
care).
------------------------------------------------------------------------
M0640-M0800 ADLs/IADLs/ Delete ``prior''
Medications column
(unreliable and
non-verifiable
responses).
------------------------------------------------------------------------
MO720-MO770 Instrumental Delete ``current''
Activities of column
Daily Living (unreliable
(IADLs) responses).
------------------------------------------------------------------------
M0830-M0840* Emergent Care Examine and
determine the
usefulness of
this item for
casemix and/or
risk adjustment;
delete item if it
is determined to
be not useful.
------------------------------------------------------------------------
M0890-M0900* Inpatient Reason/ Examine and
Reason for determine the
Nursing Home usefulness of
this item for
casemix and/or
risk adjustment;
delete item if it
is determined to
be not useful.
------------------------------------------------------------------------
The OASIS Provider Task Force would appreciate the opportunity to
discuss our recommendations with you and your staff in person. Such a
meeting would facilitate collaboration between CMS and constituent
organizations thus maintaining the spirit of CMS' ``open door''
initiatives, which have been deeply appreciated by the home health care
and hospice communities.
Contact persons for the task force are Kathy Thompson, Visiting
Nurse Association of America (VNAA) (202/737-3707), and Mary St.
Pierre, National Association for Home Care. (NAHC) (202/547-7424).
Thank you again for your consideration of our recommendations.
Sincerely,
American Hospital Association
American Home Care Association
American Association for Homecare
Connecticut Association for Home Care
Gentiva Health Services
Medstar Health VNA, Washington, D.C.
National Association for Home Care
Visiting Nurse Associations of America
cc:
Dallas R. Sweezy, Director of Public Affairs, CMS
Rob Foreman, Director of the Office of Legislation, CMS
Tom Hoyer, Director of the Chronic Care Purchasing Policy Group, CMS
Bob Wardwell, Director of the Division of Community Post-Acute Care,
CMS
Pat Bousliman, Professional Staff Member, Senate Finance Committee
Susan Christensen, Legislative Assistant, Office of Congresswoman Nancy
Johnson (R-CT)
Deborah Williams, Professional Staff Member, House Ways and Means'
Health Subcommittee
Chairman JOHNSON. Thank you very much, Ms. Wolf. Dr. Ryan.
STATEMENT OF JUDITH A. RYAN, PH.D., PRESIDENT AND CHIEF
EXECUTIVE OFFICER, EVANGELICAL LUTHERAN GOOD SAMARITAN SOCIETY,
SIOUX FALLS, SOUTH DAKOTA, ON BEHALF OF THE AMERICAN HEALTH
CARE ASSOCIATION
Dr. RYAN. Good morning. Thank you for inviting me to
provide perspective on the progress of regulatory reform in
long-term care. I am Dr. Judith Ryan, President and Chief
Executive Officer of the Evangelical Lutheran Good Samaritan
Society.
It has been my privilege and experience to watch the
evolution of regulation in long-term care for more than 45
years now from a number of perspectives: as a community health
nurse; as executive director of the American Nurses
Association; and as the chief quality officer of Lutheran
General Health System; the associate director for the
University of Iowa Hospitals and Clinics; and now I lead the
Good Samaritan Society, which is a long-term care organization,
deeply rural. We have grown large not by marketing plans, but
by responding with over 80 years of service to small rural
communities who have needed help in providing older adult
services for the elders who are there.
Over that period of time we have become the largest not-
for-profit provider of long-term care in the country. We have
250 sites of care, and care for 27,000 residents across 25
States. We employ nearly 24,000 people.
I speak today on behalf of the members of the American
Health Care Association, and testify today not to ask for less
or for more regulation, but to ask for a more accountable
regulatory process in long-term care. We believe that such a
process will benefit providers of care as well as their
residents and staff.
I would like to comment in three major areas: regulatory
solutions that we think need to be addressed in long-term care
oversight; legislative improvements that we still think are
necessary; and to share strides in quality improvement we
believe that the long-term care profession is making.
With regard to regulatory reform, as you know, in 1986 it
was the Institute of Medicine's Committee on Nursing Home
Regulations, in its final report, that provided the impetus for
Congress to enact major regulatory reform in long-term care.
Passage of the Omnibus Budget Reconciliation Act of 1990 (OBRA)
ushered in an era of change in nursing facilities' approach to
resident care.
The OBRA was intended to move long-term care in new
directions. It has moved it in a lot of new good directions.
However, OBRA enactment did not modify the basic Federal
regulatory approach to quality, and that omission has forced
perpetuation of a system that is based on external standards
and measures of quality that were current in the 1980s.
We know much more about improving quality now and have
better tools to measure that quality, and we believe that the
regulatory process must be updated to allow and to encourage us
to use them. In fact, in three of the States in which Good
Samaritan has a large presence, these States have asked for
Federal Government waivers to allow them to test outcome-based
measures of quality, and to increase their oversight of poor-
performing facilities.
Those waiver requests have been denied by HHS because there
is not that authority under the Medicare waiver. I have brought
a graphic depiction, which you can see up here, which looks at
the external regulators with which each nursing home must
comply. I have seen similar graphs in acute care, but they are
different kinds of graphs. Those charts in hospitals focus on
voluntary accreditation by Joint Commission, on accreditation
and certification by the various professional societies, etc.
You will note that in long-term care it is the Justice
Department that sometimes oversees matters of clinical care and
treats them in criminal matters. We also have the State survey
process which works under contract with CMS, and a number of
direct regulations that relate to public reporting, and to the
payment systems for long-term care that are under CMS directly.
It is a regulatory maze and it is many times duplicative
and punitive. It has been said that in acute care we talk about
medical error, and in long-term care we talk about fraud and
abuse. In reality, acute and long-term care include a continuum
of services that we must provide to our older adults. We don't
suggest that regulations be eliminated, we just suggest that
they be made smarter. There are legislative solutions that
would help, and this Committee has given leadership by paying
attention to a good number of them.
The long-term care profession supported the Medicare
Regulatory and Contract Reform Act in the last session of
Congress and will do so again in the 108th. Your legislation
will reduce the appeals backlogs. The payment appeals and
information-sharing provisions of your legislation will help
providers better navigate the maze of guidance from CMS fiscal
intermediaries, and you address other important program
changes. We applaud your leadership and will urge the Senate to
follow your lead.
Another area we urge you to address are instances where the
nursing home regulatory and enforcement system actually impedes
quality improvement. I think there are three examples I would
like to lift up:
One is the nature of the relationship between the
government as regulator and the providers of service.
Government inspectors are forbidden from providing consultative
services to nursing facilities, from sharing best practices,
making suggestions to improve care.
Second, nursing homes are often fined for following the
orders of a patient's physician, forcing them to choose between
a regulatory fine or the liability that comes with disregarding
the orders of the patient's doctor.
A third example occurs when nursing homes are automatically
forced to terminate their training programs for certified
nursing aides for 2 years. These regulations usually hurt
quality improvement more than they help.
These and several other impediments to quality improvement
are corrected in the Medicare and Medicaid Nursing Home Quality
Improvement Act that was introduced last year by Congressman
Camp on this Committee. I would like to thank you, Congressman
Camp, for that work, and Congressman McDermott, and urge other
Members of the Committee to cosponsor that bill when introduced
this session. We believe it will help us to focus the nursing
home oversight system on quality improvement.
Providers of care are taking initiative. Leaders in long-
term care have known for a long time that we have got to remove
our focus from regulatory compliance and focus rather on making
remarkable improvements in the quality of long-term care and
services. Two major initiatives have grown out of early
discussions among leaders in long-term care, leaders of both
the profession and the trade and legislative advocacy groups:
CMS's Nursing Home Quality Initiative and the Quality First
Initiative. Commissioner Scully referenced the first. That work
has really enabled us to identify measures of quality, data
that we already have, that we think go a long way to helping
inform consumers about the quality that a facility is offering.
Those measures have been validated by CMS and a system for
reporting them has been developed, tested, and rolled out. An
ongoing system of professional consultation to nursing
facilities is being put in place under CMS's quality
improvement organizations. That work is going forward very
effectively.
The second initiative has been the long-term care
profession's Quality First Initiative, which was announced last
year, with an objective of building a covenant to promote
healthy, affordable, accountable, and ethical long-term care.
That commitment is on the part of the providers and
professionals themselves.
I think these two quality initiatives give pretty good
evidence that the government, the professionals, the providers,
are working more effectively together.
One other comment. I was privileged to serve on Secretary
Thompson's Advisory Committee on Regulatory Reform, chaired by
Dr. Doug Wood, and have great respect for that undertaking.
We discovered that there is great potential for containing
costs and improving quality if we can better align both the
payment and regulation of Medicare and Medicaid programs. Many
of the Secretary's Committee recommendations focus on that.
There is one piece of unfinished business that will take
legislative action that can't be accomplished by the regulatory
authority the Secretary has. That is described in Appendix C of
the Secretary's Advisory Committee on Regulatory Reform report
as the number one piece of unfinished business.
The Secretary's Advisory Committee on Regulatory Reform
chose to report those things that we discussed but couldn't
reach closure because of time constraints. The wording of that
is in my written testimony. It encourages demonstration of
unified service delivery to those persons dually eligible for
both Medicare/Medicaid; testing of regulations in limited
geographic areas before implementation; greater flexibility in
testing the efficacy of alternative ways to survey nursing
facilities; and stimulating use of information systems across
the Medicare and Medicaid programs.
I thank you for the time to be with you, and for the time
you serve on the Committee, and I hope that you will take these
things to mind.
[The prepared statement of Dr. Ryan follows:]
Statement of Judith A. Ryan, Ph.D., President and Chief Executive
Officer, Evangelical Lutheran Good Samaritan Society, Sioux Falls,
South Dakota, on behalf of the American Health Care Association
Introduction of the Speaker
Good morning, Madam Chairman and members of the subcommittee. Thank
you for inviting me to provide perspective on the progress of
regulatory reform in long-term care.
I am Dr. Judith Ryan, President and Chief Executive Officer of The
Evangelical Lutheran Good Samaritan Society. The Society is a
membership organization of men and women collectively engaged in
building communities of care for older adults and others in need across
the country. I have watched the evolution of regulation in long-term
care for forty five years in various capacities--as a community health
nurse, executive director of the American Nurses Association, senior
vice president and chief quality officer for Lutheran General Health
Systems and Associate Director of the University of Iowa Hospitals and
Clinics.
I now lead a long-term care organization that is deeply rural. We
have grown over the 80 years of our history by partnering with
communities who have recognized the need for help to provide
facilities, programs and services for older adults. Over 80 years of
service, the Society has become the largest not-for-profit provider of
long-term care and senior services in the country. We offer senior
housing and skilled nursing options in more than 250 sites of care
across 25 states, serve 27,000 residents and employ nearly 24,000
staff. Our sites of care are linked together by cutting-edge
communications technology: by voice and telecommunications, Intranet
and satellite.
I speak today on behalf of all members of the American Health Care
Association, the national organization representing over 12,000
providers of long term care who serve over 2 million elderly and
disabled people annually and employ over 1.5 million people. We are
testifying today not to ask for less or for more regulation, but to ask
for a more accountable regulatory process. We ask for a process through
which all stakeholders can work together to promote and maintain
quality care for all Americans. Such a process will benefit providers
of care as well as their patients and their staff.
I am here to discuss three areas:
1. Regulatory solutions in long term care oversight
2. Legislative improvements to long term care oversight
3. Strides in quality improvement made by the long term care
profession
Regulatory Reform in Long-Term Care
In long term care, as in the other sectors of our health care
system, we labor under the inequities of very difficult payment and
review policies, and we are deluged with paperwork as you will hear
from the other witnesses. In fact many of our best nurses leave long
term care to work in hospitals or other settings where the paperwork
burden is less. Nevertheless, we have an additional regulatory problem
that is unique to long term care, and causes even more difficulty in
patient quality than the other two problems combined. That difficulty
comes when the regulations start impeding the quality of care that our
patients are receiving.
Twenty years ago this year, the Institute of Medicine's Committee
on Nursing Home Regulation was convened to ``serve as the basis for
adjusting federal (and state) policies and regulations governing the
certification of nursing homes so as to make those policies and
regulations as appropriate and effective as possible.'' The final
report, ``Improving the Quality of Care in Nursing Homes'' issued in
1986, provided the impetus for Congress to enact major regulatory
reform in long-term care. Passage of the Omnibus Budget Reconciliation
Act in 1987 (OBRA '87) ushered in an era of change in nursing
facilities' approach to patients' care. Congress made the care mandate
very clear: All certified facilities must: ``. . . attain or maintain
the highest practicable physical, mental and psychosocial well being of
each resident.''
The OBRA '87 mandate was intended to move care in new directions,
and it did. However, the statute did not modify the basic federal
regulatory approach to
quality. That omission has forced perpetuation of a system that is
based on expec-tations and measures of quality that were current in the
1980's. We know much more now about promoting quality and have better
tools to measure it than we did back then. The regulatory process must
be changed to allow and encourage us to use them. Today both regulators
and facilities must be involved in a dynamic system of quality
improvement, using the same principles of continuous quality
improvement. It is time to move to such a system and regulatory reform
will take us there.
In fact, Madam Chairman, each of the three states in which the Good
Samaritan Society has the largest presence have asked the federal
government for a waiver to allow them to test outcome-based measures of
quality, and to increase their oversight on poor performing facilities.
Those waivers from the States of North Dakota, South Dakota, and
Minnesota were denied by HHS due to lack of Medicare authority. This is
but one example of how static statute and regulation has prevented
quality measurement and improvement from moving forward.
For the past 15 years, those of us most accountable for providing
quality services to patients in long-term care--physicians, nurses,
social workers, therapists, pharmacists, certified nursing assistants,
administrators, residents, families and consumer advocates--have had to
become increasingly focused on compliance with external expectations of
quality and static regulations. This occurs at the expense of
continuous quality improvement and attention to individual patients'
needs. For example, nursing homes are regulated by dozens of agencies,
and from all sides. I have brought a graphic depiction of the external
regulators with whom each nursing home must comply. It is difficult to
see how staff have time for caregiving. Here are just a few of the
responsibilities we are focused on daily:
LState survey, licensure and accreditation
requirements
LRegulations related to certification for
participation in government payment systems (Medicaid and
Medicare)
LRegulations related to assessment and documentation
of the resident's functional status, related plans of care, and
quality measures.
LCMS reimbursement policy that tailors patient
assessment to payment levels.
LStandards for privacy, patient rights, and business
transactions under HIPAA.
LOffice of Inspector General (OIG) policies and
programs pertaining to fraud and abuse.
LCMS' mandatory program of reporting quality measures
to the public.
This is not to suggest that regulations be eliminated but that they
be made ``smarter.'' We are asking that the processes used to determine
compliance and judge quality and patients' outcomes be modified and
updated.
Legislative solutions
Your Committee, Madam Chairman, has taken important steps forward
toward this end. It is now my hope that your committee can provide the
impetus to make these reforms a reality.
This is why the long-term care profession strongly supported the
Medicare Regulatory and Contracting Reform Act (MRCRA) in the last
session of congress, and do so again in the 108th Congress. Our
subjective and inflexible oversight system necessitates that providers
constantly appeal erroneous citations that in turn creates backlogs of
appeals at the Administrative Law Judge (ALJ) and Departmental Appeals
Board (DAB) levels. Furthermore, because our oversight system is
punitive in nature, and because the first level of appeals is before
the very people who issued the citation in the first place, the ALJ is
really the first impartial appeal we face. Your legislation will reduce
this backlog by increasing ALJ and DAB resources to hear these cases.
The payment appeals and information sharing provisions of your
legislation will help providers better navigate the maze of guidance
from the CMS, the FIs, and other program changes. We applaud your
leadership and will urge the Senate to follow your lead. Another area
we urge you to address are the several instances where the nursing home
regulatory and enforcement system actually impedes quality improvement.
Let me discuss three examples. First, government inspectors are
forbidden from helping care providers improve quality by suggesting
best practices, or even praising good care. Second, nursing homes are
often fined for following the orders of the patient's physician--
forcing them to choose either a regulatory civil monetary penalty
(CMP), or the liability that comes with disregarding the orders of the
patient's doctor. A third example occurs when nursing homes that are
fined $5000 or more are automatically forced to terminate their
training programs for certified nurses aides--for two years. Even if
the deficiency is cleared up within a day, the provider's ability to
train more staff is gone for two years. This usually hurts quality
improvement more than it helps, especially in rural areas where there
are no training programs nearby.
These and several other impediments to quality improvement are
corrected in the Medicare and Medicaid Nursing Home Quality Improvement
Act (HR 4030) that was introduced last year by Congressman Dave Camp on
this committee. I'd like to thank Congressman Camp, Congressman
McDermott, and the other cosponsors for their leadership in quality
improvement and urge the other members of the committee to cosponsor
the bill and help us make the nursing home oversight system more
focused on improving quality.
Providers of care take the initiative
In the late 1990s, leaders in long-term care recognized that we had
to recapture a sense of professional and individual accountability to
make remarkable improvement in the quality of long-term care and
services. These leaders met to consider how we might align our
individual organizational quality initiatives and work more effectively
with government to manage change.
Two major initiatives grew out of those early discussions:
1. CMS's Nursing Home Quality Initiative, in which:
LMeasures of quality have been defined and validated
by CMS;
LA system for reporting these measures to the public
has been developed, tested and rolled out; and
LAn ongoing system of professional consult in
continuous quality improvement is currently being put in place
by the Quality Improvement Organizations.
2. The long-term care profession's Quality First Initiative, which was
announced in 2002 with the objective of building a covenant by and
among all representatives within the profession to promote healthy,
affordable, accountable and ethical long-term care. Quality First is a
comprehensive, measurable commitment to quality that we believe nursing
homes will embrace. It is, in essence, a promise from providers to
patients and their families that nursing homes will deliver the high
quality care that America's seniors deserve.
Quality First consists of seven principles that have been jointly
endorsed by AAHSA, the Alliance, and the American Health Care
Association (AHCA).
The seven core principles are as follows:
LContinuous Quality Assurance and Quality Improvement;
LPublic Disclosure and Accountability;
LPatient/Resident and Family Rights;
LWorkforce Excellence;
LPublic Input and Community Involvement;
LEthical Practices; and
LFinancial Stewardship
Quality First further calls for the creation of a National
Commission on Nursing Home Quality that will report progress toward
achieving improved quality. The panel will identify opportunities for
quality improvement; recommend annual quality improvement goals; and
assess the impact of the voluntary quality initiative on care and
services.
In addition to achieving a uniform commitment to quality, the goal
of Quality First is to build consumer trust through achieving
excellence in care and service delivery.
I believe these two quality initiatives indicate the desire on the
part of the government and provider community to work toward a common
goal of improving quality; however, more needs to be done.
Regulatory Reforms
Madam Chairman, I was privileged to serve on Secretary Thompson's
Advisory Committee on Regulatory Reform (SACRR), chaired by Dr. Douglas
Wood, and have great respect for this undertaking. During the eleven
months of work of this Committee, I have seen first hand how well
intended regulations can have the effect of impeding quality. During
our work together, Committee members learned that consumers, consumer
advocates, beneficiaries, providers, suppliers, the business community,
researchers and public officials all reject the current regulatory and
payment frameworks for long-term care. This overwhelming vote of ``no
confidence'' provides the necessary societal and political mandate for
Congress to seriously consider meaningful reform.
We also found great opportunities for streamlining programs and
making them more beneficiary focused. For example: The elderly and
persons with disabilities need both medical care, and help with
personal needs and activities of daily living. Medicare pays for the
former, and Medicaid pays for part of the latter. The two programs are
administered as separate programs. Six million people are eligible for
both programs.
There is tremendous potential for containing cost and improving
quality of care and services if we can better align both payment and
regulation in the Medicare and Medicaid programs. Many of the 255 SACRR
recommendations address this issue.
Madam Chairman, the Medicare Regulatory and Contracting Reform Act
passed by the House during the 107th Congress addressed many of the
reforms embraced by the SACRR. The Centers for Medicare and Medicaid
Services, (CMS) can implement many of SACRR's recommendations through
administrative action and we strongly encourage the agency to take this
step. However, there is unfinished business that warrants Congressional
action. Appendix C of SACRR's report contains unfinished Committee
business--recommendations that were proposed by SACRR and either
formally discussed or put forth for Committee consideration, but not
brought to closure because of time constraints.
The #1 piece of unfinished Committee business reads as follows:
``Expand Medicare waiver authority, selectively, beyond the current
limited authority to waive coverage and reimbursement, to accomplish
several high priority goals of the Committee, including but not limited
to:
LDemonstrations of unified service delivery to
Medicaid/Medicare dual eligibles.
LTesting of regulations in limited geographic areas
before requiring national implementation.
LAllowing greater flexibility to test the efficacy of
alternative State survey protocols for skilled nursing
facilities/nursing facilities, as per recommendation #213
(Multiple Reviews);
LEnabling providers to access government data for the
purpose of improving quality of care, while retaining system
security and patient privacy protections.''
Madam Chairman, in the name of regulatory reform in long-term care,
we strongly urge that SACRR's #1 piece of unfinished business be
introduced as legislation in the 108th Congress.
Concluding Comments:
In conclusion, all of us--beneficiaries, providers, suppliers,
lawmakers, regulators and consumer advocates--need to make a
disciplined commitment to remarkable improvement in the quality of
long-term care:
LThe consumer and consumer advocate must commit to
systems that will enable residents and families to exercise
informed choice.
LThe government must commit to avoid unintended
consequences of regulation, and to observe and continuously
improve the impact of regulation in the real world.
LProviders and suppliers must make a disciplined
commitment to adhere to principles of continuous improvement,
conduct formal programs of continuous quality improvement, and
to report outcomes publicly.
LAnd finally, all stakeholders must make a joint
commitment to using technology to share data that is patient
specific across sites of care and time in order to integrate
the patient's experience with episodes of acute care, skilled
nursing care, home health care, and community-based long-term
care.
While these challenges are formidable, Madam Chairman, your
legislation, Congressman Camp's legislation, and the ideas put forth by
the Secretary's Commission give us hope and the tools to achieve
meaningful reform in the regulation of long-term care. We pledge to
work with you to bring about these important changes. Thank you for
your leadership.
Chairman JOHNSON. Thank you very much. Dr. Carius.
STATEMENT OF MICHAEL CARIUS, M.D., IMMEDIATE PAST PRESIDENT,
AMERICAN COLLEGE OF EMERGENCY PHYSICIANS, NORWALK, CONNECTICUT,
AND FOUNDING MEMBER, ALLIANCE OF SPECIALTY MEDICINE
Dr. CARIUS. Thank you, Chairman Johnson, Ranking Member
Stark, and Members of the Subcommittee for the opportunity to
testify here today. I am Dr. Michael Carius, Immediate Past
President of the American College of Emergency Physicians
(ACEP), and a Founding Member of the Alliance of Specialty
Medicine. I am here today representing nearly 23,000 emergency
physicians, and more than 160,000 physician specialist members
of the 13 medical specialty societies and associations that
comprise the Alliance.
I am here today to discuss the Medicare regulatory reform
provisions in H.R. 4954, the actions CMS has taken towards
regulatory relief, and what remains to be done in the future. I
will also address the Emergency Medical Treatment and Labor
Act.
Today, liability costs and reimbursement reductions have
taken their toll on the practice of medicine. Government
regulation has compounded our paperwork, which is demoralizing
for physicians who are in the business of patient care.
Ultimately, patient care is jeopardized when physicians are
forced to spend hours filling out a blizzard of bewildering
paperwork to comply with enormous and complex Federal health
care regulations, particularly those of Medicare, Medicaid, and
now HIPAA.
We applaud the Committee's efforts during the last Congress
to reduce and streamline Medicare regulations, and encourage
you to continue your effort this year.
The ACEP and the Alliance have long supported the goal of
EMTALA to prevent discrimination in the delivery of emergency
medical care. Since 1986, EMTALA's impact on health care has
been great, but over the years, regulations, guidance and court
decisions have caused this law to be increasingly problematic
for emergency care. We are encouraged by the draft regulations
published in May 2002 which indicate that CMS has thoughtfully
reviewed the regulatory language and guidance it has
promulgated. From this, we anticipate comments from physician
and hospital groups will lead to further improvements to the
final regulation.
However, additional steps need to be taken. The ACEP and
the Alliance support section 844, which contains additional
EMTALA improvements. We believe payment for medical screening
examination and stabilizing treatments should be based on the
presenting condition, not on the final diagnosis, which has
been used by both the public and private payers to deny payment
and which is inconsistent with the EMTALA duty to screen and
stabilize.
Enforcement actions have been inconsistent, driven by poor
patient outcomes, questionable complaints, and adversarial
attitudes. The ACEP and the Alliance recognize that EMTALA
definitions are legal, not clinical, and urge that
investigations focus on whether the medical screening
examination process was discriminatory and not on clinical or
quality-of-care concerns. We view heavy-handed and uneven
enforcement as one of the greatest threats to a collapsing
emergency medical care system.
Section 844 also addresses the role of peer review in
EMTALA investigations. Currently, if peer review is obtained,
CMS recommends but does not require agencies or regional
offices to use board-certified physicians. However, peer review
often does not occur because of short review times required by
CMS.
The ACEP and the Alliance urge Congress to mandate early
peer review and require reviewers to be board-certified
physicians practicing in the specialty related to the alleged
violation. In addition, peer reviewers should also be trained
in the EMTALA law and regulations applicable to medicine. The
ACEP and the Alliance support quality EMTALA enforcement and
peer review participation and would willingly participate as
peer reviewers.
The uncertainty surrounding both initiation and closure of
an EMTALA investigation is one of the most vexing aspects for
physicians. We believe quality improvement organizations' peer
review reports should be provided to the hospitals and to
physicians being investigated concurrently with their delivery
to CMS, and we support the notification of providers when the
investigation is closed.
The ACEP and the Alliance support the provisions found in
section 845. Provider experience, expertise, and input into CMS
decision-making regarding interpretation and enforcement of the
law would avoid conflict and decision error, and improve
compliance consistent with congressional intent.
Emergency departments face a dwindling supply of medical
specialists who need to maintain their own practice obligations
while endeavoring to provide on-call services to several
different hospitals where they may have privileges. This crisis
was highlighted recently during President Bush's recent visit
to Scranton, where he found only one neurosurgeon who covers
two hospitals and a trauma center. One surgeon clearly cannot
cover three facilities simultaneously.
Unfortunately, the proposed rule further confuses and
increases emergency departments' on-call problems. How will
emergency physicians, who urgently need the services of an on-
call specialist, find one who is able to come to the emergency
department?
The lack of payment for treating and stabilizing uninsured
EMTALA-related cases is an underlying problem, and it threatens
the viability of our Nation's health care safety net, emergency
departments, and trauma centers. The proposed EMTALA technical
advisory group must examine this problem.
In conclusion, Federal policy must acknowledge today's
environment and develop broader-based approaches to on-call
coverage. It also must address funding EMTALA-mandated
services, expansion of the EMS infrastructure, and development
of a more consistent and pragmatic EMTALA enforcement program.
We believe that the proposed composition of the EMTALA
technical advisory group in section 845, which includes broad
representation from CMS, including its regional offices as well
as the Office of Inspector General (OIG), State reviewers, peer
reviewers, and consumers will adequately protect public
interest without a Federal Advisory Committee Act requirement,
while promoting frank and open discussion of today's difficult
issues surrounding EMTALA implementation and enforcement.
This concludes my testimony. I will be happy to provide
additional testimony to the Committee as needed. I thank you
for the opportunity.
[The prepared statement of Dr. Carius follows:]
Statement of Michael Carius, M.D., Immediate Past President, American
College of Emergency Physicians, Norwalk, Connecticut, and Founding
Member, Alliance of Specialty Medicine
Thank you, Chairman Johnson and Ranking Member Stark and Members of
the Subcommittee for the opportunity to testify. I am Dr. Michael
Carius, immediate past president of the American College of Emergency
Physicians and a founding member of the Alliance of Specialty Medicine.
I am here today representing over 22,000 emergency physicians and more
than 160,000 physician specialist members of the 13 medical specialty
societies and associations that comprise the Alliance.
You have asked me to speak about the Medicare regulatory reform
provisions in H.R. 4954, The Medicare Modernization and Prescription
Drug Act passed by the House last year, the actions CMS has taken
toward regulatory relief and what remains to be done. You also have
asked me to specifically address Emergency Medical Treatment and Labor
Act (EMTALA).
I would like to begin by making a few comments about the
environment in which American medicine is practiced today. We are
practicing in a time when much of the control of our private practice
has been taken away by governmental requirements and private sector
cost cutting. Liability costs and reimbursement reductions have taken
their toll. Government regulation of the practice of medicine and the
additional paperwork burden it causes is one of the most wearisome
aspects of today's medical practice environment. Chairman Johnson is
absolutely correct when she states, ``that physicians are frustrated
that today's system seemingly is oriented toward and emphasizes
policing providers rather than helping them deliver better care.''
The enormity and complexity of Federal health care regulations
particularly Medicare, Medicaid, and HIPAA regulations make it
difficult for physicians to spend time with patients. Instead,
physicians and their staff spend hours filling out a blizzard of
bewildering paperwork. It is nearly impossible for physicians to recoup
the patient care time that compliance with these requirements imposes.
We applaud the Committee's efforts during the last Congress to reduce
and streamline Medicare regulation and encourage you to continue your
efforts this year.
ACEP and the Alliance have long supported the goals of EMTALA. We
believe in the intent of EMTALA as an anti-discrimination law. Since
1986, EMTALA requirements have affected us all, but with several
versions of the regulations, guidance, and court decisions, EMTALA has
had a unique and increasingly troubling impact on emergency medical
practice.
It is clear from the draft regulations published in May 2002 that
CMS has engaged in a thoughtful review of the regulatory language and
guidance promulgated over the years. We are generally pleased with most
of the common sense proposals that clarify and refine definitions and
demonstrate CMS' efforts to respond to physician and hospital concerns
regarding EMTALA compliance. We look forward to the final regulations
and anticipate further improvements based on comments from physician
and hospital groups.
Legislation passed by the House last year would be largely
complementary to CMS' efforts, and passage by the Congress in 2003
would improve physician practice environment. However additional steps
need to be taken, and I'd like to focus my comments on a few of the
provisions in the Chairman's bill.
LACEP and the Alliance actively support Sec. 844, which contains
additional EMTALA improvements.
We believe that the payment for a medical screening examination and
stabilizing treatment be based on the presenting condition and services
ordered/performed to make a determination of whether or not an
emergency medical condition exists. Payment based on the final
diagnosis, which has been used by both public and private payers is
inappropriate and is inconsistent with EMTALA duty to screen and
stabilize.
Currently, enforcement is very unevenly applied across the country.
While not addressing enforcement in the draft regulations, CMS has
recognized the problems and has a contractor assessing the process
disparities across states and regional offices. ACEP and the Alliance
recognize that EMTALA definitions are legal rather than clinical, and
urge investigators to focus on whether the medical screening
examination process is applied in a discriminatory manner, not whether
the reviewer has clinical or quality of care concerns. Enforcement
actions have been inconsistent, driven by poor patient outcomes,
erroneous complaints and adversarial attitudes. Given the fragile and
overloaded condition of our emergency safety net including the
specialists it relies on, ACEP and the Alliance view heavy handed and
inaccurate enforcement as one of the greatest threats to our already
collapsing emergency care system. We believe that Sec 844 will help
alleviate these concerns.
Sec. 844 also addresses the role of peer review in EMTALA
investigations. Currently, if peer review is obtained, CMS recommends
but does not require that the state agencies or regional offices use
Board Certified physicians, peer review does not occur often because of
the tight review time mandated by CMS. ACEP and the Alliance urge
Congress to make early peer review mandatory and that the physician
reviewer be a Board Certified physician and actually practicing in the
appropriate specialty related to the alleged violation. ACEP and the
Alliance believe that peer reports should be made available to the
hospitals and physicians involved at the same time the Quality
Improvement Organization (QIO) is sending them to CMS.
Physicians involved in peer review should be specifically trained
in the EMTALA law and regulations applicable to the practice of
medicine. EMTALA violations are legal determinations; they are not
medical care violations. Unfortunately, most QIO reviewing physicians
understand standards of care related to medical liability rather than
the legal nuances of EMTALA. ACEP and the Alliance are very supportive
of quality EMTALA enforcement and peer review participation, and would
be readily available to participate in peer review at all stages in the
process. One of the most vexing aspects of EMTALA enforcement for
providers is the uncertainty surrounding the closure of the
investigation. ACEP and the Alliance support the notification of
providers when the investigation is closed (as found in Sec. 844).
LACEP and the Alliance enthusiastically support Sec. 845. EMTALA
Technical Advisory Group.
Provider experience, expertise, and input into CMS's decision
making regarding interpretation and enforcement of the law would avoid
conflict, decision error, and improve compliance consistent with
Congressional intent.
After more than 15 years, the resiliency of the emergency care
system and good will of specialty providers is in jeopardy. The lack of
payment for treating and stabilizing uninsured EMTALA related cases
threatens the fabric of a critical component of our nation's health
care safety net of emergency departments and trauma centers. The
problems with the ``on-call'' regulations highlight this issue.
The practical limitations in today's environment are evident. There
is a dwindling supply of medical specialists who need to maintain their
own practice obligations while endeavoring to provide on-call services
to several different hospitals where they may have privileges.
This crisis situation was underscored recently during the
President's visit to Scranton, where there is only one neurosurgeon
covering two hospitals and a trauma center. One surgeon cannot be in
all three places at once. In addition, he cannot continually cancel his
scheduled patients or work continuously without a day off.
The proposed regulation provides new and increased flexibility for
the surgeon to be on call for more than one hospital simultaneously.
Unfortunately, this does not resolve the problem. The proposed CMS
regulation requires hospitals to continue to ``maintain an on-call list
of physicians on its medical staff in a manner that best meets the
needs of the hospital's patients.''
What does this mean? Does it mean the hospitals must provide on-
call physicians services or simply maintain an on-call list? What does
this mean to emergency physicians trying to find an urgently needed
specialist? The current rules, while enhancing flexibility for certain
specialists, create uncertainty and ambiguity in how the rules will
actually work to provide timely coverage in EDs. A technical expert
group can begin to address this, and other serious problems in delivery
of emergency care created by EMTALA.
The fundamental underlying question that Congress must answer is
how does the federal government propose that hospitals, emergency
physicians and other specialists continue to provide uncompensated
EMTALA related services in light of the current practice environment?
How this issue is resolved will have enormous ramifications to the
availability of emergency services in this country, particularly in
smaller community hospitals.
Federal policy must acknowledge today's environment and develop
broader-based approaches to on-call coverage. Funding for uncompensated
care with respect to EMTALA-mandated services, expansion of EMS
infrastructure, and more consistent and pragmatic EMTALA enforcement
must be addressed also.
Given the sensitivity of many of these issues, we believe there is
a more appropriate model to engender frank discussions and generate the
compromise needed on these seemingly intractable issues than the FACA
model. We note that since the proposed composition of the EMTALA
Technical Advisory Group in Sec. 845 includes representatives from CMS
including the CMS regional offices, the OIG, State reviewers, peer
reviewers as well as consumer representation, the public interest will
be well-protected even without a FACA requirement.
ACEP and the Alliance also support Sec. 821, 823, 834, Provider
Education, Medicare Ombudsman, Prepayment review respectively and will
provide more detailed written comments on Title VIII to the Chairman.
This concludes my testimony. Again I wish to thank you for the
opportunity to testify before the Subcommittee. Thank you.
The American College of Emergency Physicians is a national
specialty society representing emergency medicine. With nearly 23,000
members, ACEP is committed to improving the quality of emergency care
through continuing education, research and public education.
Headquartered in Dallas, Texas, ACEP has 53 chapters representing each
state, as well as Puerto Rico and the District of Columbia. A
Government Services Chapter represents emergency physicians employed by
military branches and government agencies.
The Alliance of Specialty Medicine, is comprised of medical
organizations representing over 160,000 specialty care physicians in
the United States. The Alliance's mission is to improve access to
quality medical care for all Americans through a unified voice of
specialty physicians promoting sound federal policy
American Academy of Dermatology Association, American Association
of Neurological Surgeons/Congress of Neurological Surgeons, American
Association of Orthopaedic Surgeons, American College of Cardiology,
American College of Emergency Physicians, American College of
Osteopathic Surgeons, American College of Radiology, American
Gastroenterological Association, American Society of Cataract and
Refractive Surgery, American Urological Association, National
Association of Spine Specialists, and Society of Thoracic Surgeons.
Chairman JOHNSON. Thank you very much, Dr. Carius. Ms.
Gottlich.
STATEMENT OF VICKI GOTTLICH, ATTORNEY, HEALTHCARE RIGHTS
PROJECT, CENTER FOR MEDICARE ADVOCACY, INC.
Ms. GOTTLICH. I am Vicki Gottlich from the Center for
Medicare Advocacy. I thank Chairman Johnson, Mr. Stark, and the
Members of the Committee for the opportunity to testify before
you as the lone representative of beneficiaries in a very long
hearing.
I came prepared to discuss the need for a prior
determination process using Advance Beneficiary Notices, and
the need for a beneficiary ombudsman in HHS. Based on the
comments of Mr. Scully and the questions about the appeals
process, I rewrote my testimony, because I want to focus on the
appeals issues.
Beneficiary representatives across the country do not
support CMS's efforts to weaken the appeals protections that
were initiated by Mrs. Johnson, Congressman Thomas, and
supported in a bipartisan way by this Subcommittee. Those of us
who actually represent beneficiaries in the Medicare appeals
process know that the problems lie with the contractors and
they do not lie with the ALJs, as CMS would have you believe.
Like providers, beneficiaries get inappropriate,
conflicting, inaccurate information from contractors. We
believe that some of the recommendations made by CMS will only
make this provision worse and that they will weaken the role of
the ALJ.
The delays at the contractor level are unconscionable. We
oppose any effort to extend the time periods from the BIPA time
periods. We would like you to know that CMS, in its proposed
regulations to implement BIPA, even said that they aren't
prepared to enforce the time periods. So, no matter how much
extra time you give to contractors, as CMS requests, CMS isn't
going to do anything if the delays continue.
I want to give you two examples that show the problems with
contractors that have occurred recently. In response to a
request by a paralegal for the laws relied upon in denying a
claim for ambulance services, a carrier sent two pages from an
OIG report citing fraud and abuse in ambulance claims. An OIG
report is not a law upon which a carrier or anyone else may
base a decision that care is not medically necessary for an
individual.
This example illustrates why both beneficiaries and
providers have such problems with early levels of appeals at
the carrier and fiscal intermediary stage, and why they have
such high success rates at the ALJ hearing level. The ALJs make
their decisions based on the laws that govern Medicare, not on
OIG reports, other non-legal interpretations, or the confusing
and sometimes inaccurate contractor bulletins we see issued and
upon which contractors rely in making decisions.
The ALJs are independent, external reviewers who provide
beneficiaries with the fair hearing rights required by due
process of law. Yet hidden in the budget proposal, CMS is
proposing to weaken the ALJ level of review by using
alternative mechanisms in lieu of ALJs. These mechanisms will
deprive beneficiaries of the first real independent review of
the law and facts relating to their claims that they receive.
Moving the ALJs from the Social Security Administration to
HHS is opposed by every single beneficiary advocate in this
country. We are fearful that ALJs will lose their independence
and be beholden to the agency in which they are housed. The
ALJs before whom we have appeared in administrative hearings
are familiar with Medicare laws and regulations. They
understand the legal and Medicare issues and medical issues
that are involved.
I want to give you another example that arose yesterday
after I submitted my testimony. We received a copy of a
confusing and inconsistent fiscal intermediary bulletin that
may violate both the CMS skilled nursing facility (SNF) manual,
and the Federal court settlement of a case called Sarasatt
against Boeing. The SNF provider is using the fiscal
intermediary bulletin to try to collect money from the resident
beneficiary in violation of the Sarasatt settlement. If we
appeal this case, the fiscal intermediary is going to rely on
its bulletin, and so it will be a bogus, worthless appeal on
behalf of the beneficiary.
At the ALJ hearing, we would be able to submit the law, the
SNF manual, and the ALJ would rely on the law and the SNF
manual to determine whether or not the beneficiary is entitled
to relief. The problem is with the carriers and the fiscal
intermediaries that don't rely on real law.
The other problem with the CMS regulations is that they are
making it harder for beneficiaries to use the appeals process.
Congressman Thomas instituted the BIPA changes because he
wanted to make it easier for beneficiaries.
What we see in CMS's proposed regs is a process which would
require beneficiaries to have an attorney in order to put
together the legal documents and the medical records that CMS
would require. Ironically, it would be harder and require more
detail to file an appeal to the ALJ level of review than it is
to file an appeal in Federal court.
I want to say one other thing. That is, if you want to save
money in the appeals process, eliminate the quick levels of
review. Beneficiary representatives believe that the quicks
will be another bureaucratic level of review which will hinder
their access to care. The quicks will be contractors who are
beholden to the entity with whom they contract, and we are
concerned that as part of their contract analysis, CMS will
look to see how many of the appeals they upheld.
We thank you for the opportunity to testify on behalf of
your beneficiary constituents who are not represented
adequately on the Regulatory Reform Committee and do not have a
stronger voice at CMS or even before Congress as provider
organizations. I ask your help in ensuring that regulatory and
contractor reform efforts do not undermine the laws this
Committee initiated and enacted and court decisions designed to
protect beneficiary rights and access to care. Thank you.
[The prepared statement of Ms. Gottlich follows:]
Statement of Vicki Gottlich, Attorney, Healthcare Rights Project,
Center for Medicare Advocacy, Inc.
Good afternoon. I am Vicki Gottlich, an attorney with the
Healthcare Rights Project of the Center for Medicare Advocacy, Inc. I
appreciate the opportunity to address the Subcommittee on Health
concerning Medicare regulatory and contractor reform. We, like you, are
concerned with the important issue of assuring that Medicare provides
older people and people with disabilities basic protection against the
cost of medical services.
LUsing Advance Beneficiary Notices to Establish a Prior Determination
Process
One of the few pro-beneficiary provisions included in HR 3391, the
Medicare Regulatory Relief and Contracting Bill that passed the House
in the 107th Congress, builds upon the use of successful model notices
developed by CMS--in this instance the Advance Beneficiary Notices
(ABN)--to establish a prior determination process for certain items and
services covered by Medicare. We urge you to include this provision in
any future legislation, with the modifications discussed below.
Current regulations mandate that ABNs be provided to beneficiaries
by physicians who believe that Medicare is likely to deny payment for a
particular service. See 42 CFR Sec. Sec. 411.408(d)(2). The notice
serves two purposes: to inform a beneficiary that she may request that
the claim for the service be submitted to Medicare for an official
determination of Medicare payment, and to inform the beneficiary that
she could potentially be liable financially for the service if Medicare
denies payment for the claim. If the claim is not submitted to
Medicare, and no official decision is received from Medicare, then the
beneficiary has no access to the appeals system. In order to appeal a
denial of a claim, a beneficiary must both receive the service and have
Medicare, rather than the provider, determine that it will not
reimburse the provider for the service.
Though the ABN serves as a beneficiary protection, informing the
beneficiary of rights and potential responsibility, the ABN also
creates barriers to care. Many beneficiaries, fearing that Medicare
will not pay for a service, and concerned that they will be unable to
pay for the service out of their own pockets, decide to forgo treatment
when faced with an ABN. These beneficiaries are relying on the
provider's interpretation of Medicare coverage. By forgoing the
service, they forgo the right to get an official Medicare determination
on whether the claim will be paid, and they lose the right to appeal
the unfavorable decision.
Beneficiaries who can afford to pay for the service after receiving
an ABN, and who request that the claim be submitted to Medicare, are
likely to fair well. Approximately 70% of claims for which an ABN was
issued to the patient are paid by Medicare. Thus, beneficiaries who
decline a service because they cannot afford to pay are in all
probability foregoing a service that would have been covered by
Medicare.
Section 408 of HR 3391 creates a remedy for beneficiaries who want
a determination from the carrier about whether Medicare will pay for a
service for which they received an ABN, but who cannot afford to pay
for the service themselves. The process established in that section
would allow doctors and patients to request a prior determination from
Medicare about whether care will be covered in cases in which an ABN
was delivered. The section requires the decision to be made within 45
days of the submission, and allows for a redetermination of an
unfavorable prior determination to be issued within 30 days. A
beneficiary who receives an unfavorable prior determination may still
go through the claims and appeals process after obtaining the service.
What we currently have is a two-tiered Medicare system. Those
beneficiaries who receive an ABN and can afford to pay for the
services, receive the services, the Medicare claim is filed, and in 70%
of cases, Medicare pays the claim. Those beneficiaries who receive an
ABN and CANNOT afford to pay for services, do not receive the services,
no Medicare claim is filed and they are denied medical care. This
provision will rectify this inequity.
While Section 408 creates an important right for beneficiaries, it
needs to be strengthened in two ways. First, the 45 day time period for
making a determination is too long for some treatments and diagnostic
tests. Conditions may worsen while beneficiaries wait for a decision
from Medicare. Second, as part of the provider education which plays an
important part of regulatory and contractor reform, Medicare
contractors should instruct providers on the proper use of ABNs.
Beneficiary advocates find that some providers are distributing ABNs
routinely for all services, and not just for services in which there is
a question about Medicare payment. As a result, beneficiaries are
declining care for services for which there is no doubt that Medicare
would make a payment.
Medicare Beneficiary Ombudsman
The other beneficiary provision in HR 3391 is Section 303. That
section establishes the position of Medicare Beneficiary Ombudsman
within the Department of Health and Human Services to assist with
complaints, grievances, requests for information, appeals, and
disenrollment from Medicare+Choice plans. Currently, there is no
central place within HHS or CMS for beneficiaries to go and seek
information and assistance. The sources and resources available to
beneficiaries are spotty at best. Thus, creation of the Beneficiary
Ombudsman would fill a void that is getting increasingly worse.
Much confusion still remains over whether Medicare carriers and
fiscal intermediaries have eliminated their beneficiary outreach and
education specialist positions. CMS and HHS have recently stated that
press reports concerning the elimination of this position are
incorrect. Yet individuals who served as outreach and education
specialists at carrier and fiscal intermediaries have told beneficiary
representatives that they will no longer serve in that capacity.
Beneficiary representatives also were told at the February 6, 2003
monthly CMS Advocates Meeting that, because of the cut-backs, carriers
would no longer be doing beneficiary outreach about Medicare-covered
preventive services at health fairs or providing information about
preventive services in consumer newsletters. Although CMS states that
beneficiary outreach and education services remain, beneficiary
advocates still question the extent to which such assistance will be
provided.
The telephone hot-line services also do not provide the kind of
assistance that a Beneficiary Ombudsman would provide. They do not
assist with appeals, nor are they capable of answering more than the
most perfunctory questions. When I asked a representative two weeks ago
for the citation to the law upon which she based her response to me,
she told me she did not know. When I asked where I could find the law,
she told me the Library of Congress. She did not know that the Medicare
statute and regulations and CMS policy manuals are all available
through the CMS web site.
In order for the Medicare ombudsman to be an effective resource for
beneficiaries, the Ombudsman must work closely with State Health
Insurance and Assistance Programs (SHIPs). These programs provide the
direct, face-to-face assistance that beneficiaries require when working
on appeals or trying to decide among Medigap policies, long-term care
policies, or Medicare+Choice plans. The Ombudsman should serve to
assist the SHIPs in gathering medical records and Medicare policies
that are needed to help review a claim or to process an appeal.
Of course, the most effective assistance for beneficiaries would be
to fund the existing SHIP programs adequately, and to promote, not
undermine, their activities. Again, local SHIPs provide the one-on-one
assistance that beneficiaries require in complicated cases. They
provide assistance that cannot be provided by a hotline operator with
no intimate knowledge of the issues and without the time to spend
unraveling a beneficiary's complaint.
One additional point needs to be made. Section 303 would require
the Secretary to include only the 1-800 Medicare phone number in the
Medicare & You handbook. CMS partially implemented this provision by
eliminating the phone numbers for the SHIPs but including phone numbers
for some of the other contractors. Unfortunately, advocates around the
country have found that the 1-800 Medicare hotline cannot effectively
assist beneficiaries with more complicated questions than how to get a
new Medicare card or how to order publications. The hotlines do not
always refer beneficiaries to the SHIP programs, which are the only
entities that provide direct, individualized assistance to
beneficiaries.
Further, the other Medicare contractors do not consistently provide
the correct referrals to beneficiaries who need help, and they often
have telephone trees that are daunting to even the most competent of
younger, English-speaking adults. For example, I recently called the
fraud hotline to report what I considered to be fraudulent activity by
an ambulance supplier. The operator told me the issue wasn't fraud
against Medicare--though it is surely fraud against the beneficiary--
and gave me the phone number of the Durable Medical Equipment Regional
Carrier. When I said that DMERCs don't handle ambulance claims, she
hung up on me. Medicare beneficiaries and their families deserve
correct information and more polite treatment. They deserve an
Ombudsman to whom they can turn when they receive the treatment I
received.
Other Potential Beneficiary Protections
Congress can and should direct CMS to take other steps to provide
beneficiaries with the information they need to get the Medicare-
covered care they require.
1. SNF Notices: After hospitalization, Medicare covers up to 100
days of skilled nursing facility (SNF) care. Some times, residents of
SNFS are unaware that their Medicare coverage is ending, and they are
unaware of the need to secure other means of paying for their nursing
home care. CMS should be required to inform residents about the number
of days used sufficiently in advance of the end of the 100 days of
care. The notices should inform residents about the right to apply for
Medicaid and the phone number of the Medicaid office. The notice should
also inform residents of the right to appeal if they dispute the
calculation of the 100 days.
2. Life-time hospital reserve days: Similarly, beneficiaries who
use up their 60 life-time hospital reserve days should receive advance
notice informing them that they are depleting their days, that their
Medicare coverage is ending, and that they need to find another means
of paying for continued hospitalization. Again, the notice should also
inform patients of their right to appeal the number of days utilized.
Although few beneficiaries ever need such extensive hospitalization,
those who do are often unaware that Medicare will stop paying for their
care.
3. Hospital discharge information: The Medicare statute requires
hospitals to assist patients with discharge planning. As part of this
requirement, hospitals should provide a list of Medicare-certified
skilled nursing facilities and their financial relations with these
facilities. We have heard from advocates around the country that some
hospitals discharge patients who would otherwise be eligible for the
Medicare-SNF benefit to facilities that are not Medicare-certified
without informing them that they would not receive Medicare coverage
for their care or that other, Medicare-certified facilities may be
available.
4. Medicare+Choice denial notices: Initial determinations and other
notices in original Medicare must state the specific reason for the
denial, state whether a Medicare policy formed the basis for the denial
and explain how to get the policy, and tell beneficiaries how to file
an appeal. While current regulations require Medicare+Choice plans to
explain the specific reason for the unfavorable determination, few
plans state the reasons in a way that is useful to beneficiaries or
advocates. Plans should be instructed on providing proper information;
CMS should develop model notice language for this use.
Contractor Reform Issues
In 1999 and in 2000, I testified before this subcommittee in
support of a bill introduced by then-Subcommittee Chairman Thomas to
reduce the time frames by which Medicare contractors, administrative
law judges, and the Departmental Appeals Board must issue decisions on
Medicare appeals. These important beneficiary protections, along with
other appeals reforms, were enacted as Section 521 of the Beneficiary
Improvement and Protection Act of 2000.
We appreciate the bi-partisan work of this committee last year to
urge CMS to implement Section 521 and ask your assistance again to ward
off the efforts by CMS to undermine the protections you enacted for
beneficiaries.
The proposed rules to implement Section 521 issued by CMS on
November 15, 2002 create loopholes that would allow contractors at all
levels of review to avoid compliance with the statutory time frames. 67
Fed. Reg. 69312 (Nov. 15, 2002). CMS in the preamble indicates that it
would not take enforcement action against carriers and fiscal
intermediaries which fail to meet deadlines. Although Congressman
Thomas worked to establish a new appeals system to assist
beneficiaries, the CMS proposed regulations would make it almost
impossible for a beneficiary to pursue a claim without legal
representation. Some of the requirements for appealing to a higher
level of review proposed by CMS are more onerous than the requirements
for filing a federal court appeal.
We have also learned that CMS is proposing through the budget
process to weaken Section 521 protections. They plan to seek
legislation to increase time frames for making decisions, without
proposing any remedies for beneficiaries when, as now, contractors do
not comply.
Most importantly, they are seeking to replace administrative law
judges (ALJs) with some other mechanism of review that will not provide
the independence and impartiality of ALJs. Beneficiaries rely on ALJs
to apply Medicare coverage laws fairly. ALJs look to and interpret the
real Medicare law as contained in the statute and regulations in
determining whether Medicare should pay for a service. They provide the
primary opportunity to obtain a full and honest appraisal of the right
to Medicare coverage. We ask your assistance in assuring that the
statutory right to a fair hearing before an administrative law judge--a
right which stems from basic constitutional right to due process--not
be eroded.
Cautions About Regulatory Reform
The Center for Medicare Advocacy and other beneficiary
representatives do not agree with the other witnesses who testified
today that the voluminous Medicare regulations make it impossible to
provide services under the program and impede access to care. Medicare
regulations are issued by CMS to implement the changes in the laws
passed by Congress, to protect the rights of Medicare beneficiaries to
receive medically necessary services, and to assure accountability of
providers and of CMS. For example:
LThe Balanced Budget Act of 1997 included a specific
statutory section, 42 U.S.C. Sec. Sec. 1395w-26, that directed
CMS (a) to establish standards for financial solvency of
Medicare+Choice plans, and (b) to establish other standards to
carry out the new Medicare Part C, the Medicare+Choice program.
Other statutory sections relating to Part C directed CMS to
address specific substantive issues, for example, standards for
exercising choice and electing a Medicare+Choice plan,
guidelines for post-stabilization care, and time periods for
appeals of adverse determinations, and included details about
what should be included in the regulations. Thus, the
approximately 100 pages of regulations added to the Code of
Federal Regulations to implement the Medicare+Choice program
were done so at the explicit direction of Congress to help with
the administration of a new and complex program.
LFederal Medicare and Medicaid rules promulgated by
CMS to implement the Nursing Home Reform Law of 1987 have led
to reduced use of physical and chemical restraints in many
skilled nursing and nursing facilities nationwide, allowing
facilities to provide better care for residents at lower cost.
They also led to a 30% increase in the use of hearing aids; an
increase in the use of toileting programs for incontinent
residents; a 28% decrease in the proportion of residents with
little or no activity; and a 26% reduction in hospitalizations
of residents (resulting in an annual estimated savings to the
Medicare program of $2 billion in hospital costs in 1992
dollars). See, Dr. Catherine Hawes, Assuring Nursing Home
Quality: The History and Impact of Federal standards in OBRA-
1987 (Commonwealth Fund, December 1996).
Medicare regulations and other guidance developed by CMS help
assure that beneficiaries receive the services they need and to which
they are entitled. Form notices developed by CMS to explain what
services have been covered, what services have been denied, why they
have been denied, and what a beneficiary can do about a denied service
provide accurate information and consistency. Beneficiary vulnerability
increases when CMS does not mandate forms or does not include all of
the pertinent information in forms.
Advisory Committee on Regulatory Reform
The Center for Medicare Advocacy is one of the many beneficiary
organizations that expressed disappointment in the make-up of the
Advisory Committee on Regulatory Reform. We believe that the committee
was heavily biased against consumers and did not represent the
interests of the many groups for whom the health programs administered
by DHHS were intended. A review of committee proceedings shows the
effect of this bias. Most of the witnesses who testified before the
committee were providers. Many of the recommendations may not have been
passed had more beneficiary representatives participated as committee
members. Indeed, the proceeding records indicate that most of the votes
against committee recommendations were cast by the consumer
representatives. We ask that you keep this bias in mind when reviewing
the proposed recommendations.
Rather than raise objections anew to committee recommendations in
this testimony, I have attached comments filed by the Center for
Medicare Advocacy on two controversial issues. The Center disagrees
with the recommendations concerning OASIS; OASIS is an important
quality assessment tool that should apply to all home health consumers.
The Center also disagrees with the recommendations concerning
enforcement of nursing home laws; many of the recommendations made by
the committee undermine and conflict with the Nursing Home Reform Law.
Although we did not file specific comments on the committee's
recommended changes to EMTALA, the Emergency Medical Treatment and
Active Labor Act, we are concerned that the recommendations undermine
the effectiveness of that provision. EMTALA protects patients by
requiring hospitals to screen and stabilize patients in an emergency
situation before transferring the patient or asking about insurance
coverage. We fear that the recommendations will result in individuals
with emergency care needs being turned away from certain locations,
just as they were before EMTALA was enacted.
Thank you for the opportunity to testify on behalf of beneficiaries
at this hearing.
Chairman JOHNSON. Thank you very much, Ms. Gottlich. I
thank the panel for their comments. There are a couple of
things that I will follow up on, and then we will move forward.
First of all, Ms. Ryan, I wanted you to go into this issue
a little bit more. You mentioned it in the waiver section of
your testimony. I believe it was the substance of the last page
that you really didn't get to go into as well. The waivers were
denied by the Federal Government to test outcome-based measures
of quality.
In fact, let's just confine your answer to that, because I
would like to know really more about this. Why do you think
outcome-based measures are applicable to nursing home care? If
they are applicable, why were the waivers denied?
Dr. RYAN. As I understand it, the Medicare waiver authority
is more limited than some of the waiver authority under
Medicaid in which the States and local communities have been
able to look at alternative ways to provide care across
separately regulated and paid-for programs.
The State survey process has set standards for the quality
of care in nursing homes for purposes of licensure. There are
standards that are likewise set that are external for
participation in Medicare and Medicaid. Those standards have
been external and fairly inflexible in a quickly evolving care
setting. Our residents are older, they are more frail, they are
suffering co-morbidities. There are many more issues of
multiple drugs and a number of things that are part of that
care.
Chairman JOHNSON. Can you think of a way to give Members a
little clearer understanding why a regulatory system that looks
at outcomes is going to work?
Our regulatory system has in the past looked at individual
instances; such as: is the bed too high, and all of these
little things. In many ways, the outcome does not count. They
don't even look at the outcome.
It is hard to grasp this. If you would talk about that?
Dr. RYAN. A patient's overall experience in terms of
quality of life and quality of care is impacted by many, many
things, many specific instances. If we can identify measures
that are valid, measures of both quality of life and quality of
care, there ought to be flexibility with regard to the
processes that help you achieve that outcome. That is the work
that we are trying to do, with the advice of the quality
improvement organizations within long-term care under CMS's
National Nursing Home Quality Initiative.
How do we begin to grasp the principles of continuous
improvement? How do we give persons at the site of care the
information that they need to make decisions? Then how do we
aggregate that information at the level of the facility and the
level of the patient care so we know what their outcomes are?
This is a mindset shift that takes us away from focus on
process and structure to one of the individual resident's
outcome and the collective outcome at the facility level. This
is a paradigm shift for both long-term care and for acute care.
Chairman JOHNSON. It is a paradigm shift. Would anybody
else want to comment on that issue? Otherwise, I will go on to
Mr. Fay.
Mr. Fay, on the Cost Report, you mentioned that it requires
arcane Medicare-specific cost accounting principles. Now, are
those different than the cost accounting principles you use
across the rest of your patients and for other payors?
Mr. FAY. Yes, ma'am, they are. The accounting principles in
use by hospitals, as well as just about every enterprise in
this country, are based on generally accepted accounting
principles. Medicare has over the years developed Medicare cost
reporting principles to recognize costs which are generally
lower than total cost.
So, long as we had a cost-based system, those rules were
necessary in order to be sure that Medicare paid its claims in
accordance with the intent of Congress and the directives of
the Administration. As we move away from a cost-based system
into a fully prospective system--and I recognize that we still
have a few vestiges of cost-based reimbursement left in the
system--but once we totally transition to a PPS, it would at
least appear to me that we would no longer need a Medicare
cost-based system.
Chairman JOHNSON. This has been suggested, and I think it
is something we have to look into and discuss more fully. It is
expensive to keep different accounting systems up and running.
Mr. FAY. It is. The OMB's conservative estimate is that it
takes about 650 hours per year per provider--that includes SNFs
and hospitals--to do the Medicare report. We think it is much
higher. We have heard for an academic medical center it could
be 4,000 hours a year. That is time and energy we would rather
see directed towards patient care services.
Chairman JOHNSON. Mr. Stark.
Mr. STARK. Mr. Fay, would you then support a uniform set of
accounts and accounting practices for all hospitals?
Mr. FAY. Mr. Stark, personally I would. The committee's
recommendation in this regard was to simplify the existing Cost
Report, because we recognize that we still had cost-based
reimbursement.
Mr. STARK. It is my understanding that the American
Hospital Association for years has fought uniform accounting
forms, which I would prefer. I would be willing to drop all the
government's if we could just have one set; so if we are
dealing in Tennessee or Wisconsin or California, all hospitals
or all providers are using the same accounting format. Then we
could build a database and begin to understand better.
They don't. Each one wants to have their own cost
accounting system because they dreamed it up, for whatever
reason. They may be valid reasons, but I am suggesting that if
your group would be willing to be a little more flexible, I
think we could come to an agreement.
I do think it would then require a standardized set of
accounting reports. That would be one of the solutions.
Mr. FAY. If I may follow up, sir, the Committee did make
that as a long-term recommendation, to go to mandatory,
consistent GAP-based reporting formats, whether it is down to a
chart or a higher level; but it would still give the Federal
Government, and, most importantly, Medicare Payment Advisory
Commission access to real-time data that could be used to
measure the health of hospitals.
Mr. STARK. Absolutely. I have to think it would help your
industry. In other words, although you want to talk about
competition all the time, which is okay, but nonetheless, it
would seem to me it would be helpful if you could see in a
sanitized version what other hospitals were doing. What does
the laundry cost per patient in a certain State or a certain
area? If you can't pull that information out easily, it is
harder for management to make decisions. I hope you would work
with us on that.
Dr. Hill, I have the same problem with docs. I don't think
if a physician's practice--it is a small percentage--has been
identified as having the possibility of over-billing or
overcharging, that they can settle. You suggest that it is
disruptive to a practice. One would assume we have jackbooted,
helmeted people coming into your office and pawing through your
medical records and leaving them in a pile on the floor, and I
don't think that is really true.
It is not your people. They may have to pull the records
out and leave them in a pile someplace. I will tell you, it
cannot be any worse than a bank examination or an IRS audit.
There are procedures that cause people who have overcharged
us--we just had the Federal Bureau of Investigation in my
State, and I submit to you it is a lot simpler to just have a
random couple of hundred exams.
Again, it would go--and I know your membership is fighting
hammer and tongs against standardized patient benefits. Now,
someday I think we are going to have to get there. My sense is
that the sooner we can get there, the sooner Mr. Luebke can
make a fortune selling all the software to do it.
There is a certain independence on the part of your members
that doesn't fit very well with having everybody come into a
cookie-cutter sort of procedure. I just hope that we can move
to it more closely, because if we don't do that we are not
going to be able to use all the electronic technology we have,
which I think would make all of our lives simpler.
I have to suggest to you that while I have no brief for the
government's enforcement as being a lot of fun, that your
membership could move us to making it easier, too.
Dr. HILL. I totally agree with that. I think you are behind
on what we think now at the AMA about electronic medical
records particularly, and standardized procedures and
processes.
Our problem is the immediate payment up front before
appeals processes are started or completed. That is our only
issue. We absolutely would like any overpayment problems or
fraudulent problems to be taken care of, but it is just that
up-front unfairness we consider in the payment. That is the big
issue. Our autonomy as the profession is one of the great
things about American medicine, as you well know.
Mr. STARK. I believe it. Dr. Ryan, if I may say, that
chart--and again, I hate to be put on the side of encouraging
all kinds of regulation. Having just tried to add a bathroom to
my house, I can tell you, I understand it.
An awful lot of that up there would be required of an auto
dealer or a McDonald's in any city. In other words, all of the
State government stuff and the local government stuff and the
U.S. Department of Labor stuff and all of the U.S. Department
of Transportation, U.S. Department of Justice, all of that is
not unique to a medical care provider.
I am sympathetic to people having to fill out forms these
days, but I just wanted to suggest that--CMS and this Committee
are not responsible for all of those, okay?
Dr. RYAN. Mr. Congressman, I really do understand that. I
think one thing which is unique is the degree to which the
Justice Department now is regulating the abuse piece and CMS
the clinical piece, and we are beginning to see dysfunctional
crossover between those two systems.
Mr. STARK. Let me put it this way. At least with the
Justice Departmen, as long as you don't become a Muslim and
they sock you away without a lawyer, you are in good shape.
Chairman JOHNSON. We only have 12 minutes left. I would
like to recognize Mr. McCrery.
Mr. MCCRERY. Thank you, Madam Chair.
Mr. Luebke, you have made an eloquent pitch for the
competitive process in contracting. Can you give us some areas
or some examples that you think can be done more efficiently in
the administrative process, and the magnitude of any savings
that might be realized?
Mr. LUEBKE. I am not prepared to talk about magnitude of
savings, but I will give some examples. The bill really allows
for a specific focus on things like claims processing, so it
really can focus on the efficiency of that. In fact, Mr.
Scully's testimony also talks about putting some pricing
mechanisms in place that really incentivize providers to gain
efficiencies and drive down costs. So, I think there are some
real opportunities here to drive down costs.
What will happen by focusing on that is it will bring
technology, innovation, and commercial best practices, and by
applying some of the--like in our case, the very, very highly
efficient data centers that--we are continually bringing new
innovations, and have almost a fanatical focus on how do we
drive down costs, how do we bring new innovations and drive
down costs per transaction.
Some specific examples from the past of some things we have
done: We do the processing for the claims for the State of
Missouri for Medicaid. We have worked with them to
significantly drive down the number of medical claims
processed, to automate and have electronic claims processing,
and streamline the process by bringing Internet technologies so
the providers can easily enter their transactions via the
Internet.
We have brought point-of-service capabilities for pharmacy
claims so the pharmacies can again enter the claims very, very
easily, but, even more importantly, can see in real time
whether the person wanting to get the prescription--whether
they are eligible or not. So, you get real-time availability of
information.
During the period of time we have done that, we have more
than doubled the number of claims, but we have reduced the
absolute number of people who are doing it; so at least a
doubling of the efficiency of it, and some other important
things. We have reduced the time for payment from an average of
12 days to payment down to 2 days, so there are some very, very
significant improvements.
Mr. MCCRERY. While you don't have any estimated magnitude
of savings, you are convinced savings are possible through
these kinds of efficiencies?
Mr. LUEBKE. That is something that I really have not
studied in terms of looking at specifically what could we drive
as a result of this. That would be something that would take
some more detailed study.
Mr. MCCRERY. Mr. Fay, just quickly, you recommend that
EMTALA not apply for hospital in-patients that are transferred
or sent home in an unstable condition. What conditions are
there in existing procedures that would guard against the
patient--or the care deteriorating?
Mr. FAY. Yes, sir. The way I understand it, under the
current Medicare participation for a hospital, including
various State rules and so forth, once a patient is in the
hospital you have an obligation, a separate obligation and a
stronger obligation, to treat the patient; either stabilize the
patient or transfer the patient if needed.
We think those in-patient obligations actually exceed
EMTALA, and we are afraid if we have both obligations, EMTALA
and the existing in-patient requirement, you are going to have
a layering of regulations which could conflict and could cause
problems and confusion among doctors, patients, and hospitals.
Mr. MCCRERY. So, you think without EMTALA there is
sufficient direction under the law to make sure that the
patient is stable?
Mr. FAY. Yes, I do.
Mr. MCCRERY. Dr. Hill, you testified that the AMA continues
to hear from physicians about onerous audits and overpayment
demands. I know that is true because I hear from my physicians.
Will the provisions in the bill that we are considering
solve those problems, or do you think there are some more
things that we could put in the bill to provide more relief?
Dr. HILL. We are very pleased with the provisions of the
bill. If they are implemented, and monitored so we know they
are implemented, we think it would solve a problem. We thought
that last year and we still think that. We think that would
correct the problem greatly. The only other issue would be the
appeals process, which also I think would improve.
Mr. MCCRERY. Thank you, Madam Chair.
Chairman JOHNSON. Thank you very much. I thank the panel.
We do have a vote, and Members were not able to come back, so
we will conclude our hearing. I do want you to know two things.
First of all, I appreciate the quality of your testimony.
Ms. Gottlich, one thing that you could help us look at is
what are the ways that we can prevent so many cases from coming
into the system. That seems to be the Administrators' real
problem is how does he manage this volume.
There have to be ways we can reduce that volume. One of
them seems to be that at the initial level not to have the
carrier have the first hearing, since they are already biased.
That struck me as absolutely bizarre that was the case. I have
seen problems with that over the years. We need to look at
whether there are ways we can change it that will have volume
impact so we will be able to meet those time frames.
I also would not underestimate the impact on patients and
quality that some of these system changes can have. Just the
technology example you gave and speediness of response and
payment is important, particularly for small providers.
I do want you all to think about what else could be
recommended if the task force were to continue, and what, of
the business it did not get to, should it be focusing on; what
are the data issues?
Many of you said we have the same steps in OASIS and MDS
and the hospital, it is dumb to be re-collecting. We know that.
Be thinking about ways we could improve the performance, better
integrate the system, because we certainly have the technology
capability to do that. Unless we start doing it, we will never
also improve quality.
Thank you very much for being here today. We appreciate
this good start.
[Whereupon, at 2:27 p.m., the hearing was adjourned.]
[Submissions for the record follow:]
Statement of AdvaMed
AdvaMed is pleased to provide this testimony on behalf of our
member companies and the patients and health care systems we serve
around the world. AdvaMed is the largest medical technology trade
association in the world, representing more than 1100 medical device,
diagnostic products, and health information systems manufacturers of
all sizes. AdvaMed member firms provide nearly 90 percent of the $71
billion of health care technology products purchased annually in the
U.S. and nearly 50 percent of the $169 billion purchased annually
around the world.
AdvaMed would like to thank Chairwoman Johnson, Ranking Member
Stark, and the members of the Subcommittee for their bipartisan effort
to make the Medicare program more efficient and effective for providers
and Medicare beneficiaries. Medicare is a critical program for some 41
million Americans, and we greatly appreciate the way that the Committee
reached out to the health care community last Congress to develop
legislation to make the program easier to understand, comply with, and
participate in.
In his State of the Union Address in January, the President
described our health care system as the model of skill and innovation
for the world. The President noted that the pace of discovery in
advanced health care and preventive care in our country is ``adding
good years to our lives'' and ``transforming'' health care.
We believe it is in the best interest of patients and the Medicare
program to have the Medicare system capitalize on advanced
technologies, which have revolutionized the U.S. economy and driven
productivity to new heights and new possibilities in many other
sectors. Significant advances in health care technologies--from health
information systems that monitor patient treatment data to innovative
diagnostics tests that detect diseases early and lifesaving implantable
devices--improve the productivity of the health care system itself and
vastly improve the quality of the health care delivered. New
technologies can reduce medical errors, make the system more efficient
and effective by catching diseases earlier--when they are easier and
less expensive to treat, allowing procedures to be done in less
expensive settings, and reducing hospital lengths of stays and
rehabilitation times.
Our concern, however, is that Medicare is often too slow to
incorporate technologies and methods of delivering care. We appreciate
the Committee's past efforts to address these problems legislatively
because unnecessary time delays frustrate the program's ability to
provide the most cost-effective, high-quality care to America's seniors
and individuals with disabilities.
LCongressional Efforts to Improve Medicare Beneficiary Access to
Technology
AdvaMed applauds Congress for the steps it took in the Balanced
Budget Refinement Act of 1999 (BBRA) and the Benefits Improvement and
Protection Act (BIPA) of 2000 to begin to make the Medicare coverage,
coding and payment systems more effective and efficient. In addition,
the Centers for Medicare and Medicaid Services (CMS) has recently made
some changes to modernize its coverage and payment systems.
Despite these efforts, however, current policies still fail to keep
up with the pace of new medical technology. Serious delays continue to
plague Medicare in its efforts to make new medical technologies and
procedures available to beneficiaries in all treatment settings.
As demonstrated by a Lewin Group report provided by AdvaMed to the
Congress in 2000, Medicare delays can total from 15 months to five
years or more because of the program's complex, bureaucratic procedures
for adopting new technologies. Keep in mind that all this is after the
two to six years it takes to develop a product and the year or more it
takes to go through the Food and Drug Administration (FDA) review. In
addition, the impact of the delays is even more pronounced when you
consider that the average life cycle of a new technology can be 18
months.
These delays stem from the fact that for a new technology to become
fully available to Medicare patients, it must go through three separate
review processes to obtain coverage, and receive a billing code and
payment level. Serious delays in all three of these areas create
significant barriers to patient access.
Last Congress, AdvaMed strongly supported provisions based on
language from the Medicare Innovation Responsiveness Act (MIRA)
introduced by Representative Ramstad (R-MN) and incorporated in HR
2768, the Medicare Regulatory and Contracting Reform Act, that would
have created a council for technology and innovation within CMS to
oversee and coordinate Medicare coverage, coding and payment decisions
on new technologies and require the General Accoutning Office to report
on ways CMS can make better use of external sources of data to expedite
hospital inpatient payment updates. We request that the Committee
include them again in legislation it crafts this year.
Improving the Reimbursement Process for New Clinical Laboratory Tests
Innovative diagnostic tests help save lives and reduce health care
costs by detecting diseases earlier when they are more treatable. With
today's advanced technology, testing can be performed in a variety of
settings from large clinical reference laboratories to hospital
outpatient labs, to physician offices, and even in patient's nursing
homes.
Although BIPA substantially improved the processes for setting
reimbursement rates for advanced diagnostic tests, serious flaws still
exist, making it difficult for beneficiaries to gain access to many
innovative technologies. That's why AdvaMed strongly supports H.R. 569,
the Medicare Patient Access to Preventive and Diagnostic Tests Act
recently introduced by Reps. Dunn (R-WA), McDermott (D-WA) and Ramstad.
Provisions from this bill were incorporated in H.R. 2768 last Congress
to establish much needed procedures and criteria for determining
reimbursement for new clinical laboratory tests. We are hopeful that
similar provisions will be included again, along with additional
provisions from H.R. 569.
Maintaining the Local Coverage Process under Contractor Reforms
While some reforms to the contracting process are warranted,
AdvaMed strongly believes that reforms should not result in changes in
local carriers or consolidated jurisdiction for carriers should
maintain a process for making coverage decisions locally, and for
securing input from the local medical community.
AdvaMed strongly supports Medicare's local coverage process as a
vital route for timely patient access to the vast majority of
innovative medical technologies. The local coverage process offers an
important alternative to national coverage decision-making by the
Centers for Medicare and Medicaid Services (CMS), which runs Medicare
and oversees local contractors. Currently, the Medicare national
process causes delays of 15 months to five years or more for patients
who need access to technologies that are subject to a national review.
Consolidation of the number of local Medicare contractors that make
coverage decisions would severely constrict or eliminate the local
coverage process and create significant new delays in patient access to
important new medical technologies and services. AdvaMed appreciates
the work of Congress and CMS to examine Medicare contractor operations
in areas such as accountability and performance incentives. However, as
Congress addresses this issue, we urge it to avoid steps that would
undermine the local coverage process as a route to early patient access
to new medical technologies.
The local coverage process provides the flexibility and timeliness
needed to keep pace with rapid advances in medical technology. Current
flexibility at the local level very efficiently incorporates the
majority of new procedures and technologies into the existing Medicare
payment systems. This flexibility includes timely access to local
contractor decision-makers; an active relationship with the local
medical community and understanding of local medical practice, and the
ability to make case-by-case determinations. Local decision-making
authority provides Medicare beneficiaries access to new procedures and
technologies without having to wait until these innovations have been
disseminated nationally.
A report by the Lewin Group, a prominent health care policy
research firm, also highlighted the value of the current local Medicare
coverage process. According to the Lewin Group, ``the local coverage
process remains a critical avenue for obtaining coverage.'' In fact,
only about 12 services per year are reviewed through a national
coverage process.
Preservation of the local coverage process is particularly
important, the Lewin Group found, because it offers a way for patients
to gain access to many innovative technologies that otherwise would
encounter significant coverage delays at the national (CMS) level.
Lewin cites the example of a breakthrough technology in women's health,
dual x-ray absiorptiometry, which is used to diagnose osteoporosis. It
took Medicare more than seven years to cover this technology at the
national level. However, coverage decisions by local Medicare
contractors during that time enabled many women to gain access to this
technology who otherwise would not have been able to receive it.
AdvaMed strongly believes that, despite any contracting reforms, a
process for making coverage decisions locally, and for securing input
from the local medical community (through local coverage advisory
committees) should be maintained. We strongly support provisions that
will be included in the Medicare Innovation Responsiveness Act of 2003,
which will soon be reintroduced this Congress by Rep. Ramstad, that
would:
LRequire contractors to designate at least one
individual to serve as a medical director for every two states
(or portions thereof) to perform local medical review
functions;
LRequire the continuance of local carrier advisory
committees (CACs) in each state to ensure that local medical
review policy reflects the consensus of the local physician
community. Changes in local coverage decisions should be
subjected to the normal review and comment process with the
local CAC.
LTo address the need for rapid creation of codes for
emerging technologies, require CMS to establish a process for
automatically issuing national temporary codes in response to
requests from local Medicare contractors. Timely assignment of
national codes is more critical than ever to patient access
with the recent elimination of the ``local codes'' that were
used by Medicare contractors.
Additional Steps to Improve Patient Access to Technology
Congress and CMS already have told America's Medicare beneficiaries
that they will make key reforms to expand access to promising medical
technologies in clinical trials, provide a meaningful opportunity to
appeal claims denials, and reduce barriers to innovative medical
technologies in the hospital inpatient setting. Unfortunately, none of
these reforms have been meaningfully implemented.
That's why AdvaMed also supports the following provisions that will
be included in the Ramstad bill, the Medicare Innovation Responsiveness
Act of 2003, that will:
LSet 6-12 month deadlines for Medicare to implement
coverage, coding and payment for new medical technologies
subject to a national coverage decision;
LDirect CMS to provide reimbursement for the routine
costs of care for breakthrough medical technologies for
Medicare beneficiaries. Current Medicare policy is impeding
developing of potentially life-saving technologies like heart
assist devices because it does not provide reimbursement of
routine costs of care during clinical trials. While CMS issued
a memo two-and-a-half years ago announcing its intention to
implement a presidential executive order to provide
reimbursement for the routine costs of care for these
technologies, the Agency has not yet finalized the policy. This
policy would have a minimal impact on Medicare spending (as
breakthroughs represent only six percent of FDA-approved
studies) but a huge impact on Medicare patients awaiting
emerging breakthroughs like implantable artificial hearts,
bioartificial livers and kidneys and ``bionic eyes'' to treat
blindness;
LEnsure that Medicare appeals rulings apply to similar
cases. Congress passed legislation to require CMS to address
the problem, but Medicare patients remain caught in an appeals
system that is badly broken. Delays that often stretch longer
than a year and many seniors and people with disabilities
effectively are denied the ability to appeal claims that are
denied by Medicare;
LRequire Medicare to accept and consider valid
external data on resources associated with new medical
technologies to reduce delays in providing adequate
reimbursement for these innovations and update codes on a
quarterly basis; and
LBuild on the provisions in BIPA to reduce the current
two or more year delays in updating inpatient reimbursement
rates to reflect changes in medical technology. BIPA
established special transitional payments for new medical
technologies used in the inpatient setting. However, CMS
implemented this legislation so narrowly it failed to fulfill
Congressional intent. In fact, only one new medical technology
has qualified for the temporary payments. Last year, the House
passed legislation to ensure that, whenever possible, new
technologies are placed into existing inpatient payment
categories (DRGs) that provide payment levels that cover
average costs of care that most closely approximate the cost of
care using the new technology. If no appropriate DRG exists,
Medicare should provide a temporary additional payment to cover
the costs of a new technology. The Ramstad bill repeats the
House-passed language of last year, and we support its
inclusion in a bill crafted by the Committee again this year.
LRequire that CMS exercise its Inherent Reasonableness
authority in a more open, transparent, and fair process, both
nationally and regionally, including a notice of intent to
conduct an IR study, and publication of the results. DMERCs
should be required to follow the national process. An appeals
mechanism for IR determinations should be established that is
similar to the mechanism available for appealing a national
coverage determination.
Conclusion
AdvaMed thanks the Subcommittee members again for their
collaborative efforts to improve and strengthen the Medicare program.
We look forward to working with this Committee, the Congress and the
Administration on this important legislation again this Congress, as
well as additional ways to improve the quality of care available to
seniors through Medicare and foster the delivery of innovative
therapies for patients.
Statement of the Alliance to Improve Medicare
The Alliance to Improve Medicare (AIM) is pleased to submit this
statement for the hearing record to the Ways & Means Subcommittee on
Health. We applaud the Subcommittee's continued attention to the issue
of reforming burdensome Medicare regulations.
Medicare regulatory burdens adversely affect both beneficiaries and
providers. AIM believes that the current rigid and outdated Medicare
benefit structure and bureaucracy must be replaced. Program
administrators must be provided with the flexibility to make new health
care innovations and technologies more readily accessible to Medicare
beneficiaries. Medicare administrators have recently taken solid steps
to reduce excessive program complexity and bureaucracy caused by the
more than 110,000 pages of federal rules, regulations, guidelines and
mandates but more can be done to streamline current Medicare
requirements on both beneficiaries and providers.
``The Medicare Regulatory and Contracting Reform Bill''
AIM applauds the bipartisan efforts of Subcommittee Chairwoman
Nancy Johnson and Ranking Member Pete Stark to develop this important
legislation. While we have not yet reviewed the final text of the
legislation introduced today, AIM members support efforts to create a
more collaborative relationship between CMS and the providers who serve
Medicare beneficiaries, to address provider concerns, and to improve
beneficiary and provider education.
Similar legislation was approved twice in the 107th Congress, once
by unanimous vote and again as part of the ``Medicare Modernization and
Prescription Drug Act of 2002.'' That legislation sought to extend
important regulatory relief to health care providers and to modernize
Medicare's contracting processes. The 107th legislation also sought to
consolidate promulgation of CMS regulations and to create specific time
frames for progression of new regulations. AIM members support these
provisions and look forward to working with the Subcommittee on this
legislation in the 108th Congress.
HHS Activities
HHS Secretary Tommy Thompson established the Secretary's Advisory
Committee on Regulatory Reform in 2001 to examine the regulatory
burdens placed on beneficiaries and providers in the Medicare program.
The Committee held a series of meetings across the country to receive
comments and recommendations from consumers and providers on ways to
streamline regulatory requirements and lessen regulatory burden within
the Medicare program. The Advisory Committee's final report, released
in November 2002, represents an excellent step toward improving the
Medicare program for both health care providers and beneficiaries.
The Committee's final report contained over 250 recommendations to
reduce obstacles to care, reduce paperwork requirements, improve
communications, and expand the use of technology to ensure quality
care. Specifically, the Advisory Committee considered and adopted many
of the reform recommendations submitted by AIM including reducing
extensive data collection requirements and providing better information
on beneficiary eligibility and covered services.
AIM is especially pleased that Secretary Thompson announced the
creation of an ``internal strike force'' to continue the work of the
Committee and to review and implement many of the Advisory Committee's
remaining recommendations. To date, HHS has already implemented more
than two dozen recommendations contained in the Advisory Committee's
final report. AIM members will continue to work with the HHS staff to
recommend and comment on efforts to further reduce regulatory burdens
on beneficiaries and providers. Specifically, we hope HHS will consider
ways to further improve the timely availability of advanced medical
technologies through better coordination between CMS, FDA, and
technology innovators. Further, HHS should adopt and implement the
Advisory Committee's recommendations to ensure consistent
communications between the CMS central office and the regional offices,
particularly with regard to beneficiary education materials. Finally,
AIM members will work with HHS to further reduce extensive data
collection efforts.
Key Principles for Improving Medicare
AIM is the only organization focused solely on fundamental,
bipartisan modernization of the Medicare program to ensure that senior
citizens have more health care coverage choices, better benefits
(including prescription drug benefits), and access to the latest in
innovative medical practices, treatments and technologies. AIM
coalition members include organizations representing seniors,
hospitals, small and large employers, insurance plans and providers,
doctors, medical researchers and innovators, and others.
AIM's key principles to improve and strengthen Medicare address
both the administration of the Medicare program and the benefits
provided to program beneficiaries. Most importantly, AIM believes
prescription drug benefits should be offered to all Medicare
beneficiaries as an integral part of Medicare health coverage. AIM
members believe any new drug benefit should be added as part of
comprehensive, market-based improvement efforts, including efforts to
streamline and reduce regulatory burdens.
AIM also seeks to ensure the long-term financial integrity and
solvency of the Medicare program. The program's existing financial and
structural systems must be strengthened to ensure adequate long-term
financial stability to meet the challenges presented by the retirement
of the baby boom generation and the projected doubling of the Medicare
population.
Additionally, AIM believes Congress and the Administration must
address the financial crisis facing health plans and providers.
Ensuring access and choice for senior citizens should be a primary goal
of the Medicare program but both are threatened by inadequate provider
reimbursements. Health plans have left the Medicare+Choice program and
some providers have stopped accepting new Medicare patients because the
program's reimbursement rates are inadequate to cover even the costs of
basic care.
AIM supports increased consumer choice in health care coverage
options and believes that all Medicare beneficiaries should have the
option to choose from a range of coverage options similar to those
available to Members of Congress, federal employees and retirees, and
millions of working Americans under 65 years of age who are covered by
private plans. Unfortunately, excessive regulation and inadequate
reimbursement of private sector providers participating in
Medicare+Choice have seriously constrained coverage areas.
Finally, AIM supports improvement of health care coverage through
better coordination of care including health promotion and disease
prevention efforts. The traditional Medicare program has not kept pace
with private sector benefits and plans offering preventive health care
and screening measures such as annual physicals, hearing and vision
tests, and dental care. Medicare beneficiaries, more so than other
population age groups, can benefit from these preventive measures which
can help reduce long-term costs and ensure appropriate, early treatment
of health problems.
Conclusion
Complexity in Medicare's rules governing beneficiary and provider
participation has resulted in increasingly bipartisan support to
improve the fairness of the system for all participants. AIM applauds
Subcommittee Chairwoman Nancy Johnson and ranking member Pete Stark for
their bipartisan efforts in the discussion of necessary regulatory
reforms to the Medicare program.
AIM appreciates the opportunity to provide these comments to the
Health Subcommittee and applauds the Subcommittee's work toward
improving Medicare. AIM urges the Subcommittee to consider sensible,
long-term solutions to the problems confronted by the Medicare program
and by Medicare beneficiaries and we urge Members to work together on a
bipartisan basis to achieve comprehensive Medicare reform. We look
forward to working with the Subcommittee and other members to further
reduce Medicare regulatory burdens and complexity.
Statement of the American Association for Homecare, Alexandria,
Virginia
The American Association for Homecare (AAHomecare) would like to
take this opportunity to thank the Ways and Means Health Subcommittee,
Chairwoman Johnson, and Ranking Member Stark for their continued
involvement in Medicare Regulatory Reform. AAHomecare is a national
association whose members represents a continuum of home healthcare
including suppliers of durable medical equipment (DME), orthotics and
prosthetics, home health agencies (HHAs) and suppliers of re/hab and
assistive technology. As a representative of both DME suppliers and
HHAs, AAHomecare supports the Subcommittee's effort to improve the
regulatory, appeals and contracting processes under the Medicare
Program. However, we would like to take this opportunity to express
some of our concerns regarding specific provisions in H.R. 3391, which
we believe may affect a provider's or supplier's due process rights.
CORRECTION OF MINOR ERRORS AND OMISSIONS
H.R. 3391 establishes a process for correcting minor errors and
omissions on claims without requiring the provider or supplier to go
through the expense of an appeals process. Currently, most claims are
denied because the claims failed to comply with one or two technical
requirements. For instance, a provider or supplier may have failed to
secure the physician's signature on all verbal orders prior to billing,
or may have failed to include any minor treatment changes. These
omissions or errors are easily correctible, but because supplier or
provider are required to appeal claims, payment can be delayed for up
to a year. This can put a substantial amount of financial stress on a
provider or supplier and can severely interfere with their capacity to
continue their business operation.
AAHomecare strongly supports the Subcommittee's position that
providers and suppliers should not have to undergo an appeal simply
because of a minor error or omission. By allowing them to correct
discrepancies in claims submitted to a carrier, without an appeal, the
Subcommittee is ensuring a more efficient and cost-effective Medicare
system. Furthermore, this provision is a useful tool in ensuring, not
only that a provider or supplier will not undergo economic hardship,
but also that a beneficiary will have continued access to services. We
urge that any regulatory reform should include a provision such as this
for correction of minor errors and omission.
NEW EVIDENCE AND ALJ HEARINGS
While we are supportive of the general intent behind the regulatory
reform provisions of H.R. 3391, we are extremely concerned by Section
403(a)(3). Under Section 403(a)(3) a supplier or provider may not
introduce evidence in an appeal that was not presented at the
reconsideration hearing conducted by the Qualified Independent
Contractor (QIC), unless there is good cause which precluded the
admittance of such evidence before or during reconsideration.
The Centers for Medicare and Medicaid Services (CMS) are adopting a
similar stance to the one potentially created by Section 403(a)(3). On
November 15, 2002, CMS issued its proposal for the implementation of
BIPA, which included a provision that would severely curtail evidence
presented by a supplier or provider during an ALJ hearing.
Specifically, the proposed rule 405.1019 states submission of any new
evidence that was not presented to the QIC must be accompanied by a
written statement. Under this proposed rule the statement must explain
why the evidence was not previously submitted to the QIC, and the ALJ
can only admit the evidence if good cause exists.
Both Section 403(a)(3) and the CMS proposed Section 405.1019
significantly restrict the opportunity a provider or supplier has to
offer additional and new evidence during a ALJ hearing, in effect
requiring a full and early presentation of evidence at the QIC level.
CMS has based this proposed regulation, on its long held belief that a
high reversal rate on appeals is due to the presentation of new
evidence at the ALJ level. While it is true that many claims have been
reversed at the ALJ level, the decisions to reverse denials are not
arbitrary but rather are founded on the new evidence substantiating a
provider's contention that the overpayments is unfounded.
Furthermore, a provider's and supplier's right to introduce new
evidence should be safeguarded by any regulatory reform. Often, the ALJ
will reverse a denial based on evidence that was unavailable to the
interest party during the QIC review.
For example, the probe sample data and methodology used by the
carrier is not available to a supplier or provider before the ALJ
hearing. A supplier or provider will have to request the probe sampling
methodology from the carrier after the reconsideration decisions has
been rendered. Therefore, the interested party does not have immediate
access to this information from the carrier, but must wait for the
information to be turned over. Once the interested party received the
information, he or she would need to consult with experts and expend a
significant amount of resources to review the sample methodology after
receiving it, so as to determine whether the contractor's sample lacks
statistical weight or whether the methodology used was erroneous.
We strongly urge this Committee to make sure that any regulatory
reform allows providers and suppliers to introduce evidence of
erroneous sampling techniques during an ALJ hearing. Many cases that
reaches the ALJ have been reversed after the interested party presented
evidence showing that the sampling methodology was biased or that a
sample was incorrectly taken. In order to maintain due process and
ensure fairness, a provider or supplier should be allowed to introduce
this type of evidence.
Currently, providers and suppliers can provide live testimony and
may introduce new evidence during an ALJ hearing. They are not required
to provide good cause or submit a statement by explaining why the
information was not included. In fact, the ALJs have come to rely on
provider and supplier testimony as an aid when deciding whether the
interested party did have a reasonable basis to believe that the claim
would be covered. This has helped to ensure fairness and due process
during appeals. Both H.R. 3391 and 67 CFR 405.1019 would prohibit live
testimony that has repeatedly helped exemplify why the contractors
denial was incorrect.
In on case, the fiscal intermediary has denied $20,000 in home
health claims representing an entire year of services for a patient who
suffered from Multiple Sclerosis (MS). The reason given for the denial
was that the patient's physician had not prescribed the commonly used
medicine for MS. The denial stated that the drug Athcar was not
identified by the Physicians Desk Reference for treatment of MS,
despite other references that list it as an alternative. In this case
the physician had prescribed it as an alterative because the patient
could not afford the commonly prescribed Interferon. At the ALJ level,
the HHA introduced evidence from the treating physician and relied on
other authoritative reference to show why the Athcar had been used
instead of Interferon. The physician was also able to show how the
alternate medication had been effective. Based on this testimony, the
ALJ was able to reverse the denial.
Conversely, H.R. 3391 and 67 CFR 405.1012 would allow contractors
to present any additional evidence, change the basis of their denial of
the claims and present additional testimony that they believe is
pertinent. Under both H.R. 3391 and CMS' proposed rule, contractors
would be required to provide the ALJ with any additional information
requested by the ALJ, so as to aid it in understanding the contractor's
position and helping it formulate its decision. Allowing contractor's
to testify and present new evidence during the appeals process while
denying the same opportunity to an interested party would severely go
against due process and fairness. In essence, this would severely
undermine the position of suppliers and providers because they would
not be allowed to present evidence to contradict the contractor's new
arguments, and would not be allowed to adapt their position to reflect
contractor changes in arguments during an appeal.
AAHomecare urges the Subcommittee to establish a standard that does
not limit the type of information presented during an ALJ hearing. We
recommend that any regulatory reform should allow suppliers and
providers to present testimony of a treating physician opinions, expert
opinions, and provider and supplier testimony, as necessary, to the
ALJ. Furthermore, a supplier or provider should be allowed to present
evidence which was previously not available, or which at the time was
not relevant to the claim set forth by the contractor. It is important
to ensure that regulatory reform legislation should distinguish between
new evidence that involves readily available clinical documentation
from the provider or supplier from other Medicare evidence such as
expert opinion, clarifying treating physician opinions and documentary
evidence from providers or suppliers that are not directly involved in
a disputed claim, if due process is to be maintained.
LIMITED USE OF EXTRAPOLATION
The use of extrapolation can often lead to significant problems for
both DME suppliers and HHAs. Often the sampling methodology used during
extrapolation lacks any semblance of statistical validity, which in
turn can result in a significant expenditure of resources by providers
and suppliers. Furthermore, the use of extrapolation often results in
the drastically inflated overpayment. This large inflation will force
many providers and suppliers to pay hundreds of thousands of dollars,
and forces some into bankruptcy.
In one instance, the ALJ ruled in favor of an HHA after throwing
out the denials as well as finding the extrapolation and the sampling
methodology used by the physical intermediary as erroneous. While the
HHA received a favorable verdict, it had suffered irreparable harm,
leading to its bankruptcy even before the decision was rendered. This
case is of particular concern, given that the home health agency was
the only provider in that area for medically complex home health
patients.
Currently, the Durable Medical Equipment Regional Carriers (DMERCs)
also use extrapolation in determining overpayments. Not unlike HHAs,
DMEs are faced with inflated overpayments that are based on erroneous
sampling methodology. However, what is particularly disturbing is that
the DMERCs use extrapolation and base their denials on rules that have
not come into effect at the time the service was rendered. For these
reasons, AAHomecare strongly urges that the use of extrapolation and
sampling methodology should be curtailed.
AAHomecare believes that H.R. 3391 addresses many of the concerns
shared both by HHAs and DME suppliers. We support limiting the
circumstances in which a Medicare contractor can request a provider or
supplier to produce records or supporting documentations, to those two
circumstances delineated in Section 405(f)(3):
1. Lwhere either there is a sustained high level of payment
error, or
2. Lwhere documented education intervention has failed in
correcting the payment error.
Despite the limited use created by Section 405(f)(4), there is
still a great room for Medicare contractors to interpret Section 405
which may lead to unjustified used of extrapolation. Therefore,
AAHomecare urges that the Subcommittee clearly define the phrase ``high
level of payment error.'' The Subcommittee needs to provide contractors
with guidance (preferably a detailed written guidelines within this
bill) as to what constitutes a high payment error. If this term is not
defined, the contractor could apply his own subjective definition of
``high level of payment error.'' By clearly defining what constitutes a
``high level of payment error'' the Subcommittee can prevent the
inconsistent application of extrapolation by different Medicare
contractors, as well as by the same contractor when reviewing different
health supplier or provider claims.
We would further urge the Subcommittee to add a provision that
would state that any payment errors will not be deemed to exist where
the provider can show that there exists some basis in the law to
support the claim as submitted. In this instance, we feel that it is
important create a sense of security amongst providers and suppliers,
that they can in fact rely on existing laws and regulations when
submitting a claim. We strongly believe that a supplier or provider
should not be required to second guess the law, nor be penalized for
submitting claims based on a reasonable interpretation of law. Under
such a provision, the Medicare contractor would be allowed to deny
individual claims, but the provider or supplier could rely on law
relied on when appealing.
LREGULATORY REFORM SHOULD NOT INCLUDE CONSENT SETTLEMENTS
Section 405(f)(5) of H.R. 3391 grants to the Secretary the power to
settle a projected payment with a provider or supplier by the use of a
consent settlement. Before offering a consent settlement, the Secretary
is required to inform the suppliers or providers of the contractors
finding of overpayment. The supplier or provider is then given the
opportunity to either accept the consent settlement or undergo
statistical valid random sampling.
Routinely, Medicare contractors have used consent settlement
agreements to strong arm a provider into waiving their right to appeal,
despite their honest and usually well-founded belief that the denial
was an error. Often, a home health provider will settle its claims with
the contractor, not because it supports the contractor's finding, but
rather because of the costs they will incur if they fail to accept.
Providers and suppliers who do not settle will be forced to incur
greater costs associated with appealing the decision as illustrated in
the example below.
In one post payment audit, the fiscal intermediary denied 56% of a
sample of claims submitted by one small HHA. This percentage was
extrapolated to a $65,000 overpayment. In this case, the provider
refused to accept a consent settlement agreement and appealed all
claims to the ALJ. The ALJ in turn reversed over 95% of the denials.
Although, the HHA did receive a favorable outcome, it incurred
substantial costs associated with the appeal over the four years that
it took from the time of denial to the time of reversal.
If a provider or supplier chooses not to accept a proffered
settlement, then the contractor may apply the Statistically Valid
Random Sample (SVRS). An SVRS examines a larger number of claims,
usually consisting of 200-400 claims. Such an investigation by its very
nature is largely disruptive to the operation of home health agencies
and DME providers, and may force the business to cease all business
activity. Therefore, it is not surprising that many providers and
suppliers feel the need to settle, despite their honest belief that the
initial probe sample findings where inaccurate because of the
exorbitant costs associated with SVRS.
AAHomecare urges the Subcommittee to reconsider including consent
settlements in H.R. 3391 or any other regulatory reform legislation.
While the Subcommittee has addressed at least one problem associated
with consent settlements, i.e. limiting the use of extrapolation, we
believe that the detrimental effects associated with consent agreements
outweigh any potential benefits. If the Subcommittee allows the use
consent settlements, it will unwittingly provide contractors with a
tool by which it may strong-arm service providers into settling, even
if consent settlements are used only in a fraction of reviewed claims.
Those providers who challenge, the sampling methodology may be forced
into economic hardship associated with a SVRS or a lengthy appeal. The
Subcommittee may unwittingly place the provider or supplier in a
position in which it can no longer provide any services. This is of
particular concern where the home health provider or DME supplier
provide a specialized type of service in an area.
AAHomecare further recommends that if the Subcommittee decides to
include consent settlements in H.R. 3391, it should create a provision
that allows a provider to settle, while still maintaining the right to
appeal the sample probe methodology used by the provider. A provider or
supplier should be allowed to appeal the probe method without
undergoing an SVRS, otherwise they may be subjected to unjust financial
burdens.
DEFFERING RECOUPMENT DURING APPEAL
H.R. 3391 prohibits any recoupment of overpayment until the
conclusion of the reconsideration hearing. We applaud this
Subcommittee's continued effort to create an insulating mechanism to
protect providers from wrongful payment recoveries. Currently,
providers and suppliers are required to make payment before going forth
in their appeals process, causing many of these companies to undergo
substantial financial hardship for a claim where an error exists in the
overpayment determination.
While AAHomecare agrees that the Secretary should not be allowed to
recoup overpayments until the conclusion of a reconsideration hearing,
we believe that this Subcommittee should further extend this provision
by limiting recovery until the claim has run its full course throughout
the appeals process and a final and binding decision has been rendered.
As Tom Scully testified last year, physicians, providers and suppliers
should have the same rights taxpayers enjoy. A taxpayer who is audited
has the right to withhold payment, as long as interest accrues, while
an appeal is pending. Both suppliers and providers should be entitled
to the same right throughout their entire appeal process. Instead, HHAs
and DME suppliers are required to pay the amount after the
reconsideration hearing, not allowing the party to avail himself of the
benefits of an ALJ hearing.
AAHomecare fully appreciates that a substantial controversy exists
concerning further delaying recoupment beyond reconsideration. However,
we base this recommendation on two well-founded premises. First,
recoupment of an extrapolated amount often results in eliminating an
opportunity for a provider or supplier to seek an appeal. If a provider
or supplier is forced to make payment of potentially hundreds of
thousands of dollars, they will undergo a severe financial burden if
they continue to incur the cost associated with an appeal. Second, it
is administratively difficult to recompute the amount of the
extrapolated overpayment after each level of appeal where some of the
sample claims are usually reversed.
We also recommend that any extrapolation should be dropped if the
provider or supplier obtains a reversal of 10% or more of the sample
claim denial on appeal. In such a case, the sample denials would seem
to not be a statistically valid representation of denied claims in the
universe of claims. If the overpayment represents more than 10% of the
provider or supplier revenue, we believe that the interested party
should be able to repay the amount during a three year period. By this
means, the Subcommittee could ensure that companies will not suffer
financial hardship that will cause the HHA or DME supplier to either
cut back on the services it provider or file for bankruptcy.
AAHomecare would further recommend that an additional provision be
added to H.R. 3391. We believe that the Subcommittee should establish a
provision that would protect home health providers where overpayment
relates to an error in the administration of benefits by Medicare
itself. HHAs are susceptible to unknown amounts of liability due to
Medicare's own inability to appropriately process Medicare home health
PPS claim. A year ago, CMS determined that its system failed to make
the payment adjustment when a patient was admitted to another home
health agency or readmitted to the same agency within 60 days of
discharge.
AAHomecare recommends that the Subcommittee include legislation
that would limit the ability of CMS to institute retroactive payment
adjustments on any claims to more than one year previous. Financial
integrity cannot be maintained by a provider or services who is
required to carry on a indeterminate amount of financial liability from
one year to the next.
OASIS:
As of December 2002, CMS have instituted changes aimed at
decreasing the burdens associated with the collection of information
under the Outcome and Assessment Information Set (OASIS). CMS
eliminated two OASIS collection time point and seventeen data items.
Thirteen of the seventeen data items consist of demographic
information, which have been moved to the tracking sheet and should be
completed by agency office staff.
AAHomecare supports the implication of OASIS and the reduction of
paperwork. AAHomecare recommends that certain policy changes should be
incorporated as soon as possible. We believe that the Subcommittee
should also instruct the secretary to request CMS to lengthen the
definition of ``in patient stay'' from 24 hours to 72 hours. We also
feel that it is important to instruct the CMS to widen the
recertification window from 5 day to at least 10 days to ensure greater
flexibility among for an agency to schedule assessment during the
patient scheduled visits. Lastly, we urge the Subcommittee to instruct
the Secretary take steps to make OASIS electronic program specification
and the risk adjustment methodology readily available to the public and
allow the public to submit comments on any program specification
changes.
GUIDANCE BY SECRETARY OR AGENT:
We strongly support limiting any sanctions on providers or
suppliers if they reasonably rely on the guidance of Section 102(c) of
H.R. 3391. Providers and suppliers should not be subject to repayment
of amounts that they received in reasonable reliance on the guidance
from the Secretary or an agent of the Secretary.
CONCLUSION:
We appreciate this opportunity to express our concerns and present
our suggestions to the Subcommittee. We greatly value your continued
effort on these matters. AAHomecare strongly believes that there is
much at stake in regulatory reform, and recommend that any legislation
adopted should maintain due process and fairness. H.R. 3391 is a good
starting point for Medicare appeal and regulatory reform. We hope that
these comments and suggestions are helpful and look forward to working
with you to pass a regulatory reform legislation that will further the
objective of efficiency and fairness.
Statement of the American Association of Health Plans
AAHP Commends House Ways and Means Subcommittee for Advancing
Regulatory Reforms
The American Association of Health Plans (AAHP) and our member
plans are pleased to have had the opportunity to contribute to the
important work of the Secretary of Health and Human Services' (HHS)
Advisory Committee on Regulatory Reform. Last year, we were pleased to
contribute to the Advisory Committee's work on several fronts:
LTwo health plan representatives served as members of
the Advisory Committee: Heidi Margulis, senior vice president
for government relations of Humana; and Leonard Schaeffer,
chairman and CEO of Wellpoint Health Networks.
LIn March 2002, AAHP submitted comments to the
Advisory Committee outlining proposed solutions for reducing
regulatory burdens associated with Medicare, Medicaid, and the
privacy and administrative simplification provisions of the
Health Insurance Portability and Accountability Act (HIPAA).
LIn March 2002, four AAHP member plans testified
before the Advisory Committee regarding opportunities for
improving the administration of the Medicare+Choice program.
The health plans that testified were Blue Shield of California,
Group Health Cooperative, PacifiCare Health Systems, and Sun
Health.
AAHP and our member plans applaud Secretary Thompson for his strong
commitment to improving the administration of HHS programs on behalf of
health care consumers. At his direction, the Advisory Committee
outlined more than 250 recommendations for streamlining HHS regulatory
requirements in its November 2002 report. This report lays a foundation
for concrete changes that will reduce unnecessarily burdensome and
duplicative regulations while at the same time making HHS rules more
effective in promoting high quality care for consumers.
The steps HHS has taken in recent months to implement the Advisory
Committee's recommendations are clear evidence of the department's
commitment to simplifying federal regulations and maintaining
accountability in order to better serve consumers. We look forward to
working with HHS as it continues to implement reforms designed to
restore common sense to the regulatory system by striking a balance
between the vital goals of efficiency and accountability. The Advisory
Committee's recommendations represent an important starting point in
that effort.
Statement of the Honorable Ronald G. Bernoski, President, Association
of Administrative Law Judges, Milwaukee, Wisconsin
Mr. Chairman and Members of the Subcommittee:
Thank you for the opportunity to submit this statement. My name is
Ronald G. Bernoski. I am an Administrative Law Judge (``ALJ'') who has
been hearing Social Security disability cases at the Office of Hearings
and Appeals (``OHA'') of the Social Security Administration (``SSA'')
in Milwaukee, Wisconsin, for over 20 years.
This statement is presented in my capacity as the President of the
Association of Administrative Law Judges (``AALJ''), which represents
the ALJs employed in the SSA OHA and the Department of Health and Human
Services (``DHHS''). One of the stated purposes of the AALJ is to
promote and preserve full due process hearings in compliance with the
Administrative Procedure Act for those individuals who seek
adjudication of program entitlement disputes under the Social Security
Act.
We strongly oppose the Medicare Appeals item in the 2004
President's Budget that would authorize the Secretary of the DHHS to
``use alternate mechanisms in lieu of Administrative Law Judge review''
for processing Medicare appeals under Title XVIII of the Social
Security Act. This budget item is a stealth attack on the American
public's due process rights to an appellate administrative hearing and
decision by an ALJ appointed pursuant to the Administrative Procedure
Act (``APA'') after a denial of Medicare benefits by the DHHS Centers
for Medicare & Medicaid Services (``CMS''). These due process rights
are provided by the Social Security Act and the APA.
The CMS Administrator, Honorable Thomas Scully, said that ``[t]he
President's FY2004 budget includes provisions to implement Medicare
appeals reform,'' when he testified before the Subcommittee on Health
of the House Committee on Ways and Means at the February 13 Hearing on
Medicare Regulatory and Contracting Reform. He also testified that CMS
is ``proceeding toward the transfer to CMS of the Medicare hearing
function currently performed by the Administrative Law Judges (ALJ) in
the Social Security Administration (SSA). We have already had extensive
discussions with SSA to explore administratively transferring the
Medicare hearing function to CMS.''
However, the CMS Administrator did not inform the Subcommittee that
the Medicare Appeals item buried in the 2004 President's Budget would
permit CMS to strip away the Medicare beneficiaries' and providers' due
process rights under the Social Security Act and APA to a hearing and
decision on appeal before an APA ALJ. The CMS Administrator also did
not tell the Subcommittee that, on October 22, 2002, he signed an
agreement with the Connecticut Department of Social Services to test a
two-step non-APA Medicare administrative appeals process that provides
a review of an appealed Intermediary's reconsidered determination by an
unspecified CMS official followed by a private sector arbitration as
the final administrative step. CMS' reliance upon 42 U.S.C. Sec. 1395b-
1, which authorizes the DHHS to conduct ``demonstration projects'' to
test cost saving techniques in specified processes, as authority to
test a change in the appellate process is questionable. There also is a
question whether it is lawful for the federal government to permit
private binding arbitration to supplant federal sovereignty by
privately resolving disputes involving rights to public benefits
without access to the due process of law and equal protection in a
public forum.
The proposed regulations recently published by the CMS entitled
``Changes to the Medicare Claims Appeal Procedures'' include a note
that the Medicare appeals function now performed by SSA ALJs is
expected to be transferred back to HHS by October 1 of this year.
Proposed regulations are published by federal agencies pursuant to the
APA to inform the public in advance of agencies' contemplated actions.
However, nothing is said to the public in the proposed Medicare
regulations promulgated by CMS Administrator Scully that suggests CMS
is contemplating a non-APA ALJ appeals process for Medicare
beneficiaries and providers. 67 FR 69182 (November 15, 2002).
Any plan to deny Medicare beneficiaries and service providers the
right to a full due process hearing under the APA before an ALJ will
result in a denial of basic procedural due process rights to the
American people. Without APA due process, Medicare beneficiaries and
service providers would have no recourse to an independent
decisionmaker during the administrative process.
If CMS is permitted to take these steps over 60 years backward from
procedural due process, hundreds of thousands of Americans who appeal
from denials of Medicare benefits under the Social Security Act will
find themselves left with a process that undermines administrative
fairness and the public's confidence in that fairness. Our citizens and
lawful permanent residents deserve to keep their well-established right
to full due process before an independent decisionmaker.
The APA was adopted by Congress in 1946 to ensure that the American
people were provided hearings that are not prejudiced by undue agency
influence. The securing of fair and competent hearing adjudicators was
viewed as the heart of the APA. The APA presently is codified at 5
U.S.C. Sec. Sec. 551-559, 701-706, 1305, 3105, 3344, 4301(2)(E),
5335(a)(B), 5372, and 7521.
The APA was enacted to achieve reasonable uniformity and fairness
of the federal administrative process for members of the American
public with claims pending before federal agencies. The APA sets forth
a due process administrative procedure for the hearing and decision by
ALJs of cases brought before the federal agencies to which the APA
applies. The APA provides the minimum standards for federal
administrative due process in the Executive Branch, and delineates
procedures for adjudicative administrative proceedings, namely
individual case decisions about rights or liabilities as an agency's
judicial function. This includes uniform standards for the conduct of
adjudicatory proceedings including the merit appointment of ALJs.
By APA mandate, the ALJ is an independent, impartial adjudicator in
the administrative process and there is a separation of the
adjudicative and prosecutorial functions of an agency. The ALJ is the
only impartial, independent adjudicator available to a claimant for
benefits in the federal administrative process, and the only person who
stands between the claimant and the whim of agency bias and policy. If
CMS ends the APA process for Medicare appeals and returns to using
subordinated employees who would decide benefits appeals as an
instrument and mouthpiece for CMS, we will have returned to the days
when the agency was both prosecutor and judge.
The decisionmaking independence provided by the APA is not for the
benefit of the ALJ but instead is provided for the protection of the
American people. The protections are intended to ensure that the
American people receive a full and fair due process hearing with a
decision based on the evidence in the hearing record without agency
pressure.
The Supreme Court recently reaffirmed the applicability of the APA
to federal administrative adjudications, ``the numerous common features
shared by administrative adjudications and judicial proceedings,''
``the similarities between the role of an ALJ and that of a trial
judge,'' and the importance of the APA structure that ensures the ALJs'
independence of agency influence in deciding cases. Federal Maritime
Commission v. South Carolina State Ports Authority, 535 U.S. 743, 122
S. Ct. 1864, 1872-1873 (2002). In FMC, the Supreme Court relied upon
its language in Butz v. Economou, 438 U.S. 478, 513-514 (1978), which
is stated here directly from Butz:
[F]ederal administrative law requires that agency adjudication
contain many of the same safeguards as are available in the judicial
process. . . . They are conducted before a trier of fact insulated from
political influence. See [5 U.S.C. Sec. 554(d)]. A party is entitled to
present his case by oral or documentary evidence [5 U.S.C. Sec. 556
(d)], and the transcript of testimony and exhibits together with the
pleadings constitute the exclusive record for decision. [5 U.S.C.
Sec. 556(e)]. The parties are entitled to know the findings and
conclusions on all of the issues of fact, law, or discretion presented
on the record. [5 U.S.C. Sec. 557(c)].
There can be little doubt that the role of the modern federal
hearing examiner or administrative law judge within this framework is
``functionally comparable'' to that of a judge. His powers are often,
if not generally, comparable to those of a trial judge: He may issue
subpoenas, rule on proffers of evidence, regulate the course of the
hearing, and make or recommend decisions. See [5 U.S.C. Sec. 556(c)].
More importantly, the process of agency adjudication is currently
structured so as to assure that the hearing examiner exercises his
independent judgment on the evidence before him, free from pressures by
the parties or other officials within the agency.
In Butz, the Supreme Court elaborated upon the reasons that
Congress enacted the APA's many protections to assure the decisional
independence of ALJs and enumerated those protections. 438 U.S. at 513-
514:
Prior to the Administrative Procedure Act, there was
considerable concern that persons hearing administrative cases
at the trial level could not exercise independent judgment
because they were required to perform prosecutorial and
investigative functions as well as their judicial work, see,
e.g., Wong Yang Sung v. McGrath, 339 U.S. 33, 36-41 (1950), and
because they were often subordinate to executive officials
within the agency, see Ramspeck v. Federal Trial Examiners
Conference, 345 U.S. 128, 131 (1953). Since the securing of
fair and competent hearing personnel was viewed as ``the heart
of formal administrative adjudication,'' Final Report of the
Attorney General's Committee on Administrative Procedure 46
(1941), the Administrative Procedure Act contains a number of
provisions designed to guarantee the independence of hearing
examiners. They may not perform duties inconsistent with their
duties as hearing examiners. 5 U.S.C. Sec. 3105 (1976 ed.).
When conducting a hearing under Sec. 5 of the APA, 5 U.S.C.
Sec. 554 (1976 ed.), a hearing examiner is not responsible to,
or subject to the supervision or direction of, employees or
agents engaged in the performance of investigative or
prosecution functions for the agency. 5 U. S. C. Sec. 554(d)(2)
(1976 ed.). Nor may a hearing examiner consult any person or
party, including other agency officials, concerning a fact at
issue in the hearing, unless on notice and opportunity for all
parties to participate. [5 U.S.C. Sec. 554 (d)(1)]. Hearing
examiners must be assigned to cases in rotation so far as is
practicable. [5 U.S.C. Sec. 3105]. They may be removed only for
good cause established and determined by the Civil Service
Commission [now OPM] after a hearing on the record. [5 U.S.C.
Sec. 7521]. Their pay is also controlled by the Civil Service
Commission. [5 U.S.C. Sec. 5372].
There is a close relationship between the APA and the Social
Security Act. The Supreme Court has stated that the APA ``is modeled
upon the Social Security Act.'' Richardson v. Perales, 402 U.S. 389,
409 (1971).
It is clear that Congress intended the APA to apply to
adjudications conducted under the Social Security Act, including
Medicare adjudications. That the APA applies to the Social Security Act
hearing process is stated extensively in Adjudications by
Administrative Law Judges Pursuant to the Social Security Act also Are
Adjudications Pursuant to the Administrative Procedure Act, Robin J.
Arzt, 22-2 J. NAALJ ______ (Fall 2002), and Are You Willing to Make the
Commitment in Writing? The APA, ALJs, and SSA, Jeffrey Scott Wolfe, 55
Okla. L. Rev. 203 (Summer 2002).
The Medicare program (the ``Medicare Act''), which provides
federally funded hospital and supplementary medical insurance for
elderly and disabled people, was established in 1965 as Title XVIII of
the Social Security Act. 42 U.S.C.Sec. Sec. 1395-1395ggg, as amended.
The Medicare Act provides, in pertinent part, that an individual who is
``dissatisfied with any determination under [42 U.S.C. Sec. 1395ff(a)]
as to [entitlement to Medicare Part A or Part B benefits]. . ., shall
be entitled to a hearing thereon by the Secretary to the same extent as
is provided in section 205(b) [42 USCS Sec. 405(b) of Social Security
Act Title II]. . . .'' 42 U.S.C. Sec. 1395ff(b)(1).
Accordingly, if Social Security Act Title II adjudications are APA
adjudications, then the APA necessarily also applies to Medicare
adjudications. The first part of Social Security Act Title II, which
provided for old age and survivors insurance benefits, was enacted in
1935. Social Security Act of 1935, 49 Stat. 620, 627 (1935). A
claimant's right to a hearing in the event of a denial of his claim for
old age and survivors insurance benefits first was created by the 1939
amendments to the Act. A denied reconsideration entitled a claimant to
a hearing, Pub. L. No. 76-379, 53 Stat. 1360 (1939): ``Upon request by
[an applicant for benefits or certain relatives of the applicant] . . .
who makes a showing in writing that his or her rights may be prejudiced
by any decision the Commissioner of Social Security has rendered, the
Commissioner shall give such applicant and such other individual
reasonable notice and opportunity for a hearing with respect to such
decision.'' 42 U.S.C. Sec. 405(b). This is the only Social Security Act
hearing process that existed at the time that the APA was enacted.
In the Attorney General's Manual on the Administrative Procedure
Act (the ``Manual''), which is part of the APA legislative history, the
Attorney General expressly and unequivocally stated that the
determinations of claims under Title II of the Social Security Act are
adjudications covered by the APA: ``[T]he residual definition of
``adjudication'' in section 2(d) was intended to include such
proceedings as the following: . . . [t]he determination of . . . claims
under Title II (Old Age and Survivor's Insurance) of the Social
Security Act. . . .'' U.S. Justice Dept., Attorney General's Manual on
the Administrative Procedure Act 14-15 (1947) (emphasis added), citing,
Senate Judiciary Committee Hearings on the APA (1941) at 657, 1298,
1451 and S. Rep. No. 752 at 39; 92 Cong. Rec. 5648.
According to the Supreme Court, the Manual is an important part of
the legislative history of the APA. The Manual is ``a contemporaneous
interpretation'' of the APA, Vermont Yankee Nuclear Power Corp. v.
Natural Resources Defense Council, 435 U.S. 519, 546 (1978), that has
been `` `given some deference by [the Supreme] Court because of the
role played by the Department of Justice in drafting the legislation,
and Justice [Tom C.] Clark was Attorney General both when the APA was
passed and when the Manual was published.' '' Steadman v. SEC, 450 U.S.
91, 102, n. 22 (1981), quoting, Vermont, 435 U.S. at 546. ``In prior
cases, [the Supreme Court has] given some weight to the Attorney
General's Manual on the Administrative Procedure Act (1947), since the
Justice Department was heavily involved in the legislative process that
resulted in the Act's enactment in 1946.'' Chrysler Corp. v. Brown, 441
U.S. 281, 302, n. 31 (1979), citing, Vermont, supra. Justice Scalia has
described the Manual as ``the Government's own most authoritative
interpretation of the APA. . . . That document . . . was originally
issued `as a guide to the agencies in adjusting their procedures to the
requirements of the Act.' '' Bowen v. Georgetown University Hospital,
488 U.S. 204, 218 (1988) (concurring op.), quoting, Manual, p. 6, and
citing, Steadman, Chrysler and Vermont.
Therefore, Social Security Act Title II old age and survivors
insurance benefits program adjudications are APA adjudications.
The Supreme Court implicitly held in Bowen v. Georgetown University
Hospital that the APA generally applies to the Medicare Act when it
expressly affirmed the decision by the U.S. Court of Appeals for the
District of Columbia that both the APA and the Medicare Act barred the
Secretary of Health and Human Services from issuing a rule that
retroactively sets new cost-limits for Medicare payments for health
services: ``The [circuit] court based its holding on the alternate
grounds that the APA, as a general matter, forbids retroactive
rulemaking, and that the Medicare Act, by its specific terms, bars
retroactive cost-limit rules. We . . . now affirm.'' Bowen v.
Georgetown University Hospital, 488 U.S. 204, 208 (1988), affirming,
821 F.2d 750 (D.C. Cir. 1987). The Supreme Court did not discuss the
APA further because it found that the Secretary's retroactive cost-
limit rule was invalid on the threshold issue of whether the Medicare
Act permitted retroactive rulemaking. Id. at 208, 215-216.
In 1976, Congress expressly ended what it described as the
confusion during the preceding few years regarding the applicability of
the APA to the parts of the Social Security Act enacted after the APA
by enacting Public Law No. 94-202, which is entitled ``An Act to amend
the Social Security Act to expedite the holding of hearings under
titles II, XVI and XVIII by establishing uniform review procedures, and
for other purposes.'' Pub. L. No. 94-202, 89 Stat. 1135-1137 (1976).
Congress enacted Public Law No. 94-202 in connection with the SSI
program to reiterate that it intends the APA to apply to all
adjudications of Social Security Act claims that have been denied by
the SSA. The provisions of ``[Public Law No. 94-202] clearly placed all
social security cases (OASDI, SSI, and medicare) under the APA.''
Conversion of Temporary Administration Law Judges, H.R. Doc. No. 617,
95th Cong., 1st Sess. 4-5 (1977) (emphasis added).
Therefore, Congress expressly intended that the APA apply to the
Medicare administrative adjudication process, just the same as Congress
intended for Title II and all other Social Security Act adjudications.
In addition, since the APA applies to Medicare adjudications, the
enactment of the 2004 President's Budget item that would authorize the
use of a non-APA ALJ hearing process for Medicare appeals is not
sufficient to override the APA requirements. The APA provides that a
``[s]ubsequent statute may not be held to supercede or modify [the
APA], except to the extent that it does so expressly.'' 5 U.S.C.
Sec. 559. The Supreme Court repeatedly has held that ``[e]xemptions
from the terms of the Administrative Procedure Act are not lightly to
be presumed in view of the statement in Sec. 12 of the Act [now
codified at 5 U.S.C. Sec. 559] that modifications must be express . .
.'' Marcello v. Bonds, 349 U.S. 302, 310 (1955), citing, Shaughnessy v.
Pedreiro, 349 U.S. 48, 51 (1955) (The APA ``is to be given a
`hospitable' interpretation.''). Ardestani v. INS, 502 U.S. 129, 134
(1991); Brownell v. Shung, 352 U.S. 180, 185 (1956). An exemption from
the APA will not be found unless the subsequent statute expressly
supercedes the provisions of the APA and/or the Congressional intent to
override the APA or any of its provisions is sufficiently clear to
overcome the presumption that the APA applies. Id. The legislative
intent of Congress is clear: ``Subsequent legislation is not to modify
the bill except as it may do so expressly.'' Senate Judiciary Committee
Report on the APA, S. Rep. No. 752, 79th Cong., 1st Sess. 29
(1945); H.R. Rep. No. 1980, 79th Cong., 2nd Sess. 47 (1946).
Finally, in a letter dated January 9, 2001, SSA Commissioner
Kenneth S. Apfel affirmed the relationship between the APA and the
Social Security Act for Social Security hearings:
The Social Security Administration (SSA) has a long
tradition, since the beginning of the Social Security programs
during the 1930s, of providing the full measure of due process
for people who apply for or who receive Social Security
benefits. An individual who is dissatisfied with the
determination that SSA has made with respect to his or her
claim for benefits has a right to request a hearing before an
Administrative Law Judge, an independent decisionmaker who
makes a de novo decision with respect to the individual's claim
for benefits. As the Supreme Court has recognized, SSA's
procedures for handling claims in which a hearing has been
requested served as a model for the Administrative Procedure
Act (APA). Congress passed the APA in 1946 in part to establish
uniform standards for certain adjudicatory proceedings in
Federal agencies, in order to ensure that individuals receive a
fair hearing on their claims before an independent
decisionmaker. SSA always has supported the APA and is proud
that the SSA hearing process has become the model under which
all Federal agencies that hold hearings subject to the APA
operate. SSA's hearing process provides the protections set-
forth in the APA, and SSA's Administrative Law Judges are
appointed in compliance with the provisions of the APA.
Any retreat by CMS from SSA's long and proud tradition by which SSA
conducts Medicare hearings will have a substantial adverse effect on
Medicare beneficiaries and providers and will deny them basic due
process rights. American citizens will have fewer procedural due
process rights than they had prior to the enactment of the APA.
We urge you to protect the due process rights of the American
people by continuing to provide Medicare beneficiaries and providers
the full range of rights to an appellate administrative due process
hearing and decision by an APA ALJ under both the APA and the Social
Security Act. APA due process offers the best protection to our
citizens in their dealings with the federal government.
Most Americans first see the face of the United States government
when they seek Social Security Act benefits. How people view that face
depends upon the quality of justice they receive. The current hearing
procedure provided by the Social Security Act and APA allows for high
quality due process and a sense of fair play. Full APA due process must
be preserved in Medicare cases for the benefit of our citizens.
Statement of the Emergency Department Practice Management Association,
McLean, Virginia
On behalf of the Emergency Department Practice Management
Association (EDPMA), we would like to thank Chairman Johnson and
Ranking Member Stark for their hard work on Medicare regulatory reform.
We appreciate the opportunity to present this written statement about
Medicare issues that affect EDPMA members. We would be happy to work
with you on this important topic.
Background
EDPMA represents emergency department (ED) medical groups, ED
billing companies, consultants, and vendors who support ED medical
groups. EDPMA members provide patient care and ED management services
to approximately 25% of the estimated over 100 million emergency
department patients in the U.S. EDPMA supports regulatory reform to the
Medicare program. EDPMA submitted comments to the Department of Health
and Human Services (HHS) on March 5, 2002 (see attached). We have
highlighted our main concerns below. While we are pleased by the
recommendations of the Secretary of HHS' Regulatory Reform Task Force,
and progress made by HHS to date, we also believe that there are
several areas where additional reforms are necessary.
CMS' Reassignment Policies
Many hospitals in the U.S. contract with outside medical groups to
provide physician services in their EDs. Unlike private payors, CMS
policy does not currently allow ED medical groups that use independent
contractors to obtain a Medicare group enrollment number. However, CMS
has recognized that many physician independent contractors are needed
to staff EDs and established a compliance scenario (the ``lockbox''
arrangement) to permit these physicians to continue to provide services
to Medicare beneficiaries and stay affiliated with the ED medical
group.
The current compliance scenarios create a process that is labor-
intensive, expensive, and actually decreases the integrity of the
Medicare program as multiple individual provider numbers are created
and the program has a more difficult time spotting billing trends or
flagging any questionable practices that might be common to physicians
affiliated with the same group. In contrast, if the medical group could
obtain a number, there would be a direct relationship between the group
and the Medicare program, thereby enhancing program accountability.
EDPMA believes that CMS should permit ED medical groups to enroll
with the Medicare program and receive direct payments for physician
services whether those services are rendered by employees or
independent contractors. We urge Congress to include in any regulatory
reform measures a provision to explicitly permit ED medical groups to
enroll with the Medicare program and receive direct payment for
physician services whether those services are rendered by employees or
independent contractors.
855 Enrollment Forms
As noted above, EDPMA believes that ED medical groups should be
able to enroll with the Medicare program and receive direct payments
for physician services whether those services are rendered by employees
or independent contractors. In addition to this policy concern, EDPMA
also supports other changes to the enrollment process. We believe the
enrollment form (the ``855'') and the process used by the CMS
contractors in reviewing the applications could be streamlined. EDPMA
continues to emphasize the importance of Internet-based electronic
provider enrollment, and EDPMA has detailed its reasons supporting the
creation of such an Internet-based enrollment process in previous
written comments filed with CMS. Congress passed an electronic
signature law and many state laws support electronic signature and
verification. EDPMA strongly believes now more than ever that an
Internet-based enrollment process could save both CMS and the provider
community millions of dollars over what is today almost entirely a
paper-based system for provider/supplier enrollment.
EDPMA also recommends continued refinement to the 855 form to make
it user-friendly. EDPMA urges the Committee to take steps to ensure
that enrollment applications are processed fairly, consistently, and in
a timely fashion. Providers should be able to complete and submit the
applications electronically and to check on the status of the
applications electronically.
EDPMA is also concerned that the contractors are not held to a
tough standard regarding the processing time. Under the current
process, EDPMA is concerned that the majority of enrollment delays do
not result in discovery of an applicant who is not eligible to
participate in the Medicare program. Rather, the delays are often due
to mere contractor inaction and/or inefficiency, and the provider gets
its enrollment number, albeit much delayed. ED physicians must see all
patients due to the federal EMTALA requirements. They do not have the
option of not seeing Medicare patients while they await their number.
Therefore, the amount of Medicare payments postponed by the delay in
issuance of numbers is not insignificant.
EDPMA suggests that CMS continue to modify the 855 forms to make
them straightforward, establish electronic filing, and coordinate the
filing of the 855 with the filing of EDI, and EFT agreements.
EMTALA
EDPMA members have many concerns related to the effect of the
Emergency Medical Treatment and Active Labor Act, 42 U.S.C.
Sec. 1395dd, (EMTALA) on hospitals and emergency physicians. EDPMA
supports the formation of an EMTALA industry advisory group as EDPMA is
concerned that HHS' current interpretation of EMTALA has extended
beyond the law's initial intention to prevent patients from being
refused treatment or inappropriately transferred. Two general problems
have many implications. First, requiring hospitals to provide services
without a corresponding requirement for payment leads to an unstable
and untenable financial situation for hospitals and for physicians.
Second, the divergence between legal and medical definitions of key
EMTALA terms (e.g., ``stable'') has led to much confusion in the field
as to appropriate practices. We support comments made by the American
College of Emergency Physicians (ACEP) to the Committee on this matter
as well.
Documentation Guidelines for Evaluation and Management Services
It is EDPMA's understanding that CMS is currently working with the
American Medical Association (AMA) to revise the Documentation
Guidelines (``DGs'') for physician evaluation and management services.
In the past, EDPMA has provided a number of comments in this area. In
general, EDPMA supports the use by CMS of DGs so that CMS can verify
that objective standards were provided before paying claims. We believe
the 1995 documentation guidelines are a good example of objective
standards. EDPMA also believes that physician use of appropriately
structured DGs promotes quality care for all patients, including
Medicare beneficiaries. EDPMA supports the use of objective criteria to
avoid confusion for physicians and their coders. CMS should work
closely with providers in making sure that any DGs are workable from
the provider's perspective.
Once again, EDPMA appreciates this opportunity to provide input to
the Committee. We would be happy to provide additional materials in any
of the areas noted above.
______
Christy Schmidt
Executive Coordinator, Regulatory Reform Initiative
Office of the Assistant Secretary for Planning and Evaluation
Department of Health and Human Services
200 Independence Avenue, SW
Washington, DC 20201
Dear Ms. Schmidt:
EDPMA submits these comments to the Secretary's Advisory Committee
on Regulatory Reform (the Committee) in response to the January 4, 2002
request for public input set forth in the Federal Register, 67 Fed.
Reg. 599. EDPMA represents emergency department (ED) medical groups, ED
billing companies, consultants, and vendors who support ED medical
groups. EDPMA members provide patient care and ED management services
to approximately 25% of the estimated over 100 million emergency
department patients in the U.S. EDPMA supports the efforts by the
Department of Health and Human Services (HHS) to reduce regulatory
burdens imposed by HHS regulations, and we look forward to working with
the Committee in this area.
EMTALA
EDPMA members have many concerns related to the effect of the
Emergency Medical Treatment and Active Labor Act, 42 U.S.C.
Sec. 1395dd, (EMTALA) on hospitals and emergency physicians. EDPMA
supports the formation of an EMTALA industry advisory group as EDPMA is
concerned that HHS' current interpretation of EMTALA has extended
beyond the law's initial intention to prevent patients from being
refused treatment or inappropriately transferred. Two general problems
have many implications. First, requiring hospitals to provide services
without a corresponding requirement for payment leads to an unstable
and untenable financial situation for hospitals and for physicians.
Second, the divergence between legal and medical definitions of key
EMTALA terms (e.g., ``stable'') has led to much confusion in the field
as to appropriate practices.
EDPMA believes the statute's requirements have been inappropriately
extended through regulations, the interpretive guidelines and the
enforcement policies of state surveyors, CMS, and the HHS Office of
Inspector General (OIG). Most recently, HHS expanded the reach of
EMTALA to non-ED settings through the requirements for provider-based
entities. The application of EMTALA in these settings is outside the
scope of the statute, and we believe applying these requirements to
non-ED settings may tax the already thin resources of many hospital
Eds. CMS has stated that it intends to re-examine the provider-based
EMTALA requirements. EDPMA applauds this decision and urges CMS to
expeditiously revisit these regulations, and other important EMTALA
issues.
General review of current EMTALA policies is necessary as the
EMTALA regulations, the interpretive guidelines, and the positions of
state surveyors are often extremely complicated and confusing. Two OIG
reports issued in January 2001 highlighted the confusion that surrounds
implementation of the EMTALA regulations and the inconsistency in
application and enforcement of EMTALA among the CMS regions. A
particular area of confusion relates to the responsibility of hospitals
to provide ``on-call'' physicians. In many communities, specialist
physicians are refusing to be on-call, and hospital EDs are concerned
that patient care could suffer.
Recommendations: EMTALA's regulatory scope should be modified to be
consistent with the statute. CMS should establish a technical advisory
group, as both the OIG and General Accounting Office (GAO) recommended
last year. CMS should also seek to ensure that the Medicare and
Medicaid programs pay for medical screening examinations and
stabilizing treatment for all patients who are treated pursuant to the
EMTALA mandate.
2002 Medicare Physician Fee Schedule
The 2002 Medicare physician fee schedule included cuts of
approximately 8% to emergency physicians. While the negative update
affects most physicians, the cut particularly affects emergency
physicians as emergency medicine was already facing cuts in the
practice expense/work values. This Medicare cut comes at a time when
many emergency physicians are experiencing more than 20% annual premium
increases in the costs of medical malpractice insurance. Unlike other
physicians who can decide whether or not to participate in Medicare,
emergency physicians are compelled under EMTALA to see all patients who
present to the emergency department.
Recommendations: EDPMA recognizes that CMS faced statutory
limitations in calculating the update. However, EDPMA believes CMS
could make changes within the current statutory framework to reflect
some of the particular expenses borne by emergency physicians providing
the nation's safety net. Specifically, EDPMA believes CMS should
recognize the high level of uncompensated care provided in the ED and
the standby costs.
CMS' Reassignment Policies
Many hospitals in the U.S. contract with outside medical groups to
provide physician services in their EDs. Unlike private payors, CMS
policy does not currently allow ED medical groups that use independent
contractors to obtain a Medicare group number. However, CMS has
recognized that many physician independent contractors are needed to
staff EDs and establish a compliance scenario (the ``lockbox''
arrangement) to permit these physicians to continue to provide services
to Medicare beneficiaries and stay affiliated with the ED medical
group.
The current compliance scenarios create a process that is labor-
intensive, expensive, and actually decreases the integrity of the
Medicare program as multiple individual provider numbers are created
and the program has a more difficult time spotting billing trends or
flagging any questionable practices that might be common to physicians
affiliated with the same group. In contrast, if the medical group could
obtain a number, there would be a direct relationship between the group
and the Medicare program, thereby enhancing program accountability.
Recommendations: CMS should permit ED medical groups to enroll with
the Medicare program and receive direct payments for physician services
whether those services are rendered by employees or independent
contractors. CMS can modify its enrollment procedures to permit group
enrollment by providing guidance to the Medicare contractors in written
instructions and/or by adding an appropriate exception to the Medicare
Carriers Manual. EDPMA believes this policy change can be effected
without statutory or regulatory change, and in fact, CMS has done so in
the past. In 1999, CMS added a reassignment exception to the Medicare
Carriers Manual for faculty practice plans without a statutory or
regulatory modification. Implementation of a new group enrollment
process could include important safeguards for the Medicare program.
Possible safeguards include assumption of group responsibility for any
overpayments.
855 Enrollment Forms
As noted above, EDPMA believes that ED medical groups should be
able to enroll with the Medicare program and receive direct payments
for physician services whether those services are rendered by employees
or independent contractors. In addition to this policy concern, EDPMA
has concerns with the 855 enrollment forms currently in use by CMS and
its carriers. The new forms went into effect on November 1, 2001, with
a transition period until January 1, 2002. EDPMA applauds CMS on its
approach to fine-tuning these forms by reaching out to the affected
community for comments. EDPMA believes, however, that a number of
concerns remain.
The 855 forms and the process used by the CMS contractors in
reviewing the applications remain cumbersome, confusing, and require
multiple manual submission of documents. In addition, the current
approach results in significant delays in receipt of Medicare
enrollment numbers. EDPMA continues to emphasize the importance of
Internet-based electronic provider enrollment, and EDPMA has detailed
its reasons supporting the creation of such an Internet-based
enrollment process in previous written comments filed with CMS.
Congress passed an electronic signature law and many state laws support
electronic signature and verification. EDPMA strongly believes now more
than ever that an Internet-based enrollment process could save both CMS
and the provider community millions of dollars over what is today
almost entirely a paper-based system for provider/supplier enrollment.
EDPMA also recommends continued refinement to the 855 form to make
it user-friendly. EDPMA urges the Committee to take steps to ensure
that enrollment applications are processed fairly, consistently, and in
a timely fashion. Providers should be able to complete and submit the
applications electronically and to check on the status of the
applications electronically.
EDPMA is also concerned that the contractors are not held to a
tough standard regarding the processing time. EDPMA members frequently
receive last-minute requests for supporting documentations. Often, the
matter could have been resolved by a phone call as soon as the question
came up. Instead, contractors often send out a form requesting
additional information that does not clearly identify the cause for
regarding the earlier submitted documentation as inadequate. Under the
current process, EDPMA is concerned that the majority of enrollment
delays do not result in discovery of an applicant who is not eligible
to participate in the Medicare program. Rather, the delays are often
due to mere contractor inaction and/or inefficiency, and the provider
gets its enrollment number, albeit much delayed. ED physicians must see
all patients due to the federal EMTALA requirements. They do not have
the option of not seeing Medicare patients while they await their
number. Therefore, the amount of Medicare payments postponed by the
delay in issuance of numbers is not insignificant.
Recommendations: EDPMA suggests that CMS continue to modify the 855
forms to make them straightforward, establish electronic filing, and
coordinate the filing of the 855 with the filing of EDI, and EFT
agreements.
Documentation Guidelines for Evaluation and Management Services
It is EDPMA's understanding that CMS is currently revising the
Documentation Guidelines (``DGs'') for physician evaluation and
management services. In the past, EDPMA has provided a number of
comments in this area. In general, EDPMA supports the use by CMS of DGs
so that CMS can verify that medically necessary services were provided
before paying claims. EDPMA also believes that physician use of
appropriately structured DGs will promote quality care for all
patients, including Medicare beneficiaries. EDPMA supports the use of
objective criteria (e.g., ``scoring'' systems) to avoid confusion for
physicians and their coders. Scoring systems help physicians
understand, in advance, the standards that will be used by CMS, the OIG
and other payers in reviewing claims. Unfortunately, the currently
constituted work group for the DGs lacks any representatives from
emergency medicine.
Recommendations: EDPMA recommends that as CMS moves forward in this
area, CMS should work closely with providers in making sure that any
DGs are workable from the provider's perspective and emphasize the use
of objective criteria. We believe that emergency medicine should be
represented in the DG work group. EDPMA, and particularly its billing
company members, may be able to assist CMS in any pilot testing of new
DGs.
Use of Physician Assistants
EDPMA is concerned regarding CMS recent policy affecting the
flexibility of emergency groups to use physician assistants (PAs) in
the ED. The use of PAs is critical to many EDs given the 24-7 demands
of hospital EDs and the difficulty recruiting enough physicians. CMS'
contractors have denied enrollment in Medicare to PAs that work for ED
medical groups on a contractual basis (as opposed to as employees). The
refusal to enroll 1099 PAs with their medical group is despite the 1997
Balanced Budget Act (``BBA 97'') that states the PA may be either an
employee or independent contractor, provided he/she reassigns the
Medicare reimbursement to his/her group. CMS' policy appears to be
directly contrary to both the Congressional intent to make allied
health professionals more accessible and the express provisions of the
statute.
CMS has also recently stated that PAs will not be permitted to
enroll with Medicare under a medical group provider number if the PA
has an equity interest in the medical group. Many state laws permit a
PA to have ownership in their medical group, e.g., North Carolina. The
ownership of the group must be disclosed on the group's Medicare
enrollment application. Medicare contractors have denied group Medicare
enrollment where there is a PA with ownership interest in the group.
Recommendations: We believe that CMS should permit entities that
employ or contract with PAs to enroll with the Medicare program, as
long as the entities are legal entities established in accordance with
state law and the services provided by PAs meet the relevant Medicare
requirements (e.g., appropriate physician supervision).
HIPAA Privacy Regulations
In December 2000, HHS issued Final Standards for the Privacy of
Individually Identifiable Health Information, 42 C.F.R. Parts 160 and
164, (the HIPAA Privacy Regulations). EDPMA shares the concerns of many
entities affected by the HIPAA Privacy Regulations. In particular,
EDPMA is concerned with reconciling the apparent requirement of
obtaining the patient's consent to use or disclose protected health
information (``PHI'') with the restrictions of EMTALA. Specifically,
the OIG/HCFA December 1999 Notice of Special Advisory Bulletin
interprets possible delays in patients receiving their medical
screening exams as grounds for an EMTALA violation. ED providers are
concerned that a requirement to obtain the patient's consent for use or
disclosure of PHI could cause delays. Consent forms used in EDs will be
longer, and may prompt more patient questions in light of HIPAA.
Separately, the ``minimum necessary'' standard suggests an overly
subjective standard for judging whether the use or disclosure was
appropriate.
EDPMA is also concerned regarding the timeline for implementation
of the HIPAA Privacy Regulations and any modifications that are made
before the compliance date. Many EDPMA members could be both covered
entities (as providers of physician services) and business associates
to covered entities (hospitals). Therefore, EDPMA members are assessing
their own compliance strategies as well as working with others to see
what other covered entities may be requiring of their business
associates.
Recommendations: EDPMA suggests that HHS provide additional
guidance to covered entities and issue any modifications to the HIPAA
Privacy Regulations as soon as possible so that covered entities can
move forward in their compliance strategies.
EDPMA appreciates this opportunity to provide input to the
Committee. We would be happy to provide additional materials in any of
the areas noted above.
Sincerely,
Edward R. Gaines, III
Chair, EDPMA
Statement of the National Association of Chain Drug Stores, Alexandria,
Virginia
The National Association of Chain Drug Stores (NACDS) appreciates
the opportunity to provide comments to the Subcommittee on Health of
the Committee on Ways and Means on Medicare Regulatory and Contracting
Reform. NACDS represents more than 200 chain pharmacy companies that
operate almost 35,000 community retail pharmacies. NACDS members
provide almost 70 percent of all retail pharmacy prescriptions.
Community retail pharmacies provide prescription services and
health care-related products to millions of Medicare and Medicaid
recipients each year. For example, many pharmacies provide durable
medical equipment (DME) and prescription drugs to Medicare
beneficiaries. Pharmacies also provide prescription services to
millions of Medicaid recipients. Each program has its own complex set
of rules and regulations, which can often result in inefficiency,
redundancy, and interfere with the ability of health care providers to
deliver quality care.
NACDS supports initiatives by Congress and the Department of Health
and Human Services to reform many of these rules and regulations. For
example, Congress has considered several bills over the last few years
that would begin the process of regulatory reform. The November 2002
report of the Secretary's Advisory Committee on Regulatory Reform
suggested ways to reduce some of the burdens imposed on pharmacies--and
the patients they serve--by existing HHS regulations, policies, and
procedures. NACDS suggests that the following changes be made to
existing laws and regulations that would facilitate participation in
these programs.
Medicaid Prescription Copays: NACDS supports the use of reasonable
cost sharing to encourage the appropriate use of prescription services.
In the Medicaid program, however, the law prohibits pharmacies from
denying services to recipients who are unable to pay their copayments
or coinsurance. Additionally, Federal regulation prohibits states from
compensating pharmacies for uncollected copays. For pharmacies, this
means that Medicaid prescriptions are often dispensed at an economic
loss if the patient cannot or will not pay the copay. As state Medicaid
drug budgets escalate, more states are increasing copays, further
placing pharmacies at economic risk, and threatening the participation
of pharmacies in Medicaid.
The Federal regulation prohibiting states from compensating
pharmacies for uncollected prescription copays should be repealed, and
states should be required to reimburse pharmacies for these uncollected
copays. As a matter of fairness and equity, retail pharmacies should
not be forced to bear the burden of uncollected prescription drug
copayments. Moreover, CMS should further clarify the circumstances
under which an ``inability'' to pay applies, so that recipients are
aware that they must demonstrate true economic hardship in order for
the provider to be required to provide the prescription without the
copay.
Medicare/Medicaid Coordination of Benefits for Dual Eligibles:
Coordination of benefits (COB) is a major issue for NACDS members who
participate as Medicare Part B suppliers and as Medicaid providers.
Neither Medicare nor Medicaid provides adequate beneficiary information
to providers to determine how payors should be billed.
The absence of an online adjudication system in the Medicare
program adds to the problem, as most Medicare claims have to be
submitted manually. NACDS' goal is to improve cost avoidance efforts
without increasing the COB responsibilities of pharmacies. These
problems have only worsened because of recent changes in Medicare
program requirements for diabetic supplies claims, and Medicaid cost
savings recoupment endeavors by some states.
Pharmacy Enrollment as Medicare Suppliers: Many NACDS members are
already enrolled in the Medicare program as DMERC suppliers, but are
facing problems with completion of enrollment/re-enrollment forms.
Consequently, NACDS members may face delayed enrollment or interruption
in their status as suppliers. An unintended consequence is interruption
of service to Medicare beneficiaries. The 855S form requires suppliers
to submit information and documentation that have not always been
necessary for enrollment using the old enrollment applications. For
many items, extensive paperwork and disclosure of specific information
is required.
Completion of the application is compounded for members that have
hundreds or thousands of stores, and are required to complete a
separate application for each of their individual stores--despite the
fact that most of the information is identical for each of the stores.
The application has resulted in the submission of hundreds of thousands
of pages of information that could easily be formatted electronically
and submitted as a single file. This would reduce the overwhelming
paperwork burden that Nation Supplier Clearinghouse (NSC) will
encounter when reviewing the applications. On occasion, NSC and CMS
have agreed to waive certain requirements, but this has been on a case-
by-case basis, and only after numerous phone calls to both NSC and CMS.
Both CMS and suppliers would benefit from an overall streamlined
application process and acceptance of a uniform documentation standard.
Medicare Diabetes Education and Training Program: Under the 1997
BBA law creating this program, Medicare ``suppliers'' such as
pharmacies are able to provide diabetes education and training services
to Medicare beneficiaries. In fact, several NACDS members have received
American Diabetes Association (ADA) accreditation for their Medicare
diabetes education programs.
However, there are two operational obstacles to broader pharmacy
participation. First, there are other diabetes education and training
programs that meet the same qualifications and standards as the ADA
program, and pharmacies should also be able to obtain accreditation if
they complete these other programs. In addition, some members continue
to have problems obtaining provider numbers from Medicare to bill for
the services they provide. NACDS has determined that one barrier in
obtaining provider numbers is the contractors' misunderstanding of
pharmacy participation. NACDS will work with CMS to raise contractors'
understanding of this issue, and will work with Members of Congress to
assure that the program is implemented consistent with Congressional
intent.
HIPAA Privacy Protections and Administrative Simplification: To
assure maximum patient privacy, as well as administrative
simplification in the processing of prescription drug claims, HHS
should initiate rulemaking to adopt the Community Pharmacy Based
Pharmacy Claims Transaction Standard rather than the current standard
that is set to be used under HIPAA, the NCPDP Version 5.1 standard. The
NCPDP standard does not assure patient privacy because it still
contains many fields for ``optional'' patient information.
That is, the insurance company or pharmacy benefit manager (PBM)
can request this information from the pharmacy--such as address or
phone number--this is not necessary to process the prescription claim,
and can use this information for purposes unrelated to health care,
such as marketing. The pharmacy, which does not want to disclose this
information, may have no choice if the payor will not pay the claim
without this information.
Moreover, the fact that different payors may request different
information for different optional fields can result in several
different pharmacy transaction standards, rather than one standard,
which was the goal of HIPAA administrative simplification.
In order for beneficiaries to receive the best possible quality of
care, all providers, including pharmacies, should be relieved of the
burdens associated with participating in federal health care programs.
HHS should work with community pharmacy to adopt many of the
recommendations made here regarding participation in Medicare and
Medicaid. Additionally, Congress should work to address those
administrative burdens that require statutory corrections. We
appreciate the opportunity to submit this statement for the record.