Table Of Content

^ HEALTH CARE REFORM Y 4. W 36: 103-88 Health Care Reforn, Serial 103-88;... XXJ_iXXJ.VXX^vjTO BEFORETHE SUBCOMMITTEE ON HEALTH OFTHE COMMITTEE ON WAYS AND MEANS HOUSE OF REPRESENTATIVES ONE HUNDRED THIRD CONGRESS VOLUME IX President's Health Care Reform: Changes to the Medicare Program NOVEMBER 23, 1993 Issues Relating to Managed Care FEBRUARY 2, 1994 Serial 103-88 Printed for the use of the Committee on Ways and Means % HEALTH CARE REFORM HEARINGS BEFORETHE SUBCOMMITTEE ON HEALTH OFTHE COMMITTEE ON WAYS AND MEANS HOUSE OP REPRESENTATIVES ONE HUNDRED THIRD CONGRESS VOLUME EX President's Health Care Reform Proposals: Changes to the Medicare Program NOVEMBER 23, 1993 Issues Relating to Managed Care FEBRUARY 2, 1994 Serial 103-88 Printed for the use ofthe Committee on Ways and Means U.S. GOVERNMENT PRINTING OFFICE WASHINGTON : 1994 ForsalebytheU.S.GovernmentPrintingOffice SuperintendentofDocuments,CongressionalSalesOffice,Washington,DC 20402 ISBN 0-16-046161-8 COMMITTEE ON WAYS AND MEANS DANROSTENKOWSKI, Illinois.Chairman SAMM. GIBBONS, Florida BILLARCHER,Texas JC.HJ.ARPILCEKSLEB..TReAxNaGsEL, NewYork BPIHLILLITPHMO.MACSR,ANCEa,lifIolrlinnioais AFNORDTYNJEAYCOPBEST,EJRS.T,AIRnKd,iaCnaalifornia DE.OCNLSAUYNSDHQAUIWS,TJ,r.,TeFnlnoersisdaee HAROLD E. FORD,Tennessee NANCY L.JOHNSON,Connecticut ROBERTT. MATSUI, California JIM BUNNING, Kentucky BARBARA B. KENNELLY,Connecticut FRED GRANDY, Iowa WILLIAMJ. COYNE, Pennsylvania AMO HOUGHTON, NewYork MICHAELA. ANDREWS,Texas WALLY HERGER, California SANDERM. LEVIN, Michigan JIM McCRERY, Louisiana BENJAMINL. CARDIN,Maryland MELHANCOCK, Missouri JIM MCDERMOTT, Washington RICKSANTORUM, Pennsylvania GERALDD. KLECZKA, Wisconsin DAVECAMP, Michigan JOHNLEWIS, Georgia L.F. PAYNE, Virginia RICHARDE. NEAL, Massachusetts PETERHOAGLAND, Nebraska MICHAELR. MCNULTY,New York MIKE KOPETSKI, Oregon WILLIAMJ.JEFFERSON, Louisiana BILLK. BREWSTER, Oklahoma MELREYNOLDS, Illinois Janice Mays, ChiefCounselandStaffDirector CharlesM. Brajn,AssistantStaffDirector PhillipD. Moseley,Minority ChiefofStaff Subcommittee on Health FORTNEYPETE STARK, California, Chairman SANDERM. LEVIN, Michigan BILLTHOMAS, California BENJAMIN L. CARDIN,Maryland NANCY LJOHNSON, Connecticut MICHAELA. ANDREWS,Texas FREDGRANDY, Iowa JIMMcDERMOTT,Washington JIMMcCRERY, Louisiana GERALD D. KLECZKA, Wisconsin JOHNLEWIS, Geot^ia (ID CONTENTS PRESIDENT'S HEALTH CARE REFORM: CHANGES TO THE MEDICARE PROGRAM—NOVEMBER23, 1993 Page Pressreleasesannouncingthehearings 2 WITNESSES U.S. Department of Health and Human Services, Hon. Bruce C. Vladeck, Administrator,HealthCareFinancingAdministration 8 Prospective Payment Assessment Commission, Stuart H. Altman, Ph.D., Chairman,andDonaldYoung,M.D.,ExecutiveDirector 64 PhysicianPaymentReviewCommission,JohnM.Eisenberg,M.D., Chairman, andPaulB.Ginsburg,Ph.D.,ExecutiveDirector 81 AmericanAssociationofRetiredPersons,JudithBrown 103 AmericanClinicalLaboratoryAssociation,HopeFoster 186 AmericanCollegeofPhysicians,HowardB.Shapiro 178 AmericanCollegeofRadiology,K.K.Wallace,M.D 164 AmericanCollegeofSurgeons,StephenR.T.Evans,M.D 157 AmericanHealthCareAssociation,PaulWillging 214 AmericanHospitalAssociation,ThomasJ. Lewis 13 AmericanMedicalAssociation,WilliamE.Jacott,M.D.,andJanetHoran 122 Hom-Ox-EquipCo.,MichaelR.Tracey 221 Inter-AmericanDialysisInstitute,MarkZawiski 206 Minnesota Association of Home Medical Equipment Supnliers, Michael R. Tracey 221 NationalAssociationforHomeCare,ValJ.Halamandaris 198 NationalAssociationofMedicalEquipmentSuppliers,MichaelR.Tracey 221 National Committee to Preserve Social Security and Medicare, Martha McSteen 113 NationalMedicalAssociation,TracyM.Walton,Jr.,M.D 142 NationalRenalAdministratorsAssociation,MarkZawiski 206 Society for Cardiovascular and Interventional Radiology, Gordon K. McLean, M.D 169 ThomasJeffersonUniversityHospital,ThomasJ. Lewis 131 SUBMISSIONS FOR THE RECORD ABCHomeHealthServices,Inc.,JoelV.Mills,letterandattachments 232 AmericanAcademyofPhysicianAssistants,statement 245 AmericanAssociationforClinicalChemistry,statement 249 AAmmeerriiccaannAFsesdoecriaattiioonnooffKiHdonmeeyPHateiaelntths,AAg.enPceiteesr,LJuonedlinV,.M.MDi.l,ls,stalettetmeerntan.d.. 251 attachments 232 AmericanMedicalTechnologists,JoyceH. Lybrand, statement 252 AmericanSocietyofClinicalPathologists,RexB.Conn,M.D.,statement 255 Bauer,Ken,HinsdaleHospital,Hinsdale,111.,letter 266 Erase,StephenJ.,NicholsInstitute,SanJuanCapistrano,Calif.,letter 276 Conn,RexB.,M.D.,AmericanSocietyofClinicalPathologists, statement 255 Greater New York Hospital Association, Kenneth E. Raske, statement and attachment 259 HinsdaleHospital,Hinsdale,111.,KenBauer,letter 266 cm) IV Page LLuynbdriann,d,A.JoPyecteerH,.,M.ADm.e,riAcmaenriMceadnicAaslsoTceicahtnioolnogoifsKtis,dnsetyatPeamtieenntts, statement .. 225512 Metropolitan ChicagoHealthcareCouncil, statement 268 Mills, Joel v., ABC Home Health Services, Inc., and American Federation ofHomeHealthAgencies,letterandattachments 232 National Association of Rehabilitation Facilities, Rob Schwartz, statement andattachments 270 NicholsInstitute,SanJuanCapistrano,Calif.,StephenJ.Erase,letter 276 Raske, Kenneth E., Greater New York Hospital Association, statement and attachment 259 Schwartz, Rob, National Association of Rehabilitation Facilities, statement andattachments 270 Sundquist, Hon. Don, a Representative in Congress from the State ofTen- nessee,statementandattachments 279 ISSUES RELATING TO MANAGED CARE—FEBRUARY2, 1994 PressreleaseofFriday,January21, 1994,announcingthehearing 292 WITNESSES U.S.DepartmentofHealthandHumanServices: Hon.PhilipR. Lee,M.D.,AssistantSecretaryforHealth 327 Hon. Bruce C. Vladeck, Ph.D., Administrator, Health Care Financing Administration 330 U.S. General Accounting Office, Mark Nadel, Associate Director forNational and PublicHealth Issues, Division ofHealth, Education and HumanServ- ices;accompaniedbyMichael Gutowski,AssistantDirector,JohnE.Dicken, Evaluator, and Ed Stropko, Assistant Director for Health Financing and Policy 369 AmericanGroupPracticeAssociation: RobertC.Montgomery,M.D 438 JamesL.Reinertsen,M.D 454 ArizonaHealthCareCostContainmentSystem, DonaldF.Schaller,M.D 479 CaliforniaPacificMedicalCenter,G.AubreySerfling 456 CommunityHealthGroup,ThomasD.Smith 509 GroupHealthAssociationofAmerica,Karen Ignagni 471 HealthSystemsMinnesota,JamesL.Reinertsen,M.D 454 HenryJ.KaiserFamilyFoundation, DianeRowland 388 KaiserCommissionontheFutureofMedicaid, DianeRowland 388 LucyJohns,SanFrancisco,Calif 422 MeritCareMedicalGroup,RobertC.Montgomery,M.D 438 NeighborhoodHealthPlan,JayHarrington 493 NewYorkersforAccessibleHealth Coverage,SusanM. Dooha 401 PennsylvaniaHealth LawProject, MichaelJ. Campbell,andAnnTorregrossa 412 SUBMISSIONS FOR THE RECORD AmericanManagedCareandReviewAssociation, CharlesW.Stellar,letter ... 529 American Pain Society, American Academy ofPain Medicine, and American Association fortheStudyofHeadache,jointstatement 535 ElectronicDataSystems,Inc.(EDS),Alice Lusk,statement 539 HealthNetwork, Inc.; American Association of Preferred Provider Organiza- tions; and American Managed Care and Review Association, George C. Phillips,Jr.,jointstatement 542 NationalAssociationofRehabilitationFacilities,RobSchwartz,statement 546 WisconsinIndependentPhysiciansGroup, Inc.,CharlotteL.Beyerl 552 PRESIDENT'S HEALTH CARE REFORM PROPOSALS: CHANGES TO THE MEDICARE PROGRAM TUESDAY, NOVEMBER 23, 1993 House of Representatives, Committee on Waysand Means, Subcommittee on Health, Washington, D.C. The subcommittee met, pursuant to call, at 10:05 a.m., in room 1100, Longworth House Office Building, Hon. Fortney Pete Stark (chairman ofthe subcommittee) presiding. [The press releases announcingthe hearingfollow:] (1) ; FOB UOaDlXTM MLSJLSB WMB RSLBABI #22 TUSSDAY, MOVBIBBR 9, 19*3 80BC0MHITTBB OM HEALTH COMMITTBB OM WATS AMD MBAMS U.S. HOUSB or BEFRE8EMTATIVZ8 1114 LOMOWOSTH HOUSE OFTICE BLDO. MASHIMQTOM, D.C. 20S1S TBLBPHOMBi (202) 225-7785 SOPBECTOEMMSITTATREEB(ODM.,HECAALLTIHF,.), CHAZSNAH, COMMITTEE OM WATS AMD MEAM8, U.S. BOnSE OF REPRESEMTATIVES, AMMOOHCES EBARINaS OM THB PRBSIDBMT'S HEALTH CARE REFORM PROPOSALS: CHAMaBS TO THE MBOZCARE PROORAM HealthT,heCoHmomniotrtaebeleonPeWtaeysStaarnldc M(eDa.,ns,CalUi.fS..)H>ouCshaeiromfanR,eprSeusbecnotmamtiitvteese,on announced today that the Subcommittee will hold a hearing on issues relating to Medicare changes in the President's health care reform proposals. The hearing will be held on Tuesday, Novemlaer 23, 1993, at 10:00 a.m. in the main Committee hearing room, 1100 Longworth House Office Building. Witnesses for these hearings will include both invited witnesses and individuals &nd organizations who have requested an opportunity to testify before the Subcommittee. All witnesses who will appear at these hearings will b« notified in advance by the staff. BACKQROUMDl The President's health care reform proposal is intended to achieve $124 billion in Medicare savings in the years 1996 through 2000, according to Administration estimates. To achieve these savings, the President proposes the following changes: Proposals Relating to Part A 1. Reduction of the hospital inflation update to mar)cet basket minus two percent for fiscal years 1997-2000; 2. Reduction of the indirect medical education (IME) adjustment; 3. Permanent reduction in prospective Federal and hospital- specific rates for capital; 4. Reduction of the capital payment update factor to recapture excessive capital payments prior to 1992; 5. Modification and phase-out of the hospital disproportionate share payments by January 1, 1998; 6. Establishment of a moratorium on designating new long-term care hospitals; and 7. Reduction of the s)cilled nursing facility (SNF) cost limits. Proposals Relating to Part B 1. Establishment of cumulative expenditure goals for physicians services, and replacement of the current use of historical volume and intensity in the default Medicare Volume Performance Standard formula with per capita growth in real Gross Domestic Product (plus 1.5 percentage points for primary care services) 2. Reduction of the Resource-Based Relative Value Scale update by three percent in 1995, except for primary care which would be held harmless; ; . 3. Establlstunent of limits on payments to physicians of high cost hospital staffs; 4. Establishment of Medicare primary care incentives; 5. Elimination of the so-called "extra-payments" to hospitals for outpatient hospital services; and 6. Establishment of competitive bidding for certain Medicare Part B services. Pr<?P9gj>lg Rglatinq t<? Part A ania B 1. Modification of Medicare secondary payer policies affecting working beneficiaries; 2. Reduction of home health cost limits; 3. Modification of payments to health malntenence organizations 4. Establishment of "Centers of excellence"; and 5. Restructuring of Medicare payments for direct graduate medical education (GME) Proposals Relating to Beneficiary Payments 1. Permanent extension of the 25-percent rule for Part B Medicare premium; 2. Establishment of a 20-percent copayment for lalsoratory services; 3. Requirement of a 10-percent coinsurance on home health visits for visits provided more than 30 days after hospital discharge; and 4. Establishment of an income-related Part B premium. The dates, times, and rooms for subsequent hearings will be announced at a later date. Oral testimony will be heard from invited and public witnesses during the course of the Subcommittee hearings on the President's proposals. For further details about these hearings, see Subcommittee press release /18, dated September 30, 1993. FOR IMMEDIATE RELEASE PRESS RELEASE #18 THURSDAY, SEPTEMBER 30, 1993 SUBCOMMITTEE OM HEALTH COMMITTEE OM WAYS AMD MEANS U.S. HOUSE or REPRESENTATIVES 1102 LOMOWORTH HOUSE OFFICE BLDG. WASHIMQTOM, D.C. 20515 TELEPHONE: (202) 225-7785 \ THE HONORABLE PETE STARK (D., CALIF.)> CHAIRMAN, SUBCOMMITTEE OM HEALTH, \I COMMITTEE ON WAYS AND MEANS, U.S. HOUSE OF REPRESENTATIVES, ^ ANNOUNCES HEARINGS OM .' HEALTH CARE REFORM: THE PRESIDENT'S HEALTH CARE REFORM PROPOSALS The Honorable Pete Stark (D., Calif.), Chairman, Subcommittee on Health, Committee on Ways and Means, U.S. House of Representatives, announced today that the Subcommittee will hold a series of hearings on issues relating to the President's health care reform proposals. The hearings will begin on Thursday, October 7, 1993, at 10:00 a.m. in the main Committee hearing room, 1100 Longworth House Office Building. They will continue on Tuesday, October 12, 1993, in the main Committee hearing room, 1100 Longworth House Office Building, beginning at 10:00 a.m. Subsequent hearings will be announced at a later date. In announcing the hearings. Chairman Star)c said: "The President's health care reform plan presents a comprehensive response to the nation's most pressing problem. The plan would commit—the nation to universal health coverage and to cost containment goals we have been see)cing for many years. The President's proposals are complex, and we want to explore this plan and the alternatives to it, thoroughly, before proceeding to mar)c up a bill. We, therefore, expect to hold hearings to examine various aspects of the proposals throughout the fall of 1993." Oral testimony will be heard from invited and public witnesses during the course of the Subcommittee hearings on the President's proposals. The first hearing, scheduled for October 7, will include testimony from representatives of affected groups, including labor unions, health care providers, and health insurers. Testimony from Administration experts on various aspects of the President's proposals, including benefits, coverage, low-income subsidies, cost containment, governance, and Medicare proposals, will be heard by the Subcommittee at the next two hearings. The first day of Administration witnesses will be held on October 12, and the second day will be announced in a later press release. At subsequent hearings the Subcommittee will receive testimony from Members of Congress and from representatives of other affected groups, including consumer and employer groups. Testimony will be heard at additional hearings to focus on a series of priority health reform issues, including: (1) Role of State governments and the Federal Government, including the role and functions of the proposed National Health Board, the Department of Health and Human Services, and other Federal agencies; (2) Role and functions of the proposed health alliances; (3) Health cost containment, including premium caps and alternative mechanisms; (4) Proposed insurance reforms and their impact, risJc selection, and ris)c adjustment;