TEXT OF AND JUSTIFICATIONS FOR AMENDMENTS TO H.R. 6675 RECOMMENDED BY THE DEPARTMENT OF HEALTH EDUCATION, AND WELFARE Substantive I. BASIC HOSPITAL INSURANCE AND VOLUNTARY SUP- A. COMBINE INPATIENT HOSPITAL SERVICES UNDER PART A AND TEXT On page 11, line 6, insert "or inpatient psychiatric hospital services" after "such services". On page 12, line 18, before the comma at the end of the line, insert "of this section and subsection (a)(1) of section 1834". On page 36, line 19, insert "or inpatient hospital services" after "such services". On page 37, line 14, insert "of this section and subsections (b) and (c) of section 1812" before the comma. JUSTIFICATION As presently drafted, the bill is not clear that days of inpatient hospital services and days of inpatient psychiatric hospital services should be added for purposes of the limitation of 60 days of coverage during a spell of illness. The proposed changes would make this clear and would prevent any incentives to transfer from a general hospital to a psychiatric hospital, or vice versa, in order to get coverage of more than 60 days of care in a spell of illness. B. PROVIDE FOR COORDINATION OF COVERAGE OF DIAGNOSTIC TEXT On page 13, strike out lines 5 through 11 and insert in lieu thereof "deductible." On page 19, line 20, before the period, insert "; except that, in the case of outpatient hospital diagnostic services, such amount shall be equal to 80 percent of such cost". On page 35, line 12, before the period, insert ", and except that the amount, of any deductible imposed under section 1813(a)(2) with respect to outpatient hospital diagnostic services furnished in any year shall be regarded as an incurred expense under this part for such year". On page 93, line 16, before the period, insert "or, in the case of outpatient hospital diagnostic services, for which payment may be made under part A". JUSTIFICATION Under the House-passed bill, for persons insured under both the basic and supplementary plan, there would be differences in the extent to which the patient's expenses for outpatient services are reimbursed depending on whether the services are rendered in an outpatient section of a hospital or in a physician's office. The $50 deductible and coinsurance provision under the supplementary plan in some cases create a financial incentive for a beneficiary to obtain diagnostic services in the outpatient department of a hospital, in which event the services would be subject only to a $20 deductible; in other cases the incentive would be in the opposite direction. The changes proposed would minimize differences in reimbursement under part A and part B by providing for payment of 80 percent, rather than 100 percent, of the cost (above the deductible) of outpatient hospital diagnostic services covered under part A, and by counting the outpatient deductible under part A as an incurred expense under part B. The changes would also minimize the problems that beneficiaries would otherwise face in deciding whether to have diagnostic services performed in a hospital or a physician's office. II. BASIC HOSPITAL INSURANCE PLAN A. INCLUSION OF MEDICAL SPECIALISTS TEXT On page 64, line 12, strike out "intern" and insert in lieu thereof "intern (other than services provided in the field of pathology, radiology, physiatry, or anesthesiology)" (amendment 156, Senator Douglas and others). JUSTIFICATION Secretary Celebrezze stated in the hearings: ANCILLARY HOSPITAL SERVICES Mr. Chairman, it would be a mistake, in my opinion, to exclude from coverage under the basic hospital insurance plan, as H.R. 6675 does, the services furnished hospital patients under arrangements with the hospital, by medical specialists in the fields of radiology, anesthesiology, pathology, and physical medicine. These services should be covered under the basic hospital insurance plan subject to the conditions set forth in the Senate-passed bill of last year and in the bill introduced in this Congress by the distinguished senior Senator from New Mexico. Our primary concern is that medical services furnished to hospital patients in these fields be covered under this bill in a way that is in accord with the practices that hospitals and the health professions have developed over the years. Thus, we believe that the services in question should be covered as part of the hospital benefit if the specialist-hospital arrangement calls for the bill to be paid through the hospital. Conversely, we believe that, where the arrangements are that the specialist is not paid by or through the hospital, reimbursement for the specialist's services should be made under the supplementary plan. The specialists in these fields work in hospitals under various kinds of arrangements. Some work as hospital employees and are paid a salary, while others receive agreed upon percentages of the hospital's receipts for the services they furnish. Some of these specialists bill their patients directly. The approach we suggest would follow whatever practices now exist or whatever practices may be arranged in the future in this field. On the other hand, the provisions in H.R. 6675, which exclude the hospital-related services of these specialists from coverage under the basic hospital insurance provisions, would require substantial changes in the way these services are now paid for. The billing for the nonphysician components of the affected hospital department would have to be entirely separate from the billing for the physician services in the department. There are very few hospitals in the country that operate today on such a basis in the fields of pathology and radiology. Nor is there a health insurance plan, so far as we are aware, which requires the separation of the services of these specialists from the services provided by the hospital generally irrespective of the arrangements agreed upon by the hospital and the specialists. B. INCLUSION OF COMBINATIONS OF DRUGS OR BIOLOGICALS IN THE DEFINITION THEREOF TEXT On page 83, line 15, insert "(1)" after "only" and "(or approved for inclusion)" after "included". On page 83, line 19, strike out "as are approved" and insert in lieu thereof "(2) combinations of drugs or biologicals if the principal ingredient or ingredients of the combinations meet the conditions specified in clause (1), or (3) such drugs or biologicals as are approved,". On page 83, line 22, before the period, insert ", for use in such hospital". JUSTIFICATION Some of the drugs frequently administered in hospitals are combination drugs. While the principal ingredient of the combination drug may be listed in the formularies specified in the bill, the other ingredients, of secondary importance, may not. The proposed changes would permit such drugs to be covered under part A if provided as a part of covered inpatient hospital services or extended care facility services. III. VOLUNTARY SUPPLEMENTARY HEALTH INSURANCE PLAN A. CHANGE OF DESIGNATION OF SUPPLEMENTARY PROGRAM TEXT Change all references in the bill from "supplementary health insurance" to "supplementary medical insurance". JUSTIFICATION Changing "supplementary health insurance" to "supplementary medical insurance" wherever it appears in the bill would make more clear the distinction between the compulsory hospital insurance program and the voluntary health insurance program and promote better understanding among beneficiaries about the coverages under each program. B. IMPROVEMENT OF PROVISIONS ON ADMINISTRATION OF BENEFITS UNDER SUPPLEMENTARY HEALTH INSURANCE PROGRAM TEXT On page 53, strike out lines 14 through 19 and insert in lieu thereof the following: "SEC. 1842. (a) In order to provide for the administration of the benefits under this part with maximum efficiency and convenience for individuals entitled to benefits under this part and for providers of services and other persons furnishing services to such individuals, and with a view to furthering coordination of the administration of the benefits under part A and under this part, the Secretary is authorized to enter into contracts with carriers, including carriers with which agreements under section 1816 are in effect, which will perform some or all of the following functions (or, to the extent provided in such contracts, will secure performance by other organizations); and, with respect to any of the following functions which involve payments for physicians' services, the Secretary shall to the extent possible enter into such contracts: JUSTIFCIATION Under the present bill, organizations nominated by providers of services (hospitals, extended care facilities, and home health agencies) could be used by the Secretary to reimburse these institutions and agencies on a reasonable cost basis for services covered under part A, and carriers would be used to make payments for services covered under part B, including payments to providers of services on a cost. basis and for doctors' bills on a reasonable charge basis. In addition, the bill specifies that, except as otherwise provided under the bill, the Secretary may perform any of his functions directly or by contract. The proposed changes would permit a distribution of part B functions among carriers, organizations with which part A agreements are in effect, and contractors performing services in behalf of the Secretary in a way that is most efficient and convenient for hospitals and beneficiaries. These changes would eliminate the need for organizations selected to pay doctors' bills on a charge basis to acquire experience in paying hospitals on a cost basis. As under present language, it would still be required that, to the extent possible, doctors would be paid through carriers. Under the proposed changes, nominated organizations having experience with cost reimbursement could determine the amounts of payments and make such payments whether under part A or part B. In the absence of a suitable nominated organization, the Secretary could contract out all or part of this service or handle the function directly. Also, the proposed changes would permit the Secretary to use carriers under section 1842 to make payments only for services that are paid for on a charge basis unless the carrier is also an organization which is capable of handling payments for services on a cost basis. C. COMBINE PHYSICIANS' SERVICES AND MEDICAL AND OTHER HEALTH SERVICES AND INCLUDE SERVICES INCIDENTAL TO PHYSICIANS' SERVICES TEXT On page 33, strike out lines 18 through 21 and insert in lieu thereof "for medical and other health services, except those described in paragraph (2) (C); and”. On page 34, line 5, insert", other than physicians' services," after "health services". On page 82, strike out line 14 and insert in lieu thereof care services, or home health services): (1) physicians' services; (2) services and supplies (including drugs and biologicals which cannot, as determined in accordance with regulations, be self-administered) furnished as an incident to a physician's professional service, of kinds which are commonly furnished in physicians' offices and are commonly either rendered without charge or inincluded in the physicians' bills, and hospital services (including drugs and biologicals which cannot, as determined in accordance with regulations, be self-administered) incident to physicians' services rendered to outpatients; On page 82, lines 15, 18, 20, and 22, and page 83, lines 1, 5, and 8, redesignate paragraphs (1), (2), (3), (4), (5), (6), and (7) as paragraphs (3), (4), (5), (6), (7), (8), and (9), respectively. JUSTIFICATION The charges by a physician for services furnished in the home or office usually take into account items, supplies, equipment, and services of aids, etc., which are customarily considered incident to the physician's personal services. The proposed change would make clear that payment could be made for such items, supplies, etc., regardless of whether the physician performs his personal services in a hospital, a clinic, or in his office, and regardless of whether the bills for the |