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PREPARED STATEMENT BEFORE SENATE SUBCOMMITTEE OF OVERSIGHT PROCEDURES

ON CONGRESSIONAL OVERSIGHT OF FEDERAL REGULATIONS

Mr. Chairman, I am Edward J. Fechtel, Jr., Administrator of St. Mary's Hospital, Athens, Georgia, and President of the Georgia Hospital Association, which represents over 200 health care institutional providers as member institutions, including most of the hospitals in Georgia and over 1500 personal members. We appreciate this opportunity to present the views of our Association on matters of Congressional control of administrative rulemaking.

As you know, we have filed a more detailed statement for the record of the position of the Georgia Hospital Association with you. As time does not permit proper and adequate description here, I am presenting an abstract which is more of a philosophical and conceptual statement of our position. In this public hearing, we find ourselves echoing the sentiments of all of the industries which are subjected to the deluge of government regulation. Like others, we are fully cognizant of the fact that rules and regulations in our society are necessary, but there are limits. The Georgia Hospital Association and its member hospitals perhaps do not have the number of years of experience in living with government regulations as some of the other industries testifying here today, for in our industry government involvement in the admininistration and supportive functions has really come about only in the past decade beginning principally with the inauguration of the Medicare program in 1966. We have not, as many other industries have, developed the expertise in the mere problem of understanding, much less coping with these regulations and certainly most hospital administrators find the regulations to be voluminous, confusing, and at times completely overwhelming.

The government involvement in hospitals has come about in large measure through its increasing role in paying the bills of health care for its citizens, yet the government regulatory process entered an industry in which various complex elements must be put together. The hospital itself does not have total control over its business affairs. Patients are admitted and discharged only by physicians who also prescribe what treatments and diagnostic tests will be administered to patients in our hospitals. Our physicians are independent, private practitioners, whose judgments relating to the care of our patients are solely theirs and not of the institution. The vast majority of the regulations intended to control costs are principally institutional regulations, thus, we have a very awkward situation in the implemntation of regulatory controls.

We are genuinely perplexed by the callous manner in which our problems ar viewed by the Administration and the regulatory agencies. There is a reckless attempt to reduce the budget, chop out large amounts earmarked for health care, and ignore the consequences that will result because we do not have the control over the costs of health care that everyone thinks we have. Price increases in fuel, food, medical supplies, life-restoring and life-sustaining equipment and other related expenses are beyond our control. Therefore, the proposed 7 percent cost increase limitation for Medicare in Fiscal Year 1977 simply confounds us beyond human reason as we would have to reduce, restrict, or eliminate the quality or quantity of diagnostic and therapy programs. Moreover, the regulations passed by Congress add to that cost. One of the best examples is the Utilization Review regulations which hospitals must spend the money to provide a review mechanism without the government defraying the full cost of providing that requirement. In short, we are expected to spend money to help the government save money. Hospitals, however, do not enjoy the benefits of that saving. We have seen the Department of Health, Education, and Welfare arbitrarily remove the 8/2 percent nursing cost differential which recognizes the higher cost of caring for Medicare patients. This was removed without the necessary study and preparation to support the action and appeared to be simply an arbitrary attempt to reduce spending on their part. The American Hospital Association, through litigation, had this cost differential restored.

Another regulation arising out of Public Law 92–603 arbitrarily sets cost limitations on routine service costs without regard to the many variables which go into the provision of hospital care, the general economic conditions in an area, and so forth. The preoccupation with per diem costs overlooks a simple arithmetic fact that as length of hospital say is reduced through pressures exerted by Utilization Review or economic factors and as the higher cost of equipment, food, fuel, medical supplies, personnel, etc. increase the rise in the cost per day is accelerated. Finally, the mere fact that regulatory agencies can take months in preparing complex and lengthy regulations but only allows the industry affected 30 days to respond, and in some cases no time to respond, simply makes us wonder where the concern for the health care in our society lies. We see some signs our concerns are being shared in the Congress about the long term effects of current trends in regulation on the ability of our industry to fulfill its mision in society. The well intentioned promotion of the health and welfare of our citizens by regulatory agencies has become more cumbersome. The key cial decisions that must be made relating to future health care are drifting from the control of the Congress and into the regulatory agencies. Hospitals are complex and they are faced with the tremendous pressure of deciding what demands must be met, as we are now presented with an unlimited array of demands for patient care and increasingly more limited resources to provide that care.

Such decisions must be made with a clear oversight and control of the Congress who is responsive to the people and not solely made by the regulatory agencies responsive only to the Administration.

The health care industry is an environment where the demands for diagnostic expertise, treatment, facilities, and qualified personnel must be balanced by the resources to deliver them. If it is decided that this country cannot afford to provide all of the resources to meet all of the demands for care, then the most responsible body in our society, the U.S. Congress, must take the lead in making those decisions. Without adequate oversight, the Congress cannot fulfill the function which we believe they should have.

We fully understand that the oversight function of Congress will not be one which mitigates the needs for regulatory agencies. We do thing, however, it will stimulate the proper environment in which we need to operate effectively. By this I mean we must have the full cooperation and understanding of our complex problems by the regulatory agencies. Their actions and many of the issues cited in the statement we have submitted to you demonstrates, with few exceptions, the sometimes arbitrary and uncooperative manner in which this has been carried out.

In summation, in considering all that is said of the delivery of health care and the regulatory process, I hop we can overcome the preoccupation that Congress and our regulatory agencies have with what abuses there may be in the health care system. Much of this overlooks the overwhelming good that is provided by so many. Furthermore, there seems to be a general lack of understanding with respect to the sometimes conflicting relationship between concepts of efficiency in delivering health care for federal programs and the effectiveness of delivering such health care. In short, we regret that unless more of our legislators such as yourself, exhibit the concern that you have shown to us, the handicaps placed upon the health care system to respond to the demands for the quantity and quality of diagnostic and treatment facilities and programs will have serious long-range consequences and we will fail to meet public expectations. We must have health policy through Congressional legislation and oversight and not by regulatory fiat.

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On the average, about three times as many people will be required to work on UR activities as hospitals have had in the past.

11. Discharge Planning

Of the reporting under 200 bed hospitals: 9 people were designated for discharge planning responsibilities a year ago, 25 persons have the responsibility now, and 32 are projected for the future.

Of the reporting 100-200 bed hospitals: 19 people were designated for discharge planning responsibilities a year ago, 31 have the responsibility now, and 37 are projected for the future.

Of the hospitals over 200 beds reporting: 17 people were designated a year ago, 20 now and 24 projected for the future.

m. Most Common Limitations and Problems with Implementation of UR Regs

Number of
Hospitals

Increased Personnel Time
Limited Physician Cooperation and Acceptance
Limited Physician Time
Increased Cost
Availability of Qualified Personnel
Need Unified Approach to Medicare and Medicaid

20
17
14
12
6
4

Other limitations mentioned were: problems ir writing criteria; motivating staff and physicians; lack of documentation on records; adverse public relations with patients and physicians, and legal implications.

Senator Nunn. Thank you very much. I would like to ask some questions but I think we better move on to Dr. Rogers and Mr. Bishop because of the time pressure.

TESTIMONY OF DR. HARRISON L. ROGERS, JR., CHAIRMAN, NA

TIONAL LEGISLATIVE COMMITTEE, MEDICAL ASSOCIATION OF GEORGIA

Dr. ROGERS. Mr. Chairman and members of the subcommittee, I am Dr. Harrison L. Rogers, Jr., chairman of the National Legislative Committee of the Medical Association of Georgia. I also serve as a delegate to the American Medical Association for the Medical Association of Georgia and a delegate to the American Hospital Association. For your information, Mr. Chairman, our association represents some 4,300 physicians in the State.

We are deeply concerned over the large number of regulations placed on the practice of medicine by an equally large number of agencies.

We recognize the need for regulations. Many times, they add clarity to statutes that make working with them easier. I think with various agencies making regulations in similar areas there is always the danger of changing congressional intent or creating conflicting regulations. We are pleased to see the committee holding these hearings and are especially pleased to have remedial lgislation introducd in the two Houses of Congress by members of the Georgia delegation.

I would like to cite three recent examples that point up some of our reasons for concern with the regulatory process.

The first example occurred when Social Security promulgated regulations dealing with utilization review in hospitals. These regulations were based on sections 207 and 237 of Public Law 92-603, and would have required physician certification of all-except emergency-hospital admissions prior to admission.

These regulations were finally withdrawn by HEW but not until the American Medical Association had filed suit against the Departinent.

Before their withdrawal they were the focal point of much discussion in the profession and with the hospitals. These regulations had heen promulgated in spite of massive negative comments which, in addition to total opposition, called for extension of the comment period. The comments and request were disregarded by the agency which obviously had determined the issue, in its own mind, before the comment period even began.

The second example I would call to the committee's attention is one again dealing with Public Law 92-603, this time section 224 of that law. Section 224 establishes an economic index which arbitrarily limits the prevailing charge level of physicians' fees recognized by medicare.

As published in proposed form, HEW indicated it would base the index on nonmedical criteria, that it would apply the index on a procedure by procedure basis, and that it would not include the index in its regulations.

The regulations were incomplete and inconsistent with the statute and with the language of congressional reports which spoke of regional indices, medical economic criteria and gave examples of how an index might be constructed.

The AMA requested an extension of the comment period for thirty days beyond the 30 days set by HEW. This was denied in a letter dated one day after the close of the comment period.

The final regulations were to take effect on July 1, 1975 and were published in final form on June 16. There was little substantive change in the final regulations, and to compound an already bad situation, HEW published concurrently, in the form of a notice, an economic index along with the relative values assigned to the components of the index. The index became effective also on July 1.

No opportunity was given the public for comment on any major part of the index. Much to the credit of Congress, the House Ways and Means Subcommittee on Health held two hearings on these and other regulatory procedures of HEW and they have approved some proposals to relieve hardships resulting from the index. We happen to know in this case, HEW spent 21/2 years studying and preparing these regulations and allowed interested parties only 30 days to review and comment.

The third example I would like to bring before the committee deals with the National Health Planning and Resources Development Act, signed into law on January 4, 1975. This act is intended to mandate a national system of health planning which will have an influence on all facets of health everything from facilities and manpower to resources.

One provision of the act allows a pilot project for rate setting in six States and requires that notification by a Governor be submitted to the secretary. On July 3, 1975, the secretary published a notice that such requests must be submitted by July 4. In the notice was a copy of a letter which was referred to as having been sent to all Governors on June 9. However, the July 3d, notice was the first given to the general public.

On September 17, the Secretary published, as final rules, the regulations for a State seeking a grant for rate regulation. No proposed rules had been published at that time.

On October 17, the secretary published proposed rules for the health systems agency, which is the basic operational unit of the health planning concept. These units will be responsible for planning, approving or denying health facilities and for carrying out the health plan for their area. You can appreciate the impact and importance of the regulations, which, as time goes by, will come at a rapid pace. It is a frightening prospect to think that only 30 days will be given for analysis and comment on rules and regulations that will touch the lives of every American.

Mr. Chairman, I am sure you are aware of the recent law suits filed by the AMA on behalf of the public and its members. This process is distasteful, but appears necessary for the protection of physicians and our patients. As you may know, here in Georgia, our association has filed suit against the State medicade program seeking relief from regulations that directly and frontally attack the very heart of medicine, the inviolate physician-patient relationship.

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