APPEARANCES:
Committee Members
G. KRISTIN CROSBY, M.D.
BRUCE DEVEREUX CUMMINGS
GARY C. DENNIS, M.D.
SUSAN DESMOND-HELLMANN, M.D.
RONALD W. DOLLENS
MICHELE M. EVINK
EUGENE ANTHONY FAY
JOHN FINAN, JR.
APPEARANCES:
LISA GIGLIOTTI, J.D.
THOMAS R. HEFTY
HEIDI MARGULIS
MARY M. MARTIN
HON. STEPHEN H. MARTIN
GARY S. MENDOZA, J.D.
NANCY H. NIELSEN, M.D.
DR. ERIK OLSEN
GARY B. REDDING
APPEARANCES:
JACK ROVNER, J.D.
JUDITH A. RYAN
LEONARD D. SCHAEFFER
PATRICIA OSBORNE SHAFER, R.N., M.N.
JUDITH G. SUTHERLAND
WILLIAM TOBY, JR.
KAREN B. UTTERBACK, R.N.
PATRICIA M. WALDEN
KERN C. WILDENTHAL, M.D.
APPEARANCES:
DOUGLAS L. WOOD, M.D., Committee Chair
Also Present
CHRISTY SCHMIDT
Executive Coordinator
Regulatory Reform Initiative
Office of the Secretary, HHS
JEFF BLOOM
C O N T E N T S
PAGE
Introductory Remarks and Swearing
in of Committee
Tommy Thompson
Secretary, HHS 9
Bobby Jindal
Assistant Secretary for Planning
and Evaluation, HHS 20
Statement of the Committee Chair
Douglas L. Wood, M.D. 25
Committee Member Introductions 36
Panel One: Perspectives from the Field:
Beneficiaries and Providers
Margaret Barron, M.D.
Providence Hospital 116
Christine Shamloo, R.N.
Washington Hospital Center 124
Sean Gallagher
Washington Hospital Center 129
Cecilia Moore
Washington Hospital Center 130
Eileen Mulaney
Carroll Manor Nursing Home 134
Michelle Holzer
Program Officer, Senior Health Insurance
Assistance Program (SHIP)
Maryland Department of Aging 141
Questions and Answers 150
C O N T E N T S
PAGE
Public Comment
Steve Hitov
National Health Law Program, Inc. 167
Diana Zuckerman, Ph.D.
National Center for Policy Research
for Women and Families 171
Robert Britain
National Electrical Manufacturers' Association 175
Robert Griss
Center on Disability and Health 178
Discussion 182
Panel Two: Perspective from the Government:
Overview of the Regulatory Process from
Legislation to Operations
David Cade
Office of the General Counsel, HHS 191
Linda Fishman
Centers for Medicare and Medicaid Services 204
Bill Hubbard
Food and Drug Administration 214
Questions and Answers 221
Panel Three: Perspective from the Office
of the Inspector General
D. McCarty Thornton
Chief Counsel to the Inspector General, HHS 242
Questions and Answers 252
C O N T E N T S
PAGE
Panel Four: Perspective from External Bodies
Jonathan Blum
Staff, Senate Finance Committee 271
Pat Morrisey
Staff, House Energy and Commerce Committee 274
John McManus
Staff, House Ways and Means Committee 279
Murray Ross, Ph.D.
Executive Director, MedPAC 285
Leslie Aronovitz
Director, Program Administration and
Integrity Issues, GAO 294
Questions and Answers 302
Overview of Second Day Work Plan
Douglas L. Wood, M.D. 306
AFTERNOON SESSION (12:53 p.m.)
DR. WOOD: We'd like to begin the afternoon with our first panel. The goal of this panel is to begin to hear the concerns of practitioners and beneficiaries. We've chosen several parts of the delivery system to highlight here, and as was commented on by the committee members earlier this morning, this is an opportunity for us to see whether also there are issues of integration.
Now, the way we'll structure this is to give each of our presenters and presenter teams -- there is a team -- 10 minutes for their presentation. I would appreciate it if you would write your questions and hold them for the end of the discussion, and then we'll have adequate time afterward for discussion.
I'm pleased to welcome to the meeting Dr. Margaret Barron. Some of us had the privilege of meeting Dr. Barron this morning in the emergency department next door. To her immediate left is Ms. Christine Shamloo, who is a nurse from the Washington Hospital Center. Also we're pleased to welcome from the Washington Hospital Center Mr. Sean Gallagher and Ms. Cecilia Moore, and then Eileen Mulaney is here from the Carol Manor Nursing Home, and I think some of you had a chance to see that. Then at the far end of the table is Michelle Holzer. Welcome. Michelle is a program officer in the Senior Health Insurance Assistance Program for the Maryland Department of Aging, and so she'll bring us also the state perspective.
So with that, let me invite Dr. Barron to share with us her perspectives about regulation in the emergency department and how much fun that creates for her everyday life.
DR. BARRON: Thank you very much for this opportunity. I thought I'd pick three of my favorite areas, and I thought I'd start out with CLIA. CLIA is the Clinical Laboratory Improvement Act, and this has been around for a number of years. Like many other things, it had good intentions, to make sure that people know how to do the tests that they're doing and interpret them. It's a patient care issue.
Well, it's gone a little bit too far, like many other things. I apologize for the nature of my audio-visual aids. I didn't realize I was going to be right after lunch, but they make a point.
In front of you, you have a little card that most of you have had experience with in your doctors' offices, and it's a card to test for fecal occult blood. It's a test that the average medical student learns the first day of their junior year.
DR. WOOD: I'm going to stop for just a moment and ask if I could interrupt you, Margaret, just for a short announcement by Mr. Jindal.
MR. JINDAL: I do apologize for interrupting. I promise you I will not do this again. I did want to apologize to the members of the committee. I am going to have to leave at this moment. I didn't anticipate having to do this. I just got a beep from my wife, however, and we're expecting our first child.
(Applause.)
MR. JINDAL: Thank you. The only difficulty is that this child is being born in Baton Rouge, Louisiana. So I'm about to go to the airport and find a flight home.
I do apologize. I did anticipate spending the rest of today and the rest of tomorrow with you. I will leave you in the very capable hands of your chairman and Christy and the rest of the staff. I do want to thank you on behalf of the Secretary and the entire Department. We've already gotten off to a great start this morning, and I'm only sorry that I won't be here for the rest of the afternoon and tomorrow to be with you. My wife thought you would understand.
(Laughter.)
MR. JINDAL: She did explain to me that I didn't have any choice but to be on the next flight home. I think they're about to give her medication, so I think her attitude may change a little.
(Laughter.)
PARTICIPANT: Good luck.
MR. JINDAL: Thank you.
(Applause.)
DR. WOOD: You have our best wishes, Bobby, and we're pleased that you understand the priorities of domestic peace and tranquility.
(Laughter.)
DR. WOOD: I appreciate your indulgence, Dr. Barron, but please proceed.
DR. BARRON: Thank you.
As I was saying, this is a straightforward test. The average medical student learns it the first day of junior year, the first day on the clinical wards. The average nursing student learns it, again, the first day in clinical medicine.
The test is classified as moderately complex. I have to certify that my physicians and nurses know how to do this. Now, the certification process -- first I have to give them a color-blindness test, and you have the 12 questions there, and I have to flip through this book. I mean, if they don't know they're color-blind on the first day of medical school, we've got problems.
After I do the color-blindness test, which takes about 20 minutes, the last panel I really like. You have to trace with your finger the path through the color points here. So after I've done the color-blindness test, then I have to give them the -- I didn't have all the pages xeroxed. There's a 15-question true and false test about the fecal occult blood test.
Now, all of this takes me at least an hour to do a test that's this simple. The sample is on one side, open the card, put on the drop, drop, drop, and I wait the specified three to five minutes, and I read it within 20 seconds. That's the test. I'm supposed to do that four times a year. I won't tell you how many times a year I do it because JCH might come back.
The next test is almost as simple, and you've all seen this in your doctor's office. It's a urine dipstick, classified as moderately complex. The nurses dip the stick. There's a little jar. Again, we have to do the color-blindness test first. They hold the stick up and they read it against the jar, and you have to wait the required number of seconds, which is written right here on the jar, 60 seconds for most of the tests.
We're supposed to do that four times a year. That is for 107 nursing employees and approximately 30 doctors. They're on the clock for this, so they're being paid, my time, the lab's time.
The glucometer test is even more simple. That's the one where you stick the finger, put it on the stick, and put it in the machine. For that one you don't even have to be color-blind to screw that one up. It's real simple. That one we have to test monthly for. It used to be quarterly, but now they have to do the test once a month. That's just a simple example.
When the commission came recently to do the certification process, they asked me to see my physicians' Gwyet competencies, and we had them. But I said to the reviewer, wouldn't you rather see the competencies to see if they know how to intubate a patient, put in a chest tube, open the laceration the correct way? "No, these are the only ones I have to ask you for."
Now, this should be part of credentialing. I should be able to credential someone for this, the same way we credential them to read an electrocardiogram. It doesn't need to be done once a year. If the test changes and the lab sends out a memorandum, then fine, I need to check and teach everybody again. But that's an example of regulatory burden that takes a lot of time and a lot of money to keep up with.
One of the other areas that we have is the EMTALA Act, the Emergency Medical Treatment and Active Labor Act, known to some of you earlier as COBRA. This was the anti-dumping law, which is now -- I think 1988 it started, 1987. Again, it was a good idea, it was a patient care issue. Bad things were happening to patients in emergency departments. But it's gone way too far again. The interpretation and application are overly broad.
A couple of years ago they decided that this act applies to any facility the hospital operates within -- I can't remember if it's a 5- or 10-mile radius. For example, we operate a clinic down on M Street, and they're about two miles from here. If a patient walks into clinic and they say, "I don't feel good," and they think the patient is having a heart attack, theoretically they're supposed to call me in the emergency department and arrange a transfer, get an accepting physician. Now, if they're calling me and it's my facility, no problem, they don't have to do that. They can get an ambulance and send the patient to me.
But that's not the closest hospital. The closest hospital is GW, and it makes more sense to pick up the phone and call 911, get the paramedics there and take them to the closest hospital. But if they do that without first calling GW, getting an accepting physician, they're in violation of the EMTALA Act. There's a ton of paperwork that's supposed to be filled out before the patient leaves, a copy of the chart, et cetera. Well, the paramedics are there and gone before that stuff is done, but you want me to sit there and wait while I fill out the paperwork.
There are some common sense aspects of EMTALA that have been completely bypassed. Another good example is the anthrax epidemic, and I call it an epidemic because it affected far more than the people who actually came down with anthrax. In the midst of all that, we had 170 patients in our department that first day after the announcement. I couldn't triage them away. I had to see every one of them, do the medical screening exam, even though they were there to say, "I just want to be tested for anthrax, I think I have anthrax." There's a difference, "I want to be tested for anthrax" versus "I think I have anthrax."
We couldn't send people away because of that Act. They had to be seen by a licensed person, independently licensed, either a physician or a physician assistant or a nurse practitioner. They had to have the medical screening exam done, and then we could say you're fine. But that's just an example that during a time of crisis that we couldn't use common sense and send people out and say follow up with your doctor. We couldn't even take care of the genuinely sick people we had that day, we were so overwhelmed. So EMTALA is another act that's got a lot of paperwork and regulation to it.
The last one was -- what was the last one? I forgot this morning. Oh, E&M guidelines, billing. The billing guidelines, I didn't bring those for you, but they're incredibly complex, especially for emergency medicine. There are five levels of service, 1 through 5, with 1 being a very simple thing -- I pinched myself and I need a tetanus shot. That's a level 1. I'm having a heart attack and I need to be admitted, level 5. Most of these things are common sense. But if you look at what you have to put down on paper, it becomes a game.
In order for me to bill a level 4 visit, there is a grid. I have to have X pieces of documentation from the organ systems, and I think for a level 4 I have to have 9 of 14 organ systems covered, even though you're coming in for your heart attack. I mean, I'm going to listen to your heart and your lungs and feel your belly, and then I'm going to get going, okay? You don't want me looking in your ears. But in order for me to get up to a level 4 or 5 visit, I have to put all these things down. You know, if you're 94 years old, I'm sorry but your family history is not relevant.
So there are things that you do to get to these levels of service that I have to document that, frankly, don't make any sense. You're documenting for billing, you're not documenting for patient care. If anybody is interested in that, I made the grids but I forgot to bring them. I can bring them over afterwards.
I think that's it.
DR. WOOD: Thank you very much.
Next, Ms. Shamloo.
MS. SHAMLOO: Good afternoon. Thank you for the opportunity to be able to speak to you about mandates and how they affect patient care. Specifically what I'm going to refer to is nursing care, the impact on the acute care facilities.
My role at the Washington Hospital Center is that I'm a clinical nurse specialist, and amongst my various and numerous duties, I am responsible for monitoring the utilization of restraints throughout our entire health care organization. When I was first given this duty, I will tell you that the entire division of nursing threw a party for me. They made a makeshift crown that they put on my head. I had no idea what I was getting into.
I will tell you that two years into this, my crown is severely sagging. Back in 1999 and 2000, both JCAHO and HCFA previously, now CMS, had put together some mandates, changes in regulation in relation to the use of restraints throughout health care organizations. Specifically in regards to behavioral management in the acute care facility, there were significant changes in the utilization of restraints.
I will tell you that our initial response to these mandates, because we were unable to interpret the mandates because we felt they were vague at the point in time that we got them, was to stop utilizing restraints, just to drop the number so we don't have to do the data collection on the 18 variables that are related to restraint utilization alone, on every patient that's restrained within our facility.
I will tell you at our health care facility alone, 1,200 patients are restrained every three months. There are 18 variables that need to be collected on each patient that we restrain. Imagine the amount of data collection that needs to occur to analyze the reasons why we're restraining and how to reduce those. So in response we stopped using them in our highest usage areas, specifically in our cardiovascular recovery room and our recovery room, where restraint utilization was about 100 patients per month.
I think that the mandates were well intended. I think we've seen very good results as a result of stopping the use of restraints. We benchmarked with other facilities first to find out what they're doing, if they actually could be in compliance with these regulations, or if, in fact, they were decreasing utilization of restraints, and we found out that those facilities were making progress, so we followed foot with them.
But my concern with the mandates is that we struggle with them so much when we get them. Why does there need to be that process where we have to take so much time to figure out what we need to do in order to accomplish the regulations, to meet those guidelines? If there are other benchmark practices that regulatory agencies take from best practices, I'm unaware of that communication occurring with health care facilities throughout the nation. I'm unaware of what those practices are.
It would be great if those mandates came along with some best practice facilities. If there are significant changes in regards to practice, for regulatory agencies to communicate with one another what those changes would be to inform the other agencies of what's coming down the pipeline -- I will give you an example.
In regards to restraining patients for behavioral reasons, we have to have a licensed independent practitioner come and see a patient face to face within one hour of the application of the restraint product. Well, we went back to joint commission and CMS and said who is a licensed independent practitioner? It says in your regulations that it's physician assistants, nurse practitioners, physicians, et cetera. They said yes, we are outlining those individuals, but you need to check with your state to see what they define as a licensed independent practitioner.
In Washington, D.C., physician assistants are not licensed independent practitioners. So for certification boards to be informed that this is going to be impacting licensed independent practitioners, who do you have in your area who is a licensed independent practitioner so we can communicate that out or you can communicate that out to the acute care facilities so that they can either make accommodations around it or address those with your regulatory agency. That would really be wonderful.
In regards to educating nurses, in our facility, along with obtaining data, I will tell you I calculated out for this committee how many hours it takes for nursing to do this per year, and my best guess -- and I think I'm going really conservatively -- is 9,033 hours, just in regards to restraints. That comes out to four full-time nurse positions that could be used otherwise in health care to provide patient care overall.
Also, to find out what educational type of materials are out there that would be in line with regulatory agencies, so that we don't need to struggle to find out what are the best educational materials that are out there, so that we can begin to educate our nurses and health care providers as soon as possible so that we can try and meet the mandates. Maybe to foster a relationship between regulatory agencies and benchmark practices to say, hey, we're thinking about doing this in regards to this issue of restraints, because deaths result from restraints. Would you be interested in being a benchmark, a best practices facility, for us to foster a relationship?
If that practice is already in place, again, I and my colleagues are unaware of it. So I think that communication is really a key in improving practices throughout the country, putting out mandates, getting everyone in line with regulations overall.
I can't think of anything else, but I hope these recommendations are helpful to find out where we can benchmark, to find out what materials are out there, help with interpretation of guidelines because they're vague. I think those key elements would be very helpful. When HHS had come in a couple of weeks ago, we went over documentation that we're completing that's comprehensive to meet many of our regulations, and we were surprised and HHS was surprised what we had in place, and we had some dialogue that maybe we didn't need to do all the double documentation that we do in order to meet the mandates, and maybe there's a communication piece missing there.
Also, again, to find out what's out there in regards to automation. How can we make data collection streamlined? How can we make it easy? What programs are out there that we could utilize that other facilities are utilizing in the nation in regards to data collection to meet these mandates? That would be a really great communication piece for acute care facilities throughout the country. I don't think we'd need to allocate as many resources as we do to trying to meet them, and I think it would be an overall win for patient care.
Thank you.
DR. WOOD: Thank you very much.
Cost reports. Sean?
MR. GALLAGHER: Thank you. I'm vice president for finance at Washington Hospital Center, and I'm here with Cecilia Moore, who is assistance vice president for patient financial services. Between us today, we'd like to talk about three aspects of the regulatory burden that have impacted us.
One is the volume of regulations that we have to deal with on a daily basis. Two is the volume of work papers that we have to prepare to comply with those regulations. Lastly, I'd like to talk about the clarity of the regulations and how important that is to us.
Cecilia is going to start out with how the volume of regulations impacts her areas.
MS. MOORE: I primarily run the business office at the Washington Hospital Center. I am responsible for the billing and the collection within the facility. That means that we deal with everything from the admitting of the patient through the collecting and the posting of payments.
I brought for you, just to glimpse at as much of it as I could, just some of the regulations, the books that house the regulations for my department. These include both admitting regulations, which would be the information that we have to have to register a patient. It includes one of the most labor intensive of forms, and that is the Medicare secondary payer information. We are often found asking 85- and 90-year-old people when was the day that they retired. Rarely do they know, but we are required to ask them each and every time they come into the facility. We are pleased that CMS recognized that that was such a burden to ask people and recently changed the policy from asking once every time they came in to once a month. However, it's still a very labor intensive process.
We also spend a great deal of our energy and our time trying to abide by all of the particular regulations that we are given. Most of my employees are high school graduates with some level of college. If, however, you read our policies and procedures, you will know that I should be hiring Ph.D.s, because that is exactly what it takes to understand a great deal of the information that we are given.
We then choose, because of the complexity of it all, we choose to try to use a fiscal intermediary for interpretation, and Sean will talk to you somewhat about the fact that we can get multiple interpretations constantly from our fiscal intermediaries, from anyone that we talk to. My business office is even more bombarded with policies, procedures, guidelines. For example, the business office is responsible for making sure that the coding is correct. We use the standard guidelines. However, Medicare sets the tone for the guidelines, and we get provider memorandums almost daily that update change, explain, give us some type of information relevant to the coding, the billing of some types of procedures.
To combat some of the information that we're given, and we're given so much of it, but to combat it, the hospital often has to buy editing systems. My hospital pays a great deal of money for editing systems just to be able to interpret, just to be able to follow the guidelines, just to find itself in some level of compliance relative to those guidelines. There's no other way to do it.
We look constantly for automation to help our staff understand these types of guidelines and to be able to move forward. We spend on average at least a day a month with an entire staff of over 200 people training at some point in time on some new Medicare/Medicaid regulation. It's a very costly endeavor for us, and it's a very complex endeavor. The amount of paper that we are asked to review, to understand, to summarize, and then to implement into reality, is just enormous.
With respect to the volume of work papers required to comply with the laws, I think many of you saw this morning the Washington Hospital Center's cost report work papers, starting from that first black binder over. As you can see, it's an extremely voluminous set of work papers and that is for one year's cost report. We estimate it takes our staff about 2,500 hours a year to complete those work papers, and this is in addition to the hours spent by staff throughout the institution to help us gather statistics and other information required to complete the cost report.
But at least as important as the volume of work papers and regulations is the ambiguity of regulations in some cases. You often have different agencies or even people within the same agencies responsible for enforcing the regulations having different interpretations of those regulations.
I'd like to share just one recent example that has impacted us at Washington Hospital Center. It started back in August of 1998 when we received a letter or we got word from our fiscal intermediary that they believed that we should not be charging for recovery room charges after certain diagnostic tests. We believed this position to be in error, so we wrote them a letter, a detailed letter, explaining our position and why we thought that we should be able to bill for these charges. And we wrote that letter to the manager of Medicare Audit and Reimbursement. We promptly received a reply from him agreeing with our position.
In June of 2001, we got another letter from the intermediary's fraud unit saying that we had billed these same types of charges inappropriately and asking for $142,000 in restitution for these charges. We promptly sent back the letter that we sent, another letter explaining again our position, and the reply we got from the Medicare intermediary explaining that why these charges were appropriately billed. Subsequently they took back the money anyway, and so we still will have to resolve that.
That's what we have to say for today. I'll be glad to answer any questions.
(Laughter.)
MR. GALLAGHER: Thank you for the opportunity to talk to you.
DR. WOOD: Well, we appreciate your comments and we'll be anxious to hear however many others of us will commiserate with that. I can give you some of my own examples.
Next I'd like to invite Ms. Mulaney to share her experiences.
MS. MULANEY: Thank you very much, and I too appreciate the opportunity to meet with you and to talk. I think Sean's story is going to be hard to beat, but I'll do my best.
I thought one way to experience another health care setting is to have experience it. I've brought papers with me and put them on your tables. They are a contract if you were admitting to a nursing home. I thought if we could go through them together, you might get the sense of how it feels if you're admitting to a nursing home. Let's say you had a hospital stay. Perhaps you've replaced a hip or a knee, and now it's time for you to come to a subacute unit. Or let's say, like our friend here, you're sitting here and you just got a call from your spouse who said, come home, your father is ready to go to the nursing home. His hip is ready to go to the subacute unit. And it's your chance to admit into a health care setting where we give subacute care.
Everyone that does come in, we have to sit down with them and sign a contract, a normal contract between our party who are going to provide services and you who are going to pay for these services or have your insurance company pay for these services.
So first we say, this is a contract. And we write it in very big, bold print because we want anyone who comes in to understand what they're signing and to be comfortable with it. We spend considerable time training people consistently about the regulations, about the factors in the contract. We have our nicest people doing this job, and it still is quite difficult.
So if you would come with me then, we have a contract. I have some paperwork here that our financial office would want to sit down with you and discuss.
And then I do have a package here to show our UB-92 billing and some MDSs which are attached, which is the clinical review of the resident, which has to match the billing in order for us to receive payment.
There's a Medicare determination act. If we find someone no longer needing the Medicare, we have an obligation to give them this piece of paper so they can appeal our decision.
Then the last package is a Medicaid application, which every state would have. Oftentimes in our position as a provider, we have to help a person apply for Medicaid assistance because they turn into perhaps what we would call a long-term care resident. They cannot go home. Their circumstances are such that they're going to need nursing home care for the rest of their life.
So if we were to admit, we'd get your name and we'd also ask you for the name of a responsible party. Most of the residents who admit to Carroll Manor really want a son or a daughter and they may even have guardian at this point taking care of them. So we'd need to get that name at this time.
We talk about the payment source. Let's say in this case it's going to be Medicare. We would advise them of what's in their per diem and what is not, any other charges. The biggest one we have is the hair/beauty salon. It's not a big item.
We talk about the payment of the bill, how that would occur, talk to them about how they could select a doctor, what doctor they would like to have.
We talk to them about their right to bring in a private duty nurse if they felt they needed that or wanted that.
We have to inform them that they have a right to have their bed held if they have to go back to the hospital. They can pay for that privately or, if they're in Medicaid assistance, they do get 18 days that are already paid for by the state government.
We have to alert them to the fact that if they have any complaints, they can go to the state or the ombudsman and give them their number and name.
We talk to them about their right to make a decision, about end-of-life decision making.
We talk to them about our right to transfer or discharge them, under what circumstances we would do that. Of course, it would only be if we could no longer help them in the improvement of their own care or if we closed our facility or if they became a danger to themselves or others.
We talk about the right to end this contract, our ability and our limitations on our liability, as well as changes in the law, what effect they might have.
There are a number of exhibits that we are required to advise somebody coming into a nursing home about. They are attached. They include the obligations and responsibilities of the representative, and we do have to walk that person, be it a son or a daughter or a guardian, through all the obligations that they have and that they're signing and what their signature does mean under the law with this contract.
We also talk about the schedule of charges, the Medicare and Medicaid, what do they cover. We do find that it's necessary to spend a considerable amount of time educating people on the Medicare program, the Medicaid program, third party insurance.
We offer them a physician's services and talk about the physician rotation service at Carroll Manor.
We do have to give them their rights and responsibilities as outlined in OBRA.
There is a form here for the bed-hold policy which they can sign in advance.
We also have to educate them about their legal right to decide about future medical treatment and ask them if they do have a durable power of attorney. If they have those documents, of course, we try to get them and pull them in at this time.
We ask them any information about their funding, if they'd like us to collect all that money and have it sent right to Carroll Manor, if we should take care of their funds for them or if they want, again, a family member to take care of them.
Then we have to inform them about the fact that their MDS data -- and that's the minimum data set -- all the assessment data that we are doing on any resident in the facility is transmitted over electronic wire or electronic forces to now CMS and to the state.
So that is the contract experience. Now, if there are questions raised during that, we do also at this point try to tell them that they will have CMS and the Centers for Disease Control and also our DelMarVa, which is our local peer review -- we're moving with them to a standing order for the flu and the pneumococcal vaccine. So we have put an additional paper in our contract advising them that we are moving to a standing order and that their giving us consent will be consent for the length of their stay at the nursing home.
We also have a copy of our valuables policy here so they can understand how we secure their valuables. We certainly encourage people not to bring them in if at all possible.
If you'll go through the contract, there are a number of cases where we cause them to sign so that we have evidence and they have evidence that they have been informed of these rights. But it's about an hour's process to take a person -- and this is a person who is clear and able -- through this contract. If you come in and you're not feeling well, your position or your disposition is I don't want to do that or I can't do it now or I really don't want to handle that or my son will handle that or I'll do it later. You see a lot of people wanting to postpone this action.
Once we do have the admission contract signed, the person may have to go in and meet with the folks in the financial office in order to clear up the benefit and the flow of funds and how that will all occur. I've got a regular checklist here that we go through in our financial office, so you'll see all the paperwork that we have to make sure is in place when somebody is coming into a nursing home. And they are things all the way from power of attorney, as we've discussed, documented burial arrangements, assignment of benefits to Carroll Manor, if they want to use our resident fund account, and all information of course on their insurance. And there are copies of the bed-hold agreement in this document as well.
The next package is a UB-92, and these are the billing forms that we send to the federal government. On the stay that we've got here as an example, we have a 100-day stay of a resident. We do file MDSs, and on the subacute unit we file a 5-day, followed by a 14-day, followed by a 30-day, followed by a 60-day, and followed by a 90-day. And that sequence would afford a 100-day stay, which is the benefit under Medicare.
These are filed according to the month you're in rather than to the stay. So it is difficult for the billing office to go through the clinical documents and to make sure that they put the number of days in the month according to the RUG category on the billing form correctly. For example, in this package I've given you, the billing for December, we have 13 days of the 5-day Medicare statement, and on the next month, which is January, we have 1 day remaining for the 5-day, and then 16 days for the 14-day statement, and 14 days for the 30-day statement. The next month we have 16 days for the remaining 30 days, 12 days for the next 60-days, and then the next month we have 18 days for the remaining, and then for the final MDS, we have 10 days, making the 100-day stay. So this is a very difficult operation, and the penalties to a provider for doing this incorrectly are quite severe. I appreciated your remark about a Ph.D.
I think that's enough, and I'll be here for questions. Thank you.
DR. WOOD: Thank you.
Michelle?
MS. HOLZER: Hi. My name is Michelle Holzer. I'm with the Maryland Department of Aging, and I'm here to represent our Senior Health Insurance Assistance Program, which we call the SHIP program. And I've given our brochure out to each of our panel members. I want to thank you for the honor and opportunity to have us all here today.
I'd like to tell you a little bit about the SHIP program and what we do, but first I want to ask for all the extra minutes from my panel. First of all, I can't see the traffic light, and second, I'm supposed to represent the 40 million Medicare beneficiaries out there, so I do have a lot to say.
(Laughter.)
MS. HOLZER: I'm also representing the 53 SHIP programs that exist in every state, Puerto Rico, Virgin Islands, and the District of Columbia. We train volunteer counselors, thousands of volunteer counselors out there, in all aspects of health insurance, Medicare, long-term care insurance, Medicare Plus Choice, HMOs, everything you ever wanted to know about health insurance but were afraid to ask. The buck stops with us. We're the place where they come when they need the answers to their questions that they can't get from anyone else. We're the ones who sit for hours on the phone talking to thousands of seniors.
And I've been doing this for 13 years, and I know I have spoken to thousands of seniors either individually, in person, on the phone, or through group presentations about all the aspects of health insurance, in addition to that, their financial situation, their medical situation, their relationship with their son-in-law and daughter-in-law, and everything else that the senior might want to tell me, they tell me and we do listen.
So I've also been able to do this program through my own personal situation of having aged parents. I think one group that we really didn't talk about were caregivers and family members. About a third of our phone calls are from family members who are trying to negotiate the maze of Medicare for their senior member, and I talked to as many younger people -- let's say my age -- who are taking care of their parents either hands on hand or through helping them figure things out, as I do the seniors themselves, because the senior oftentimes won't call us because they don't understand what they're being told. So they send their son and daughter who also don't understand the whole area of health insurance.
As I said, we train our volunteers. We provide claims assistance either on one problem claim or the folks who come in with their shopping bags and the cartons, which they do, full of claims notices, statements, MSNs, EOMBs, dunning notices, legal notices, and say what do I owe. What do I do with all of this? Half of them are not opened up because they're scared to open up all of these papers.
We counsel folks on what types of supplements they need in addition to Medicare, what Medicare coverage is or is not. We talk to folks about all areas of medical assistance, Medicaid. We call it medical assistance in Maryland, including programs such as QMB and SLMB for those folks who know about those programs for the dually eligible. We talk to them about prescription issues. We talk to folks who are not seniors, but about 10 to 15 percent of Medicare beneficiaries are disabled people under age 65. So we talk to those folks.
We do public education. We do professional education, appeals work, referrals, coordination, and advocacy. We meet seniors in their homes, in senior centers, fast food restaurants, libraries, lodges, community centers, grange halls. Wherever they are we meet them.
We form tremendously wonderful partnerships with CMS central office, the 10 regional offices. The carriers, the intermediaries, hospitals, providers' offices call us up to try to make sure that beneficiaries are being well served, to make sure that their claims are being paid appropriately, quickly for them all.
We talk to social workers, hospital discharge planners, community advocacy programs. Anyone who will listen to us we will talk to.
I know that much of the emphasis today has been on the provider side, but I want to give you a little bit from the beneficiary point of view, the 40 million beneficiaries who are out there.
I want to address about eight problems. I'm a former New Yorker. I speak quickly, so just hang on here with me. I'll take you through a little ride.
The first problem is just the pure vastness of information that's out there for someone to understand. If we think it's difficult for us to understand, imagine how it is for a Medicare beneficiary and their families. We play games with our beneficiaries. We play Medicare bingo. When we go to conferences with advocates like myself in the 53 SHIP programs, we occupy our time by seeing who can name as many acronyms as possible and do you know what they all mean. So we come up with the big words like the BBA, the BBRA, the BIPA, BBR, BUBBA, all those terms like that. Medicare Plus Choice has brought to us PLSs, PSOs, PPSs, fee for service, HMOs, something with an R that I can't remember, MSAs, I mean, a whole new alphabet soup out there. Social Security, SSI, SSDI. That's kind of easy. Again, I know home health care has its own areas. They have the OASIS. They have RUGs. You have RAPs. I mean, we sit around and it has been a tremendous alphabet soup out there.
It's difficult for all of us, and I would say at least 90 to 100 percent of the folks in this room are college graduates if not a lot higher. Try to explain this to Medicare beneficiaries and their families. I watched the folks walk out of here. I think I saw every person with a cell phone in their hand. A lot of our beneficiaries don't have telephones. So again, we have a really daunting task out there.
Some of our population -- imagine that 65-year-old senior going into Medicare who might have been with an employer group health plan previously now has Medicare as a primary payer and now they have their employer plan as a secondary payer. Or if not, now they have to choose between HMOs, if they're available, or whether they should go MEDICAP plans A to J, not to be confused with Medicare Parts A and B. So we have to explain all of that and explain all their choices. If there are HMOs in the community, we have to explain about the HMOs that are out there and explain all the changes that that plan may have from year to year to year.
We've had people in Maryland. We had seven HMOs at one time in Maryland. We're now down to one plan that's not statewide. The one plan has recently raised their rates $20 a month, which is significant, but I wouldn't say catastrophic. But what's buried in the voluminous paperwork that beneficiaries get who are in that plan is not only the changes in their premium but the imposition now of a $300 per hospitalization co-payment. So they lose that very important piece because they see the $20 per month increase in their monthly premium. So now we have to explain their rights about leaving that plan, what options they have, what open enrollment periods there are, what special enrollment periods, what their guarantee rights are, and it's tremendously confusing and daunting.
The information that's out there is excellent. There is excellent information for you and for me to read. The Medicare handbook and all of the CMS publications are terrific. The Internet sites are really great, but whether or not these are friendly for the people on Medicare I would say is questionable. I was talking to one lady -- I think she was about 84 years old -- about all the information she has gotten from CMS and the handbook, and we talked about the Medicare Website. We talked about what's available by telephone, and she said something about her disabilities. She was visually impaired, hearing impaired, and arthritic and how difficult it was for her to negotiate the telephone, to talk on these telephone trees and push the buttons and go through all of the menus and all that. She didn't have a computer and she said, honey, I'm blind, I'm deaf, I'm crippled, and I need help. So forget about being visually impaired, hearing impaired, and arthritic. She needed help because she had a lot of disabilities and she needed information and she needed it now.
So again, some of that information is available and wonderful, but whether or not it's getting to the people who need it in time is the question.
When is the last time you've all read your car insurance policies? Probably not recently. It's not fun reading insurance policies to any of you who sit down and read your insurance, your homeowner's. And when do you read it? You read it when you need to read it, when you have a fender-bender, when something happens in your house and you have a burst pipe. So when you're most vulnerable and most upset, that's when you start reading your materials.
The same thing with individuals on Medicare. They don't understand Medicare, and then when they get sick or are facing surgery, then they have to start understanding the coverage they have or maybe don't have. And it's not easy to buy health insurance coverage if you don't have it when you need it. Just like you can't buy fire insurance when your house is on fire, you can't buy car insurance right after you have that fender-bender to cover that fender-bender. You have to buy it pre-need. So again, if you haven't purchased that insurance because you didn't understand why you needed it, now all of a sudden you discover you need it. Now you have to get it. You're in a pretty pickle right then and there. So again, these are the folks that we're dealing with and some of the issues that we're facing.
Some of the other issues that we're facing regarding regulatory issues that perhaps you can address. I have many of them.
Skilled nursing facility. The appeals for skilled nursing facilities. First of all, people don't get the same rights regarding grace days as they do if they're a hospital patient, and if they get their HINN, their hospital issued notice of noncoverage, that tells them when they need to leave the hospital and what their rights are to appeal, and while it's being appealed, they will not be held responsible for that bill if it goes against them. They don't have those same rights as a skilled nursing facility patient under Medicare. I think that's real important.
DR. WOOD: Michelle, may I ask you to quickly summarize so that we can have an opportunity for questions for the other presenters?
MS. HOLZER: Okay, will do.
Homebound. Definitions for homebound. What does that mean?
Therapies. How much therapy is enough therapy? You have to make sure that you keep people up to their optimum function and not just arbitrarily cut off their therapy.
Areas that are not covered by Medicare. Presurgical testing. People don't know that those tests they go to prior to their surgery is not going to be covered. We need to tell people.
Mental health parity. There are different payment rules under Medicare for mental health treatment. It's 62.5 percent of the 80 percent, which turns out to be 50 percent rather than the 80 percent coverage. Again, many areas of definitions.
And I see that you have a tremendously daunting task ahead of you, and I commend you and thank you for the opportunity to have a few minutes of your time.
DR. WOOD: You've given us actually a lot to think about, and I think some of us have actually lived this in our own persons as we work with families, and we're grateful for that brief introduction. And I invite you to leave more detailed information with our staff so that we don't miss any of your points.
MS. HOLZER: Thank you.
DR. WOOD: I would like to take the time now to ask the committee members for specific questions of any of the presenters that have started so far.
I might take the liberty of asking the first question for Dr. Barron. If you're color-blind, do you ever get normal color vision back?
DR. BARRON: Can I phone a friend?
(Laughter.)
DR. WOOD: We can ask the audience.
(Laughter.)
DR. WOOD: We'll get the expert opinion here. Dr. Dennis will give us the consultation fairly quickly. I think the answer is actually no.
DR. DENNIS: The answer is no.
DR. WOOD: The reason I asked the question was from the perspective of the requirements when the requirements are written, obviously it's sort of like listening to the question about the retirement. I mean, once you retire, you pretty much retire, although I guess if you're young enough you could retire and unretire. But as we think about how we would make our recommendations, here are some very specific things we might actually do.
Tony?
MR. FAY: My name is Tony Fay. I have a question for Ms. Mulaney. Regarding the MDS forms that have to be filed with the intermediary and CMS, at one time it was my understanding that if those forms weren't filed precisely on those given days like the 5th day, the 14th day, the 30th day, then what they would do is not deny payment but they would automatically downgrade you to the lowest paying RUGs for that particular type of patient. Is that a true statement?
MS. MULANEY: What's true is that if you're delayed, if you're late, if you miss your ARD date, if you miss one of those dates or one of those form filings, then you're downgraded to the lowest payment possible.
DR. WOOD: Jack first and then I'll come to Dr. Nielsen.
MR. ROVNER: I also have a question for Ms. Mulaney. I'm Jack Rovner.
In the forms that you gave us, how many of the exhibits and so forth are a requirement of a CMS rule versus how many are your lawyers' trying to help you do risk management or a contract?
MS. MULANEY: "This is a contract" is our paragraph, and probably payment of the bill, in terms of the timing, we'd like the payment of the bill. The limitations of liability are ours, and that's about it. Everything is required information for the consumer in order to protect the consumer.
MR. ROVNER: Just to be clear, is it required by CMS regulation under Medicare as opposed to a state Medicaid regulation?
MS. MULANEY: I'd really have to go through every paragraph. But under OBRA, which covers both programs, there was a considerable -- and deservedly so -- concern for people entering nursing homes that they get good treatment and that their rights be recognized. A lot of this information requirement, as well as the self-determination requirement, apply to both programs.
MR. ROVNER: Thank you.
DR. WOOD: Dr. Nielsen?
DR. NIELSEN: I have a question for Ms. Holzer and a comment for Dr. Barron.
Ms. Holzer, what is the level of training of the people who work with you who have to give this information, what level of education, what level of in-service training, and so on?
And then as a follow-up to that, apparently there have been some concerns by GAO that some of the information given out by the SHIP program folks -- I'm sure not in Maryland, but perhaps in other states -- was confusing and inaccurate in and of itself. So let me just ask that.
MS. HOLZER: Every state program has different requirements, although we are working to standardize the requirements somewhat for volunteer counselors. There is a basic curriculum that we've all agreed upon in terms of the areas that need to be covered, the length of time.
Generally in Maryland I can say that we would do a three- to four-day basic training of our volunteer counselors. We team up our volunteer counselors with more experienced counselors. Each of our local programs have paid staff coordinators, in Maryland at least, and they work under their direction and their monitoring.
I've found that oftentimes it is difficult to get a well-trained veteran counselor and to bring them up to the level where they need to be brought up. There's a tremendous amount of information and changing information that we're dealing with. And we are talking about volunteers, and generally we're talking about senior volunteers also.
So again, we do constant and continual training and in-service training to try to bring to them new information and certainly try to stress to our volunteers that if they have questions that they feel they can't answer, they shouldn't answer and they should then bring that to the attention of their coordinator who's more able to answer that question.
But I would say for a volunteer spending time with us, it's going to take them a good six to nine months to really be working a lot in the program and have the experience to start really understanding all the intricacies out there.
And it is difficult to get good, well-trained volunteers. We generally don't have a requirement regarding their past education or work history. If they want to learn the information, we feel that we can teach them most of the information, and more importantly have them know when it's gone over their head. We do try to keep on top of our volunteers to make sure they are giving out good information and follow up a lot of their appointments to make sure that the problem has been solved, the person doesn't have any other questions. But it's a difficult job to train volunteers, to keep good volunteers in this program. It takes a lot of commitment.
DR. NIELSEN: And, Dr. Barron, just a follow-up. In Buffalo, we lived through all of these things that you cited, and we could all tell the war stories. But the one that I just cannot resist telling has to do with the glucometer. At my hospital, which is a major teaching hospital, we were unable to convince the hospital to put glucometers on the floors, and the reason is exactly what you cite. It's the handling of the equipment, the repeated calibration of the equipment, the repeated training of the personnel. They simply could not afford to do that. Therefore, we cannot get an immediate finger-stick glucose in my hospital. We cannot get it. It is simply preposterous.
DR. WOOD: Mr. Finan?
MR. FINAN: I'm just curious. For Ms. Shamloo and Dr. Barron, you all gave some excellent examples of regulatory requirements that you or your staff spend a lot of time on. You live in the trenches, which is very important to us. Is there anything in any of that that you believe adds value from your perspective? Any of the restraints or the tests that Dr. Barron described? I'd just be interested in your views about that. Is there some portion of this that you believe really does add value to the care of the patients, or is it all worthless? And should we rely on just the professionalism of the staffs to see that proper care is rendered and things are done properly?
DR. BARRON: I think it all depends on the complexity of the task. A task this simple I don't need regulations for. If it's a very complicated procedure, then I do think you need some type of formal testing, and in that sense going through some of these things did make me look at whether or not people did know how to do all these tests. We realized that we should at least do this once no matter how simple the test is, but once was enough.
MS. SHAMLOO: In regards specifically to restraints, there was extreme value. I worked harder. I thought harder than I ever had to about any clinical practice issue in the past. I have gone as far as researching hospitals to find out what alternatives they're attempting. I went to Target and I bought a whole kit of toys.
I will tell you one anecdotal story where I had a 33-year-old who had the mind of a 3-year-old. He was in the holding area for surgery and he was on standby. He was a very large, 6-foot-4, 300-pound man who didn't have very much patience for standby surgery. I was supervisor on the evening by a fluke. I was called emergently, along with security, because he had become severely agitated and started swinging at everyone. In the past our initial response would have been leather restraints, although we don't have those in the facility anymore, but we used to apply four points on an individual like that.
I walked into this situation. Security was about to do so. I turned around and I said, Bryan, and he looked at me. I started singing Row, Row, Row Your Boat, and he stopped the behavior. I then said, please, someone, get me my kit of toys. I gave him a Crayola coloring book, a box of crayons. That gentleman sat there for another hour and a half waiting for his surgery and did not need restraints.
In regards to the recovery areas that I had mentioned earlier, we dropped our utilization of restraints from 100 restraint products per month to 20 to 30 per month.
But I think the piece that was really important and to really drive home with individuals is how can we get to that point without it being so painful. We're trying to provide patient care and run a viable corporation that is in compliance with regulatory agencies. That is a very daunting task that I don't even think Bill Gates has to work with. So if you can make this any easier by developing relationships with us to give us as much information as we can possibly get in order to make it an easier process for us, we'd greatly appreciate it. I think the intentions of all of these mandates and regulations are very good. Just the process, I think the communication piece is what we really need to hone down on at this point in time.
DR. WOOD: Mr. Toby?
MR. TOBY: Thank you, Mr. Chairman. I have two questions, one for Dr. Barron and one for Ms. Moore and Mr. Gallagher.
Dr. Barron, I heard your pain and plea for rationality in the process with CLIA. By way of background, in 1992 I had a role in implementing CLIA, and I just want you to know that we tried to not be as strict in the regulatory process as we were, but we were hounded by Congressman Dingell. It was his brainchild and he cared deeply about it and told us very specifically. There was very little leeway for the providers.
Anyway, my question goes to the idea of credentialing, which you mentioned I believe. I would just hope that you can tell us what part of the process you believe there should be this implicit and explicit trust in the provider so that we don't have a lot of documentation or have to prove. If you can just tell us explicitly where in that process and leave it with us. You don't have to tell us now, but it would be nice to have that information because I think that's very important. I like credentialing and I like deeming. I think both issues can help reduce the burden.
With respect to Ms. Moore and Mr. Gallagher, I'm the oldest person on this committee I believe. I spent 20 years actually applying standards that I didn't write to cost reports and to providers. So on the issue of automation, which I'm very interested in, you had mentioned that that would help you somewhat. Most claims are filed by Medicare at least electronically.
But I'm just wondering, since you still have this huge pile of paper that you brought forth today, in this process of cost report and applying standards and what have you and communication back to CMS, do you see any role where the Internet could be helpful to you and reduce your burden to some extent? I know it has a lot of issues dealing with privacy. I know it has a lot of issues dealing with how do you protect beneficiaries' identification and what have you, but have you thought about it? Do you envision the Internet being helpful in reducing your burden?
MS. MOORE: Well, on the billing side, we have in fact a fiscal intermediary and CMS and the hospitals have all started to look in deep detail relative to that. While we're looking at HIPAA and trying to make sure the confidentiality is taken care of, we're also looking at the processes that could be more streamlined.
Medicare, I have to say, is one of the most computerized claims processing systems. However, there are a great deal of exceptions to the routine electronic claims processing. So what we're working on is trying to figure out how we can eliminate some of those exceptions to the electronic process. Most of that includes the confidentiality thing.
We believe that the Internet is going to be the thing that helps us get where we're going, that helps improve the process and makes the information more accessible to all of the population, both the claims processing population, the patient population, and all of that.
MR. TOBY: Thank you.
One last question. You mentioned, Mr. Gallagher, that I guess when CMS finds that you made a mistake, they take the money back. You mentioned that. In the past, we used to allow providers actually to work out a repayment schedule. Many providers used to say to me at least when there was a dispute about money, because the providers need to keep the money in many instances while the dispute is worked out to some resolution -- however, we didn't ever allow a provider to do that unless we allowed a payback schedule. But many times we would just take the money out of the next payment, which often hurt the provider very badly. With the next cycle of payment, we'd just take it back to make sure we got our money. So I'm just wondering if you have any ideas about whether or not there can be more flexibility in the system while you keep the money and work out some payment schedule so that we don't hit you in the next round when you're due a payment.
MR. GALLAGHER: And that's what happened in this instance. As I said, they just took the money out of the next payment. I do think that if there's a dispute, there could be a much better opportunity to work that dispute out before the money is taken out and at least get some level of agreement or have an opportunity to air out your differences. You're not going to always agree with Medicare, but generally speaking, you can come to some type of agreement, either that you have a disagreement that's going to have to go to an appeal or an explanation as to why the Medicare intermediary has a position that's different than yours. In that case, there might be a justification for the intermediary to take back the money if it's not paid within the prescribed time period. But I think what's key is to have the communication and opportunity to have both sides heard before money is arbitrarily taken back.
MR. TOBY: Thank you.
DR. WOOD: Mr. Mendoza?
MR. MENDOZA: Dr. Barron, you commented upon the need to document for billing rather than the need to document for patient care. Do you have a sense for the scale of that problem both as an administrative burden and also to what extent the need to gather data sets compromises the clinical treatment because it takes time that would otherwise be spent dealing with the immediate concern?
DR. BARRON: I don't think it compromises clinical care. The physicians just don't do it. So the bill is lower. If they think it's silly, they're not going to ask the question, and then I don't bill for it.
What was the first part, please?
MR. MENDOZA: I think you answered it.
DR. BARRON: I was explaining we have an electronic medical record, and there actually is a function on there where at the end of the charting process, the physician can push a button and it will calculate the E&M score based on what the physician has pointed and clicked on. I didn't even show the physicians how to use that because I don't want them to play a game where, oh, I answer three more questions and I can get a level 4 out of this. You should be charting what you need to chart and not playing a billing game. But in many places that's what it is.
DR. WOOD: Heidi?
MS. MARGULIS: Mr. Chairman, I think my question is more a point of information that we've heard incredible stories, case studies, today and gotten some questions answered, but I don't know that all of us could come up with the appropriate or some of the same recommendations for change. I'm wondering if each of the panelists will be submitting after today, for the record or with staff, their recommendations for changing those issues and regulations and activities that they presented to us today so that we have a plethora of options for consideration.
DR. WOOD: I think it's an important point. We, in fact, would invite each of you to send to staff some specific recommendations, although I've been writing a few myself actually listening to these.
I'm going to turn around and ask a question to the committee, and it's going to be about the EMTALA issue. What we heard Dr. Barron describe was actually an extension of the original EMTALA law to other areas.
Now, I'm not a lawyer. I should say it's the first acknowledgement of my many limitations. But I understand that the actual law has never changed. Is that true? So all my attorney colleagues across that end of the table? It hasn't changed.
But I think what has changed actually then becomes the impact of judicial interpretation. So then after cases are decided, somewhere we need to understand the process by which then a judicial interpretation is then turned back into regulation that extends EMTALA if we're going to find the fix to the problem that we heard about today.
DR. BARRON: No. It has changed and Dr. Dennis knows this really well too. The law has been changed multiple times since 1987. It was updated in 1994 and again in 1997. Right, Gary?
DR. DENNIS: It has to do with the interpretation. The law itself hasn't changed. It's like regulations have been reinterpreted. I think that that is what this committee can look at. You don't have to go back and change the regulation. Of course, a lot of interpretations have to do with, in fact, what Congress is interested in or even what the OIG is interested in. In fact, sometimes it may be the OIG that influences what that interpretation is because it's felt that for some reason it should be applied in a certain way and it's not being applied. So I think we need to discover all of those issues. We have to put them on the table and then begin to sort through them and try to come up with a better interpretation.
DR. WOOD: Well, that's specifically why I asked the question. It's a very good example of where what starts out as something that could be relatively simple starts getting complex as we go through the iterations. And as we try to figure out then where we need to make suggestions for improvement, we will need all of our good help of trying to specifically identify the very precise areas where we need to try to do things actually.
Tony, I'll give you the last comment and then we need to move on to public comment.
MR. FAY: Just a final comment on EMTALA. This is how one regulation can affect another regulation. One of the things that has caused EMTALA to become more expansive is that CMS has changed the definition of what is provider-based. So now that more things are under that provider-based umbrella, then by definition more things are subject to EMTALA.
DR. WOOD: I want to thank our presenters this afternoon for giving us very good insight and giving us several things to consider and again invite your specific suggestions for us.
The next panel actually is one of a period of public comment. Now, earlier today we actually asked people to sign in for their opportunity to comment, and we have several people who have signed in. I'd like to invite each of them for 5 minutes to share their particular comments with us. There's either a microphone in the middle of the room or, if you prefer, you may use the microphone at the podium.
As we begin, I'm going to start down the list of people who actually signed in, and I'll do it in the order of sign-in. Then after that, hopefully, if there's time remaining for any public members who have arrived late, we'll try to accommodate comments that you might want to make as well.
So to lead, Mr. Steve Hitov. Good afternoon. Welcome. And as you start, would you please tell us your perspectives, that is, who you might represent and the point of view you might represent?
MR. HITOV: I will.
Good afternoon. I would like to thank you for this opportunity to address the advisory committee. My name is Steve Hitov and I am the managing attorney of the Washington, D.C. office of the National Health Law Program. My remarks today are made on behalf of my organization and the National Senior Citizens Law Center, the Center for Medicare Advocacy, the Center on Disability and Health, and the Medicare Rights Center. In addition to this statement, we will be submitting written comments about this undertaking.
Each of the organizations that I have mentioned supports the desire of this committee to ensure that the regulations of the Department of Health and Human Services are as effective as possible in improving the quality of health care and access to that health care. We also support the articulated goal of HHS to create a culture of responsiveness to consumers.
Given those goals, however, I find myself in the position of having to deliver a message that I fear may cause some discomfort. We are deeply dismayed at the composition of this committee, not for the quality of its members which is unquestionable, but which we believe is severely unbalanced with regard to consumer participation. As you are certainly aware, at the moment only three committee members could be said to represent the consumer perspective. We question whether such a distribution complies with section 5 of the Federal Advisory Committee Act which requires that committees like this one be balanced among those with an interest in the subject matter at hand. Unfortunately, missing from this committee's ranks is an adequate and unconflicted voice for low income consumers, including seniors, the millions of children affected by HHS regulations, pregnant women, single mothers and fathers, consumers with disabilities, the immigrant community, and the limited English proficiency community.
The absence of these consumer voices on this committee is especially disturbing in light of the reasons underlying the existence of the very regulations you are charged with reviewing and the statutes on which they are based. Programs like Medicaid and Medicare and the State Children's Health Insurance Program were enacted by Congress for the benefit of consumers, not providers. As recognized by previous speakers, the regulations promulgated under those programs are not gratuitous but rather often respond to identified problems. And in many cases they were designed to protect this country's most vulnerable populations.
This committee surely recognizes that there will often be a tension between provider burden and consumer protection. This is especially true in certain areas critical to the protection of the consumer. These include the form and content of written notices, data collection practices, including race, ethnicity, and primary language data, quality assurance and oversight, and appeal rights.
Indeed, in this committee's request for public input published three days ago in the Federal Register, the words "unduly," "excessive," and "unreasonable" were used eight times in three pages with regard to the types of burdens that this committee is charged with identifying. These are inherently judgmental terms. What may seem excessive to a provider, for example, may strike the consumer as the bare minimum necessary.
Given these inherent tensions, any conclusions of this committee will be devoid of credibility if the decision making process does not include strong consumer voices at every step. The opportunity for public comment is not enough. The consumer must be adequately represented during the undoubtedly difficult give and take that can be anticipated as this committee decides on its ultimate recommendations to the Secretary.
In light of these comments, we have two immediate suggestions.
First, as one of its first acts, the committee should suggest to Secretary Thompson that he either expand or reconstitute the committee to include many more consumer voices than currently are present.
Second, the committee should ensure that its future meetings are much more accessible and much better advertised than this one. Meeting nearly a mile away from the nearest Metro station is not likely to afford access to people with disabilities, the elderly and the poor, who are the groups most likely to be affected by any recommendations that this committee may ultimately make. Nor are notices in the Federal Register or on the HHS Website likely to reach consumers. Rather, in the future this committee, once it has been reconstituted to include the consumer viewpoint, should make certain that its meetings are publicized in the popular media and held in locations accessible to those whose interest will be affected by your conduct.
Thank you again for taking the time to listen to these comments and for your anticipated attention to the issues we have raised.
DR. WOOD: Thank you, Mr. Hitov. We appreciate your comments. You might not have been here this morning for the Secretary's comments. I would let you know that the Secretary has indicated already he is looking at the committee membership in consideration of its expansion with the points that you have raised. So we've heard that and are all listening too. Thank you, sir.
Next I'd like to invite Dr. Diana Zuckerman to either microphone.
DR. ZUCKERMAN: I also thank you for the opportunity to speak today. I'm Dr. Diana Zuckerman. I'm the President of the National Center for Policy Research for Women and Families. We're a nonprofit, nonpartisan organization that uses medical and scientific research information to advocate for programs and policies to improve the health and well-being of adults and children.
There's no doubt that there are unnecessarily burdensome, inefficient regulations that interfere with the quality of health care in our country. And your mission to reduce the burden of excessive paperwork, while keeping protections in place, is one that certainly my organization shares and that's absolutely essential if we're going to improve health care in our country.
But I have to agree with our previous speaker that you have 27 members on this advisory committee that can provide many different important perspectives on health issues, but that you have been noticeably absent in terms of members that are full-time consumer advocates working on health issues and particularly on FDA related issues.
Consumer advocates have a great deal of information that they can share and they tend to know where a lot of problems lie, and although I have no doubt that the members of this committee also have come across many, many problems, I think that the perspective of consumers needs to be better represented. And I appreciate that the Secretary plans to respond to that.
I also want to say that patients' points of view, of course, are very important but patients often do not have the information that they need about regulations to really have the big picture of what needs to be done.
So consumer advocates who are knowledgeable about the FDA as well as about Medicare and Medicaid are really an essential perspective for this committee, and they deserve to be included, of course, on the committee itself. Unfortunately, the focus on field hearings for this committee I think will also tend to exclude consumer advocates from many of the Washington, D.C. based consumer organizations that don't have the resources to send representatives across the country for all the field hearings. So I'm concerned that those kinds of advocates will not be able to provide the information that you all need when you're gathering information.
So as you consider your task, I urge you to look also beyond the many regulations that could be less burdensome and also look at the ones that need to be strengthened and that sometimes seem burdensome because they're not working appropriately. There are many regulations that just need to be enforced better or enforced differently in order to be effective, and I'd like to give just one example.
The example I'd like to give are advertisements for prescription drugs, whether they're direct to consumer advertisements or advertisements for physicians. Here's the Ladies Home Journal filled with ads that I challenge anybody in this room -- anybody in this room -- to be able to read the risk information on the back of this very attractive ad. And this is what advertising is all about. It's to persuade you to buy a product, not to provide objective information about the advantages and disadvantages of that product. I would say that most people in this room could not read the back of this without a magnifying glass, and even if you could read it, you wouldn't want to because it's really set up in such a way that it's not exactly user friendly. Nobody would want to read this.
Now, this may seem like a minor issue but we know that billions of dollars are spent on these advertisements and they add to the cost of prescription drugs, and they also add to the cost of medical care as many patients come looking for and asking for drugs that perhaps they don't need and drugs that may even be harmful for them. And many of the people in this room know that it can be a burden on physicians also who are bombarded with requests for drugs from patients, drugs that may or may not be really appropriate for them.
So this is just one of the many examples that I think the consumer reps from consumer organizations have talked a lot about in the past few years. They understand the regulations currently. They understand that those regulations are inadequate and inadequately enforced.
Then I'd like to make just one final comment because I know it's time to stop.
I'm sure you all agree that regulatory reform should be done in public with meetings like this. It's already been mentioned this is not exactly the center of Washington. In fact, I've lived here 20 years, had never been to this hospital, had no idea where it was, and had a little difficulty finding it.
You also may not all realize that this meeting was announced the day after Christmas, again not exactly a time to announce something if you really want attention and you want people to come. So although the room is full, perhaps it would have been even fuller if announced at a better time.
So I urge you to embrace public attention and discussion, to encourage the press to cover your meetings. I think it's important to attract media coverage as well as participation from a wide range of people from across the country.
Thanks very much and I have copies of my statement.
DR. WOOD: Very well. Thank you.
Mr. Robert Britain.
MR. BRITAIN: Thank you. Good afternoon, everybody. My name is Bob Britain. I'm Vice President of the National Electrical Manufacturers Association, which is referred to as NEMA. NEMA represents manufacturers of diagnostic imaging and therapy systems equipment, for example, x-ray imaging, computed tomography, diagnostic ultrasound, radiation therapy, magnetic resonance, and nuclear imaging equipment.
I'm going to have to drastically summarize this statement, but I have brought the written text that you can have later.
First we would like to raise an issue involving the Food and Drug Administration. Before focusing on this issue, we would first like to acknowledge the significant improvements that have been made at the Center for Devices and Radiological Health over the last four or five years.
One of the positive changes at the FDA's Center for Devices and Rad Health was the third party pilot program for reviewing most class 2 products. This third party review program is an FDA administered program that permits certain medical device products to be reviewed by FDA-approved third parties to standards that are established by FDA. Final product clearance, however, is done by FDA.
Both the industry and the FDA are pleased with this program. By tapping outside expertise, the third parties are able to consistently review products significantly faster than FDA, and by reducing the volume of applications that require complete review by the FDA, the agency can shift resources to other priority health matters. And that pleases FDA. This program has been a win-win for all involved.
NEMA believes that it's time to replicate the success of this third party review program with a voluntary FDA pilot third party inspections program. As you may know, by law FDA is required to inspect medical device establishments at least once every two years. In practice, however, FDA inspects medical device establishments once in five to seven years. This situation is not good for the FDA, the medical device industry, or patients.
Why would companies volunteer to participate in this kind of a program and why would they be willing to pay to have themselves inspected more frequently? The answer to that lies in one key development, the proliferation of different medical device regulatory regimes around the world. Today the facilities for global American medical device manufacturers are not only inspected by FDA, but by inspectors from Europe, Canada, Australia, Japan, China, and other nations as well. Many of these inspections involve examining the same criteria at each facility. This involves costly, multiple, and often redundant inspections. This is a significant and increasing regulatory burden for manufacturers. As a result, we believe many of the manufacturers would be interested in participating in a program that would permit properly accredited third parties to conduct a single inspection but, on the basis of their accreditations, to facilitate the approval of the facility by multiple national health agencies, including FDA.
The second issue NEMA would like to raise for your consideration involves CMS. NEMA is concerned that the CMS coverage and reimbursement decisions could have a profound adverse impact on the access of patients to the benefits of new and improved medical imaging technologies. We at NEMA know that the medical imaging products and services that NEMA companies provide must satisfy CMS if they are to be made available to the elderly and the disabled who rely on Medicare for their health insurance. We also understand the need for the insurers like Medicare to maintain processes to make coverage decisions on new medical procedures and services, to grapple with questions of utilization and services and patient indications and the appropriate site of care. We also understand the complexities of the various payment systems CMS uses to set prices for these medical procedures and services, but we are concerned that these coverage and payment processes result in delays in beneficiary access to appropriate medical technologies.
I'm just going to summarize since I'm being asked to stop.
We are in the process of looking at this and we hope to provide you a process in which CMS might be able to take leading edge technologies that get through FDA that don't produce the kind of data CMS needs. We are going to try and package the proposed solution and by March 3rd hope to have this for you to look at, and I hope you will give it some consideration. And I thank you.
DR. WOOD: We appreciate your comments.
Next I'd like to invite Mr. Bob Griss to share his comments.
MR. GRISS: Hello. My name is Bob Griss. I'm the Director of the Center on Disability and Health in Washington, D.C., and a co-chair of the Consortium for Citizens with Disabilities Health Task Force.
I noticed that the word "consumer" is used quite freely by most of you to represent the groups that you serve, but in fact you also represent other stakeholders. I feel we have to be critical of our loyalties in the system that we're operating. As other commentators have said, I think we need more consumer representation on the committee to raise the critical issues that you need to be thinking about.
We heard in the panel a very embarrassing description of how fragmented our health care system is and what burdens it does impose on providers as they try to document the eligibility of the clients they serve and the services that they provide for payment, to say nothing of the quality of the services that they provide that the payers should be interested in. And this type of inefficiency is worthy of public attention.
But I think that the focus that we heard this morning from Secretary Thompson to come up with immediate solutions is very problematic because any little change has ramifications, as the panelists said, that are often very unintended. So we need to focus on the larger system and how it impacts on the efficiency, equity, and quality of care and not just focus on immediate solutions that the Secretary can run with because we don't want to spend any more money, and we recognize that we are relying more and more on the marketplace to ration care.
I heard some discussion this morning on the subject of quality. We want to improve quality. And I'm a consumer advocate, but I'm actually quite nervous when I hear the focus on improving quality. The reason is because in a market system one can provide high quality for one individual and ignore all the other people who it is less profitable to serve. I think the focus needs to be on the system, the health care system, and how we equitably distribute our limited resources in effective ways. This is not just dealt with by focusing on maximizing professional judgment about maximizing quality.
Therefore, I think we need to focus also on other systems like health care systems where universal health care is the norm and see what kind of regulatory burden exists in those systems because they may actually contain some of the solutions that we claim to want for consumers.
I think that's about all I wanted to say. Just that I would like my comments to be included on the Internet because I think that the proceedings here need to be accessible to all, and so transcripts of materials and comments should be there.
I hope this process is actually a constructive one for the society because I'm afraid that with the desire to not add dollars to the health care system, that the real battles are taking place over regulations and an advisory committee that is trying to make recommendations on reducing regulatory burden I'm afraid is possibly putting the emphasis in the wrong place.
Thank you.
DR. WOOD: Thank you very much.
Because there was a little bit of confusion about the sign-up process, there are no other names that we have on the list of people who signed up earlier wishing to make comments, but we do have some remaining time. So I would like to ask if there are any other members of the public audience who are in attendance who would like to make comments to the group.
(No response.)
DR. WOOD: Seeing none, we appreciate comments that we have heard.
Christy reminds me that the statements that all of you have brought will be up on the Website. So they will be available for others to see, and so we want to reassure you about that.
I'm also reminded that the full transcript of the meeting will be on the Website ultimately as well. The time of that will be obviously as quickly as it can be transcribed by staff.
Now, I want to take a little bit of time and ask the committee members, having heard the last comments and then the ones before, if there are any areas of concern or if there are any specific comments that any of you have so far about areas that we might want to begin to identify activities or if it raises for you questions about how we should structure work. Gary?
DR. DENNIS: Well, just in terms of structuring work, there are a lot of important issues. What I can see from this particular day is that not only did we have a very good panel focusing mainly on hospital issues, but we also had a lot of interest from the public. With more information getting out earlier, we will probably have even more of an interest. Wherever you have a hearing or a meeting, it doesn't matter. There should probably be a lot of comment.
But it would be good to structure, just as you did today, the meeting so we focus on the subcommittee issues so that if you have three subcommittees, at least at one of those, you would have one of those subcommittees presenting and trying to elicit more comments about those areas that we feel are a priority for those subcommittees. I'm not sure what you ultimately will decide to do, but I think that might make it an efficient use of our time because we could actually hear the same thing over and over again and never get anything decided. But I think that if you let the subcommittees do some of the work in between, have them make their recommendations, have the public comment on them, then we can come to some conclusions.
The second thing is that I think the representation on this particular advisory committee is pretty good, but I think you probably should have more consumer representation and maybe invite someone from the Hispanic community to be represented as well on this group now, as well as there are various consumer groups, other groups that represent the senior citizens. So you could probably add three. I think you could add three more people, could you not? I would add three and try to add them in the underrepresented areas, maybe like Kaiser Family Foundation or some group that will add to our body of knowledge, true experts on issues that affect consumers but also clearly have the voice of consumers.
DR. WOOD: There are a couple of other options we might consider. We actually have already talked with Bobby and you have heard him reflect those recommendations on to the Secretary, so I think we will be expanding the committee.
But as we've done this in a couple of other areas, I've had some involvement with some projects where we've tried to work on measures of quality for cardiovascular care, and in trying then to make sure that we could incorporate the different groups that would be affected, we created an advisory committee who worked alongside the regular committee. The advisory committee actually was kept in the process by sending them all of the agenda materials ahead of time, as well as all of the outputs of the meeting. They were invited to come to the meeting and to participate. They weren't voting members, but our expectation was that they would maintain contact with their respective constituencies and keep us informed about the response of their constituencies as we were going forward. So one of the concepts that we might consider is for us to create an advisory committee of consumers.
And as I have thought about this over the last few days, having looked at some of the feedback from some of our listening sessions, one of the thoughts to me was actually somewhat like the problem I addressed this morning. For what I do to have face validity, it's got to pass the mother-in-law test in my mind. I mean, I have to go back and be able to explain to my mother-in-law why we did and what we did and how it's going to make it easier for her to get her benefits and make sure that she understands how the program works.
So when I'm thinking about it from the advisory committee perspective then, my thought is can we create a group of people that we could then bounce things back against and say give us your reaction to this. We can make the recommendation on to Mr. Jindal and the working group, but that's how I've thought about it. So if there are any of you who have a different idea or think we should take a different approach, give me your thoughts.
Ms. Shafer?
MS. SHAFER: You know, I hadn't thought of that idea and I think that's good merit maybe to be able to bounce things off of another body separate from ourselves. But a lot of work is going to be happening in subcommittee, just looking at the initial draft, and I think those subcommittees is a place where you can involve more consumers in a wider representation.
DR. WOOD: Jack?
MR. ROVNER: I tend to agree with what Ms. Shafer just said. I don't know, having an advisory committee to the advisory committee may just get us too much.
But I do like the concept because -- and it's an invitation, if I can do that, to our consumer advocate speakers -- I'm very concerned and interested to know how you cut through the maze of information overload because I'm looking at this contract that we got, I look at all the notices that are required and things like coming out in HIPAA. I remember getting the blitz of GLBA notices, which I doubt everybody read them when they got them. And keeping in mind the population that Medicare/Medicaid serves, are we really achieving anything by blitzing people with paper and information? I'm very interested to know if there is a better way to deal with the kind of problems that Ms. Holzer articulated I thought very well. I think that's something that I certainly would be very interested to hear.
DR. WOOD: Judy?
MS. RYAN: I would just like to share an observation about one other set of principles that kind of was discussed this morning. The question was raised in what way do regulations add value and ought we just to consider relying on professional clinical inference. Some of the work that's been done in the quality arena would suggest that the complexity of the decision making in medical and health care and other aspects of long-term care have become so great that clinical inference and the human mind no longer singularly have the capacity to deal with all of those variables and that we have to look to building systems to prevent error, while in the past we've been primarily socialized to deal with expert practitioners and clinical inference.
But then in my mind that also related to comments that were made about we're documenting for payment purposes or we're documenting for compliance purposes. And maybe the principle that says we talk about focusing on the building of systematic supports for the delivery of care and services not primarily for documentation of compliance or, in other words, the direction we try to set is to move away from regulatory compliance to one of professional self-regulation. Just thoughts.
DR. WOOD: I will come back to that a little bit later because I think it is something we should probably consider for the larger framework, that is, how we set a framework for future performance, because I do think we could actually change the way that the system works by changing the measurement system to make it really align more with what our objectives are.
Mr. Toby?
MR. TOBY: Mr. Chairman, I just have two comments to make. One is that I very much agree with what Dr. Dennis said about perhaps enlarging the committee, and I think you've thought about that long and hard. As Ms. Zuckerman spoke about FDA issues, which are very, very complicated, and as I look around this room, I have spent all my professional life in Medicare and Medicaid, and as I heard all the other members of the committee speak, it was heavily weighed for those issues of course. Medicare is the largest payer in our system, so it's not surprising and its effect is incredible.
But I think as we enlarge -- and you talked about the subcommittee idea -- I think we do need more FDA expertise around this table. I think definitely so.
I also would like to say, as I heard the other three public speakers talk about our work and what we're in business to do, I think it's very important for those speakers to keep in mind what the purpose of this committee is. This committee is not in business to fix all the problems in the American health care system. We have a lot of problems in the system. I have represented this country abroad in England, in France, at international meetings and I can tell you we have incredible deficiencies. We're not a universal system, but this committee is not in business to fix that.
We are in business to deal with a very difficult and specific problem of really easing the burden of providers on the existing system, and I don't think we have to apologize for that at all. And I think it's very real, as you heard the providers talk today about the negative effect of our regulations. So I would just hope that we would keep that very much in mind that we're not in business to fix the entire health care system.
DR. WOOD: I'll go over to you, after that, Mary.
MS. MARTIN: I just want to echo Bill's comments. We can't fix everything overnight. We have a huge mandate as it is, and I think we do need to focus. I agree with Bill.
DR. WOOD: We'll have to work harder prioritizing.
Sue?
DR. DESMOND-HELLMANN: Yes, just two comments. The first one is about the question about regulatory compliance because I guess it goes back to the trust issue that we talked about when we talked about our mission. I think when we talk about streamlining complex regulations, it ought to be synonymous to talk about regulatory compliance and quality, and if there's a regulation that's there for compliance reasons only that doesn't drive quality, that's a problem. So I think those are some of the questions we ought to be asking, and if there's any diminution in quality because of an absence of compliance, then I think we're not doing our job correctly. So that would be one point I would make.
And the second point is I just wanted to echo the comment about FDA that I do think that the committee could use additional voices on the FDA side of the regulatory equation and put in a pitch for consumer advocacy, trained consumer advocates who really can add an enormous amount of value. In my job we've worked very closely for a number of years with consumer advocates who have given us an awful lot of added value in many things we've done in terms of interactions with FDA.
DR. WOOD: We are pretty close to being on schedule, and so the schedule now includes a 15-minute break. So we'll reconvene at 3:00 p.m.
(Recess.)
DR. WOOD: For the next panel, we need as a committee I think to come to a little better understanding of how it is that the regulatory process works; that is, how you go from legislation to regulation in the various programs. So we have asked people from various parts of CMS and the FDA to actually teach us about the process of regulation, and in that understanding then, I think as a committee we'll actually make better recommendations and we'll understand the process better.
So I am particularly pleased to welcome this afternoon Mr. David Cade, who is from the Office of General Counsel, Ms. Linda Fishman from CMS, and Mr. Bill Hubbard from the FDA. We will ask them to share their insights and I hope we will have some time for discussion and asking questions for each of them afterwards, but I would appreciate it if you would hold your questions. So David, could I invite you to begin?
MR. CADE: Well, good afternoon, distinguished members of the committee, and to the general public, I welcome you. As Dr. Wood said, I just wanted to take a moment this afternoon to walk through general fundamentals of the APA and the rulemaking process.
But before I get started, let me also introduce Judy Rosenberg, who will be assisting me. She is at the podium today assisting with today's presentation. She's one of our staff attorneys from our CMS Division, formerly the Health Care Financing Division, of the Office of General Counsel.
As Dr. Wood said, this presentation basically lays out the foundation for the laws that govern the regulations and therefore regulation reform. I don't think this presentation should give you too much to feel bogged down in the regulatory process, but I think it's something that you should keep in the back of your mind as you think through the varying rules and regulations that you'll be considering to recognize that there is a process that we have to go through in order to make changes or to implement new laws.
This presentation will discuss the Administrative Procedures Act, the APA. The APA touches on practically everything that this department and most departments in the federal government do. Hopefully after the presentation, you'll have a basic understanding of the mechanics of the APA, you'll have a greater appreciation of the different types of rules under the APA, and you'll have a basic legal foundation as you embark on your regulatory reform work.
The Administrative Procedures Act, for those who like statutes, can be found at 5 United States Code at sections 551 through 559.
Now, the act was passed by unanimous vote of both houses of Congress and signed by President Truman in 1946. It originated in the 1930s as a response to President Roosevelt's New Deal and the perceived unchecked power of administrative agencies. The act seemed to represent a compromise between the American Bar Association, which recommended abolition of some of the independent regulatory agencies, and the Attorney General's Committee on Administrative Procedure.
Now, on this side you'll see a quote from the Attorney General at the time the APA was passed. The quote is from a letter the Attorney General sent to the chairman of the Senate Judiciary Committee. The quote illustrates how the APA was intended to serve at least three purposes: one, to ensure that the public has a voice in how the bureaucracy regulates; two, to create uniform standards so that most federal agencies follow the same process for issuing the regulations; and three, to allow federal courts to serve as a check on agency power by creating a process for judicial review of agency rules.
On this slide, you see a definition of the rule as defined in the APA. As you can see, the definition is extremely broad. Just quoting from a section of it, "any agency statement of general or particular applicability and future effect." That's incredibly broad. It shows that practically everything that the Department does is governed by the APA.
Now, although everything the agency does can be viewed as a rule under the APA, not all rules are the same. There are several rulemaking options under the law. Some rules are required to go through the process of notice and comment while others do not. This slide shows you the different options available for rulemaking under the APA. Each option has its own legal standards as I will discuss.
Now, one of the best know and most common rules is the notice and comment rule, or the NPRM, notice and comment rulemaking. This type of rulemaking is used when the agency is creating major new programs or establishing new binding norms. Now, in our estimates in 2000, the Department published approximately 100 notice and comment regulations. Historically almost two-thirds of the regulations are issued by two agencies in the Department, CMS and FDA, who are on the panel with me today. Historically about 38 percent of the regulations are from CMS, formerly HCFA, and 38 percent are from FDA, the remaining 24 spread out over the remaining agencies.
Generally speaking, the notice and comment process involves four basic steps.
First, a notice of proposed rulemaking is published in the Federal Register. This is usually after the passage of legislation or a new program initiative, and the agency is initiating rulemaking.
Second, the public gets an opportunity to submit written comments on the proposed rule to the agency.
Third, the agency issues a final rule which shows that public comments were considered. The consideration of the public comments is the important piece to this that shows that throughout this process the public is inherently involved throughout every phase of the rulemaking process, and when the agency reaches that fourth point and issues the final rule, it must respond to the public comments. It must explain how it is dealing with the comments that it has rejected, and in essence, it must provide a basic rationale as to why the rule stayed the way it stayed or changes that the agency proposed to make.
Now, in fact, the notice and comment rulemaking process is a lot more involved than the four basic steps that I had outlined previously. So before you is a graph of the notice and comment process in its real world steps. Lest you think this looks like health care reform, it is not designed to do that, but it is designed to show you that there are some integral key steps that you don't normally see in the basic four blocks that we showed previously.
The first step, as I said earlier, is the proposed rule phase, and that's when the agency is going to issue its proposed rule. It's going to draft the rule.
After the draft rule is completed, the rule first has to go through departmental clearance.
Once the rule is cleared by the Department, most of the rules that we deal with today, and I think the ones that you're most concerned about, are cleared by OMB.
Now, there's an executive order, 12866, which requires OMB to clear all significant rules. Significant rules include rules that affect the economy by $100 million or more, as well as rules that raise novel or legal policy issues. As I said, most of the Department's rules do fall into this category.
OMB reviews significant rules to ensure that the cost of the regulation to the general public does not outweigh its benefit. OMB also considers the impact of the regulation on the federal budget. Agencies are required to prepare impact analyses of the NPRMs that attempt to analyze the benefits and costs of the proposed rule, and by executive order, OMB has 90 days to conduct this review.
Now, aside from the impact analysis, there are many other requirements with which the agency must comply. For rules that include collections of information such as rules including application forms or questionnaires, agencies must comply with the Paperwork Reduction Act, by justifying that their collections are the least burdensome possible.
For the rules that have a significant impact on a substantial number of small entities, the agency must prepare a regulatory flexibility analysis, which is commonly known as REGFLEX. The agency must analyze the potential impact of the regulation on small businesses and whether there are any regulatory alternatives that are less burdensome to small entities, and if so, why the agency did not choose such alternatives. The REGFLEX analysis must be submitted to the chief counsel for advocacy at the Small Business Administration who is charged with reviewing the agency's analysis and can file comments directly. The chief counsel, however, cannot prevent the promulgation or the publication of any final rule.
We will continue with these internal rules. There is another one. For rules that impose mandates on state, local, or tribal entities, there's the Unfunded Mandates Reform Act which requires agencies to prepare a written cost/benefit statement for any NPRM that results in an expenditure by state, local, or tribal governments in the aggregate or by private parties in excess of $100 million in any one year.
There are also numerous existing executive orders with which the agency must comply. During OMB review, OMB staff ensure that the agency has complied with the existing federalism executive order, as well as the consultation and coordination with Indian tribal governments executive order. Many of you may know that OMB Director Daniels has pledged to Congress that rulemaking proposals by any agency that were not subject to proper and adequate state and local consultation will be returned to the agency for review.
Now, once OMB has completed its review, the notice of proposed rulemaking is published in the Federal Register. Publication triggers the second phase of notice and comment rulemaking, and that's the comment phase. Although the APA does not address the length of the comment period, the Department has a practice of allowing 60 days for comment and CMS is required by law to have a 60-day comment period for most rules. OMB has also encouraged agencies to use 60-day comment periods. And many of you know from some of the more significant regs from the agency, there have been occasions where the agency will extend the comment period to allow for more comments to come in.
Agencies are required, as I said earlier, to respond to comments received in the final rule. The courts have stated that the responses must allow a court to understand what major issues of policy were vetted by the informal proceedings and why the agency reacted to them as it did. That's the key point of the judicial review. If comments raise alternative options, the agency must explain clearly why it rejected those options.
Agencies often receive substantial comments, and one example recently is the privacy rule that generated over 50,000 comments for the agency. Now, as I said, the agency doesn't need to respond to each comment individually, but they do need to respond to categories of comments to have a thorough response.
Now, we've reached the third and the final phase of the notice and comment rulemaking process in the final rule phase. This phase is very similar to the proposed rule phase internally to the Department as it works to get the rule out to the public in final form. It again involves departmental clearance. OMB, once again, has 90 days to review the significant rules, and at the end of the process, a final rule is finally published in the Federal Register. By law, most rules cannot become effective until 30 days after publication.
Special Contract with America laws also impose new requirements to allow Congress to review and overturn, if necessary, major rules. In fact, those laws, which were the provisions used to overturn the OSHA ergonomics regulation earlier last year require that agencies must wait at least 60 days for major rules to become effective. Here the major rule is defined to include: A, effect on the economy by $100 million or more; B, rules that result in a major increase in cost or prices for consumers, federal, state, and local government agencies or geographic regions; or C, rules that have a significant adverse impact on competition, employment, investment productivity, innovation, or the ability of United States-based enterprises to compete with foreign-based enterprises in domestic or export markets.
A little caveat to note is that rules which grant an exemption or relieve a restriction can become effective immediately.
So as you can see from this slide, there are several steps involved in releasing a new regulation to the public, but each step, I think you'll agree, has a lot of merit and value throughout the process.
Now, in addition to the notice and comment rulemaking, which I said is the most common to our agency and one that I think is probably most familiar to you, is also a process called interim final rulemaking. Interim final rules are not discussed in the APA. However, the practice follows recommendations made by the Administrative Conference in 1995. In interim final rulemaking, the agency issues a rule without notice and comment and then modifies the rule, as appropriate, following post-promulgation comments. Interim final rules may be used when there is good cause under the APA. Good cause is defined where a comment period is impracticable, unnecessary, or contrary to the public interest. In some cases, courts have found a public health emergency to constitute good cause. In other cases, Congress has specifically required that the agency issue an interim final rule.
If an agency issues an interim final rule without good cause, the rule can be struck down on procedural grounds. Nevertheless, some courts have used their equitable power to allow the agency to cure the procedural defect by treating the interim final rule as a proposed rule, providing an opportunity for public comment.
Agencies may also engage in a process known as direct final rulemaking when a rule is not controversial or it's routine. In this process, the agency publishes a rule in the Federal Register with a statement that unless an adverse comment is received within a specific time period, the rule will become effective on a particular date, at least 30 days from the date of publication. However, if an adverse comment is filed, the rule is withdrawn and the agency may publish the proposed rule under normal notice and comment procedures. This process is generally used where an agency believes that the rule is noncontroversial and adverse comments will not be received. So far, there have been no legal challenges to this process in federal court, and I gather for most of you who deal with FDA and CMS regulations, perhaps this is not the kind of rulemaking that you see us do very often.
(Laughter.)
MR. CADE: Interpretive rules are exempt also from the notice and comment process of the APA. They are still considered rules under the APA, but they need not be published in the Federal Register. They are not subject to public comment and they do not have a delayed effective date. Interpretive rules are generally used where an agency is either interpreting or filling in the details of its own regulation or merely reminding parties of existing law or interpreting statutes without creating any new rights or duties.
This is not a bright line between interpretive and notice and comment rules. The D.C. Circuit, the foremost authority on administrative law short of the Supreme Court, has stated that distinguishing between the two types of rules must be on a case-specific basis.
In addition, there has been some recent line of cases, both in the D.C. Circuit and the Fifth Circuit, stating that when an agency wants to alter a longstanding interpretive rule, it has to go through notice and comment. Again, this is a recent line of cases that our agency and all agencies I think are following very closely.
Now, like interpretive rules, statements of policy are also exempt from notice and comment rules under the APA. These rules may be issued immediately without the necessity of public comment. Policy statements advise the public prospectively of the manner in which the agency proposes to exercise its discretionary power. These policy statements allow the agency to announce its tentative intent for the future without necessarily binding itself. Policy statements are often used to advise the public of how an agency plans to exercise its enforcement powers, by way of an example.
This slide here shows you a quote from one of the D.C. Circuit decisions defining a statement of policy. The quotation shows how a statement of policy is generally not binding and how it is not intended to create a binding rule creating uniform standards for all members of the public.
Finally, rules of agency organization, procedure, or practice are also exempt from notice and comment rulemaking. These are rules that govern an agency's internal procedures. For example, the name change from HCFA to CMS, that we did not too very long ago I guess, would be an example of a rule of agency organization.
I know that was a perhaps lightening-quick run-through of anything and everything you wanted to know about the APA. It's actually a little more complicated than that, but as a general primer for you, as I said, to keep in the back of your mind that there are many ways to look at rolling out or changing rules to the general public. It's something that you would want to keep in the back of your mind as you think through what changes you want to make, and I hope that this was just enough of a flavor to let you know that the process does exist. There are rules that govern. It's not just the APA but OMB and the general public that are involved in the process.
I guess we will take questions at the end of the panel. Thank you.
DR. WOOD: Thank you very much.
Linda?
MS. FISHMAN: Although I'm not a lawyer by training, I've been at CMS since the end of June, and I feel like I'll be one by the time I end my service at CMS.
(Laughter.)
MS. FISHMAN: I'm learning all this as well.
Before I get started, I'd like to introduce some of the staff who are from CMS who have been very much involved in the development work getting us to the first meeting, and I'd like you to become familiar with them because they'll be working on the commission's work throughout its tenure.
Paul Hughes is at the back of the room. He is in the Office of Strategic Planning and is on loan to Christy Schmidt.
Joelle Oishi is sitting along the wall and works for the lady next to her in our Office of Communications and Operations Support that we call OCOS. We have a whole division that does nothing but manage the flow of paper throughout the agency, which I found to be quite mind-boggling when I got there.
Next to Joelle is Jackie White. She's the acting Director of OCOS, and is responsible for the 100 or so FTEs who actually work on developing regs and managing the paper flow throughout the CMS, as well as its interaction with the rest of the Department.
And next to Jackie is Peggy Sparr who is the staff person at our Center for Beneficiary Choices and is also on loan to the reg reform commission.
I thought I'd take a few moments to go through all the activity that CMS has been involved in since the Secretary and the energetic administrator, Tom Scully, have come on board. They both have common goals in that they want to streamline the Medicare requirements and most of my remarks here are going to be about the Medicare program. I've a few Medicaid things to say but will get there later.
They wanted to bring a certain openness and responsiveness to the regulatory process and to make certain that regulations and paperwork are sensible and predictable.
The major management challenge for CMS is to continue to run the day-to-day operations of the program at the same time as trying to address the important changes in regulation that you and the Secretary, as well as Tom Scully, want to make. As we run the operation pretty much on a shoestring, no one can afford in HHS to waste scarce resources, and that extends from providers and physicians, also to CMS and HHS staff, and we are very keenly aware of the resources that we have available.
I'd like to say welcome to the first step toward Medicare reform. As you know, for several years, we've been talking about reforming the Medicare program and this past summer when the President came out with his principles of how to strengthen the Medicare program, among them was making the agency a better place, more responsive to providers, more transparent, if you will, in how we go about conducting our business.
Now, it is true, as Mr. Cummings pointed out earlier, we've